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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, 2006; 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
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(Full title of the plan)
SPIRE CORPORATION
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(Name of issuer of the securities held pursuant to the plan)
ONE PATRIOTS PARK
BEDFORD, MASSACHUSETTS 01730-2396
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(Address of principal executive offices)
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SPIRE CORPORATION 401(K) PROFIT SHARING PLAN
Table of Contents
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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), December 31, 2006 9 - 10
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,
2006 and 2005 and the related statement of changes in net assets available for
benefits for the year ended December 31, 2006. 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, 2006 and 2005, and the changes in net assets available for benefits
for the year ended December 31, 2006, 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, 2006 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.
CARLIN, CHARRON & ROSEN, LLP
Westborough, Massachusetts
June 27, 2007
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SPIRE CORPORATION 401(K) PROFIT SHARING PLAN
Statements of Net Assets Available for Benefits
December 31, 2006 and 2005
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2006 2005
ASSETS
Investments:
At fair value:
Common stock - Spire Corporation $1,608,632 $1,489,404
Mutual funds 4,352,003 3,735,970
Participant loans 87,924 74,971
Hartford Fixed Income Fund 170,252 192,719
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6,218,811 5,493,064
Participant contributions receivable -- 9,270
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Total assets 6,218,811 5,502,334
Liabilities
Excess contributions payable 47,710 --
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Net assets reflecting all investments at fair value 6,171,101 5,502,334
Adjustment from fair value to contract value for
fully benefit responsive investment contracts 10,666 10,352
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Net assets available for benefits $6,181,767 $5,512,686
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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, 2006
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Additions to net assets:
Investment income:
Interest and dividends $ 170,257
Interest on loans 4,289
Net appreciation in fair value of investments 411,038
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585,584
Participant contributions 307,345
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Total additions 892,929
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Deductions from net assets:
Benefits paid to participants 223,208
Administrative fees 640
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Total deductions 223,848
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Net increase 669,081
Net assets available for benefits:
Beginning of year 5,512,686
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End of year $6,181,767
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See notes to financial statements
3
SPIRE CORPORATION 401(K) PROFIT SHARING PLAN
Notes to Financial Statements
FOR THE YEAR ENDED DECEMBER 31, 2006
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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 2006, 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.
4
SPIRE CORPORATION 401(K) PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2006 CONTINUED --
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1. PLAN DESCRIPTION (CONTINUED)
FORFEITED ACCOUNTS
At December 31, 2006 and 2005, forfeited nonvested accounts totaled
$28,950 and $27,002, 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 account balance,
whichever is less. 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
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 generally accepted accounting principles
("GAAP"). Benefits payable at year end are not accrued as they are
considered to be a component of net assets available for benefits.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles 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.
5
SPIRE CORPORATION 401(K) PROFIT SHARING PLAN
Notes to Financial Statements
For the Year Ended December 31, 2006
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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
ADOPTION OF NEW ACCOUNTING STANDARDS
The Company has adopted FASB Staff Position (FSP) AAG INV-1 and SOP
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, which
requires that certain investment assets be reported at fair value and that
an adjustment from fair value to contract value be included on the
Statements of Net Assets Available for Benefits. As a result, certain
amounts reported as of December 31, 2005 have been restated to comply with
this standard. There was no effect on net assets available for benefits.
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.
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.
6
SPIRE CORPORATION 401(K) PROFIT SHARING PLAN
Notes to Financial Statements
For the Year Ended December 31, 2006
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3. INVESTMENTS
Investments that represent five percent or more of the Plan's net assets are
as follows:
December 31,
2006 2005
Mutual funds
Oppenheimer Quest Opportunity Value $ 854,265 $ 777,474
Franklin Flexible Capital Growth 1,058,695 1,083,273
American Funds Europacific Growth 485,937 408,940
Eaton Vance Large Cap Value 352,755 *
Common stock
Spire Corporation 1,608,632 1,489,404
* Represents less than 5% of the Plan's net assets
During 2006 the Plan's investments (including investments bought, sold, and
held during the year) appreciated in value as follows:
Mutual funds $ 249,580
Common stock 161,458
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$ 411,038
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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,
2006 2005
Net assets:
Common stock - Spire Corporation $ 1,592,053 $ 1,455,183
Other 35,002 25,920
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Total nonparticipant-directed $ 1,627,055 $ 1,481,103
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Changes in net assets during 2006:
Benefits paid to participants $ (14,622)
Net appreciation 160,575
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$ 145,953
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7
SPIRE CORPORATION 401(K) PROFIT SHARING PLAN
Notes to Financial Statements
For the Year Ended December 31, 2006
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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, 2006 and 2005 was $170,252 and $192,719, respectively. The
average yield was 3% for both 2006 and 2005. The interest crediting rate
was 3.29% and 3.30% for 2006 and 2005, 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 National. 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.
8
SPIRE CORPORATION 401(K) PROFIT SHARING PLAN
Notes to Financial Statements
For the Year Ended December 31, 2006
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8. EXCESS CONTRIBUTIONS
Benefit distributions for the plan year ended December 31, 2006 include
payments of $29,685 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, 2006 are net of
payments of $47,710 made on March 9, 2007 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, 2006.
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.
9
SPIRE CORPORATION 401(K) PROFIT SHARING PLAN
Schedule H, Line 4i - Form 5500
Schedule of Assets (Held at End of Year)
December 31, 2006
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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 194,279 shares of common stock $263,264 $1,608,632
OppenheimerFunds Oppenheimer Quest Opportunity Value n/a 854,265
Franklin Templeton Investments Franklin Flexible Capital Growth n/a 1,058,695
Third Avenue Third Avenue Small Cap Value A n/a 33,289
American Funds Europacific Growth n/a 485,937
Hartford Life Insurance Co. Fixed Income n/a 180,918
AIM Funds AIM Cash Reserve Shares n/a 243,581
American Funds American Balanced n/a 177,956
Franklin Templeton Investments Franklin Small-Mid Cap Growth n/a 64,094
MFS Investment Management Mass Investors Growth Stock n/a 16,552
Eaton Vance Large Cap Value n/a 352,755
Eaton Vance Income Fund of Boston n/a 173,447
Allianz Funds RCM Global Technology n/a 91,941
American Funds New Perspective n/a 94,090
OppenheimerFunds Oppenheimer Strategic Income n/a 168,632
Sentinel Group Funds Sentinel Small Company n/a 99,387
PIMCO Funds Total Return n/a $ 132,469
Davis Funds Davis New York Venture n/a 81,443
Evergreen Investments Evergreen Money Market n/a 72,214
Black Rock Funds Black Rock Money Market n/a 6,796
Pioneer Investments Pioneer Cash Reserves n/a 28,950
Goldman Sachs MidCap Value A n/a 45,180
Allianz NJF Dividend Value R n/a 70,330
Participant Loans Interest rates 5% to 9.5% n/a 87,924
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$6,229,477
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* Represents party-in-interest
The registered independent accounting firm's report should be read with this
supplementary schedule
10
SIGNATURE
The Plan. Pursuant to the requirements of the Securities Exchange Act of
1034, 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 29, 2007 By: /s/ Christian Dufresne
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Christian Dufresne
Chief Financial Officer
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