FORM 11-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
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ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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For the fiscal year ended
December 31, 2008 |
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or |
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TRANSITION REPORT PURSUANT TO SECTION 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934 |
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For the transition period from to |
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Commission file number 0-3134 |
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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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INDIVIDUAL ACCOUNT RETIREMENT PLAN OF PARK-OHIO
INDUSTRIES, INC. AND ITS SUBSIDIARIES |
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B.
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Name of issuer of the securities held pursuant to the plan
and the address of its principal executive office: |
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PARK-OHIO HOLDINGS CORP.
6065 Parkland Boulevaid
CLEVELAND, OHIO 44124
Page 1
INDEX
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PAGE (S) |
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Report
of Independent Registered Public Accounting Firm
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F-1 |
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FINANCIAL STATEMENTS |
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Statements of Net Assets Available for Benefits.
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F-2 |
Statement of Changes in Net Assets Available for Benefits.
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F-3 |
Notes to Financial Statements.
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F-4F-12 |
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SUPPLEMENTAL SCHEDULE |
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Schedule H, Line 4iSchedule of Assets (Held at End of Year).
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F-13 |
EXHIBITS
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Exhibit |
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Number |
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Description |
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23.1
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Consent of Independent Auditors |
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*
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Other supplemental schedules required by Section 2520.103-10
of the Department of Labor Rules and Regulations for
Reporting and Disclosure under the Employee Retirement
Income Security Act of 1974 have been omitted because they
are not applicable |
Page 2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Administrator of the Plan has duly caused this annual report to be signed on
its
behalf by the undersigned hereunto duly authorized.
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Individual Account
Retirement Plan of
Park-Ohio Industries, Inc.
and Its Subsidiaries
Date: June 26, 2009
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By |
/s/
Jeffrey L. Rutherford
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Jeffrey L. Rutherford |
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Vice President and Chief
Financial Officer |
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Page 3
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Ernst & Young LLP
Suite 1300
925 Euclid Avenue
Cleveland, Ohio 44115
Tel: 216 861 5000
www.ey.com |
Report of Independent Registered Public Accounting Firm
The Plan Administrative Committee
Individual Account Retirement Plan
of Park-Ohio Industries, Inc. and
its Subsidiaries
We have audited the accompanying statements of net assets available for benefits of the Individual
Account Retirement Plan of Park-Ohio Industries, Inc. and its Subsidiaries as of December 31, 2008
and 2007, and the related statement of changes in net assets available for benefits for the year
ended December 31, 2008. These financial statements are the responsibility of the Plans
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. We
were not engaged to perform an audit of the Plans internal control over financial reporting. Our
audits included 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 Plans 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, and 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 December 31, 2008 and 2007, and the
changes in its net assets available for benefits for the year ended December 31, 2008, in
conformity with U.S. generally accepted accounting principles.
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 December
31, 2008, 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 Labors Rules
and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. This supplemental schedule is the responsibility of the Plans 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.
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Cleveland, Ohio
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/s/ Ernst & Young LLP
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June 26, 2009 |
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F-1
Individual Account Retirement Plan of Park-Ohio
Industries, Inc. and its Subsidiaries
Statements of Net Assets Available for Benefits
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December 31 |
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2008 |
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2007 |
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Assets |
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Investments, at fair value |
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$ |
62,380,907 |
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$ |
81,779,184 |
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Cash |
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576 |
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Receivables: |
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Employer contribution |
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158,892 |
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163,721 |
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Employee contribution |
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345,790 |
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329,909 |
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Interest receivable |
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6,852 |
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7,090 |
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Total receivables |
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511,534 |
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500,720 |
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Net assets available for benefits |
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$ |
62,892,441 |
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$ |
82,280,480 |
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See accompanying notes.
F-2
Individual Account Retirement Plan of Park-Ohio
Industries, Inc. and its Subsidiaries
Statement of Changes in Net Assets Available for Benefits
Year Ended December 31, 2008
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Additions |
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Investment income: |
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Dividends and interest |
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$ |
1,978,175 |
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Transfers from other plans |
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894,455 |
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Contributions: |
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Participants |
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4,919,949 |
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Employer |
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2,082,048 |
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Rollovers |
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220,090 |
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7,222,087 |
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Total additions |
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10,094,717 |
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Deductions |
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Net depreciation in fair value of investments |
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22,367,694 |
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Distributions to participants |
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6,907,889 |
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Corrective distributions |
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105,668 |
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Trustee fees and expenses |
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101,505 |
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Total deductions |
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29,482,756 |
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Net (decrease) |
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(19,388,039 |
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Net assets available for benefits: |
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Beginning of year |
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82,280,480 |
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End of year |
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$ |
62,892,441 |
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See accompanying notes.
F-3
Individual Account Retirement Plan of Park-Ohio
Industries, Inc. and its Subsidiaries
Notes to Financial Statements
December 31, 2008 and 2007 and
Year Ended December 31, 2008
1. Significant Accounting Policies
Basis of Accounting
The accounting records of the Individual Account Retirement Plan of Park-Ohio Industries, Inc. and
its Subsidiaries (the Plan) are maintained on the accrual basis.
Investment Value and Income Recognition
All investments are under the control and management of The Charles Schwab Trust Company, Plan
Trustee. Purchases of investments are recorded at cost and revalued to market value at the close of
each day by the Plan Trustee. All investments of the Plan are participant directed.
Investment income and realized and unrealized gains and losses are reported as net income derived
from investment activities and are allocated among the individual accounts in proportion to their
respective balances immediately preceding the valuation date.
Realized gains and losses are calculated based upon historical cost of securities using the average
cost method.
The investments in common stock are stated at fair value, which equals the quoted market price on
the last business day of the plan year. The fair value of the participation units held by the Plan
in the mutual funds and common/collective fixed income investments funds are based on quoted
redemption values on the last business day of the plan year. The participant loans are valued at
their outstanding balances, which approximate fair value. Purchases and sales of securities are
recorded on a settlement-date basis. Interest income is recorded on the accrual basis. Dividends
are recorded on the ex-dividend date.
Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting
principles requires management to make estimates that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those estimates.
F-4
Individual Account Retirement Plan of Park-Ohio
Industries, Inc. and its Subsidiaries
Notes to Financial Statements (continued)
2. Description of Plan
The Plan, adopted by Park-Ohio Industries, Inc. (Company) originally effective January 1, 1985 and
last restated on December 19, 2006 is a defined contribution plan. The Plan generally provides that
an employee who is in service of a division or group to which the Company has extended eligibility
for membership in the Plan (other than a temporary employee or employees covered by a collective
bargaining agreement that does not specify coverage under the Plan) will be eligible to participate
after completion of the probationary period which generally occurs after 30 days of continuous
employment. The Plan is subject to the provisions of the Employee Retirement Income Security Act of
1974 (ERISA).
Individual accounts are maintained for all participants. All amounts are credited or charged to an
account in terms of full and fractional investment units at the investment unit values determined
as of the transaction date. Each participant designates how his share of the contributions is to be
allocated among the investment funds of the Plan. The benefit to which a participant is entitled is
the benefit that can be provided from the participants account.
The Plan provides for contributions to be made to the Plan pursuant to a qualified cash or deferred
arrangement under Section 401(k) of the Internal Revenue Code. If a participant elects to have
contributions made for the participant pursuant to such an arrangement, the participants
compensation is reduced by the amount of such contributions elected and the employer makes plan
contributions equal to the amount of the reduction.
The Company may terminate the Plan at any time by resolution of its Board of Directors, subject to
the provisions of ERISA. In the event of the termination of the Plan, the beneficial interests of
all participants under the Plan shall become fully vested.
Information about the Plan is contained in the Plan document, which is available from the Companys
Plan Administrative Committee.
F-5
Individual Account Retirement Plan of Park-Ohio
Industries, Inc. and its Subsidiaries
Notes to Financial Statements (continued)
3. Contributions
Contributions by employees to the Plan are made via payroll deductions. Employees may contribute up
to 80% of their compensation on a pretax basis. Excluding catch-up contributions for eligible
participants, contributions by employees may not exceed $15,500, the Internal Revenue Service
maximum contribution for 2008. Employee contributions are fully vested and nonforfeitable at all
times.
The Plan provides for discretionary uniform rates of employer contributions for eligible employees,
which generally include nonbargaining unit employees of the Company, so that each participant is
entitled to basic contributions equal to 2% of credited compensation paid by the employer. The
basic contribution is allocated among the investment options based on individual participants
investment allocation designation. As described in Note 11, during March 2009, the Company
suspended indefinitely its contributions to the Plan.
Corrective distributions to participants represent current year contributions and earnings on such
deposits that must be returned to employees to ensure Plan compliance with additional limitations
in the Internal Revenue Code (the Code) on contributions by highly compensated individuals.
Participants of the Plan can make changes to their account, via the telephone or the internet,
through Schwab Retirement Plan Services, Inc. The current provision of the system permits a
participant to change investment allocation percentages daily and change payroll deferral
percentages on the first day of every month.
4. Participant Loans
A participant may borrow from employee 401(k) contributions and earnings a minimum of $1,000 and a
maximum of the lesser of 50% of the participants eligible account or $50,000. Loan repayments are
made via payroll deductions on after-tax dollars, which commence thirty to sixty days after receipt
and acceptance of the loan check. Terms of the participant loan are five years for a personal loan
and fifteen years for a mortgage loan, with interest payable at prime plus 1%.
F-6
Individual Account Retirement Plan of Park-Ohio
Industries, Inc. and its Subsidiaries
Notes to Financial Statements (continued)
5. Investments
Investments that represent 5% or more of fair value of the Plans net assets are as follows:
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December 31 |
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2008 |
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2007 |
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Victory Value Fund |
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$ |
6,485,036 |
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$ |
11,695,092 |
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Schwab Value Advantage Fund |
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18,216,054 |
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15,056,412 |
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Growth Fund of America |
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5,448,466 |
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10,426,852 |
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Oakmark Equity Income |
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7,638,775 |
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9,734,065 |
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Templeton World Fund |
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2,948,578 |
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5,283,752 |
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JP Morgan Core Bond Fund |
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6,678,129 |
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5,580,887 |
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Calamos Growth Fund |
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1,696,286 |
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4,130,725 |
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During 2008, the Plans investments (including investments purchased and sold, as well as held
during the year) (depreciated) in fair value as determined by quoted market prices as follows:
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Net |
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(Depreciation) |
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in Fair Value |
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of Investments |
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Park-Ohio Holdings Corp. Common stock fund |
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$ |
(2,455,364 |
) |
Mutual funds |
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(18,945,000 |
) |
Common/collective trusts |
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(967,330 |
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Total |
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$ |
(22,367,694 |
) |
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F-7
Individual Account Retirement Plan of Park-Ohio
Industries, Inc. and its Subsidiaries
Notes to Financial Statements (continued)
6. Fair Value Measurements
Financial Accounting Standards Board Statement No. 157, Fair Value Measurements (FASB Statement No.
157), establishes a framework for measuring fair value. That framework provides a fair value
hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The
hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical
assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level
3 measurements). The three levels of the fair value hierarchy under FASB Statement No. 157 are
described below:
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Level 1 |
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Inputs to the valuation methodology are unadjusted quoted prices for identical
assets or liabilities in active markets that the Plan has the ability to access. |
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Level 2 |
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Inputs to the valuation methodology include: |
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Quoted prices for similar assets or liabilities in active markets; |
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Quoted prices for identical or similar assets or liabilities in inactive
markets; |
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Inputs other than quoted prices that are observable for the asset or
liability; |
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Inputs that are derived principally from or corroborated by observable
market data by correlation or other means. |
If the asset or liability has a specified (contractual) term, the Level 2 input
must be observable for substantially the full term of the asset or liability.
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Level 3 |
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Inputs to the valuation methodology are unobservable and significant to the fair
value measurement. |
F-8
Individual Account Retirement Plan of Park-Ohio
Industries, Inc. and its Subsidiaries
Notes to Financial Statements (continued)
6. Fair Value Measurements (continued)
The assets or liabilitys fair value measurement level within the fair value hierarchy is based on
the lowest level of any input that is significant to the fair value measurement. Valuation
techniques used need to maximize the use of observable inputs and minimize the use of unobservable
inputs.
Following is a description of the valuation methodologies used for assets measured at fair value.
There have been no changes in the methodologies used at December 31, 2008 and 2007.
Common stocks: Valued at the closing price reported on the active market on which the individual
securities are traded.
Mutual funds and common/collective trusts: Valued at the net asset value (NAV) of shares held by
the plan at year end.
Participant loans: Valued at amortized cost, which approximates fair value.
The methods described above may produce a fair value calculation that may not be indicative of net
realizable value or reflective of future fair values. Furthermore, while the Plan believes its
valuation methods are appropriate and consistent with other market participants, the use of
different methodologies or assumptions to determine the fair value of certain financial instruments
could result in a different fair value measurement at reporting date.
The following table sets forth by level, within the fair value hierarchy, the Plans assets at fair
value as of December 31, 2008.
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Level 1 |
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Level 2 |
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Level 3 |
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Total |
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Mutual funds |
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$ |
57,481,644 |
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$ |
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$ |
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$ |
57,481,644 |
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Common/collective trusts |
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2,648,843 |
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2,648,843 |
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Common stocks |
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1,063,984 |
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1,063,984 |
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Participant loans |
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1,186,436 |
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1,186,436 |
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Total assets at fair value |
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$ |
58,545,628 |
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$ |
2,648,843 |
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$ |
1,186,436 |
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$ |
62,380,907 |
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F-9
Individual Account Retirement Plan of Park-Ohio
Industries, Inc. and its Subsidiaries
Notes to Financial Statements (continued)
6. Fair Value Measurements (continued)
The table below sets forth a summary of changes in the fair value of the Plans level 3 assets for
the year ended December 31, 2008:
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Participant |
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Loans |
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Balance, beginning of year |
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$ |
1,224,973 |
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Purchases, sales, issuances and settlements (net) |
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(38,537 |
) |
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Balance, end of year |
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$ |
1,186,436 |
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7. Benefits
A participant is entitled to receive the full value of his or her account upon (1) normal
retirement at age 65; (2) attainment of at least age 55 and 10 years of service; (3) death, or
total and permanent disability as determined by the plan administrator upon the basis of competent
medical opinion, or (4) termination of employment after seven years of credited service. Such
benefits may be paid in a lump sum cash payment or through the purchase of a single premium annuity
contract.
In the event of termination of employment, a participant has a vested right in the participants
share of the Companys contributions determined as follows:
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Vested |
Credited Vesting Service |
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Percentage |
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Less than 3 years |
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0 |
% |
At least 3 years but less than 4 years |
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20 |
% |
At least 4 years but less than 5 years |
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40 |
% |
At least 5 years but less than 6 years |
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|
60 |
% |
At least 6 years but less than 7 years |
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|
80 |
% |
7 years or more |
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100 |
% |
F-10
Individual Account Retirement Plan of Park-Ohio
Industries, Inc. and its Subsidiaries
Notes to Financial Statements (continued)
7. Benefits (continued)
The portion of the Companys contributions that are not vested in such terminated participants will
generally be forfeited and may be used to reduce the Companys future contributions to the Plan.
The total of forfeited contributions by participants was $120,750, and contributions required by
the employer were reduced by this entire amount in 2008.
A participant may withdraw in cash a portion of the participants contributions subject to certain
limitations and restrictions. The hardship withdrawal may be used to purchase a principal
residence, avoid foreclosure on a mortgage, or pay bona fide medical or education expenditures.
8. Related-Party Transactions
Certain plan investments are mutual funds or common collective trust funds managed by the Plan
Trustee. Therefore, these transactions qualify as party in interest. Fees paid by the Plan for the
investment management and trustee services amounted to $75,411 and $71,635 for the years ended
December 31, 2008 and 2007, respectively.
At December 31, 2008 and 2007, the Plan held 352,312 and 281,206 shares of Park-Ohio Holdings Corp.
common stock with a fair value of $1,063,984 and $3,166,375, respectively.
9. Income Tax Status
The Plan has received a determination letter from the Internal Revenue Service dated May 11, 2009,
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 the Plan, is qualified and the related trust is tax exempt.
F-11
Individual Account Retirement Plan of Park-Ohio
Industries, Inc. and its Subsidiaries
Notes to Financial Statements (continued)
10. 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 statements of net assets available
for benefits.
11. Subsequent Events
During March 2009, the Company suspended indefinitely its contributions to the Plan.
F-12
Individual Account Retirement Plan of Park-Ohio
Industries, Inc. and its Subsidiaries
EIN #34-6520107 Plan #011
Schedule H, Line 4i Schedule of Assets
(Held at End of Year)
December 31, 2008
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Identity of Issue, Borrower, |
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Current |
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Lessor, or Similar Party |
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Description of Investment |
|
Value |
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Common Stock |
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Park-Ohio Holdings Corp.* |
|
352,312 shares of Park-Ohio Stock Fund |
|
$ |
1,063,984 |
|
|
Mutual Funds |
|
|
|
|
|
|
|
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Schwab Value Advantage Fund* |
|
18,216,054 shares |
|
|
18,216,054 |
|
Allegiant Small Cap Value CLI |
|
63,299 shares |
|
|
602,574 |
|
Calamos Growth A |
|
58,172 shares |
|
|
1,696,286 |
|
Europacific Growth |
|
44,209 shares |
|
|
1,218,403 |
|
Growth Fund of America |
|
269,726 shares |
|
|
5,448,466 |
|
Jensen |
|
40,481 shares |
|
|
778,855 |
|
Lord Abbett Mid Cap Value A |
|
120,484 shares |
|
|
1,256,643 |
|
Oakmark Equity Income |
|
354,303 shares |
|
|
7,638,775 |
|
JP Morgan Core Bond Fund |
|
625,293 shares |
|
|
6,678,129 |
|
Schwab
S&P 500 Investor Shares* |
|
83,079 shares |
|
|
1,153,965 |
|
Neuberger Berman Genesis Advantage Fund |
|
150,505 shares |
|
|
2,727,145 |
|
Templeton World Fund |
|
274,798 shares |
|
|
2,948,578 |
|
Victory Value Fund |
|
763,844 shares |
|
|
6,485,036 |
|
Washington Mutual R3 |
|
29,706 shares |
|
|
632,735 |
|
|
|
|
|
|
|
|
|
|
Schwab Common/Collective Trusts |
|
|
|
|
|
|
|
|
Schwab Managed Retirement 2010* |
|
18,707 shares |
|
|
228,600 |
|
Schwab Managed Retirement 2020* |
|
65,447 shares |
|
|
798,448 |
|
Schwab Managed Retirement 2030* |
|
68,636 shares |
|
|
841,479 |
|
Schwab Managed Retirement 2040* |
|
61,792 shares |
|
|
747,067 |
|
Schwab Managed Retirement Inc.* |
|
3,292 shares |
|
|
33,249 |
|
|
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
Participant loans* |
|
Interest rates ranging from 4.25% to 8.50% with maturities of varying dates |
|
|
1,186,436 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
62,380,907 |
|
|
|
|
|
|
|
|
|
|
|
|
* |
|
Indicates party in interest to the Plan. |
F-13