UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended December 31, 2003
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _____________ to ___________
Commission file number 333-91178
A. Full title of the plan and the address of the plan, if different
from that of the issuer named below:
Park National Corporation
Employees Stock Ownership Plan
B. Name of issuer of the securities held pursuant to the plan and
the address of its principal executive office:
Park National Corporation
50 North Third Street
Newark, Ohio 43055
REQUIRED INFORMATION
The following financial statements and supplemental schedules for
the Park National Corporation Employees Stock Ownership Plan are being filed
herewith:
Audited Financial Statements:
Report of Independent Registered Public Accounting Firm - Ernst & Young LLP
Statements of Net Assets Available for Benefits at December 31, 2003 and 2002
Statements of Changes in Net Assets Available for Benefits for the Years Ended
December 31, 2003 and 2002
Notes to Financial Statements - December 31, 2003
Supplemental Schedules:
Schedule of Assets Held for Investment Purposes, Schedule H, Line 4(i) -
December 31, 2003
Schedule of Reportable Transactions, Schedule H, Line 4(j) - December 31, 2003
The following exhibit is being filed herewith:
Exhibit No. Description
----------- -----------
23.1 Consent of Independent Registered Public Accounting Firm -
Ernst & Young LLP
-2-
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange
Act of 1934, the trustees (or other persons who administer the employee benefit
plan) have duly caused this annual report to be signed on its behalf by the
undersigned hereunto duly authorized.
PARK NATIONAL CORPORATION EMPLOYEES
STOCK OWNERSHIP PLAN
By THE PARK NATIONAL BANK, Trustee
Date: June 24, 2004 By: /s/Stuart N. Parsons
--------------------------------
Printed Name: Stuart N. Parsons
Title: Senior Vice President
-3-
Audited Financial Statements
And Supplemental Schedules
Park National Corporation Employees
Stock Ownership Plan
Years ended December 31, 2003 and 2002
with Report of Independent Registered Public Accounting Firm
Park National Corporation Employees
Stock Ownership Plan
Audited Financial Statements
Years ended December 31, 2003 and 2002
CONTENTS
Audited Financial Statements
Report of Independent Registered Public Accounting Firm..................... 1
Statements of Net Assets Available for Benefits............................. 2
Statements of Changes in Net Assets Available for Benefits.................. 3
Notes to Financial Statements............................................... 4
Supplemental Schedules
Schedule H, Line 4(i) - Assets Held for Investment Purposes................ 10
Schedule H, Line 4(j) - Reportable Transactions............................ 11
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Executive Committee of the Board of Directors
Park National Corporation
We have audited the accompanying statements of net assets available for benefits
of the Park National Corporation Employees Stock Ownership Plan (the Plan) as of
December 31, 2003 and 2002, 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 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. 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 assets available for benefits of the Plan as of
December 31, 2003 and 2002, and the changes in assets available for benefits for
the years then ended, in conformity with U.S. generally accepted accounting
principles.
Our audits were performed for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying schedule of assets (held at end of
year) and schedule of reportable transactions as of December 31, 2003 are
presented for the purpose of additional analysis and are not a required part of
the 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 our audits of the
financial statements and, in our opinion, are fairly stated in all material
respects in relation to the financial statements taken as a whole.
ERNST & YOUNG LLP
Columbus, Ohio
June 23, 2004
1
Park National Corporation Employees
Stock Ownership Plan
Statements of Net Assets Available for Benefits
DECEMBER 31,
2003 2002
----------- -----------
ASSETS
Cash and cash equivalents $ 332,737 $ 263,188
Investments:
Park National Corporation Common Stock 54,426,847 44,070,827
Mutual Funds 10,761,920 8,992,444
Certificates of Deposit,
issued by Park National Corporation bank affiliates 2,716,720 3,284,643
----------- -----------
67,905,487 56,347,914
Contributions receivable:
Employer 454 900
Employee - -
----------- -----------
454 900
Accrued interest and dividends 450,628 429,390
----------- -----------
450,628 429,390
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Net assets available for benefits $68,689,306 $57,041,392
=========== ===========
See accompanying notes.
2
Park National Corporation Employees
Stock Ownership Plan
Statements of Changes in Net Assets Available for Benefits
YEAR ENDED DECEMBER 31,
2003 2002
----------- -----------
Additions
Investment Income:
Net realized and unrealized appreciation
in fair value of investments $ 8,726,533 $ 657,835
Interest and dividends 1,823,943 1,745,932
----------- -----------
10,550,476 2,403,767
Contributions:
Employer 1,460,976 1,378,751
Employee 3,444,603 3,081,381
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4,905,579 4,460,132
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Total additions 15,456,055 6,863,899
Deductions:
Benefit payments to participants 3,808,141 2,850,045
----------- -----------
Net increase in net assets available for benefits 11,647,914 4,013,854
Net assets available for benefits at beginning of year 57,041,392 53,027,538
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Net assets available for benefits at end of year $68,689,306 $57,041,392
=========== ===========
See accompanying notes.
3
Park National Corporation
Employees Stock Ownership Plan
Notes to Financial Statements
December 31, 2003
1. DESCRIPTION OF THE PLAN
The following description of the Park National Corporation Employees Stock
Ownership 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 full-time or part-time
employees of Park National Corporation and subsidiaries (Park) who have one year
of service, age twenty-one or older, and worked at least 1,000 hours. It is
subject to the provisions of the Employee Retirement Income Security Act of 1974
(ERISA).
CONTRIBUTIONS
Each year, participants may contribute up to 25% of their pretax annual
compensation, as defined in the Plan. Participants may also contribute rollover
amounts representing distributions from other qualified defined contribution
plans. The maximum salary deferral permitted by the Internal Revenue Code (Code)
for 2003 and 2002 was $12,000 and $11,000.
Park provides a matching contribution at a level established annually by Park.
For 2003, Park matched 50% up to the first 15% of compensation.
PARTICIPANT ACCOUNTS
Each participant's account is credited with the participant's salary deferral
and allocation of Park's contribution and Plan earnings. Allocations are based
on participant earnings or account balances, as defined. The benefit to which a
participant is entitled is the benefit that can be provided from the
participant's account.
VESTING
Participants' accounts are 100% vested at all times.
4
Park National Corporation
Employees Stock Ownership Plan
Notes to Financial Statements (continued)
1. DESCRIPTION OF THE PLAN (CONTINUED)
PAYMENTS OF BENEFITS
On termination of service and before age 59-1/2, a participant may elect to
receive either a lump sum or rollover amount equal to the value of his or her
account. After age 59-1/2, a participant may elect lump sum, rollover, or
installments over a period certain not to exceed the participant's (and his
designated beneficiary's) life expectancy.
ESOP
Effective January 1, 2002, the Plan was amended and restated to become a ESOP
Plan that invests in Park National Corporation common stock. The Plan is
unleveraged and all new contributions (both employer and employee) will be used
to purchase Park National Corporation common stock only. Participants have the
ability to diversify their investments upon reaching age 55. The Plan has
changed its name from Park National Corporation Employees Voluntary Salary
Deferral Plan and Trust to Park National Corporation Employees Stock Ownership
Plan. All other provisions of the Plan remain the same.
2. SUMMARY OF ACCOUNTING POLICIES
BASIS OF PRESENTATION
The financial statements of the Plan are prepared on the accrual basis.
VALUATION OF INVESTMENTS
Investments are stated at fair value. Park National Corporation common stock is
valued at its quoted market price. Shares of mutual funds are valued at quoted
market prices which represent the net asset value of shares held by the Plan at
year end.
ADMINISTRATIVE EXPENSES
All administrative expenses charged to the Plan are borne by Park. Trustee fees
for the Plan are waived each year. Park also provides other accounting and
administrative services to the Plan.
5
Park National Corporation
Employees Stock Ownership Plan
Notes to Financial Statements (continued)
2. SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
USE OF ESTIMATES
The preparation of financial statements in conformity with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect reported amounts of assets and liabilities at the date
of the financial statements, and the reported amounts of investment income and
expenses during the reporting period. Actual results could differ from those
estimates.
RECLASSIFICATIONS
Certain amounts in the prior year financial statements have been reclassified to
conform with the current year presentation. These reclassifications had no
effect on net assets available for benefits as previously reported.
3. PLAN TERMINATION
Although Park has not expressed any intent to do so, it has the right under the
Plan to discontinue its contributions at any time and to terminate the Plan
subject to the provisions of ERISA.
6
Park National Corporation
Employees Stock Ownership Plan
Notes to Financial Statements (continued)
4. INVESTMENTS
The Plan's investments are held in trust by The Park National Bank, a wholly
owned subsidiary of Park National Corporation. The Plan's investments (including
investments bought and sold as well as held during the year) appreciated
(depreciated) in fair value during the years ended December 31, 2003 and 2002 as
follows:
DECEMBER 31,
2003 2002
----------- -----------
Park National Corporation Common Stock $ 6,835,876 $ 2,619,639
Vanguard Institutional Index 500 Portfolio Fund 1,172,399 (1,415,297)
Vanguard Fixed-Income Securities Short-term Corporate Fund 604 (2,283)
Vanguard Growth Index Fund 132,432 (164,082)
Vanguard Institutional Extended Market Fund 277,105 (172,638)
Vanguard Balanced Index Fund 169,308 (149,758)
Vanguard Total International Stock Index Fund 143,479 (95,997)
Vanguard Intermediate-Term Bond Index Fund (4,670) 38,251
----------- -----------
$ 8,726,533 $ 657,835
=========== ===========
The following table represents the fair value of those investments that
represent 5 percent or more of the Plan's net assets available for benefits as
of December 31, 2003 and 2002:
DECEMBER 31,
2003 2002
----------- -----------
*Park National Corporation Common Stock $54,426,847 $44,070,827
Vanguard Institutional Index 500 Portfolio Fund 5,618,316 4,439,862
----------- -----------
$60,045,163 $48,510,689
=========== ===========
*Nonparticipant-directed
7
Park National Corporation
Employees Stock Ownership Plan
Notes to Financial Statements (continued)
4. INVESTMENTS (CONTINUED)
Information about the net assets and the significant components of changes in
net assets related to the nonparticipant-directed investment is as follows:
FOR THE YEAR ENDED
DECEMBER 31,
2003
------------------
Beginning balance Park National Corporation Common Stock $ 44,070,827
Changes in net assets:
Contributions 4,985,950
Net realized and unrealized appreciation in fair value 6,835,876
In-kind stock distributions (1,465,806)
------------
Ending balance Park National Corporation Common Stock $ 54,426,847
============
5. INCOME TAX STATUS
The Plan has received a determination letter from the Internal Revenue Service
dated September 30, 2003 stating that the Plan is qualified under Section
401(a)of the Code and, therefore, the related trust is exempt from taxation.
Once qualified, the Plan is required to operate in conformity with the Code to
maintain its qualification. The plan administrator believes the Plan is being
operated in compliance with the applicable requirements of the Code and,
therefore, believes that the Plan is qualified and the related trust is tax
exempt.
8
Park National Corporation
Employees Stock Ownership Plan
Notes to Financial Statements (continued)
6. PARTY IN INTEREST
The Plan held the following party-in-interest investments (at fair value):
DECEMBER 31,
2003 2002
----------- -----------
Park National Corporation Common Stock $54,426,847 $44,070,827
Certificates of Deposit issued by Park National
Corporation Affiliates 2,716,720 3,284,643
----------- -----------
$57,143,567 $47,355,470
=========== ===========
Costs and expenses incurred in administering the Plan are paid by Park, which
totaled $101,224 and $101,689 for 2003 and 2002, respectively.
7. FORM 5500 RECONCILIATION
Net assets available for benefits do not agree to the Form 5500 for 2003 and
2002. The Form 5500 total for net assets available for benefits does not include
accrued interest and dividends of $450,628 in 2003 and $429,390 in 2002.
9
PARK NATIONAL CORPORATION EMPLOYEES
STOCK OWNERSHIP PLAN
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
SCHEDULE H, LINE 4(i)
DECEMBER 31, 2003
EIN 31-1179518
Plan 002
DESCRIPTION OF INVESTMENT UNITS MARKET VALUE
Cash and Equivalents:
Northern Institutional Government Portfolio $ 332,737
------------
Total Cash and Equivalents 332,737
Common Stock:
Park National Corporation Common Stock 481,015 54,426,847
------------
Total Common Stock: 54,426,847
Mutual Funds:
Vanguard Stock Index Fund 55,201 5,618,316
Vanguard Short-Term Corp Bond Fund 96,385 1,040,961
Vanguard Growth Fund 26,494 660,231
Vanguard Extended Market Fund 34,306 914,954
Vanguard Intermediate-Term Bond Fund 81,788 874,319
Vanguard Balanced Fund 62,511 1,142,069
Vanguard International Fund 48,033 511,070
------------
Total Mutual Funds: 10,761,920
Certificates of Deposit, issued by Park National Corporation bank affiliates:
The Park National Bank 2,072,349
Second National Bank 92,570
The Richland Trust Company 551,801
------------
Total Certificates of Deposit, issued by Park National Corporation affiliates: 2,716,720
------------
Total Assets Held for Investment Purposes: $ 68,238,224
============
10
PARK NATIONAL CORPORATION EMPLOYEES
STOCK OWNERSHIP PLAN
SCHEDULE OF REPORTABLE TRANSACTIONS
SCHEDULE H, LINE 4(j)
DECEMBER 31, 2003
EI # - 31-1179518
Plan # 002
(b) (h)
DESCRIPTION OF ASSET CURRENT VALUE
INCLUDING MATURITY DATE, (c) (d) (g) OF ASSET ON (i)
(a) RATE OF INTEREST, PURCHASE SELLING COST OF TRANSACTION NET GAIN
IDENTITY OR PARTY INVOLVED PAR OR MATURITY VALUE PRICE PRICE ASSET DATE OR (LOSS)
----------------------------- -------------------------------- ----------- ---------- ----------- ------------- ---------
CATEGORY (iii) - A SERIES OF TRANSACTIONS IN A SECURITY ISSUE AGGREGATING 5.0% OR MORE OF PLAN ASSETS
Northern Government Portfolio Money Market Fund, 182 purchases $ 6,404,216 $ - $ 6,404,216 $ -
Northern Government Portfolio Money Market Fund, 201 sales - 6,334,667 6,334,667 -
Park National Corporation Common Stock, 107 purchases 4,985,950 - 4,985,950 -
There were no Category (i), (ii) or (iv) reportable transactions during the year
ended December 31, 2003.
11
PARK NATIONAL CORPORATION
EMPLOYEES STOCK OWNERSHIP PLAN
ANNUAL REPORT ON FORM 11-K
FOR FISCAL YEAR ENDED DECEMBER 31, 2003
INDEX TO EXHIBITS
Exhibit No. Description
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23.1 Consent of Independent Registered Public Accounting Firm -
Ernst & Young LLP