UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
(Mark One)
| x | ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] |
For the fiscal year ended June 30, 2003
OR
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] |
For the transition period from to
Commission file number: 000-16723
| A. | Full title of the plan and the address of the plan, if different from that of the issuer named below: |
Respironics, Inc.
Retirement Savings Plan
| B. | Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: |
Respironics, Inc.
1010 Murry Ridge Lane
Murrysville, PA 15668-8525
REQUIRED INFORMATION
The financial statements and related report, prepared in accordance with the financial reporting requirements of ERISA, listed below are furnished for the Respironics, Inc. Retirement Savings Plan (the Plan). The pages referred to are the numbered pages in the Plan’s audited financial statements for the years ended June 30, 2003 and 2002.
| Pages | ||
| Report of Independent Auditors |
1 | |
| Audited Financial Statements and Supplemental Schedule |
2-9 |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on behalf of the Plan by the undersigned hereunto duly authorized.
| RESPIRONICS, INC. RETIREMENT SAVINGS PLAN | ||
| By: | /s/ William R. Wilson | |
| William R. Wilson | ||
| Plan Administrator | ||
Dated: December 12, 2003
Respironics, Inc. Retirement Savings Plan
Audited Financial Statements and Supplemental Schedule
Years ended June 30, 2003 and 2002
| 1 | ||
| 2 | ||
| 3 | ||
| 4 | ||
| Schedule H, Line 4i—Schedule of Assets (Held at End of Year) |
9 | |
Report of Independent Auditors
Plan Administrator
Respironics, Inc. Retirement Savings Plan
Murrysville, Pennsylvania
We have audited the accompanying statements of net assets available for benefits of the Respironics, Inc. Retirement Savings Plan as of June 30, 2003 and 2002, 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 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 June 30, 2003 and 2002, and the changes in its net assets available for benefits for the years then ended 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 June 30, 2003 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. The 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
Pittsburgh, Pennsylvania
November 14, 2003
1
Respironics, Inc. Retirement Savings Plan
Statements of Net Assets Available for Benefits
| June 30 | ||||||
| 2003 |
2002 | |||||
| Assets |
||||||
| Investments, at fair value |
$ | 45,844,106 | $ | 34,599,274 | ||
| Receivables: |
||||||
| Participants’ contributions |
225,815 | 217,149 | ||||
| Employer’s contribution |
262,342 | 1,834,729 | ||||
| 488,157 | 2,051,878 | |||||
| Liabilities |
||||||
| Participants’ refunds |
5,247 | 11,898 | ||||
| Net assets available for benefits |
$ | 46,327,016 | $ | 36,639,254 | ||
See accompanying notes.
2
Respironics, Inc. Retirement Savings Plan
Statements of Changes in Net Assets Available for Benefits
| Years ended June 30 |
||||||||
| 2003 |
2002 |
|||||||
| Net assets available for benefits at beginning of year |
$ | 36,639,254 | $ | 35,655,738 | ||||
| Contributions: |
||||||||
| Participants’ |
5,459,924 | 4,654,998 | ||||||
| Employer’s: |
||||||||
| Cash |
2,228,070 | 1,693,157 | ||||||
| Stock |
140,625 | 141,572 | ||||||
| Transfers from other plans |
2,936,753 | — | ||||||
| Investment income |
386,153 | 534,187 | ||||||
| Net realized and unrealized appreciation (depreciation) in fair value of investments |
1,304,742 | (4,120,046 | ) | |||||
| Participant withdrawals |
(2,768,505 | ) | (1,920,352 | ) | ||||
| Net increase |
9,687,762 | 983,516 | ||||||
| Net assets available for benefits at end of year |
$ | 46,327,016 | $ | 36,639,254 | ||||
See accompanying notes.
3
Respironics, Inc. Retirement Savings Plan
June 30, 2003
1. Significant Accounting Policies
Basis of Accounting
The accounting records of the Respironics, Inc. Retirement Savings Plan (the Plan) are maintained on the accrual basis.
Valuation of Investments
The fair value of the Plan’s investments in registered investment companies and common collective funds are based on quoted redemption values on the last business day of the plan year. Shares of Respironics, Inc. common stock are valued at the last trade price on the last business day of the plan year. Participant loans are valued at their outstanding unpaid principal balance, which approximates fair value.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
2. Plan Description
The Plan is a defined contribution plan qualifying under Section 401(a) of the Internal Revenue Code. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). The following description of the Plan provides only general information. Participants should refer to the Summary Plan Description for a more complete description of the Plan’s provisions.
Contributions
Employees of Respironics, Inc. (the Company), upon date of hire, are eligible to participate and contribute to the Plan. An employee electing to participate in the Plan (a participant) may contribute from 1% to 30% of his or her compensation through payroll deductions. Prior to July 1, 2002, a participant’s contributions were limited to 15% of his or her compensation. The Plan sponsor matches 100% of participant contributions up to a maximum of 3% of the participant’s W-2 compensation, as defined by the Plan. The matching contribution is funded in cash on a biweekly basis among the available investment options based upon the election of each participant.
4
Respironics, Inc. Retirement Savings Plan
Notes to Financial Statements (continued)
2. Plan Description (continued)
Discretionary contributions may be authorized by the Board of Directors of the Company. The amount of the discretionary contribution shall be determined by the Board of Directors. No discretionary contributions were made during 2003 or 2002.
Investments
Participants may elect to invest their salary deferral contributions in any one of the available investment funds or may split their contributions among these funds (including investments in Company stock). Individual accounts are established for each Plan participant and are credited for participant and Company contributions and an allocation of earnings based on the participant’s account balance.
Termination and Vesting
Participants become immediately vested in Company discretionary and matching contributions. For those active employees that participated in the Plan as of July 1, 2002, all previously unvested balances also became immediately vested. Prior to July 1, 2002, a participant became vested in Company contributions at the end of four years of credit services; participants who terminated as a result of normal retirement, death or disability became 100% vested at that time regardless of years of credited service. Upon termination of service, participants receive their entire salary deferral contributions and the Company’s discretionary and matching contributions through a lump-sum payment at termination or at a future date of their choosing.
Participants may elect to withdraw all or a portion of their account without terminating employment with the Company upon reaching age 59- 1/2, or under special hardship provisions.
Although the Company expects to continue the Plan indefinitely, it maintains the right to discontinue contributions and terminate the Plan. In the event of a termination of the Plan, each participant’s account balances would be distributed.
5
Respironics, Inc. Retirement Savings Plan
Notes to Financial Statements (continued)
2. Plan Description (continued)
Loans
The Plan Administrator may authorize a loan to a participant for an amount up to 50% of the vested account balance of the participant. The minimum amount that may be borrowed is $1,000, and the maximum amount varies with the participant’s vested account balance, but cannot exceed $50,000. The plan administrator will determine a reasonable rate of interest for each loan upon consideration of the rate of interest then prevailing in the local community for similar loans, currently prime plus 1%. Loans are generally required to be repaid in five years in equal installments; however, the term of the loan may be extended if the intended use of the funds is to acquire a residence. A participant may have no more than three loans outstanding under the Plan at any time.
3. Plan Investments
The following presents investments that represent five percent or more of the Plan’s net assets:
| June 30 | |||||||
| 2003 |
2002 | ||||||
| PNC Investment Contract Fund |
$ | 6,274,852 | $ | 4,502,262 | |||
| American Balanced Fund |
6,044,437 | 4,520,408 | |||||
| Aim Basic Value Fund |
6,681,830 | 5,721,423 | |||||
| Blackrock Intermediate Government Class A |
2,355,782 | 1,259,869 | |||||
| Janus Adviser International Fund |
2,000,990 | * | 1,915,686 | ||||
| Janus Adviser Worldwide Fund |
2,365,140 | 2,142,764 | |||||
| Growth Fund of America |
4,569,670 | 3,030,305 | |||||
| Invesco Dynamics K Fund |
3,239,498 | 2,533,722 | |||||
| Respironics, Inc. common stock |
6,001,151 | 5,356,231 | |||||
* – Investment balance represents less than 5% of the Plan’s net assets and is shown for comparative purposes only.
All investments are participant directed.
6
Respironics, Inc. Retirement Savings Plan
Notes to Financial Statements (continued)
3. Plan Investments (continued)
The Plan’s investments (including gains and losses on investments bought and sold, as well as held during the year) appreciated (depreciated) in value as follows:
| Years ended June 30 |
|||||||
| 2003 |
2002 |
||||||
| Registered investment companies |
$ | 537,338 | $ | (4,770,165 | ) | ||
| Common stock |
478,636 | 623,062 | |||||
| Common collective funds |
288,768 | 27,057 | |||||
| $ | 1,304,742 | $ | (4,120,046 | ) | |||
4. Income Tax Status
The Plan has received a determination letter from the Internal Revenue Service (IRS) dated November 8, 1995, 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. 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 is qualified and the related trust is tax-exempt.
5. Transactions with Parties-in-Interest
All administrative expenses of the Plan are paid by the Company.
6. Acquisition
On April 11, 2002, the Company acquired 100% of the outstanding common stock of Novametrix Medical Systems Inc. (Novametrix), a leading cardiopulmonary monitoring company that develops, manufactures, and markets proprietary state-of-the-art noninvasive monitors, sensors, and disposable accessories. Novametrix employees became eligible to participate in the Respironics, Inc. Retirement Savings Plan. On April 11, 2002, the Company’s Board of Directors approved the termination of the Novametrix Medical Systems Inc. 401(k) Savings and Retirement Plan (the Novametrix Plan). In connection therewith, the Company obtained a final determination letter from the Internal Revenue Service dated May 9, 2003 regarding this termination. In conjunction with these events, Novametrix employees either received a distribution from their plan or rolled their participant accounts into the Respironics, Inc. Retirement Savings Plan.
7
Respironics, Inc. Retirement Savings Plan
Notes to Financial Statements (continued)
6. Acquisition (continued)
At various times from August 2002 through June 30, 2003, the accounts of former participants in the Novametrix Plan were transferred into the Respironics, Inc. Retirement Savings Plan. Additionally, $167,000 was transferred to the Plan after June 30, 2003.
8
Respironics, Inc. Retirement Savings Plan
EIN: 25-1304989 Plan Number: 001
Schedule H, Line 4i—Schedule of Assets
(Held at End of Year)
June 30, 2003
| Identity of Issue, Borrower, or Similar Party |
Number of Shares/ Units |
Market Value | |||
| PNC Funds*: |
|||||
| PNC Investment Contract Fund |
2,471,387 | $ | 6,274,852 | ||
| Blackrock Intermediate Government Class A |
217,524 | 2,355,782 | |||
| Blackrock Managed Income Class A |
126,617 | 1,387,726 | |||
| PNC Moderate Profile Fund |
35,107 | 571,111 | |||
| PNC Balanced Profile Fund |
32,013 | 540,824 | |||
| PNC Growth Profile Fund |
62,123 | 1,002,062 | |||
| American Balanced Fund |
385,979 | 6,044,437 | |||
| Fidelity Advisor Value |
35,462 | 860,302 | |||
| Invesco Dynamics K Fund |
263,374 | 3,239,498 | |||
| Janus Adviser International Fund |
104,002 | 2,000,990 | |||
| Janus Adviser Worldwide Fund |
103,146 | 2,365,140 | |||
| Federated Max-Cap Index |
15,171 | 298,721 | |||
| Aim Basic Value Fund |
269,646 | 6,681,830 | |||
| Growth Fund of America |
216,469 | 4,569,670 | |||
| MFS Value |
29,642 | 521,994 | |||
| Respironics, Inc. common stock* |
161,191 | 6,001,151 | |||
| Respironics Liquidity Fund* |
33,095 | 33,095 | |||
| Participant loans (interest rates: 5.25%-5.75%)* |
1,094,921 | ||||
| $ | 45,844,106 | ||||
*Indicates a party-in-interest.
9
Respironics, Inc.
Retirement Savings Plan
Annual Report on Form 11-K
For the Fiscal Year Ended June 30, 2003
EXHIBIT INDEX
| Exhibit No. |
Description of Exhibit | |
| 1 |
Consent of Independent Auditors, filed herewith. |
Exhibit No. 1
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statement (Form S-8 No. 333-16721) pertaining to the Respironics, Inc. Retirement Savings Plan of our report dated November 14, 2003, with respect to the financial statements and schedule of the Respironics, Inc. Retirement Savings Plan included in this Annual Report (Form 11-K) for the year ended June 30, 2003.
/s/ Ernst & Young LLP
December 9, 2003
Pittsburgh, Pennsylvania