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 HOURLY 401(k) RETIREMENT SAVINGS 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
HOURLY 401(k) RETIREMENT SAVINGS 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
HOURLY 401(k) RETIREMENT SAVINGS 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 - 7
SUPPLEMENTAL SCHEDULE AS OF DECEMBER 31, 2003 -
Form 5500, Schedule H, Part IV, Line 4i - Schedule of
Assets (Held at End of Year)...................................... 8 - 10
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 and Participants of the Layne Christensen
Company Hourly 401(k) Retirement Savings Plan:
We have audited the accompanying statements of net assets available for benefits
of the Layne Christensen Company Hourly 401(k) Retirement Savings 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 HOURLY 401(K) RETIREMENT SAVINGS 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 $ 3,214,373 $ 3,234,335
Mutual funds 3,391,076 2,585,495
Layne Christensen Company stock account 84,821 62,346
Participant loans 598,309 597,558
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Total investments, at fair value 7,288,579 6,479,734
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RECEIVABLES:
Employee contributions 35,717 32,182
Accrued income 2,002 1,966
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Total receivables 37,719 34,148
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CASH 200 205
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Total assets 7,326,498 6,514,087
LIABILITIES:
Accrued expenses 13,865 13,780
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NET ASSETS AVAILABLE FOR BENEFITS $ 7,312,633 $ 6,500,307
===================== ===================
See Notes to Financial Statements.
2
LAYNE CHRISTENSEN COMPANY HOURLY 401(K) RETIREMENT SAVINGS 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 $ 218,386 $ 291,868
Net appreciation (depreciation)
in fair value of investments 739,077 (593,326)
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Net investment income (loss) 957,463 (301,458)
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Participant contributions 593,478 646,894
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TOTAL ADDITIONS 1,550,941 345,436
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DEDUCTIONS:
Withdrawals and terminations 719,706 379,516
Administrative expenses 18,909 22,090
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TOTAL DEDUCTIONS 738,615 401,606
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NET ADDITIONS (DEDUCTIONS) 812,326 (56,170)
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NET ASSETS AVAILABLE FOR BENEFITS
AT BEGINNING OF YEAR 6,500,307 6,556,477
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NET ASSETS AVAILABLE FOR BENEFITS
AT END OF YEAR $ 7,312,633 $ 6,500,307
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See Notes to Financial Statements.
3
LAYNE CHRISTENSEN COMPANY HOURLY 401(k) RETIREMENT SAVINGS 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 401(k)
Hourly Retirement Savings 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 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 - All hourly employees of Layne Christensen Company and
its subsidiaries (the "Company") who have completed three months of
service and are not represented by a collective bargaining unit or
covered under another qualified profit sharing plan are eligible to
participate in the Plan. Effective December 31, 2003, the Company
elected to freeze the Plan in which no new Plan participants will
enter the Plan and no new elective deferrals will be contributed into
the Plan. (See Note 7.)
(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"). The Plan does not
allow for employer contributions. 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.
(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. Participants may allocate their elected
deferral percentage to any or all funds in 1% increments. Participants
may change their allocation between funds any time during the year.
(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. Participants are immediately vested in their contributions
plus actual earnings thereon.
4
(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 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 greater than $5,000 can elect to indefinitely
maintain their account balance within the Plan.
(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
those 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
5
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.
(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 $ 3,214,373 $ 3,234,335
Merrill Lynch Basic Value Fund 1,814,798 1,384,273
Participant Loans 598,309 597,558
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 $ 26,193 $ (355)
Mutual funds 712,884 (592,971)
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Net change in fair value $ 739,077 $ (593,326)
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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 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 June 10,
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.
(6) 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 7,146 and 7,603 units, respectively, of common stock of Layne
Christensen Company, the sponsoring employer, with a cost basis of $49,758
and $49,533, respectively. There was no dividend income recorded by the
Plan during the years ended December 31, 2003 and 2002.
(7) SUBSEQUENT EVENTS
Effective January 1, 2004, the Company merged the Plan into the Layne
Christensen Company Capital Accumulation Plan ("CAP Plan"). After the
merger, all participants in the Plan became eligible to participate in the
CAP Plan.
Effective January 1, 2004, the following funds were eliminated from the
Plan's investment options: 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.
7
LAYNE CHRISTENSEN COMPANY HOURLY 401(K) RETIREMENT SAVINGS PLAN
FORM 5500, SCHEDULE H, PART IV, LINE 4i-SCHEDULE OF ASSETS (HELD AT END OF YEAR)
AS OF DECEMBER 31, 2003
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(a) (b) (c) (d) (e)
DESCRIPTION OF INVESTMENT INCLUDING MATURITY
IDENTITY OF ISSUER, BORROWER, DATE, RATE OF INTEREST, COLLATERAL, PAR OR
LESSOR OR Similar Party maturity value Cost Current Value
* Merrill Lynch Layne Christensen Company Stock Account ** $ 84,821
Common Stock (7,146 shares)
* Merrill Lynch Merrill Lynch Retirement Preservation Trust ** 3,214,373
Common/Collective Trust (3,214,373 units)
Managers Managers International Equity Fund ** 120,336
Mutual Fund (2,926 shares)
* Merrill Lynch Merrill Lynch Fundamental Growth Fund ** 75,822
Mutual Fund (4,666 shares)
Franklin Franklin Small-Mid Capital Growth Fund ** 43,670
Mutual Fund (1,445 shares)
MFS MFS Emerging Growth Fund ** 30,955
Mutual Fund (1,095 shares)
John Hancock John Hancock Health Sciences Fund ** 24,867
Mutual Fund (583 shares)
AllianceBernstein AllianceBernstein Worldwide Privatization Fund ** 4,186
Mutual Fund (385 shares)
* Merrill Lynch Merrill Lynch Basic Value Fund ** 1,814,798
Mutual Fund (59,580 shares)
8
LAYNE CHRISTENSEN COMPANY HOURLY 401(K) RETIREMENT SAVINGS PLAN
FORM 5500, SCHEDULE H, PART IV, LINE 4i-SCHEDULE OF ASSETS (HELD AT END OF YEAR)
AS OF DECEMBER 31, 2003
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(a) (b) (c) (d) (e)
DESCRIPTION OF INVESTMENT INCLUDING MATURITY
IDENTITY OF ISSUER, BORROWER, DATE, RATE OF INTEREST, COLLATERAL, PAR OR
LESSOR OR Similar Party maturity value Cost Current Value
* Merrill Lynch Merrill Lynch Balanced Capital Fund ** $ 246,181
Mutual Fund (9,339 shares)
* Merrill Lynch Merrill Lynch Pacific Fund ** 6,057
Mutual Fund (323 shares)
PIMCO PIMCO Total Return Fund ** 319,124
Mutual Fund (29,797 shares)
* Merrill Lynch Merrill Lynch S&P 500 Index Trust ** 141,257
Mutual Fund (10,356 shares)
AllianceBernstein AllianceBernstein Corporate Bond Portfolio ** 871
Mutual Fund (72 shares)
Van Kampen Van Kampen Emerging Growth Fund ** 89,393
Mutual Fund (2,474 shares)
Seligman Seligman Communications and Information Fund ** 114,708
Mutual Fund (4,989 shares)
AllianceBernstein AllianceBernstein Small Cap Fund ** 321
Mutual Fund (16 shares)
State Street State Street Research Global Resources Fund ** 493
9
LAYNE CHRISTENSEN COMPANY HOURLY 401(K) RETIREMENT SAVINGS PLAN
FORM 5500, SCHEDULE H, PART IV, LINE 4i-SCHEDULE OF ASSETS (HELD AT END OF YEAR)
AS OF DECEMBER 31, 2003
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(a) (b) (c) (d) (e)
DESCRIPTION OF INVESTMENT INCLUDING MATURITY
IDENTITY OF ISSUER, BORROWER, DATE, RATE OF INTEREST, COLLATERAL, PAR OR
LESSOR OR Similar Party maturity value Cost Current Value
Mutual Fund (15 shares)
Pioneer Pioneer Europe Fund ** $ 2,031
Mutual Fund (79 shares)
MFS MFS Research Fund ** 20,045
Mutual Fund (1,146 shares)
Davis New York Davis New York Venture Fund ** 335,488
Mutual Fund (12,191 shares)
John Hancock John Hancock Sovereign Investors Fund ** 473
Mutual Fund (25 shares)
* Plan Participants Participant Promissory Notes 598,309
Interest rates ranging from 4% to 9.5%;
maturity dates through July 2014.
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TOTAL INVESTMENTS $ 7,288,579
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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.
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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
HOURLY 401(k) RETIREMENT
SAVINGS PLAN
DATE: June 28, 2004 By Layne Christensen Company
By /s/ Jerry W. Fanska
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Jerry W. Fanska
Vice President Finance - Treasurer
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EXHIBIT INDEX
Exhibit
Number Description of Documents Page
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24 Consent of Independent Registered 13
Public Accounting Firm
12