UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
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, 2003
OR
o TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1933
For the transition period from to
Commission file number 1-12080
A. Full title of the plan and the address of the plan, if different from that of the issuer named below:
Post Properties, Inc.
401(k) Plan
B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:
Post Properties, Inc.
4401 Northside Parkway, Suite 800
Atlanta, GA 30327
POST PROPERTIES, INC. 401(K) PLAN
TABLE OF CONTENTS
Page |
||||
Report of Independent Auditors |
1 | |||
Statements of Net Assets Available for Plan Benefits as of
December 31, 2003 and 2002 |
2 | |||
Statement of Charges in Net Assets Available for Plan Benefits for
the Years Ended December 31, 2003 |
3 | |||
Notes to Financial Statements |
4 | |||
Supplemental Schedule |
9 |
REPORT OF INDEPENDENT AUDITORS
To the Plan Administrator
Post Properties, Inc. 401(k) Plan:
We have audited the accompanying statements of net assets available for benefits of the Post Properties, Inc. 401(k) Plan as of December 31, 2003 and 2002, and the related statement of changes in net assets available for benefits for the year ended December 31, 2003. These financial statements are the responsibility of the Plans management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audit 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 audit provided 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 Post Properties, Inc. 401(k) Plan as of December 31, 2003 and 2002 and the changes in its net assets available for benefits for the year ended December 31, 2003.
Our audit was performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedule of assets held (at year end) 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 Labors Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental schedule is the responsibility of the Plans management. The supplemental information has been subjected to the auditing procedures applied in the audit 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.
GIFFORD, HILLEGASS & INGWERSEN, LLP
Atlanta, Georgia
July 7, 2004
1200 Ashwood Parkway,
Suite 300
Atlanta, GA 30338-4747
Tel (770) 396-1100 Fax (770) 393-0319
www.ghi-cpa.com
MEMBERS OF THE LEADING EDGE ALLIANCE AND KRESTON INTERNATIONAL
1
POST PROPERTIES, INC. 401(k) PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
December 31, 2003 and 2002
2003 |
2002 |
|||||||
Investments, at fair value |
$ | 18,398,336 | $ | 15,091,479 | ||||
Receivables |
||||||||
Employee Contribution |
2,229 | | ||||||
Employer Contribution |
513,398 | 452,175 | ||||||
Miscellaneous |
4,554 | | ||||||
TOTAL RECEIVABLES |
520,181 | 452,175 | ||||||
NET ASSETS AVAILABLE
FOR PLAN BENEFITS |
$ | 18,918,517 | $ | 15,543,654 | ||||
The accompanying notes are an integral part of these financial statements.
2
POST PROPERTIES, INC. 401(k) PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
For the Year Ended December 31, 2003
Contributions |
||||
Employer |
$ | 513,398 | ||
Participants |
1,974,984 | |||
Rollover |
66,290 | |||
TOTAL CONTRIBUTIONS |
2,554,672 | |||
Investment income |
||||
Interest and dividends |
361,505 | |||
Net appreciation in fair value of investments |
3,095,970 | |||
TOTAL INVESTMENT INCOME |
3,457,475 | |||
TOTAL ADDITIONS |
6,012,147 | |||
Deductions from net assets attributed to: |
||||
Forfeitures used to offset employer contribution |
(52,636 | ) | ||
Benefits paid to participants |
(2,584,648 | ) | ||
TOTAL DEDUCTIONS |
(2,637,284 | ) | ||
NET INCREASE IN BENEFITS |
3,374,863 | |||
Net Assets Available for Benefits at Beginning of Year |
15,543,654 | |||
Net Assets Available for Benefits at End of Year |
$ | 18,918,517 | ||
The accompanying notes are an integral part of these financial statements.
3
POST PROPERTIES, INC. 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2003 and 2002
NOTE 1-DESCRIPTION OF THE PLAN
The following is a brief description of the Post Properties, Inc. 401(k) Plan (the Plan). Reference should be made to the plan document for a more complete description of the Plans provisions.
General: The Plan is a defined contribution plan covering all full-time employees and part-time employees who have completed 3 months of service. It is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA).
Contributions: Each year, participants may contribute up to 25% of pretax annual compensation, as defined in the Plan not to exceed the amount allowed for income tax purposes. Participants 50 years of age or older may make catch-up contributions as allowed by the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA). 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. Company matching contributions are discretionary and match 50% of employee deferrals that do not exceed 4% of eligible compensation. The Company may make additional discretionary contributions. Company contributions are invested directly into Post Properties, Inc. common stock. Effective January 1, 2004 Participants may immediately reallocate Company contributions from Company stock to other Plan investments. Contributions are subject to certain limitations.
Participant Accounts: Each participants account is credited with the participants contribution and allocations of (1) the Companys contributions and (2) 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 participants vested account.
Vesting: Participants are fully vested in their contributions and the earnings thereon. Vesting in Sponsor contributions and related earnings accrues using a graduated scale based on years of service. Participants with six or more years of service are fully vested in all their accounts.
Participant Loans: Participants may borrow from their fund account a minimum of $1,000 and up to a maximum of the lesser of $50,000 or 50% of their vested account balance. Loans are secured by the balance in the participants account and bear interest at rates that range from 5% to 10.5%, which are commensurate with local prevailing rates charged by banks and have a definite repayment period. Principal and interest is paid ratably through payroll deductions.
4
POST PROPERTIES, INC. 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2003 and 2002
NOTE 1-DESCRIPTION OF THE PLAN-Continued
Payment of Benefits: On termination of service for any reason a participant may elect to receive either a lump-sum amount equal to the value of the participants vested interest in his or her account, or a portion of that vested interest.
Participants who have been in the Plan for a total of five years may withdraw up to 50% of their vested rollover account and vested employer discretionary profit sharing contribution account and, thereafter, at the end of each full five year period.
Account balances that do not exceed $5,000 are automatically distributed upon termination of service.
In the event of a hardship as defined by the Plan, participants may withdraw an amount not to exceed the total of their vested account balance.
Administrative Expenses: All usual and reasonable costs of administering the Plan are paid by the Company.
Forfeited Accounts: Forfeited accounts will be used to reduce future employer contributions. Employer contributions for 2003 and 2002 were reduced by $58,073 and $52,636, respectively, from forfeited accounts.
NOTE 2-ACCOUNTING POLICIES
Basis of Accounting: The financial statements of the plan are prepared under the accrual basis of accounting which is in accordance with accounting principles generally accepted in the United States of America.
Investment Valuation and Income Recognition: Securities traded on national securities exchanges are valued at the closing price on the last day of the plan year; investments traded in over-the-counter markets and listed securities for which no sale was reported on that date are valued at the last reported bid price. Net realized gains (losses) and unrealized (depreciation) appreciation are recorded in the accompanying Statement of Changes in Net Assets Available for Benefits as net (depreciation) appreciation in fair value of investments.
Purchases and sales of securities are recorded on a trade-date basis. Reinvested dividends are recorded on the ex-dividend date.
5
POST PROPERTIES, INC. 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2003 and 2002
NOTE 2-ACCOUNTING POLICIES-Continued
Payments of Benefits: Benefits are recorded when paid.
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 assets, liabilities and changes therein, and disclosure of contingent assets and liabilities. Actual results could differ from those estimates.
NOTE 3-INVESTMENTS
Individual investments that represent 5% or more of the Plans net assets as of December 31, 2003 or 2002 are as follows:
2003 |
2002 |
|||||||
STI Classic Prime Quality Money Market Fund |
$ | 1,729,439 | $ | 2,260,216 | ||||
STI Classic Value Income Stock |
2,425,720 | 2,033,394 | ||||||
STI Classic Balanced |
2,086,046 | 1,695,536 | ||||||
Vanguard 500 Index Fund |
2,689,894 | 1,928,412 | ||||||
Post Properties, Inc. Common Stock |
2,390,104 | * | 1,929,108 | * | ||||
Janus Worldwide Fund |
| 880,074 | ||||||
STI Classic Small Cap Growth Stock Fund |
2,827,241 | 1,929,103 | ||||||
Templeton Growth Fund |
1,097,367 | |
Net appreciation in fair value of investments for the year ended December 31, 2003 is comprised of:
Mutual funds |
$ | 2,744,713 | ||
Post Properties common stock |
351,257 | |||
$ | 3,095,970 | |||
* Post Properties, Inc. common stock are non-participant directed investments to the extent of employer contributions until January 1, 2004 at which time, all investments will be participant directed. (See Note 1)
6
POST PROPERTIES, INC. 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2003 and 2002
NOTE 3-INVESTMENTS-Continued
Security transactions are accounted for on the trade dates.
Investment securities, in general, are exposed to various risks, including credit, interest, and overall market volatility risks. Due to the level of risk associated with certain investment securities, it is possible that changes in values of investment securities will occur and that such changes could materially affect the amount reported in the Statements of Net Assets Available for Benefits.
Information about the net assets and significant components of the changes in net assets relating to the Companys stock is as follows as of December 31:
2003 |
2002 |
|||||||
Net Assets: |
||||||||
Post Properties, Inc. Common Stock |
$ | 2,390,104 | * | $ | 1,929,108 | * | ||
Change in Net Assets: |
||||||||
Contributions |
558,967 | |||||||
Dividends and interest |
188,724 | |||||||
Net appreciation in fair value |
351,257 | |||||||
Distributions to participants |
(426,115 | ) | ||||||
Transfers |
(211,837 | ) | ||||||
$ | 460,996 | |||||||
* Post Properties, Inc. common stock are non-participant directed investments to the extent of employer contributions until January 1, 2004 at which time, all investments will be participant directed. (See Note 1)
NOTE 4-TAX STATUS
The Internal Revenue Service has determined and informed the Company by a letter dated December 4, 2003, that the Plan, as designed, is qualified and that the trust established under the Plan is tax-exempt under the appropriate sections of the IRC. The Plan administrator and the Plan tax counsel believe that the Plan as currently designed is being operated in compliance with the applicable requirements of the IRC. On this basis, the Plan administrator believes that,
7
POST PROPERTIES, INC. 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2003 and 2002
NOTE 4-TAX STATUS-Continued
as of the date of these financial statements, the Plan was qualified and the related trust was tax-exempt.
NOTE 5-RELATED PARTY TRANSACTIONS
The Plan held 85,603 and 80,719 shares of Post Properties, Inc. (the Plan sponsor) as of December 31, 2003 and 2002 with a fair value of $2,390,104 and $1,929,108, respectively.
Certain plan investments are shares of registered investment companies and common/collective trusts managed by SunTrust Bank. SunTrust Bank is the trustee as defined by the Plan and, therefore, these transactions qualify as party-in-interest transactions.
NOTE 6-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.
NOTE 7-RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
Benefits paid to the participants per the financial statement |
$ | 2,584,648 | ||
Participant loan distributions |
(81,054 | ) | ||
Amounts allocated to withdrawing participants |
299,267 | |||
Benefits paid to the participants per the 5500 |
$ | 2,802,861 | ||
Amounts allocated to withdrawing participants are recorded on the Form 5500 for benefit claims that have been processed and approved for payment prior to year end, but not yet paid as of that date.
8
POST PROPERTIES, INC. 401(k) PLAN
SCHEDULE H, LINE 4i ASSETS HELD AT END OF THE YEAR
December 31, 2003
Identity of Issuer, | ||||||||||||
Borrower, Lessor, | Description of | Current | ||||||||||
or Similar Party |
Investment |
Cost |
Value |
|||||||||
*
|
SunTrust | STI Classic Small Cap Growth Stock Fund, 143,587.68 shares | (a | ) | $ | 2,827,241 | ||||||
Vanguard 500 Index Fund, 26,199.42 shares | (a | ) | $ | 2,689,894 | ||||||||
STI Classic Value Income Stock, 217,944.29 shares | (a | ) | $ | 2,425,720 | ||||||||
STI Classic Balanced Fund, 170,289.50 shares | (a | ) | $ | 2,086,046 | ||||||||
STI Classic Prime Quality Money Market, 1,674,107.24 shares | (a | ) | $ | 1,729,439 | ||||||||
Templeton Growth Fund, 53,089.86 shares | (a | ) | $ | 1,097,367 | ||||||||
American Century Ultra Advisor Fund, 31,541.83 shares | (a | ) | $ | 832,704 | ||||||||
Putnam Investors Fund, 70,079.33 shares | (a | ) | $ | 783,487 | ||||||||
STI Classic Investment Grade Bond, 34,221.61 shares | (a | ) | $ | 362,065 | ||||||||
T. Rowe Price Midcap Growth Fund, 8,461.76 shares | (a | ) | $ | 360,894 | ||||||||
STI Classic International Equity Index, 27,900.50 shares | (a | ) | $ | 304,394 | ||||||||
STI Classic Life Vision Growth & Income, 2,550.58 shares | (a | ) | $ | 27,113 | ||||||||
STI Classic Life Vision Aggressive Growth, 1,277.72 shares | (a | ) | $ | 12,828 | ||||||||
STI Classic Life Vision Moderate Growth, 1,102.52 shares | (a | ) | $ | 11,027 | ||||||||
**
|
Post Properties, Inc. | Common stock, 85,603.42 shares | $ | 2,786,866 | 2,390,104 | |||||||
*
|
Participant Loans | Interest rates range from 5.0% to 10.5% | (a | ) | 458,013 | |||||||
TOTAL | $ | 18,398,336 | ||||||||||
* Indicates party in interest
** Post Properties, Inc. common stock are non-participant directed investments to the extent of employer contributions until January 1, 2004 at which time, all investments will be participant directed. (See Note 1)
(a) Participant directed
10
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.
Date: July 13, 2004 | By: | Post Properties, Inc., the Plan Administrator of the 401(k) Plan | ||
/s/ Linda J. Ricklef Linda J. Ricklef Vice President of Human Resources Post Properties, Inc. |