11-K 1 d11k.htm FORM 11-K Form 11-K
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UNITED STATES

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, 2004

 

OR

 

¨ TRANSITION REPORT PURSUANT TO SECTION 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934.

 

For the transition period from              to             .

 

Commission file number: 0-20828

 


 

A. Full title of the plan and the address of the plan, if different from that of the issuer named below:

 

Danka 401(k) Profit Sharing Plan

 

B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:

 

Danka Business Systems PLC

11101 Roosevelt Boulevard

St. Petersburg, Florida 33716.

 



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REQUIRED INFORMATION

 

Item 4. Plan financial statements and schedules prepared in accordance with the financial reporting requirements of ERISA.

 

 


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DANKA 401(K) PROFIT SHARING PLAN

 

Financial Statements and Schedule

 

December 31, 2004 and 2003

 

(With Report of Independent Registered Certified Public Accounting Firm)


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Danka 401(K) PROFIT SHARING PLAN

 

Financial Statements and Schedule

 

December 31, 2004 and 2003

 

Table of Contents

 

     Page

Report of Independent Registered Certified Public Accounting Firm    1
Statements of Net Assets Available for Benefits    2
Statements of Changes in Net Assets Available for Benefits    3
Notes to Financial Statements    4
Schedule H, Line 4i – Schedule of Assets (Held at End of Year)    9
Signature    10
Consent of Independent Registered Certified Public Accounting Firm    11

 

 


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REPORT OF INDEPENDENT REGISTERED CERTIFIED PUBLIC ACCOUNTING FIRM

 

To the Plan Administrator

Danka 401(k) Profit Sharing Plan

 

We have audited the accompanying statements of net assets available for benefits of the Danka 401(k) Profit Sharing Plan as of December 31, 2004 and 2003, 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 the 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. We were not engaged to perform an audit of the Plan’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and 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, 2004 and 2003, and the changes in its net assets available for benefits for the years then ended, in conformity with U.S. generally accepted accounting principles.

 

Our audits were performed for the purpose of forming an opinion on the financial statements taken as a whole. The accompanying supplemental schedule of assets (held at end of year) as of December 31, 2004, 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. This 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
Tampa, Florida    
June 24, 2005    

 

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Danka 401(k) Profit Sharing Plan

 

Statements of Net Assets Available for Benefits

December 31, 2004 and 2003

 

     December 31,

     2004

   2003

Assets              

Cash

   $ 286,899    $ 191,081

Investments at fair value

             

Common stocks

     23,807,952      38,362,231

Common trusts

     62,980,213      65,473,527

Mutual funds

     110,770,231      104,201,055

Participants’ loans

     5,095,664      5,904,699
    

  

Total investments

     202,654,060      213,941,512

Accrued interest income

     77,459      75,346

Participants’ contributions receivable

     259,314      803,855
    

  

Total assets

     203,277,732      215,011,794
    

  

Liabilities              

Refunds payable

     —        9,247
    

  

Total liabilities

     —        9,247
    

  

Net assets available for benefits

   $ 203,277,732    $ 215,002,547
    

  

 

See accompanying notes to the financial statements

 

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Danka 401(k) Profit Sharing Plan

 

Statements of Changes in Net Assets Available for Benefits

Years Ended December 31, 2004 and 2003

 

     2004

    2003

Additions to net assets attributed to:

              

Investment Income:

              

Interest

   $ 311,949     $ 346,964

Dividends

     3,754,356       3,581,973

Net appreciation in fair value of investments

     2,429,878       26,255,678
    


 

Total investment income

     6,496,183       30,184,615
    


 

Contributions:

              

Participants’

     9,104,079       10,304,392

Employer

     —         1,291,500
    


 

Total contributions

     9,104,079       11,595,892
    


 

Total additions

     15,600,262       41,780,507
    


 

Deductions from net assets attributed to:

              

Participants’ distributions

     27,304,993       21,838,773

Administrative expenses

     20,084       29,979
    


 

Total deductions

     27,325,077       21,868,752
    


 

Net increase (decrease)

     (11,724,815 )     19,911,755

Net assets at beginning of year

     215,002,547       195,090,792
    


 

Net assets at end of year

   $ 203,277,732     $ 215,002,547
    


 

 

See accompanying notes to financial statements

 

 

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Danka 401(k) Profit Sharing Plan

Notes to Financial Statements

December 31, 2004 and 2003

 

(1) Description of the Plan

 

The Danka 401(k) Profit Sharing Plan (the Plan) was adopted by Danka Office Imaging Company (the Sponsor or Employer) on August 8, 1984, effective January 1, 1984. The following description of the Plan provides only general information. The Plan document should be referred to for a complete description of the Plan’s provisions.

 

  (a) General

 

The Plan is a defined contribution plan that contains an employee salary deferral arrangement under Internal Revenue Code Section 401(k). Employees are eligible to participate immediately as of the first payroll date following their date of hire. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA) as amended.

 

  (b) Amendments

 

The Plan has been amended at various times, including an amendment in January 1994, creating the Danka Business Systems PLC Fund. On April 1, 1996, the Employer changed its name from Danka Industries, Inc. to Danka Corporation. During 1998, the Danka Corporation 401(k) Plan changed its name to Danka Office Imaging Company 401(k) Profit Sharing Plan.

 

In October 1999, Danka Office Imaging Company amended its matching policy from a cash match to a match in Danka Business Systems PLC common stock, which was a discretionary match. The change was effective as of February 1, 1999. All employer contributions from February 1999 through October 2000 were in Danka Business Systems common stock. Effective November 1, 2000, the Company suspended the employer match until further notice.

 

Effective April 1, 2001, Danka Office Imaging Company amended the Plan to reinstate employer-matching contributions. The amount of the match is discretionary and will depend in part on the extent to which Danka satisfies its EBITDA (Earnings before Interest, Taxes, Depreciation and Amortization) and other financial targets for the respective fiscal year. In addition, the Danka Office Imaging Company 401(k) Plan changed its name to the Danka 401(k) Profit Sharing Plan.

 

In December 2003, Danka Office Imaging Company amended the Plan. The amendment was effective as of January 1, 2003, and changed the discretionary matching contribution formula and more clearly defined which participants are not eligible to share in the matching contribution allocation. The amendment also changed the Actual Deferral Percentage (ADP) and the Actual Contribution Percentage (ACP) testing method. In addition, Danka Office Imaging Company also adopted an amendment to the Plan to reflect recently issued Treasury Regulations regarding age 70 ½ required minimum distributions. This change was effective January 1, 2003.

 

Effective January 1, 2004, Danka Office Imaging Company amended and restated the Danka 401(k) Profit Sharing Plan. Changes included the removal of the percentage compensation limitation on elective contributions that a participant may elect to have contributed to the Plan and the elimination of the installment payment form of benefit distribution. Lump sum payments will be the only remaining form of benefit distribution available after January 31, 2005.

 

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Danka 401(k) Profit Sharing Plan

Notes to Financial Statements (Continued)

December 31, 2004 and 2003

 

  (c) Contributions

 

The Plan provides that contributions each year will consist of (a) voluntary employee contributions equal to the amount of total compensation that each participant has elected to defer and (b) a discretionary employer-matching contribution, as approved by the Board of Directors. Total elective deferrals for any individual participant cannot exceed $13,000 for 2004 and $12,000 for 2003. In the case of certain highly compensated individuals, additional restrictions may be applicable.

 

Contributions are credited to the individual account of each participant. The Plan allows participants to direct the investment of their contributions into 25 different investment options including Danka Business Systems PLC common stock. Employer contributions are recorded in the Plan year of Board approval. There were no employer contributions recorded in 2004.

 

  (d) Participant Accounts

 

Each participant’s account is self-directed and is credited with the participant’s contribution, the Sponsor’s matching contribution, if applicable, and an allocation of Plan earnings and investment gains or losses on Plan investments. 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

 

  (e) Forfeitures

 

At December 31, 2004 and 2003, forfeited nonvested accounts totaled $526,103, and $513,436, respectively. Forfeitures generated during 2004 and 2003 were $41,005 and $67,672, respectively. Forfeiture accounts are used to reduce the amount the Company is required to contribute under terms of the Plan and to pay plan expenses. During 2004 and 2003, no forfeitures were used to offset employer contributions.

 

  (f) Vesting

 

Participants are immediately vested in their voluntary contributions. Vesting in sponsor contributions is determined based upon a participant’s years of service. The following schedules indicate the vesting percentages for the 2004 and 2003 plan years:

 

Years of service


   Vested
percentage


 
Less than 1 year    0 %
1    25 %
2    50 %
3    75 %
4    100 %

 

In the event of death or total and permanent disability, all amounts credited to such participant’s account shall become fully vested.

 

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Danka 401(k) Profit Sharing Plan

Notes to Financial Statements (Continued)

December 31, 2004 and 2003

 

  (g) Participant Loans

 

Eligible participants, with a vested account balance of at least $2,000, may borrow from their fund accounts a minimum of $1,000 up to a maximum amount equal to the lesser of $50,000 or 50% of their vested account balance. Loan transactions are treated as transfers between the investment fund and the participant loan fund. Loan terms range from six months to five years. The loans are secured by the balance in the participant’s account and bear interest at prime interest rate as of the last business day of the month preceding the month in which the loan is processed, plus 1%.

 

  (h) Payment of Benefits

 

Upon retirement, death or termination of service, a participant may elect to receive either a lump sum amount equal to the value of his or her account, a direct rollover or annuity payments for the life of the participant.

 

  (i) Plan Termination

 

Although it has not expressed any intention to do so, Danka (the Company) has the right under the Plan to terminate the Plan. In the event of plan termination, each participant shall immediately become 100% vested and receive his individual account balance in accordance with the Plan provisions in effect at the time of the Plan termination.

 

(2) Summary of Significant Accounting Policies

 

  (a) Basis of Presentation

 

The accompanying financial statements have been prepared under the accrual method of accounting.

 

  (b) Investment Valuation and Income Recognition

 

The Plan’s investments are stated at fair value. Fair value is determined as of the close of business on the last day of the plan year. For common stock and mutual funds, fair value is determined by the last reported sales price on the last business day of the Plan year. For common and collective trusts, fair value is determined by the Plan trustee. Purchases and sales of securities are recorded on a trade date basis. Interest income is recorded on an accrual basis. Dividends are recorded at the ex-dividend date.

 

  (c) Use of Estimates

 

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates that affect the amounts reported in the financial statements and accompanying notes. Actual results differ from those estimates.

 

  (d) Payment of Benefits

 

Benefits are recorded when paid.

 

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Danka 401(k) Profit Sharing Plan

Notes to Financial Statements (Continued)

December 31, 2004 and 2003

 

(3) Investments

 

The following investments represent 5% or more of the Plan’s net assets available for benefits at December 31, 2004 and 2003:

 

     2004

   2003

Danka Business Systems PLC Common Stock    $ 22,665,326    37,304,958
ML Equity Index Trust      21,359,459    20,571,485
Davis New York Venture Fund      28,636,775    27,133,166
ML Retirement Preservation Trust      41,620,754    44,902,042
AIM Constellation Fund      14,089,166    14,720,589
ML Global Allocation Fund      12,707,974    11,972,160

 

During 2004 and 2003, the Plan’s investments (including investments bought, sold and held during the year) appreciated in value by $2,429,878 and $26,255,678, respectively, as follows:

 

     2004

    2003

Investments at fair value as determined by quoted market price:               

Net appreciation (depreciation):

              

Common stocks

   $ (8,848,421 )   $ 983,740

Common/collective trusts

     2,088,801       4,587,627

Mutual Funds

     9,189,498       20,684,311
    


 

Net appreciation in fair value of investments

   $ 2,429,878     $ 26,255,678
    


 

 

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Danka 401(k) Profit Sharing Plan

Notes to Financial Statements (Continued)

December 31, 2004 and 2003

 

(4) Transactions With Parties-in-Interest

 

The Plan held investments in trust funds invested by the trustee, which includes the common stock of the sponsor, with a fair value of $115,103,114 and $132,957,777 at December 31, 2004 and 2003, respectively.

 

The Plan held investments in the common stock of the Sponsor with a fair value of $22,665,326 and $37,304,958 at December 31, 2004 and 2003, respectively.

 

(5) 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 statements of net assets available for benefits.

 

(6) Tax Status

 

The Plan has received a determination letter from the Internal Revenue Service dated June 21, 2002, stating that the Plan is qualified under Section 401(a) of the Internal Revenue Code (the “Code”) and, therefore, the related trust is exempt from taxation. Subsequent to this determination by the Internal Revenue Service, the Plan was amended. Once qualified, the Plan is required to operate in conformity with the Code to maintain its qualification. The plan administrator believes the Plan is being operated in compliance with the applicable requirements of the Code and, therefore, believes that the Plan, as amended, is qualified and the related trust is tax exempt.

 

(7) Reconciliation to Form 5500

 

The following is a reconciliation of net assets available for benefits per the financial statements to the 2004 Form 5500.

 

     2004

   2003

Net assets available for benefits per accompanying financial statements

   $ 203,277,732    $ 215,002,547

Less Benefits Payable

     289,167      190,500
    

  

Net assets available per Form 5500

   $ 202,988,565    $ 214,812,047
    

  

Benefit payments per accompanying financial statements

   $ 27,304,993       

Plus Benefits Payable

     289,167       
    

      

Net benefits payments per Form 5500

   $ 27,594,160       
    

      

 

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Danka Office Imaging Company

EIN: 59-3407614 Plan: 001

Schedule H, Line 4i

Schedule of Assets (Held at End of Year)

December 31, 2004

 

(a)


 

                (b)

Identity of Party Involved


  

                (c)

Description of Investment


  

(e)

Current Value


    Common stocks:            

*

 

Danka Business System PLC

   7,172,571 shares of Danka Business Systems PLC Common Stock    $ 22,665,326
   

Eastman Kodak

  

35,430 shares of Eastman Kodak Common Stock

     1,142,626
             

        

Total common stocks

     23,807,952
    Common/Collective Trusts:            

*

 

Merrill Lynch Trust Company

   41,620,754 units of Merrill Lynch Retirement Preservation Trust      41,620,754

 

Merrill Lynch Trust Company

   240,264 units of Merrill Lynch Equity Index Trust      21,359,459
             

        

Total common/collective trusts

     62,980,213
             

    Mutual Funds:            
   

Davis Venture Advisors

  

933,098 units of Davis New York Venture Fund

     28,636,775
   

AIM Management

  

616,864 units of AIM Constellation Fund

     14,089,166

*

 

Merrill Lynch Trust Company

   769,714 units of Merrill Lynch Global Allocation Fund      12,707,974

*

 

Merrill Lynch Trust Company

   962,437 units of Merrill Lynch US Govt Mortgage Fund Class A      9,884,228
   

Templeton

  

752,559 units of Templeton Foreign Fund

     9,256,481
   

Alliance

  

254,561 units of AllianceBerstein Small Cap

     5,949,096
   

PIMCO

  

533,655 units of PIMCO Total Return Fund Class A

     5,694,099
   

Seligman

  

161,908 units of Seligman Communications

     4,115,699
   

Davis Venture Advisors

  

84,694 units of Davis Series Inc Real Estate

     3,347,115

*

 

Merrill Lynch Trust Company

   84,869 units of Merrill Lynch Basic Value Fund      2,700,518

*

 

Merrill Lynch Trust Company

   79,726 units of Merrill Lynch Value Opportunities Fund      2,180,508
   

Davis Venture Advisors

  

49,083 units of Davis Series Financial Class A

     2,012,400

*

 

Merrill Lynch Trust Company

   112,120 units of Merrill Lynch Fundamental Growth Fund Class A      1,982,277
   

Eaton Vance Worldwide

  

157,545 units of EV Worldwide Health Services

     1,679,433
   

PIMCO

  

147,933 units of PIMCO Long-term US Government

     1,608,028
   

Oakmark

  

62,812 units of Oakmark Equity & Income Fund

     1,471,677
   

Franklin

  

42,265 units of Franklin Small-Mid Cap Growth Fund

     1,443,760
   

Templeton

  

62,749 units of Templeton Developing Markets

     1,162,120
   

JP Morgan

  

25,195 units of JP Morgan Mid-Cap Val A

     555,548
   

ABN

  

13,194 units of ABN Amro/Veredus Aggressive Growth Fund

     247,784
   

AIM

  

2,160 units of AIM International Growth Fund

     43,475

*

 

Merrill Lynch Trust Company

   2,070 units of CMA Money Fund      2,070
             

        

Total mutual funds

     110,770,231
    Loans:            
   

Participant loans

  

Interest rates of 5% to 10.5%

     5,095,664
             

    Total   

Total

   $ 202,654,060
             


* Party-in-interest to the Plan

 

Historical Cost not presented as all investments are participant directed

 

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SIGNATURES

 

The Danka 401(k) Profit Sharing 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, thereunto duly authorized.

 

    Danka 401(k) Profit Sharing Plan
Dated: June 29, 2005        
    By:  

/s/ Keith J. Nelsen


    (Signature)
    By:   Keith J. Nelsen
    Its:   General Counsel and Chief Administrative Officer

 

 

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