þ | ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|
For the fiscal year ended December 31, 2008 | ||
OR | ||
o | TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
A. | Full title of the plan and the address of the plan, if different from that of the issuer named below: |
B. | Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: |
Contents | ||||
1 | ||||
2 | ||||
3 | ||||
4-14 | ||||
15-16 | ||||
17 | ||||
Exhibit 23.1 - Consent of Independent Registered Public Accounting Firm |
18 |
1
December 31, | 2008 | 2007 | ||||||
Assets |
||||||||
Investments, at fair value: |
||||||||
Interest bearing cash |
$ | 97,456 | $ | 106,287 | ||||
Money market fund |
2,173,390 | 641,736 | ||||||
Mutual funds |
60,624,643 | 96,375,743 | ||||||
Common collective trust |
9,349,839 | 8,525,283 | ||||||
Reliance Steel & Aluminum Co. common stock |
1,840,422 | 2,204,748 | ||||||
Participant loans |
3,989,290 | 3,457,678 | ||||||
Total investments |
78,075,040 | 111,311,475 | ||||||
Receivables: |
||||||||
Other receivables |
8,674 | 26,649 | ||||||
Total receivables |
8,674 | 26,649 | ||||||
Total Assets |
78,083,714 | 111,338,124 | ||||||
Liabilities |
||||||||
Due to brokers and other payables |
84,877 | 17,579 | ||||||
Net assets available for benefits at fair value |
77,998,837 | 111,320,545 | ||||||
Adjustment from fair value to contract value
for the fully benefit-responsive investment
contracts (common collective trust) |
504,349 | 92,648 | ||||||
Net assets available for benefits |
$ | 78,503,186 | $ | 111,413,193 | ||||
2
Year ended December 31, | 2008 | |||
Additions |
||||
Investment income: |
||||
Interest and dividends |
$ | 3,675,037 | ||
Other |
1,343 | |||
Total investment income |
3,676,380 | |||
Contributions: |
||||
Employer, net of forfeitures |
5,105,914 | |||
Participant |
3,083,805 | |||
Rollover |
80,587 | |||
Total contributions, net |
8,270,306 | |||
Total additions |
11,946,686 | |||
Deductions |
||||
Net depreciation in fair value of investments |
42,052,640 | |||
Benefits paid to participants and beneficiaries |
2,771,587 | |||
Deemed distributions of participant loans |
8,681 | |||
Administrative fees |
23,785 | |||
Total deductions |
44,856,693 | |||
Net decrease |
32,910,007 | |||
Net assets available for benefits, beginning of year |
111,413,193 | |||
Net assets available for benefits, end of year |
$ | 78,503,186 | ||
3
1.
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Description of the Plan | The following brief description of the Precision Strip, Inc. (the Company) Retirement and Savings Plan (the Plan) provides only general information. Participants should refer to the Summary Plan Description for a more complete description of the Plans provisions. | ||
General |
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The Plan is a defined contribution plan providing retirement benefits covering substantially all employees who meet certain eligibility requirements of Precision Strip, Inc., a wholly-owned subsidiary of Reliance Steel & Aluminum Co., and Precision Strip Transport, Inc., a wholly-owned subsidiary of Precision Strip, Inc. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). The Plan is administered by the Precision Strip Retirement and Savings Plan Administrative Committee (Plan Administrator). | ||||
Participation |
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Each employee is eligible to participate on the first entry date (first day of each Plan calendar quarter) after the completion of three months of service. | ||||
Contributions |
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For the year ended December 31, 2008, participants had the opportunity to contribute up to 50% of their annual compensation to the Plan, subject to federal limitations. Company profit sharing contributions are discretionary. The Plan requires employees to complete a year of service before being eligible to receive the employer contribution. Participants may also contribute amounts representing distributions from other qualified defined benefit or defined contribution plans. |
4
1.
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Description of the Plan (Continued) | Participant
Accounts Each participants account is credited with the participants contributions, employer contributions and allocation of investment earnings. The benefit to which a participant is entitled is the benefit that can be provided from the participants account. Participants may direct the investment of their account balances into various investment funds offered by the Plan. |
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Vesting |
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Participants are immediately vested in all employee contributions plus actual earnings thereon. | ||||
Employer profit sharing contributions and any earnings thereon will be vested in accordance with the following schedule: |
Years of Service | Percentage | |||
Less than 2 | 0% | |||
2 | 20% | |||
3 | 40% | |||
4 | 60% | |||
5 | 80% | |||
6 or more | 100% |
Payment of Benefits |
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On termination of service, a participant receives a lump sum amount equal to the vested value of his or her account, or upon death, disability or retirement, may elect to receive a lump sum amount or monthly installments. Other withdrawals from participants account balances may be made under certain circumstances, as defined in the Plan document. |
5
1.
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Description of the Plan (Continued) | Forfeitures Forfeitures from nonvested participant accounts are used to reduce future Company contributions. During the year ended December 31, 2008, forfeitures of approximately $90,690 were used to reduce the Companys contributions. Forfeited non-vested accounts totaled $11,771 and $3,359 at December 31, 2008 and 2007, respectively. |
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Participant Loans |
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Participants may borrow from their accounts up to the lesser of $50,000 or 50% of their vested account balance. Loans to participants are secured by the respective participants vested account balance and are subject to interest charges. Interest rates applicable to new participant loans are determined by the Plan Administrator on the first day of each calendar quarter based on prevailing market rates. Loans are repaid ratably through periodic payroll deductions over a term not exceeding five years, or ten years for loans used for the purchase of a primary residence. Interest rates on outstanding loans as of December 31, 2008 ranged from 5.25% to 9.50% and mature through May 2018. | ||||
Administrative Expenses |
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Non-investment costs and administrative expenses of the Plan are paid by the Company which is a party-in-interest. These expenses, which are not reflected in the accompanying financial statements, constitute exempt party-in-interest transactions under ERISA. Loan establishment, loan maintenance and short-term trading fees are paid by the Plan and all other investment expenses are offset against the related investment income. Fees paid by the Plan to the custodian for administrative expenses amounted to $23,785 for the year ended December 31, 2008. |
6
2.
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Summary of Significant Accounting Policies | Basis of Presentation The accompanying financial statements of the Plan are prepared under the accrual method of accounting in accordance with U.S. generally accepted accounting principles. As described in Financial Accounting Standards Board (FASB) Staff Position AAG INV-1 and SOP 94-4-1, Reporting of Fully Benefit-Responsive Investment Contracts Held by Certain Investment Companies Subject to the AICPA Investment Company Guide and Defined-Contribution Health and Welfare and Pension Plans, investment contracts held by a defined-contribution plan are required to be reported at fair value. However, contract value is the relevant measurement attribute for that portion of the net assets available for plan benefits of a defined contribution plan attributable to fully benefit-responsive investment contracts because contract value is the amount participants would receive if they were to initiate permitted transactions under the terms of the Plan. |
||
The Plan invests in the Fidelity Managed Income Portfolio which is a common collective trust. It invests in fully benefit-responsive investment contracts issued by insurance companies and other financial institutions, and in fixed income securities (see Investment Valuation and Income Recognition). The Plans Statements of Net Assets Available for Benefits present the fair value of these investment contracts as well as the adjustment of the fully benefit-responsive investment contracts from fair value to contract value. The Statement of Changes in Net Assets Available for Plan Benefits is prepared on a contract value basis. |
7
2.
|
Summary of Significant Accounting Policies (Continued) | New Accounting Pronouncements In September 2006, the FASB issued Statement on Financial Accounting Standards No. 157 (SFAS No. 157), Fair Value Measurements. This standard clarifies the definition of fair value for financial reporting, establishes a framework for measuring fair value and requires additional disclosures about the use of fair value measurements. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, which is the year beginning January 1, 2008 for the Plan (See Note 4 Fair Value Measurements). There was no material impact to the financial statements of the Plan upon adoption of SFAS No. 157. |
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Investment Valuation and Income Recognition |
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The Plans investments in registered investment companies (mutual funds) and in common stock are stated at fair value based on the quoted market price of the funds or common stock; the investments in registered investment companies represent the net asset value of the shares held by the Plan at year end. The common collective trust is stated at net asset value as determined by the trustee at the end of the Plan year except when holding fully benefit-responsive investment contracts as described below. Participant loans are stated at cost, which approximates fair value because the loans bear interest at rates commensurate with loans of similar credit quality and duration as of year-end. Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on ex-dividend date. | ||||
The Fidelity Managed Income Portfolio, a common collective trust, has entered into fully benefit-responsive investment contracts to provide preservation of principal, maintain a stable interest rate, and provide liquidity at contract value for participant withdrawals and transfers. For purposes of the Statement of Net Assets Available for Benefits, these investments are stated at fair value, rather than contract value, to the extent they are fully benefit-responsive. The fair value of these investments is determined using the market price of the underlying securities and the value of the investment contract. |
8
2.
|
Summary of Significant Accounting Policies (Continued) | Net Appreciation (Depreciation) in Fair Value of Investments Realized and unrealized appreciation (depreciation) in the fair value of investments is based on the difference between the fair value of the assets at the beginning of the year, or at the time of purchase for assets purchased during the year, and the related fair value on the day investments are sold with respect to realized appreciation (depreciation), or on the last day of the year for unrealized appreciation (depreciation). |
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Realized and unrealized appreciation (depreciation) is recorded in the accompanying Statement of Changes in Net Assets Available for Benefits as net depreciation in fair value of investments. |
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Risks and Uncertainties |
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The Plan provides various funds that hold investment securities. Investment securities are exposed to various risks such as interest rate, market volatility, and credit risks. 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 risk in the near term would materially affect participants account balances and the amounts reported in the financial statements. | ||||
The Plan provides investment options that hold securities of foreign companies, which may involve special risks and considerations not typically associated with investing in U.S. companies. These risks include devaluation of currencies, less reliable information about issuers, different securities transaction clearance and settlement practices, and possible adverse political and economic developments. Moreover, securities of many foreign companies and their markets may be less liquid and their prices more volatile than securities of comparable U.S. companies. |
9
2.
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Summary of Significant Accounting Policies (Continued) | Use of Estimates The preparation of the financial statements, in conformity with U.S. generally accepted accounting principles, requires management to make estimates and assumptions that affect the financial statements and accompanying notes. Actual results could materially differ from those estimates. |
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Payment of Benefits |
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Benefits paid to participants are
recorded when paid. |
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3.
|
Investments | Participants may invest in certain investments
offered by Fidelity Management Trust Company, the
custodian of the Plan, including a unitized common
stock fund containing common stock of Reliance Steel
& Aluminum Co. and interest bearing cash. At
December 31, 2008 and 2007, the Plan held 363,777
and 174,369 unitized shares of Reliance Steel &
Aluminum Co. stock fund with fair values of
$1,861,675 and $2,297,108, respectively. As of
December 31, 2008 and 2007, the Reliance Steel &
Aluminum Co. stock fund consisted of 92,298 and
40,678 shares, respectively, of Reliance Steel &
Aluminum Co. common shares valued at $1,840,422 and
$2,204,748, respectively. Also, at December 31,
2008 and 2007, respectively, the fund contained; a)
interest bearing cash of $97,456 and $106,287,
respectively, b) other receivables of $8,674 and
$3,652, respectively, and c) due to brokers and
other payables of $84,877 and $17,579, respectively. For risks and uncertainties regarding investment in Reliance Steel & Aluminum Co. common stock, participants should refer to the Reliance Steel & Aluminum Co. Annual Report on Form 10-K for the year ended December 31, 2008 and the Quarterly Report on Form 10-Q for the quarter ended March 31, 2009. |
10
3.
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Investments (Continued) |
The following investments represent 5% or more of the Plans net assets at December 31, 2008 and 2007: |
December 31, | 2008 | 2007 | ||||||
Mutual Funds: |
||||||||
Spartan U.S. Equity Index Fund |
$ | 11,567,634 | $ | 19,804,113 | ||||
Fidelity Dividend Growth Fund |
10,805,949 | 20,735,614 | ||||||
Baron Asset Fund |
8,175,879 | 14,122,312 | ||||||
Fidelity Diversified International |
5,867,107 | 10,779,825 | ||||||
PIMCO Total Return Fund |
4,555,121 | * | ||||||
Fidelity Puritan Fund |
4,452,254 | 6,920,152 | ||||||
Janus Twenty Fund |
* | 5,723,499 | ||||||
Common Collective Trust: |
||||||||
Fidelity Managed Income Portfolio |
9,349,839 | 8,525,283 | ||||||
* | Investment did not represent 5% or more of the Plans net assets available for benefits. |
Amount | ||||
Mutual funds |
$ | 40,352,257 | ||
Reliance Steel & Aluminum Co. common stock |
1,700,383 | |||
Total |
$ | 42,052,640 | ||
11
4.
|
Fair Value Measurements | SFAS 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 lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy under SFAS No. 157 are described as follows: | ||
Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; Level 2: Quotes prices in markets that are not considered to be active or financial instruments for which all the significant inputs are observable, either directly, or indirectly. Level 3: Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable. The following table sets forth by level, within the fair value hierarchy, the Plans investment assets measured at fair value as of December 31, 2008: |
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Mutual Funds |
$ | 60,624,643 | $ | | $ | | $ | 60,624,643 | ||||||||
Common collective trust |
| 9,349,839 | | 9,349,839 | ||||||||||||
Money market fund |
2,173,390 | | | 2,173,390 | ||||||||||||
Reliance Steel & Aluminum Co. common stock |
1,840,422 | | | 1,840,422 | ||||||||||||
Interest bearing cash |
97,456 | | | 97,456 | ||||||||||||
Participant loans |
| 3,989,290 | | 3,989,290 | ||||||||||||
Total investments at fair value |
$ | 64,735,911 | $ | 13,339,129 | $ | | $ | 78,075,040 | ||||||||
12
4.
|
Fair Value Measurements (Continued) |
The Plans investments that are measured at fair value on a recurring basis, such as money market funds, mutual funds, and equity securities are generally classified within Level 1 of the fair value hierarchy. The fair values of these investments are based on quoted market prices in active markets. The Plan also invests in a common collective trust for which the valuation is based on the values of the underlying investments. Based on the nature of the underlying investments in the common collective trust, this investment asset has been classified as Level 2. Participant loans are also classified as Level 2 since the loans are issued at prevailing market rates. |
5.
|
Related Party Transactions | Certain Plan investments are shares of mutual funds, shares of a common collective trust, shares of a unitized common stock fund and a money market fund managed by Fidelity Management Trust Company. Fidelity Management Trust Company is the trustee and custodian as defined by the Plan and, therefore, these transactions qualify as exempt party-in-interest transactions. |
6.
|
Income Tax Status |
The underlying non-standardized prototype plan has received an opinion letter from the Internal Revenue Service (IRS) dated October 9, 2003 stating that the form of the plan is qualified under Section 401 of the Internal Revenue Code, and therefore, the related trust is tax exempt. In accordance with Revenue Procedure 2002-6 and Announcement 2001-77, the Plan Sponsor has determined that it is eligible to and has chosen to rely on the current IRS prototype plan opinion letter. Once qualified, the Plan is required to operate in conformity with the Code to maintain its qualification. Although the Plan has been amended since receipt of the IRS opinion letter, the Plan Administrator believes the Plan is being operated in compliance with the applicable requirements of the Code and, therefore, believes that the Plan is qualified and the related trust is tax exempt. | ||
7.
|
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 will become 100% vested in their accounts. |
13
8.
|
Reconciliation of Financial Statements to Form 5500 | The following is a reconciliation of net assets available for benefits as reported on Form 5500 with that reported in the accompanying financial statements: |
December 31, | 2008 | 2007 | ||||||
Net assets available for
benefits as reported on Form 5500 |
$ | 77,998,837 | $ | 111,320,545 | ||||
Adjustments from fair value to contract value
for the fully benefit-responsive investment
contracts (common collective trust) |
504,349 | 92,648 | ||||||
Net assets available for benefits as reported on
accompanying financial statements |
$ | 78,503,186 | $ | 111,413,193 | ||||
The following is a reconciliation of the changes in net assets available for
benefits as reported on Form 5500 with that reported in the accompanying
financial statements: |
Year ended December 31, | 2008 | |||
Total investment income
as reported on Form 5500 |
$ | 3,264,679 | ||
Investments: |
||||
Adjustment from fair value to contract value for
the fully benefit-responsive investment contracts
(common collective trust): |
||||
Beginning of period |
(92,648 | ) | ||
End of period |
504,349 | |||
Total investment income as reported on
the accompanying financial statements |
$ | 3,676,380 | ||
14
(c) | ||||||||||
Description of Investment, including | ||||||||||
(b) | Maturity Date, | (e) | ||||||||
Identity of Issue, Borrower, | Rate of Interest, Collateral, | (d) | Current | |||||||
(a) | Lessor or Similar Party | Par or Maturity Value | Cost | Value | ||||||
Mutual Funds: | ||||||||||
*
|
Fidelity Investments | Spartan U.S. Equity Index Fund | a | $ | 11,567,634 | |||||
*
|
Fidelity Investments | Fidelity Dividend Growth Fund | a | 10,805,949 | ||||||
Baron Funds | Baron Asset Fund | a | 8,175,879 | |||||||
*
|
Fidelity Investments | Fidelity Diversified International Fund | a | 5,867,107 | ||||||
PIMCO | PIMCO Total Return Fund | a | 4,555,121 | |||||||
*
|
Fidelity Investments | Fidelity Puritan Fund | a | 4,452,254 | ||||||
Janus Funds | Janus Twenty Fund | a | 2,821,165 | |||||||
*
|
Fidelity Investments | Fidelity Equity Income Fund | a | 1,333,367 | ||||||
American Funds | American Funds Growth Fund of America R4 | a | 1,183,532 | |||||||
*
|
Fidelity Investments | Fidelity Freedom 2025 Fund | a | 1,137,278 | ||||||
*
|
Fidelity Investments | Fidelity Freedom 2030 Fund | a | 1,119,751 | ||||||
Neuberger Berman | Neuberger & Berman Genesis Trust Fund | a | 955,853 | |||||||
*
|
Fidelity Investments | Fidelity Freedom 2035 Fund | a | 945,551 | ||||||
*
|
Fidelity Investments | Fidelity Freedom 2040 Fund | a | 793,660 | ||||||
*
|
Fidelity Investments | Fidelity Freedom 2020 Fund | a | 718,130 | ||||||
American Beacon | American Beacon Large Cap Value Fund | a | 682,986 | |||||||
*
|
Fidelity Investments | Fidelity Freedom 2050 Fund | a | 493,512 | ||||||
*
|
Fidelity Investments | Fidelity Freedom 2045 Fund | a | 452,774 | ||||||
*
|
Fidelity Investments | Fidelity Freedom 2010 Fund | a | 368,153 | ||||||
*
|
Fidelity Investments | Fidelity Value Fund | a | 362,393 | ||||||
The Harford Mutual Funds | The Hartford International Small Company Fund | a | 312,321 | |||||||
The Royce Funds | Royce Opportunity Fund | a | 309,282 | |||||||
*
|
Fidelity Investments | Fidelity Fund | a | 294,520 | ||||||
*
|
Fidelity Investments | Fidelity Freedom 2015 Fund | a | 271,699 | ||||||
Morgan Stanley | MAS Mid-Cap Growth Portfolio Fund | a | 255,047 | |||||||
*
|
Fidelity Investments | Spartan Total Market Index Fund | a | 161,926 | ||||||
*
|
Fidelity Investments | Fidelity Mid Cap Stock Fund | a | 158,178 | ||||||
*
|
Fidelity Investments | Fidelity Freedom Income Fund | a | 46,765 | ||||||
*
|
Fidelity Investments | Fidelity Freedom 2000 Fund | a | 13,779 | ||||||
*
|
Fidelity Investments | Fidelity Freedom 2005 Fund | a | 9,077 | ||||||
Total mutual funds | $ | 60,624,643 |
15
(c) | ||||||||||
Description of Investment, | ||||||||||
(b) | including Maturity Date, | (e) | ||||||||
Identity of Issue, Borrower, | Rate of Interest, Collateral, | (d) | Current | |||||||
(a) | Lessor or Similar Party | Par or Maturity Value | Cost | Value | ||||||
Common Collective Trust: | ||||||||||
*
|
Fidelity Investments | Fidelity Managed Income Portfolio | a | $ | 9,349,839 | |||||
Interest bearing cash | ||||||||||
*
|
Fidelity Investments | Cash | a | 97,456 | ||||||
Money market fund | ||||||||||
*
|
Fidelity Investments | Fidelity Retirement Money Market Portfolio Fund |
a | 2,173,390 | ||||||
Common Stock: | ||||||||||
*
|
Reliance Steel & Aluminum Co. | Common stock | a | 1,840,422 | ||||||
Loans: | ||||||||||
*
|
Participant loans | Loans to participants, secured by participant balances, with interest rates ranging from 5.25% to 9.50%, maturities from 2009 to 2018 | - | 3,989,290 | ||||||
Total Investments | $ | 78,075,040 | ||||||||
*
|
- | A party in interest as defined by ERISA. | ||
a
|
- | The cost of participant-directed investments is not required to be disclosed. |
16
Dated: June 26, 2009 | By: | /s/ Karla Lewis | ||
Karla Lewis | ||||
Member of the Precision Strip, Inc. Retirement and Savings Plan Committee |
17