================================================================================
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, 2007; or
[_] Transition Report Pursuant to 15(d) of the Securities Exchange
Act of 1934.
For the transition period from ____________ to ____________
Commission file number: 0-12742
SPIRE CORPORATION 401(k) PROFIT SHARING PLAN
--------------------------------------------
(Full title of the plan)
SPIRE CORPORATION
-----------------
(Name of issuer of the securities held pursuant to the plan)
ONE PATRIOTS PARK
BEDFORD, MASSACHUSETTS 01730-2396
---------------------------------
(Address of principal executive offices)
================================================================================
SPIRE CORPORATION
401(k) PROFIT SHARING PLAN
Table of Contents
Page
Number
------
Report of Independent Registered Public Accounting Firm 1
Financial Statements:
Statements of Net Assets Available for Benefits 2
Statement of Changes in Net Assets Available for Benefits 3
Notes to Financial Statements 4 - 8
Supplemental Schedule:
Schedule H, Line 4i - Form 5500, Schedule of Assets
(Held at End of Year) 9
Signatures 10
Exhibits:
Consent of Independent Registered Public Accounting Firm
(filed herewith) 11
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Plan Administrator
Spire Corporation 401(k) Profit Sharing Plan
Bedford, Massachusetts
We have audited the accompanying statements of net assets available for benefits
of Spire Corporation 401(k) Profit Sharing Plan (the Plan) as of December 31,
2007 and 2006 and the related statement of changes in net assets available for
benefits for the year ended December 31, 2007. 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 the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. 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, and
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 Plan as of
December 31, 2007 and 2006, and the changes in net assets available for benefits
for the year ended December 31, 2007, in conformity with accounting principles
generally accepted in the United States of America.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of assets (held
at end of year) as of December 31, 2007 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 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 the audits 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/ Carlin, Charron & Rosen, LLP
CARLIN, CHARRON & ROSEN, LLP
Westborough, Massachusetts
June 27, 2008
1
SPIRE CORPORATION 401(k) PROFIT SHARING PLAN
Statements of Net Assets Available for Benefits
December 31, 2007 and 2006
2007 2006
------------ ------------
Assets
Investments:
At fair value:
Common stock - Spire Corporation $ 3,284,103 $ 1,608,632
Mutual funds 5,341,544 4,352,003
Participant loans 133,171 87,924
Hartford Fixed Income Fund 179,031 170,252
------------ ------------
Money market receivable 4,732 --
------------ ------------
Total assets 8,942,581 6,218,811
Liabilities
Excess contributions payable 29,149 47,710
------------ ------------
Net assets reflecting all investments at fair value 8,913,432 6,171,101
Adjustment from fair value to contract value for fully
benefit responsive investment contracts 7,976 10,666
------------ ------------
Net assets available for benefits $ 8,921,408 $ 6,181,767
============ ============
See notes to financial statements.
2
SPIRE CORPORATION 401(k) PROFIT SHARING PLAN
Statement of Changes in Net Assets Available for Benefits
For the Year Ended December 31, 2007
Additions to net assets:
Investment income:
Interest and dividends $ 359,917
Interest on loans 7,137
Net appreciation in fair value of investments 2,436,707
------------
2,803,761
Participant contributions 433,863
------------
Total additions 3,237,624
------------
Deductions from net assets:
Benefits paid to participants 497,590
Administrative fees 393
------------
Total deductions 497,983
------------
Net increase 2,739,641
Net assets available for benefits:
Beginning of year 6,181,767
------------
End of year $ 8,921,408
============
See notes to financial statements.
3
SPIRE CORPORATION 401(k) PROFIT SHARING PLAN
Notes to Financial Statements
For the Year Ended December 31, 2007
1. PLAN DESCRIPTION
The following description of the Spire Corporation 401(k) Profit Sharing
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 is a defined contribution plan covering all employees of Spire
Corporation (the Company) who have completed 90 days of service and are age
twenty-one or older. The Plan is subject to the provisions of the Employee
Retirement Income Security Act of 1974 (ERISA).
Contributions
-------------
Each year, participants may contribute up to the maximum amount of pre-tax
annual compensation as determined under the Internal Revenue Code.
Participants who have attained age 50 before the end of the Plan year are
eligible to make catch-up contributions. Participants may also contribute
amounts representing distributions from other qualified defined benefit or
defined contribution plans. Participants direct the investment of their
contributions into various investment options offered by the Plan. The Plan
currently offers the Company's common stock, twenty-one mutual funds, and
an insurance contract as investment options for participants. The Company
may contribute, at the determination of the board of directors, a
discretionary matching contribution on the first 15 percent of base
compensation that a participant contributes to the Plan. The Company's
matching contribution is invested directly in Company common stock. The
Company may also make a profit sharing contribution. In 2007, the Company
did not make matching or profit sharing contributions. Contributions are
subject to certain limitations.
Participant Accounts
--------------------
Each participant's account is credited with the participant's contributions
and the Company's matching contribution (if any) and an allocation of (a)
the Company's profit sharing contribution (if any), and (b) 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 vested account.
Vesting
-------
Participants are immediately vested in voluntary contributions plus actual
earnings thereon. Vesting in the Company matching contribution is based on
years of continuous service. A participant is 100 percent vested after six
years of credited service.
Forfeited Accounts
------------------
At December 31, 2007 and 2006, forfeited nonvested accounts totaled $32,714
and $28,950, respectively. These amounts may be used to reduce future
employer contributions.
Participant Loans
-----------------
Participants may borrow from their fund accounts a minimum of $1,000 up to
a maximum equal to $50,000 or 50 percent of their vested account balance,
whichever is less. The maximum number of
4
outstanding loans at any given time is five. Loan terms range from 1 to 10
years, but not beyond the Normal Retirement Date. The loans are secured by
the balance in the participant's account and bear interest at a rate
commensurate with local prevailing rates as determined by the plan
administrator. Interest rates are Prime Rate + 1% and currently range from
5% to 9.5%. Principal and interest are repaid through payroll deductions.
Payments of Benefits
--------------------
On termination of service for any reason, a participant may elect to
receive a lump-sum amount equal to the value of the participant's vested
interest in his or her account or annual installments over a period of not
more than a participant's and his or her beneficiary's assumed life
expectancy determined at the time of distribution. Withdrawals may be made
under certain other circumstances in accordance with the Plan document.
Administrative Costs
--------------------
Except for loan fees, which are charged against the borrowers' accounts,
administrative costs of the Plan are paid by the Company.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting
-------------------
The financial statements of the Plan are prepared on the accrual basis of
accounting in conformity with accounting principles generally accepted in
the United States of America.
Use of Estimates
----------------
The preparation of financial statements in conformity with generally
accepted accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect
the reported amounts of net assets, liabilities and changes therein and
disclosure of contingent assets and liabilities, if any. Actual results
could differ from those estimates.
Recent Accounting Standard Changes
----------------------------------
In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements".
This standard addresses how companies should measure fair value when they
are required to use a fair-value measure for recognition or disclosure
purposes under GAAP. This standard is effective for all financial
statements issued for fiscal years beginning after November 15, 2007.
Relative to SFAS No. 157, the FASB issued FASB Staff Position ("FSP") 157-1
and 157-2. FSP No. 157-1 amends SFAS No. 157 to exclude SFAS No. 13,
"Accounting for Leases", and its related interpretive accounting
pronouncements that address leasing transactions, while FSP 157-2 delays
the effective date of SFAS No. 157 for all non-financial assets and
non-financial liabilities, except those that are recognized or disclosed at
fair value in the financial statements on a recurring basis. The Plan is in
the process of evaluating whether the adoption of FSP No. 157-2 will have a
material effect on its financial position, results of operations or cash
flows.
Investment Valuation
--------------------
Investments in mutual funds are stated at fair value based on quoted market
prices, which represents the net asset value of shares held by the Plan at
year end. Investments in the Spire Corporation common stock are stated at
fair value based on the quoted market price on the last business day of the
year for Company's common stock.
5
Investments in benefit responsive insurance contracts are stated at fair
value as determined by the custodian of those Plan assets. The difference
between fair value and contract value of the benefit responsive insurance
contracts are presented as an adjustment to net assets available for
benefits.
Other investment securities are stated at fair value based on their quoted
market prices on the last business day of the year. Participant loans are
valued at cost, which approximates fair value.
Investment Transactions and Investment Income
---------------------------------------------
Investment transactions are accounted for on a trade-date basis. Interest
income is recorded on the accrual basis. Dividend income is recorded on the
ex-dividend date.
The Plan presents in the statement of changes in net assets the net
appreciation or depreciation in the fair value of its investments that
consists of the realized gains or losses and unrealized appreciation or
depreciation on those investments.
Payment of Benefits
-------------------
Benefits are recorded when paid.
3. INVESTMENTS
Investments that represent five percent or more of the Plan's net assets
are as follows:
December 31,
-------------------------
2007 2006
---------- ----------
Mutual funds
Oppenheimer Quest Opportunity Value $ 831,305 $ 854,265
Franklin Flexible Capital Growth 1,114,589 1,058,695
American Funds Europacific Growth 725,646 485,937
Eaton Vance Large Cap Value 451,696 352,755
Common stock
Spire Corporation 3,284,103 1,608,632
During 2007 the Plan's investments (including investments bought, sold, and
held during the year) appreciated in value as follows:
Mutual funds $ 163,462
Common stock 2,273,245
----------
$2,436,707
==========
6
4. NONPARTICIPANT-DIRECTED INVESTMENTS
Information about the net assets and the significant components of the
changes in net assets relating to nonparticipant-directed investments is as
follows:
December 31,
-------------------------
2007 2006
---------- ----------
Net assets:
Common stock - Spire Corporation $3,268,876 $1,592,053
Other 393,040 35,002
---------- ----------
Total nonparticipant-directed $3,661,916 $1,627,055
========== ==========
Changes in net assets during 2007:
Benefits paid to participants $ (215,973)
Net appreciation 2,250,834
----------
$2,034,861
==========
5. INVESTMENT CONTRACT WITH INSURANCE COMPANY
In 1995, the Plan entered into a benefit-responsive investment contract
with The Hartford Group (Hartford). Hartford 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 statements of net assets
available for benefits at fair value as determined using the market
approach based on market prices of similar contracts. The adjustment from
fair value to contract value for the investment contract is based on the
contract value as reported to the Plan by Hartford. Contract value
represents contributions made under the contract, plus earnings, less
participant withdrawals and administrative expenses. Participants may
ordinarily direct the withdrawal or transfer of all or a portion of their
investment at contract value.
The fair value of the investment contract at December 31, 2007 and 2006 was
$179,031 and $170,252, respectively. The average yield was 3% for both 2007
and 2006. The interest crediting rate was 3.36% and 3.29% for 2007 and
2006, respectively.
Certain events, such as the premature termination of the contract by the
Plan or the termination of the Plan, would limit the Plan's ability to
transact at contract value with Hartford. The Plan administrator believes
the occurrence of such events that would also limit the Plan's ability to
transact at contract value with Plan participants is not probable.
6. PLAN TERMINATION
Although it has not expressed any intent to do so, the Company has the
right under the Plan to discontinue its contributions at any time and to
terminate the Plan subject to the provisions of ERISA. In the event of plan
termination, participants would become 100 percent vested in their employer
contributions.
7. INCOME TAX STATUS
The Internal Revenue Service has determined and informed the Company by a
letter dated May 23, 1995, that the Plan and related trust are designed in
accordance with applicable sections of the Internal Revenue Code (IRC).
Although the Plan has been amended since receiving the determination
letter, the plan administrator believes that the Plan is designed and is
currently being operated in compliance with the applicable requirements of
the IRC.
7
8. EXCESS CONTRIBUTIONS
Benefit distributions for the plan year ended December 31, 2007 and 2006
include payments of $29,149 and $47,710, respectively, made to certain
active participants to return to them excess deferral contributions as
required to satisfy the relevant nondiscrimination provisions of the Plan
for the prior year.
Contributions received for the year ended December 31, 2007 are net of
payments of $29,149 made on March 31, 2008 to certain active participants
to return to them excess deferral contributions as required to satisfy the
relevant nondiscrimination provisions of the Plan. That amount is also
included in the plan's statement of net assets available for benefits as
excess contributions payable at December 31, 2007.
9. RISKS AND UNCERTAINTIES
The Plan invests in various investment securities. Investment securities
are exposed to various risks, such as interest rate, market, and credit
risks. Due to the level of risk associated with certain investment
securities, it is at least reasonably possible that changes in the values
of investment securities will occur in the near term and that such changes
could materially affect participants' account balances and the amounts
reported in the statement of net assets available for benefits.
10. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
The following is a reconciliation of net assets available for benefits at
December 31 per the financial statements to the 2007 Form 5500:
2007 2006
---------- ----------
Net assets available for benefits per the financial statements $8,921,408 $6,181,767
Plus: Excess contributions payable 29,149 47,710
---------- ----------
Net assets available for benefits per the 2007 Form 5500 $8,950,557 $6,229,477
========== ==========
The following is a reconciliation of participant contributions for the
year ended December 31, 2007 per the financial statements to the 2007
Form 5500:
Participant contributions per the financial statements $ 433,863
Less: Prior year excess contributions payable (47,710)
Plus: Current year excess contributions payable 29,149
----------
Participant contributions per the Form 5500 $ 415,302
8
SPIRE CORPORATION
401(k) PROFIT SHARING PLAN
Schedule H, Line 4i - Form 5500
Schedule of Assets (Held at End of Year)
December 31, 2007
E.I.N. 04-2457335
Plan Number 002
(a) (b) (c) (d) (e)
Description of Investment
Identity of Issue, Including Maturity Date,
Borrower, Lessor or Rate of Interest, Collateral, Current
Similar Party Par or Maturity Value Cost Value
-------------------------------------------------------------------------------------------------------------------
* Spire Corporation 126,156 shares of common stock $1,295,427 $3,284,103
OppenheimerFunds Oppenheimer Quest Opportunity Value n/a 831,305
Franklin Templeton Investments Franklin Flexible Capital Growth n/a 1,114,589
Third Avenue Third Avenue Small Cap Value A n/a 7,299
American Funds Europacific Growth n/a 725,646
Hartford Life Insurance Co. Fixed Income n/a 187,007
AIM Funds AIM Cash Reserve Shares n/a 287,845
American Funds American Balanced n/a 260,212
Franklin Templeton Investments Franklin Small-Mid Cap Growth n/a 79,037
MFS Investment Management Mass Investors Growth Stock n/a 22,220
Eaton Vance Large Cap Value n/a 451,696
Eaton Vance Income Fund of Boston n/a 237,362
Allianz Funds RCM Global Technology n/a 146,466
American Funds New Perspective n/a 198,833
OppenheimerFunds Oppenheimer Strategic Income n/a 154,125
Sentinel Group Funds Sentinel Small Company n/a 142,578
PIMCO Funds Total Return n/a 154,485
Davis Funds Davis New York Venture n/a 154,694
Evergreen Investments Evergreen Money Market n/a 139,564
Pioneer Investments Pioneer Cash Reserves n/a 32,714
Goldman Sachs MidCap Value A n/a 107,171
Allianz NJF Dividend Value R n/a 98,435
Participant Loans Interest rates 5% to 9.5% n/a 133,171
----------
$8,950,557
==========
* Represents party-in-interest
The independent registered public accounting firm's report should be read with
this supplementary schedule.
9
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Investment Committee of the Spire Corporation 401(k) Profit Sharing Plan have
duly caused this annual report to be signed on their behalf by the undersigned
hereunto duly authorized.
SPIRE CORPORATION 401(k) PROFIT SHARING PLAN
Date: June 27, 2008 By: /s/ Christian Dufresne
-------------------------------------
Christian Dufresne
Chief Financial Officer and Treasurer
10