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. (No Fee Required)
For the short plan period ended December 31, 2002 and fiscal year ended
December 30, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (NO FEE REQUIRED).
Commission file number 001-31486
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
Webster Bank Employee Investment Plan
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
Webster Financial Corporation
Webster Plaza
Waterbury, CT 06702
Telephone (203) 578-2476
WEBSTER BANK
EMPLOYEE INVESTMENT PLAN
--------------------------------
FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES
FOR SHORT PLAN PERIOD ENDED DECEMBER 31, 2002
AND
FISCAL YEARS ENDED DECEMBER 30, 2002 AND 2001
(WITH INDEPENDENT AUDITORS' REPORT THEREON)
WEBSTER BANK
EMPLOYEE INVESTMENT PLAN
FOR SHORT PLAN PERIOD ENDED DECEMBER 31, 2002 AND
FISCAL YEARS ENDED DECEMBER 30, 2002, 2001 AND 2000
INDEX
Independent Auditors' Report ....................................................................................1
Financial Statements:
Statements of Net Assets Available for Benefits.............................................................2
Statements of Changes in Net Assets Available for Benefits..................................................3
Notes to Financial Statements ...........................................................................4-15
Supplemental Schedules:
Schedule H, Line 4i - Schedule of Assets (Held at December 31, 2002) ......................................16
Schedule H, Line 4i - Schedule of Assets (Held at December 30, 2002) ......................................17
Note: Schedules of reportable transactions, nonexempt transactions, loans
or fixed income obligations in default or classified as uncollectible,
leases in default or classified as uncollectible and investment assets both
acquired and disposed of within the plan year as required by the Employee
Retirement Income Security Act of 1974 (ERISA) and Department of Labor
Regulations have not been included herein as the information is not
applicable.
Signatures .....................................................................................................18
Exhibit Index...................................................................................................19
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Webster Bank:
We have audited the accompanying statements of net assets available for benefits
of the Webster Bank Employee Investment Plan as of December 31, 2002 and
December 30, 2002 and 2001, and the related statements of changes in net assets
available for benefits for the short plan period ended December 31, 2002 and
each of the years in the three-year period ended December 30, 2002. 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 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 audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Webster Bank
Employee Investment Plan, as of December 31, 2002 and December 30, 2002 and
2001, and the changes in net assets available for benefits for the short plan
period ended December 31, 2002 and for each of the years in the three-year
period ended December 30, 2002 in conformity with accounting principles
generally accepted in the United States of America.
Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The supplemental schedules of assets held at
December 31 and December 30, 2002 are presented for purposes of additional
analysis and are 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 schedules have 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.
/s/ KPMG LLP
Hartford, Connecticut
June 20, 2003
1
WEBSTER BANK
EMPLOYEE INVESTMENT PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 2002 AND
DECEMBER 30, 2002 AND 2001
------------------------------------------
---------------------------------------------------------------------------------
December 31, December 30,
2002 2002 2001
---------------------------------------------------------------------------------
ASSETS
------
Investments (cost basis of
$58,467,938 at December 31, 2002, $53,114,577 53,075,646 50,678,412
$58,467,927 at December 30, 2002 and
$52,670,659 at December 30, 2001)
Loans to Participants 1,482,141 1,482,141 1,160,527
Receivables:
Participants 872,990 839,094 611,367
Employer 306,335 294,222 231,411
Cash 16,589 16,578 10,479
----------- ----------- -----------
Total Assets $55,792,632 55,707,681 52,692,196
=========== =========== ===========
NET ASSETS AVAILABLE FOR BENEFITS $55,792,632 55,707,681 52,692,196
=========== =========== ===========
See accompanying notes to financial statements.
2
WEBSTER BANK
EMPLOYEE INVESTMENT PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
SHORT PLAN PERIOD ENDED DECEMBER 31, 2002 AND
FISCAL YEARS ENDED DECEMBER 30, 2002, 2001 AND 2000
------------------------------------------------------------------------------------------------------------------------------
SHORT PLAN PERIOD 2002 2001 2000
December 31, 2002 December 31, 2001 December 31, 2000 December 31, 1999
December 31, 2002 December 30, 2002 December 30, 2001 December 30, 2000
------------------------------------------------------------------------------------------------------------------------------
ADDITIONS TO NET ASSETS:
Net appreciation (depreciation) in fair
value of investments $ 38,160 (5,328,082) (1,344,233) 813,703
Interest and dividends 782 802,836 799,688 677,505
-------------------------------------------------------------------------------
Net investment income (loss) 38,942 (4,525,246) (544,545) 1,491,208
Contributions:
Participants 33,896 7,941,751 5,775,194 4,604,841
Employer 12,113 2,381,527 2,124,792 1,718,392
Transfers from other plans (Note 4) -- -- -- 11,791,339
-------------------------------------------------------------------------------
Total additions 84,951 5,798,032 7,355,441 19,605,780
-------------------------------------------------------------------------------
DEDUCTIONS FROM NET ASSETS:
Benefits paid to participants -- 2,773,187 6,336,125 5,172,626
Miscellaneous expenses -- 9,360 5,920 4,235
-------------------------------------------------------------------------------
Total deductions -- 2,782,547 6,342,045 5,176,861
-------------------------------------------------------------------------------
Net increase 84,951 3,015,485 1,013,396 14,428,919
NET ASSETS AVAILABLE FOR BENEFITS
Beginning of period 55,707,681 52,692,196 51,678,800 37,249,881
-------------------------------------------------------------------------------
END OF PERIOD $55,792,632 55,707,681 52,692,196 51,678,800
===============================================================================
See accompanying notes to financial statements.
3
WEBSTER BANK
EMPLOYEE INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
------------------------------------------
1. DESCRIPTION OF THE PLAN
-----------------------
The following brief description of the Webster Bank Employee Investment
Plan (the "Plan") is provided for general information purposes only.
Participants should refer to the full Plan document for a more complete
description of the Plan's provisions.
(a) General
-------
The Plan is a qualified profit-sharing and deferred compensation plan
under Section 401(a) of the Internal Revenue Code of 1986. The Plan is also
subject to the provisions of the Employee Retirement Income Security Act of 1974
("ERISA") as amended. The Plan was initially adopted effective as of October 1,
1984. Subsequent to this date, the Plan has been amended on various dates for
reasons that include: certain legislative and regulatory changes, employer name
change, plan merger, plan name change, plan year changes and various
acquisitions. The Plan is sponsored and administered by Webster Bank (the
"Bank"), a subsidiary of Webster Financial Corporation ("Webster" or the
"Company"). The Plan covers all eligible employees who are employed by the Bank
and its subsidiaries, who are members of the controlled group. The Plan also
covers certain subsidiaries of Webster who are members of the controlled group.
To be eligible to participate in the Plan, an employee must have attained age 21
and have completed one year of service (at least 1,000 hours of service). An
eligible employee may join the Plan on the first day of any calendar quarter.
Participants in the Plan may change their contribution amounts up to four times
per year on specific dates and cease contribution at any time during the Plan
year. All investments in the Plan are participant directed. Participation in the
Plan is completely voluntary.
The Plan was amended on December 16, 2002, to incorporate a change in the
Plan year. The amendment, effective December 31, 2002, changed the plan year end
to December 31 from December 30. The 2002 plan year consisted of a regular year
from December 31, 2001 to December 30, 2002 and a short plan period, which
commenced December 31, 2002 and ended December 31, 2002. Effective January 1,
2003, the Plan will have a calendar fiscal year.
Effective June 1, 2002, the trustee was changed to Riggs Bank, N.A. from
UBS PaineWebber Trust.
On October 22, 2001, an amendment and restatement of the Plan
incorporating "GUST" changes was adopted by the Board of Directors. The changes
under "GUST" were required to be adopted by the Plan by December 31, 2001.
"GUST" is the acronym for a series of statutes that were enacted between 1994
and 2000 that affected the rules governing qualified retirement plans. The
statutes include the General Agreement on Tariffs and Trade, the Uniform Service
Employment and Reemployment Rights Act, the Small Business Job Protection Act
and the Tax Reform Act of 1997. Subsequent to implementing the changes required
under "GUST", the Plan was submitted to the Internal Revenue Service ("IRS") for
a favorable determination letter. The IRS has determined and informed the Bank
in a letter dated September 13, 2002, that the Plan was in accordance with
applicable sections of the Internal Revenue Code. Refer to Note 6 within this
report for further tax information.
Webster, through its subsidiaries, the Bank, Webster Insurance, Inc.
("Webster Insurance"), Webster D&P Holdings, Inc. ("Duff & Phelps"), and
Fleming, Perry & Cox ("Fleming"), delivers financial services to individuals,
families and businesses primarily in Connecticut and equipment financing,
mortgage origination and financial advisory services to public and private
companies throughout the United States. The Bank provides business and consumer
banking, mortgage lending, trust and investment services and insurance services
through 111 banking and other offices, 219 ATM's and its Internet website
(www.websteronline.com).
4
WEBSTER BANK
EMPLOYEE INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
------------------------------------------
On October 10, 2002, Webster acquired Fleming. Effective December 31,
2002, the Plan was amended to cover the employees of Fleming. All services
provided by employees of Fleming prior to the acquisition date will not
constitute services rendered for the purpose of meeting eligibility requirements
for participation under the Plan, vesting or eligibility for contributions under
the Plan. Fleming will become a member of the Plan's controlled group on January
1, 2004. Prior to the acquisition, Fleming maintained a 401(k) plan. The plan
was terminated on October 31, 2002. All participants' accounts under the plan
were fully vested and the assets will be distributed as soon as administratively
feasible subsequent to the termination date.
On August 5, 2002, the Bank, through a newly formed subsidiary named
Whitehall Business Credit Corporation ("Whitehall"), acquired certain
asset-based loans and other specified assets and liabilities of IBJ Whitehall
Business Credit Corporation ("IBJ"), a subsidiary of The Industrial Bank of
Japan Trust Company. Effective as of the date of the acquisition, the Plan was
amended to cover the employees who were transferred from IBJ to Whitehall. All
employees who transferred from IBJ became members of the Plan's controlled group
in August 2002. Former IBJ employees that were eligible to participate in the
IBJ plan just prior to the acquisition date became immediately eligible under
the Plan. IBJ maintained a 401(k) plan and the employees who transferred from
IBJ to Whitehall had the option to rollover their account balance to the Plan
subsequent to receiving their payment. During 2002, the Plan received $150,370
from the participants who elected to rollover their payouts from the IBJ plan to
the Plan.
On April 5, 2001, Webster acquired, through Webster Insurance, Wolff
Zackin & Associates, Inc. ("Wolff Zackin"), and its sister company, Benefit
Plans Design & Administration, Inc. ("Benefit Plans"). Effective June 25, 2001,
the Plan was amended to provide provisions for the employees of Wolff Zackin and
Benefit Plans. All service rendered by employees of Wolff Zackin and Benefit
Plans prior to the acquisition date constituted service rendered for the purpose
of meeting eligibility requirements for participation under the Plan. Wolff
Zackin and Benefit Plans became members of the Plan's controlled group effective
July 1, 2001. Prior to the acquisition date, Wolff Zackin did not maintain a
401(k) plan. Prior to the acquisition date, Benefit Plans terminated its 401(k)
plan and the net assets of the plan were paid directly to its participants. The
participants of the former plan had the option to rollover their account balance
to the Plan subsequent to receiving their payment. During 2002 and 2001, the
Plan received $52,531 and $127,618, respectively, from participants of the
former Benefits Plans 401(k) plan who elected to rollover their direct payouts
to the Plan.
On March 14, 2001, Webster acquired Center Capital Corporation ("Center
Capital"). Effective April 1, 2001, the Plan was amended to provide provisions
for the employees of Center Capital. All service rendered by employees of Center
Capital prior to the acquisition date constituted service rendered for the
purpose of meeting eligibility requirements for participation under the Plan.
Center Capital became a member of the Plan's controlled group on March 14, 2001.
Prior to the acquisition date, Center Capital terminated its 401(k) plan and the
net assets of the plan were paid directly to the participants of the former
plan. The participants of the former plan had the option to rollover their
account balance to the Plan subsequent to receiving their payment. During 2002,
the Plan received $757,420 from participants of the former Center Capital 401(k)
plan who elected to rollover their payouts to the Plan.
5
WEBSTER BANK
EMPLOYEE INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
------------------------------------------
On January 5, 2001, Webster acquired, through Webster Insurance, Musante
Reihl Associates, Inc. ("Musante"). Effective as of January 1, 2001, the Plan
was amended to provide provisions for the employees of Musante. All service
rendered by employees of Musante prior to the acquisition date constituted
service rendered for the purpose of meeting eligibility requirements for
participation under the Plan. Musante became a member of the Plan's controlled
group on April 1, 2001. Prior to the acquisition date, Musante did not maintain
a 401(k) plan.
During 2002, the Plan received $249,916 from participants of the former
Levine 401(k) plan, who elected to rollover their payouts to the Plan. On
February 1, 2000, Webster acquired, through Webster Insurance, the Levine
Companies. The former Levine plan was terminated and did not merge with the
Plan.
Effective August 21, 2002, the following investment funds were eliminated
as investment options under the Plan: AIM Balanced Fund and AIM Value Fund.
Effective August 23, 2002, the following investment funds were added as
investment options under the Plan: American Balanced Fund and American
Washington Mutual Investors Fund. These changes in investment fund options were
made on the advice of the Plan's financial advisor, UBS PaineWebber.
(b) Contributions
-------------
Employees who are members of the Plan, could make contributions of 1% to
15% of their pay on a pre-tax basis for the 2002 Plan year and 1% to 10% for the
2001 Plan year. Highly compensated employees could make contributions of 1% to
8% of their pre-tax pay for the 2002 and 2001 Plan years. Highly compensated
employees, as defined in the Internal Revenue Code, are limited in the percent
of their compensation which they can defer to the Plan based upon the average
percent of compensation deferred by the non-highly compensated group of
employees. Total salary deferrals were limited to $11,000 and $10,500 for the
2002 and 2001 Plan years, respectively. The Bank contributes a matching
contribution to the Plan equal to 50% of the first 6% of a participant's salary
deferral contribution. The cost of the matching contribution is allocated among
the Bank and the participating subsidiaries of the Bank and Webster.
The Bank may also make a discretionary contribution to the Plan on behalf
of employee participants.
During 2002, the Plan was amended to incorporate a "value sharing"
component. Under the "value sharing" component of the Plan, the Bank can make a
discretionary profit sharing contribution to the Plan for the benefit of
eligible participants below the level of senior vice president. The
contributions will be invested in Webster common stock and remain invested in
such until the participant becomes fully vested in his or her account under Plan
guidelines. The "value sharing" component of the Plan became effective for the
Plan year beginning December 31, 2001 and ending December 30, 2002. Refer to
Notes 8 and 9 within this report for further information concerning
discretionary contributions.
6
WEBSTER BANK
EMPLOYEE INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
------------------------------------------
The investment alternatives available under the Plan for the 2002 Plan
year are summarized below:
American New Perspective Fund This fund invests primarily in the
common stocks of companies located
around the world.
American Fundamental Investors This fund invests primarily in
Fund common stock of large established
companies. This fund may also
invest in non-U.S. securities.
American Bond Fund of America This fund invests in diversified
fixed income securities.
American Growth Fund of America This fund invests primarily in
common stocks of companies that
seek long-term capital growth.
American Europacific Growth Fund This fund invests primarily in
stocks of issuers located in Europe
and the Pacific Rim.
American Balanced Fund*** This fund invests in a broad range
of securities, including stocks and
bonds.
American Washington Mutual This fund invests primarily in
Investors Fund*** common stock of larger, more
established companies that have a
strong record of earnings and
dividends.
UBS PaineWebber Trust Stable This fund invests in units of the
Value Fund* Guaranteed Investment Contract
portfolio under the UBS PaineWebber
Trust Company pooled trust.
Webster Financial Corporation Invests 100% in the common stock of
Common Stock* Webster.
Seligman Capital Fund This fund invests primarily in
common stock of medium-sized U.S.
companies.
AIM Balanced Fund** This fund invests in a diversified
portfolio of common stocks,
preferred stocks, convertible
securities and bonds.
7
WEBSTER BANK
EMPLOYEE INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
------------------------------------------
AIM Value Fund** This fund invests primarily in
equity securities. The fund may
also invest in preferred stocks,
debt instruments and foreign
securities.
UBS Tactical Allocation Fund* This fund invests in stocks in the
S&P 500 and short-term U.S.
Treasury securities.
Dreyfus Founders Discovery Fund This fund invests primarily in
common stocks of small-cap
companies. The fund may also invest
in foreign securities.
MFS Mass Investors Growth Stock Fund This fund invests in common stocks
of U.S. companies for long-term
growth.
* Indicates party-in-interest to the Plan.
** Indicates fund was closed as of August 21, 2002
*** Indicates new fund as of August 23, 2002. Refer to Item 1(a) for
information regarding changes to fund investment alternatives.
-------------------------------------------------------------------------------
(c) Vesting
-------
All amounts contributed to the 401(k) Plan by the participant and the
employer matching contributions are fully vested and non-forfeitable at all
times. Discretionary employer contributions are subject to a graduated vesting
schedule. Refer to Notes 1(b) 8 and 9 for further information on employer
discretionary contributions. The participant's vested balance is increased or
decreased by any investment gains or losses generated by the participant's
account.
(d) Payment of Benefits
-------------------
Under the Plan, effective December 31, 2002, a participant's "normal
retirement date" is the date age 65 is attained. Previously, normal retirement
age was 59 1/2. Payment options under the Plan are either a single lump sum
payment or a series of equal periodic payments in the form of an annuity. If the
participant's vested account balance is no more than $5,000, the balance will be
paid in a single lump sum payment within 90 days after the end of the Plan year
in which the participant becomes eligible to receive the payment. If the
participant's vested account balance is more than $5,000, the payout will be in
the form of an annuity unless the annuity option is waived. Participant's who
have an account balance of more than $5,000 may have their balance remain in the
Plan. The participant may also elect to have the vested account balance directly
rolled over to another qualified plan. If the participant is married, a joint
and survivor annuity will provide monthly payments for as long as the
participant and the spouse live. In the event of a participant's death, the
vested account balance will be paid to the participant's designated beneficiary
or beneficiaries. If the participant dies before his spouse, the monthly annuity
payment to a spouse will be 50% of the payments that would have been received
prior to the participant's death.
8
WEBSTER BANK
EMPLOYEE INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
------------------------------------------
If the participant does not want an annuity payout, the participant may
choose another type of payment, such as a single lump sum or installment
payments over a set period. In the event of a participant's total and permanent
disability, a participant would receive their vested account balance as if
normal retirement had occurred. All benefit payments to participants are
recorded upon distribution.
(e) Loans
-----
Employees have the ability to borrow up to 50% of their account balances
up to $50,000. Interest on the loan is paid by Plan participants to their
account at prevailing interest rates through payroll deductions. Loans must
generally be repaid within five years or by the normal retirement date of the
borrower, if earlier.
(f) Rollovers
---------
Under the Plan, transfers from other tax-qualified retirement plans are
permitted even if the employee is not currently participating in the Plan.
Rollovers must be deposited to the Plan trust fund within 60 days of receipt.
All rollovers will be invested and distributed in accordance with the rules of
the Plan.
(g) Withdrawals
-----------
Hardship withdrawals are permitted under the Plan.
The Plan administrator is required by law to recognize obligations the
participant incurs as a result of court-ordered support or alimony payments. The
Plan administrator is obligated to honor a qualified domestic relations order
("QDRO"). If a QDRO is received by the Plan administrator, all or a portion of
the Plan participant's account balance may be used to satisfy the obligation.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
The following are the significant accounting policies followed by the
Plan:
(a) Basis of Accounting
-------------------
The accompanying financial statements of the Plan are prepared in
conformity with accounting principles generally accepted in the United States of
America.
(b) Purchases and Sales Transactions
-------------------------------
Transactions are recorded on a trade-date basis.
(c) Valuation of Assets
-------------------
Investments are stated at current market values based upon quoted values.
Loans to participants are stated at amortized cost, which approximates their
market values.
(d) Payment of Benefits
------------------
Benefits are recorded when paid.
9
WEBSTER BANK
EMPLOYEE INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
------------------------------------------
(e) Use of 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, liabilities and changes therein, and disclosure of contingent assets and
liabilities. Actual results could differ from those estimates.
(f) Administrative Expenses
-----------------------
Total administrative fees for the 2002 Plan year were $76,090 of which $66,730
was paid by the Bank and $9,360 was paid by the Plan. The $9,360 paid by the
Plan represents loan and investment fund administrative costs charged directly
to the Plan. There were no administrative fees for the short plan period ended
December 31, 2002.
Total administrative fees for the 2001 plan year were $82,832 of which
$76,912 was paid by the Bank and $5,920 was paid by the Plan. Total
administrative fees paid for the 2000 plan year were $152,392 of which $148,157
was paid by the Bank and $4,235 was paid by the Plan. The lower fees for the
2002 and 2001 Plan years was primarily due to a change in record keepers.
3. INVESTMENTS
-----------
The Plan's assets are invested in various mutual funds and Webster common
stock through UBS PaineWebber, the Plan's investment advisor. PFPC, Inc. was the
record keeper for the 2002 and 2001 Plan years. UBS PaineWebber Trust Company
was the trustee for the period from December 31, 2001 through May 31, 2002.
Riggs Bank, N.A. was appointed the new Plan trustee effective June 1, 2002. The
Plan is sponsored and administered by the Bank. Plan participants have the
ability to direct and allocate their account balances among the mutual funds
available under the Plan or Webster common stock. Refer to Item 1(b) within this
report for investment options that were available for the 2002 Plan year and
short Plan year.
10
WEBSTER BANK
EMPLOYEE INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
------------------------------------------
The fair value of fund investments that exceed 5% of the Plan's net
assets available for benefits at December 31, 2002 and December 30, 2002 and
2001 are as follows:
----------------------------------------------------------------------------------------
December 31, December 30,
2002 2002 2001
----------------------------------------------------------------------------------------
Webster Financial Corporation Common Stock* $15,121,003 15,172,586 13,937,542
UBS PaineWebber Trust Stable Value Fund* 8,261,583 8,256,169 5,961,894
American Growth Fund of America 5,274,640 5,254,650 6,031,906
American Fundamental Investors Fund 5,240,789 5,226,644 6,679,784
American Bond Fund of America 4,715,673 4,715,673 3,920,294
American New Perspective Fund 3,275,140 3,253,354 3,824,314
Seligman Capital Fund -- -- 3,719,518
* Indicates party-in-interest to the Plan.
----------------------------------------------------------------------------------------
A summary of changes in the value of the Plan's net investments (including gains
and losses on investments bought and sold within the Plan year, as well as held
during the year) for the short plan period ended December 31, 2002 and the years
ended December 30, 2002, 2001 and 2000 is as follows:
-------------------------------------------------------------------------------------------------------------------------
SHORT PLAN PERIOD 2002 2001 2000
December 31, 2002 December 31, 2001 December 31, 2000 December 31, 1999
December 31, 2002 December 30, 2002 December 30, 2001 December 30, 2000
-------------------------------------------------------------------------------------------------------------------------
Mutual Funds $ 88,134 (6,784,352) (3,216,474) (1,342,608)
Webster Stock* (49,974) 1,456,270 1,872,241 2,156,311
-------------------------------------------------------------------------------------------
$ 38,160 (5,328,082) (1,344,233) 813,703
===========================================================================================
* Indicates party-in-interest to the Plan.
11
WEBSTER BANK
EMPLOYEE INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
------------------------------------------
4. TRANSFER FROM OTHER PLANS
-------------------------
The following net assets were received during the 2000 Plan year by the
Plan as a result of direct transfers from other plans due to acquisitions
completed by Webster.
Former Plan Name Net Assets
-----------------------------------------------
Mechanics (a) $ 6,697,536
NECB (b) 4,348,626
FleetBoston (c) 401,625
Chase (d) 343,552
-----------------------------------------------
$ 11,791,339
-----------------------------------------------
(a) On June 23, 2000, Webster acquired MECH Financial, Inc. MECH
Financial, Inc. was the holding company for Mechanics Savings Bank
that maintained the former Mechanics Savings Bank 401(k) plan.
(b) On December 1, 1999, Webster acquired New England Community
Bancorp, Inc. New England Community Bancorp, Inc. was the holding
company for New England Bank and Trust that maintained the former
New England Bank and Trust 401(k) plan.
(c) On August 18, 2000, Webster acquired certain branches and employees
from FleetBoston Financial Corporation. Acquired employees had the
option to have their balance in the FleetBoston 401(k) plan
directly transferred into the Plan.
(d) On April 7, 2000, Webster acquired certain branches and employees
from The Chase Manhattan Bank. Acquired employees had the option to
have their balance in the Chase 401(k) plan directly transferred
into the Plan.
5. PLAN TERMINATION
----------------
Although the Bank has not expressed any intent to terminate the Plan
Agreement, it has the right to do so at any time. The rights of all employees to
benefits accrued under the Plan as of the date of such termination, partial
termination or discontinuation of contributions are fully vested and
nonforfeitable. After providing for the expenses of the Plan, the remaining
assets of the Plan will be allocated by the Retirement Plans Committee appointed
by the Board of Directors.
6. TAX STATUS
----------
The IRS has determined and informed the Bank in a letter dated September
13, 2002, that the Plan and related trust are designed in accordance with
applicable sections of the Internal Revenue Code. Accordingly, no provision for
income taxes has been made in the accompanying financial statements. On December
17, 2002, a Form 5308 was filed with the IRS to request a change in the Plan
year. As of the filing of this report, a response from the IRS is pending. It is
the opinion of the Plan administrator, that the Plan is designed and is
currently being operated in compliance with the applicable requirements of the
Internal Revenue Code.
12
WEBSTER BANK
EMPLOYEE INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
------------------------------------------
7. RELATED PARTY TRANSACTIONS
--------------------------
Certain Plan investments are shares of mutual funds managed by UBS
PaineWebber. UBS PaineWebber was the trustee for the Plan for the period
from December 31, 2001 through May 31, 2002, and therefore, these
transactions qualify as party-in-interest transactions.
The Plan maintains two money market accounts at Riggs Bank, N.A., the
Plan's current trustee. One of the money market accounts is used
specifically for forfeitures and the other for the Plan's general
transactions.
Webster Financial Corporation stock is an investment option under the
Plan. Webster Financial Corporation is the parent of Webster Bank, the
Plan's sponsor.
8. AMENDMENTS
----------
The Plan was amended during 2002 as follows:
(1) To include the following changes: (a) each participant may elect
to have 1% to 15% of compensation deferred with the maximum
pre-tax contribution not exceeding $11,000 for the 2002 Plan
year, (b) participants may not make a special deferral election
with respect to bonuses, (c) participants may modify their salary
deferral elections on January 1, April 1, July 1 and October 1 of
each Plan year, (d) participants who do not affirmatively elect
to receive cash or have a specified amount contributed to the
Plan automatically will have deferred compensation, (e) there
will not be a special effective date for the salary deferral
component of the Plan, (f) to add "catch-up" contribution
provisions for eligible participants who have attained age 50.
(2) Effective June 1, 2002, the Plan's trustee changed from UBS
PaineWebber Trust Company to Riggs Bank, N.A.
(3) Effective December 31, 2002, the Plan year was amended to begin
January 1st and end December 31st with a short plan period
beginning and ending December 31, 2002.
(4) A "value sharing" component was incorporated into the Plan
effective December 31, 2001.
(5) Effective December 31, 2002, the Plan had several changes. Two
significant changes are as follows:
(a) The vesting period for employee contributions and employer
matching contributions remained at 100% upon entering the
Plan. However, the vesting schedule for employer
discretionary contributions other than matching contributions
changed. The Plan's vesting period for these other employer
discretionary contributions was changed from 100% vesting
upon entering the Plan to 0-1 year 0%, 2 years 33 1/3%, 3
years 66 2/3% and 4 years 100%. Any participant who had three
or more years of service on December 30, 2002, will be
considered 100% vested in regards to the discretionary
contribution.
(b) The Plan's normal retirement age was changed to age 65 from
59 1/2.
13
WEBSTER BANK
EMPLOYEE INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
------------------------------------------
(6) To add provisions for the former employees of IBJ. Refer to Item
1(a) within this report for further information on the Whitehall
acquisition and transferred employees from IBJ to Whitehall.
(7) To add provisions for the former employees of Fleming. Refer to
Item 1(a) within this report for further information on the
Fleming acquisition.
(8) To add provisions of the Economic Growth and Tax Relief
Reconciliation Act of 2002.
The above information is meant to provide only a brief description of
amendments to the Plan during the 2002 Plan year. The Webster Bank Employee
Investment Plan document should be referenced for complete information.
9. SUBSEQUENT EVENTS
-----------------
(1) On January 6, 2003, Webster acquired the Mathog and Moniello
Companies ("Mathog"). On December 16, 2002, the Plan was amended
to provide provisions for the employees of Mathog. The provisions
will become effective as of the first date to which the
processing of the payroll for Mathog employees is performed in
conjunction with the payroll for employees of the Bank. All
services rendered by employees of Mathog prior to the acquisition
date constitutes services rendered for the purpose of meeting
eligibility requirements for participation and vesting under the
Plan. Mathog became a member of the Plan's controlled group
effective January 6, 2003.
(2) On January 24, 2003, Webster Bank acquired Budget Installment
Corp. ("BIC"). On February 26, 2003, the Plan was amended to
provide provisions for the employees of BIC. The provisions will
become effective as of the first date to which the processing of
the payroll for BIC employees is performed in conjunction with
the payroll for employees of the Bank. All service rendered by
employees of BIC prior to the acquisition date constitutes
services rendered for the purposes of meeting eligibility
requirements for participation and vesting under the Plan. BIC
became a member of the Plan's controlled group effective January
24, 2003.
(3) In 2003, the maximum pre-tax contribution limit for Plan
participants will be increased to 20% from 15% with the total
pre-tax contribution limit increasing to $12,000.
(4) For the 2002 Plan year, the Bank's Board of Directors approved on
February 26, 2003 a discretionary contribution to eligible
employee Plan participants. Employees were eligible for this
discretionary contribution if they met eligibility requirements
under the Plan during 2002 and were employed before October 1,
2001. Employees at the Senior Vice President and higher levels
were not eligible for the discretionary contribution. The
discretionary contribution was based on 1% of participant's
eligible compensation and totaled $799,288. This contribution was
based on the financial performance of Webster for the 2002 year
and therefore credited to eligible participants' accounts during
the first quarter of 2003. The discretionary contribution was
credited to a new Value Sharing Account in the Plan and will vest
based on a graduated vesting schedule with one-third vesting
after 2 years, another third after 3 years and the remaining
third after 4 years. Any participant who has three or more years
of service on December 30, 2002, will be considered 100% vested
in regards to the discretionary contribution. Refer to Note 1(b)
for further information.
14
WEBSTER BANK
EMPLOYEE INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
------------------------------------------
(5) On June 9, 2003, UBS PaineWebber, the Plan's current investment
advisor changed its name to UBS Financial Services.
(6) On April 17, 2003, Wachovia Retirement Services announced that
its retirement services unit reached an agreement to acquire the
proprietary retirement services record keeping and third-party
servicing business of PFPC, Inc., the Plan's current record
keeper. This transaction is expected to close by the end of the
second quarter of this year.
(7) On April 30, 2003, Webster filed a Form S-8 with the Securities
and Exchange Commission for the purpose of registering additional
shares for the Plan.
15
WEBSTER BANK
EMPLOYEE INVESTMENT PLAN
SCHEDULE OF ASSETS (HELD AT END OF YEAR)
SCHEDULE H - LINE 4I
DECEMBER 31, 2002
------------------------------------------
Number of Current
Identity of Issue Shares Held Value
----------------- ----------- -------
Webster Financial Corporation 434,511.58 shares; $ 15,121,003
Common Stock* value per share $34.80
UBS PaineWebber Trust Stable Value 541,388.139 shares; net asset 8,261,583
Fund* value per share $15.26
American Growth Fund of 285,578.776 shares; net asset 5,274,640
America value per share $18.47
American Fundamental 235,752.991 shares; net asset 5,240,789
Investors Fund value per share $22.23
American Bond Fund 371,312.835 shares; net asset 4,715,673
of America value per share $12.70
American New Perspective 181,548.780 shares; net asset 3,275,140
Fund value per share $18.04
Seligman Capital Fund 211,153.318 shares; net asset 2,768,220
value per share $13.11
MFS Mass Investors Growth 223,126.869 shares; net asset 2,059,461
Stock Fund value per share $9.23
American Europacific Growth Fund 71,842.273 shares; net asset 1,650,217
value per share $22.97
Dreyfus Founders Discovery Fund 80,048.769 shares; net asset 1,528,131
value per share $19.09
American Washington Mutual 58,332.454 shares; net asset 1,371,396
Investors Fund value per share $23.51
American Balanced Fund 86,835.021 shares; net asset 1,252,161
value per share $14.42
UBS Tactical Allocation Fund* 29,867.886 shares; net asset 596,163
value per share $19.96 -------------
TOTAL INVESTMENTS $ 53,114,577
=============
Loans to Participants* Rate range 5.75% to 10.50% $ 1,482,141
=============
* Indicates party-in-interest to the Plan.
16
WEBSTER BANK
EMPLOYEE INVESTMENT PLAN
SCHEDULE OF ASSETS (HELD AT END OF YEAR)
SCHEDULE H - LINE 4I
DECEMBER 30, 2002
------------------------------------------
Number of Current
Identity of Issue Shares Held Value
----------------- ----------- -------
Webster Financial Corporation 434,495.590 shares; $ 15,172,586
Common Stock* value per share $34.92
UBS PaineWebber Trust Stable Value 541,388.131 shares; net asset 8,256,169
Fund* value per share $15.25
American Growth Fund of 285,578.804 shares; net asset 5,254,650
America value per share $18.40
American Fundamental 235,753.000 shares; net asset 5,226,644
Investors Fund value per share $22.17
American Bond Fund 371,312.835 shares; net asset 4,715,673
of America value per share $12.70
American New Perspective 181,548.772 shares; net asset 3,253,354
Fund value per share $17.92
Seligman Capital Fund 211,153.247 shares; net asset 2,763,996
value per share $13.09
MFS Mass Investors Growth 223,126.869 shares; net asset 2,059,461
Stock Fund value per share $9.23
American Europacific Growth Fund 71,842.282 shares; net asset 1,643,033
value per share $22.87
Dreyfus Founders Discovery Fund 80,048.787 shares; net asset 1,517,725
value per share $18.96
American Washington Mutual 58,332.453 shares; net asset 1,369,646
Investors Fund value per share $23.48
American Balanced Fund 86,835.024 shares; net asset 1,249,556
value per share $14.39
UBS Tactical Allocation* 29,866.717 shares; net asset 593,153
value per share $19.86 -------------
TOTAL INVESTMENTS $ 53,075,646
=============
Loans to Participants* Rate range 5.75% to 10.50% $ 1,482,141
=============
* Indicates party-in-interest to the Plan.
17
SIGNATURES
------------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
administrative committee of the Plan has duly caused this annual report to be
signed by the undersigned hereunto duly authorized.
WEBSTER BANK
EMPLOYEE INVESTMENT PLAN
------------------------
Date: June 26, 2003 By: /s/ R. David Rosato
------------- ----------------------------
R. David Rosato
Member of the Retirement
Plans Committee
Date: June 26, 2003 By: /s/ Patrick T. Murphy
------------- ----------------------------
Patrick T. Murphy
Member of the Retirement
Plans Committee
Date: June 26, 2003 By: /s/ William J. Healy
------------- ----------------------------
William J. Healy
Member of the Retirement
Plans Committee
18
EXHIBIT INDEX
-------------
------------------------------------------
Exhibit
Number Description
------- ----------------------
23 Consent of KPMG LLP
99 Certification
19