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, 2003
OR
[.] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _________________ to __________________
Commission File Number: 1-13889
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 28, 2004 By: /s/ Frank Monteiro
-------------------------------
Frank Montiero
Member, MacDermid Benefit Plans
Administration Committee
MACDERMID, INCORPORATED PROFIT SHARING
AND EMPLOYEE STOCK OWNERSHIP PLAN
Financial Statements and Supplemental Schedule
December 31, 2003 and 2002
(With Report of Independent Registered Public Accounting Firm Thereon)
MACDERMID, INCORPORATED PROFIT SHARING
AND EMPLOYEE STOCK OWNERSHIP PLAN
TABLE OF CONTENTS
Report of Independent Registered Public Accounting Firm 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.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Plan Administrator
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, 2003 and 2002 and the related statements of changes in
net assets available for plan 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 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 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,
2003 and 2002 and the changes in net assets available for plan benefits for the
years then ended in conformity with U.S. generally accepted accounting
principles.
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. 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.
Hartford, Connecticut
April 9, 2004
MACDERMID, INCORPORATED PROFIT SHARING
AND EMPLOYEE STOCK OWNERSHIP PLAN
Statements of Net Assets Available for Plan Benefits
December 31, 2003 and 2002
2003 2002
------------- -----------
Investments, at fair value (note 5):
MacDermid Company Stock Fund . . . . . . . . . . . $ 80,686,697 $56,948,479
Other investments. . . . . . . . . . . . . . . . . 52,307,458 42,694,019
------------- -----------
Total investments. . . . . . . . . . . . . 132,994,155 99,642,498
Cash . . . . . . . . . . . . . . . . . . . . . . . . 157,091 (63)
------------- -----------
Net assets available for plan benefits . . $ 133,151,246 $99,642,435
============= ===========
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
Years ended December 31, 2003 and 2002
2003 2002
-------------- ------------
Investment income:
Dividend and interest income on securities . . . . . . . . . . $ 581,093 $ 374,588
Interest on participant loans. . . . . . . . . . . . . . . . . 137,540 192,279
Net appreciation in fair value of investments (note 6) . . . . 32,860,979 11,759,318
-------------- ------------
Total investment income. . . . . . . . . . . . . . . . 33,579,612 12,326,185
Contributions:
Employer . . . . . . . . . . . . . . . . . . . . . . . . . . . 860,418 812,321
Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,572,899 3,865,670
Rollover . . . . . . . . . . . . . . . . . . . . . . . . . . . 44,527 448,163
-------------- ------------
Total additions. . . . . . . . . . . . . . . . . . . . 38,057,456 17,452,339
-------------- ------------
Deductions:
Distributions to participants. . . . . . . . . . . . . . . . . (8,051,685) (12,697,226)
Administrative expenses. . . . . . . . . . . . . . . . . . . . (211,591) (238,638)
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . (2,679) ---
-------------- ------------
Total deductions . . . . . . . . . . . . . . . . . . . (8,265,955) (12,935,864)
-------------- ------------
Transfers from other plans (note 2). . . . . . . . . . . . . . . 3,717,309 ---
Net increase . . . . . . . . . . . . . . . . . . . . . 33,508,811 4,516,474
-------------- ------------
Net assets available for plan benefits, beginning of year. . . . 99,642,435 95,125,961
-------------- ------------
Net assets available for plan benefits, end of year. . . . . . . $ 133,151,246 $ 99,642,435
============== ============
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.
Interest and dividend income is recorded when earned.
(B) TRUST FUND
Effective December 1, 2003, The Charles Schwab Trust Company (Schwab) was named
the Trustee of the Plan. Wachovia was the Trustee through December 1, 2003.
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.
(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 January 1, 2003, the Company announced the merger of the Polyfibron
Technologies, Inc. Retirement Plan and the MacDermid Equipment Money Purchase
Pension into the Plan. In connection with the merger into the Plan, participants
(or to their beneficiaries) were given the option of receiving a distribution or
transferring their balance to the Plan. During 2003, $3,589,749 and $658,445
were transferred from the Polyfibron Technologies, Inc. Retirement Plan and the
MacDermid Equipment Money Purchase Pension, respectively.
Effective March 31, 2002, the Company announced the termination of the MacDermid
Equipment, Inc. 401K Plan (ME4 Plan). 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. During 2003, the Company amended the ME4 Plan to
merge it into the Plan, and $69,115 was transferred into the Plan from the ME4
Plan.
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 $12,000
in 2003 and $11,000 in 2002 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 $2,000 for 2003.
Participants of the KSOP portion of the Plan are restricted from liquidating
their MacDermid Stock Investment holdings (both employee funds and employer
match) until they reach the age of 55. At age 55, they are permitted to
diversify their holdings into other investment options of the Plan.
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
years ended December 31, 2003 and 2002.
Employees vest immediately in their contributions. As required by the Economic
Growth and Tax Relief Reconciliation Act of 2001, 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 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 $79,739 and
$108,460 at December 31, 2003 and 2002, respectively. Forfeitures used to reduce
employer contributions amounted to $122,286 and $227,853 for the years ended
December 31, 2003 and 2002, respectively.
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.
(3) FEDERAL INCOME TAXES
The Plan has received a tax determination letter from the Internal Revenue
Service (IRS) dated July 13, 1995 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 2003, a number of investment funds available to Plan participants
were eliminated and replaced with new funds, due to the change in Plan Trustee.
The following list summarizes this change:
Eliminations Additions
------------ ---------
First Union Stable Investment Schwab Stable Value Advisor
Fidelity Advisor Mortgage Securities T Strong Government Securities Investment
Evergreen Select Core Bond Fund One Group Bond I
Federated Capital Appreciation A Excelsior Value & Restructuring
Evergreen Special Equity UBS US Small Cap Growth Y
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, 2003 are as follows:
(1) Schwab Stable Value Advisor - 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) UBS US Small Cap Growth Y - 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) Excelsior Value & Restructuring- 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 Equity 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) One Group Bond Fund I - Seeks to maximize total return through a
combination of current income and capital growth by investing mainly in
corporate and mortgage securities.
(14) Strong Government Securities - 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,
-------------
2003 2002
------------- ----------
MacDermid Incorporated Company Stock Fund $ 80,686,697 $56,948,479
Schwab Stable Value Fund. . . . . . . . . 24,033,547 ---
Wachovia Stable Value Fund. . . . . . . . --- 22,032,956
Davis NY Venture Fund A . . . . . . . . . 6,887,787 4,982,457
Other investments . . . . . . . . . . . . 21,386,124 15,678,606
----------- ----------
$ 132,994,155 $99,642,498
============= ==========
(6) NET APPRECIATION (DEPRECIATION)
During the years ended December 31, 2003 and 2002, 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,
-----------------------------
2003 2002
----------------------------- -----------
Company Stock Fund $ 29,800,399 $15,135,822
Other investments. 3,060,580 (3,376,504)
----------------------------- -----------
$ 32,860,979 $11,759,318
============================= ===========
(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, 2003. Principal and interest is
paid ratably through regular payroll deductions.
(8) RELATED PARTY TRANSACTIONS
Certain Plan investments are shares of mutual funds managed by Charles Schwab.
Schwab 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 $303 for the year ended December 31,
2003. Prior to the change in Trustee, fees paid by the Plan for the investment
management services of Wachovia Securities amounted to $211,288 and $238,638 for
the years ended December 31, 2003 and 2002, respectively.
(9) SUBSEQUENT EVENTS
Subsequent to December 31, 2003, the Company re-constituted the membership of
the MacDermid, Incorporated Investment Committee by removing the existing six
Committee members and replacing them with three new Committee members.
Schedule H Line 4I
MACDERMID, INCORPORATED PROFIT SHARING
AND EMPLOYEE STOCK OWNERSHIP PLAN
Schedule of Assets (Held at End of Year)
December 31, 2003
IDENTITY OF ISSUER, BORROWER, DESCRIPTION CURRENT
LESSOR, OR SIMILAR PARTY OF INVESTMENT VALUE
---------------------------------------- --------------- ---------
*Schwab Stable Value Fund. . . . . . . . 1,627,451 units $ 24,033,547
*Schwab Money Market/Liquidity Account . 329 shares 329
*MacDermid Company Stock Fund. . . . . . 2,356,504 shares 80,686,697
Hercules Company Stock Fund. . . . . . 4,631 shares 56,498
American Century Ultra Fund. . . . . . 24,190 units 638,612
Davis NY Venture Fund A. . . . . . . . 250,283 units 6,887,787
UBS US Small Cap Growth CL Y. . . . . 222,682 units 2,819,157
Federated Stock Trust Fund . . . . . . 7,567 units 259,326
Federated Kaufman Fund K . . . . . . . 283,504 units 1,406,180
Excelsior Value & Restructuring Fund . 87,164 units 3,125,687
Dreyfus S&P Mid-Cap Index Fund . . . . 56,144 units 1,311,531
Royce Premier Fund . . . . . . . . . . 49,256 units 635,397
Templeton Growth Fund A. . . . . . . . 81,713 units 1,689,007
Van Kampen Equity & Income Fund A. . . 273,435 units 2,160,134
Putnam International Equity Fund A . . 24,737 units 511,060
One Group Bond Fund I. . . . . . . . . 214,086 units 2,352,807
Strong Government Securities . . . . . 216,167 units 2,351,895
*Participant Loans . . . . . . . . . . . 5.25% - 5.75% 2,068,504
------------
Total $ 132,994,155
===============
*Represents a party-in-interest.