11-K 1 l01722ae11vk.txt THE REYNOLDS & REYNOLDS CO. 11-K/401K SAVINGS PLAN SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 11-K [X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED: DECEMBER 31, 2002 [ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM __________ TO __________ COMMISSION FILE NUMBER: 1-10147 THE REYNOLDS AND REYNOLDS COMPANY 401(K) SAVINGS PLAN (FULL TITLE OF THE PLAN) THE REYNOLDS AND REYNOLDS COMPANY 115 SOUTH LUDLOW STREET, DAYTON, OHIO 45402 (NAME OF ISSUER AND ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) THE REYNOLDS AND REYNOLDS COMPANY 401(k) SAVINGS PLAN FINANCIAL STATEMENTS AS OF DECEMBER 31, 2002 AND 2001 AND FOR THE YEAR ENDED DECEMBER 31, 2002 AND SUPPLEMENTAL SCHEDULE AS OF DECEMBER 31, 2002 AND INDEPENDENT AUDITORS' REPORT The Reynolds and Reynolds Company 401(k) Savings Plan Financial Statements as of December 31, 2002 and 2001 and for the Year Ended December 31, 2002 and Supplemental Schedule as of December 31, 2002 and Independent Auditors' Report THE REYNOLDS AND REYNOLDS COMPANY 401(k) SAVINGS PLAN TABLE OF CONTENTS ------------------------------------------------------------------------------
PAGE INDEPENDENT AUDITORS' REPORT 1 FINANCIAL STATEMENTS AS OF DECEMBER 31, 2002 AND 2001 AND FOR THE YEAR ENDED DECEMBER 31, 2002: Statements of Net Assets Available for Benefits 2 Statement of Changes in Net Assets Available for Benefits 3 Notes to Financial Statements 4--7 SUPPLEMENTAL SCHEDULE AS OF DECEMBER 31, 2002-- Form 5500, Schedule H, Part IV, Line 4i--Schedule of Assets (Held at End of Year) 9
All other schedules required by Section 2520.103-10 of the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974 have been omitted because they are not applicable. INDEPENDENT AUDITORS' REPORT The Reynolds and Reynolds Company 401(k) Savings Plan We have audited the accompanying statements of net assets available for benefits of The Reynolds and Reynolds Company 401(k) Savings Plan (the "Plan") as of December 31, 2002 and 2001, and the related statement of changes in net assets available for benefits for the year ended December 31, 2002. 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 Plan as of December 31, 2002 and 2001, and the changes in net assets available for benefits for the year ended December 31, 2002, in conformity with accounting principles generally accepted in the United States of America. Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedule, listed in the table of contents, 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 when considered in relation to the basic financial statements taken as a whole. DELOITTE & TOUCHE LLP Dayton, Ohio June 13, 2003 THE REYNOLDS AND REYNOLDS COMPANY 401(k) SAVINGS PLAN STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS DECEMBER 31, 2002 AND 2001 -------------------------------------------------------------------------------
ASSETS 2002 2001 INVESTMENTS, At fair value: Mutual Funds $239,692,544 $262,400,865 Brokerage Accounts 3,701,069 4,268,819 Participant Loans 11,323,120 13,236,266 ----------- ---------- Total investments 254,716,733 279,905,950 CASH 83,570 ------------ ------------ Total assets 254,716,733 279,989,520 LIABILITIES Accrued expenses 161,525 174,146 ------------- ------------ NET ASSETS AVAILABLE FOR BENEFITS $254,555,208 $279,815,374 ============= ============
See notes to financial statements. -2- THE REYNOLDS AND REYNOLDS COMPANY 401(k) SAVINGS PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS YEAR ENDED DECEMBER 31, 2002 -------------------------------------------------------------------------------
ADDITIONS: Participant contributions $ 16,629,586 Employer contributions 6,843,121 Participant rollover contributions 539,946 Interest and dividends 2,443,453 ------------- Total additions 26,456,106 ------------- DEDUCTIONS: Net depreciation in fair value of investments 34,288,235 Distributions to participants 17,002,190 Administrative expenses 425,847 ------------- Total deductions 51,716,272 ------------- NET DECREASE IN NET ASSETS AVAILABLE FOR BENEFITS (25,260,166) NET ASSETS AVAILABLE FOR BENEFITS: Beginning of year 279,815,374 ------------- End of year $254,555,208 ============
See notes to financial statements. -3- THE REYNOLDS AND REYNOLDS COMPANY 401(k) SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS AS OF DECEMBER 31, 2002 AND 2001 AND FOR THE YEAR ENDED DECEMBER 31, 2002 ------------------------------------------------------------------------------- A. DESCRIPTION OF THE PLAN The following description of The Reynolds and Reynolds Company 401(k) Savings Plan (the "Plan") is provided for general information purposes only. Participants should refer to the Plan agreement for more complete information. GENERAL--The Plan is a defined contribution savings plan and is subject to provisions of the Employee Retirement Income Security Act of 1974 ("ERISA"). All salaried, non-union hourly and certain groups of union employees of The Reynolds and Reynolds Company (the "Company") are eligible to participate upon the first day of employment. The Plan is administered by a Committee appointed by the Company. CONTRIBUTIONS--Eligible employees may elect to become participants by contributing from 1% to 50% of their earnings through tax-deferred payroll deductions. The Company contributes an amount equal to 40% of the first 3% of a participant's contribution to the Plan. The Company also makes an additional employer discretionary contribution ("ERD") each year to eligible employees, which is a flat dollar amount that is the same for each participant. These contributions are made at the Company's discretion and currently are based on the Company's return on equity. ERD totaled $4,359,280 and $4,066,960 in 2002 and 2001, respectively. PARTICIPANT ACCOUNTS--Participants may invest their account balances in any of the 18 mutual funds or the participant directed brokerage account offered by the Plan. Each participant's account is credited with the participant's contribution and their proportionate share of the Company's contributions and the Plan's earnings. Allocations are based on daily valuation accounting, as provided in the Plan agreement. The benefit to which a participant is entitled is the benefit that can be provided from the participant's vested account. VESTING AND DISTRIBUTIONS--Participants' accounts, except for balances related to ERD, are fully vested at all times. Vesting in the ERD amounts is 0% until three years from the participant's hire date, at which time they become 100% vested. A participant who has reached the age of 59-1/2 may elect to withdraw all or a portion of their account. Participants may also apply for hardship withdrawals from their vested tax-deferred contribution accounts, subject to approval by the Plan's Committee. Distributions and withdrawals under this Plan are subject to federal income tax withholding as prescribed by Section 3405 of the Internal Revenue Code and the regulation thereunder or any other withholding required by law. -4- LOANS--Participants may borrow from their account on the terms specified by the Committee. The maximum loan amount is defined in the Plan agreement and, in any case, cannot exceed the amount credited to the participant's account. A loan to a participant is funded by a reduction of the participant's 401(k) account prorated based on the current balance of each respective fund. The interest rate on loans is determined monthly using the prime rate of interest plus 1%. Interest on the loan is paid back directly into the participant's account. Loan repayments are made through payroll deductions but can be repaid in full at any time. FORFEITURE ACCOUNT--Funds that are forfeited by participants are transferred to a forfeiture holding account and invested in the JP Morgan Stable Value Fund. The forfeiture holding account is used to offset next year's ERD or Plan expenses. The account is also used to rebuild a rehired participant's account if the ERISA break-in-service rules determine the participant is entitled to any previously forfeited funds. B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF ACCOUNTING--The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. USE OF ESTIMATES--The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires Plan management to make estimates and assumptions that affect the reported amounts of net assets available for benefits and changes therein, and disclosure of contingent assets and liabilities. Actual results could differ from those estimates. VALUATION OF GUARANTEED INVESTMENT CONTRACTS--The Plan's investment in the benefit responsive guaranteed investment contracts is valued at contract value which approximates fair value. Contract value represents contributions made by participants and the Company, plus interest at the contract rate, less withdrawals or transfers by participants. INVESTMENT VALUATION AND INCOME RECOGNITION--Investments are stated at fair value, determined by quoted prices in an active market, of the underlying assets of the funds. Security transactions are recorded on trade dates. Gains and losses are computed using the specific-identification method. The Plan utilizes various investment instruments. Investment securities, in general, are exposed to various risks, such as interest rate, credit and overall market volatility. Due to the level of risk associated with certain investment securities, it is reasonably possible that changes in the value of investment securities will occur in the near term and that such changes could materially affect the amounts reported in the statements of net assets available for benefits. PAYMENT OF BENEFITS--Benefits are recorded when paid. ADMINISTRATIVE EXPENSES--All administrative expenses are paid by the Plan. -5- C. INVESTMENT CONTRACTS JP MORGAN STABLE VALUE FUND--The Plan has entered into various contracts issued by a variety of insurance companies and financial institutions. JP Morgan was the investment manager for this Fund as of December 31, 2002. At December 31, 2002, the fund included $79,106,298 of fully benefit responsive guaranteed investment contracts and wrapped bond portfolios with interest rates ranging from 3.43% to 7.64% and an average yield of 6.43% based on contract value and cash equivalents of $1,857,775. At December 31, 2001, this fund included $74,339,558 of fully benefit responsive guaranteed investment contracts and bond portfolios and cash equivalents of $917,559. No valuation reserves are recorded against these contracts. D. INCOME TAX STATUS The Internal Revenue Service has determined and informed the Company by a letter dated February 20, 1996, that the Plan and related trust are 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 the Plan's tax counsel believe that the Plan is designed and is currently being operated in compliance with the applicable requirements of the IRC. Therefore, no provision for income taxes has been included in the Plan's financial statements. E. RELATED-PARTY TRANSACTIONS Certain Plan investments are shares of common stock of The Reynolds and Reynolds Company, the Plan Sponsor, and shares of mutual funds managed by JP Morgan/American Century, the trustee of the Plan. These transactions qualify as party-in-interest transactions. F. INVESTMENTS The Plan's investments that represented five percent or more of the Plan's net assets available for benefits are as follows:
DECEMBER 31, 2002 DECEMBER 31, 2001 ------------------------- -------------------------- NUMBER NUMBER OF FAIR OF FAIR SHARES VALUE SHARES VALUE JP Morgan Stable Value Fund 751,445 $ 80,964,073 752,571 $ 75,257,117 Barclays Global Investors S&P 500 Stock Fund 695,624 17,613,192 698,559 22,717,124 American Century International Growth Fund 1,840,627 14,688,209 American Century Growth Fund 1,243,740 18,034,231 1,325,974 25,962,580 American Century Heritage Fund 2,282,053 20,903,604 2,510,133 27,285,150 American Century Strategic Alloc: Moderate Fund 2,513,499 13,195,870 2,515,426 14,866,168 PIMCO Capital Appreciation Fund 1,982,429 24,859,663 2,171,388 35,480,480
-6- During 2002, the Plan's investments (including gains and losses on investments bought and sold, as well as held during the year) depreciated in value by $34,288,235 as follows:
Mutual Funds $33,321,867 Participant Directed Brokerage Accounts 966,368 ----------- $34,288,235 ===========
G. PLAN TERMINATION Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue contributions at any time and to terminate the Plan subject to the provisions set forth in ERISA. In the event of Plan termination, all benefits will be distributed to participants and beneficiaries in proportion to their respective account balances. ****** -7- SUPPLEMENTAL SCHEDULE -8- THE REYNOLDS AND REYNOLDS COMPANY 401(k) SAVINGS PLAN
FORM 5500, SCHEDULE H, PART IV, LINE 4i--SCHEDULE OF ASSETS (HELD AT END OF YEAR) DECEMBER 31, 2002 ------------------------------------------------------------------------------------------------------------------------ (c) (B) DESCRIPTION OF INVESTMENT INCLUDING (e) IDENTITY OF ISSUER, BORROWER, MATURITY DATE, RATE OF INTEREST, COLLATERAL, CURRENT (a) LESSOR OR SIMILAR PARTY PAR OR MATURITY VALUE VALUE Mutual Funds: * American Century Small Cap Value, 677,485 shares $ 4,613,671 * American Century Growth, 1,243,740 shares 18,034,231 * American Century Heritage, 2,282,053 shares 20,903,604 * American Century International Growth, 1,770,915 shares 11,316,147 * American Century Strategic Alloc: Aggr, 67,713 shares 372,423 * American Century Strategic Alloc: Cons, 134,668 shares 654,485 * American Century Strategic Alloc: Mod, 2,513,499 shares 13,195,870 Barclays EAFE Equity Index, 76,427 shares 486,073 Barclays Extended Equity Market, 88,132 shares 825,796 Barclays Global Investors S&P 500 Stock, 695,624 shares 17,613,192 Barclays Lehman Aggregate Bond Index, 221,989 shares 2,601,712 Franklin Small Cap Growth, 343,007 shares 7,529,002 * JP Morgan Stable Value, 751,445 shares 80,964,073 Lord Abbett Affiliated--Class A, 570,991 shares 6,012,533 MFS Investors Growth Stock, 938,114 shares 8,658,788 Neuberger & Berman Genesis Trust, 351,469 shares 9,890,336 PIMCO Capital Appreciation, 1,982,429 shares 24,859,663 PIMCO Total Return, 1,046,012 shares 11,160,945 ------------ Total Mutual Funds 239,692,544 ------------ Brokerage Accounts: * American Century Brokerage Accounts Various investments 3,256,796 * The Reynolds and Reynolds Company Common stock, 17,443 shares 444,273 ------------ Total Brokerage Accounts 3,701,069 ------------ Participant Loans Interest rates ranging from 5.48% to 10% 11,323,120 ------------ TOTAL $254,716,733 ============
* Party-in-interest. Column (d) has been omitted because it is not applicable. -9- SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit Plan) have caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized. THE REYNOLDS AND REYNOLDS COMPANY 401(K) SAVINGS PLAN /s/ Dale L. Medford ----------------------------------------- Dale L. Medford, Executive Vice President and Chief Financial Officer Dated: June 25, 2003