form11kretirementplan2006.htm
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, 2006
 
 
OR
 
 
[ ]TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________________ to _________________________
 
 
Commission file number: 1-7201
 
 
 
A. Full title of the plan and the address of the plan, if different from that of the issuer named below:
 
 
AVX CORPORATION
RETIREMENT PLAN
Plan number: 001
 
 
 
B. Name of the issuer of the securities held pursuant to the plan and the address of its principal executive office:
 
 
AVX CORPORATION
P.O. Box 867
Myrtle Beach, SC 29577-0867
IRS Employer Identification Number: 33-0379007
AVX CORPORATION RETIREMENT PLAN
 
 
INDEX
 
 
Page No.
 
 
2
 
 
3
 
 
4
 
 
5-11
 
 
12
 
 
13
 
 
14
 
 
Exhibit:
 
 
 

 
*All other schedules required by Section 2520.103-10 of the Department of Labor's Rules and Regulations for Reporting and Disclosure under ERISA have been omitted because they are not applicable.
 
 
-1-
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


 
To the Participants and Administrator of the
AVX Corporation Retirement Plan
 
 
We have audited the accompanying statements of net assets available for benefits of the AVX Corporation Retirement Plan (the Plan) as of December 31, 2006 and 2005, and the related statement of changes in net assets available for benefits for the year ended December 31, 2006.  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 audits to obtain reasonable assurance about whether the financial statements are free of material misstatement.  The Plan is not required to have, nor were we engaged to perform, an audit of its 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 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, 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, 2006 and 2005, and the changes in its net assets available for benefits for the year ended December 31, 2006 in conformity with accounting principals generally accepted in the United States of America.

Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as whole.  The accompanying schedules of assets (held at end of year) and reportable transactions are presented for purposes 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.  These supplemental schedules are the responsibility of the Plan’s management.  The supplemental schedules have been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole.
 
 
 
/s/ GRANT THORNTON LLP
Columbia, South Carolina
June 29, 2007
 
-2-
AVX CORPORATION RETIREMENT PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
as of December 31, 2005 and 2006
 
Assets
  
2005
  
2006
 
Investments, at fair value:
        
   
AVX Corporation Common Stock
$
13,849,903
$
13,486,424
   
Kyocera Corporation American Depository Shares
  
8,411,078
  
9,775,378
   
Money Market Fund
  
12,244,726
  
15,264,656
   
Mutual Funds
  
41,707,227
  
65,342,293
   
Participant loans
  
2,376,020
  
2,793,685
     
Subtotal
  
78,588,954
  
106,662,436
               
   
Interest in Master Trust
  
16,598,607
  
---
               
     
Total Investments
  
95,187,561
  
106,662,436
               
 
Receivables:
        
   
Employer contributions
  
1,830,671
  
1,918,565
   
Participant contributions
  
3,182
  
10,233
   
Transfer from 401(k) Plan
  
51,103
  
---
   
Miscellaneous Receivable
  
5,036
  
---
     
Total Receivables
  
1,889,992
  
1,928,798
               
   
Net assets available for benefits
$
97,077,553
$
108,591,234
 
 
 
 
 
 
 
The accompanying notes are an integral part of these financial statements.
 
 
 
-3-
AVX CORPORATION RETIREMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
for the year ended December 31, 2006
 
         
2006
Additions to net assets attributed to:
    
 
Investment income:
    
   
Net appreciation in fair value of investments
$
9,281,907
   
Interest and dividends
  
1,856,373
   
Net investment gain from interest in Master Trust
  
231,634
         
 
     
Net investment income
  
11,369,914
           
 
Contributions:
    
   
Participant
  
2,719,493
   
Employer
  
4,656,107
           
     
Total contributions
  
7,375,600
           
 
Transfers into Plan
  
66,304
           
     
Total additions
  
18,811,818
           
Deductions from net assets attributed to:
    
 
Benefits paid to participants
  
7,246,764
 
Administrative expenses
  
51,373
           
     
Total deductions
  
7,298,137
           
     
Net increase
  
11,513,681
           
 
Net assets available for benefits:
    
   
Beginning of year
  
97,077,553
           
   
End of year
$
108,591,234
 
 
The accompanying notes are an integral part of this financial statement.
 
-4-
AVX CORPORATION RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS
 
1.  
Description of Plan:

The following description of the AVX Corporation Retirement Plan (the "Plan") is provided for general information purposes only. Participants should refer to the Plan documents for more complete information.

General:

The Plan is a defined contribution plan covering employees who have at least three months of service and are not hourly-paid employees or employees covered by a collective bargaining agreement (unless such agreement provides for participation in the Plan). The Plan includes a 401(k) feature to which employees can contribute, and AVX Corporation ("the Company") makes a matching contribution. The Plan also includes a discretionary contribution plan feature and a non-discretionary contribution plan feature to which participants are not required to contribute. The Plan is administered by the AVX Corporation Retirement Committee and is subject to the provisions of the Employee Retirement Income Security Act of 1974 ("ERISA"). The Plan also includes an after tax contribution plan feature that the participants can, but are not required to, participate in. Plan assets are held in trust by New York Life Investment Management, LLC (the “Trustee”).  On August 31, 2005 the Plan assets were transferred to New York Life Trust Company from HSBC Bank USA (the former Trustee).

Payment of Benefits:

Upon retirement, total disablement or death, a participant or the participant's beneficiary is entitled to receive the value of the aggregate vested amount credited to the participant's account in a lump-sum payment or in installments over a period not to exceed the life expectancy of the participant or his or her beneficiaries. For the non-discretionary contribution portion of the account, payment of benefits is in monthly installments unless an alternate form of payment is elected. Upon the termination of employment of a participant other than by retirement, disability or death, such participant is entitled to the vested portion of his account. For the AVX Corporation Common Stock (“AVX Stock”), Kyocera Corporation American Depository Shares (“Kyocera ADS” or “ADS”), a participant will receive either cash or whole shares with any partial shares being paid in cash.

Participant Loans:

With certain restrictions, participants may borrow up to a maximum of 50% of their vested account balance or $50,000, whichever is less, repayable within five years except for borrowing for the purchase of a primary residence which is repayable during a period up to ten years.  These loans bear interest at a rate equal to the commercial loan rate for similar loan types prevailing at the time the loan is originated.  At December 31, 2005 and 2006, interest rates ranged from 6.00% to 11.50%.

Administrative Expenses:

Expenses that arise in connection with the administration of the Plan are paid by the Company.
-5-
Participant Accounts:

Each participant's account is credited with the participant's contributions and allocations of the Company's contributions and Plan earnings. Allocations are based on participant compensation or account balances, as defined in the Plan document. The benefit to which a participant is entitled is the benefit that can be provided from the participant's vested account.

Forfeited Accounts:

Amounts of employer contributions under the Plan which have been forfeited are used to pay administrative costs. At December 31, 2005 and 2006, the net forfeited balance that can be used to pay administrative costs totaled $79,858 and $103,811, respectively. Throughout the year ended December 31, 2006, the forfeitures used to pay administrative costs were $44,923.
 
2.  
Summary of Significant Accounting Policies:

Basis of Accounting:

The financial statements of the Plan are prepared under the accrual method of accounting 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 management to make estimates and assumptions that may affect the reported amounts of certain assets and liabilities and disclosure of contingencies at the date of the financial statements and the reported amounts of income and expenses during the reporting year. Actual results could differ from those estimates.

Valuation of Investments:

Investments are presented at estimated fair values.  Investments in securities (ADS and commonstocks) traded on a national securities exchange are valued at the end of each business day based on closing quoted market prices.  Temporary cash is invested in the MainStay Cash Reserves Fund. The shares of mutual funds are valued at the net asset value as reported on national securities exchanges at the end of each business day. The investments in the Master Trust as discussed in Note 9 herein, were valued based upon fair market value as reported on national securities exchanges, of the assets held in the AVX Corporation Master Trust, (the “Master Trust”), divided by the units of participation attributable to the plan. Participant loans are valued at their outstanding balances, which approximate fair value.

Investments are exposed to various risks, such as interest rate, market and credit. Due to the level of risk associated with certain investment securities and the level of uncertainty related to changes in the value of investment securities, it is at least reasonably possible that changes in risks in the near term would materially affect participants' account balances and the amounts reported in the statements of net assets available for benefits.

Investment Transactions and Investment Income:

Purchases and sales of securities are reflected on a trade-date basis and stated at market values based upon the closing sales prices on the last business day of the year. Dividend income is recorded on the ex-dividend date. Income from other investments is recorded as earned on an accrual basis.
-6-
The Plan presents in the statement of changes in net assets available for benefits the net appreciation in the fair value of its investments which consists of the realized gains (losses) and the unrealized appreciation (depreciation) on those investments.
 
Benefit payments:

Benefits are recorded when paid.

3.  
Investments:

The Trustee invests the Plan's assets according to participant investment elections in the following investment options:

Common Stock

AVX Corporation

American Depository Shares

Kyocera Corporation

Money Market Fund

MainStay Cash Reserves Fund

Mutual Funds

T. Rowe Price Spectrum Income Fund (This fund was eliminated as an investment option in July 2003.)
Templeton Foreign Fund
Janus Balanced Fund
Janus Fund
MainStay S&P 500 Index Fund
Lord Abbett Mid-Cap Value Fund
PIMCO Total Return Fund
Seligman Large-Cap Value Fund

Master Trust

Seligman Equity Portfolio (The Trust was dissolved on March 8, 2006 and all assets were transferred to Seligman Large-Cap Value Fund).
 
-7-
The market values of the following investments represent 5% or more of the Plan's total assets available for benefits for the years ended December 31, 2005 and 2006, respectively:

December 31,
  
2005
  
2006
         
AVX Corporation Common Stock
$
13,849,903
 $
13,486,424
Kyocera Corporation American Depository Shares
  
8,411,078
  
9,775,378
Investment in Master Trust
  
 16,598,607
  
*
Seligman Large-Cap Value Fund
  
*
  
17,346,450
MainStay Cash Reserves Fund
  
12,244,726
  
15,264,656
Janus Balanced Fund
  
6,397,384
  
7,033,869
MainStay S&P 500 Index Fund
  
7,703,855
  
9,237,752
Janus Fund
  
7,296,407
  
8,083,540
Templeton Foreign Fund
  
7,070,800
  
9,420,468
Lord Abbett Mid-Cap Value Fund
  
8,512,008
  
9,311,458

*Amounts were less than 5% of the Plan’s total assets available for benefits for the respective year.

During 2006, the Plan's investments (including gains and losses on investments bought and sold, as well as held during the year) appreciated in value as follows:

AVX Corporation Common Stock
  
$    382,404
Kyocera Corporation American Depository Shares
  
2,444,005
Mutual Funds
  
6,455,498
   Subtotal
  
9,281,907
Interest in Master Trust
  
231,634
    Total
  
$    9,513,541
 
4.  
Contributions and Vesting:

401(k) and Discretionary Contribution Plan Features:

Contributions from the Company are at the discretion of the Company's Board of Directors. Total contributions credited to any participant's account are limited to the lesser of 25% of the participant's annual compensation as defined in the Plan's provisions, or $44,000 in accordance with Section 415 of the Internal Revenue Code. All contribution percentages are set in accordance with the Internal Revenue Code. For the 401(k) feature, participant contributions are limited to 1% to 25% of compensation.

Participants age 50 and older are eligible to make a catch up contribution of an additional $5,000 to the Plan once the participant meets the Maximum Elective Deferral Limit of $15,000 for the calendar year or once the Plan deferral limit of 25% has been reached for the calendar year. The Company will match the first 3% of pre-tax pay an employee contributes to the 401(k) portion of the Retirement Plan dollar for dollar into AVX Stock, regardless of how the employee invests his contributions.
-8-
The Company's fiscal year-end is March 31. The accompanying financial statements recognize any Company discretionary contributions approved by the Board of Directors in the Plan year.

Amounts attributable to the Company's contributions (excluding the 401(k) contribution) are vested according to the following table:
 
   
Vested Percentage
   
---Discretionary Contribution----
Years of Service
  
All Locations Except Sun Valley
Sun Valley
1 Year
  
0%
20%
2 Years
  
15%
30%
3 Years
  
30%
40%
4 Years
  
45%
50%
5 Years
  
60%
60%
6 Years
  
80%
80%
7 Years
  
 100%
 100%

All participant's contributions are fully vested at all times. AVX Stock acquired with the Company's matching 3% contributions are fully vested and non-forfeitable.

Non-discretionary Contribution Plan Features:

Non-discretionary Plan contributions made by the Company are non-elective and fully vested. The Company contributes 0% to 5% of each participant's eligible compensation for the year.

5.  
Nonparticipant-Directed Investments:

Information about the net assets and the significant components of the changes in net assets relating to the nonparticipant-directed investments is as follows:

   
December 31,
   
2005
  
2006
Net Assets:
        
      AVX Corporation Common Stock Match Fund
$
5,480,305
$
2,236,035
 
 
Year Ended
 
December 31, 2006
Changes in Net Assets:
      
    Contributions
$
1,013,461
  
    Dividends
  
24,124
  
    Net appreciation
  
117,933
  
    Benefits paid to participants
  
(300,174)
  
Transfers to participant-directed investments
  
(4,099,614)
  
           Total
$
(3,244,270)
  
-9-
6.  
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 become 100% vested in their accounts.
 
7.  
Tax Status:

The Plan received a favorable determination letter from the U.S. Treasury Department in April 2002 advising that it constitutes a qualified trust under Section 401(a) of the Internal Revenue Code (“IRC”) and is thereby exempt from Federal income taxes under the provisions of Section 501(a). The Plan has been amended since receiving the determination letter.  The Company has identified an insignificant operational failure that occurred in the 2006 plan year.  In consultation with legal counsel, management has determined that this will be corrected under the self-correction program provided by the Internal Revenue Service.  The Plan’s management is committed to ensuring the Plan remains in compliance with the provisions of the IRC and, based upon the favorable determination letter and the availability of the voluntary correction program, management believes the Plan is designed in accordance with the IRC and will remain tax-exempt.

Participants will not be subject to income tax for contributions made on their behalf by the Company, nor on money earned by the Plan and credited to their account until such time as they withdraw their accumulated balance.

8.  
Related-Party Transactions:

Loans to participants qualified as party-in-interest transactions which are exempt from the prohibited transaction rules.

The Plan allows for investment in shares of AVX Stock and in Kyocera ADS.  As of December 31, 2005, the Plan held investments of $13,849,903 or 956,485 shares of AVX Stock and $8,411,078 or 114,937 shares of Kyocera ADS.  As of December 31, 2006, the Plan held investments of $13,486,424 or 911,861 shares of AVX Stock and $9,775,378 or 103,018 shares of Kyocera ADS.

9.  
Interest in Master Trust:

Prior to March 8, 2006, the assets of the AVX Corporation Master Trust were invested in the Seligman Equity Portfolio (the “Portfolio”).  Assets of the Plan as well as those in the AVX Corporation Retirement Plan that were invested in the Portfolio were commingled.  Thus throughout the enclosed financial statements and related notes the Master Trust and the Portfolio are collectively referred to as Master Trust investments.  The assets of the Portfolio related to the plan were transferred to the Seligman Large-Cap Value Fund on March 8, 2006. Therefore, at December 31, 2006 there were no assets in the Master Trust, and assets of the Plan are no longer commingled with those of the AVX 401(k) Plan.

The Plan's allocated participation in the Master Trust, as well as the individual participants' balances comprising the Plan's participation in the Master Trust, was determined by adding or deducting the participant’s allocations to, or withdrawals from, the Master Trust and a proportionate share of the other changes in the Master Trust's net assets (related principally to investment activities), based on the relative interest of the Plan's net assets to the Master Trust's net assets.

The Plan's allocated share of the Master Trust net assets was approximately 86% at December 31, 2005.
-10-
At December 31, 2005, the net assets of the Master Trust were composed of the following:
 
 
 
 
 
2005
Assets:
 
 
Investments at fair value:
 
 
 
 
Common stocks
$
 18,842,393
 
 
Common/collective trust funds
 
      460,530
 
Total Investments
 
 19,302,923
 
 
 
 
 
Cash
 
 ---
 
 
 
 
 
Liability for Unsettled Trades
 
      (24,923)
 
 
 
 
  
Interest and dividends receivable
 
        36,471
 
 
 
 
 
 
Net Assets
$
 19,314,471
 
The change in Master Trust net assets for the year ended December 31, 2006 was as follows:
 
 
 
 
 
2006
Additions:
 
 
 
Net appreciation in fair value of investments
$
       269,238
 
 
 
 
 
Deductions:
 
 
 
Transfer to AVX Corporation Separate Plan Trusts
 
  19,798,154
 
Investment management expenses
 
             400
 
 
Total deductions
 
  19,798,554
 
 
 
 
  
 
 
Net decrease from investment activity
 
(19,529,316)
 
Excess of fund allocations over fund withdrawals
 
       214,845
 
 
Net decrease
 
(19,314,471)
 
 
 
 
 
Net assets available for benefits:
 
 
 
Beginning of year
 
  19,314,471
 
End of year
$
 ---

The accounting policies of the Master Trust regarding basis of accounting, valuation of investments and investment transactions and investment income are the same as those for the Plan.

10.  
Subsequent Event:

In May 2007, the Company's Board of Directors approved a discretionary Company contribution of $1,840,814 for the fiscal year ended March 31, 2007. This contribution will be included in the Plan for the year ended December 31, 2007.
-11-
SIGNATURE
 
 
 
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Administrative Committee has duly caused this annual report to be signed by the undersigned thereunto duly authorized.
 
 
 
 
 
AVX CORPORATION RETIREMENT PLAN
 
 
 
 
 
 
 
 
 
 

By:
/s/ Kurt P. Cummings
 
Kurt P. Cummings
 
Member of Retirement Committee
   
Date:
June 29, 2007
 
 
 
 
-12-
AVX CORPORATION RETIREMENT PLAN
PN: 001
EIN: 33-0379007
Schedule H, Line 4(i) - Schedule of Assets (Held at End of Year)
As of December 31, 2006

(a)
(b)
  
(c)
  
(d)
  
(e)
 
Identity of issue, borrower, lessor or similar party
  
Description of investment including maturity date, rate of interest, collateral, par or maturity value
  
Cost
  
Market Value
               
*
AVX Corporation
  
Common Stock
$
12,109,282
$
13,486,424
               
*
Kyocera Corporation
  
American Depository Shares
  
 **
  
9,775,378
               
 
MainStay Cash Reserves Fund
  
Money Market Fund
  
 **
  
15,264,656
               
 
T. Rowe Price Spectrum Income Fund
  
Mututal Fund
  
 **
  
1,311,038
 
Janus Balanced Fund
  
Mututal Fund
  
 **
  
7,033,869
 
MainStay S&P 500 Index Fund
  
Mututal Fund
  
 **
  
9,237,752
 
Janus Fund
  
Mututal Fund
  
 **
  
8,083,540
 
Templeton Foreign Fund
  
Mututal Fund
  
 **
  
9,420,468
 
Lord Abbett Mid-Cap Value Fund
  
Mututal Fund
  
 **
  
9,311,458
 
Seligman Large-Cap Value Fund
  
Mututal Fund
  
 **
  
17,346,450
 
PIMCO Total Return Fund
  
Mututal Fund
  
 **
  
3,597,718
             
65,342,293
               
*
Participant Loans
  
Interest rates ranging from 6% - 11.50% and maturing through 2025.
  
 **
  
2,793,685
               
     
Total Investments
    
$
106,662,436

* Denotes a party-in-interest.

 
** Cost information is not required for individual account plans with participant directed transactions.
 
-13-
AVX CORPORATION RETIREMENT PLAN
PN: 001
EIN: 33-0379007
Schedule H, Line 4(j) -Schedule of Reportable Transactions
For the Year Ended December 31, 2006

(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
Identity of Party Involved
Description of investment
Purchase Price
Selling Price
Lease Rental
Expense Incurred with Transaction
Cost of Asset
Current Value of Asset on Transaction Date
Net Gain/
    (Loss)
Seligman Large Cap Value Fund
Mutual Fund
 $   34,208,633
 $                 ---
n/a
---
 $      34,208,633
 $   34,208,633
 $             ---
Seligman Equity Portfolio
Master Trust
 $                ---
 $   (33,594,217)
n/a
---
 $   (31,175,009)
 $  (33,594,217)
 $  2,419,208