Applica Incorporated 401(k) Profit Sharing Plan
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
FOR ANNUAL REPORTS OF EMPLOYEE STOCK
REPURCHASE SAVINGS AND SIMILAR PLANS
PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE
FISCAL YEAR ENDED DECEMBER 31, 2005 |
OR
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TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission File Number 1-10177
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A. |
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Full title of the plan and the address of the plan, if different from that of
the issuer named below: |
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Applica Incorporated 401(k) Profit Sharing Plan and Trust |
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B. |
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Name of the issuer of the securities held pursuant to the plan and the address
of its principal executive office: |
Applica Incorporated
3633 Flamingo Road,
Miramar, Florida 33027
Required Information
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The audited Statement of Net Assets Available for Benefits as of December 31, 2005 and
December 31, 2004, and the Statement of Changes in Net Assets Available for Benefits for the
year ended December 31, 2005, together with the notes to such financial statements, and the
report of Kaufman, Rossin & Co., independent registered public
accounting firm, are contained in Schedule 1
to this Annual Report. |
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The Supplemental Schedule of Assets (Held at End of Year) for the year ended December 31,
2005 is contained in Schedule 1 to this Annual Report. |
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The consent of Kaufman, Rossin & Co., independent registered public accounting firm, is
contained in Exhibit 23.1 to this Annual Report. |
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, thereunto duly authorized.
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Applica Incorporated 401(k) Profit Sharing Plan
and Trust
(Name of Plan)
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/s/ Terry Polistina
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By: Terry Polistina, Chief Operating Officer and |
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Chief Financial Officer of Applica Incorporated |
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Date: June 27, 2006
SCHEDULE 1
APPLICA INCORPORATED 401(k)
PROFIT SHARING PLAN AND TRUST
FINANCIAL
STATEMENTS
DECEMBER 31, 2005 AND 2004
C O N T E N T S
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1 |
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FINANCIAL STATEMENTS |
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4 - 7 |
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8 |
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Trustees
Applica Incorporated 401(k) Profit Sharing Plan and Trust
We have audited the accompanying statements of net assets available for benefits of Applica
Incorporated 401(k) Profit Sharing Plan and Trust (the “Plan”) as of December 31, 2005 and 2004,
and the related statement of changes in net assets available for benefits for the year ended
December 31, 2005. 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. An
audit includes 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, 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, 2005 and 2004, and
the changes in net assets available for benefits for the year ended December 31, 2005, 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) as of December 31,
2005 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. This 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.
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/s/ KAUFMAN, ROSSIN & CO.
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Miami, Florida
May 1, 2006
APPLICA INCORPORATED 401(k) PROFIT SHARING PLAN AND TRUST
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 2005 AND 2004
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| ASSETS |
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2005 |
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2004 |
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INVESTMENTS, at fair value (Note 4) |
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$ |
23,778,273 |
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$ |
25,729,464 |
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NET ASSETS AVAILABLE FOR BENEFITS |
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23,778,273 |
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$ |
25,729,464 |
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The accompanying notes are an integral part of these financial statements.
2
APPLICA INCORPORATED 401(k) PROFIT SHARING PLAN AND TRUST
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEAR ENDED DECEMBER 31, 2005
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ADDITIONS |
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Additions to net assets attributed to: |
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Net depreciation in fair value of investments (Note 4) |
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(908,611 |
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Dividends |
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1,242,259 |
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Interest |
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19,023 |
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Investment income |
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352,671 |
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Participant contributions |
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1,493,472 |
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Employer’s contributions |
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641,863 |
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Total contributions |
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2,135,335 |
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Total additions |
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2,488,006 |
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DEDUCTIONS |
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Deductions from net assets attributed to: |
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Benefits paid to participants |
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4,437,875 |
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Administrative expenses |
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1,322 |
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Total deductions |
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4,439,197 |
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NET DECREASE IN NET ASSETS AVAILABLE FOR BENEFITS |
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(1,951,191 |
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NET ASSETS AVAILABLE FOR BENEFITS — beginning of year |
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25,729,464 |
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NET ASSETS AVAILABLE FOR BENEFITS — end of year |
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$ |
23,778,273 |
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The accompanying notes are an integral part of these financial statements.
3
APPLICA INCORPORATED 401(k) PROFIT SHARING PLAN AND TRUST
NOTES TO FINANCIAL STATEMENTS
NOTE 1. DESCRIPTION OF THE PLAN
The following description of the Applica Incorporated
401(k) Profit Sharing Plan and Trust (the “Plan”)
provides only general information. Participants should
refer to the Plan agreement for a more complete
description of the Plan’s provisions. The Plan Sponsor
is Applica Incorporated (the “Sponsor” or the
“Company”).
General
The Plan is a defined contribution plan generally covering all regular full-time
employees of the Company who have at least ninety days of service and are at least
twenty-one years old. The Plan is subject to the provisions of the Employee
Retirement Income Security Act of 1974 (ERISA).
Contributions
Each year, participants may elect to contribute a minimum of 1% of their compensation
up to the maximum statutory amount allowed as an elected deferral. Participants who
have attained age 50 before the end of the Plan year are eligible to make catch-up
contributions. Participants may also contribute amounts representing distributions
from other qualified defined benefit or contribution plans. The Company makes
matching contributions equal to 100% of employee contributions for the first 3% of
employee compensation and then matches 50% of employee contributions in excess of 3%,
up to 6% of employee compensation, not to exceed a maximum annual amount of $4,000.
In 2005, the employer match for highly compensated employees was reinstated.
Participant Accounts
Each participant’s account is credited with the participant’s contribution,
allocations of the Company’s matching contribution and earnings from participant
directed investments, net of administrative expenses. 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
vested account.
Vesting
Participants are 100% vested immediately, in the full value of their individual
accounts.
Investment Options
Upon enrollment in the Plan, a participant may direct the investment of their
contributions to various investment options offered by the Plan, including an
investment in the common stock of the Company. The Plan allows participants to
change their investment options daily.
4
NOTE 1. DESCRIPTION OF THE PLAN (Continued)
Participant Loans
A participant may borrow from their fund account a minimum of
$1,000 up to a maximum equal to the lesser of 50% of a
participant’s vested account balance or $50,000. The loans are
secured by the balance in the participant’s account and bear
interest at a rate reasonable at the time of application. At
December 31, 2005, the interest rate on participant loans ranged
from 5.00% to 10.95%. Principal and interest is paid ratably
through payroll deductions.
Plan Administration
The Plan is administered by MFS Retirement Services, Inc. The
Plan assets are maintained by its trustees, Massachusetts
Financial Services Company (“MFS”) and Reliance Trust Company.
Payment of Benefits
On termination of service due to death, disability or retirement,
a participant may elect to receive a lump-sum amount equal to the
value of the participant’s vested interest in his or her account,
or monthly, quarterly or annual installments over a period not to
exceed the participant’s estimated life expectancy. If the
participant’s vested account balance is less than $1,000 at the
date of death, disability, retirement or termination of
employment, then that balance shall be distributed in a single
lump-sum payment. For termination of services for other reasons,
a participant may receive the value of the vested interest in his
or her account as a lump-sum distribution.
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.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting
The financial statements of the Plan are prepared using the
accrual method of accounting.
Investment Valuation and Income Recognition
All of the Plan’s investments are stated at fair value. Shares of
mutual funds are valued at quoted market prices which represent
the net asset value of shares held by the Plan at year end.
Security transactions are recorded on a trade date basis, which is
the date the order to buy or sell is executed. Interest income is
accrued on a daily basis. Dividend income is recorded on the
ex-dividend date.
Payment of Benefits
Benefits are recorded when paid.
5
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Plan Expenses
Certain administrative functions are performed by employees of the
Company. No such employees receive compensation from the Plan.
Certain administrative expenses, such as professional fees, are
paid directly by the Company.
Party-In-Interest Transactions
Certain Plan investments are shares of mutual funds managed by
MFS. MFS is the record keeper and one of the trustees of the Plan
and, therefore, these transactions qualify as party-in-interest
transactions.
Risk and Uncertainties
The Plan provides for various investment options. 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 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 could
materially affect participants’ account balances and the amounts
reported in the statements of net assets available for benefits
and the statement of changes in net assets available for benefits.
Concentrations
Substantially all of the Plan’s assets are held by MFS, located in
Boston, Massachusetts.
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
affect the reported amounts of assets and liabilities and changes
therein, and disclosure of contingent assets and liabilities.
Actual results could differ from those estimates.
NOTE 3. INCOME TAX STATUS
The Plan obtained its latest determination letter on January 9,
2004, in which the Internal Revenue Service stated that the Plan,
as then designed, was in compliance with the applicable sections
of the Internal Revenue Code. Although the Plan has been amended
since receiving the determination letter, the Plan administrator
believes that the Plan is designed and is currently being operated
in compliance with the applicable provisions of the Internal
Revenue Code.
6
NOTE 4. INVESTMENTS
The fair value of individual investments that represent 5% or more
of the Plan’s net assets at December 31 is as follows:
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2005 |
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2004 |
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INVESTMENTS, at fair value |
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MFS Fixed Fund |
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$ |
5,439,350 |
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$ |
6,276,558 |
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Fidelity Low Priced Stock Fund |
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2,983,898 |
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3,307,967 |
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MFS Value Fund |
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2,595,752 |
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3,163,112 |
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MFS International New Discovery Fund |
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2,273,362 |
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1,908,994 |
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Dreyfus
Basic S&P 500 Stock Index Fund |
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2,003,238 |
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2,532,897 |
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MFS Total Return Fund |
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1,610,901 |
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1,626,533 |
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MFS Research Bond Fund |
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1,463,566 |
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1,846,672 |
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Applica Incorporated Common Stock |
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* |
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1,490,036 |
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Other investments individually
representing less than 5% of the
Plan’s net assets |
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5,408,206 |
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3,576,695 |
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Total investments |
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$ |
23,778,273 |
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$ |
25,729,464 |
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* Represents less than 5% of the Plan’s net asset
During 2005, the Plan’s investments (including gains and losses on investments bought
and sold, as well as held during the year) depreciated in value by $908,611.
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Mutual Funds |
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$ |
329,896 |
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Applica Incorporated Common Stock |
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(1,238,507 |
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Total depreciation |
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$ |
(908,611 |
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7
SUPPLEMENTARY INFORMATION
APPLICA INCORPORATED 401(k) PROFIT SHARING PLAN AND TRUST
DECEMBER 31, 2005
Employer Identification Number — #59-1028301
Plan Number — 002
Form 5500 — Schedule H, Line 4(i) — Schedule of Assets (Held at End of Year)
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(c) Description of Investment - including |
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(b) Identity of Issue, Borrower, |
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maturity date, rate of interest, |
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(e) Current |
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Lesser or Similar Party |
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value
collateral, par or maturity value |
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(d) Cost ** |
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Value |
*
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Applica Incorporated
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Applica Incorporated Common Stock
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N/A
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$ |
570,451 |
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*
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Massachusetts Financial Services Co.
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Money Market Fund
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N/A
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23,904 |
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*
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Massachusetts Financial Services Co.
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MFS Total Return Fund
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N/A
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1,610,901 |
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*
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Massachusetts Financial Services Co.
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MFS International New Discovery Fund
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N/A
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2,273,362 |
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*
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Massachusetts Financial Services Co.
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MFS Research Bond Fund
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N/A
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1,463,566 |
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*
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Massachusetts Financial Services Co.
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MFS Fixed Fund
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N/A
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5,439,350 |
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*
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Massachusetts Financial Services Co.
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MFS Mid-Cap Growth Fund
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N/A
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372,828 |
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*
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Massachusetts Financial Services Co.
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MFS Value Fund
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N/A
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2,595,752 |
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*
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Massachusetts Financial Services Co.
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MFS Strategic Value Fund
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N/A
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278,703 |
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*
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Massachusetts Financial Services Co.
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MFS Conservative Allocation Fund
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N/A
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157,052 |
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*
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Massachusetts Financial Services Co.
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MFS Moderate Allocation Fund
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N/A
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314,299 |
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*
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Massachusetts Financial Services Co.
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MFS Growth Allocation Fund
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N/A
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138,215 |
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*
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Massachusetts Financial Services Co.
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MFS Aggressive Allocation Fund
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N/A
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133,885 |
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Fidelity Investments
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Fidelity Low Priced Stock Fund
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N/A
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2,983,898 |
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Fidelity Investments
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Fidelity Export and Multinational Fund
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N/A
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807,334 |
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Oakmark Funds
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Oakmark International Fund
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N/A
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841,759 |
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The Royce Funds
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Royce Premier Fund
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N/A
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660,115 |
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Dreyfus Funds
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Dreyfus Basic S&P 500 Stock Index Fund
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N/A
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2,003,238 |
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Fidelity Investments
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Fidelity Capital Appreciation Fund
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N/A
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746,940 |
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*
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Participant loans
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Interest ranging from 5.00% to 10.95%
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N/A
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362,721 |
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Total
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$ |
23,778,273 |
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* Indicates party-in-interest to the Plan
** Cost information not provided, as all investments are participant-directed