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] 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: 001-13889
A. Full title of the plan and the address of the plan, if different
from that of the issuer named below:
MacDermid, Incorporated Profit Sharing and Employee Stock Ownership
Plan
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
MacDermid, Incorporated
245 Freight Street
Waterbury, CT 06702-0671
REQUIRED INFORMATION
The following financial statements shall be furnished for the plan:
1. An audited statement of financial condition as of the end of the latest
two fiscal years of the plan (or such lesser period as the plan has been in
existence).
2. An audited statement of income and changes in plan equity for each of
the latest three fiscal years of the plan (or such lesser period as the plan has
been in existence).
3. The statements required by Items 1 and 2 shall be prepared in
accordance with the applicable provisions of Article 6A of Regulation S-X (17
CFR 210.6A-01--.6A-05).
4. In lieu of the requirements of Items 1-3 above, plans subject to ERISA
may file plan financial statements and schedules prepared in accordance with the
financial reporting requirements of ERISA. To the extent required by ERISA, the
plan financial statements shall be examined by an independent accountant, except
that the "limited scope exemption" contained in Section 103(a)(3)(C) of ERISA
shall not be available.
Note: A written consent of the accountant is required with respect to the
plan annual financial statements which have been incorporated by reference in a
registration statement of Form S-8 under the Securities Act of 1933. The
consent should be filed as an exhibit to this annual report. Such consent shall
be currently dated and manually signed.
In accordance with the rules to Form 11-K, attached as Appendix 1 to
this Form 11-K are the plan financial statements and schedules prepared in
accordance with the financial reporting requirements of ERISA and examined by an
independent accountant on a full scope basis.
EXHIBITS
23.1 Consent of KPMG LLP
SIGNATURES
The 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 hereunto duly authorized.
MACDERMID, INCORPORATED PROFIT
SHARING AND EMPLOYEE STOCK OWNERSHIP PLAN
Date: June 18, 2003 By: /s/ Frank Monteiro
-------------------------------
Frank Montiero
Member, MacDermid Benefit Plans
Administration Committee
APPENDIX 1
MACDERMID, INCORPORATED PROFIT SHARING
AND EMPLOYEE STOCK OWNERSHIP PLAN
Financial Statements and Supplemental Schedule
December 31, 2002 and 2001
(With Independent Auditors' Report Thereon)
MACDERMID, INCORPORATED PROFIT SHARING
AND EMPLOYEE STOCK OWNERSHIP PLAN
TABLE OF CONTENTS
Page
Independent Auditors' Report . . . . . . . . . . . . . . . . . . 1
Statements of Net Assets Available for Plan Benefits . . . . . . 2
Statements of Changes in Net Assets Available for Plan Benefits. 3
Notes to Financial Statements. . . . . . . . . . . . . . . . . . 4
SCHEDULE
Schedule H, Line 4i - Schedule of Assets (Held at End of Year) . 10
Note: Schedules of reportable transactions, nonexempt transactions, loans,
or fixed income obligations in default or classified as uncollectible, leases in
default or classified as uncollectible and investment assets both acquired and
disposed of within the plan year as required by the Employee Retirement Income
Security Act of 1974 and Department of Labor Regulations have not been included
herein as the information is not applicable.
INDEPENDENT AUDITORS' REPORT
Plan Administration Committee
MacDermid, Incorporated Profit Sharing and
Employee Stock Ownership Plan:
We have audited the accompanying statements of net assets available for plan
benefits of MacDermid, Incorporated Profit Sharing and Employee Stock Ownership
Plan as of December 31, 2002 and 2001, and the related statements of changes in
net assets available for plan benefits for the year ended December 31, 2002 and
nine months 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 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 plan benefits of MacDermid,
Incorporated Profit Sharing and Employee Stock Ownership Plan as of December 31
2002 and 2001 and the changes in net assets available for plan benefits for the
year ended December 31, 2002 and nine months ended December 31, 2001 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 of assets held
at end of year 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. Th is supplemental schedule is
the responsibility of the Plan's management. The supplemental schedule
has been subjected to the auditing procedures applied in the
audits of the basic financial statements and, in our opinion, is fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
Hartford, Connecticut
April 15, 2003
MACDERMID, INCORPORATED PROFIT SHARING
AND EMPLOYEE STOCK OWNERSHIP PLAN
Statements of Net Assets Available for Plan Benefits
December 31, 2002 and 2001
2002 2001
------------ ----------
Investments, at fair value (note 5):
MacDermid Incorporated Company Stock Fund . . . . . . . $56,948,479 44,908,192
Other investments . . . . . . . . . . . . . . . . . . . 42,694,019 50,010,959
------------ ----------
Total investments. . . . . . . . . . . 99,642,498 94,919,151
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . (63) 206,810
------------ ----------
Net assets available for plan benefits $99,642,435 95,125,961
============ ==========
See accompanying notes to financial statements.
MACDERMID, INCORPORATED PROFIT SHARING
AND EMPLOYEE STOCK OWNERSHIP PLAN
Statements of Changes in Net Assets Available for Plan Benefits
Year ended December 31, 2002 and nine months ended December 31, 2001
2002 2001
------------- ------------
Investment income:
Dividend and interest income on securities. . . . . c 374,588 323,181
Interest on participant loans . . . . . . . . . . . 192,279 190,129
Net appreciation (depreciation) in fair value of
investments (note 6). . . . . . . . . . . . . . . 11,759,318 (3,899,683)
------------- ------------
Total investment income (loss) . . . . . . . 12,326,185 (3,386,373)
Contributions:
Employer. . . . . . . . . . . . . . . . . . . . . . 812,321 929,568
Employee. . . . . . . . . . . . . . . . . . . . . . 3,865,670 3,767,973
Rollover. . . . . . . . . . . . . . . . . . . . . . 448,163 261,399
------------- ------------
Total additions. . . . . . . . . . . . . . . . . . . . 17,452,339 1,572,567
------------- ------------
Deductions:
Distributions to participants . . . . . . . . . . . (12,697,226) (14,841,955)
Administrative expenses (note 8). . . . . . . . . . (238,638) (94,470)
Other, net. . . . . . . . . . . . . . . . . . . . . - (75,596)
------------- ------------
Total deductions . . . . . . . . . . . . . . (12,935,864) (15,012,021)
------------- ------------
Net increase (decrease). . . . . . . . . . . 4,516,474 (13,439,454)
Net assets available for plan benefits, beginning of
period . . . . . . . . . . . . . . . . . . . . . . . . 95,125,961 108,565,415
------------- ------------
Net assets available for plan benefits, end of period. $ 99,642,435 95,125,961
============= ============
See accompanying notes to financial statements.
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(A) BASIS OF PRESENTATION
The accompanying financial statements have been prepared on an accrual basis.
Current values of investments are determined using quoted market prices and
current yields. Purchases and sales of securities are recorded on a trade-date
basis. The cost of investments sold is determined on an average cost basis.
(B) TRUST FUND
Wachovia Bank N.A. ("Wachovia Bank") is the Trustee of the Plan. Under the
terms of a trust agreement between the Trustee and the MacDermid, Incorporated
Profit Sharing and Employee Stock Ownership Plan (the Plan), the Trustee manages
a trust fund on behalf of the Plan. The Plan Trustee has discretionary authority
concerning purchases and sales of investments in the trust fund. The investments
and changes therein of this trust fund have been reported to the Plan by the
Trustee as having been determined through the use of current values for all
assets and liabilities.
(C) USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management of the
Plan to make estimates and assumptions that affect the reported amounts of
assets, liabilities, and changes therein, and the disclosure of contingent
assets and liabilities. Actual results could differ from those estimates.
(D) PAYMENT OF BENEFITS
Benefits are recorded when paid.
(E) GENERAL
Effective December 31, 2001, the Plan year changed from a March 31 fiscal year
end to a December 31 calendar year end.
(2) PLAN PROVISIONS
The Plan, as amended and restated, is a defined contribution plan sponsored by
MacDermid, Incorporated (the Company).
All domestic employees of the Company are eligible to participate in the Plan.
This includes employees of MacDermid Incorporated and its continental United
States subsidiaries, except Dynacircuits LLC. Beginning April 1, 2002,
MacDermid Equipment employees were eligible to participate.
Effective March 31, 2002, the Company announced the termination of the MacDermid
Equipment, Inc. 401K Plan (ME4). In connection with the termination of the ME4
Plan, the assets were distributed to participants (or to their beneficiaries).
Distributions were made, in whole or in part, in the form of eligible rollover
distributions to the MacDermid, Incorporated Profit Sharing and Employee Stock
Ownership Plan or an IRA. The forfeitable portion of eligible, active
participants' account balances became fully vested on the date the ME4 Plan was
terminated.
Effective January 1, 1999, the ESOP provision of the Plan was changed to allow
participants to contribute to the Plan using pre-tax dollars to purchase company
stock. This provision is referred to as a KSOP.
Under the terms of the Plan, employees are eligible to contribute under the
KSOP, 401(k) and after-tax options on the first of the month following their
date of hire. Participating employees may elect to have up to 10% of pre-tax
wages contributed to the Plan under the 401(k) option, and up to 7% of pre-tax
wages under the KSOP provision. Participating employees may elect to have up to
3% deducted from their after-tax wages and invested in the same investment
options as the 401(k) arrangement. The Company will match 50% of the employee's
KSOP contribution, up to a maximum of 3.5% of the employee's compensation.
Employees may elect to make pre-tax contributions up to the IRS limit of $11,000
in 2002 and $10,500 in 2001 to the same investment options as the 401(k)
arrangement. Catch-up contributions can also be made by employees age 50 and
older up to $1,000 for 2002.
The Company may make profit-sharing contributions to the Plan. This is a
discretionary contribution determined by the Board of Directors. Employees
become participants in the Profit Sharing Plan as of December 1st of the first
plan year during which they are an employee, provided their employment by the
Company commences on or before July 1st of such plan year and they are at least
18 years of age, or as of December 1st of the second plan year if their
employment with the Company commences after July 1st of the first plan year and
they are at least 18 years of age. Profit sharing contributions were $0 for the
year ended December 31, 2002 and the nine months ended December 31, 2001.
Employees vest immediately in their contributions. As required by the Economic
Growth and Tax Relief Reconciliation Act of 2001 ("EGTRRA"), the Plan adopted
new vesting requirements. All matching contributions made on or after January
1, 2002 will vest pursuant to a 3-year cliff. All matching contributions prior
to January 1, 2002 will remain on a 5-year cliff. The exception is that full
vesting will apply when an employee attains age 55, dies or becomes totally
disabled. Any forfeited amounts related to the maximum additional 3.5% of
compensation allocated to the MacDermid Incorporated Company Stock Fund are used
to reduce the cash contribution required by the Company in the following year.
Forfeitures available to reduce future employer contributions amounted to
$108,460 and $193,808 at December 31, 2002 and 2001, respectively. Forfeitures
used to reduce employer contributions amounted to $227,853 and $0 for the year
ended December 31, 2002 and the nine months ended December 31, 2001,
respectively.
The 1,000-hour rule for credited service was waived for the plan period ending
December 31, 2001. For the plan period April 1, 2001 to December 31, 2001, all
participants employed by MacDermid on December 31, 2001 would receive one
credited year of service towards vesting.
Distribution of participants' accounts upon separation shall be paid in (a) a
lump sum, or (b) equal installments over a period not to exceed 15 years. If the
non-forfeitable balance does not, and did not at the time of any prior
distribution, exceed $5,000, the participant's account shall be distributed in a
lump-sum.
The Company expects to continue the Plan indefinitely, but necessarily reserves
the right to amend, modify or terminate the Plan at any time. If it is necessary
to discontinue the Plan, the assets in the Trust Fund will be used to provide
benefits in accordance with the provisions of the Plan document.
As of January 1, 2002, the deferral amount that participants could contribute to
the Plan was increased from 8% to 10%.
Effective January 1, 2002, the diversification requirement for the KSOP/ESOP
portion of the Plan was changed from age 55 and 10 years of service to age 55
only.
Effective January 1, 2002, the stock distributions from the Plan will be either
in-kind or cash.
(3) FEDERAL INCOME TAXES
The Plan has received a tax determination letter from the Internal Revenue
Service (IRS) dated January 25, 1996 indicating that the Plan qualifies under
the provisions of Section 401(a) of the Internal Revenue Code (IRC) and is
exempt from federal income taxes. The Plan has been amended since receiving the
determination letter, however, the Company believes the Plan is designed and is
currently being operated in compliance with the applicable sections of the IRC.
The Plan was amended and restated on January 1, 2002 to incorporate recent
amendments required as a result of current law changes. The Plan has been
submitted to the IRS for a new determination letter and is currently awaiting a
response.
Plan participants are taxed on plan benefits at the time of distribution to the
extent such distribution exceeds a participant's post-tax contribution to the
Plan. Effective January 1, 1993, the Plan withholds the mandatory 20% federal
tax from all taxable distributions, which are not direct rollovers. The tax
consequences to the participant will depend on the type of distribution (lump
sum, annuity or installments).
(4) INVESTMENT PROGRAMS
In December 2002, a number of investment funds available to Plan participants
were eliminated and replaced with new funds. As a result, the selection of funds
available for Plan participants to invest in was reduced from 17 to 15. The
following list summarizes this change:
ELIMINATIONS . . . . . . . . . . . . . . ADDITIONS
---------------------------------------- -------------------------------------
Wachovia Bank Enhanced Stock Market Fund Van Kampen Equity & Income Fund A
Franklin Templeton Small/Mid Cap Growth. Federated Capital Appreciation Fund A
Invesco Dynamics Fund. . . . . . . . . . Federated Kaufman Fund K
Janus Growth & Income Fund . . . . . . . Royce Premier Fund
Janus Worldwide Fund . . . . . . . . . . Templeton Growth Fund A
MFS Capital Opportunities Fund A
AIM Funds Group Balanced A
Plan participants may now elect from among 15 separate investment funds in which
to have their contributions and a portion of the Company's contributions
invested. The 15 investment funds as of December 31, 2002 are as follows:
(1) Wachovia Bank Stable Investment Fund - Seeks maximum current income
----------------------------------------
consistent with stability of capital and maintenance of liquidity.
(2) American Century Ultra Fund - Seeks capital growth by investing
------------------------------
primarily in common stocks that are considered by management to have
better-than-average prospects for appreciation.
(3) Davis NY Venture Fund A - Seeks long-term capital appreciation and
---------------------------
income through purchasing high-quality, well managed growing companies at value
prices and holding them for the long term.
(4) Evergreen Special Equity Fund I - Seeks growth of capital through
-----------------------------------
investing mainly in both growth and value-oriented stocks that show potential
for growth in earnings and price.
(5) Federated Stock Trust Fund - Seeks growth of income and capital by
-----------------------------
investing principally in a professionally managed and diversified portfolio of
common stocks of high quality companies.
(6) Federated Kaufman Fund K - Seeks to provide investors with capital
---------------------------
appreciation by investing principally in common stocks of small to mid-size
companies that have grown rapidly and profitably.
(7) Federated Capital Appreciation Fund A - Seeks capital appreciation.
-----------------------------------------
Exposure is to the mid- and large-cap companies and is combined with a blend of
both growth and value securities.
(8) Dreyfus Mid-Cap Index Fund - Seeks to provide investment results that
-----------------------------
correspond to the price and yield performance of publicly-traded common stocks
of medium-size domestic companies in the aggregate, as represented by the
Standard & Poor's MidCap 400 Index.
(9) Royce Premier Fund - Seeks to invest primarily in a limited number of
--------------------
small-cap securities. Emphasis is placed on finding companies that possess
excellent business strengths and/or prospects, high internal rates of return and
low leverage.
(10) Templeton Growth Fund A - Seeks long-term capital growth, investing
--------------------------
primarily in equity securities of companies located in any nation.
(11) Van Kampen Equity & Income Fund A - Seeks to provide highest possible
-----------------------------------
income consistent with safety of principal. Long-term growth of capital is an
important secondary objective. Fund invests in income-producing equity
securities and investment-grade debt securities.
(12) Putnam International Growth Fund A - Seeks capital appreciation through
----------------------------------
a diversified portfolio of international stocks, targeting companies with
established earnings growth that are selling at below market prices.
(13) Evergreen Select Core Bond Fund - Seeks to maximize total return
-----------------------------------
through a combination of current income and capital growth by investing mainly
in corporate and mortgage securities.
(14) Fidelity Mortgage Securities Fund - Seeks high current income
------------------------------------
consistent with prudent investment risk. The fund may also consider the
potential for capital gain.
(15) MacDermid Incorporated Company Stock Fund - This fund consists
---------------------------------------------
primarily of common stock of MacDermid, Inc.
Participants may elect to transfer amounts from one investment fund to another,
up to once per day, using a voice mail response system or via the internet.
(5) INVESTMENTS
The following table represents the fair value of investments. Investments that
represent 5% or more of the Plan's net assets are separately identified:
DECEMBER 31,
----------- ----------
2002 2001
----------- ----------
MacDermid Incorporated Company Stock Fund $56,948,479 44,908,192
Wachovia Bank Stable Investment Fund. . . 22,032,956 22,841,110
Davis NY Venture Fund A . . . . . . . . . 4,982,457 7,466,240
Other investments . . . . . . . . . . . . 15,678,606 19,703,609
----------- ----------
$99,642,498 94,919,151
=========== ==========
9 (Continued)
(6) NET APPRECIATION (DEPRECIATION)
During the year ended December 31, 2002 and the nine months ended December 31,
2001, the Plan's investments (including investments bought and sold, as well as
investments held during the year) appreciated (depreciated) as follows:
NET APPRECIATION
(DEPRECIATION) IN FAIR VALUE
DECEMBER 31,
--------------- --------------
2002 2001
--------------- --------------
Company Stock Funds $ 15,135,822 (3,929,977)
Other securities. . (3,376,504) 30,294
--------------- --------------
$ 11,759,318 (3,899,683)
=============== ==============
(7) PARTICIPANT NOTES RECEIVABLE
Participants may borrow from their fund accounts a minimum of $1,000 up to a
maximum equal to the lesser of $50,000 or 50% of their vested account balance.
Loan transactions are treated as a transfer to (from) the investment fund from
(to) the Loan Fund. Loan terms range from 1-5 years or up to 10 years for the
purchase of a primary residence. The loans are secured by the balance in the
participant's account and bear interest at a rate commensurate with local
prevailing rates as determined quarterly by the Plan administrator. Interest
rates range from 5.25% to 5.75% at December 31, 2002. Principal and interest is
paid ratably through regular payroll deductions.
(8) RELATED PARTY TRANSACTIONS
Certain Plan investments are shares of mutual funds managed by Wachovia Bank.
Wachovia Bank is the Trustee as defined by the Plan and, therefore, these
transactions qualify as party-in-interest transactions. Fees paid by the Plan
for the investment management services amounted to $238,638 and $94,471 for the
year ended December 31, 2002 and the nine months ended December 31, 2001,
respectively.
SCHEDULE H, LINE 4I
MACDERMID, INCORPORATED PROFIT SHARING
AND EMPLOYEE STOCK OWNERSHIP PLAN
Schedule of Assets (Held at End of Year)
December 31, 2002
IDENTITY OF ISSUER, BORROWER, . . . . . . DESCRIPTION CURRENT
LESSOR, OR SIMILAR PARTY. . . . . . . . . OF INVESTMENT VALUE
- ----------------------------------------- -------------- ------ -----------
* Wachovia Bank Stable Investment Fund. . . 767,947 units $22,032,956
* MacDermid Incorporated Company Stock Fund 2,492,275 shares 56,948,479
Hercules Company Stock Fund . . . . . . . 4,778 shares 42,046
American Century Ultra Fund . . . . . . . 18,308 units 384,842
Davis NY Venture Fund A . . . . . . . . . 237,940 units 4,982,457
Evergreen Special Equity Fund I . . . . . 122,276 units 1,001,440
Federated Stock Trust Fund. . . . . . . . 7,675 units 208,614
Federated Kaufman Fund K. . . . . . . . . 143,471 units 494,976
Federated Capital Appreciation Fund A . . 124,713 units 2,415,684
Dreyfus S&P Mid-Cap Index Fund. . . . . . 43,615 units 761,954
Royce Premier Fund. . . . . . . . . . . . 1,376 units 12,919
Templeton Growth Fund A . . . . . . . . . 65,632 units 1,045,522
Van Kampen Equity & Income Fund A . . . . 227,631 units 1,506,916
Putnam International Growth Fund A. . . . 19,885 units 326,316
Evergreen Select Core Bond Fund . . . . . 169,113 units 2,116,451
Fidelity Mortgage Securities Fund . . . . 283,766 units 3,301,367
* Participant loans . . . . . . . . . . . . 5.25% - 5.75% 2,059,558
-----------
Total $99,642,498
============
* Represents a party-in-interest.