-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OKjElJesY+GTlxXDEL+86kVouX1zkTwqiRpXoOFEyytUL68uznZxMNw4tjNEIvUm 2rrBWXZfKBYwWNgpwiFBtw== 0000930661-02-002231.txt : 20020627 0000930661-02-002231.hdr.sgml : 20020627 20020627164830 ACCESSION NUMBER: 0000930661-02-002231 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20011231 FILED AS OF DATE: 20020627 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SOUTHWEST SECURITIES GROUP INC CENTRAL INDEX KEY: 0000878520 STANDARD INDUSTRIAL CLASSIFICATION: SECURITY BROKERS, DEALERS & FLOTATION COMPANIES [6211] IRS NUMBER: 752040825 STATE OF INCORPORATION: DE FISCAL YEAR END: 0625 FILING VALUES: FORM TYPE: 11-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-19483 FILM NUMBER: 02689546 BUSINESS ADDRESS: STREET 1: SUITE 3500 STREET 2: 1201 ELM STREET CITY: DALLAS STATE: TX ZIP: 75270 BUSINESS PHONE: 2146511800 MAIL ADDRESS: STREET 1: SUITE 3500 STREET 2: 1201 ELM STREET CITY: DALLAS STATE: TX ZIP: 75270 11-K 1 d11k.txt FORM 11-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 11-K FOR ANNUAL REPORTS OF EMPLOYEE STOCK PURCHASE, SAVINGS AND SIMILAR PLANS PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE, SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2001 [_] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the transition period from __________ to __________ Commission file number 000-19483 A. Full title of the plan and the address of the plan, if difference from that of the issuer named below: SWS GROUP 401(K) PROFIT SHARING PLAN B. Name of issuer of these securities held pursuant to the plan and the address of its principal executive office: SWS GROUP, INC. 1201 Elm Street, Suite 3500 Dallas, Texas 75270 SWS GROUP 401(K) PROFIT SHARING PLAN FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE DECEMBER 31, 2001 AND 2000 WITH REPORT OF INDEPENDENT ACCOUNTANTS SWS GROUP 401(K) PROFIT SHARING PLAN TABLE OF CONTENTS - --------------------------------------------------------------------------------
Page ---- Report of Independent Accountants 1 Statements of Net Assets Available for Benefits - December 31, 2001 and 2000 2 Statement of Changes in Net Assets Available for Benefits - for the year ended December 31, 2001 3 Notes to Financial Statements 4-7 Supplemental Schedule: Schedule of Assets Held for Investment Purposes at End of Year - December 31, 2001 8
Report of Independent Accountants To the Participants and Administrator of SWS Group 401(k) Profit Sharing Plan: In our opinion, the accompanying statement 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 SWS Group 401(k) Profit Sharing Plan (the "Plan") at December 31, 2001, and the changes in net assets available for benefits for the year ended December 31, 2001 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 audit. We conducted our audit 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 audit provides a reasonable basis for our opinion. The financial statements of the Plan as of December 31, 2000 were audited by other independent accountants whose report dated June 8, 2001 expressed an unqualified opinion on those statements. 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 for investment purposes 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 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. PricewaterhouseCoopers LLP May 31, 2002 Independent Auditors' Report The Trustees Committee Southwest Securities Group 401(K) Profit Sharing Plan: We have audited the accompanying statement of net assets available for benefits of Southwest Securities Group 401(K) Profit Sharing Plan as of December 31, 2000. This financial statement is the responsibility of the Plan's management. Our responsibility is to express an opinion on this financial statement based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. 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 provides a reasonable basis for our opinion. In our opinion, the financial statement referred to above presents fairly, in all material respects, the net assets available for benefits of Southwest Securities Group 401(K) Profit Sharing Plan as of December 31, 2000 in conformity with accounting principles generally accepted in the United States of America. KPMG LLP Dallas, Texas June 8, 2001 SWS GROUP 401(K) PROFIT SHARING PLAN STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS DECEMBER 31, 2001 AND 2000 - -------------------------------------------------------------------------------- December 31, December 31, 2001 2000 ------------ ------------ Investments, at fair value (Notes 4 and 5): Common stock $ 25,977,960 $ 21,472,906 SWS Group Inc., common stock 1,861,611 5,124,755 Money market funds 8,014,929 6,768,789 Government securities 579,259 998,061 Mutual funds 18,518,336 17,288,093 Common/collective trusts 3,304,782 3,390,885 Corporate bonds and debentures 358,892 598,101 Preferred stock 218,648 102,010 Other assets 333,944 333,911 Loans to participants 2,495,071 2,090,940 ------------ ------------ Total investments 61,663,432 58,168,451 ------------ ------------ Receivables: Employer contributions (Note 2 (a)) 1,657 2,833,791 Participant contributions (Note 2 (b)) 2,344 1,560 Other 1,672 929 ------------ ------------ Total receivables 5,673 2,836,280 Cash 20,730 53,073 ------------ ------------ Net assets available for benefits $ 61,689,835 $ 61,057,804 ------------ ------------ The accompanying notes are an integral part of these financial statements. 2 SWS GROUP 401(K) PROFIT SHARING PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS FOR THE YEAR ENDED DECEMBER 31, 2001 - -------------------------------------------------------------------------------- December 31, 2001 -------------- Additions (deductions) to net assets attributed to: Investment income (loss) (Note 4): Net depreciation in fair value of investments $ (1,293,232) Interest and dividends 562,404 ------------- (730,828) ------------- Contributions: Employer 2,461,139 Participant 3,513,751 Participant rollovers from other plans 609,990 ------------- Total additions 5,854,052 ------------- Deductions from net assets attributed to: Benefits paid to participants (5,977,920) Administrative expenses (113,049) ------------- Total deductions (6,090,969) ------------- Transfers to the Plan (Note 1(a)) 868,948 Net increase 632,031 Net assets available for benefits, beginning of year 61,057,804 ------------- Net assets available for benefits, end of year $ 61,689,835 ------------- The accompanying notes are an integral part of these financial statements. 3 SWS GROUP 401(K) PROFIT SHARING PLAN NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) General The SWS Group 401(k) Profit Sharing Plan (the "Plan") (formerly known as the Southwest Securities Group 401(k) Profit Sharing Plan) is a defined contribution plan covering all employees of companies affiliated with SWS Group, Inc. (the "Company" or "Employer") who meet certain minimum hours of service requirements. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 ("ERISA"). Participants should refer to the Plan agreement for a more complete description of the Plan's provisions. In September 2001, approximately $869,000 was merged into the Plan from the qualified retirement plans of two of the Company's affiliates, First Savings Bank and May Financial Corporation. (b) Basis of Presentation The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. (c) Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the Plan administrator to make estimates and assumptions that affect the reported amounts of assets and liabilities and changes therein, and disclosure of contingent assets and liabilities. Actual results could differ from those estimates. (d) Administration The Plan is administered by a Trustee Committee appointed by the Company's Board of Directors. The Trustees of the Plan are Charles Schwab Trust Company and Westwood Trust Company, an affiliate of SWS Group, Inc. Expenses of the Plan were $113,049 for 2001 and were paid out of Plan assets. 2. CONTRIBUTIONS (a) Employer The Company contributes 100% of the first 4% of compensation that a participant contributes into the Plan. The Board of Directors of the Company determines the amount of discretionary Employer contribution to the Plan each year. The contribution may not exceed the lesser of 15% of the total annual compensation paid to the participants or of the Employer's net profits before taxes. These contributions are allocated to each participant in the ratio of each participant's covered compensation to the total covered compensation of all participants. No discretionary contribution is required to be made by the Employer. 4 SWS GROUP 401(K) PROFIT SHARING PLAN NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- The carrying amount of the Employer contributions receivable approximates fair value at December 31, 2001 and 2000, due to the short-term nature of the account. (b) Participant Contributions Participants may contribute up to 10% of pretax annual compensation, as defined by the Plan. Participants may also contribute rollovers of 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. Participant contributions were limited to $10,500 during the 2001 Plan year. The carrying amount of the Participant contributions receivable approximates fair value at December 31, 2001 and 2000, due to the short-term nature of the account. (c) Forfeitures Forfeitures reduce Employer contributions for the year in which the forfeitures occur and are allocated to participants in the same manner as the Employer contribution. At December 31, 2001 forfeited nonvested accounts totaled $431,610. These accounts will be used to reduce future employer contributions. During 2001, employer contributions were reduced by approximately $977,000 from forfeited nonvested accounts. 3. ELIGIBILITY AND VESTING (a) Eligibility Employees of the Company are eligible to participate in the Plan upon hire, as soon as administratively possible. (b) Vesting Participant contributions and Employer matching contributions are immediately vested. Employees who work a minimum of 1,000 hours a year and are employed on the last day of the calendar year qualify for a year of service and vest as follows in the discretionary Employer contribution; Years Percentage of service vested --------------- --------------- Less than 2 0% 2 years 20% 3 years 40% 4 years 60% 5 years 80% 6 years 100% 5 SWS GROUP 401(K) PROFIT SHARING PLAN NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- (c) Plan Benefits The vested portion of the accrued benefit of a participant upon termination or retirement is his or her plan benefit. Normal retirement age as elected by the Company is 55. Several options for payments are available and all require the agreement of the participant. Benefits are recorded by the Plan when paid. 4. INVESTMENTS AND INVESTMENT INCOME All investments, except $2,563,034 in investments which are held by Westwood Trust Company, an affiliate of SWS Group, Inc., are held by Charles Schwab Trust Company. The Company maintains a self-directed plan with separate, segregated accounts and each participant's income or loss, including market fluctuations, is applied directly to the participant's account. Investments are carried at fair value based on quoted market prices. The fair values of all securities held at December 31, 2001 and 2000 are based on quoted market prices. Purchases and sales of securities are recorded on a settlement-date basis. Interest income is recorded as earned and dividends are recorded on the ex-dividend date. Investments greater than 5% of net assets available for benefits at December 31, 2001 and 2000 are as follows: 2001 2000 ----------- ---------- Southwest Securities 401(k) Stock Fund $ * $5,124,755 Schwab Value Advantage Fund 3,304,782 3,390,885 Money market funds, Schwab 7,967,987 6,697,767 *Did not meet 5% threshold for reporting for this period. The Plan has investments in parties-in-interest (including SWS Group, Inc.) with market values of $15,240,389 and $22,083,079 at December 31, 2001 and 2000, respectively. During the year ended December 31, 2001, the Plan received dividends from investments in SWS Group, Inc. of approximately $55,000. During the year ended December 31, 2001, the Plan's investments, including those bought, sold and held during the year, appreciated (depreciated) in value as follows: 2001 ------------ Common stock $ 186,207 Mutual funds (1,479,299) Other (140) ------------ Net depreciation in fair value of investments $(1,293,232) ============ 6 SWS GROUP 401(K) PROFIT SHARING PLAN NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- Included in net appreciation in common stock is depreciation on investments in SWS Group, Inc. of approximately $86,800 for the year ended December 31, 2001. 5. LOANS TO PARTICIPANTS As allowed by the Plan, loans have been made to numerous participants. Loans are limited to a maximum term of five years except when the loan is used to acquire the principal residence of the participant. Loan amounts are limited to 50% of the respective participant's nonforfeitable accrued benefit at the time of the loan less any outstanding loans up to a maximum total of $50,000. Interest rates ranged from 4.75% to 10.5% at December 31, 2001. 6. TAX STATUS The Company has modeled its Plan on a prototype plan for which a favorable tax determination letter has been received from the Internal Revenue Service. The Plan has not applied for a determination letter. The Plan administrator believes that the Plan is currently designed and being operated in compliance with the applicable requirements of the Internal Revenue Code. Therefore, the Plan was qualified and the related trust was tax-exempt as of the financial statement date. 7. PLAN TERMINATION Although it has not expressed any intent to do so, the Company may terminate the Plan at any time subject to the provisions of ERISA. In the event of Plan termination, the rights of each participant to the amount in his or her account on the date of such termination shall be fully vested and nonforfeitable. 8. SUBSEQUENT EVENT In 2002, the Plan was amended to include the language that complies with certain provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001. The changes modified the top-heavy rules and increased the annual eligible compensation and benefit limits. 7 SWS GROUP 401(K) PROFIT SHARING PLAN SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AT END OF YEAR AT DECEMBER 31, 2001 - --------------------------------------------------------------------------------
Identity of issuer, borrower, lessor or similar party and description of investment including maturity date, Current rate of interest, collateral, par or maturity value value -------------------------------------------------------------------------- ------------ * Schwab Value Advantage Fund $ 3,304,782 * Southwest Securities 401(k) Stock Fund 1,861,611 Self-directed brokerage accounts 41,786,215 Alliance Premier Growth Fund 1,407,632 * Gabelli Westwood Balanced Fund 901,862 * Gabelli Westwood Equity Fund 959,564 * Gabelli Westwood Realty Fund 27,880 * Gabelli Westwood Small Cap Equity RET Fund 781,249 Manager's Special Equity Fund 702,184 Pimco Total Return FD Class D Fund 453,005 * Schwab Markettrack Balanced Fund 230,452 * Schwab Markettrack Conservative Fund 188,519 * Schwab Markettrack Growth Fund 350,909 * Schwab S&P 500-Investors SHS Fund 1,575,456 Scudder International Fund 737,481 Weitz Value Portfolio 1,336,526 * SEI Government Securities Principal 46,942 * Westwood Trust Fourth Wave Fund-EB Fund 482,442 * Westwood Trust Mid Cap Equity-EB Fund 336,497 * Westwood Trust Small Cap Equity-EB Fund 858,349 * Westwood Trust High Yield Bond-EB Fund 450,505 * Westwood Trust Real Estate Invest Trust-EB Fund 141,389 * Westwood Trust International Equity-EB Fund 59,949 * Westwood Trust Large Cap Equity-EB Fund 93,405 * Westwood Trust Core Investment Grade Bond-EB Fund 93,556 * Loans to Participants, Interest Rates 4.75% to 10.5% due through 2025 2,495,071 ------------ Total assets held for investment purposes $ 61,663,432 ============
*Designates a party in-interest. Note: Cost information has been omitted as all investments are participant-directed. 8 SIGNATURE The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the Administrator has duly caused this annual report to be signed on its behalf by the undersigned thereunto duly authorized. THE SWS GROUP 401(K) PROFIT SHARING PLAN Date: June 26, 2002 By: /s/ Jim Zimcosky -------------------- Jim Zimcosky Director - Human Resources Plan Administrator EX-23.1 3 dex231.txt CONSENT OF PRICEWATERHOUSECOOPERS LLP Exhibit 23.1 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (No. 000-19483) of SWS Group, Inc. of our report dated May 31, 2002 relating to the 2001 financial statements of SWS Group 401(k) Profit Sharing Plan, which appears in this Form 11-K. PricewaterhouseCoopers LLP Dallas, TX June 26, 2002 EX-23.2 4 dex232.txt CONSENT OF KPMG LLP Exhibit 23.2 The Trustees Committee SWS Group 401(K) Profit Sharing Plan (formerly Southwest Securities Group 401(k) Profit Sharing Plan): We consent to the incorporation by reference in the registration statement No. 000-19483 on Form S-8 of SWS Group, Inc. (formerly Southwest Securities Group, Inc.) of our report dated June 8, 2001 relating to the statement of net assets available for benefits of the Southwest Securities Group 401(K) Profit Sharing Plan as of December 31, 2000 which report appears in the December 31, 2001 annual report on Form 11-K of the SWS Group 401(k) Profit Sharing Plan. KPMG LLP Dallas, Texas June 26, 2002 -----END PRIVACY-ENHANCED MESSAGE-----