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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, 2008; 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
Full title of the plan and the address of the plan,
if different from that of the issuer named below:
Spire Corporation 401(k) Profit Sharing Plan
--------------------------------------------
Name of issuer of the securities held pursuant to the plan and
the address of its principal executive office:
Spire Corporation
-----------------
One Patriots Park
Bedford, Massachusetts 01730-2396
---------------------------------
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SPIRE CORPORATION
401(k) PROFIT SHARING PLAN
Table of Contents
Page Number
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:
Schedule H, Line 4i - Form 5500,
Schedule of Assets (Held at End of Year) 14
Signatures 15
Exhibits:
Consent of Independent Registered Public Accounting Firm
(filed herewith)
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Plan Administrator and Participants of
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,
2008 and 2007, and the related statement of changes in net assets available for
benefits for the year ended December 31, 2008. These financial statements and
schedules 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. 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, 2008 and 2007 and the changes in net assets available for benefits
for the year ended December 31, 2008 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 schedule of assets (held
at end of year) as of December 31, 2008 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 under the Employee Retirement Income Security Act of
1974. The 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/ Siegrist and Cree, CPA's, PC
SIEGRIST AND CREE, P.C.
Wellesley Hills, Massachusetts
June 23, 2009
1
SPIRE CORPORATION 401(k) PROFIT SHARING PLAN
Statements of Net Assets Available for Benefits
December 31, 2008 and 2007
2008 2007
------------ ------------
Assets
------
Investments:
At fair value:
Common stock - Spire Corporation $ 923,532 $ 3,284,103
Mutual funds 4,022,348 5,341,544
Participant loans 175,176 133,171
Hartford Fixed Income Fund 182,660 179,031
------------ ------------
Total investments 5,303,716 8,937,849
Money market receivable -- 4,732
Contribution receivable:
Participants 7,432 15,294
Employeer 2,640 --
------------ ------------
10,072 15,294
Total assets 5,313,788 8,957,875
Liabilities
-----------
Excess contributions payable 33,365 29,149
------------ ------------
Net assets reflecting all investments at fair value 5,280,423 8,928,726
Adjustment from fair value to contract value for fully
benefit responsive investment contracts 9,957 7,976
------------ ------------
Net assets available for benefits $ 5,290,380 $ 8,936,702
============ ============
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, 2008
Additions to net assets:
Investment income:
Interest and dividends $ 171,076
Interest on loans 13,148
Net decline in fair value of investments (4,220,586)
------------
(4,036,362)
Participant contributions 567,389
Employer contributions 47,531
------------
Total additions (3,421,442)
------------
Deductions from net assets:
Benefits paid to participants 216,683
Administrative fees 8,197
------------
Total deductions 224,880
------------
Net decrease (3,646,322)
Net assets available for benefits:
Beginning of year 8,936,702
------------
End of year $ 5,290,380
============
See notes to financial statements.
3
SPIRE CORPORATION 401(k) PROFIT SHARING PLAN
Notes to Financial Statements
For the Year Ended December 31, 2008
1. Plan Description
The following brief description of the Spire Corporation 401(k) Profit
Sharing Plan (the Plan) provides general information 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 plan covering all eligible employees of
Spire Corporation (the "Company"). The Plan was established January 1, 1985
and was most recently amended on December 29, 2004. Wachovia Retirement
Services serves as the trustee (the "Trustee") of the Plan's assets. The
Plan is subject to the provisions of the Internal Revenue Code of 1986, as
amended, and the provisions of the Employee Retirement Income Security Act
of 1974 (ERISA).
Eligibility, Vesting and Contributions
--------------------------------------
Eligibility and Contributions
-----------------------------
Employees of the Company become eligible to participate in the Plan
with voluntary contributions to their 401(k) salary deferral account
upon reaching the age of 21 and upon completion of ninety (90) days of
service with the Company. The entry dates are the first of the month
following eligibility. Participants are immediately vested in their
voluntary contributions plus actual earnings. A participant may
contribute up to the maximum amount of pre-tax annual compensation
allowed by the Internal Revenue Code. Participants may contribute
amounts from distributions from other qualified plans. Participants
direct the investment of their contributions into various investment
funds offered by the Plan. Currently, the Plan offers to participant's
investments in the Company's common stock, mutual funds and an
insurance contract.
4
Matching Contribution and Profit Sharing Contribution Plan Component
--------------------------------------------------------------------
The Company may contribute a discretionary matching contribution on the
first 15% of compensation that a participant contributes to the Plan.
The Company's matching contribution is invested directly in the
Company's common stock. In 2008, the Company made a matching
contribution for a portion of the year amounting to $47,531. In
addition, the Company may make a profit sharing contribution. In 2008,
the Company did not make any profit sharing contribution.
Vesting
-------
Participants are vested immediately in their voluntary contributions to
the Plan plus actual earnings thereon. Vesting in the Company matching
contribution is based on continuous years of service and a participant
is 100 percent vested after six years of credited service.
Participant Accounts
--------------------
Each participant's account is credited with the participant's
contributions and allocations of any Company matching contribution and
the Plan earnings. The benefit to which a participant is entitled is
the benefit that can be provided from the participant's vested account.
The participant directs the investment of his or her individual account
by selecting among funds in a common/collective trust, an insurance
contract or Company common stock. Each participant has the ability to
change the investment percentage at any time.
Forfeited Accounts
------------------
Termination of a participant before being fully vested results in
forfeiture of the non-vested portion of the participant's account
balance. Forfeitures may be used to reduce future employer
contributions. The forfeited amounts available at December 31, 2008 and
2007 amounted to $33,523 and $32,714, respectively.
Participant Loans
-----------------
Participants may borrow from their fund accounts a minimum of $1,000 up
to a maximum equal to the lesser of $50,000 or fifty percent of their
vested account balance. The loan terms range from 1 to 5 years or up to
10 years for the purchase of a primary residence. The loans are secured
by the balance in the participant's account and bear interest rate
commensurate with local prevailing rates as determined by the plan
administrator. The participant may have five outstanding loans at any
given time. Interest rates are prime plus one percent. Principal and
interest are repaid ratably through payroll deductions.
5
Payments of Benefits
--------------------
Employees are permitted to withdraw funds from their accounts upon
attaining the age of 59-1/2, retirement, termination, financial
hardship, disability or death. The participant or beneficiary may elect
to receive lump-sum cash payments or installment payments over the
participant's and beneficiary's assumed life expectance determined at
the time of distribution. Benefits are recorded when paid.
Plan Termination
----------------
Although management has not expressed any intent to do so, the Company
has the right under the Plan to discontinue and terminate the Plan
subject to the provisions of ERISA. In the event the Plan terminates,
participants will become 100% vested in their accounts.
Administrative Costs
--------------------
Certain administrative expenses of the Plan are borne by the Company
for the year ended December 31, 2008 and amounted to $24,000. Loan fees
are charged against the borrowers' accounts.
2. Summary of Significant Accounting Policies
Basis of Accounting
-------------------
The financial statements of the Plan are prepared on the accrual basis of
accounting in conformity with accounting principles generally accepted in
the United States of America.
Recent Accounting Pronouncements
--------------------------------
Effective January 1, 2008, the Plan adopted Statement of Financial
Accounting Standards ("SFAS") No. 157, Fair Value Measurements ("FAS 157").
In February 2008, the Financial Accounting Standards Board ("FASB") issued
FASB Staff Position No. FAS 157-2, Effective Date of FASB Statement No.
157, which provides a one year deferral of the effective date of FAS 157
for non-financial assets and non-financial liabilities, except those that
are recognized or disclosed in the financial statements at fair value at
least annually. Therefore, the Plan has adopted the provisions of FAS 157
with respect to its financial assets and liabilities only. FAS 157 defines
fair value, establishes a framework for measuring fair value, and expands
disclosures about fair value measurements. The new standard provides a
consistent definition of fair value which focuses on an exit price which is
the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at the
measurement date. The standard also prioritizes, within the measurement of
fair value, the use of market-based information over entity specific
information and establishes a three-level hierarchy for fair value
measurements based on the nature of inputs used in the valuation of an
asset or liability as of the measurement date. The application of FAS 157
in situations where the market for a financial asset is not active was
clarified by the issuance of FASB Staff Position No. FAS 157-3, Determining
the Fair Value of a Financial Asset When the Market for That Asset Is Not
Active, ("FAS 157-3") in October 2008. FAS 157-3 became effective
immediately and did not significantly impact the methods by which the
Plan determines the fair values of its financial assets.
6
On April 9, 2009, the FASB issued Staff Position No. FAS 157-4 Determining
Fair Value When the Volume and Level of Activity for the Asset or Liability
Have Significantly Decreased and Identifying Transactions That Are Not
Orderly ("FAS 157-4"). FAS 157-4 provides additional guidance for
estimating fair value when the volume and level of activity for the asset
or liability have significantly decreased and includes guidance on
identifying circumstances that indicate a transaction is not orderly. FAS
157-4 is effective for reporting periods ending after June 15, 2009, and is
applied prospectively. Early adoption is not permitted for periods ending
before March 15, 2009. Plan management does not expect the provisions of
FAS 157-4 to have a material effect on the Plan's financial statements.
Investments
-----------
The Plans investments are valued at fair value. The mutual funds are valued
based on quoted market prices which represent the net asset value of the
underlying assets of the account. Investments in the Company's common stock
are stated at fair value based on the unitized value of the fund on the
last business day of the year.
Investments in benefit responsive insurance contracts are stated at fair
value as determined by the custodian of those Plan assets. The difference
between the contract value and the fair value of the benefit responsive
insurance contracts are presented as an adjustment to net assets available
for benefits.
Participant loans are valued at their outstanding balances, which
approximate fair value. Other investment securities are stated at fair
value based on their quoted market prices on the last day of the year.
Use of Estimates
----------------
The preparation of financial statements in conformity with generally
accepted accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect
the reported amounts of net assets, liabilities and changes in net assets
in the financial statements and accompanying notes. Actual results could
differ from those estimates.
7
Risks and Uncertainties
-----------------------
The Plan provides to participants various investment options consisting
primarily of mutual funds, Company common stock and an insurance contract.
Mutual funds invest in securities, such as, stocks, bonds, and fixed rate
income securities. Investment securities are exposed to risks including
changing interest rates, market fluctuations and credit risks. Due to the
level of risk associated with investment securities, it is reasonable to
assume that changes in the values of the investment securities will occur
and that such changes could materially affect participants' account
balances and the amounts reported in the statement of assets available for
benefits.
Investment Transactions and Income
----------------------------------
Purchase and sale transactions are recorded on a trade-date basis. Interest
income is recorded on the accrual basis and dividend income is recorded on
the ex-dividend date.
The Plan reports the net appreciation or decline in the fair value of its
investments consisting of realized gains or losses and unrealized
appreciation or depreciation on those investments in the statement of
changes in net assets available for benefits.
3. Investments
Investments that represent five percent (5%) or more of the Plan's net
assets are as follows:
December 31,
------------
2008 2007
---------- ----------
Mutual funds
Oppenheimer Quest Opportunity Value $ 643,991 $ 831,305
Franklin Flexible Capital Growth 720,284 1,114,589
American Funds Europacific Growth 395,254 725,646
AIM Cash Reserve Shares 367,515 287,845
PIMCO Funds 273,395 154,485
Eaton Vance Large Cap Value 124,996 451,696
Common stock
Spire Corporation 923,532 3,284,103
During 2008 the Plan's investments (including investments bought, sold, and
held during the year) depreciated in value as follows:
Mutual funds $ (1,635,479)
Common stock (2,585,107)
------------
$ (4,220,586)
============
8
4. Fair Value Measurements
FAS 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) and the lowest priority to unobservable inputs
(Level 3). The three levels of the fair value hierarchy under FAS 157, and
its applicability to the Plan, are described below:
Level 1 - Pricing inputs are quoted prices available in active markets
for identical investments as of the reporting date. As required by FAS
157, the Plan does not adjust the quoted price for these investments,
even in situations where the Plan holds a large position and a sale
could reasonably impact the quoted price.
Level 2 - Pricing inputs are quoted prices for similar investments, or
inputs that are observable, either directly or indirectly, for
substantially the full term through corroboration with observable
market data. Level 2 includes investments valued at quoted prices
adjusted for legal or contractual restrictions specific to these
investments.
Level 3 - Pricing inputs are unobservable for the investment, that is,
inputs that reflect the reporting entity's own assumptions about the
assumptions market participants would use in pricing the asset or
liability. Level 3 includes investments that are supported by little
or no market activity.
The following table presents the financial instruments related to the
Plan's assets carried at fair value as of December 31, 2008 by FAS 157
valuation hierarchy (as defined above).
Level 1 Level 2 Level 3 Total
----------- ----------- ----------- -----------
Common stock - Spire Corporation $ -- $ 923,532 $ -- $ 923,532
Mutual funds 4,022,348 -- -- 4,022,348
Hartford fixed income fund -- 182,660 -- 182,660
Participant Loans -- -- 175,176 175,176
----------- ----------- ----------- -----------
Total investments at fair value $ 4,022,348 $ 1,106,192 $ 175,176 $ 5,303,716
=========== =========== =========== ===========
The following table presents a summary of changes in the fair value of the
Plan's Level 3 assets for the year ended December 31, 2008.
9
Participant Loans:
------------------
Beginning balance at January 1, 2008 $ 133,171
Purchases, sales, issuances and settlements (net) 42,005
---------
Ending balance at December 31, 2008 $ 175,176
=========
5. Nonparticipant-Directed Investments
Information about the net assets and the significant components of the
changes in net assets relating to nonparticipant-directed investments is as
follows:
December 31,
------------
2008 2007
---------- ----------
Net assets:
Common stock - Spire Corporation $ 722,115 $3,268,876
Other 434,846 393,040
---------- ----------
Total nonparticipant-directed $1,156,961 $3,661,916
========== ==========
Changes in net assets during 2008:
Employer contributions $ 47,531
Net decline in fair value of investments (2,552,486)
-----------
$(2,504,955)
===========
6. Investment Contract with Insurance Company
In 1995, the Plan entered into a benefit-responsive investment contract
with The Hartford Group (Hartford). Hartford maintains the contributions in
a general account. The account is credited with earnings on the underlying
investments and charged for participant withdrawals and administrative
expenses. The contract is included in the statements of net assets
available for benefits at fair value as determined using the market
approach based on market prices of similar contracts. The adjustment from
fair value to contract value for the investment contract is based on the
contract value as reported to the Plan by Hartford. Contract value
represents contributions made under the contract, plus earnings, less
participant withdrawals and administrative expenses. Participants may
ordinarily direct the withdrawal or transfer of all or a portion of their
investment at contract value.
10
The fair value of the investment contract at December 31, 2008 and 2007 was
$182,660 and $179,031, respectively. The average yield was 3% for both 2008
and 2007. The interest crediting rate was 3% and 3.36% for 2008 and 2007,
respectively.
Certain events, such as the premature termination of the contract by the
Plan or the termination of the Plan, would limit the Plan's ability to
transact at contract value with Hartford. The Plan administrator believes
the occurrence of such events that would also limit the Plan's ability to
transact at contract value with Plan participants is not probable.
7. 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 Internal Revenue Code. Therefore, no provision for income taxes has
been included in the Plan's financial statements.
8. Excess Contributions
Benefit distributions for the plan year ended December 31, 2008 and 2007
include payments of $33,365 and $29,149, respectively, made to certain
active 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, 2008 are net of
payments of $33,365 made on March 15, 2009 to certain active participants
to return to them excess deferral contributions as required to satisfy the
relevant nondiscrimination provisions of the Plan. That amount is also
included in the plan's statement of net assets available for benefits as
excess contributions payable at December 31, 2008.
9. Loans to Participants
The Plan permits participants to obtain loans against their account
balance. The loans are administered by the trustee and are recorded at
their estimated fair value as reported by the administrator. As of December
31, 2008 and 2007, total loans outstanding were $175,176 and $133,171
respectively. Interest earned on such loans for the year ended December 31,
2008 amounted to $13,148.
11
10. Related Party Transactions
Wachovia Retirement Services is the custodian of the Plan's assets and
record keeper. Certain participant investments are in mutual funds managed
by Wachovia Retirement Services and these transactions are considered as
party-in-interest.
The Plan sponsor has paid the third party administrator fees and audit fees
for 2008 aggregating $24,000.
Participant loans granted in accordance with the Plan are considered as
party-in-interest transactions.
11. Reconciliation of Financial Statements to Form 5500
The following is reconciliation per the financial statements at December
31, 2008 to the 2008 Form 5500 - Annual Return/Report of Employee Benefit
Plan:
2008 2007
------------ ------------
Net assets available for benefits per the financial statements $ 5,290,380 $ 8,936,702
Less: Contributions receivable
Participants (7,432) (15,294)
Employer match (2,640) --
------------ ------------
(10,072) (15,294)
Add: Excess contributions payable 33,365 29,149
------------ ------------
Net assets available for benefits per the 2008 Form 5500 $ 5,313,673 $ 8,950,557
============ ============
Participant contributions per the financial statements $ 567,389
Less: Current year excess contributions payable (7,432)
Add: Current year excess contributions payable 33,365
Prior year contribution receivable 15,294
Loan payment incorrectly posted as contribution 94
------------
Participant contributions per Form 5500 - 2008 $ 608,710
============
Employer matching contributions per financial statements $ 47,531
Less: Current year contribution receivable (2,640)
------------
Employer matching contributions per Form 5500 - 2008 $ 44,891
============
12
12. Adjustment to Prior Year
The Plan financial statements for 2007 did not include the participant's
contribution receivable. The following table restates 2007 for that item:
2007
------------
Net assets available for benefit as reported $ 8,921,408
Add: Participants contribution receivable 15,294
------------
Net assets available for benefits as restated $ 8,936,702
============
13
SPIRE CORPORATION
401(k) PROFIT SHARING PLAN
Schedule H, Line 4i - Form 5500
Schedule of Assets (Held at End of Year)
December 31, 2008
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
-----------------------------------------------------------------------------------------------------------------------
* Spire Corporation 168,538 shares of common stock $1,518,737 $ 923,532
Franklin Templeton Investments Franklin Flexible Capital Growth n/a 720,284
OppenheimerFunds Oppenheimer Quest Opportunity Value n/a 643,991
American Funds Europacific Growth n/a 395,254
AIM Funds AIM Cash Reserve Shares n/a 367,515
Evergreen Investments Evergreen Money Market n/a 325,257
PIMCO Funds Total Return n/a 273,395
Eaton Vance Large Cap Value n/a 205,702
Hartford Life Insurance Co. Fixed Income n/a 192,617
Allianz NJF Dividend Value R n/a 144,876
OppenheimerFunds Oppenheimer Strategic Income n/a 142,757
Eaton Vance Income Fund of Boston n/a 124,996
American Funds New Perspective n/a 110,352
American Funds American Balanced n/a 98,719
Sentinel Group Funds Sentinel Small Company n/a 97,580
Goldman Sachs MidCap Value A n/a 95,454
Allianz Funds RCM Global Technology n/a 87,833
Davis Funds Davis New York Venture n/a 64,303
Franklin Templeton Investments Franklin Small-Mid Cap Growth n/a 53,065
Pioneer Investments Pioneer Cash Reserves n/a 33,523
MFS Investment Management Mass Investors Growth Stock n/a 16,059
Third Avenue Third Avenue Small Cap Value A n/a 10,825
Cash 10,608
* Participant Loans Interest rates 5% to 9.5% n/a 175,176
----------
$5,313,673
==========
* Represents party-in-interest
The independent registered public accounting firm's report should be read
with this supplementary schedule.
14
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, 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 30, 2009 By: /s/ Christian Dufresne
-----------------------------------
Christian Dufresne
Chief Financial Officer and Treasurer
15