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, 2002
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, 2002 AND 2001
MOORE STEPHENS APPLE
CERTIFIED PUBLIC ACCOUNTANTS
2
THE LAMSON & SESSIONS CO. DEFERRED SAVINGS PLAN
FINANCIAL STATEMENTS
DECEMBER 31, 2002 AND 2001
TABLE OF CONTENTS
Page
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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 for Investment Purposes at Year End 15
3
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
The Lamson & Sessions Co.
We have audited the accompanying statements of net assets available for benefits
- modified cash basis of The Lamson & Sessions Co. Deferred Savings Plan as of
December 31, 2002 and 2001, and the related statements of changes in net assets
available for benefits - modified cash basis 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 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 Lamson &
Sessions Co. Deferred Savings Plan as of December 31, 2002 and 2001, and changes
in its net assets available for benefits for the years 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 audits of the Plan's financial statements as of and for the years ended
December 31, 2002 and 2001 were conducted 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 as of and for the year ended December 31,
2002, referred to as "supplemental information", 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 information is the responsibility of the
Plan's management. The supplemental information has been subjected to the
auditing procedures applied in the audit of the basic financial statements for
the year ended December 31, 2002, and in our opinion, is fairly stated in all
material respects in relation to the financial statements taken as a whole.
/s/ Moore Stephens Apple
Westlake, Ohio
May 29, 2003
4
THE LAMSON & SESSIONS CO. DEFERRED SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
- MODIFIED CASH BASIS
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DECEMBER 31, 2002 2001
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ASSETS
CASH $ 22,160 $ 13,654
INVESTMENTS, AT FAIR VALUE:
Mutual funds 24,392,189 25,838,137
Cash value of life insurance 121,400 137,722
Lamson & Sessions Company stock 1,384,633 1,579,720
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25,898,222 27,555,579
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RECEIVABLES:
Employer's contribution 281,136 35,636
Participant's contributions 79,325 72,693
Participant loans 790,297 659,854
Other 1,687 6,826
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1,152,445 775,009
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Total Assets 27,072,827 28,344,242
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LIABILITIES
Accounts payable 25,058 15,529
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NET ASSETS AVAILABLE FOR BENEFITS $27,047,769 $28,328,713
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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
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YEARS ENDED DECEMBER 31, 2002 2001
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ADDITIONS TO NET ASSETS ATTRIBUTABLE TO:
Investment income
Interest and dividends $ 792,891 $ 894,528
Contributions
Employee salary deferrals 2,134,263 2,157,804
Employer matching and profit sharing 1,256,693 1,008,775
Rollover contributions 24,627 19,709
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3,415,583 3,186,288
Assets from merged plan 888,245 --
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TOTAL ADDITIONS 5,096,719 4,080,816
DEDUCTIONS FROM NET ASSETS ATTRIBUTABLE TO:
Benefits paid to participants 2,208,084 2,360,343
Net depreciation in fair value of investments 4,166,228 2,641,606
Insurance premiums 3,351 7,434
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TOTAL DEDUCTIONS 6,377,663 5,009,383
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NET DECREASE IN NET ASSETS (1,280,944) (928,567)
NET ASSETS AVAILABLE FOR BENEFITS:
BEGINNING OF YEAR 28,328,713 29,257,280
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END OF YEAR $ 27,047,769 $ 28,328,713
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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
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DECEMBER 31, 2002 AND 2001
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 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). 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 which was acquired by Credit Suisse First Boston in
November 2000 ("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.
Effective January 1, 2000 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.
In addition, the Company can make discretionary matching contributions.
Based on the Company's annual financial performance the Company may
make a profit-sharing matching contribution. This profit-sharing match,
if any, can add as much as an additional 25% of the participant's
contribution up to the first 6% of compensation and is initially
invested in Lamson & Sessions stock. A participant is 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.
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7
THE LAMSON & SESSIONS CO. DEFERRED SAVINGS PLAN
NOTES TO THE FINANCIAL STATEMENTS
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DECEMBER 31, 2002 AND 2001
NOTE A - DESCRIPTION OF PLAN - CONTINUED
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. The benefit to which a
participant is entitled is the benefit that can be provided from the
participant's vested account.
Participants may direct their individual account balances as of
December 31, 2002 among the following investment options:
Bond Fund of America - This fund seeks a high level of current
income consistent with preservation of capital by investing
primarily in high quality corporate bonds and U.S. government
securities.
EuroPacific Growth Fund - A foreign stock fund that seeks
long-term capital appreciation by investing in companies
located outside the United States.
Stable Value Fund - This fund seeks to produce consistent,
positive returns for investors while preserving principal and
maintaining liquidity.
Templeton Developing Markets Fund - An emerging market stock
fund that seeks long-term capital appreciation by investing in
stocks of issuers in countries with developing markets.
Fundamental Investors Fund - A large company value fund that
invests primarily in large company stocks or investments that
are convertible to stock. It seeks both long-term growth of
capital and current income.
Franklin Balance Sheet Investment Fund - A small company value
fund that seeks capital appreciation primarily through
investment in securities that the fund's manager believes are
undervalued in the marketplace.
Franklin Real Estate Securities - A specialty real estate fund
that seeks to maximize total return by investing in real
estate securities.
Lord Abbett Developing Growth A Fund - A small company growth
fund that seeks long-term capital growth by investing in
stocks of companies with dramatic growth potential.
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8
THE LAMSON & SESSIONS CO. DEFERRED SAVINGS PLAN
NOTES TO THE FINANCIAL STATEMENTS
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DECEMBER 31, 2002 AND 2001
NOTE A - DESCRIPTION OF PLAN - CONTINUED
3. PARTICIPANT ACCOUNTS - CONTINUED
Fidelity Advisor Equity Growth Fund - This fund seeks to
achieve capital appreciation by investing primarily in common
stock of companies with above-average characteristics.
Putnam International Voyager Fund - This fund seeks long-term
capital appreciation by investing primarily in equity
securities of small and mid-capitalization companies whose
principle place of business is located outside of the United
States or whose securities are principally traded on foreign
markets.
Lamson & Sessions Stock Fund - Funds are invested in common
stock of the The Lamson & Sessions Co. The Fund's objective is
to provide investment returns linked to Lamson & Sessions'
long-term capital appreciation and offer employees a
convenient way to invest in Lamson & Sessions' stock.
In addition, subject to the terms of the Plan, participants with
sufficient vested balances may borrow from their fund accounts.
Participant loans are treated as an additional investment option under
the terms of the Plan.
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, but additional investments in
insurance are no longer permitted.
Effective January 1, 2002 salaried and non-union hourly employees of
Pyramid Industries, 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, 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, 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.
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9
THE LAMSON & SESSIONS CO. DEFERRED SAVINGS PLAN
NOTES TO THE FINANCIAL STATEMENTS
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DECEMBER 31, 2002 AND 2001
NOTE A - DESCRIPTION OF PLAN - CONTINUED
4. VESTING
Participants are immediately vested in their 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.
5. PARTICIPANT LOANS RECEIVABLE
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 6.00 percent to
10.84 percent.
6. PAYMENT OF BENEFITS
Benefits upon retirement, death or other termination of employment may
be paid either in a lump sum or in periodic payments. Withdrawals from
a participant's account may be made prior to termination, subject to
certain restrictions.
7. PLAN EXPENSES
The Lamson & Sessions Co. absorbs all costs to administer the Plan.
8. FORFEITURES
Forfeited nonvested accounts are used to reduce employer contributions.
In 2002 and 2001, the amount of forfeited nonvested accounts which were
applied to reduce such contributions were $68,689 and $36,980,
respectively.
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10
THE LAMSON & SESSIONS CO. DEFERRED SAVINGS PLAN
NOTES TO THE FINANCIAL STATEMENTS
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DECEMBER 31, 2002 AND 2001
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. 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
receivable are valued at their outstanding principal balance. Life
insurance contracts are valued at cash 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 and
disclosures. Actual results could differ from those estimates.
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11
THE LAMSON & SESSIONS CO. DEFERRED SAVINGS PLAN
NOTES TO THE FINANCIAL STATEMENTS
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DECEMBER 31, 2002 AND 2001
NOTE C - INVESTMENTS
The following table presents investments at December 31, 2002 and 2001.
Investments that represent 5% or more of the Plan's net assets are
separately identified.
2002 2001
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Bond Fund of America $ 3,239,761 $ 3,414,059
EuroPacific Growth Fund 1,753,291 1,994,976
Stable Value Fund 5,954,505 5,052,560
Fundamental Investors 4,917,710 5,511,630
Franklin Balance Sheet Investment Fund 2,108,506 2,091,192
Fidelity Advisor Equity Growth Fund 3,364,264 4,241,977
Lord Abbett Developing Growth A 1,087,092 1,446,351
Lamson & Sessions Company Stock Fund 1,384,633 1,579,720
Other 2,088,460 1,890,114
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$25,898,222 $27,555,579
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During 2002 and 2001, the Plan's investments, including investments
bought, sold and held during the year, depreciated in value by
$4,149,906 and $2,641,606 respectively, as follows:
2002 2001
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Mutual funds at fair value as determined
by quoted market prices. $(3,448,221) $(1,931,602)
Life insurance contracts at cash value. (16,322) 11,459
The Lamson & Sessions Co. stock at
fair value as determined by quoted market
prices. (701,685) (721,463)
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$(4,166,228) $(2,641,606)
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12
THE LAMSON & SESSIONS CO. DEFERRED SAVINGS PLAN
NOTES TO THE FINANCIAL STATEMENTS
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DECEMBER 31, 2002 AND 2001
NOTE D - TAX STATUS
The Internal Revenue Service has determined and informed the Company by
a letter dated February 14, 1996, that the Plan was designed in
accordance with applicable sections of the Internal Revenue Code (IRC).
The Plan was amended and restated effective January 1, 2001 in
accordance with the Uruguay Round Agreements Act (GATT), the Taxpayer
Relief Act of 1997, the Reemployment Rights Act of 1994 (USERRA), the
Internal Revenue Service Restructuring and Reform Act of 1998, the
Small Business Job Protection Act of 1996 (SBJPA), collectively
referred to as the "GUST restatements" and the Economic Growth and Tax
Relief Reconciliation Act of 2001 ("EGTRRA"). The Plan received a
favorable determination letter dated May 7, 2002.
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.
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13
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SUPPLEMENTAL INFORMATION
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14
THE LAMSON & SESSIONS CO. DEFERRED SAVINGS PLAN
SCHEDULE H, LINE 4i SCHEDULE OF ASSETS HELD FOR
INVESTMENT PURPOSES AT YEAR END EIN: 34-0349210 PLAN:028
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DECEMBER 31, 2002
COLUMN A COLUMN B COLUMN C COLUMN E
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IDENTITY OF ISSUE,
BORROWER,
LESSOR OR DESCRIPTION OF CURRENT
SIMILAR PARTY INVESTMENT(1) VALUE
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American Funds Bond Fund of America $ 3,239,761
EuroPacific Growth Fund 1,753,291
Fundamental Investors 4,917,710
Franklin Templeton Developing Markets Fund 326,655
Balance Sheet Investment Fund 2,108,506
Real Estate Securities 1,174,380
Fidelity Advisor Equity Growth Fund 3,364,264
Lord Abbett Developing Growth A 1,087,092
Invesco Stable Value Fund 5,954,505
New England Cash Value of Insurance 121,400
Putnam International Voyager Fund 466,025
* Lamson & Sessions Stock Fund 1,384,633
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25,898,222
Participant Loans Participant loans with various rates
of interest from 6.00% to 10.84%
and various maturity dates
through 2016 790,297
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TOTAL ASSETS HELD FOR INVESTMENT PURPOSES AT YEAR END $ 26,688,519
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*Party-In-Interest
(1) Including maturity date, rate of interest, collateral, par or maturity
value, where applicable.
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15
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 25, 2003 By: /s/ James J. Abel
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James J. Abel
Trustee
16
EXHIBIT INDEX
EXHIBIT EXHIBIT
NUMBER DESCRIPTION
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23 Consent of Moore Stephens Apple
99 Certification pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
17