11-K 1 d11k.htm FORM 11-K Form 11-K
Table of Contents

 

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 (FEE REQUIRED)

 

For the fiscal year ended December 31, 2004

 

OR

 

¨ TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

 

For the transition period from                      to                     .

 

Commission File Number 000-20242

 

A. Full title of the plan and address of the plan, if different from that of the issuer named below:

 

Central Garden & Pet Company Investment Growth Plan

 

B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:

 

CENTRAL GARDEN & PET COMPANY

1340 Treat Blvd., Suite 600

Walnut Creek, California 94597

 


 


Table of Contents

REQUIRED INFORMATION

 

1.

 

Financial Statements and Supplemental Schedule

    
   

The following documents are filed as part of this report on the pages indicated:

    
         Page No.

   

Reports of Independent Registered Public Accounting Firms

   3 -4
   

Statements of Net Assets Available for Benefits

   5
   

Statements of Changes in Net Assets Available for Benefits

   6
   

Notes to Financial Statements

   7 -11
   

Supplemental Schedule

    
   

Schedule H, Part IV Item 4i - Schedule of Assets (Held At End of Year)

   12

2.

 

Exhibits

    
   

Exhibit 23.1 – Consent of Armanino McKenna LLP

    
   

Exhibit 23.2 – Consent of Deloitte and Touche LLP

    

 

SIGNATURE

 

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 thereunto duly authorized.

 

       

CENTRAL GARDEN & PET COMPANY

INVESTMENT GROWTH PLAN

Date:  

June 29, 2005

      By:   /s/     MARTIN S. BROWN        
               

Martin S. Brown

Director of Compensation and Benefits

 

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Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Trustees and Participants

Central Garden & Pet Company Investment Growth Plan

 

We have audited the accompanying statement of net assets available for benefits (modified cash basis) of the Central Garden & Pet Company Investment Growth Plan as of December 31, 2004, and the related statement of changes in net assets available for benefits (modified cash basis) for the year then ended. 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 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. The Plan is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also 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 the Plan’s management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

 

As discussed in Note 1 “Basis of Accounting,” these financial statements were prepared on a modified cash basis of accounting, which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America.

 

In our opinion, such financial statements present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2004, and the changes in net assets available for benefits for the year then ended on the basis of accounting described in Note 1.

 

Our audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedule listed in the table of contents 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. Such schedule has been subjected to the auditing procedures applied in our audit of the 2004 basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the 2004 basic financial statements taken as a whole.

 

/s/ ARMANINO McKENNA LLP

San Ramon, California

June 23, 2005

 

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Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Trustees and Participants

Central Garden and Pet Company Investment Growth Plan

 

We have audited the accompanying statement of net assets available for benefits (modified cash basis) of the Central Garden & Pet Company Investment Growth Plan as of December 31, 2003, and the related statement of changes in net assets available for benefits (modified cash basis) for the year then ended. 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 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 provides a reasonable basis for our opinion.

 

As discussed in Note 1, “Basis of Accounting”, these financial statements were prepared on a modified cash basis of accounting, which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America.

 

In our opinion, such financial statements present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2003, and the changes in net assets available for benefits for the year then ended on the basis of accounting described in Note 1.

 

/s/ DELOITTE & TOUCHE LLP

San Francisco, California

June 15, 2004

 

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Table of Contents

CENTRAL GARDEN & PET COMPANY

INVESTMENT GROWTH PLAN

Statements of Net Assets Available for Benefits

December 31, 2004 and 2003

 


 

     2004

   2003

Assets

             

Investments at fair value

             

Mutual funds

   $ 37,737,685    $ 31,468,164

Common stock - Central Garden & Pet Company

     7,531,214      5,497,025

Participant loans

     998,914      898,917
    

  

Total

     46,267,813      37,864,106

Investments at contract value

             

Investment contract with insurance company

     14,388,246      13,731,136
    

  

Total investments

     60,656,059      51,595,242
    

  

Net assets available for benefits

   $ 60,656,059    $ 51,595,242
    

  

 

See notes to financial statements.

 

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Table of Contents

CENTRAL GARDEN & PET COMPANY

INVESTMENT GROWTH PLAN

Statements of Changes in Net Assets Available for Benefits

For the Years Ended December 31, 2004 and 2003

 


 

     2004

    2003

 

Additions to net assets available for benefits

                

Investment income

                

Net appreciation in fair value of investments

   $ 6,394,502     $ 7,403,216  

Interest and dividend income

     555,394       1,027,955  
    


 


Total investment income

     6,949,896       8,431,171  
    


 


Contributions

                

Employer

     818,454       768,021  

Participant

     4,198,961       4,195,084  
    


 


Total contributions

     5,017,415       4,963,105  
    


 


Total additions

     11,967,311       13,394,276  
    


 


Deductions from net assets available for benefits

                

Benefits paid to participants

     2,884,211       2,777,102  

Plan expenses

     5,025       6,009  
    


 


Total deductions

     2,889,236       2,783,111  
    


 


Net increase before plan transfer

     9,078,075       10,611,165  

Transfer of net assets to the Pennington Seed & Subsidiaries 401(k) Profit Sharing Plan

     (17,258 )     (354,674 )
    


 


Net increase in net assets available for benefits

     9,060,817       10,256,491  

Net assets available for benefits

                

Beginning of year

     51,595,242       41,338,751  
    


 


End of year

   $ 60,656,059     $ 51,595,242  
    


 


 

 

See notes to financial statements.

 

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Table of Contents

CENTRAL GARDEN & PET COMPANY

INVESTMENT GROWTH PLAN

Notes to Financial Statements

December 31, 2004 and 2003

 


 

1. Significant Accounting Policies

 

General

 

The following description of the Central Garden & Pet Company (the “Company”) Investment Growth Plan (the “Plan”) provides only general information. Participants seeking detailed information about the Plan should refer to the Plan document and the Summary Plan Description.

 

The Plan is a defined contribution plan that was established on July 1, 1985 to provide benefits to eligible employees, as provided in the Plan document. The Plan covers all eligible employees of the Company. Employees whose compensation is not determined by a collective bargaining agreement become eligible to participate in the Plan at age 21 or older after at least 1,000 hours of service as defined by the Plan in a year. The Plan is intended to comply with the applicable requirements of the Internal Revenue Code of 1986, as amended (the “Code”) and the provisions of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”).

 

Plan administration

 

The Company is the administrator of the Plan and, as such, carries out the duties imposed by ERISA. The Company has contracted with ING Life Insurance and Annuity Company (“ING”) to maintain the Plan’s individual participant accounts and provide certain other record-keeping and administrative services, and with ING National Trust (“ING Trust”) to act as the Plan’s custodian and trustee. Primarily all administrative expenses of the Plan, including recordkeeping and trustee fees, were paid directly by The Company, except for loan maintenance and set-up fees, which are paid by individual participants.

 

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 and liabilities, and changes therein, and the disclosure of contingent assets and liabilities. Actual results could differ from those estimates.

 

Basis of accounting

 

The accompanying financial statements have been prepared on the modified cash basis of accounting. Under this basis of accounting, investment income and contributions to the Plan are recognized when received and disbursements are recognized when made. Additionally, investments are stated at fair value or contract value, as appropriate. Accordingly, the accompanying financial statements are not intended to present net assets of the Plan in conformity with accounting principles generally accepted in the United States of America.

 

Investments

 

Investments of the Plan are held by ING Trust and are invested in the investment options available under the Plan based solely upon instructions received from Plan participants or as provided in the Plan document. The Plan’s investments in mutual funds and common stocks are valued at fair value, as measured by quoted market prices, as of the last day of the Plan year. The investment contract with ING Trust is stated at contract value. Participant loans are valued at unpaid principal balance, which approximates fair value.

 

Purchases and sales of securities are recorded on a trade-date basis. Interest income and dividends are recorded as received.

 

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Table of Contents

CENTRAL GARDEN & PET COMPANY

INVESTMENT GROWTH PLAN

Notes to Financial Statements

December 31, 2004 and 2003

 


 

1. Significant Accounting Policies (continued)

 

Income taxes

 

The Plan is intended to qualify for favorable federal and state income tax treatment accorded to plans that qualify under Section 401(a) and 401(k) of the Code, and therefore is intended to be exempt from federal income and state franchise taxes. The Plan has been amended subsequent to receipt of its most recent Internal Revenue Service (“IRS”) favorable determination letter dated May 23, 2002 to bring it into compliance with applicable law and to make other desired changes. However, the Plan administrator and the Plan’s tax counsel believe that the Plan is currently designed and 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.

 

Risks and uncertainties

 

The Plan provides participants with investment options consisting of the Company’s common stock and various mutual funds offered by the Plan. These mutual funds invest in stocks, bonds and other investment securities. The Company’s common stock and other investment securities are exposed to risks, such as those associated with interest rates, market conditions and credit worthiness of the securities’ issuers. These risks could materially affect participants’ account balances and the amounts reported in the financial statements.

 

2. Participation and Benefits

 

Participant contributions

 

Participants of the Plan can elect to defer pretax eligible compensation as defined for the contribution to the Plan, subject to the dollar maximum of $13,000 and $12,000 in 2004 and 2003, respectively. For participants who elect to contribute a portion of their compensation to the Plan, their taxable compensation is reduced by the amount contributed. Participant salary deferral contributions are invested in various funds in whole-percent increments according to the participant’s direction.

 

Participants are also allowed to make rollover contributions of eligible amounts received from other tax-qualified employer-sponsored retirement plans or conduit IRAs. Such contributions are invested in various funds in accordance with the participant’s direction and the Plan’s provisions.

 

Match contributions

 

The Company provides a matching contribution equal to 25% of the first 8% of compensation contributed to the Plan. The Company’s matching contribution for the year ended December 31, 2004 was $885,869. As of December 31, 2004, $636,098 has been paid and $249,771 will be paid in 2005. For the year ended December 31, 2003, The Company’s matching contribution was $760,631 of which $171,014 was paid in 2004.

 

The Company can make a discretionary profit sharing contribution to the Plan. Such contribution is allocated to all eligible employees in proportion to the participant’s eligible compensation. Participants are eligible only if they remain employed at the end of the year and completed the hours of service requirement during the year, unless employment is terminated during the year due to death, disability or retirement. The Company made no discretionary contributions in 2004 or 2003.

 

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Table of Contents

CENTRAL GARDEN & PET COMPANY

INVESTMENT GROWTH PLAN

Notes to Financial Statements

December 31, 2004 and 2003

 


 

2. Participation and Benefits (continued)

 

Participant accounts

 

Each participant’s account is credited with the participant’s contributions, an allocation of Plan investment income (or losses), and the Company contributions. 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 their vested account.

 

Payment of benefits

 

Upon termination of service for any reason, including death or disability, participants with vested account values of less than $5,000 will receive a lump-sum distribution of such amounts. If the value of the vested portion of the account exceeds $5,000, the terminated participant can elect to receive his or her distribution immediately or at any time prior to attaining the normal retirement age of 65, as defined by the Plan. When a participant attains the normal retirement age, the participant can withdraw all or any portion of his or her accounts under the Plan without restriction.

 

Loans to participants

 

Participant loans are available to active employees for up to 50% of an employee’s vested account balance, with a minimum borrowing of $500 and a maximum of $50,000. Loan maturities are for a maximum of five years or, for the purchase of a primary residence, a maximum of fifteen years. Participants are allowed to have only one loan outstanding at a time. Loans are secured by the participant’s vested balances, bear interest at prime plus one percent at the time of the borrowing and generally must be repaid to the Plan from payroll deductions over the loan term. Loans are generally payable in full upon a participant’s termination of employment, or the occurrence of certain other events. Outstanding loans at December 31, 2004 carry interest rates ranging from 5 percent to 10.5 percent.

 

Vesting

 

Participants are immediately vested in their salary deferral and rollover contributions and any related earnings. Vesting in The Company matching contribution, plus any earnings thereon, is based on years of continuous service as defined by the Plan. A participant is 100% vested after five years of credited service.

 

Forfeiture

 

At December 31, 2004 and 2003, forfeited nonvested accounts totaled $60,153 and $91,385, respectively. These accounts will be used to reduce future employer contributions. Total forfeitures during 2004 and 2003 were $11,638 and $17,942, respectively. During the year ended December 31, 2004, employer contributions were reduced by forfeited nonvested accounts of $40,267.

 

Plan Termination or Modification

 

The Company currently intends to continue the Plan indefinitely for the benefit of its participants and their beneficiaries; however, it reserves the right to terminate or modify the Plan at any time and for any reason, subject to the provisions of ERISA. In the event the Plan is terminated, participants would become fully vested in their accounts.

 

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Table of Contents

CENTRAL GARDEN & PET COMPANY

INVESTMENT GROWTH PLAN

Notes to Financial Statements

December 31, 2004 and 2003

 


 

3. Party-in-Interest and Related Party Transactions

 

As allowed by the Plan, participants may elect to invest their salary deferral contributions and employer matching contributions in the Company’s common stock. Aggregate investment in the Company’s common stock at December 31, 2004 and 2003 was as follows:

 

     Number of Shares

   Fair Value

2004

   166,303    $ 7,531,214

2003

   182,903    $ 5,497,025

 

Certain Plan investments are managed by ING Trust, the custodian and trustee of the Plan. Any purchases and sales of these funds are performed in the open market at fair value. Such transactions, while considered party-in-interest transactions under ERISA regulations, are permitted under the provisions of the Plan and are specifically exempt from the prohibition of party-in-interest transactions under ERISA.

 

4. Investments

 

The following information presents fair values of investments and investment funds that represent 5 percent or more of the Plan’s net assets at December 31:

 

     2004

   2003

ING Fixed Account

   $ 14,388,246    $ 13,731,136

Pioneer Equity Income Fund

   $ 5,095,635    $ 3,796,706

Janus Balanced Fund

   $ 5,175,718    $ 4,269,132

Scudder Equity 500 Index Fund

   $ 8,480,152      —  

Baron Growth Fund

   $ 3,038,788      —  

Central Garden & Pet Company Common Stock

   $ 7,531,214    $ 5,497,025

ING Index Plus LargeCap Fund

     —      $ 7,550,892

 

The Plan’s investments, including gains and losses on investments bought, sold and held during the year, appreciated in value as follows for the years ended December 31:

 

     2004

   2003

Mutual funds

   $ 3,995,476    $ 5,538,378

Common stock

     2,399,026      1,864,838
    

  

Total appreciation

   $ 6,394,502    $ 7,403,216
    

  

 

5. Investment Contract with Insurance Company

 

In 2000, the Plan began offering the ING Fixed Account, a benefit-responsive investment contract, as an investment option to Plan participants. As of December 31, 2004 and 2003, Plan participants had $14,388,246 and $13,731,136, respectively, invested in this insurance company contract.

 

Contributions to ING under this contract are maintained 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 financial statements at contract value as reported to the Plan by ING. 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.

 

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Table of Contents

CENTRAL GARDEN & PET COMPANY

INVESTMENT GROWTH PLAN

Notes to Financial Statements

December 31, 2004 and 2003

 


 

5. Investment Contract with Insurance Company (continued)

 

There are no reserves against contract value for credit risk. The crediting interest rates were approximately 3.48% and 4.75% for 2004 and 2003, respectively. The crediting interest rate is determined on a monthly basis by an actuarial formula, as designated by ING. The crediting interest rate is subject to a guaranteed minimum floor as defined on an annual basis by ING. The floor rate at December 31, 2004 and 2003 was 3.65% and 4.45%, respectively. Interest income from this fund was $478,147 and $604,943 for the years ended December 31, 2004 and 2003, respectively.

 

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Table of Contents

SUPPLEMENTAL SCHEDULE

CENTRAL GARDEN & PET COMPANY INVESTMENT GROWTH PLAN

Schedule H, part IV, Item 4i – Schedule of Assets (Held at End of Year)

EIN: 68-0275553, Plan #001

December 31, 2004


 

(a)

  

(b)
Identity of Issue,
Borrower, Lessor or Similar Party


  

(c)

Description of Investment Including
Maturity Date, Rate of Interest, Collateral,
Par or Maturity Value


   (d)
Cost


  

(e)

Current Value


*   

Central Garden & Pet Company

  

Common stock

        $ 7,531,214
*   

ING Fixed Accounts

  

Investment contract with insurance company, minimum interest at 4.45%

          14,388,246
*   

ING Aeltus Money Market Fund

  

Money market account

          40,514
*   

ING Government Fund

  

Mutual Fund

          505,901
*   

ING Small Company Fund

  

Mutual Fund

          1,658,474
*   

ING Salomon Bros Fund

  

Mutual Fund

          2,073,948
    

INVESCO Dynamics Fund

  

Mutual Fund

          1,058,534
    

Janus Balanced Fund

  

Mutual Fund

          5,175,718
    

Baron Growth Fund

  

Mutual Fund

          3,038,788
    

Massachusetts Investors Growth Stock Fund

  

Mutual Fund

          1,935,929
    

Oppenheimer Global Fund

  

Mutual Fund

          2,852,845
    

Oppenheimer High Yield Fund

  

Mutual Fund

          1,111,131
    

Oppenheimer Main Street Fund

  

Mutual Fund

          2,265,768
    

Pioneer Equity Income Fund

  

Mutual Fund

          5,095,635
    

Templeton Foreign Fund

  

Mutual Fund

          1,463,942
    

Scudder Equity 500 Index Fund

  

Mutual Fund

          8,480,152
    

AIM Mid Cap Core Equity Fund

  

Mutual Fund

          980,406
*   

Participant loans

  

Participant loans with interest rates ranging from 5 % to 10.5 %

          998,914
                   

    

Total investments

             $ 60,656,059
                   

*   

Party-in-interest, as defined by ERISA.

                

 

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