UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 11-K
ANNUAL REPORT
PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2004
OR
[ ] TRANSITIONAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______ to _____.
Commission file number 1-313
THE LAMSON & SESSIONS CO. DEFERRED SAVINGS PLAN
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(Full title of the plan)
THE LAMSON & SESSIONS CO., 25701 Science Park Drive, Cleveland, Ohio 44122
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(Name of issuer of the securities held pursuant to the plan
and the address of its principal executive office)
THE LAMSON & SESSIONS CO.
DEFERRED SAVINGS PLAN
FINANCIAL STATEMENTS
DECEMBER 31, 2004 AND 2003
CIUNI & PANICHI, INC.
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CERTIFIED PUBLIC ACCOUNTANTS
2
THE LAMSON & SESSIONS CO. DEFERRED SAVINGS PLAN
FINANCIAL STATEMENTS
DECEMBER 31, 2004 AND 2003
TABLE OF CONTENTS
Page
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Report of Independent Registered Public Accounting Firm 4
Financial Statements
Statements of Net Assets Available for Benefits 5
- Modified Cash Basis
Statements of Changes in Net Assets Available for Benefits 6
- Modified Cash Basis
Notes to the Financial Statements 7
Schedule of Assets (Held at End of Year) 16
3
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
The Lamson & Sessions Co.
We have audited the accompanying statements of net assets available for benefits
- modified cash basis of The Lamson & Sessions Co. (the "Company") Deferred
Savings Plan (the "Plan") as of December 31, 2004 and 2003 and the related
statements of changes in net assets available for benefits - modified cash basis
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 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. The Plan is not required
to have, nor were we engaged to perform, an audit of its 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.
As described in Note B, these financial statements and supplemental schedule
were prepared on a modified cash basis of accounting, which is a comprehensive
basis of accounting other than generally accepted accounting principles in the
United States.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of The Lamson &
Sessions Co. Deferred Savings Plan as of December 31, 2004 and 2003 and changes
in its net assets available for benefits for the years then ended in conformity
with the modified cash basis of accounting.
Our audit was performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule (modified cash
basis) of assets held at end of year as of December 31, 2004 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 audit of the basic financial
statements for the year ended December 31, 2004 and, in our opinion, is fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
/s/ Ciuni & Panichi, Inc.
Cleveland, Ohio
May 13, 2005
4
THE LAMSON & SESSIONS CO. DEFERRED SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS -
MODIFIED CASH BASIS
DECEMBER 31,
2004 2003
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ASSETS
CASH $ 218,849 $ 121,934
INVESTMENTS, AT FAIR VALUE:
Common/collective trust fund 7,031,505 6,578,183
Registered investment companies 29,507,199 25,210,619
Lamson & Sessions Company stock 3,793,426 2,679,263
INVESTMENTS, AT ESTIMATED FAIR VALUE:
Participant loans 804,919 736,838
Cash surrender value of life insurance - 121,400
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Total investments 41,137,049 35,326,303
RECEIVABLES:
Employer's contribution 426,243 -
Other 3,206 -
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429,449 -
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Total Assets 41,785,347 35,448,237
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LIABILITIES
Accounts payable 198,666 110,952
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NET ASSETS AVAILABLE FOR BENEFITS $41,586,681 $35,337,285
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The accompanying notes are an integral part of these financial statements.
5
THE LAMSON & SESSIONS CO. DEFERRED SAVINGS PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR
BENEFITS - MODIFIED CASH BASIS
YEARS ENDED DECEMBER 31,
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2004 2003
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ADDITIONS TO NET ASSETS ATTRIBUTABLE TO:
Investment income
Interest and dividends $ 1,022,026 $ 701,200
Net appreciation in fair value of investments 4,322,364 6,453,667
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5,344,390 7,154,867
Contributions
Employee salary deferrals 2,302,601 2,204,379
Employer matching and profit sharing 1,504,665 995,171
Rollover contributions 41,512 58,241
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3,848,778 3,257,791
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TOTAL ADDITIONS 9,193,168 10,412,658
DEDUCTIONS FROM NET ASSETS ATTRIBUTABLE TO:
Benefits paid to participants 2,935,030 2,120,389
Other 8,742 2,753
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TOTAL DEDUCTIONS 2,943,772 2,123,142
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NET INCREASE IN NET ASSETS 6,249,396 8,289,516
NET ASSETS AVAILABLE FOR BENEFITS:
BEGINNING OF YEAR 35,337,285 27,047,769
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END OF YEAR $41,586,681 $35,337,285
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The accompanying notes are an integral part of these financial statements.
6
THE LAMSON & SESSIONS CO. DEFERRED SAVINGS PLAN
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2004 AND 2003
NOTE A - DESCRIPTION OF PLAN
The following description of The Lamson & Sessions Co. (the "Company")
Deferred Savings Plan (the "Plan") provides only general information.
Participants should refer to the Plan agreement for a more complete
description of the Plan's provisions.
1. GENERAL
The Plan is a defined contribution plan covering substantially all
employees of the Company. Employees are eligible to participate in the
Plan on the first day of the calendar quarter after which they have
attained the age of 21 (age 18 for Pyramid Industries II, Inc. salaried
and non-union hourly employees) and completed one-half (1/2) year of
service. The Plan is subject to the provisions of the Employee Retirement
Income Security Act of 1974 (ERISA) as amended. The Company is the Plan's
administrator. The 401(k) Company is the Plan's record keeper. The Plan's
custodian is the Pershing Division of Donaldson, Lufkin & Jenrette
Securities Corporation ("Pershing").
2. CONTRIBUTIONS
Each year, participants contribute 1% to 15% of their eligible
compensation (pre-tax contributions), as defined in the Plan. The Company
contributes a matching contribution equal to 50% of the participant's
contribution, not to exceed 6% of the participant's compensation for any
plan year. Effective January 1, 2005, participants can contribute 1% to
100% of their eligible compensation.
For each salaried participant for whom a salary reduction contribution has
been made, the employer shall also contribute an additional matching
contribution equal to 25% of such salary reduction contribution, up to the
first 6% of the participant's contribution. This additional contribution
is required to be contributed or initially invested in the Lamson &
Sessions Stock Fund. Immediately following such contribution or initial
investment in stock, the participant shall have the ongoing option to
redirect the investment of such matching contributions among the
investment options available under the Plan.
7
THE LAMSON & SESSIONS CO. DEFERRED SAVINGS PLAN
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2004 AND 2003
NOTE A - DESCRIPTION OF PLAN - CONTINUED
2. CONTRIBUTIONS - CONTINUED
In addition, the Company can make discretionary matching contributions.
Based on the Company's annual financial performance, the Company may make
an additional matching contribution. This additional matching
contribution, if any, will be a percentage as determined by the Board of
Directors or its delegate and is initially invested in Lamson & Sessions
stock. Participants are also eligible to receive an additional
discretionary matching contribution if they were employed with the Company
on the last day of the Plan year for which the contribution is made and
they have completed one year of service during the Plan year.
3. PARTICIPANT ACCOUNTS
Each participant's account is credited with the participant's elective
contributions, allocations of the Company's contributions and earnings on
those contributions. Forfeitures due to the distribution of a
participant's account before the participant has become fully vested
reduce subsequent Company contributions. 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.
4. VESTING
Participants are immediately vested in their voluntary contributions plus
actual earnings thereon. Vesting in the Company's matching and
discretionary contribution portions of their accounts plus actual earnings
thereon is based on Years of Service as defined by Plan provisions. A
participant is fully vested after five years.
8
THE LAMSON & SESSIONS CO. DEFERRED SAVINGS PLAN
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2004 AND 2003
NOTE A - DESCRIPTION OF PLAN - CONTINUED
5. PARTICIPANT LOANS
Participants may borrow from their fund accounts a minimum of $1,000 and a
maximum equal to the lesser of $50,000 or 50 percent of their vested
balance in all their accounts reduced by their highest outstanding loan
balance within the twelve (12) preceding months. Loan transactions are
treated as transfers to (from) the investment fund from (to) the
Participant Notes fund. A loan must be repaid through payroll withholding,
the repayments must be periodic, and the term must not exceed five (5)
years unless the proceeds are used to acquire a home. Such loans can be
repaid over a maximum of fifteen (15) years. 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 by the trustees on
the date the loan is made. Interest rates currently charged on outstanding
balances range from 5.27 percent to 10.74 percent.
6. PAYMENT OF BENEFITS
On termination of service due to death, disability or retirement, a
participant may elect to receive an amount equal to the value of the
participant's vested interest in his or her account in either a lump-sum
amount, or in annual installments. Withdrawals from a participant's
account may be made prior to termination, subject to certain restrictions
as defined by the Plan.
7. PLAN EXPENSES
The Lamson & Sessions Co. absorbs substantially all costs to administer
the Plan.
8. FORFEITURES
Forfeited non-vested accounts are used to reduce employer contributions.
In 2004 and 2003, the amount of forfeited non-vested accounts which were
applied to reduce such contributions were $36,931 and $62,179,
respectively.
9
THE LAMSON & SESSIONS CO. DEFERRED SAVINGS PLAN
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2004 AND 2003
NOTE A - DESCRIPTION OF PLAN - CONTINUED
9. OTHER
Prior to January 1, 1998, the Plan also offered participants the option to
invest in life insurance. Participants with portions of their accounts
invested in life insurance at January 1, 1998 have the option of keeping
the insurance in place. Additional investments in insurance are no longer
permitted.
10
THE LAMSON & SESSIONS CO. DEFERRED SAVINGS PLAN
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2004 AND 2003
NOTE B - SUMMARY OF ACCOUNTING POLICIES
1. BASIS OF ACCOUNTING
The financial statements of the Plan are prepared under the modified cash
basis of accounting. Under this basis, contributions which are withheld by
the Plan sponsor but not allocated to participant accounts at year-end are
recorded as a receivable. In addition pending trades and certain
withholdings are included in accrued expenses.
2. INVESTMENT VALUATION AND INCOME RECOGNITION
The Plan's investments are stated at fair value except for participant
loans and life insurance contracts. Shares of registered investment
companies are valued at quoted market prices which represent the net asset
value of shares held by the Plan at year-end. The Company stock is valued
at its quoted market price. Participant loans are valued at their
outstanding principal balance, which approximates fair value. Life
insurance contracts are valued at cash surrender value.
Purchases and sales of securities are recorded on a trade-date basis.
Interest and dividend income is recorded when received.
3. PAYMENT OF BENEFITS
Benefits are recorded when paid.
4. USE OF ESTIMATES
The preparation of financial statements, in conformity with the modified
cash basis of accounting, requires the Plan administrator to make
estimates and assumptions that affect certain reported amounts of assets,
liabilities and changes therein, and disclosure of contingent assets and
liabilities. Actual results could differ from those estimates.
11
THE LAMSON & SESSIONS CO. DEFERRED SAVINGS PLAN
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2004 AND 2003
NOTE C - INVESTMENTS
The following presents investments at December 31, 2004 and 2003 that
represent 5% or more of the Plan's net assets.
2004 2003
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Bond Fund of America $4,127,680 $3,635,956
EuroPacific Growth Fund 3,110,316 2,584,245
Stable Value Fund 7,031,505 6,578,183
Fundamental Investors 7,757,556 6,874,560
Fidelity Advisor Equity Growth Fund 4,832,624 4,631,629
Lamson & Sessions Company Stock Fund 3,793,426 2,679,263
American AAdvantage Fund - Small Cap 3,654,370 -
Phoenix-Duff & Phelps Real Estate Fund 2,303,459 -
Franklin Balance Sheet Investment Fund - 2,919,135
During 2004 and 2003, the Plan's investments, including investments
bought, sold and held during the year, appreciated in value by $4,322,364
and $6,453,667, respectively, as follows:
2004 2003
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Mutual funds at fair value as determined
by quoted market prices $2,791,777 $5,288,295
The Lamson & Sessions Co. stock at
fair value as determined by quoted market
prices 1,530,587 1,165,372
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$4,322,364 $6,453,667
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12
THE LAMSON & SESSIONS CO. DEFERRED SAVINGS PLAN
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2004 AND 2003
NOTE D - TAX STATUS
The Internal Revenue Service has determined and informed the Company by a
letter dated May 7, 2002, that the Plan was designed in accordance with
applicable sections of the Internal Revenue Code (IRC). Although the Plan
has been amended since receiving the determination letter, the Plan
administrator and Plan's tax counsel believe the Plan is designed and is
currently operated in compliance with applicable requirements of the IRC.
Therefore, no provision for income taxes has been included in the Plan's
financial statements.
NOTE E - 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 immediately become 100% vested in
their accounts.
NOTE F - RELATED PARTY TRANSACTIONS
The Lamson & Sessions Stock Fund invests in Lamson & Sessions Co. common
stock, which is traded on the New York Stock Exchange under the symbol
LMS. The fund maintains short-term cash sufficient to meet its estimated
daily cash needs. The fund purchases shares of Lamson & Sessions Co.
common stock on the open market at open market prices. Transactions in the
fund qualify as permitted party-in-interest transactions.
NOTE G - RISKS AND UNCERTAINTIES
The Plan invests in various investment securities. 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, it is at least reasonably possible that changes in the values
of investment securities will occur in the near term and that such changes
could materially affect participants' account balances and the amounts
reported in the statement of net assets available for benefits.
13
THE LAMSON & SESSIONS CO. DEFERRED SAVINGS PLAN
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2004 AND 2003
NOTE H - AMENDMENT
The Plan was amended on December 22, 2003 to allow, effective January 1, 2003,
certain hourly associates to be included in discretionary matching
contributions.
NOTE I - RECONCILIATON OF FINANCIAL STATEMENTS TO FORM 5500
The following is a reconciliation of net assets available for benefits per the
financial statements at December 31, 2004 and 2003 to Form 5500:
2004 2003
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Net assets available for benefits per the
financial statements $ 41,586,681 $ 35,337,285
Amounts allocated to withdrawing
participants (82,984) (650,215)
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Net assets available for benefits per the
Form 5500 $ 41,503,697 $ 34,687,070
============ ============
The following is a reconciliation of benefits paid to participants per the
financial statements for the year ended December 31, 2004 and 2003 to Form 5500:
2004 2003
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Benefits paid to participants per the
financial statements $ 2,935,030 $ 2,120,389
Add: Amounts allocated to withdrawing
participants at end of year 82,984 650,215
Less: Amount allocated to withdrawing
participants at beginning of year (650,215) -
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Benefits paid to participants per Form
5500 $ 2,367,799 $ 2,770,604
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Amounts allocated to withdrawing participants are recorded on the Form 5500 for
benefit claims that have been processed and approved for payment prior to year
end, but not yet paid as of that date.
14
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SUPPLEMENTAL INFORMATION
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15
THE LAMSON & SESSIONS CO. DEFERRED SAVINGS PLAN
SCHEDULE H, LINE 4i SCHEDULE OF ASSETS (HELD AT END OF YEAR) EIN: 34-0349210
PLAN: 028
DECEMBER 31, 2004
COLUMN B
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IDENTITY OF ISSUE, COLUMN C COLUMN E
BORROWER, ------------------------------------- -------------
LESSOR OR DESCRIPTION OF CURRENT
COLUMN A SIMILAR PARTY INVESTMENT(1) VALUE
-------- --------------------- ------------------------------------- -------------
American Funds Bond Fund of America $ 4,127,680
EuroPacific Growth Fund 3,110,316
Fundamental Investors 7,757,556
Oppenheimer Developing Markets Fund 917,706
AAdvantage Funds Small Cap Value Fund 3,654,370
Phoenix-Duff & Phelps Real Estate Securities 2,303,459
Fidelity Advisor Equity Growth Fund 4,832,624
Lord Abbett Developing Growth A 1,879,461
Invesco Stable Value Fund 7,031,505
MFS International New Discovery Fund 924,027
* Lamson & Sessions Stock Fund 3,793,426
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40,332,130
Participant Loans Participant loans with various rates
of interest from 5.27% to 10.74%
and various maturity dates
through 2017 804,919
Cash 218,849
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$ 41,355,898
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*Party-In-Interest
(1) Including maturity date, rate of interest, collateral, par or maturity
value, where applicable.
16
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934,
the trustees (or other person who administer the employee benefit plan) have
duly caused this annual report to be signed on its behalf by the undersigned
hereunto duly authorized.
THE LAMSON & SESSIONS CO.
DEFERRED SAVINGS PLAN
Date: June 15, 2005 By: /s/ James J. Abel
--------------------------------
James J. Abel
Trustee
17
EXHIBIT INDEX
EXHIBIT EXHIBIT
NUMBER DESCRIPTION
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23 Consent of Ciuni & Panichi, Inc.
18