Form
11-K
Annual
report of employee stock purchase, savings and similar plans
Huntingdon Life Sciences, Inc. Savings
and Investment Plan
Financial
Statements and Supplementary Information
With
Report
of Independent Registered Public Accounting Firm
For
the Years Ended December 31, 2008 and 2007
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 SECTION 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
For the
transition period from
to
.
COMMISSION
FILE NUMBER 0-33505
______________
A.
(Full title of the Plan)
Huntingdon
Life Sciences, Inc.
Savings
and Investment Plan
B.
(Name of issuer of the securities held pursuant to the Plan)
Life
Sciences Research, Inc.
(Address
of principal executive office)
PO
BOX 2360, METTLERS ROAD
EAST
MILLSTONE
NJ
08875-2360
732-649-9961
HUNTINGDON
LIFE SCIENCES, INC. SAVINGS AND INVESTMENT PLAN
TABLE
OF CONTENTS
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Page
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Report
of Independent Registered Public Accounting Firm
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1
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Audited
Financial Statements:
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Statements
of Net Assets Available for Benefits as of December 31, 2008 and
2007
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2
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Statements
of Changes in Net Assets Available for Benefits for the
Years
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Ended
December 31, 2008 and 2007
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3
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Notes
to Financial Statements
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4 –
18
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Supplemental
Schedule*:
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Schedule
H, Part IV, Line 4i – Schedule of Assets (Held at End of Year)
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December
31, 2008
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19
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Signatures
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20
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Exhibits:
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23.1 Consent
of Independent Registered Public Accounting Firm
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21
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* Other
supplemental schedules required by 29 CFR 2520.103-10 of the Department
of Labor's Rules and Regulations for Reporting and Disclosure
under the Employee Retirement Income Security Act of 1974 (ERISA) have
been omitted because they are not applicable.
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REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
To The
Plan Administrator for
Huntingdon
Life Sciences, Inc. Savings and Investment Plan
We have
audited the accompanying statements of assets available for benefits of
Huntingdon Life Sciences, Inc. Savings and Investment Plan (the "Plan") as of
December 31, 2008 and 2007, and the related statements of changes in net assets
available for benefits for the years 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 audits.
We
conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require
that we plan and perform the audits to obtain reasonable assurance about whether
the financial statements are free of material misstatement. We were
not engaged to perform an audit of the Plan's internal control over financial
reporting. Our audits 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 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 aspects, the assets available for benefits of the Plan as of December
31, 2008 and 2007, and changes in net assets available for benefits for the
years then ended, in conformity with accounting principles generally accepted in
the United States of America.
Our
audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental
schedule of Huntingdon Life Sciences, Inc. Savings and Investment Plan 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
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 audits of
the financial statements and, in our opinion, is fairly stated in all material
respects in relation to the financial statements taken as a whole.
Hugh
Scott, P.C.
Saddle
Brook, New Jersey
July 8,
2009
HUNTINGDON
LIFE SCIENCES, INC. SAVINGS AND INVESTMENT PLAN
STATEMENTS
OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER
31, 2008 AND 2007
See
Accompanying Notes to Financial Statements.
HUNTINGDON
LIFE SCIENCES, INC. SAVINGS AND INVESTMENT PLAN
STATEMENTS
OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR
THE YEARS ENDED DECEMBER 31, 2008 AND 2007
See
Accompanying Notes to Financial Statements.
HUNTINGDON
LIFE SCIENCES, INC. SAVINGS AND INVESTMENT PLAN
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2008 AND 2007
NOTE
1 - DESCRIPTION OF PLAN:
The
following description of the Huntingdon Life Sciences, Inc. Savings and
Investment Plan (the "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
was established effective November 21, 1995. The Plan is a defined contribution
plan covering all eligible employees of Huntingdon Life Sciences, Inc. and its
participating affiliates, (the "Employer") who are age 18 or
older. The Plan is subject to the provisions of the Employee
Retirement Income Security Act of 1974 ("ERISA").
Contributions
Each
year, participants may elect to contribute any whole percentage between 1% and
50% of their pre-tax annual compensation not to exceed the Internal Revenue
Service ("IRS") allowable amount, as defined in the Plan agreement; in 2008 and
2007, the maximum limit was $15,500. If any participant's compensation deferrals
for a year exceed the maximum allowable for that year, the excess amount may be
returned to the participant as taxable compensation.
The Plan
permits participants who are older than 50 as of the beginning of the calendar
year or who attain age 50 during the calendar year and are making the maximum
Internal Revenue Code (the "Code") pre-tax contributions to make additional
"Catch-up Contributions" of up to $5,000 for tax years beginning in 2008.
Participants may also rollover amounts representing distributions from other
qualified defined benefit and defined contribution plans.
The
Employer makes matching contributions equal to seventy-five percent (75%) of the
participant's deferrals that do not exceed six percent (6%) of the participant's
annual eligible compensation with the exception of Catch-up
Contributions. If required, the Plan permits the Employer to make
qualified non-elective contributions to correct failures of certain
nondiscrimination testing required under the Plan.
Participant
Accounts
Each
participant's account is credited with the participant's contribution and
allocations of (a) the Employer's contribution and (b) transfer contributions
and rollover contributions, if any, and (c) Plan earnings and appreciation in
the value of investments; and charged with (a) distributions made to the
participant and (b) allocation of Plan losses and depreciation in the value of
the investments and (c) allocation of participant account administrative
expenses. 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 vested
account.
HUNTINGDON
LIFE SCIENCES, INC. SAVINGS AND INVESTMENT PLAN
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2008 AND 2007
NOTE
1 - DESCRIPTION OF PLAN (CONTINUED):
Investment
Options
The Plan
is intended to satisfy the requirements under Section 404(c) of ERISA and
therefore, provides that participants may choose to direct their contributions,
including Employer matching contributions, and/or part of their account balance
among any of the Plan's twenty-one (21) investment alternatives which include,
Life Sciences Research, Inc. (the "Parent") common stock and the Self-directed
brokerage accounts, as long as the investment alternative requirements, if any,
are met.
Vesting
Participants
are 100% vested immediately upon eligibility in their contributions, the
Employer's contributions, and actual earnings thereon.
Participant
Loans
Participants
may borrow from their account a minimum of $1,000 up to a maximum equal to the
lesser of: (a) $50,000 reduced by the excess, if any, of the highest outstanding
balance of loans from the Plan during the one-year period prior to the loan over
the participant's current outstanding balance of loans; or (b) one-half of the
present value of the accrued benefit of the employee under the
Plan. Participants may only have one (1) outstanding loan at any
time. Loans are secured and bear interest at rates ranging from 4.00%
to 8.25% in 2008 and 2007. Principal and interest are paid ratably
through bi-weekly payroll deductions. All loans are repaid within a period of
five years and have maturity dates ranging from January 2009 to December
2013.
Payment of Benefits After
Termination of Employment
On
termination of service due to death, disability or retirement, a participant may
elect, with the consent of the Employer, to have their benefit paid as a lump
sum, an annuity contract, or as installments over a specified period of
time. In the event of the death of a participant, 100% of the
participant's account will be paid to their beneficiary. In the event
of total and permanent disability, 100% of the participant's account will be
distributed to the participant. A participant may request early
payment of their benefit upon separation of service, before retirement, death or
disability, or once reaching age 59 ½.
Forfeited
Accounts
Forfeited
accounts may be used to reduce future Employer matching contributions, pursuant
to the Plan document. The balance in the forfeiture account totaled $1,639 and
$1,585 at December 31, 2008 and 2007, respectively. Forfeitures in
the amount of $0 and $1,641 were utilized to reduce Employer contributions
during 2008 and 2007, respectively.
HUNTINGDON
LIFE SCIENCES, INC. SAVINGS AND INVESTMENT PLAN
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2008 AND 2007
NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Basis of
Accounting
The
financial statements of the Plan have been prepared on the accrual basis of
accounting in conformity with generally accepted accounting
principles.
As
described in Financial Accounting Standards Board Staff Position ("FASB"), FSP
AAG INV-1 and AICPA Statement of Position 94-4-1,
Reporting of Fully Benefit
Responsive Investment Contracts Held by Certain Investment Companies Subject to
the AICPA Investment Company Guide and Defined Contribution Health and Welfare
and Pension Plans (the "FSP")
, investment contracts held by a defined
contribution plan are required to be reported at fair value. However,
contract value is the relevant measurement attribute for that portion of the net
assets available for benefits of a defined contribution plan attributable to
fully benefit-responsive investment contracts because contract value is the
amount participants would receive if they were to initiate permitted
transactions under the terms of the Plan. As required by the FSP, the
statements of assets available for benefits presents the fair value of the
Plan's investment contracts as well as the adjustment from fair value to
contract value for fully benefit-responsive investment contracts. As
of December 31, 2008 and 2007, fair value approximates contract
value.
Use of
Estimates
The
preparation of financial statements in conformity with generally accepted
accounting principles of the United States 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 and
assumptions.
Investment Valuation and
Income Recognition
The
Plan's investments are stated at fair value. Pooled separate accounts are
measured by using net unit value and are based on quoted redemption value of the
underlying investments on the last business day of the year. The Guaranteed
income fund is valued at the fair market value of the underlying investments.
Shares of Mutual funds, investments under the Self-directed brokerage option and
shares of the Parent common stock of the Plan are valued at published market
prices, which represent the net asset value of shares held by the Plan at
December 31, 2008 and 2007. Participant loans are valued at their outstanding
balances which approximates fair value.
HUNTINGDON
LIFE SCIENCES, INC. SAVINGS AND INVESTMENT PLAN
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2008 AND 2007
NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
Investment Valuation and
Income Recognition (Continued)
Interest
income is recorded on an accrual basis. Dividend income is recorded on the
ex-dividend date. Realized gains and losses on investments are
recognized upon the sale of the related investments and unrealized appreciation
or depreciation is recognized at period end when the carrying values of the
related investments are adjusted to their estimated fair market value. Purchases
and sale of securities are reflected on a trade-date basis.
Earnings
on investments, with the exception of participant loans, are allocated on a pro
rata basis to individual participant accounts based on the type of investment
and the ratio of each participant's individual account balance to the aggregate
of participant account balances. The portion of interest included in
each loan payment made by a participant is recognized as interest income in the
participant's individual account.
As
described in the FSP, investment contracts held by a defined-contribution plan
are required to be reported at fair value.
The Plan
adopted FSP AAG-INV-1 in 2007 for the Plan's Guaranteed income fund, which is
presented on the statements of net assets available for benefits.
Management
fees and operating expenses charged to the Plan for investment options are
deducted from income earned on a daily basis and are reflected as a reduction on
net (depreciation) appreciation in fair value of investments.
Net Change in Fair Value of
Investments
The Plan
presents, in the statement of changes in net assets available for benefits, the
net change in the fair value of its investments, which consists of the realized
gains or losses and the net unrealized increase (decrease) on those
investments.
Fair Value
Measurements
Effective
January 1, 2008, the Plan adopted Statement of Financial Accounting Standards
("SFAS") No. 157,
Fair Value
Measurements
. SFAS 157 defines fair value, establishes a framework for
measuring fair value, and expands disclosures about fair value measurements.
This statement applies whenever other accounting pronouncements require or
permit fair value measurements. Refer to Note 4, Fair Value Measurements, for
the required disclosures under SFAS 157.
HUNTINGDON
LIFE SCIENCES, INC. SAVINGS AND INVESTMENT PLAN
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2008 AND 2007
NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
Risks and
Uncertainties
The Plan
has made available through Prudential Retirement Insurance and Annuity Company
("PRIAC") and Prudential Bank & Trust F.S.B., various investment
options. These investment options are exposed to various risks, such
as interest rate, market and credit risk. Management believes that PRIAC
maintains the Plan's investments with high credit quality institutions and
attempts to limit the credit exposure to any particular investment. Due to the
level of risk associated with certain investment securities and the level of
uncertainty related to changes in the value of investment securities, it is at
least reasonably possible that changes in risks in the near term would
materially affect participants' balances and the amounts reported in the
statements of net assets available for benefit and the statement of changes in
net assets available for benefits. The Plan permits every participant
to direct the investment of their account balances under the Plan.
The
Parent common stock investments are subject to various risks including
concentration risk since the fund is primarily determined by the performance of
the Parent common stock. At December 31, 2008 and 2007, the Plan held 395,975
and 386,144 shares, respectively, of common stock of the Parent, the ultimate
owner of the sponsoring Employer, with a fair value of $3,722,165 and
$7,761,500, respectively, (28.08% and 40.66% of total assets,
respectively).
Payment of
Benefits
Benefit
payments to participants are recorded upon distribution.
Administrative
Expenses
The costs
and expenses of administrating the Plan are paid by Plan participants with the
exception of quarterly fees to the Plan, document services and on-site meetings.
Such charges are paid by the Employer. Administrative expenses incurred by the
Plan include loan fees charged directly to the participants' accounts and
investment management fees which are netted against investment
returns.
Reclassifications
Certain
amounts in the Plan year 2007 financial statements have been reclassified to
conform to the Plan year 2008 presentation, with no effect on the net assets
available for benefits.
HUNTINGDON
LIFE SCIENCES, INC. SAVINGS AND INVESTMENT PLAN
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2008 AND 2007
NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
Recently Pronounced
Accounting Standards
In April
2009, the FASB issued FSP No. 157-4,
Determining Fair Value When the
Volume and Level of Activity for the Asset and Liability Have Significantly
Decreased and Identifying Transactions That Are Not Orderly
. This FSP
emphasizes that even if there has been a significant decrease in the volume and
level of activity, the objective of a fair value measurement remains the same.
Fair value is the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction (that is, not a forced
liquidation or distressed sale) between market participants. The FSP provides a
number of factors to consider when evaluating whether there has been a
significant decrease in the volume and level of activity for an asset or
liability in relation to normal market activity. In addition, when transactions
or quoted prices are not considered orderly, adjustments to those prices based
on the weight of available information may be needed to determine the
appropriate fair value. The FSP also requires increased disclosures. This FSP is
effective for annual reporting periods ending after June 15, 2009, and shall be
applied prospectively. Plan management does not expect the adoption to have a
material effect on the Plan's net assets available for benefits or changes
therein.
In
December 2008, the FASB issued FSP 132(R)-1,
Employers' Disclosures about
Postretirement Benefit Plan Assets
("FSP 132(R)-1"), which provides
guidance on an employer's disclosures about plan assets of a defined benefit
pension or other postretirement plan. FSP 132(R)-1 requires
disclosure of investment allocation methodologies and information that enables
users of financial statements to assess the inputs and valuation techniques used
to develop fair value measurements of plan assets in order to provide users with
an understanding of significant concentrations of risk in plan
assets. FSP 132(R)-1 is effective for years ending after December 15,
2009. FSP 132(R)-1 requires additional disclosure only and therefore,
will not impact the Plan’s results of operations or financial
position.
In May
2008, the FASB issued SFAS No. 162,
The Hierarchy of Generally Accepted
Accounting Principles
. SFAS No. 162 identifies the sources of
accounting principles and the framework for selecting the principles to be used
in the preparation of financial statements of non-governmental entities that are
presented in conformity with generally accepted accounting
principles. SFAS No. 162 is effective 60 days following the
Securities and Exchange Commission's approval of the Public Company Accounting
Oversight Board Auditing amendments to AU Section 411, "The Meaning of Present
Fairly in Conformity with Generally Accepted Accounting
Principles." The Plan does not expect the adoption of SFAS No. 162 to
change its current practice nor does the Plan anticipate an effect on the Plan's
results of operations or financial position.
HUNTINGDON
LIFE SCIENCES, INC. SAVINGS AND INVESTMENT PLAN
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2008 AND 2007
NOTE
3 - INVESTMENTS:
The
following table presents investments that represent 5% or more of the Plan's net
assets as of December 31, 2008 and 2007:
Total
investment (loss) income for the year ended December 31, 2008 and 2007 is as
follows:
Net
(depreciation) appreciation in fair value of investments by fund for the year
ended December 31, 2008 and 2007 is as follows:
HUNTINGDON
LIFE SCIENCES, INC. SAVINGS AND INVESTMENT PLAN
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2008 AND 2007
NOTE
3 - INVESTMENTS (CONTINUED):
Assets
held for the years ended December 31, 2008 and 2007, at fair value is as
follows:
Investment Funds Name
Change:
Effective
August 20, 2008, the following fund name change occurred:
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Balanced/Wellington
Management, SSGA fund changed its name to the Balanced/Wellington
Management, PIM fund.
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Effective
April 4, 2008, the following fund name changes occurred:
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Lifetime20
fund changed its name to Lifetime Aggressive growth
fund;
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Lifetime30
fund changed its name to Lifetime growth
fund;
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Lifetime40
fund changed its name to Lifetime balanced
fund;
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Lifetime50
fund changed its name to Lifetime conservative
fund;
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Lifetime60
fund changed its name to Lifetime income and equity
fund.
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Effective
June 2, 2008, the following investment options were added to/removed from the
Plan:
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American
Century real estate fund (replaced Cohen & Steers realty
fund)
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·
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Core
Bond Plus/PIMCO fund (replaces Core Bond/BSAM
Fund)
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Effective
June 2, 2008, the following investment options were added to the
Plan:
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Self-directed
brokerage account
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·
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Thornberg
International value fund
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Effective
July 29, 2008, the following investment options were added to the
Plan:
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Income
flex – for participants age 50 or
above
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HUNTINGDON
LIFE SCIENCES, INC. SAVINGS AND INVESTMENT PLAN
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2008 AND 2007
NOTE
4 - FAIR VALUE MEASUREMENTS:
Effective
January 1, 2008, the Plan implemented FASB 157,
Fair Value Measurements
. FASB
157 establishes 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 measurements) and the lowest priority to
unobservable inputs (Level 3 measurements). The three levels of the
fair value hierarchy under FAS 157 are described below:
Basis of
Fair Value Measurements
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Level
1
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Unadjusted
quoted prices in active markets that are accessible at the measurement
date for identical, unrestricted assets or liabilities;
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Level
2
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Quoted
prices in markets that are not considered to be active or financial
instruments for which all significant inputs are observable, either
directly or indirectly;
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Level
3
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Prices
or valuations that require inputs that are both significant to the fair
value measurement and unobservable.
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A
financial instrument's level within the fair value hierarchy is based on the
lowest level of any input that is significant to the fair value
measurement.
The
following tables present by level, within the fair value hierarchy, the Plan
investment assets at fair value, as of December 31, 2008. As required by FASB
157, investment assets are classified in their entirety based upon the lowest
level of input that is significant to the fair value measurement.
Total
Plan investment assets at fair value classified within Level 3 were $7,369,166,
as of December 31, 2008, which primarily consists of the Plan's Pooled separate
accounts, Guaranteed income fund, and Participant loans. Such amounts
were approximately fifty-six percent (56%) of total investment assets on the
Plan's statements of net assets available for benefits at fair value as of
December 31, 2008.
HUNTINGDON
LIFE SCIENCES, INC. SAVINGS AND INVESTMENT PLAN
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2008 AND 2007
NOTE
4 - FAIR VALUE MEASUREMENTS (CONTINUED):
Below are
the Plan's financial instruments carried at fair value on a recurring basis by
the FAS 157 fair value hierarchy levels:
Valuation
techniques for Level 3 inputs included:
|
·
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Estimated
fair values of the participation units owned by the Plan in Pooled
separate accounts are based on quoted redemption values, as determined by
the record keeper, on the last business day of the Plan year. Pooled
separate accounts are accounts established by the Trustee solely for the
purpose of investing the assets of one or more plans. Funds in a separate
account are not commingled with other assets of the Trustee for investment
purposes.
|
|
·
|
Guaranteed
income fund held by the Plan based upon estimated returns of non-public
investment vehicles unrelated to outside market measurements, issuer and
management's estimate of the present value of future cash flows arising
from the contract.
|
|
·
|
Participant
loans based upon stated interest rates, payment history, collateralization
and default rates of participant loans held by the
Plan.
|
HUNTINGDON
LIFE SCIENCES, INC. SAVINGS AND INVESTMENT PLAN
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2008 AND 2007
NOTE
4 - FAIR VALUE MEASUREMENTS (CONTINUED):
Level 3
Gains and Losses
The table
below sets forth a summary of changes in the fair value of the Plan's Level 3
investment assets for the year ended December 31, 2008. As reflected in the
tables below, the net unrealized loss on Level 3 investment assets was
$2,248,481 and was primarily related to the net unrealized loss on the Pooled
separate accounts held by the Plan.
NOTE
5 - INVESTMENT CONTRACT WITH INSURANCE COMPANY:
The
Guaranteed income fund is a stable value fund that invests in diversified
portfolio of fully benefit-responsive investment contract issued by insurance
companies, banks and other financial institutions. The Plan entered into a
benefit-responsive investment contract with PRIAC. PRIAC 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
financial statements at contract value as reported to the Plan by
PRIAC. The guaranteed income fund issuer is contractually obligated
to repay the principal and a specified interest rate that is guaranteed to the
Plan.
HUNTINGDON
LIFE SCIENCES, INC. SAVINGS AND INVESTMENT PLAN
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2008 AND 2007
NOTE
5 - INVESTMENT CONTRACT WITH INSURANCE COMPANY (CONTINUED):
As
described in Note 2, because the Guaranteed income fund is fully
benefit-responsive, contract value is the relevant measurement attribute the net
assets available for benefits attributable to the guaranteed income
fund. Contract value, as reported to the Plan by PRIAC, represents
contributions made under the contract, plus earnings, less participant
withdrawals and administrative expenses. Participants may direct the
withdrawal or transfer of all or a portion of their investment at contract
value.
At
December 31, 2008 and 2007, the contract value is estimated to approximate fair
value. The fair value of the investment contract at December 31, 2008 and 2007
was $1,530,060 and $1,114,903, respectively. The average yield on the contract
was 3.55% and 3.75% for 2008 and 2007, respectively. The asset
charges at December 31, 2008 and 2007 were 1.00% and .50%, respectively. The
average net crediting interest rate was approximately 3.36% and 3.20% for 2008
and 2007, respectively.
Minimum
Interest Rates
The
crediting interest rates are reviewed on a semi-annual basis for resetting but
cannot be less than 1.50%. Interest is credited to participant
accounts using the single portfolio rate approach whereby a discrete contractual
interest rate is applied to all contributions during the period, regardless of
the timing of the receipt of the contributions during such period. The crediting
net interest rate is based on a formula agreed by the issuer.
Terminations
at other than Contract Value
The
contracts are evergreen contracts that contain terminating
provisions. There are no events that allow PRIAC to terminate the
contract and require the Employer to settle at an amount different than Contract
Value.
NOTE
6 - RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500:
The
accompanying financial statements have been prepared on the accrual basis of
accounting in conformity with accounting principles generally accepted in the
United States of America.
The Form
5500 for the year ended December 31, 2008 and 2007 have been prepared on the
cash basis of accounting, which is another comprehensive basis of
accounting. The following is a reconciliation of net assets available
for benefits per the financial statements at December 31, 2008 and 2007 to
Schedule H of Form 5500:
HUNTINGDON
LIFE SCIENCES, INC. SAVINGS AND INVESTMENT PLAN
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2008 AND 2007
NOTE
6 - RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
(CONTINUED):
The
following is a reconciliation of changes in net assets available for benefits
per the financial statements for the year ended December 31, 2008 and 2007 to
Schedule H of Form 5500:
NOTE
7 - PLAN TERMINATION:
Although
the Employer has not expressed any intent to do so, the Employer has the right,
under the Plan Agreement, to amend any or all provisions of the Plan, as well as
discontinue contributions and terminate the Plan at any time subject to the
provisions of ERISA. In the event of Plan termination, participants
are 100% vested in their accounts, and the net assets of the Plan must be
allocated among the participants and beneficiaries of the Plan in the order
provided for by ERISA.
NOTE
8 - TAX STATUS:
The Plan
received a favorable tax determination letter from the IRS
dated September 4, 2001, which states that the Plan as then designed,
qualifies under the applicable provisions of the IRC and that is therefore
exempt from federal income taxes. The Plan has been amended since receiving this
determination letter. In the opinion of the Employer and the Plan's tax counsel,
the Plan continues to meet the IRC requirements and is currently operating such
that its exempt status has been maintained. Accordingly, no provision
for income taxes has been included in the accompanying financial
statements.
HUNTINGDON
LIFE SCIENCES, INC. SAVINGS AND INVESTMENT PLAN
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2008 AND 2007
NOTE
9 - RELATED PARTY TRANSACTIONS:
Prudential
Retirement Insurance and Annuity Company and Prudential Bank & Trust F.S.B.
are the Trustees of the Plan and receive compensation for their services, which
is paid by the Employer. Additionally, they receive payment of
certain transactional costs directly from participants during the
year. As such, they are considered parties-in-interest and the
transactions have been determined to be non-prohibitive party-in-interest
transactions as defined by ERISA.
At
December 31, 2008 and 2007, the Plan held 395,975 and 386,144 shares,
respectively, of common stock of the Parent, the ultimate owner of the
sponsoring Employer, with a fair value of $3,722,165 and $7,761,500,
respectively.
Certain
employees and officers of the Employer, who may also be participants in the
Plan, perform administrative services to the Plan at no cost to the
Plan.
NOTE
10 - SUBSEQUENT EVENTS:
Plan
Amendments
Effective
March 28, 2009, the Plan has been amended to reflect a discretionary match
instead of a fixed uniform rate match.
New and Replaced Investment
Options
The
following Plan investment options were changed:
|
·
|
Effective
April 3, 2009, SA/Waddell & Reed Accumulative Strategy replaced
Waddell & Reed Adv Accumulative
(a).
|
|
·
|
Effective
April 17, 2009, SA/Janus Balanced Strategy replaced Janus Adviser Balanced
(Class S Shares).
|
|
·
|
Effective
April 24, 2009, SA/AIM Small Cap Growth Strategy replaced AIM Small Cap
Growth A.
|
These new
pooled separate accounts will invest in a portfolio of securities, as opposed to
shares of a mutual fund.
Market
Conditions
Changes
in investment returns can have a significant effect on the
Plan. Since December 31, 2008, U.S. and world markets have continued
to experience significant volatility. Management is monitoring investment market
conditions and the impact such volatility is having on the Plan's investment
portfolio. Due to the activity of the financial markets as of the date of this
report, there is uncertainty regarding the impact which continued volatility may
have on the Plan's investment portfolio.
HUNTINGDON
LIFE SCIENCES, INC. SAVINGS AND INVESTMENT PLAN
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2008 AND 2007
NOTE
10 - SUBSEQUENT EVENTS (CONTINUED EVENTS):
Agreement and Plan of
Merger
As of
July 8, 2009, the Parent entered into an agreement and plan of merger ("Merger
Agreement") with Lion Holdings, Inc. and Lion Merger Corp. Under the
terms of the Merger Agreement, the Parent common stockholders will receive $8.50
in cash for each outstanding share of the Parent common
stock. Management expects the Merger Agreement to close in the fourth
quarter of 2009 and will have a material effect on the Plan's operations and its
financial statements in fiscal 2009.
SUPPLEMENTAL
SCHEDULE
HUNTINGDON
LIFE SCIENCES, INC. SAVINGS AND INVESTMENT PLAN
EIN: 22-3405025,
PLAN #: 001
SCHEDULE
OF ASSETS HELD FOR INVESTMENT PURPOSES AT END OF YEAR
FORM
5500, SCHEDULE H, PART IV, LINE 4i
DECEMBER
31, 2008
*
Represents a non-prohibitive
party-in-interest as defined by ERISA
See
Report of Independent Registered Public Accounting Firm
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.
Huntingdon Life Sciences,
Inc. Savings and Investment Plan
(Name of
the Plan)
By: /s/
Mark Bibi
__________________________________________
Secretary
and General Counsel
Date: July
8, 2009
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