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, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
COMMISSION FILE NUMBER 1-14337
PENTON MEDIA, INC. 401(k) RETIREMENT SAVINGS PLAN
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(Full title of the Plan)
PENTON MEDIA, INC.
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(Name of Issuer of the Securities Held Pursuant to the Plan)
1300 East Ninth Street, Cleveland, Ohio 44114
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(Address of Issuer's Principal Executive Office)
PENTON MEDIA, INC.
INDEX TO FORM 11-K
Page
(a) Financial Statements - financial statements 3-14
required to be filed are listed in the
Index to Financial Statements attached hereto,
which is incorporated herein by reference.
(b) Signatures 15
(c) Exhibits:
Number Description
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23 Consent of Independent Auditors 16
99.1 Certification Pursuant to 18 U.S.C. Section 1350,
As Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 17
2
PENTON MEDIA, INC. 401(k) RETIREMENT SAVINGS PLAN
FINANCIAL STATEMENTS
AND SUPPLEMENTAL SCHEDULE
DECEMBER 31, 2002 AND 2001
3
PENTON MEDIA, INC. 401(k) RETIREMENT SAVINGS PLAN
INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE
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Page
Report of Independent Auditors 5
Financial Statements:
Statements of Net Assets Available for Benefits
at December 31, 2002 and 2001 6
Statement of Changes in Net Assets Available for Benefits
for the year ended December 31, 2002 7
Notes to Financial Statements 8-13
Supplemental Schedule required by ERISA: *
Schedule H Part IV Item 4i -
Schedule of Assets (Held At End Of Year) 14
* Note: All other schedules required by 29 CFR 2520.103-10 of the Department of
Labor's Rules and Regulations for Reporting and Disclosure under ERISA (Employee
Retirement Income Security Act of 1974) have been omitted because the conditions
under which they are required are not present.
4
REPORT OF INDEPENDENT AUDITORS
To the Participants and Administrator of the
Penton Media, Inc. 401(k) Retirement Savings Plan
In our opinion, the accompanying statements of net assets available for benefits
and the related statement of changes in net assets available for benefits
present fairly, in all material respects, the net assets available for benefits
of the Penton Media, Inc. 401(k) Retirement Savings Plan (the "Plan") at
December 31, 2002 and 2001, and the changes in net assets available for benefits
for the year ended December 31, 2002 in conformity with accounting principles
generally accepted in the United States of America. 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 of these statements in accordance with auditing standards
generally accepted in the United States of America, which 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, 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.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule, Schedule H,
Part IV, Item 4i, Schedule of Assets (Held At End of Year), is presented for the
purpose of additional analysis and is not a required part of the basic financial
statements but is supplementary information required by the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. This supplemental schedule is the
responsibility of the Plan's management. The supplemental schedule has been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
/s/ PricewaterhouseCoopers LLP
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Cleveland, Ohio
June 20, 2003
5
PENTON MEDIA, INC. 401(k) RETIREMENT SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
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DECEMBER 31,
2002 2001
Assets:
Investments, at fair market value (See Note 6) $43,963,121 $61,474,709
Participant loans 1,232,757 1,658,583
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Net assets available for benefits $45,195,878 $63,133,292
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The accompanying notes are an integral part of these financial statements.
6
PENTON MEDIA, INC. 401(k) RETIREMENT SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
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FOR THE YEAR ENDED
DECEMBER 31, 2002
Additions:
Additions to net assets attributed to:
Interest and dividends $ 645,780
Participant contributions 4,665,158
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Total additions 5,310,938
------------
Deductions:
Deductions from net assets attributed to:
Net depreciation in fair market value of investments (See Note 6) (12,098,800)
Benefits paid to participants (11,139,729)
Administrative expenses (9,823)
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Total deductions (23,248,352)
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Net decrease (17,937,414)
Net assets available for benefits:
Beginning of year 63,133,292
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End of year $ 45,195,878
============
The accompanying notes are an integral part of these financial statements.
7
PENTON MEDIA, INC. 401(k) RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002 AND 2001
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1. PLAN DESCRIPTION
The following description of the Penton Media, Inc. 401(k) Retirement
Savings Plan (the "Plan") provides only general information. Participants
should refer to the Plan document for a more complete description of the
Plan's provisions.
GENERAL
Prior to August 7, 1998, Penton Media, Inc. ("Penton" or the "Company")
was a wholly owned subsidiary of Pittway Corporation ("Pittway"). Pittway
distributed 100% of Penton's common stock on August 7, 1998, to Pittway's
shareholders in a tax-free spinoff. On September 1, 1998, the Company
adopted the Plan, a 401(k) defined contribution plan. Effective January 1,
2001, the Plan was amended and restated to incorporate various plan
qualification requirements made by the Uruguay Round Agreements Act
(GATT), the Taxpayer Relief Act of 1997, the Reemployment Rights Act of
1994 (USERRA), the Internal Revenue Service Restructuring and Reform Act
of 1998 and the Small Business Job Protection Act of 1996 (SBJPA). The
Plan was amended in 2002 to reflect the adoption of various provisions of
the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA).
The Plan is subject to the provisions of the Employee Retirement Income
Security Act of 1974 (ERISA). Employees of the Company become eligible to
participate in the plan on the first day of the month that is at least 30
days after the date on which the employee begins employment with the
Company.
CONTRIBUTIONS
Prior to January 1, 2002, participants were able to contribute up to 15%
of pre-tax annual compensation, as defined in the Plan. Effective January
1, 2002, participants may contribute up to 25%. Unless waived, 3% of an
eligible employee's compensation will automatically be deducted and
contributed to the Plan. The matching percentage contributed by the
Company is determined by the Board of Directors of the Company. Prior to
January 1, 2002, the matching contribution was equal to 50% of the first
6% of the participants' contributions to the Plan. Effective January 1,
2002, the Company suspended the Company match. The Plan does not have any
non-participant directed contributions.
Effective October 1, 2002, the Plan was amended to allow for catch-up
contributions for participants age 50 or older.
The Plan also permits rollover contributions from other qualified
retirement plans. Rollover contributions are included in participant
contributions and amounted to $110,758 in 2002.
PARTICIPANT ACCOUNTS
Fidelity Investments Institutional Operations Company, Inc., the trustee
of the Plan ("Fidelity" or the "Trustee"), maintains an individual account
for each participant. This account is credited with participant
contributions, employer matching contributions and Plan earnings, as
allocated based upon each participant's election.
VESTING
Participants are immediately vested in both employee and employer matching
contributions, plus actual earnings thereon.
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PENTON MEDIA, INC. 401(k) RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002 AND 2001
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INVESTMENT OPTIONS
Upon enrollment in the Plan, a participant may direct employee and
matching employer contributions in one quarter percent increments to any
of the investment options. Two of the investment options are no longer
available for future investment purposes, as noted in the descriptions
which follow.
Northern Trust Company ("Northern Trust") is the trustee for the
AptarGroup Inc. Stock Fund and the Penton Media, Inc. Stock Fund. Northern
Trust reports all activity of these funds to Fidelity. Fidelity manages
the following remaining funds: Retirement Government Money Market
Portfolio, Managed Income Portfolio, Growth & Income Portfolio, Aggressive
Growth Fund, Magellan Fund, Spartan 500 Index Fund, Diversified
International Fund, Fidelity Mid-Cap Stock Fund, PIMCO Total Return Fund
II, Neuberger Berman Genesis, Morgan Stanley Value Added Equity, and the
Fidelity Freedom Funds.
Fidelity Retirement Government Money Market Portfolio is a money market
mutual fund that invests in obligations, issued or guaranteed as to
principal and interest by the U.S. Government.
Fidelity Managed Income Portfolio is a stable value fund (common or
collective trust). It invests primarily in high-quality, short and long
term insurance company investment contracts (GICs), bank investment
contracts (BICs), short term money market instruments and "synthetic" GICs
(debt obligations issued by one institution and insured by another as to
the payment of principal at maturity).
Fidelity Growth & Income Portfolio is a growth and income mutual fund,
which seeks long-term capital growth, current income, and growth of income
consistent with reasonable investment risk. It invests primarily in U.S.
and foreign stocks, focusing on those that pay dividends and show
potential earnings growth. It may also invest in bonds.
Fidelity Aggressive Growth Fund is a growth mutual fund and invests
primarily in stocks of small and medium size developing companies that
have the potential to grow rapidly. Such stocks may be subject to abrupt
or erratic price changes.
Fidelity Magellan Fund is a growth mutual fund and seeks long-term capital
appreciation by investing in the stocks of both well known and lesser
known companies with potentially above-average growth potential and a
correspondingly higher level of risk. Securities held by the fund may
include both foreign and domestic companies.
Spartan 500 Index Fund is a growth mutual fund and invests primarily in
the stocks that are included in the Standard & Poor's Composite Index of
500 stocks ("S&P 500") and other securities that are based on the value of
the index.
Fidelity Diversified International Fund is a growth mutual fund that
invests primarily in stocks of companies located outside of the U.S. that
are included in the Morgan & Stanley EAFE Index (Europe, Australia, Far
East Index). It seeks stocks of larger companies that are considered
undervalued in their countries.
Fidelity Mid-Cap Stock Fund is a long-term growth mutual fund that invests
primarily in domestic and foreign stocks of companies with medium market
capitalization.
PIMCO Total Return Fund II is a growth mutual fund that seeks total fund
return with an average portfolio duration between three and six years. The
fund invests primarily in investment grade fixed income securities, which
may include U.S. government obligations, mortgage and asset backed
9
PENTON MEDIA, INC. 401(k) RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002 AND 2001
--------------------------------------------------------------------------------
securities, variable and floating debt securities and convertible
securities.
Neuberger Berman Genesis Trust is a growth mutual fund that seeks long
term capital appreciation. The fund primarily invests in common stocks of
small companies.
Morgan Stanley Value Added Equity Fund is a growth mutual fund that seeks
capital appreciation and current income. The fund primarily invests in
common stocks listed on the S&P 500.
Fidelity Freedom Funds are growth and income mutual funds that provide
investing opportunities for both short and long term goals by allowing
investors to choose from the following fund options based on the
participants' targeted retirement date: Fidelity Freedom Income Fund,
Fidelity Freedom 2000 Fund, Fidelity Freedom 2010 Fund, Fidelity Freedom
2020 Fund, Fidelity Freedom 2030 Fund and Fidelity Freedom 2040 Fund. The
funds invest in a combination of Fidelity equity, fixed income and money
market funds which are allocated differently based on the retirement goal.
AptarGroup, Inc. Stock Fund is a fund which invested exclusively in shares
of AptarGroup, Inc. Effective July 1, 2003, the AptarGroup, Inc. Stock
Fund will no longer be available as an investment option. See Note 8 -
Subsequent Events.
Penton Media, Inc. Stock Fund invests exclusively in shares of Penton
Media, Inc. stock. Shares in the Penton Media, Inc. Stock Fund are
acquired on the open market at fair market value on the date purchased.
See Note 8 - Subsequent Events.
PARTICIPANT LOANS
Participants may borrow from their fund accounts a minimum of $1,000 not
to exceed the lesser of $50,000 or 50% of the account balance. Participant
loans are reflected as a transfer from the respective investment funds to
the Loan Fund. Loan repayments are treated as a transfer to the investment
funds from the Loan Fund. Loan terms may not exceed five years. The loans
are secured by the balance in the participant's vested account and carry
an interest rate equal to the prime rate plus one percent on the date of
the loan. Interest rates range from 5.75% to 11.50%. Principal and
interest are paid ratably through payroll deductions.
PAYMENT OF BENEFITS AND WITHDRAWALS
A participant may withdraw their account balance upon termination of
employment or upon reaching age 59 1/2 by calling Fidelity directly.
Hardship withdrawals are available if requirements are met as outlined in
the Plan document.
Upon termination of employment or death, the accumulated benefits will be
paid to the participant or beneficiary based on their payment election.
Participants may elect to receive either a lump sum payment, a series of
installment payments over a period of time as determined by the Plan
document, or a combination of the two.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The financial statements of the Plan have been prepared on the accrual
basis of accounting in accordance with accounting principles generally
accepted in the United States of America ("GAAP").
10
PENTON MEDIA, INC. 401(k) RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002 AND 2001
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ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities" ("SFAS No. 133"). SFAS No.
133, as amended by SFAS No. 137, "Accounting for Derivative Instruments
and Hedging Activities - Deferral of the Effective Date of SFAS No. 133"
and SFAS No. 138, "Accounting for Derivative Instruments and Hedging
Activities - an amendment of SFAS No. 133" is effective for fiscal years
beginning after June 15, 2000. SFAS No. 133 establishes standards for
accounting and reporting for derivative instruments, including certain
derivative instruments embedded in other contracts, and for hedging
purposes. It requires that an entity recognize all derivatives as either
assets or liabilities. The adoption of SFAS No. 133 as of January 1, 2001,
did not have a material impact on the financial statements.
USE OF ESTIMATES
The preparation of financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect the amounts
reported in the financial statements and accompanying notes. Actual
results could differ from these estimates.
INVESTMENT VALUATION AND INCOME RECOGNITION
Investments in the AptarGroup, Inc. Stock Fund and Penton Media, Inc.
Stock Fund are valued at quoted market prices at year-end. Investments in
the Fidelity Growth and Income Portfolio, Fidelity Retirement Government
Money Market Portfolio, Fidelity Managed Income Portfolio, Fidelity
Aggressive Growth Fund, Fidelity Magellan Fund, Spartan 500 Index Fund,
Fidelity Diversified International Fund, Fidelity Mid-Cap Stock Fund,
PIMCO Total Return Fund II, Neuberger Berman Genesis Trust, Morgan Stanley
Value Added Equity Fund, and Fidelity Freedom Funds are valued at quoted
market prices which represent the net asset value of shares held by the
Plan at year-end.
Purchases and sales of securities, including related gains and losses, are
recorded as of the trade date. Interest income is recorded when earned.
Dividend income is recorded on the ex-dividend date.
The Plan presents in the statement of changes in net assets available for
benefits the net appreciation or depreciation in the fair value of its
investments, which consists of the realized gains or losses and the
unrealized appreciation or depreciation on those investments.
PAYMENT OF BENEFITS
Benefits are recorded when paid by the Plan.
ADMINISTRATIVE EXPENSES
Certain Trustee and administrative expenses incurred in the administration
of the Plan are paid by the Plan. Audit and legal fees incurred on behalf
of the Plan are paid by the Company.
3. RISKS AND UNCERTAINTIES
The Plan provides for various investment options in any combination of
stocks, bonds, fixed income securities, mutual funds, and other investment
securities. Investment securities are exposed to various risks, such as
interest rate, market and credit risk. Due to the level of risk associated
with certain investment securities and the level of uncertainty related to
changes in the value of investment securities, it is at least reasonably
possible that changes in risks in the near term would materially affect
participants' account balances and the amounts reported in the statement
of net assets available for benefits and the statement of changes in net
assets available for benefits.
4. PARTY-IN-INTEREST TRANSACTIONS
Plan investments managed by and fees paid to the Trustee qualify as a
party-in-interest transaction. Party-in-interest transactions also include
loans made to participants and investments made in the Penton Media, Inc.
Stock Fund and the AptarGroup, Inc. Stock Fund.
11
PENTON MEDIA, INC. 401(k) RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002 AND 2001
--------------------------------------------------------------------------------
5. PLAN TERMINATION
Although it has not expressed any intent to do so, the Company has the
right under the Plan to amend or terminate the Plan subject to the
provisions of ERISA. In the event the Plan is terminated, the participants
are immediately entitled to the full value of their account. The Company
also has the right under the Plan to discontinue its contributions at
anytime.
6. INVESTMENTS
The following are investments that represent 5% or more of the Plan's net
assets at December 31:
2002 2001
Fidelity Retirement Government Money Market Portfolio, $ 11,201,427 $ 14,358,552
11,201,427 and 14,358,552 shares, respectively
Fidelity Growth & Income Portfolio $ 7,102,956 $ 10,458,287
234,344 and 279,783 shares, respectively
Fidelity Magellan Fund $ 12,060,814 $ 18,593,551
152,746 and 178,407 shares, respectively
Fidelity Aggressive Growth Fund $ 3,138,507 $ 5,897,179
280,474 and 310,051 shares, respectively
Spartan 500 Index Fund $ - $ 3,688,516
46,755 shares
The Plan's investments depreciated in value for the year ended December
31, as follows:
2002
Common Stock $ (2,543,270)
Mutual Funds (9,555,530)
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Total $ (12,098,800)
==============
7. FEDERAL INCOME TAX STATUS
The Plan received a favorable determination letter dated September 26,
2002. The plan administrator believes that the Plan is designed and is
currently being operated in compliance with the applicable requirements of
the Code. As such, the Plan financial statements do not reflect any
accruals for federal and state taxes.
8. SUBSEQUENT EVENTS
PENTON MEDIA, INC. STOCK FUND
On June 17, 2003, the Company was notified by the New York Stock Exchange
(NYSE) that the Company's common stock did not meet the NYSE's listing
criteria and as such, the common stock was delisted. The Plan was amended,
effective June 13, 2003, to remove the Penton Media, Inc.
12
PENTON MEDIA, INC. 401(k) RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002 AND 2001
--------------------------------------------------------------------------------
Stock Fund ("Stock Fund") as an investment option. Participants will be
able to retain their holdings in the Stock Fund or liquidate their
holdings, but participants will not be able to allocate future
contributions or transfer existing assets to the Fund.
APTARGROUP, INC. STOCK FUND
Effective July 1, 2003, the AptarGroup, Inc. Stock Fund will no longer be
available as an investment option. Participants have the option to
transfer their account balance to any other available funds within the
Plan by July 1, 2003 or allow the funds to automatically transfer to the
Fidelity Retirement Government Money Market Portfolio.
UNREGISTERED SALES OF COMPANY COMMON STOCK
The sales of common stock under the Plan from May 2001 through March 2003
were not registered under the federal securities laws (the "unregistered
sales"). As a result, certain Plan participants may have the right to
rescind their purchases for an amount equal to the purchase price paid for
the shares, plus interest from the date of purchase. The Company may also
be subject to civil and other penalties by regulatory authorities. On
March 31, 2003, the Company filed a Form S-8 registration and registered
6.0 million additional shares to be offered under the Plan.
In April 2003, the Company offered to reimburse employees who had
purchased Company common stock through the Plan between March 25, 2002 and
March 25, 2003. Employees who sign a release of federal securities law
claims would be reimbursed the amount by which the price paid for the
common stock exceeds the closing price of the stock on the date they
execute the release, or if the stock has been sold, the amount by which
the price paid by the employee exceeds the sales price. Employees who do
not sign the release by May 22, 2003, retain their rights under the
Federal securities laws. Rescission remedies available under Federal
securities laws expire on the one-year anniversary of the date the
unregistered shares were purchased. As of June 23, 2003, approximately
eighty percent of the employees who were offered the reimbursement have
accepted the terms of the release, representing a liability to the Company
of approximately $0.6 million. The estimated total liability to the
Company for all employees who were offered is approximately $1.0 million.
13
PENTON MEDIA, INC. 401(k) RETIREMENT SAVINGS PLAN
SCHEDULE H PART IV ITEM 4i
SCHEDULE OF ASSETS (HELD AT END OF YEAR)
At December 31, 2002
Investment Description Number of Shares Market Value Interest Rate
------------------------------------------------------- -------------------- ------------------- ---------------------
* Fidelity Retirement Government Money Market Portfolio 11,201,427 $ 11,201,427
* Fidelity Managed Income Portfolio 1,961,414 1,961,414
* Fidelity Growth & Income Portfolio 234,344 7,102,956
* Fidelity Aggressive Growth Fund 280,474 3,138,507
* Fidelity Magellan Fund 152,746 12,060,814
Spartan 500 Index Fund 35,604 2,152,979
* Fidelity Diversified International Fund 117,474 2,015,849
* Fidelity Mid-Cap Stock Fund 16,607 270,022
PIMCO Total Return Fund II 132,700 1,415,914
Neuberger Berman Genesis Trust 18,133 510,249
Morgan Stanley Value Added Equity Fund 65,898 475,124
* Fidelity Freedom Funds 53,342 569,900
* AptarGroup, Inc. Stock Fund 5,210 162,770
* Penton Media, Inc. Stock Fund 1,360,583 925,196
* Participant Loans 1,232,757 5.75% - 11.50%
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$ 45,195,878
===================
* A party-in-interest as defined by ERISA.
14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons who administer the Plan) have duly caused this annual
report to be signed on its behalf by the undersigned hereunto duly authorized.
PENTON MEDIA, INC. 401(k) RETIREMENT SAVINGS PLAN
BY: /s/ PRESTON L. VICE
---------------------
Preston L. Vice
Chief Financial Officer and
Member of Administrative Committee of
Penton Media Inc., Retirement Savings Plan
Date: June 27, 2003
15