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, 2003
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _______ to _______
Commission File Number 333-48402
A. Full title of the plan and the address of the plan, if different
from that of the issuer named below:
Lakeland Financial Corporation 401(k) Plan
B. Name of issuer of the securities held pursuant to the plan and
the address of its principal executive office:
Lakeland Financial Corporation
202 East Center Street, P.O. Box 1387
Warsaw, Indiana 46581-1387
REQUIRED INFORMATION
Audited statements of net assets available for benefits of the Lakeland
Financial Corporation 401(k) Plan as of December 31, 2003 and 2002, and the
related statements of changes in net assets available for benefits for the
year ended December 31, 2003 are provided as Exhibit 99.1 to this Form 11-K.
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.
LAKELAND FINANCIAL CORPORATION
401(k) PLAN
Date: June 28, 2004 By: Lakeland Financial Corporation,
as Trustee to the Plan
By: /s/ Jill A. DeBatty
LAKELAND FINANCIAL CORPORATION 401(k) PLAN
EXHIBIT INDEX
TO
ANNUAL REPORT ON FORM 11-K
Exhibit Sequential
No. Description Page No.
- --------- ------------------------------ -------------------------
23.1 Consent of Crowe Chizek and 5
Company LLC
99.1 Financial Statements 6
========= ============================== =========================
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in Lakeland Financial
Corporation's Registration Statement on Form S-8 (Registration # 333-48402) of
our report, dated April 13, 2004, on the financial statements of the Lakeland
Financial Corporation 401(k) Plan which is included in this Annual Report on
Form 11-K for the year ended December 31, 2003.
Crowe Chizek and Company LLC
South Bend, Indiana
June 24, 2004
Exhibit 99.1
LAKELAND FINANCIAL CORPORATION
401(k) PLAN
FINANCIAL STATEMENTS
December 31, 2003 and 2002
LAKELAND FINANCIAL CORPORATION 401(k) PLAN
Warsaw, Indiana
FINANCIAL STATEMENTS
December 31, 2003 and 2002
CONTENTS
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
SUPPLEMENTAL SCHEDULE REPORTED
SCHEDULE H, LINE 4i - SCHEDULE OF ASSETS (HELD AT END OF YEAR)..... 9
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Lakeland Financial Corporation
401(k) Plan
Warsaw, Indiana
We have audited the accompanying statements of net assets available for
benefits of the Lakeland Financial Corporation 401(k) Plan ("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 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. 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 net assets available for
benefits for the year ended December 31, 2003, in conformity with United
States generally accepted accounting principles.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of assets
(held at end of year) is presented for the purpose of additional analysis and
is not a required part of the 2003 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. The supplemental schedule has been subjected to the
auditing procedures applied in the audit of the 2003 basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the 2003 basic financial statements taken as a whole.
Crowe Chizek and Company LLC
South Bend, Indiana
April 13, 2004
1
LAKELAND FINANCIAL CORPORATION 401(k) PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
December 31, 2003 and 2002
- ---------------------------------------------------------------------------
2003 2002
---- ----
ASSETS
Investments, at fair value (Note 4) $ 25,763,158 $ 18,033,505
Receivables
Employer contribution 379,303 317,597
Accrued income 112,168 107,340
--------------- ----------------
491,471 424,937
--------------- ----------------
Cash - 12,482
--------------- ----------------
NET ASSETS AVAILABLE FOR BENEFITS $ 26,254,629 $ 18,470,924
=============== ================
See accompanying notes to financial statements.
2
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
Year ended December 31, 2003
- -----------------------------------------------------------------------------
Additions to net assets attributed to:
Investment income
Net appreciation in fair value of investments (Note 4) $ 7,973,195
Interest 2,699
Dividends 481,938
------------
8,457,832
Contributions
Employer 744,875
Participants 978,002
Rollovers 1,608
------------
1,724,485
Total additions 10,182,317
Deductions from net assets attributed to:
Benefits paid directly to participants or their
beneficiaries 2,394,403
Administrative expenses 4,209
------------
Total deductions 2,398,612
Net increase 7,783,705
Net assets available for benefits
Beginning of year 18,470,924
------------
End of year $ 26,254,629
============
See accompanying notes to financial statements.
3
LAKELAND FINANCIAL CORPORATION 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2003 and 2002
- ------------------------------------------------------------------------------
NOTE 1 - DESCRIPTION OF PLAN
The following description of the Lakeland Financial Corporation 401(k) Plan
(the "Plan") is provided for general information purposes only. Participants
should refer to the Plan agreement for a more complete description of the
Plan's provisions.
General: The Plan is a defined contribution 401(k) profit sharing plan
covering substantially all employees of Lakeland Financial Corporation ("LFC")
and its subsidiary, Lake City Bank (collectively, "employer"). An employee
becomes eligible to enter the Plan on January 1, April 1, July 1 and October 1
following attainment of age 18 and completion of one month of service.
The Plan was originally adopted December 13, 1983 and has been amended.
Effective October 10, 2000, the Plan was amended and restated. The provisions
of the amended and restated Plan state that the employer each year may set the
matching percentage as well as any discretionary contributions. The amended
and restated Plan also does not permit loans to plan participants. Effective
January 1, 2001, the Plan was further amended. The provisions of the amended
Plan state the matching contributions shall be allocated to participants who
have completed at least one hour of service during the Plan year. The amended
Plan also provides for a six-year graded vesting schedule and that employees
working at any branch that is sold shall become 100% vested as of the date of
the branch sale. Effective January 1, 2003, the Plan was further amended. The
January 1, 2003 amendment states that employees become eligible to participate
in the Plan following attainment of age 18 and completion of one month of
service. Information regarding the changes to the Plan is provided for general
information purposes only. Participants should refer to the amended and
restated Plan agreement for a more complete description of the Plan's
provisions. The Plan provides for retirement, death, disability and
termination benefits, and it is subject to the provisions of the Employee
Retirement Income Security Act of 1974 (ERISA).
Investment Funds: The Plan consists of nine funds, or investment options, one
of which is invested primarily in LFC common stock. The "AIM Constellation
Fund", "Enterprise Growth Fund", "Enterprise Small Company Value Fund" and
"American Funds AMCAP Fund" are invested primarily in common and preferred
stock. The "Franklin Adjustable U.S. Government Securities" is invested
primarily in fixed income obligations of United States Government agencies.
The "Money Market Fund" is invested primarily in short-term fixed income
investments having maturities of one year or less. The "Balanced Fund" is
invested primarily in a balanced portfolio, and the "Federated International
Equity Fund" is invested primarily in foreign common stocks.
A participant's salary redirection is invested in any of the funds offered at
the participant's discretion. Employer matching contributions are initially
invested in employer stock. Participants may redirect the matching
contributions at their discretion.
(Continued)
4
NOTE 1 - DESCRIPTION OF PLAN (Continued)
Participant Accounts: Each participant's account is credited with the
participant's contribution and an allocation of (a) the Corporation's
contributions, (b) Plan earnings and (c) forfeitures of non-vested balances of
accounts of participants who have left the plan. 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 account.
Contributions: The Plan provides that participants may make voluntary pre-tax
contributions to the Plan in amounts equal to the maximum amount allowable
under the Internal Revenue Code ($12,000 in 2003 and $11,000 in 2002). Each
year the employer may set a matching percentage of up to 6% of a participant's
compensation, as well as make discretionary contributions. For 2003, the
matching percentage was set at 100% of the first 6% of compensation an
employee contributes to the Plan as a voluntary pre-tax contribution. In
addition, no discretionary contributions were made.
Retirement, Death and Disability: A participant is entitled to 100% of his or
her account balance upon retirement, death or disability.
Vesting: Participants are 100% vested in salary deferral contributions.
Effective January 1, 2001, employer contributions vest according to a six-year
graded schedule. Prior to January 1, 2001, employer contributions vested
according to a seven-year graded schedule.
Payment of Benefits: On termination of service, a participant may elect to
receive either a lump sum or a direct rollover equal to the value of his or
her vested interest in the account. For distributions of LFC common stock,
distributions are made in stock or cash at the participant's option, with the
exception of fractional shares which are paid out in cash. Distributions out
of the other funds are made in cash.
Loan Provisions: Prior to the restatement of the Plan effective October 10,
2000, participants were able to borrow from their fund accounts a minimum of
$1,000 up to a maximum of $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 rates equal to the prime interest rate stated in
the Wall Street Journal plus 1% at the date the participant applied for the
loan.
(Continued)
5
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The policies and principles which significantly affect the determination of
net assets and results of operations are summarized below.
Accounting Method: The accounting practices and principles followed by the
Plan and the methods of applying those principles conform to accounting
principles generally accepted in the United States of America.
Investments Valuation and Income Recognition: Investments are stated at fair
value. The fair values of mutual fund investments and LFC common stock are
based upon quoted market prices. Money market fund investments and participant
loans are reported at cost, which approximates fair value. 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.
Net Appreciation (Depreciation) in Fair Value of Investments: In accordance
with the policy of stating investments at fair value, net unrealized
appreciation (depreciation) for the year along with gains and losses on sales
of investments are reflected in the statement of changes in net assets
available for benefits as net appreciation (depreciation) in fair value of
investments. Unrealized appreciation (depreciation) for investments held as of
the end of the current fiscal year is the difference between the current value
of those investments and the value of those investments as of the end of the
prior fiscal year or the purchase date for investments purchased during the
year.
Administrative Expenses: Trustee expenses have been waived by Lake City Bank,
the Plan Trustee.
Estimates: The preparation of financial statements in conformity with United
States generally accepted accounting principles requires the plan
administrator to make estimates and assumptions that affect certain reported
amounts and disclosures, and actual results may differ from these estimates.
It is at least reasonably possible that a significant change may occur in the
near term for the estimates of investment valuation.
Concentration of Credit Risk: At December 31, 2003 and 2002, the majority of
the Plan's assets were invested in LFC common stock.
Risk and Uncertainties: The Plan provides for various investment options
including any combination of certain mutual funds, stocks, and money market
funds. The underlying 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 and the level of uncertainty related to
changes in the value of 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 in the values of investment securities will
occur in the near term and that such changes could materially affect the
amounts reported in the statement of net assets available for benefits and
participant's individual account balances.
(Continued)
6
NOTE 3 - PLAN TERMINATION
Although it has not expressed any intent to do so, LFC has the right under the
Plan to discontinue its contributions at any time and to terminate the Plan
subject to the provisions of ERISA and its related regulations. In the event
of termination, participants will become 100% vested in their accounts.
NOTE 4 - INVESTMENTS
The following presents investments that represent 5 percent or more of the
Plan's net assets.
December 31,
2003 2002
---- ----
LFC common stock, 590,356 and
631,411 shares, respectively $ 20,851,367 $ 14,806,592
The following table presents the net appreciation (depreciation) (including
investments bought, sold and held during the year) in fair value for each of
the Plan's investment categories for the year ended December 31, 2003.
Mutual funds $ 629,589
LFC common stock 7,343,606
---------------
$ 7,973,195
All of the Plan's investments are uninsured.
NOTE 5 - PARTY-IN-INTEREST TRANSACTIONS
Parties-in-interest are defined under Department of Labor Regulations as any
fiduciary of the Plan, any party rendering service to the Plan, the employer,
and certain others. Fees paid by the Plan to AMI Benefit Plan Administrators,
Inc. for accounting services amounted to $4,209 for the year ended December
31, 2003.
(Continued)
7
NOTE 5 - PARTY-IN-INTEREST TRANSACTIONS (Continued)
During 2003, the Plan purchased 52,929 shares of Lakeland Financial
Corporation common stock at a cost ranging from $23.54 to $41.18 per share. In
2003, the Plan sold 74,337 shares of Lakeland Financial Corporation common
stock at a sales price ranging from $19.58 to $36.41 per share and distributed
19,647 shares of common stock to employees due to termination or retirement.
At December 31, 2003 and 2002, the Plan held the following party-in-interest
investments (at estimated fair value):
2003:
Lakeland Financial Corporation common
stock - 590,356 shares $ 20,851,367
Loans to participants 3,440
2002:
Lakeland Financial Corporation common
stock - 631,411 shares $ 14,806,592
Loans to participants 3,970
NOTE 6 - TAX STATUS
The Plan is maintained using a prototype plan document sponsored by AMI
Benefit Plan Administrators, Inc. The Internal Revenue Service has ruled in a
letter dated September 18, 2001, that the prototype plan qualifies under
Section 401 of the Internal Revenue Code (IRC) and is, therefore, not subject
to tax under present income tax law. The plan administrator believes that the
Plan is being operated in compliance with applicable requirements of the IRC.
NOTE 7 - TERMINATED PARTICIPANTS
Included in net assets available for benefits are amounts allocated to
individuals who have withdrawn from the Plan and requested a distribution
prior to year end. Amounts allocated to these participants were approximately
$3,185,218 and $36,801 at December 31, 2003 and 2002.
8
SUPPLEMENTAL INFORMATION
LAKELAND FINANCIAL CORPORATION 401(k) PLAN
SCHEDULE H, LINE 4i - SCHEDULE OF ASSETS (HELD AT END OF YEAR)
December 31, 2003
- -----------------------------------------------------------------------------
Name of Plan Sponsor: Lakeland Financial Corporation
----------------------------------
Employer Identification Number: 35-1559596
----------------------------------
Three-digit Plan Number: 004
----------------------------------
(c)
Description of Investment
(b) Including Maturity Date, (e)
Identity of Issue, Borrower, Rate of Interest, Collateral, (d) (1) Current
(a) Lessor, or Similar Party Par or Maturity Value Cost Value
--- ------------------------ --------------------- ---- -----
Money market account 595,046 units $ 595,046
Mutual funds
Franklin Adjustable U.S.
Government Securities Fund 79,045 units 723,263
Federated International
Equity Fund 20,967 units 323,107
AIM Constellation Fund 38,467 units 827,430
Enterprise Growth Fund 81,108 units 1,286,368
Enterprise Small Company
Value Fund 14,407 units 140,897
American Funds AMCAP
Fund 60,074 units 1,012,240
---------------
4,313,305
* Lakeland Financial Corporation
common stock 590,356 shares 20,851,367
* Loans to participants Interest rate 9.5% 3,440
---------------
$25,763,158
* Denotes party-in-interest
(1) Cost is not presented as all investments are participant directed investments.
9