-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OTKyx2tEN+x2k4yHfX/+DxOidPzsw6jwktDrmjY0HpmGhqIezU5UMgr2MeYl6Hfn tdlmP+43/uLtnkEyy7wxjw== 0000950135-03-003722.txt : 20030723 0000950135-03-003722.hdr.sgml : 20030723 20030630171207 ACCESSION NUMBER: 0000950135-03-003722 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20021231 FILED AS OF DATE: 20030630 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WELLMAN INC CENTRAL INDEX KEY: 0000812708 STANDARD INDUSTRIAL CLASSIFICATION: PLASTIC MAIL, SYNTH RESIN/RUBBER, CELLULOS (NO GLASS) [2820] IRS NUMBER: 041671740 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 11-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-10033 FILM NUMBER: 03765326 BUSINESS ADDRESS: STREET 1: 595 SHREWSBURY AVENUE CITY: SHREWSBURY STATE: NJ ZIP: 07702 BUSINESS PHONE: (732)212-3300 MAIL ADDRESS: STREET 1: P.O. BOX 31331 CITY: CHARLOTTE STATE: NC ZIP: 28231 11-K 1 b47053wme11vk.txt WELLMAN, INC. 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 33-54075 A. Full title of the plan: Wellman, Inc. Retirement Plan B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: Wellman, Inc. 595 Shrewsbury Avenue Shrewsbury, NJ 07702 AUDITED FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE Wellman, Inc. Retirement Plan For the years ended December 31, 2002 and 2001 with Report of Independent Auditors Wellman, Inc. Retirement Plan Audited Financial Statements and Supplemental Schedule Years ended December 31, 2002 and 2001 CONTENTS Report of Independent Auditors.............................................1 Audited Financial Statements Statements of Net Assets Available for Benefits............................2 Statements of Changes in Net Assets Available for Benefits.................3 Notes to Financial Statements..............................................4 Supplemental Schedule Schedule of Assets Held for Investment Purposes at End of Year............10 Report of Independent Auditors Employee Benefits Committee Wellman, Inc. We have audited the accompanying statements of net assets available for benefits of the Wellman, Inc. Retirement Plan as of December 31, 2002 and 2001, 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. 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, 2002 and 2001, and the changes in its net assets available for benefits for the years 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 accompanying supplemental schedule of assets held for investment purposes (at end of year) as of December 31, 2002, is presented for purposes of additional analysis and is not a required part of the 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. The supplemental schedule is the responsibility of the Plan's management. The supplemental schedule has been subjected to the auditing procedures applied in our audits 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. /s/ Ernst & Young LLP Charlotte, North Carolina June 13, 2003 1 Wellman, Inc. Retirement Plan Statements of Net Assets Available for Benefits
DECEMBER 31 2002 2001 ------------------------------------ ASSETS Investments $ 123,504,066 $ 146,128,681 Employer contributions receivable 3,620,554 3,969,515 Accrued income receivable - 222,637 ------------------------------------ Net assets available for benefits $ 127,124,620 $ 150,320,833 ====================================
See notes to financial statements. 2 Wellman, Inc. Retirement Plan Statements of Changes in Net Assets Available for Benefits
YEAR ENDED DECEMBER 31 2002 2001 --------------------------------- ADDITIONS Employee contributions $ 3,272,964 $ 3,017,907 Employer contributions 5,664,121 5,493,091 Net investment income (loss): Interest and dividends 4,369,662 3,658,961 Net depreciation in fair value of investments (17,798,837) (10,294,949) --------------------------------- Net investment loss (13,429,175) (6,635,988) --------------------------------- Total additions (deductions) (4,492,090) 1,875,010 DEDUCTIONS Distributions to participants 18,602,042 14,637,284 Participant forfeitures 101,941 172,799 Administrative expenses 140 1,715 --------------------------------- Total deductions 18,704,123 14,811,798 --------------------------------- Decrease in net assets available for benefits (23,196,213) (12,936,788) Net assets available for benefits at beginning of year 150,320,833 163,257,621 --------------------------------- Net assets available for benefits at end of year $ 127,124,620 $ 150,320,833 =================================
See notes to financial statements. 3 Wellman, Inc. Retirement Plan Notes to Financial Statements December 31, 2002 1. DESCRIPTION OF THE PLAN The following description of the Wellman, Inc. Retirement Plan (the Plan) provides only general information. Participants should refer to the Summary Plan Description for a more complete description of the Plan's provisions. GENERAL The Plan is a defined contribution plan covering all non-bargaining employees of Wellman, Inc. (the Company) who have at least one year of service and are age twenty-one or older. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). CONTRIBUTIONS The Plan includes pension plan, 401(k) and discretionary performance plan provisions. The pension plan provision of the Plan is funded by Company contributions. The Company contributed annually 6% in 2002 and 2001, respectively, of each participant's compensation plus an additional 5% of the portion of such compensation in excess of the Social Security taxable wage base. The Plan has met minimum funding standards of ERISA. Participants may contribute to their 401(k) accounts 1% to 12% (9% in 2001) on a before-tax or after-tax basis of their compensation through payroll deductions up to the maximum amount per calendar year defined by the Internal Revenue Code (the Code). In the event a participant elects to contribute on a before-tax basis, the Company will contribute $.50 for each $1.00 of the participant's contribution on the first 4% and $1.00 for each $1.00 of the participant's contribution up to the next 1%, of the participant's eligible compensation for the calendar year. The performance plan provision of the Plan is funded by Company contributions from net profits at the discretion of the Company. The Company may contribute that amount of its net profits for a given plan year as designated by the Company's Board of Directors. No performance contribution was made in 2002 or 2001. The annual addition to a participant's account under the Plan is limited to the lesser of $40,000 or 100% of the participant's gross compensation. 4 Wellman, Inc. Retirement Plan Notes to Financial Statements (continued) 1. DESCRIPTION OF THE PLAN (CONTINUED) VESTING A participant's pension plan account is 100% vested upon completion of five years of vesting service with the Company. A participant's 401(k) account attributable to before-tax and after-tax contributions by the participant and matching contributions are immediately 100% vested. The Company's discretionary performance contributions are 100% vested after three years of service. A participant is also automatically 100% vested at age 65 or upon death or disability while employed by the Company. PARTICIPANT ACCOUNTS Each participant's account is credited with the Company's contributions, the participant's contributions, plan earnings and is charged with an allocation of administrative expenses. Allocations are based on participant earnings or account balances. Forfeited balances of terminated participants' nonvested accounts are used to reduce future Company contributions. The benefit to which a participant is entitled is the benefit that can be provided from the participant's account. PARTICIPANT LOANS Effective January 1, 2002, the plan was amended to allow participant loans. Participants may borrow from their fund accounts a minimum of $1,000 up to 50% of their vested account balance with a maximum loan of $50,000. Loan terms range from one to five years unless the loan proceeds are used for the purchase of a primary residence of the participant. The loans are secured by the balance in the participant's account and bear interest at a rate based upon the prime rate. PAYMENT OF BENEFITS Upon retirement at or after age 65 or, if earlier, death, disability, or termination, the vested balance in the participant's account is paid to the participant or the participant's beneficiaries in the form of either a lump-sum distribution, equal annual installments, or a nontransferable annuity contract. 5 Wellman, Inc. Retirement Plan Notes to Financial Statements (continued) 1. DESCRIPTION OF THE PLAN (CONTINUED) 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 have a fully-vested nonforfeitable interest in their share of the trust fund. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF ACCOUNTING The financial statements have been prepared on the accrual basis of accounting. VALUATION OF INVESTMENTS AND INCOME RECOGNITION Marketable securities are stated at fair value. Securities traded on a national securities exchange are valued at the last reported sales price on the last business day of the plan year; investments traded in the over-the-counter market and listed securities for which no sale was reported on the date are valued at the average of the last reported bid and ask prices. 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. Investment contracts held by the Plan are recorded at their contract values, which approximate fair value, and represent contributions and reinvested income, less any withdrawals plus accrued interest because these investments have fully benefit-responsive features. Purchases and sales of investments are reflected on the trade dates. Gains and losses on the sale of investments are based on the average cost of the investments. Income from investments is recorded as earned on an accrual basis. Dividends are recorded on the ex-dividend date. 6 Wellman, Inc. Retirement Plan Notes to Financial Statements (continued) 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) USE OF ESTIMATES The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates and assumptions. ADMINISTRATIVE EXPENSES The Company pays all trustee and record keeping administrative expenses of the Plan; however, investment management fees and certain brokerage commissions, transfer taxes and other charges in connection with the purchase or sale of securities are paid by the Plan. 3. INVESTMENTS During 2002 and 2001, the Plan's investments (including investments bought, sold, and held during the year) depreciated in fair value by $17,798,837 and $10,294,949, respectively, as follows:
YEAR ENDED DECEMBER 31 2002 2001 -------------------------------- Investments at fair value as determined by quoted market price: Shares of registered investment companies $ (16,514,462) $ (12,478,517) Common Stock (1,284,375) 2,124,239 Certificates of deposit - 59,329 -------------------------------- $ (17,798,837) $ (10,294,949) ================================
7 Wellman, Inc. Retirement Plan Notes to Financial Statements (continued) 3. INVESTMENTS (CONTINUED) The fair value of individual investments that represent 5% or more of the Plan's net assets is as follows:
DECEMBER 31 2002 2001 ----------------------------- Vanguard Institutional Index Fund $ 21,159,564 $ 33,121,747 ABN AMRO Income Plus Fund (formerly LaSalle Income Plus Fund) 21,385,695 11,480,015 Wellman, Inc. Common Stock 9,518,317 10,915,642 Growth Fund of America 18,589,080 28,965,403 MFS Total Return Fund 15,292,936 19,860,688
The average yield and crediting interest rate for fully benefit responsive investment contracts is as follows:
DECEMBER 31 2002 2001 -------------------- Allstate Insurance Company Matures 08/16/2004 7.17% 7.17% Business Men's Assurance Co. Matured 05/15/2002 - 7.00% Business Men's Assurance Co. Matured 11/15/2002 - 6.28% Combined Insurance Co. Cancelled 08/15/2004 - 6.65% GE Life Insurance Co. Matures 11/15/2003 5.50% 5.50% Jackson National Contract Matures 02/18/2003 6.90% 6.90% John Hancock Ins. Co. Matures 10/15/2004 7.29% 7.29% John Hancock Inc. Co. Matures 03/06/2006 5.77% 5.77% Mass Mutual Life Ins. Co. Matures 07/14/2006 5.67% 5.67% Metropolitan Life Ins. Co. Matures 06/16/2003 6.58% 6.58% Monumental Life Matures 12/20/2004 7.25% 7.25% New York Life Ins. Co. Matured 02/19/2002 - 6.41% Ohio National Life Ins. Co. Matured 04/15/2002 - 7.47% Pacific Life Ins. Co. Matures 10/17/2005 5.51% 5.51% Principal Life Ins. Co. Matures 04/15/2006 5.62% 5.62% Protective Life Ins. Co. Matured 05/15/2002 - 7.02% Safeco Life Ins. Co. Matured 06/17/2002 - 6.81% Sunamerica Life Ins. Co. Matured 03/15/2002 - 6.85% Transamerica Occidental Matures 02/15/2003 5.77% 5.77% Travelers Group Matures 01/15/2004 5.64% 5.64%
8 Wellman, Inc. Retirement Plan Notes to Financial Statements (continued) 4. TRANSACTIONS WITH PARTIES-IN-INTEREST Certain investments held by the Plan are party-in-interest transactions with the trustee. The Northern Trust Company served as trustee during 2000 and for the eleven months ended November 30, 2001. Effective December 1, 2001, National City Bank was appointed trustee of the Plan. 5. INCOME TAX STATUS The Plan has received a determination letter from the Internal Revenue Service dated September 3, 2002 stating that the Plan is qualified under Section 401(a) of the Code and, therefore, the related trust is exempt from taxation. The Plan is required to operate in conformity with the Code to maintain its qualification. The Employee Benefits Committee believes the Plan is being operated in compliance with the applicable requirements of the Code and, therefore, believes the Plan is qualified and the related trust is tax exempt. 6. VOLUNTARY COMPLIANCE RESOLUTION PROGRAM During 2000, an operational defect in the Plan was identified. Certain employees, who were previously contracted labor, did not receive credit for their years of service as contracted employees once they became employees of the Company. As a result, employer contributions for those employees were not made in accordance with the terms of the Plan. In 2001, the Company voluntarily applied to the IRS to correct the defects through the Voluntary Compliance Resolution Program. During 2002 the Company completed corrective action by contributing $542,573 to participant accounts affected by the operational defect. Final approval of the corrective action by the IRS is expected during 2003. 9 Supplemental Schedule Wellman, Inc. Retirement Plan EIN: 04-1671740 Plan Number: 002 Schedule H Line 4i Schedule of Assets Held for Investment Purposes at End of Year December 31, 2002
DESCRIPTION OF INVESTMENT IDENTITY OF ISSUE, BORROWER, LESSOR OR INCLUDING MATURITY DATE, RATE OF CURRENT SIMILAR PARTY INTEREST, PAR OR MATURITY VALUE VALUE - ---------------------------------------------------------------------------------------------------- Shares of Registered Investment Companies: Vanguard Institutional Index Fund 263,015 units $ 21,159,564 PIMCO Total Return Fund 410,211 units 4,376,956 MFS Total Return Fund 1,152,444 units 15,292,936 AIM Basic Value Fund 73,261 units 1,601,485 Growth Fund of America 1,006,447 units 18,589,080 Armada Small Cap Value Fund 147,238 units 2,358,750 Armada U.S. Gov't Income Fund 147,163 units 1,412,768 ING International Value Fund 90,132 units 927,459 Strong Advisor Small Cap Value Fund 79,118 units 1,501,663 ABN AMRO Income Plus Fund 21,385,695 units 21,385,695 ------------- 88,606,356 *Wellman, Inc. 705,583 shares of Common Stock 9,518,317 Loans to Participants Interest rates from 6.25 to 6.75% 2,523,878 Guaranteed Investment Contracts: Allstate Insurance Company Matures 08/16/2004; 7.17% per annum $ 3,115,410 GE Life Insurance Co. Matures 11/15/2003; 5.50% per annum 2,013,836 Jackson National Contract Matures 02/18/2003; 6.90% per annum 1,042,782 John Hancock Ins. Co. Matures 10/15/2004; 7.29% per annum 1,250,604
10 Wellman, Inc. Retirement Plan EIN: 04-1671740 Plan Number: 002 Schedule H Line 4i Schedule of Assets Held for Investment Purposes at End of Year (continued)
DESCRIPTION OF INVESTMENT IDENTITY OF ISSUE, BORROWER, LESSOR OR INCLUDING MATURITY DATE, RATE OF CURRENT SIMILAR PARTY INTEREST, PAR OR MATURITY VALUE VALUE - --------------------------------------------------------------------------------------------------------- John Hancock Ins. Co. Matures 03/06/2006; 5.77% per annum $ 1,571,021 Mass Mutual Life Ins. Co. Matures 07/14/2006; 5.67% per annum 2,052,039 MetLife Insurance Co. Matures 06/16/2003; 6.58% per annum 2,070,347 Monumental Life Matures 12/20/2004; 7.25% per annum 2,004,608 Pacific Life Ins. Co. Matures 10/17/2005; 5.51% per annum 2,022,916 Principal Life Ins. Co. Matures 04/15/2006; 5.62% per annum 2,079,745 Transamerica Occidental Matures 02/15/2003; 5.77% per annum 1,313,013 Travelers Group Matures 01/15/2004; 5.64% per annum 2,319,194 ------------- 22,855,515 ------------- Total assets held for investment purposes $ 123,504,066 =============
*Indicates party-in-interest to the Plan. 11 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Plan Administrator has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized. WELLMAN, INC. RETIREMENT PLAN By: WELLMAN, INC. EMPLOYEE BENEFITS COMMITTEE By: /s/Keith R. Phillips ------------------------------- Name: Keith R. Phillips Title: Member Date: June 30, 2003 EX-23 3 b47053wmexv23.txt CONSENT OF ERNST & YOUNG EXHIBIT 23 CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in the Registration Statements (Form S-8, No. 33-44877, No. 33-54075, and No. 333-38752) pertaining to the Wellman, Inc. Retirement Plan of our report dated June 13, 2003, with respect to the financial statements and supplemental schedule of the Wellman, Inc. Retirement Plan included in this Annual Report (Form 11-K) for the year ended December 31, 2002. /s/Ernst & Young Charlotte, North Carolina June 26, 2003 EX-99 4 b47053wmexv99.txt CERTIFICATION PURSUANT TO SEC 906 EXHIBIT 99 CERTIFICATION The undersigned chief executive officer and chief financial officer of the plan each certifies pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge this report fully complies with the requirements of section 13(a) and 15(d) of the Securities Exchange Act of 1934 and that, to his knowledge, the information contained in this report fairly presents, in all material respects, the net assets available for benefits and changes in net assets available for benefits of the plan. A signed original of this written statement required by Section 906 has been provided to Wellman, Inc. and will be retained by Wellman, Inc. and furnished to the Securities and Exchange Commission or its staff upon request. Date: June 30, 2003 /s/ Keith R. Phillips ------------------------------------- Keith R. Phillips Member of Employee Benefits Committee Date: June 30, 2003 /s/ John Hulla ------------------------------------- John Hulla Member of Employee Benefits Committee -----END PRIVACY-ENHANCED MESSAGE-----