UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
(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
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from __________ to ___________
Commission file number 333-91178
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
Park National Corporation
Employees Stock Ownership Plan
(formerly known as Park National Corporation Employees
Voluntary Salary Deferral Plan and Trust)
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
Park National Corporation
50 North Third Street
Newark, Ohio 43055
REQUIRED INFORMATION
The following financial statements and supplemental schedule
for the Park National Corporation Employees Stock Ownership Plan (formerly known
as the Park National Corporation Employees Voluntary Salary Deferral Plan and
Trust) are being filed herewith:
AUDITED FINANCIAL STATEMENTS:
Report of Independent Auditors - Ernst & Young LLP
Statements of Net Assets Available
for Benefits at December 31, 2001 and 2000
Statements of Changes in Net Assets Available for Benefits for the Years Ended
December 31, 2001 and 2000
Notes to Financial Statements - December 31, 2001
Independent Auditors' Report - Jones, Cochenour & Co.
SUPPLEMENTAL SCHEDULE:
Schedule of Assets Held for Investment
Purposes as of December 31, 2001
The following exhibits are being filed herewith:
EXHIBIT NO. DESCRIPTION
23.1 Consent of Ernst & Young LLP
23.2 Consent of Jones, Cochenour & Co.
2
Report of Independent Auditors
Executive Committee of the Board of Directors
Park National Corporation
We have audited the accompanying statements of net assets available for benefits
of the Park National Corporation Employees Voluntary Salary Deferral Plan and
Trust as of December 31, 2001, and the related statement of changes in net
assets available for benefits 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. The
financial statements of the Park National Corporation Employees Voluntary Salary
Deferral Plan and Trust for the year ended December 31, 2000, were audited by
other auditors whose report dated September 28, 2001, expressed an unqualified
opinion on those statements.
We conducted our audit in accordance with auditing standards generally accepted
in the 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 statements
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the 2001 financial statements referred to above present fairly,
in all material respects, the net assets available for benefits of the Plan at
December 31, 2001 and the changes in its net assets available for benefits for
the year then ended, in conformity with accounting principles generally accepted
in the United States.
3
Our audit was performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule of assets held for
investment purposes 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. The supplemental schedule is the responsibility of the Plan's management.
The supplemental schedule has been subjected to the auditing procedures applied
in our audit of the basic financial statements, and, in our opinion, is fairly
stated in all material respects in relation to the financial statements taken as
a whole.
/s/ Ernst & Young LLP
Columbus, Ohio
May 20, 2002
4
Park National Corporation Employees
Voluntary Salary Deferral Plan and Trust
Statements of Net Assets Available for Benefits
DECEMBER 31,
2001 2000
-------------------------
ASSETS
Cash and cash equivalents $ 112,932 $ 44,418
Investments:
Park National Corporation Common Stock 30,034,027 26,842,393
Mutual Funds 6,758,907 7,417,402
Certificates of Deposit,
issued by Park National Corporation bank affiliates 2,274,699 2,207,469
----------- -----------
39,067,633 36,467,264
Contributions receivable:
Employer 938,455 864,246
Employee -- 4,049
----------- -----------
938,455 868,295
Accrued interest and dividends 275,346 --
Receivable from Security Banc Corporation 401(k) Plan 12,633,172 --
----------- -----------
Net assets available for benefits $53,027,538 $37,379,977
=========== ===========
See accompanying notes.
5
Park National Corporation Employees
Voluntary Salary Deferral Plan and Trust
Statements of Changes in Net Assets Available for Benefits
YEAR ENDED DECEMBER 31,
2001 2000
-----------------------------
Additions
Investment Income:
Net realized and unrealized appreciation/(depreciation)
in fair value of investments $ 278,794 $ (2,852,580)
Interest and dividends 1,423,833 1,055,919
------------ ------------
1,702,627 (1,796,661)
Contributions:
Employer 959,826 868,684
Employee 2,081,147 2,008,932
------------ ------------
3,040,973 2,877,616
Plan Merger - Second National Bank and United Bank, N.A -- 5,366,412
Plan Merger - Security Banc Corporation 12,633,172 --
------------ ------------
Total additions 17,376,772 6,447,367
Deductions:
Benefit payments to participants 1,729,211 1,594,741
------------ ------------
Net increase in net assets available for benefits 15,647,561 4,852,626
Net assets available for benefits at beginning of year 37,379,977 32,527,351
------------ ------------
Net assets available for benefits at end of year $ 53,027,538 $ 37,379,977
============ ============
See accompanying notes.
6
Park National Corporation
Employees Voluntary Salary Deferral Plan and Trust
Notes to Financial Statements
December 31, 2001
1. DESCRIPTION OF THE PLAN
The following description of the Park National Corporation Employees Voluntary
Salary Deferral Plan (Plan) provides only general information. 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 full-time employees of Park
National Corporation and subsidiaries (Park) who have one year of service and
are age twenty-one or older. It is subject to the provision of the Employee
Retirement Income Security Act of 1974 (ERISA).
CONTRIBUTIONS
Each year, participants may contribute up to 14% of their pretax annual
compensation, as defined in the Plan. Participants may also contribute rollover
amounts representing distributions from other qualified defined contribution
plans. The maximum salary deferral permitted by the Internal Revenue Code (Code)
for both 2001 and 2000 was $10,500.
Park provides a matching contribution at a level established annually by Park.
For 2001 and 2000, Park matched 20% of officers' contributions and 40% of
non-officers' contributions. If the participant chooses the option of investing
in Park National Corporation stock, Park will match 50% of the contributions for
both officers and non-officers.
PARTICIPANT ACCOUNTS
Each participant's account is credited with the participant's salary deferral
and allocation of Park's contribution and Plan earnings. Allocations are based
on participant earnings or account balances, as defined. The benefit to which a
participant is entitled is the benefit that can be provided from the
participant's account.
VESTING
Participants' accounts are 100% vested at all times.
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Park National Corporation
Employees Voluntary Salary Deferral Plan and Trust
Notes to Financial Statements (continued)
1. DESCRIPTION OF THE PLAN (CONTINUED)
INVESTMENT OPTIONS
Upon enrollment in the Plan, a participant may direct both employee and employer
contributions in any of nine investment options:
Park National Corporation Common Stock - Funds are invested in common stock
of Park National Corporation.
Bank Certificates of Deposit - Funds are invested in Certificates of
Deposit issued by The Park National Bank, The Richland Trust Company, and
The Second National Bank and Trust Co.
Vanguard Institutional Index Fund - Funds are invested in shares of a
mutual fund that invests mainly in common stocks tracked by the Standard
and Poor's 500 stock index.
Vanguard Short-Term Corporate Fund - Funds are invested in shares of a
mutual fund that invests mainly in short-term corporate bonds.
Vanguard Growth Index Fund - Funds are invested in shares of a mutual fund
that invests mainly in common stocks.
Vanguard Institutional Extended Market Fund - Funds are invested in shares
of a mutual fund that invests mainly in common stocks of companies of
medium capitalization.
Vanguard Balanced Index Fund - Funds are invested in shares of a mutual
fund that invests mainly in a mix of common stocks, debt investments and
cash equivalents.
Vanguard Total International Stock Index Fund - Funds are invested in
shares of a mutual fund that invests wholly in common stocks of companies
located outside of the United States of America.
8
Park National Corporation
Employees Voluntary Salary Deferral Plan and Trust
Notes to Financial Statements (continued)
1. DESCRIPTION OF THE PLAN (CONTINUED)
INVESTMENT OPTIONS (CONTINUED)
Vanguard Intermediate-Term Bond Index Fund - Funds are invested in shares
of a mutual fund that invests mainly in intermediate term debt instruments
of the United States government and domestic corporations.
Participants may change their investment options quarterly.
PAYMENTS OF BENEFITS
On termination of service and before age 59 1/2, a participant may elect to
receive either a lump sum or rollover amount equal to the value of his or her
account. After age 59 1/2, a participant may elect lump sum, rollover, or
installments over a period certain not to exceed the participant's (and his
designated beneficiary's) life expectancy.
2. SUMMARY OF ACCOUNTING POLICIES
BASIS OF PRESENTATION
The financial statements of the Plan are prepared on the accrual basis.
VALUATION OF INVESTMENTS
Investments are stated at fair value. Park common stock is valued at its quoted
market price. Shares of mutual funds are valued at quoted market prices which
represent the net asset value of shares held by the Plan at year end.
ADMINISTRATIVE EXPENSES
All administrative expenses charged to the Plan are borne by Park. Trustee fees
for the Plan are waived each year. Park also provides other accounting and
administrative services to the Plan.
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Park National Corporation
Employees Voluntary Salary Deferral Plan and Trust
Notes to Financial Statements (continued)
2. SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect reported amounts of assets and liabilities at the
date of the financial statements, and the reported amounts of investment income
and expenses during the reporting period. Actual results could differ from those
estimates.
RECLASSIFICATIONS
Certain amounts in the prior year financial statements have been reclassified to
conform with the current year presentation. These reclassifications had no
effect on net assets available for benefits as previously reported.
3. PLAN MERGER
On November 20, 2000, Security Banc Corporation (Security) entered into an
agreement and plan of merger with Park. The corporate merger was completed on
March 23, 2001 and the Security Banc Corporation 401(k) Profit Sharing Savings
Plan (the Security Plan) was merged into the Plan as of December 31, 2001.
Participants previously eligible for the Security Plan were immediately eligible
to participate in the Plan. As a result of the merger, cash of $4,958,851 and
shares of Park National Corporation common stock (Ticker Symbol PRK) with a
market value of $7,674,321, totaling $12,633,172 were transferred to the Plan on
January 2, 2002 which is reflected as a receivable at December 31, 2001.
During the Plan year ended December 31, 2000, Park acquired Second National Bank
and United Bank, N.A. The Second National Bank Employees Retirement Plan (a
401(k) plan) (Second) and the United Bank, N.A. 401(k) Profit Sharing Retirement
Plan (United) were merged into the Plan. United and Second transferred
$1,981,695 and $3,384,717, respectively, into the Plan.
4. PLAN TERMINATION
Although Park has not expressed any intent to do so, it has the right under the
Plan to discontinue its contributions at any time and to terminate the Plan
subject to the provisions of ERISA.
10
Park National Corporation
Employees Voluntary Salary Deferral Plan and Trust
Notes to Financial Statements (continued)
5. INVESTMENTS
The Plan's investments are held in trust by The Park National Bank, a wholly
owned subsidiary of Park. The Plan's investments (including investments bought
and sold as well as held during the year) appreciated (depreciated) in fair
value during the years ended December 31, 2001 and 2000 as follows:
DECEMBER 31,
2001 2000
---------------------------------
Park National Corporation Common Stock $1,073,064 $(1,828,916)
Vanguard Institutional Index Fund (518,500) (475,014)
Vanguard Short-Term Corporate Fund 13,260 12,087
Vanguard Growth Index Fund (94,027) (213,018)
Vanguard Institutional Extended Market Fund (76,923) (241,107)
Vanguard Balanced Index Fund (48,473) (58,897)
Vanguard Total International Stock Index Fund (76,312) (57,941)
Vanguard Intermediate-Term Bond Index Fund 6,705 10,226
-------------- ------------------
$ 278,794 $(2,852,580)
============== ==================
The following table represents the fair value of those investments that
represent 5 percent or more of the Plan's net assets available for benefits as
of December 31, 2001 and 2000:
DECEMBER 31,
2001 2000
--------------- --------------
Park National Corporation Common Stock $30,034,027 $26,842,393
Vanguard Institutional Index 500 Portfolio Fund 3,359,456 3,966,085
--------------- --------------
$33,393,483 $30,808,478
=============== ==============
6. INCOME TAX STATUS
The Plan has received a determination letter from the Internal Revenue Service
dated January 3, 1994, stating that the Plan is qualified under Section 401(a)
of the Code and, therefore, the related trust is exempt from taxation. However,
subsequent to the issuance of the favorable determination letter, the Plan has
been amended.
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Park National Corporation
Employees Voluntary Salary Deferral Plan and Trust
Notes to Financial Statements (continued)
6. INCOME TAX STATUS (CONTINUED)
The Plan believes the Plan, as amended, is being operated in compliance with the
applicable requirements of the Code and, therefore, believes that the Plan is
qualified and the related trust is tax exempt.
7. PARTY IN INTEREST
The Plan held the following party-in-interest investments (at fair value):
DECEMBER 31,
2001 2000
Park National Corporation Common Stock $30,034,027 $26,842,393
Costs and expenses incurred in administering the Plan paid by Park, including
brokerage commissions and trustee fees in connection with each purchase of
securities, totaled $105,446 and $94,633 for 2001 and 2000, respectively.
8. SUBSEQUENT EVENT
Effective January 1, 2002, the Plan was amended and restated to become a KSOP
plan that invests in Park National Corporation Common Stock. The Plan is
unleveraged and all new contributions (both employer and employee) will be
deposited to Park National Corporation Common Stock only. Participants have the
ability to diversify their investments upon reaching age 55. The Plan has
changed its name from Park National Corporation Employees Voluntary Salary
Deferral Plan and Trust to Park National Corporation Employees Stock Ownership
Plan. All other provisions of the Plan remain the same.
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[JONES, COCHENOUR & CO. LOGO]
INDEPENDENT AUDITORS' REPORT
TO THE TRUSTEES
PARK NATIONAL CORPORATION EMPLOYEES
VOLUNTARY SALARY DEFERRAL PLAN AND TRUST
NEWARK, OHIO
WE HAVE AUDITED THE ACCOMPANYING STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
OF THE PARK NATIONAL CORPORATION EMPLOYEES VOLUNTARY SALARY DEFERRAL PLAN AND
TRUST AS OF DECEMBER 31, 2000, AND THE RELATED STATEMENT OF CHANGES IN NET
ASSETS AVAILABLE FOR BENEFITS FOR THE YEAR ENDED DECEMBER 31, 2000. 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 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 STATEMENTS PRESENTATION. WE BELIEVE THAT OUR AUDIT PROVIDES A
REASONABLE BASIS FOR OUR OPINION.
IN OUR OPINION, THE FINANCIAL STATEMENTS, REFERRED TO ABOVE, OF THE PARK
NATIONAL CORPORATION EMPLOYEES VOLUNTARY SALARY DEFERRAL PLAN AND TRUST AS OF
DECEMBER 31, 2000, AND FOR THE YEAR THEN ENDED PRESENT FAIRLY, IN ALL MATERIAL
RESPECTS, THE FINANCIAL STATUS OF THE PARK NATIONAL CORPORATION EMPLOYEES
VOLUNTARY SALARY DEFERRAL PLAN AND TRUST AS OF DECEMBER 31, 2000, AND CHANGES IN
ITS FINANCIAL STATUS FOR THE YEAR THEN ENDED IN CONFORMITY WITH ACCOUNTING
PRINCIPLES GENERALLY ACCEPTED IN THE UNITED STATES OF AMERICA.
/S/ JONES, COCHENOUR & CO.
JONES, COCHENOUR & CO.
SEPTEMBER 28, 2001
Park National Corporation Employees
Voluntary Salary Deferral Plan and Trust
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
SCHEDULE H, LINE 4(I)
DECEMBER 31, 2001
EIN 31-1179518
Plan 002
DESCRIPTION OF INVESTMENT UNITS MARKET VALUE
Common stock:
Park National Corporation Common Stock 323,817 $ 30,034,027
--------------
Total common stock: 30,034,027
Mutual funds:
Vanguard Institutional Index Fund 32,028 3,359,456
Vanguard Short-Term Corporate Fund 80,577 871,844
Vanguard Growth Index Fund 23,959 632,763
Vanguard Institutional Extended Market Fund 23,968 553,410
Vanguard Intermediate-Term Bond Index Fund 28,530 293,286
Vanguard Balanced Index Fund 42,849 765,287
Vanguard Total International Stock Index Fund 30,481 282,860
--------------
Total mutual funds: 6,758,907
Certificates of Deposit, issued by Park National Corporation bank affiliates:
The Park National Bank 1,320,677 1,320,677
The Second National Bank and Trust Co. 359,802 359,802
The Richland Trust Company 594,220 594,220
--------------
Total certificates of deposit,
issued by Park National
Corporation affiliates: 2,274,699
Total Assets Held for Investment at Year End: $ 39,067,633
==============
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.
PARK NATIONAL CORPORATION
EMPLOYEES STOCK OWNERSHIP PLAN
(formerly known as Park National
Corporation Employees Voluntary
Salary Deferral Plan and Trust)
By THE PARK NATIONAL BANK, Trustee
Date: June 26, 2002 By: /s/ Stuart N. Parsons
-----------------------------------
Printed Name: Stuart N. Parsons
-------------------
Title: Senior Vice President
----------------------------------
15
PARK NATIONAL CORPORATION
EMPLOYEES STOCK OWNERSHIP PLAN
(formerly known as Park National Corporation Employees
Voluntary Salary Deferral Plan and Trust)
ANNUAL REPORT ON FORM 11-K
FOR FISCAL YEAR ENDED DECEMBER 31, 2001
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION
23.1 Consent of Ernst & Young LLP
23.2 Consent of Jones, Cochenour & Co.
16