Prepared by R.R. Donnelley Financial -- Form 11-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
ANNUAL REPORT
Pursuant to Section 15(d) of the
Securities Exchange Act of 1934
(Mark One):
x |
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ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the plan year ended December 31, 2001
OR
¨ |
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TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from
to
Commission file number: 0-12449
A. Full title of the plan and the address of the plan, if different from that of the issuer named below:
SMC CASH ACCUMULATION PLAN
B. Name
of issuer of the securities held pursuant to the plan and the address of its principal executive office:
SCPIE
Holdings Inc.
1888 Century Park East
Los Angeles,
California 90067
SMC CASH ACCUMULATION PLAN
AUDITED FINANCIAL STATEMENTS
AND SUPPLEMENTAL SCHEDULE
December 31, 2001 and 2000 and year ended December 31, 2001
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1 |
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| Audited Financial Statements |
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3 |
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4 |
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| Supplemental Schedule |
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12 |
REPORT OF INDEPENDENT AUDITORS
SCPIE Management Company as the
Administrator of SMC Cash Accumulation Plan
We have audited the accompanying statements of net assets available for benefits of SMC Cash Accumulation Plan as of December 31, 2001 and 2000, and the related statements of changes in net assets
available for benefits for the year ended December 31, 2001. 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, 2001 and 2000, and the changes in its net assets available for benefits for the year ended December 31, 2001, in conformity with accounting
principles generally accepted in the United States.
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, 2001, is presented for the purpose 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
Los Angeles, California
May 29, 2002
1
SMC CASH ACCUMULATION PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
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December 31
|
| |
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2001
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2000
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| ASSETS |
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|
|
|
|
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| Investments at fair value: |
|
|
|
|
|
|
| Mutual funds |
|
$ |
13,643,514 |
|
$ |
13,019,487 |
| Short-term investment funds |
|
|
— |
|
|
1,350,409 |
| Common stock—SCPIE Holdings Inc. |
|
|
— |
|
|
22,453 |
| Participant loans |
|
|
451,231 |
|
|
540,989 |
| |
|
|
|
|
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| Net assets available for benefits |
|
$ |
14,094,745 |
|
$ |
14,933,338 |
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|
|
|
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|
See accompanying notes.
2
SMC CASH ACCUMULATION PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS Year ended December 31, 2001
| Additions |
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| Investment income (loss): |
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|
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| Net depreciation in fair value of investments |
|
$ |
(2,257,936 |
) |
| Interest and dividends |
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|
182,005 |
|
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|
|
|
|
| |
|
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(2,075,931 |
) |
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| Contributions: |
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|
|
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| Employer |
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|
999,148 |
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| Participants |
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|
1,140,656 |
|
| |
|
|
|
|
| |
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2,139,804 |
|
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|
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| Total additions |
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63,873 |
|
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| Deductions |
|
|
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| Benefits paid to participants |
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896,387 |
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| Administrative expenses |
|
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6,079 |
|
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| Total deductions |
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902,466 |
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|
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| Net decrease in net assets |
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(838,593 |
) |
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| Net assets available for benefits: |
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|
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| Beginning of year |
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14,933,338 |
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| End of year |
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$ |
14,094,745 |
|
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|
|
|
|
See accompanying notes.
3
SMC CASH ACCUMULATION PLAN
NOTES TO FINANCIAL STATEMENTS
1. Description of the Plan
The following description of the SMC Cash Accumulation Plan (the Plan) provides only general information. Participants should
refer to the Plan agreement for a more complete description of the Plan’s provisions.
General
The Plan is a defined contribution plan covering all full-time employees of SCPIE Management Company (the
Company) who are age 21 or older. Participants pay the administrative expenses of the Plan. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA).
Contributions
Participants may contribute up to 15% of pretax annual compensation, as defined in the Plan, up to $10,500. During 2000, highly compensated employee participants were allowed to contribute up to 8%. Participants may also contribute
amounts representing rollover distributions from other qualified defined benefit or defined contribution plans. Company contributions to the Plan are discretionary. During 2001, the Company matched 200% (100% during 2000) of the individual
participant’s contributions up to the first 3% (6% during 2000) of base compensation.
During 2001, the
Company provided an additional contribution to all the participant’s 401(k) accounts equal to 1% of total eligible pay. During 2000, the Company made no such contributions.
During 2001, both employee and employer contributions were based on base salary, overtime and bonus pay. During 2000, contributions were based on base compensation only.
Participant Accounts
Each participant’s account is credited with the participant’s contributions and allocations of (a) the Company’s contributions and (b) Plan earnings.
Individual participant’s accounts are charged with loan fees if the participant takes a loan against his account.
4
SMC CASH ACCUMULATION PLAN
NOTES TO FINANCIAL STATEMENTS—(Continued)
1. Description of the Plan (continued)
Participant Accounts (continued)
Allocations
are based on participant earnings or account balances, as defined. 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 vested account.
Vesting
Participants are immediately vested in 100% of their contributions and the Company’s contributions made after January 1, 2001, plus
actual earnings thereon. Vesting in the Company contributions made on or before December 31, 2000, plus actual earnings thereon is based on years of continuous service. Such contributions are vested at 34% after one year of service, 67% after two
years of service, with full vesting after three years of service, or upon the attainment of age 65, death or permanent disability of the participant.
Investment Options
Upon enrollment in the Plan, a
participant may direct employer and employee contributions among the following CIGNA and Fidelity Investments Funds:
CIGNA
Guaranteed Income Fund
Objective: Safety of principal, attractive rate of returns, liquidity from corporate bonds and commercial mortgages.
Core Bond Fund
Objective: Higher current income, through investments in moderate fixed income obligations.
CIGNA Lifetime 20
Objective: Growth, income and capital preservation through stock, bonds,
and short-term investments.
5
SMC CASH ACCUMULATION PLAN
NOTES TO FINANCIAL STATEMENTS—(Continued)
1. Description of the Plan (continued)
Investment Options (continued)
CIGNA (continued)
CIGNA Lifetime 30
Objective: Growth, income and capital preservation through stock, bonds, and short-term investments.
CIGNA Lifetime 40
Objective: Growth, income and capital preservation through stock, bonds, and short-term investments.
CIGNA Lifetime 50
Objective: Growth, income and capital preservation through stock, bonds,
and short-term investments.
CIGNA Lifetime 60
Objective: Growth, income and capital preservation through stock, bonds, and short-term investments.
Large CAP Value/John A. Levin & Co.
Objective: Long-term capital appreciation from equities, with little or no need for current income.
Large CAP Value/Dresdner RCM
Objective: Long-term capital appreciation from equities, with
little or no need for current income.
Growth & Income/Multi-Manager
Objective: Capital growth and current income, through investments in moderate to high large company equity securities.
S&P 500 Index
Objective: A total return which corresponds to that of the Standard & Poor’s 500 Index.
6
SMC CASH ACCUMULATION PLAN
NOTES TO FINANCIAL STATEMENTS—(Continued)
1. Description of the Plan (continued)
Investment Options (continued)
CIGNA (continued)
Invesco Dynamics
Objective: Long-term capital appreciation from equities, with little or no need for current income.
Mid CAP Blend/Cadence
Objective: Long-term capital appreciation from equities, with little or no need for current income.
Small CAP Growth/Timessquare
Objective: Rapid growth of
capital, through investments in small company stock.
Small CAP Value/Berger
Objective: Rapid growth of capital, through investments in small company stock.
American Century International Growth Account
Objective: Increased returns from participation in foreign stock markets, as well as associated portfolio diversification benefits.
International Blend/Bank of Ireland
Objective: Increased
returns from participation in foreign stock markets, as well as associated portfolio diversification benefits.
Janus Adviser Worldwide Account
Objective: Increased returns from participation in foreign
and domestic stock markets, as well as associated portfolio diversification benefits.
CIGNADIRECT
Objective: Capital growth through investments offered by CIGNA Financial Services, Inc.
Fidelity
Fidelity Retirement Money Market Portfolio
Objective: Current income,
preservation of capital, and liquidity from money market instruments.
7
SMC CASH ACCUMULATION PLAN
NOTES TO FINANCIAL STATEMENTS—(Continued)
1. Description of the Plan (continued)
Investment Options (continued)
Fidelity (continued)
Fidelity Intermediate Bond Fund
Objective: A high level of current income, through investment in high- and medium-grade fixed income obligations.
Fidelity Fund
Objective: Long-term capital growth, with a reasonable level of current income as a secondary objective, through investment in common stocks.
Fidelity Independence Fund
Objective: Capital appreciation through investments primarily in, but not restricted to, common stocks.
Fidelity Growth & Income Portfolio
Objective: High total return through a combination
of current income and capital appreciation by investing mainly in equity securities.
Fidelity Blue Chip Growth
Fund
Objective: Long-term growth of capital, through investments in common stocks of well-known and
established companies.
Spartan U.S. Equity Index Fund
Objective: A total return which corresponds to that of the Standards & Poor’s 500 Index.
During 2001, the SCPIE Holding Inc. common stock was deleted as an investment option of the plan.
Participants may change their investment options on a daily basis.
Participant Loans
Participants may borrow from their fund accounts a minimum of $1,000 up to the lesser of $50,000 or 50% of their nonforfeitable account balance. Loan transactions are treated as a transfer between the investment funds and the
participant loans
8
SMC CASH ACCUMULATION PLAN
NOTES TO FINANCIAL STATEMENTS—(Continued)
1. Description of the Plan (continued)
Participant Loans (continued)
fund. Loan terms range from one to five
years. The loans are secured by the balance in the participant’s account and bear interest at 2% above the prime rate at the time the loan is entered. Principal and interest are paid ratably through payroll deductions.
Payment of Benefits
Benefits become payable to participants upon their termination of employment with the Company.
On completion of service, a participant may receive a lump-sum amount equal to the account balance less 20% withheld for federal income tax vested value of his or her account. The participant may also elect to receive installments
over a period the participant selects.
2. Summary of Accounting Policies
Basis of Accounting
The financial statements of the Plan are prepared under the accrual method of accounting.
Use of Estimates
The preparation of the 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.
Investment Valuation and Income Recognition
The Plan’s investments are stated at fair value. The shares of registered investment companies (mutual funds) are valued at quoted market prices, which represent the net asset values of shares
held by the Plan at year-end. Short-term investment funds and participant loans are valued at their outstanding balances, which approximate fair value.
Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date.
9
SMC CASH ACCUMULATION PLAN
NOTES TO FINANCIAL STATEMENTS—(Continued)
3. Investments
During 2001, the Plan’s investments (including investments purchased, sold as well as held during the year) appreciated (depreciated)
in fair value as determined by quoted market prices as follows:
| |
|
|
|
|
| Mutual funds |
|
$ |
(2,255,133 |
) |
| Common stock SCPIE Holdings Inc. |
|
|
(2,803 |
) |
| |
|
|
|
|
| |
|
$ |
(2,257,936 |
) |
| |
|
|
|
|
The Plan’s investments are presented in the following table.
| |
|
December 31
|
|
| |
|
2001
|
|
|
2000
|
|
| Investments at fair value as determined by quoted market price: |
|
|
|
|
|
|
|
|
| Fidelity Retirement Money Market Portfolio |
|
$ |
— |
|
|
$ |
1,350,409 |
* |
| Fidelity Intermediate Bond Fund |
|
|
— |
|
|
|
599,544 |
|
| Fidelity Fund |
|
|
— |
|
|
|
3,977,877 |
* |
| Fidelity Independence Fund |
|
|
— |
|
|
|
5,684,066 |
* |
| Fidelity Growth & Income Portfolio |
|
|
— |
|
|
|
931,996 |
* |
| Fidelity Blue Chip Growth Fund |
|
|
— |
|
|
|
990,295 |
* |
| Spartan U.S. Equity Index Fund |
|
|
— |
|
|
|
835,709 |
* |
| SCPIE Holdings Inc. |
|
|
— |
|
|
|
22,453 |
* |
| Guaranteed Income Fund |
|
|
2,018,608 |
* |
|
|
— |
|
| Core Bond Fund |
|
|
1,412,975 |
* |
|
|
— |
|
| CIGNA Lifetime 20 |
|
|
4,488 |
|
|
|
— |
|
| CIGNA Lifetime 30 |
|
|
151,921 |
|
|
|
— |
|
| CIGNA Lifetime 40 |
|
|
269,597 |
|
|
|
— |
|
| CIGNA Lifetime 50 |
|
|
96,889 |
|
|
|
— |
|
| CIGNA Lifetime 60 |
|
|
61,151 |
|
|
|
— |
|
| Large CAP Value/John A. Levin & Co. |
|
|
73,836 |
|
|
|
— |
|
| Large CAP Value/Dresdner RCM |
|
|
4,527,049 |
* |
|
|
— |
|
| Growth & Income/Multi-Manager |
|
|
3,706,089 |
* |
|
|
— |
|
| S&P 500 Index |
|
|
812,011 |
* |
|
|
— |
|
| Invesco Dynamics |
|
|
104,961 |
|
|
|
— |
|
| Mid CAP Blend/Cadence |
|
|
25,165 |
|
|
|
— |
|
| Small CAP Growth/Timesquare |
|
|
145,796 |
|
|
|
— |
|
| Small CAP Value/Berger |
|
|
160,047 |
|
|
|
— |
|
| American Century International Growth Account |
|
|
8,489 |
|
|
|
— |
|
| International Blend/Bank of Ireland |
|
|
21,322 |
|
|
|
— |
|
| Janus Adviser Worldwide Account |
|
|
20,566 |
|
|
|
— |
|
| CIGNADIRECT |
|
|
22,554 |
|
|
|
— |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
13,643,514 |
|
|
|
14,392,349 |
|
| Investments at estimated fair value: |
|
|
|
|
|
|
|
|
| Participant loans |
|
|
451,231 |
|
|
|
540,989 |
|
| |
|
|
|
|
|
|
|
|
| Total investments at fair value |
|
$ |
14,094,745 |
|
|
$ |
14,933,338 |
|
| |
|
|
|
|
|
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|
* |
|
Investment represents more than 5% of the Plan’s net asset at year-end. |
10
SMC CASH ACCUMULATION PLAN
NOTES TO FINANCIAL STATEMENTS—(Continued)
4. 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.
5. Income Tax Status
The Plan received a determination letter from
the Internal Revenue Service dated June 22, 1995, stating that the Plan qualified under Section 401(a) of the Internal Revenue Code (the Code) and, therefore, the related trust is exempt from taxation. Subsequent to this issuance of the
determination letter, 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.
11
SMC CASH ACCUMULATION PLAN
EIN: 95-2980685 Plan: 001
SCHEDULE H, LINE 4(I)—SCHEDULE OF ASSETS (Held at End of Year) December 31, 2001
| Identity of Issue, Borrower, Lessor or Similar Party
|
|
Description of Investment, Including Maturity Date, Rate of Interest, Par or Maturity Value
|
|
Cost
|
|
Current Value
|
| Guaranteed Income Fund* |
|
26.42 shares |
|
$ |
2,450,821 |
|
$ |
2,018,608 |
| Core Bond Fund* |
|
11.94 shares |
|
|
1,588,248 |
|
|
1,412,975 |
| CIGNA Lifetime 20* |
|
12.06 shares |
|
|
4,816 |
|
|
4,488 |
| CIGNA Lifetime 30* |
|
12.10 shares |
|
|
152,751 |
|
|
151,921 |
| CIGNA Lifetime 40* |
|
11.88 shares |
|
|
295,162 |
|
|
269,597 |
| CIGNA Lifetime 50* |
|
11.96 shares |
|
|
96,885 |
|
|
96,889 |
| CIGNA Lifetime 60* |
|
12.22 shares |
|
|
61,167 |
|
|
61,151 |
| Large CAP Value/John A. Levin & Co.* |
|
15.30 shares |
|
|
75,639 |
|
|
73,836 |
| Large CAP Value/Dresdner RCM* |
|
7.38 shares |
|
|
5,516,969 |
|
|
4,527,049 |
| Growth & Income/Multi-Manager* |
|
11.20 shares |
|
|
4,585,589 |
|
|
3,706,089 |
| S&P 500 Index* |
|
62.75 shares |
|
|
929,486 |
|
|
812,011 |
| Invesco Dynamics* |
|
23.18 shares |
|
|
134,457 |
|
|
104,961 |
| Mid CAP Blend/Cadence* |
|
11.53 shares |
|
|
41,023 |
|
|
25,165 |
| Small CAP Growth/Timesquare* |
|
15.62 shares |
|
|
146,131 |
|
|
145,796 |
| Small CAP Value/Berger* |
|
17.66 shares |
|
|
364,800 |
|
|
160,047 |
| American Century International Growth Account* |
|
9.30 shares |
|
|
13,288 |
|
|
8,489 |
| International Blend/Bank of Ireland* |
|
9.87 shares |
|
|
21,320 |
|
|
21,322 |
| Janus Adviser Worldwide Account* |
|
32.04 shares |
|
|
21,240 |
|
|
20,566 |
| CIGNADIRECT* |
|
1.00 shares |
|
|
123,382 |
|
|
22,554 |
| Participant loans* |
|
Various |
|
|
— |
|
|
451,231 |
| |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
$ |
14,094,745 |
| |
|
|
|
|
|
|
|
|
* |
|
Indicates party-in-interest to the Plan. |
12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Administrator of the Plan has duly caused this annual report to be signed on its behalf by the undersigned, hereunto duly authorized.
| SCPIE MANAGEMENT COMPANY CASH ACCUMULATION PLAN |
| |
| By: |
|
/s/ ROBERT B.
TSCHUDY
|
| |
|
Robert B. Tschudy Senior Vice
President and Chief Financial Officer of SCPIE Management Company and Plan Administrator |
Dated: June 28, 2002
13
INDEX TO EXHIBITS
| Exhibit
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|
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|
Page
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| |
| 23.1 |
|
Consent of Ernst & Young LLP |
|
15 |
14