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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
|X| Annual Report Pursuant to Section 15(d) of the Securities Exchange
Act of 1934.
For the fiscal year ended December 31, 2005; or
|_| Transition Report Pursuant to 15(d) of the Securities Exchange Act
of 1934.
For the transition period from ____________ to ____________
Commission file number: 0-12742
SPIRE CORPORATION 401(K) PROFIT SHARING PLAN
(Full title of the plan)
SPIRE CORPORATION
(Name of issuer of the securities held pursuant to the plan)
ONE PATRIOTS PARK
BEDFORD, MASSACHUSETTS 01730-2396
(Address of principal executive offices)
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SPIRE CORPORATION 401(K) PROFIT SHARING PLAN
FOR THE YEAR ENDED DECEMBER 31, 2005
TABLE OF CONTENTS
Page
Number
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Report of Independent Registered Public Accounting Firm.................... 1
Financial Statements:
Statements of Net Assets Available for Benefits........................ 2
Statement of Changes in Net Assets Available for Benefits.............. 3
Notes to Financial Statements.......................................... 4-7
Supplemental Schedules:
Schedule H, Item 4i - Form 5500
Schedule of Assets (Held at End of Year), December 31, 2005........ 8
Schedule H, Line 4j - Form 5500
Schedule of Reportable Transactions, For the Year Ended
December 31, 2005.................................................. 9
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Plan Administrator
Spire Corporation 401(k) Profit Sharing Plan
Bedford, Massachusetts
We have audited the accompanying statements of net assets available for benefits
of Spire Corporation 401(k) Profit Sharing Plan (the Plan) as of December 31,
2005 and 2004 and the related statement of changes in net assets available for
benefits for the year ended December 31, 2005. 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. We were not engaged to perform an
audit of the Plan's 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 Plan's
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 as of
December 31, 2005 and 2004, and the changes in net assets available for benefits
for the year ended December 31, 2005, 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 schedules of assets
(held at end of year) and reportable transactions as of and for the year ended
December 31, 2005 are presented for the purpose of additional analysis and are
not a required part of the basic financial statements but are supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting under the Employee Retirement Income Security Act of 1974. The
supplemental schedules are the responsibility of the Plan's management. The
supplemental schedules have been subjected to the auditing procedures applied in
the audits of the basic financial statements and, in our opinion, are fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
/s/ CARLIN, CHARRON & ROSEN, LLP
Westborough, Massachusetts
June 16, 2006
1
SPIRE CORPORATION 401(K) PROFIT SHARING PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 2005 AND 2004
2005 2004
---------- ----------
ASSETS
Investments:
At fair value:
Common stock - Spire Corporation $1,489,404 $1,241,277
Mutual funds 3,735,970 4,449,785
Participant loans 74,971 89,153
At contract value:
Hartford Fixed Income Fund 203,071 264,124
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5,503,416 6,044,339
Participant contributions receivable 9,270 17,169
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Total assets $5,512,686 $6,061,508
========== ==========
Net assets available for benefits $5,512,686 $6,061,508
========== ==========
See notes to financial statements.
2
SPIRE CORPORATION 401(K) PROFIT SHARING PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 2005
Additions to net assets attributed to:
Investment income:
Interest and dividends $ 184,504
Interest on loans 4,351
Net appreciation in fair value of investments 1,097,902
----------
1,286,757
Participant contributions 337,986
----------
Total additions 1,624,743
----------
Deductions from net assets attributed to:
Benefits paid to participants 2,166,078
Corrective distributions 6,683
Administrative charges 804
----------
Total deductions 2,173,565
----------
Net decrease (548,822) Net assets available for benefits:
Beginning of year 6,061,508
----------
End of year $5,512,686
==========
See notes to financial statements.
3
SPIRE CORPORATION 401(K) PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2005
1. Plan Description
The following description of the Spire Corporation 401(k) Profit Sharing
Plan (the Plan) provides only general information. Participants should
refer to the Plan agreement for a more complete description of the Plan's
provisions.
GENERAL
The Plan is a defined contribution plan covering all employees of
Spire Corporation (the Company) who have completed 90 days of service
and are age twenty-one or older. The Plan is subject to the
provisions of the Employee Retirement Income Security Act (ERISA).
CONTRIBUTIONS
Each year, participants may contribute up to the maximum amount of
pre-tax annual compensation as determined by the Internal Revenue
Code. Participants who have attained age 50 before the end of the
Plan year are eligible to make catch-up contributions. Participants
may also contribute amounts representing distributions from other
qualified defined benefit or defined contribution plans. Participants
direct the investment of their contributions into various investment
options offered by the Plan. The Plan currently offers the Company's
common stock, sixteen mutual funds, and an insurance contract as
investment options for participants. The Company may contribute, at
the determination of the board of directors, a discretionary matching
contribution on the first 15 percent of base compensation that a
participant contributes to the Plan. The Company's matching
contribution is invested directly in Company common stock. The
Company may also make a profit sharing contribution. In 2005, the
Company did not make a matching or profit sharing contribution.
Contributions are subject to certain limitations.
PARTICIPANT ACCOUNTS
Each participant's account is credited with the participant's
contributions and the Company's matching contribution (if any) and an
allocation of (a) the Company's profit sharing contribution (if any),
and (b) plan earnings. Allocations are based on participant earnings
or account balances, as defined. The benefit to which a participant
is entitled is the benefit that can be provided from the
participant's vested account.
VESTING
Participants are immediately vested in voluntary contributions plus
actual earnings thereon. Vesting in the Company matching contribution
is based on years of continuous service. A participant is 100 percent
vested after six years of credited service.
FORFEITED ACCOUNTS
At December 31, 2005 and 2004, forfeited nonvested accounts totaled
$27,002 and $21,745, respectively. These amounts will be used to
reduce future employer contributions.
PARTICIPANT LOANS
Participants may borrow from their fund accounts a minimum of $1,000
up to a maximum equal to $50,000 or 50 percent of their account
balance, whichever is less. The loans are secured by the balance in
the participant's account and bear interest at a rate commensurate
with local prevailing rates as determined by the plan administrator.
Interest rates range from 5% to 10%. Principal and interest are
repaid through payroll deductions.
4
SPIRE CORPORATION 401(K) PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS - CONTINUED
FOR THE YEAR ENDED DECEMBER 31, 2005
PAYMENTS OF BENEFITS
On termination of service for any reason, a participant may elect to
receive a lump-sum amount equal to the value of the participant's
vested interest in his or her account or annual installments over a
period of not more than a participant's and his or her beneficiary's
assumed life expectancy determined at the time of distribution.
Withdrawals may be made under certain other circumstances in
accordance with the Plan document.
ADMINISTRATIVE COSTS
Except for loan fees, which are charged against the borrowers'
accounts, administrative costs of the Plan are paid by the Company.
2. Summary of Significant Accounting Policies
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets,
liabilities and changes therein and disclosure of contingent assets
and liabilities. Actual results could differ from those estimates.
INVESTMENT VALUATION AND INCOME RECOGNITION
The Plan's investments are stated at fair value except for its
insurance contract which is stated at contract value, which
approximates fair value, as reported to the plan administrator by
Hartford Life Insurance Company. Quoted market prices are used to
value investments. Purchases and sales of securities are recorded on
a trade-date basis. Interest income is recorded on the accrual basis.
Dividends are recorded on the ex-dividend date.
PAYMENT OF BENEFITS Benefits are recorded when paid.
3. Investments
Investments that represent five percent or more of the Plan's net assets
are as follows:
December 31,
------------------------
2005 2004
---------- ----------
Mutual funds
Oppenheimer Quest Opportunity Value $ 777,474 $1,255,486
Franklin Flexible Capital Growth 1,083,273 1,204,944
American Funds Washington Mutual Investors -- 386,337
American Funds Europacific Growth 408,940 383,644
Common stock
Spire Corporation 1,489,404 1,241,277
5
SPIRE CORPORATION 401(K) PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS - CONTINUED
FOR THE YEAR ENDED DECEMBER 31, 2005
During 2005, the Plan's investments (including investments bought, sold,
and held during the year) appreciated in value as follows:
Mutual funds $ 41,167
Common stock 1,058,790
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$1,099,957
4. Nonparticipant-Directed Investments
Information about the net assets and the significant components of the
changes in net assets relating to the nonparticipant-directed investments
is as follows:
December 31,
-------------------------
2005 2004
---------- ----------
Net assets:
Common stock - Spire Corporation $1,481,103 $1,235,266
========== ==========
Changes in net assets during 2005:
Benefits paid to participants $ (791,704)
Net appreciation 1,037,541
----------
$ 245,837
5. Plan Termination
Although it has not expressed any intent to do so, the Company has the
right under the Plan to discontinue its contributions at any time and to
terminate the Plan subject to the provisions of ERISA. In the event of
plan termination, participants would become 100 percent vested in their
employer contributions.
6. Income Tax Status
The Internal Revenue Service has determined and informed the Company by a
letter dated May 23, 1995, that the Plan and related trust are designed
in accordance with applicable sections of the Internal Revenue Code
(IRC). Although the Plan has been amended since receiving the
determination letter, the plan administrator believes that the Plan is
designed and is currently being operated in compliance with the
applicable requirements of the IRC.
7. Excess Contributions
Benefit contributions for the plan year ended December 31, 2005 include
payments of $6,683 made to certain participants to return to them excess
deferral contributions as required to satisfy the relevant
nondiscrimination provisions of the Plan for the prior year.
Contributions received for the year ended December 31, 2005 include
excess deferral contributions in the amount of $29,685. These amounts
must be refunded as required to satisfy the relevant nondiscrimination
provisions for the 2005 plan year. These excess deferral contributions
will be shown as distributions in the year in which the refunds are
actually made.
6
SPIRE CORPORATION 401(K) PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS - CONTINUED
FOR THE YEAR ENDED DECEMBER 31, 2005
8. Risks and Uncertainties
The Plan invests in various investment securities. Investment securities
are exposed to various risks, such as interest rate, market, and credit
risks. Due to the level of risk associated with certain investment
securities, it is at least reasonably possible that changes in the values
of investment securities will occur in the near term and that such
changes could materially affect participants' account balances and the
amounts reported in the statement of net assets available for benefits.
7
SPIRE CORPORATION 401(K) PROFIT SHARING PLAN
SCHEDULE H, ITEM 4I - FORM 5500
SCHEDULE OF ASSETS (HELD AT END OF YEAR)
DECEMBER 31, 2005
E.I.N. 04-2457335
Plan Number 002
(a) (b) (c) (d) (e)
Description of Investment
Identity of Issue, Including Maturity Date,
Borrower, Lessor or Rate of Interest, Collateral, Current
Similar Party Par or Maturity Value Cost Value
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* Spire Corporation 199,920 shares of common stock $301,306 $1,489,404
Oppenheimer Funds Oppenheimer Quest Opportunity Value n/a 777,474
Franklin Templeton Investments Franklin Flexible Capital Growth n/a 1,083,273
American Funds Europacific Growth n/a 408,940
Hartford Life Insurance Co. Fixed Income n/a 203,071
AIM Funds AIM Cash Reserve Shares n/a 226,816
American Funds American Balanced n/a 169,111
Franklin Templeton Investments Franklin Small-Mid Cap Growth n/a 134,099
MFS Investment Management Mass Investors Growth Stock n/a 37,068
Eaton Vance Large Cap Value n/a 193,146
Eaton Vance Income Fund of Boston n/a 111,845
Allianz Funds RCM Global Technology n/a 106,421
American Funds New Perspective n/a 60,898
Oppenheimer Funds Oppenheimer Strategic Income n/a 103,445
Sentinel Group Funds Sentinel Small Company n/a 84,812
PIMCO Funds Total Return n/a 169,377
Davis Funds Davis New York Venture n/a 22,114
Evergreen Investments Evergreen Money Market n/a 20,244
Black Rock Funds Black Rock Money Market n/a 3,019
Pioneer Investments Pioneer Cash Reserves n/a 23,868
Participant Loans Interest rates 5% to 10% n/a 74,971
----------
$5,503,416
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* Represents party-in-interest
8
SPIRE CORPORATION 401(K) PROFIT SHARING PLAN
SCHEDULE H, ITEM 4J - FORM 5500
SCHEDULE OF REPORTABLE TRANSACTION
FOR THE YEAR ENDED DECEMBER 31, 2005
E.I.N. 04-2457335
Plan Number 002
(a) (b) (c) (d) (e) (g) (h) (i)
Identity of
Party Description Purchase Selling Expense Cost of Current Net
Involved of Assets Price Price Incurred Asset Value Gain (Loss)
----------- ------------ -------- -------- -------- -------- -------- -----------
Spire Corp. Common stock
3 purchases $3,111 $ -- $ 31 $ 3,142 $ 3,209 $ --
14 sales -- $674,286 $2,413 $300,718 $631,111 $371,155
9
SIGNATURE
The Plan. Pursuant to the requirements of the Securities Exchange Act of
1034, the Investment Committee of the Spire Corporation 401(k) Profit Sharing
Plan have duly caused this annual report to be signed on their behalf by the
undersigned hereunto duly authorized.
SPIRE CORPORATION 401(k) PROFIT SHARING PLAN
Date: June 29, 2006 By: /s/ Christian Dufresne
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Christian Dufresne
Chief Financial Officer
10