FORM 11-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[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
Commission file number 0-20578
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A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
LAYNE CHRISTENSEN COMPANY CAPITAL ACCUMULATION PLAN
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
LAYNE CHRISTENSEN COMPANY
1900 SHAWNEE MISSION PARKWAY
MISSION WOODS, KANSAS 66205
LAYNE CHRISTENSEN COMPANY
CAPITAL ACCUMULATION PLAN
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FINANCIAL STATEMENTS AS OF DECEMBER 31, 2003 AND 2002 AND FOR THE
YEARS THEN ENDED, SUPPLEMENTAL SCHEDULE AS OF DECEMBER 31, 2003,
AND REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
LAYNE CHRISTENSEN COMPANY
CAPITAL ACCUMULATION PLAN
TABLE OF CONTENTS
PAGES
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM........................................ 1
FINANCIAL STATEMENTS AS OF DECEMBER 31, 2003 AND 2002, AND FOR THE YEARS THEN
ENDED:
Statements of Net Assets Available for Benefits........................................... 2
Statements of Changes in Net Assets Available for Benefits................................ 3
Notes to Financial Statements............................................................. 4 - 9
SUPPLEMENTAL SCHEDULE AS OF DECEMBER 31, 2003 -
Form 5500, Schedule H, Part IV, Line 4i - Schedule of
Assets (Held at End of Year)............................................................. 10 - 12
Note: All other schedules required by Section 2520.103-10 of the Department of
Labor's Rules and Regulations for Reporting and Disclosures under the
Employee Retirement Income Security Act of 1974 have been omitted because
they are not applicable.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Administrative Committee of the Layne Christensen Company Capital
Accumulation Plan:
We have audited the accompanying statements of net assets available for benefits
of the Layne Christensen Company Capital Accumulation Plan (the "Plan") as of
December 31, 2003 and 2002, and the related statements of changes in net assets
available for benefits for the years then ended. These financial statements are
the responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with 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 benefits of the Plan as of
December 31, 2003 and 2002 and the changes in its net assets available for
benefits for the years then ended in conformity with accounting principles
generally accepted in the United States 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 listed in the
table of contents 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 schedule is the responsibility of the Plan's management. The
supplemental schedule has been subjected to the auditing procedures applied in
our audits of the 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.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Kansas City, Missouri
May 27, 2004
1
LAYNE CHRISTENSEN COMPANY CAPITAL ACCUMULATION PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 2003 AND 2002
2003 2002
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ASSETS:
INVESTMENTS, at fair value:
Common/collective trust fund $11,974,431 $11,474,375
Mutual funds 27,280,130 21,675,677
Layne Christensen Company stock account 2,008,390 1,314,356
Participant loans 636,838 724,864
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Total investments, at fair value 41,899,789 35,189,272
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RECEIVABLES:
Employee contributions 86,699 78,519
Employer contributions 39,215 38,469
Accrued income 12,507 12,307
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Total receivables 138,421 129,295
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CASH 50 18,549
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Total assets 42,038,260 35,337,116
LIABILITIES:
Accrued expenses 15,375 16,905
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NET ASSETS AVAILABLE FOR BENEFITS $42,022,885 $35,320,211
=========== ===========
See Notes to Financial Statements.
2
LAYNE CHRISTENSEN COMPANY CAPITAL ACCUMULATION PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002
2003 2002
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ADDITIONS:
Investment income:
Interest and dividend income $ 903,453 $ 1,200,881
Net appreciation (depreciation) in fair value
of investments 6,207,725 (4,809,218)
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Net investment income (loss) 7,111,178 (3,608,337)
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Contributions:
Participant 2,522,779 2,391,850
Employer 1,077,546 1,165,309
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Total contributions 3,600,325 3,557,159
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TOTAL ADDITIONS (DEDUCTIONS) 10,711,503 (51,178)
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DEDUCTIONS:
Withdrawals and terminations 3,984,896 2,590,648
Administrative expenses 23,933 33,605
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TOTAL DEDUCTIONS 4,008,829 2,624,253
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NET ADDITIONS (DEDUCTIONS) 6,702,674 (2,675,431)
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NET ASSETS AVAILABLE FOR BENEFITS
AT BEGINNING OF YEAR 35,320,211 37,995,642
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NET ASSETS AVAILABLE FOR BENEFITS
AT END OF YEAR $ 42,022,885 $ 35,320,211
============ ============
See Notes to Financial Statements.
3
LAYNE CHRISTENSEN COMPANY CAPITAL ACCUMULATION PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2003 AND 2002
(1) DESCRIPTION OF PLAN
The following brief description of the Layne Christensen Company Capital
Accumulation Plan (the "Plan") is provided for general information
purposes only. Participants should refer to the Plan document for more
complete information.
(a) General - The Plan is a defined contribution plan and is administered
by Layne Christensen Company and an Administrative Committee comprised
of individuals appointed by the Layne Christensen Company Board of
Directors. Merrill Lynch Trust Company ("Merrill Lynch") serves as the
Plan's trustee. The Plan is subject to the provisions set forth in the
Employee Retirement Income Security Act of 1974 ("ERISA"), as amended.
(b) Eligibility - Salaried and certain hourly employees of Layne
Christensen Company and its subsidiaries (the "Company") become
eligible for membership in the Plan after completion of three months
of service.
(c) Contributions - Employee contributions are voluntary. Employees may
make a basic (pre-tax) contribution of at least 1% up to limitations
imposed by the Internal Revenue Service ("IRS"). After-tax
contributions are not permitted after November 30, 1986. Effective
January 2002, employees age 50 or older who make the maximum allowable
pre-tax contribution to the Plan, are entitled to make an additional
"catch-up contribution" in accordance with the Plan documents.
Participants are eligible for a matching contribution immediately upon
electing to make a basic contribution. Each plan year the Company may
make a matching contribution as follows: 1) 100 percent of the
participant's basic contributions to the extent that such basic
contributions do not exceed 3 percent of the participant's
compensation; and 2) 50 percent of the participant's basic
contributions to the extent that such basic contributions exceed 3
percent but do not exceed 5 percent of the participant's compensation.
Additionally, employees as of the end of the Plan year who have
completed at least two years of service at that time are eligible to
receive an allocation of the Company profit sharing contribution. This
discretionary contribution is determined annually by the Board of
Directors of the Company and is based on a stated percentage, if any,
of participants' eligible compensation.
(d) Investment Options - The Plan has twenty-three types of investment
funds available through Merrill Lynch. Of these, nine are considered
"core" investment options while the remaining fourteen represent an
expanded group of funds available to participants who wish to invest
beyond the core offerings.
4
Participants may allocate their elected deferral percentage to any or
all of the funds in 1% increments. Participants may change their
allocation between funds any time during the year. Company
contributions are allocated to the funds in proportion with the
participants' elected deferral percentage at the time of contribution.
(e) Participant Accounts and Vesting - Investment income is allocated on a
daily basis among the Plan members who are participants of the Plan.
The income allocation is made in proportion to the amount each
participant's account bears to the aggregate amount of all such
accounts. After January 1, 2000, participant contributions, Company
matching contributions, Company profit sharing contributions and
earnings thereon are fully vested at all times and are not subject to
forfeiture for any reason. Upon distribution, forfeitures from
employer contributions made prior to January 1, 2000 become available
to the Company and are fully applied toward employer contributions. At
December 31, 2003 and 2002, forfeited non-vested accounts totaled $910
and $872, respectively. In 2002, employer contributions were reduced
by $2,523 from forfeited non-vested accounts. No forfeitures were
utilized during 2003.
(f) Loans to Participants - Participants may borrow from their fund
accounts a minimum of $1,000 up to a maximum of $50,000, not to exceed
50% of their vested employee deferral account balance. Loan
transactions are treated as a transfer between the investment funds
and the loan fund. Loan terms for repayment shall be no less than one
year and no greater than five years, unless the loan qualifies as a
home loan, for which repayment terms may be up to 15 years. Loans are
secured by assignment of 50% of the vested amount of the participant's
account and bear interest at a rate equal to the prime rate. Principal
and interest are paid ratably through payroll deductions.
Participants eligible for a withdrawal as a result of financial
hardship may request that all or a portion of their supplemental
(after-tax) and basic (pre-tax) account be distributed. IRS
regulations define severe financial hardship as a condition caused by
the need for funds required for the purchase of or eviction from a
family's principal residence, college education for employees'
dependent children, self or spouse, or for major uninsured family
medical expenses. The Administrative Committee must approve any such
hardship withdrawals. The loan provision must be exhausted prior to
applying for a hardship withdrawal.
(g) Payment of Benefits - Upon termination of employment or retirement,
the participant or, in the case of death, the surviving spouse, can
elect to receive the participant's account balance in a single lump
sum or in installments. Account balances which do not exceed $5,000
may be paid in a single lump sum upon termination. Participants with
an account balance of greater than $5,000 can elect to indefinitely
maintain their account balance within the Plan.
5
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of Accounting - The accompanying financial statements have been
prepared in accordance with accounting principles generally accepted
in the United States of America.
(b) 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 net assets available
for benefits and changes therein. Actual results could differ from
these estimates.
The Plan utilizes various investment instruments. Investment
securities, in general, are exposed to various risks, such as interest
rate, credit, and overall market volatility. Due to the level of risk
associated with certain investment securities, it is reasonably
possible that changes in values of investment securities will occur in
the near term and that such changes could materially affect the
amounts reported in the financial statements.
(c) Valuation of Investments - The common/collective trust fund is stated
at estimated fair value which has been determined based on the unit
values of the fund. Unit values are determined by the institution
sponsoring such fund by dividing the fund's net assets by its units
outstanding at the valuation dates. The mutual funds are valued at
quoted market values which represent the net asset values of shares
held by the Plan at year end. The Plan's investment in the Layne
Christensen Company Stock Account is valued at quoted market prices as
determined by closing sales prices reported on the last business day
of the year. Participant loans are valued at outstanding principal
balances due which approximate fair value. Investment transactions are
recorded on a trade date basis. Interest income is recorded on the
accrual basis. Dividends are recorded on the ex-dividend date.
Management fees and operating expenses charged to the Plan for
investments in the mutual funds are deducted from income earned on a
daily basis and are not separately reflected. Consequently, management
fees and operating expenses are reflected as a reduction of investment
return for such investments.
(d) Administrative Expenses - Most administrative costs (e.g., investment
transaction fees, trustee fees, record keeping fees, and audit fees)
are paid by the Plan. Other costs are paid by the Company.
(e) Payment of Benefits - Benefit payments to participants are recorded
upon distribution. Amounts allocated to accounts of persons who have
elected to withdraw from the Plan but have not yet been paid were
$24,064 at December 31, 2002. There were no such unpaid balances as of
December 31, 2003.
6
(3) INVESTMENTS
The Plan's investments that represented 5% or more of the Plan's net
assets available for benefits as of December 31, 2003 and 2002, are as
follows:
December 31, 2003 December 31, 2002
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Merrill Lynch Retirement Preservation Trust $11,974,431 $11,474,375
PIMCO Total Return Fund 2,408,130 2,782,309
Davis New York Venture Fund 7,265,040 5,455,254
Merrill Lynch Basic Value Fund 6,458,226 4,873,449
Merrill Lynch Balanced Capital Fund 4,369,055 3,592,430
During 2003 and 2002, the Plan's investments (including investments
bought, sold, and held during the year) appreciated (depreciated) as
follows:
Year Ended Year Ended
December 31, 2003 December 31, 2002
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Investments at fair value as determined
by quoted market price:
Common stock $ 618,186 $ 20,371
Mutual funds 5,589,539 (4,829,589)
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Net change in fair value $ 6,207,725 $(4,809,218)
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(4) PLAN TERMINATION
Although it has not expressed any intention to do so, the Company has the
right under the Plan to discontinue its contributions at any time or to
terminate the Plan subject to the provisions set forth in ERISA.
(5) TAX STATUS
The IRS has determined and informed the Company by a letter dated
September 26, 2002, that the Plan is qualified and the trust established
under the Plan is tax-exempt, under the appropriate sections of the
Internal Revenue Code (the "Code"). The Plan administrator believes that
the Plan is designed and is currently being operated in compliance with
the applicable requirements of the Code. Therefore, the Plan administrator
believes that the Plan is qualified and the related trust is tax-exempt.
7
(6) RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
The following is a reconciliation of the net assets available for benefits
per the financial statements at December 31, 2003 and 2002 to Form 5500:
2003 2002
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Net assets available for benefits per the
financial statements $ 42,022,885 $ 35,320,211
Amounts allocated to withdrawing
participants - (24,064)
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Net assets available for benefits per
the Form 5500 $ 42,022,885 $ 35,296,147
============ ============
The following is a reconciliation of benefits paid to participants per the
financial statements for the years ended December 31, 2003 and 2002, to
Form 5500:
2003 2002
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Benefits paid to participants per the financial
statements $3,984,896 $2,590,648
Add: Amounts allocated to withdrawing
participants at December 31, 2003 and 2002 - 24,064
Less: Amounts allocated to withdrawing
participants at December 31, 2002 (24,064) -
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Benefits paid to participants per Form 5500 $3,960,832 $2,614,712
========== ==========
(7) RELATED-PARTY TRANSACTIONS
Certain Plan investments are shares of mutual funds and units in a common
collective trust fund managed by Merrill Lynch. Merrill Lynch is the
trustee as defined by the Plan and, therefore, these transactions qualify
as party-in-interest transactions. Fees paid by the Plan for investment
management services were included as a reduction of the return earned on
each fund.
The Layne Christensen Company Stock Account includes transactions that
also qualify as party-in-interest transactions. At December 31, 2003 and
2002, the Plan held 169,199 and 160,287 units, respectively, of common
stock of Layne Christensen Company, the sponsoring employer, with a cost
basis of $1,648,451 and $1,589,166, respectively. There was no dividend
income recorded by the Plan during the years ended December 31, 2003 and
2002.
8
(8) SUBSEQUENT EVENTS
Effective January 1, 2004, the Company merged the Layne Christensen
Company Hourly 401(k) Retirement Savings Plan ("Hourly Plan") into the
Plan. After the merger, all participants previously eligible to
participate in the Hourly Plan became eligible to participate in the Plan.
As of December 31, 2003, net assets available for benefits in the Hourly
Plan are $7,312,633.
Effective January 1, 2004, the following funds were eliminated from the
Plan's investment lineup: AllianceBernstein Small Cap Growth Fund, MFS
Research Fund, AllianceBernstein Worldwide Privatization Fund, John
Hancock Sovereign Investors Fund, MFS Emerging Growth Fund, Merrill Lynch
Fundamental Growth Fund, AllianceBernstein Corporate Bond Portfolio.
9
LAYNE CHRISTENSEN COMPANY CAPITAL ACCUMULATION PLAN
FORM 5500, SCHEDULE H, PART IV, LINE 4i-SCHEDULE OF ASSETS (HELD AT END OF YEAR)
AS OF DECEMBER 31, 2003
(a) (b) (c) (d) (e)
IDENTITY OF ISSUER, DESCRIPTION OF INVESTMENT INCLUDING MATURITY
BORROWER, LESSOR OR DATE, RATE OF INTEREST, COLLATERAL, PAR OR
SIMILAR PARTY MATURITY VALUE COST CURRENT VALUE
* Merrill Lynch Layne Christensen Company Stock Account ** $ 2,008,390
Common Stock (169,199 shares)
* Merrill Lynch Merrill Lynch Retirement Preservation Trust ** 11,974,431
Common/Collective Trust (11,974,431 units)
Managers Managers International Equity Fund ** 1,058,237
Mutual Fund (25,735 shares)
* Merrill Lynch Merrill Lynch Fundamental Growth Fund ** 658,950
Mutual Fund (40,551 shares)
Franklin Franklin Small-Mid Capital Growth Fund ** 570,752
Mutual Fund (18,887 shares)
MFS MFS Emerging Growth Fund ** 334,603
Mutual Fund (11,836 shares)
John Hancock John Hancock Health Sciences Fund ** 180,584
Mutual Fund (4,232 shares)
AllianceBernstein AllianceBernstein Worldwide Privatization Fund ** 160,971
* Merrill Lynch Merrill Lynch Basic Value Fund ** 6,458,226
Mutual Fund (212,023 shares)
* Merrill Lynch Merrill Lynch Balanced Capital Fund ** 4,369,055
Mutual Fund (165,746 shares)
10
LAYNE CHRISTENSEN COMPANY CAPITAL ACCUMULATION PLAN
FORM 5500, SCHEDULE H, PART IV, LINE 4i-SCHEDULE OF ASSETS (HELD AT END OF YEAR)
AS OF DECEMBER 31, 2003
(a) (b) (c) (d) (e)
IDENTITY OF ISSUER, DESCRIPTION OF INVESTMENT INCLUDING MATURITY
BORROWER, LESSOR OR DATE, RATE OF INTEREST, COLLATERAL, PAR OR
SIMILAR PARTY MATURITY VALUE COST CURRENT VALUE
* Merrill Lynch Merrill Lynch Bond Fund High Income Portfolio ** $ 36,916
Mutual Fund (7,168 shares)
* Merrill Lynch Merrill Lynch Pacific Fund ** 255,762
Mutual Fund (13,641 shares)
PIMCO PIMCO Total Return Fund ** 2,408,130
Mutual Fund (224,849 shares)
* Merrill Lynch Merrill Lynch S&P 500 Index Trust ** 599,515
Mutual Fund (43,953 shares)
AllianceBernstein AllianceBernstein Corporate Bond Portfolio ** 58,289
Mutual Fund (4,805 shares)
Van Kampen Van Kampen Emerging Growth Fund ** 746,983
Mutual Fund (20,675 shares)
Seligman Seligman Communications and Information Fund ** 898,820
Mutual Fund (39,096 shares)
AllianceBernstein AllianceBernstein Small Cap Fund ** 37,749
Mutual Fund (1,841 shares)
State Street State Street Research Global Resources Fund ** 810,931
Mutual Fund (24,049 shares)
11
LAYNE CHRISTENSEN COMPANY CAPITAL ACCUMULATION PLAN
FORM 5500, SCHEDULE H, PART IV, LINE 4i-SCHEDULE OF ASSETS (HELD AT END OF YEAR)
AS OF DECEMBER 31, 2003
(a) (b) (c) (d) (e)
IDENTITY OF ISSUER, DESCRIPTION OF INVESTMENT INCLUDING MATURITY
BORROWER, LESSOR OR DATE, RATE OF INTEREST, COLLATERAL, PAR OR
SIMILAR PARTY MATURITY VALUE COST CURRENT VALUE
Pioneer Pioneer Europe Fund ** $ 69,925
Mutual Fund (2,737 shares)
MFS MFS Research Fund ** 224,198
Mutual Fund (12,819 shares)
Davis New York Davis New York Venture Fund ** 7,265,040
Mutual Fund (263,991 shares)
John Hancock John Hancock Sovereign Investors Fund ** 76,494
Mutual Fund (4,082 shares)
* Plan Participants Participant Promissory Notes 636,838
Interest rates ranging from 4% to 9.5%; maturity dates
through June 2016.
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TOTAL INVESTMENTS $ 41,899,789
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*Indicates party-in-interest to the Plan.
**Cost information is not required for participant-directed investments and,
therefore, is not included.
12
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.
LAYNE CHRISTENSEN COMPANY
CAPITAL ACCUMULATION PLAN
DATE: June 28, 2004 By Layne Christensen Company
By /s/ Jerry W. Fanska
-------------------------
Jerry W. Fanska
Vice President Finance - Treasurer
13
EXHIBIT INDEX
Exhibit
Number Description of Documents Page
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24 Consent of Independent Registered 15
Public Accounting Firm
14