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 year ended December 31, 2002
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from_____to_____.
Commission File No. 1-13783
A. Full title of the plan and the address of the plan, if different from that
of the issuer named below:
INTEGRATED ELECTRICAL SERVICES, INC.
401(k) RETIREMENT SAVINGS PLAN
B. Name and issuer of the securities held pursuant to the plan and the
address of its principal executive office:
Integrated Electrical Services, Inc.
1800 West Loop South, Suite 500
Houston, Texas 77027
INTEGRATED ELECTRICAL SERVICES, INC.
401(K) RETIREMENT SAVINGS PLAN
Financial Statements and Supplemental Schedules
December 31, 2002 and 2001
(With Independent Auditors' Report Thereon)
INTEGRATED ELECTRICAL SERVICES, INC.
401(K) RETIREMENT SAVINGS PLAN
Table of Contents
Page
Independent Auditors' Report 2
Report of Independent Public Accountants 3
Financial Statements:
Statements of Net Assets Available for Plan Benefits as of December 31, 2002 and
2001 4
Statement of Changes in Net Assets Available for Plan Benefits for the
year ended December 31, 2002 5
Notes to Financial Statements 6
Supplemental Schedules:
Schedule 1 - Schedule G, Part III - Schedule of Nonexempt Transactions for the
year ended December 31, 2002 13
Schedule 2 - Schedule H, Line 4i - Schedule of Assets (Held at End of Year)
as of December 31, 2002 18
All other supplemental schedules required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974 are omitted as they are inapplicable or not required.
1
Independent Auditors' Report
The Administrative Committee of the
Integrated Electrical Services, Inc.
401(k) Retirement Savings Plan:
We have audited the accompanying statement of net assets available for plan
benefits of the Integrated Electrical Services, Inc. 401(k) Retirement Savings
Plan (the Plan) as of December 31, 2002, and the related statement of changes in
net assets available for plan benefits for the year 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 audit.
We conducted our audit 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 audit provides 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 plan benefits of the Plan as
of December 31, 2002 and the changes in net assets available for plan benefits
for the year then ended, in conformity with accounting principles generally
accepted in the United States of America.
Our audit was performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule G, part III -
schedule of nonexempt transactions for the year ended December 31, 2002 and
supplemental schedule H, line 4i - schedule of assets (held at end of year) as
of December 31, 2002 are presented for purposes of additional analysis and are
not a required part of the basic financial statements but are 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. These supplemental schedules are the responsibility of the Plan's
management. The supplemental schedules have been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, are fairly stated, in all material respects, in relation to the basic
financial statements taken as a whole.
KPMG LLP
Houston, Texas
June 27, 2003
2
[This is a copy of the audit report previously issued by Arthur Andersen LLP in
connection with the Plan's Filing on Form 11-K for the year ended December 31,
2001. This audit report has not been reissued by Arthur Andersen LLP in
connection with the Filing on Form 11-K. See Exhibit 23.2 for further
discussion.]
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Administrative Committee of
the Integrated Electrical Services, Inc.
401(k) Retirement Savings Plan
We have audited the accompanying statements of net assets available for benefits
of the Integrated Electrical Services, Inc. 401(k) Retirement Savings Plan (the
Plan) as of December 31, 2001 and 2000, and the related statement of changes in
net assets available for benefits for the year ended December 31, 2001. These
financial statements and the supplemental schedules referred to below are the
responsibility of the Administrative Committee. Our responsibility is to express
an opinion on these financial statements and supplemental schedules based on our
audits.
We conducted our audits in accordance with auditing standards generally accepted
in the 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 the Administrative Committee, 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 Plan as of
December 31, 2001 and 2000, and the changes in net assets available for benefits
for the year ended December 31, 2001, in conformity with accounting principles
generally accepted in the United States.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule H, line 4i -
schedule of assets (held at end of year) as of December 31, 2001, and schedule
G, Part III - schedule of nonexempt transactions for the year ended December 31,
2001, are presented for the purpose of additional analysis and are not a
required part of the basic financial statements but are 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 basic financial statements and, in our opinion, are
fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
ARTHUR ANDERSEN LLP
Houston, Texas
May 8, 2002
3
INTEGRATED ELECTRICAL SERVICES, INC.
401(k) RETIREMENT SAVINGS PLAN
Statements of Net Assets Available for Plan Benefits
December 31, 2002 and 2001
2002 2001
------------ ------------
Assets:
Investments, at fair value $ 82,114,179 $101,093,144
Accrued income 21,713 26,989
Contributions receivable:
Employee 287,430 309,044
Employer 68,771 --
Cash, non-interest bearing 64,468 6,000
------------ ------------
Total assets 82,556,561 101,435,177
------------ ------------
Liabilities:
Accrued liabilities 196,081 142,192
Excess contributions payable 257,548 429,555
------------ ------------
Total liabilities 453,629 571,747
------------ ------------
Net assets available for plan benefits $ 82,102,932 $100,863,430
============ ============
See accompanying notes to financial statements
4
INTEGRATED ELECTRICAL SERVICES, INC.
401(k) RETIREMENT SAVINGS PLAN
Statement of Changes in Net Assets Available for Plan Benefits
Year ended December 31, 2002
Net investment income (loss):
Interest $ 477,339
Dividends 677,720
Net depreciation in fair value of investments (17,528,353)
-------------
(16,373,294)
-------------
Contributions:
Employee 15,467,474
Employer 2,807,278
Rollovers 411,245
-------------
18,685,997
-------------
Transfers from other plans (note 5) 1,334,650
Transfers to other plans (note 6) (7,200,114)
Withdrawals (14,603,362)
Excess contributions (257,548)
Administrative expenses (346,827)
-------------
Net decrease (18,760,498)
Net assets available for plan benefits:
Beginning of year 100,863,430
-------------
End of year $ 82,102,932
=============
See accompanying notes to financial statements.
5
INTEGRATED ELECTRICAL SERVICES, INC.
401(k) RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 2002 and 2001
(1) Description of the Plan
The following description of the Integrated Electrical Services, Inc.
401(k) Retirement Savings Plan (the Plan) is provided for general
information purposes only. Participants should refer to the Plan document
for more complete information about the Plan's provisions.
(a) General
The Plan is a defined contribution plan established by Integrated
Electrical Services, Inc. (the Company), on January 1, 1999. The Plan
was established under the provisions of Section 401(a) of the Internal
Revenue Code of 1986, as amended (the Code), which includes a
qualified deferred arrangement as described in Section 401(k) of the
Code, for the benefit of eligible employees of the Company. The Plan
is subject to the provisions of the Employee Retirement Income
Security Act of 1974, as amended (ERISA). The Plan was amended and
restated effective January 1, 2002.
The Company, as plan administrator, established an administrative
committee (the Administrative Committee). The Administrative Committee
is responsible for the general administration of the Plan. The
Administrative Committee is given all powers necessary to enable it to
carry out its duties including, but not limited to, the power to
interpret the Plan.
(b) Trustee
Hand Benefits & Trust, Inc. (the Trustee), is the trustee of the Plan.
Trustee fees, audit fees and all other administrative costs, excluding
participant loan fees, incurred during 2002 were paid either by the
Plan or through unallocated forfeitures within the Plan unless the
Company elected to pay such expenses on behalf of the Plan.
Participant loan fees were paid by the participants requesting the
loan.
(c) Eligibility
All employees, excluding members of a collective bargaining unit,
nonresident aliens, leased employees, and employees of an affiliate of
the Company that has not adopted the Plan, are eligible to participate
in the Plan on the first day of any month coinciding with or
immediately following the later of the date on which he or she
completes 60 days of service or attains age 21.
(d) Rollovers
Participants may contribute amounts representing distributions from
other qualified defined benefit or defined contribution plans.
(e) Contributions
Eligible employees may contribute, on a pretax basis, an amount up to
20% of their compensation, as defined. In addition, eligible employees
who have attained age 50 before the close of the Plan year are
eligible to make catch-up contributions subject to limitations of
section 414(v) of the Code. The Company does not match the employees'
catch-up contributions. Employee contributions are subject to certain
limitations.
6
INTEGRATED ELECTRICAL SERVICES, INC.
401(k) RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 2002 and 2001
Employee contributions for the year ended December 31, 2002, include
excess contributions which will be refunded to participants subsequent
to year end as the contributions were determined to be in excess of
maximum contributions levels for certain participants. A liability for
excess contribution refunds in the amount of $257,548 and $429,555 has
been reflected in the statements of net assets available for plan
benefits as of December 31, 2002 and 2001, respectively.
The Company will make matching contributions based on a percentage, if
any, as determined each plan year by the Company. During 2002, the
Company made matching contributions equal to 25% of the first 6% of
each participant's contribution.
The Plan allows the Company to make a "true-up" matching contribution
at its sole discretion at the end of a plan year for eligible
participants in an amount which, when aggregated with the Company
contributions made during the year, will produce aggregate matching
contributions equal to the percentage established by the Company. The
Company did not elect to make a "true-up" matching contribution for
the 2002 plan year.
(f) Participant Accounts
Each participant's account is credited with the participant's
contributions, the Company's matching contributions and the
participant's share of earnings, losses, any appreciation or
depreciation of the funds invested and administrative expenses. The
benefit to which a participant is entitled is the benefit that can be
provided from the participant's account.
(g) Loans
Participants may borrow from their before-tax contribution accounts a
minimum of $1,000 to a maximum equal to the lesser of (a) $50,000
minus any outstanding loan balance(s) in the last 12 months or (b) 50%
of their vested account balances. No more than one loan is allowed per
account at any given time. Interest rates are established by the
Administrative Committee. Loans must be repaid within five years for
general loans and fifteen years for loans used to purchase a primary
residence. Principal and interest are repaid through after-tax payroll
deductions.
(h) Investment Options
The Plan allows for participant transactions on the first day of any
given month with respect to changes in the contribution level. The
Plan allows for participant transactions on a daily basis with respect
to (a) the transfer of funds from one investment alternative to
another and (b) changes in the investment of new contributions.
Participants may cease their deferrals at the beginning of any payroll
period with proper notice. The Plan provides for contributions to be
invested by the Trustee among the Company's common stock, five mutual
funds, and five common/collective trust funds in accordance with
participant investment elections and the provisions of the trust
agreement.
The Trustee utilizes a short-term investment account to invest assets
of the Plan pending investment into the directed funds.
7
INTEGRATED ELECTRICAL SERVICES, INC.
401(k) RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 2002 and 2001
(i) Company Common Stock Voting Rights
Participants are entitled to exercise voting rights attributable to
the shares of Integrated Electrical Services, Inc. common stock
allocated to their account and are notified prior to the time that
such rights are to be exercised. The Trustee is not permitted to vote
any shares for which instructions have not been given by the
participant.
(j) Vesting
Participants are 100% vested in their contributions, rollover
contributions, and earnings thereon. Participants vest in their
Company matching contributions, and earnings thereon, as follows:
Vested
Completed years of service percentage
----------------------------------------------------
Less than 3 0%
3 or more 100
(k) Forfeitures
Forfeitures result from termination of employment before full vesting
has occurred. Forfeitures are first used to pay the Plan's ordinary
and necessary administrative expenses and then any remaining
forfeitures are used to reduce the Company matching contributions. At
December 31, 2002 and 2001, forfeited nonvested accounts totaled
approximately $305,000 and $396,368, respectively. During 2002,
approximately $191,000 of forfeitures were utilized to pay plan
expenses and reduce Company matching contributions.
(l) Withdrawals
Once age 59-1/2 is attained, a participant may withdraw some or all of
the vested amounts in his or her account. If the participant is
younger than 59-1/2, he or she may withdraw some or all of the vested
amounts in his or her account, excluding earnings thereon, only in the
event of financial hardship. Upon retirement, termination of
employment, death, or permanent disability, participants or their
beneficiaries will be paid in the form of a lump sum equal to the
vested value of their accounts.
(2) Summary of Significant Accounting Policies
(a) Basis of Accounting
The Trustee provides statements, prepared on a cash basis of
accounting, to the Company. Adjustments have been made to convert the
statements to an accrual basis for reporting purposes. Withdrawals are
recorded when paid.
8
INTEGRATED ELECTRICAL SERVICES, INC.
401(k) RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 2002 and 2001
(b) Use of Estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to use estimates and assumptions that affect the reported
amounts of net assets available for plan benefits and changes therein.
Actual results could differ from those estimates.
(c) Investment Valuation and Gains (Losses) on Investments
Investments are reported at market value. Mutual funds and the
Company's common stock are valued based upon quoted market prices. The
common/collective trust funds are valued at fair value based upon the
market value of the underlying assets. The Hand Composite Employee
Benefit Trust - Short-Term Income Fund (the Short-Term Income Fund) is
a fully benefit-responsive common/collective trust fund investing in
short-term debt instruments, including guaranteed investment
contracts. The investments of the Short-Term Income Fund are stated at
amortized cost which approximates fair value. Participant loans are
valued at cost, which approximates fair value. Realized gains (losses)
on the sale of investments and unrealized appreciation (depreciation)
in the fair value of investments are shown as net depreciation in fair
value of investments in the statement of changes in net assets
available for plan benefits.
Purchase and sales of securities are recorded on a trade-date basis.
Interest is recorded as earned. Dividends are recorded on the
ex-dividend date.
9
INTEGRATED ELECTRICAL SERVICES, INC.
401(k) RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 2002 and 2001
(3) Investments
The following table presents investments that represent 5% or more of
the Plan's net assets for December 31, 2002 and 2001:
December 31, 2002:
American Growth Fund of America $ 11,827,263
Hand Benefit and Trust Company
Composite Employee Benefit Group Trust:
Benefit Trust Equity Index 500 Fund 8,906,439
Short-Term Income Fund 11,191,362
SMART Aggressive Fund 4,486,883
SMART Moderate Fund 5,623,971
Fidelity Advisor Government Investment Portfolio 9,290,123
Investment Company of America 5,411,148
Janus Worldwide Fund 9,146,218
MFS Capital Opportunities Fund 6,619,115
December 31, 2001:
American Growth Fund of America $ 19,059,759
Hand Benefit and Trust Company
Composite Employee Benefit Group Trust:
Benefit Trust Equity Index 500 Fund 12,133,183
Short-Term Income Fund 10,655,399
SMART Aggressive Fund 5,197,719
SMART Moderate Fund 6,466,815
Fidelity Advisor Government Investment Portfolio 6,830,047
Investment Company of America 6,368,231
Janus Worldwide Fund 13,813,496
MFS Capital Opportunities Fund 10,408,388
During 2002, the Plan's investments (including gains and losses on
investments bought and sold, as well as held during the year)
depreciated in fair value as follows:
Common/collective trust funds $ (4,691,863)
Mutual funds (11,902,480)
Common stock (934,010)
--------------
$ (17,528,353)
==============
10
INTEGRATED ELECTRICAL SERVICES, INC.
401(k) RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 2002 and 2001
(4) Concentration of Investments
The Plan's investment in Integrated Electrical Services, Inc. common
stock represents 4% of total investments as of December 31, 2002 and
2001. The Company is the largest provider of electrical contracting
services in the United States and provides a broad range of services
including designing, building and maintaining electrical, low voltage
and utilities systems for commercial, industrial and residential
customers.
(5) Transfers From Other Plans
During 2002, account balances of employees of various acquired
companies who had participated in plans sponsored by the acquired
companies were transferred to the Plan. Transfers from the acquired
companies' plans totaled $1,334,650.
(6) Transfers To Other Plans
During 2002, account balances of employees of various divested
companies who had participated in the Plan were transferred from the
Plan. Transfers from the Plan totaled $7,200,114.
(7) Risks and Uncertainties
The Plan provides for various investments in common/collective trust
funds, mutual funds, and the Company's common stock. Investment
securities, in general, are exposed to various risks, such as interest
rate, credit, and overall market volatility risks. Due to the level of
risk associated with certain investment securities, it is reasonably
possible that changes in the values of investment securities will
occur in the near term.
(8) Tax Status
The Plan obtained its latest determination letter on October 18, 2001,
in which the Internal Revenue Service (IRS) stated that the Plan, as
then designed, was in compliance with the applicable requirements of
the Code. The Plan has been amended since receiving the determination
letter. Even so, the Administrative Committee believes that the Plan
is currently designed and being operated in compliance with the
applicable requirements of the Code and that the Plan was qualified
and the related trust was tax-exempt as of December 31, 2002 and 2001.
(9) Priorities Upon Termination
Under the terms of the Plan, the Company has the right at any time to
terminate the Plan subject to the provisions of ERISA. In the event of
Plan termination, participants would become fully vested in the
balance of their accounts. The Trustee would then commence
distribution as directed by the Administrative Committee.
(10) Related-Party Transactions
Certain Plan investments are units of common/collective trust funds
managed and distributed by Hand Benefits & Trust, Inc. Hand Benefits &
Trust, Inc. is the Trustee for the Plan; therefore, these transactions
qualify as party-in-interest transactions. In addition, the Plan
provides for investment in Company common
11
INTEGRATED ELECTRICAL SERVICES, INC.
401(k) RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 2002 and 2001
stock and participant loans, which also qualify as party-in-interest
transactions. These transactions are covered by an exemption from the
"prohibited transaction" provisions of ERISA and the Code.
(11) Nonexempt Transactions
As reported on Schedule 1, certain Plan contributions were not
remitted to the trust within the time frame specified by the
Department of Labor's Regulation 29 CFR 2510.3-102, thus constituting
nonexempt transactions between the Plan and the Company for the year
ended December 31, 2002. The Company remitted earnings on the
nonexempt transactions subsequent to year-end.
(12) Subsequent Event (unaudited)
Participant account balances from an acquired company's former plan
totaling approximately $6,000,000 will be merged into the Plan on or
after July 10, 2003.
12
Signature
The Plan, Pursuant to the requirements of the Securities Exchange Act of 1934,
the plan administrator has duly caused this annual report to be signed on its
behalf by the undersigned thereunto duly authorized.
June 27, 2003
Integrated Electrical Services, Inc.
401(k) Retirement Savings Plan
By: /s/ Margery M. Harris
---------------------
Margery M. Harris
Senior Vice President - Human Resources and
an Advisory Member of the Administrative
Committee
Exhibit Index
Exhibit
number Description
- ---------------- ---------------------------------------------------------------------------------
23.1 Independent Auditors' Consent
23.2 Notice Regarding Consent of Arthur Andersen LLP
99.1 Certification of the Senior Vice President - Human Resources and an
Advisory Member of the Administrative Committee pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sabanes-Oxley Act of 2002
99.2 Certification of the Chief Financial Officer pursant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the Sabanes-Oxley Act of 2002
Schedule 1
INTEGRATED ELECTRICAL SERVICES, INC.
401(k) RETIREMENT SAVINGS PLAN
Schedule G, Part III - Schedule of
Nonexempt Transactions Year
ended December 31, 2002
Relationship to plan, Description of transactions, including
Identity of party employer, or other maturity date, rate of interest, Amount Interest incurred
involved party in interest collateral, and maturity value loaned on loan
- ----------------------- -------------------------- -------------------------------------------- ----------- -----------------
Integrated Electrical
Services, Inc. Plan Sponsor Lending of monies from the plan to the
employer (contributions not timely
remitted to the Plan) as follows:
Deemed loan dated July 23, 2001
maturity January 11, 2002,
with weighted average interest
at 8.40% per month $ 1,485 46 (a)
Deemed loan dated August 21,
2001, maturity February 22, 2002,
with weighted average interest
at 10.01% per month 1,680 297 (a)
Deemed loan dated September 24,
2001, maturity February 22, 2002,
with weighted average interest
at 13.09% per month 2,112 488 (a)
Deemed loan dated September 24,
2001, maturity March 8, 2002,
with weighted average interest
at 13.09% per month 375 110 (a)
Deemed loan dated October 22,
2001, maturity January 16, 2002,
with weighted average interest
at 16.43% per month 527 46 (a)
Deemed loan dated October 22,
2001, maturity March 8, 2002,
with weighted average interest
at 16.43% per month 3,360 1,233 (a)
Deemed loan dated November 21,
2001, maturity February 22, 2002,
with weighted average interest
at 22.07% per month 24 9 (a)
Deemed loan dated November 21,
2001, maturity March 8, 2002,
with weighted average interest
at 22.07% per month 2,636 1,299 (a)
Deemed loan dated December 21,
2001, maturity January 9, 2002,
with weighted average interest
at 25.49% per month 4,440 340 (a)
Deemed loan dated December 21,
2001, maturity January 16, 2002,
with weighted average interest
at 25.49% per month 3,284 446 (a)
Deemed loan dated December 21,
2001, maturity January 23, 2002,
with weighted average interest
at 25.49% per month 6,334 1,238 (a)
Deemed loan dated December 21,
2001, maturity January 25, 2002,
with weighted average interest
at 25.49% per month 11,263 2,392 (a)
Deemed loan dated December 21,
2001, maturity February 6, 2002,
with weighted average interest
at 25.49% per month 6,766 2,127 (a)
13
Deemed loan dated December 21,
2001, maturity February 22, 2002,
with weighted average interest
at 25.49% per month 8,276 3,727 (a)
Deemed loan dated December 21,
2001, maturity March 8, 2002,
with weighted average interest
at 25.49% per month 1,738 989 (a)
Deemed loan dated January 23,
2002, maturity February 6, 2002,
with weighted average interest
at 0.91% per month 15,805 67
Deemed loan dated January 23,
2002, maturity February 22, 2002,
with weighted average interest
at 0.96% per month 10,665 103
Deemed loan dated January 23,
2002, maturity March 8, 2002,
with weighted average interest
at 3.51% per month 12,294 633
Deemed loan dated January 23,
2002, maturity April 9, 2002,
with weighted average interest
at 7.15% per month 2,639 478
Deemed loan dated January 23,
2002, maturity May 17, 2002,
with weighted average interest
at 6.40% per month 173 42
Deemed loan dated February 22,
2002, maturity March 8, 2002,
with weighted average interest
at 8.97% per month 38 2
Deemed loan dated February 22,
2002, maturity April 12, 2002,
with weighted average interest
at 10.80% per month 234 41
Deemed loan dated February 22,
2002, maturity December 6, 2002,
with weighted average interest
at 6.71% per month 1,696 1,089
Deemed loan dated March 21,
2002, maturity April 5, 2002,
with weighted average interest
at 11.63% per month 1,981 116
Deemed loan dated March 21,
2002, maturity April 9, 2002,
with weighted average interest
at 10.23% per month 1,373 89
Deemed loan dated March 21,
2002, maturity April 12, 2002,
with weighted average interest
at 9.52% per month 234 16
Deemed loan dated March 21,
2002, maturity May 24, 2002,
with weighted average interest
at 6.46% per month 2,907 401
Deemed loan dated April 19,
2002, maturity April 25, 2002,
with weighted average interest
at 5.00% per month 94,366 944
Deemed loan dated April 19,
2002, maturity May 17, 2002,
with weighted average interest
at 4.86% per month 10,902 494
14
Deemed loan dated April 19,
2002, maturity May 24, 2002,
with weighted average interest
at 4.84% per month 2,833 160
Deemed loan dated April 19,
2002, maturity May 29, 2002,
with weighted average interest
at 4.83% per month 3,014 194
Deemed loan dated April 19,
2002, maturity September 10, 2002,
with weighted average interest
at 5.26% per month 16,281 4,107
Deemed loan dated April 19,
2002, maturity February 7, 2003,
with weighted average interest
at 5.53% per month 5,655 2,669 (b)
Deemed loan dated May 21,
2002, maturity June 11, 2002,
with weighted average interest
at 9.41% per month 58 4
Deemed loan dated May 21,
2002, maturity January 17, 2003,
with weighted average interest
at 5.63% per month 1,630 685 (b)
Deemed loan dated December 27,
2002, maturity January 10, 2003,
with weighted average interest
at 2.17% per month 16,810 49 (b)
Deemed loan dated May 21,
2002, maturity May 23, 2003,
with weighted average interest
at 5.63% per month 399 168 (b)
Deemed loan dated June 21,
2002, maturity July 1, 2002,
with weighted average interest
at 12.27% per month 10,826 443
Deemed loan dated June 21,
2002, maturity January 17, 2003,
with weighted average interest
at 4.80% per month 1,697 524 (b)
Deemed loan dated July 22,
2002, maturity June 26, 2003,
with weighted average interest
at 4.70% per month 2,380 604 (b)
Deemed loan dated July 22,
2002, maturity July 23, 2002,
with weighted average interest
at 1.96% per month 1,306 1
Deemed loan dated August 21,
2002, maturity December 27, 2002,
with weighted average interest
at 5.41% per month 189 44
Deemed loan dated August 21,
2002, maturity June 26, 2003,
with weighted average interest
at 5.31% per month 3,321 776 (b)
Deemed loan dated August 21,
2002, maturity August 27, 2002,
with weighted average interest
at 2.02% per month 2,574 10
Deemed loan dated August 21,
2002, maturity August 23, 2002,
with weighted average interest
at 2.02% per month 19,546 26
15
Deemed loan dated August 21,
2002, maturity September 4, 2002,
with weighted average interest
at 2.06% per month 1,257 12
Deemed loan dated August 21,
2002, maturity November 22, 2002,
with weighted average interest
at 6.02% per month 4,328 808
Deemed loan dated August 21,
2002, maturity December 20, 2002,
with weighted average interest
at 5.60% per month 3,673 829
Deemed loan dated July 22,
2002, maturity December 27, 2002,
with weighted average interest
at 4.76% per month 2,702 678
Deemed loan dated September 23,
2002, maturity November 19, 2002,
with weighted average interest
at 8.11% per month 5,088 784
Deemed loan dated September 23,
2002, maturity November 22, 2002,
with weighted average interest
at 8.17% per month 7,498 1,225
Deemed loan dated September 23,
2002, maturity December 6, 2002,
with weighted average interest
at 7.79% per month 1,639 315
Deemed loan dated September 23,
2002, maturity December 27, 2002,
with weighted average interest
at 6.55% per month 5,676 1,177
Deemed loan dated October 22,
2002, maturity November 5, 2002,
with weighted average interest
at 8.93% per month 5,325 222
Deemed loan dated October 22,
2002, maturity November 12, 2002,
with weighted average interest
at 9.03% per month 7,522 475
Deemed loan dated October 22,
2002, maturity November 19, 2002,
with weighted average interest
at 9.07% per month 1,459 124
Deemed loan dated October 22,
2002, maturity December 13, 2002,
with weighted average interest
at 7.38% per month 8,690 1,111
Deemed loan dated October 22,
2002, maturity December 20, 2002,
with weighted average interest
at 6.76% per month 3,222 428
Deemed loan dated November 22,
2002, maturity January 24, 2003,
with weighted average interest
at 3.61% per month 656 31 (b)
Deemed loan dated November 22,
2002, maturity January 7, 2003,
with weighted average interest
at 3.61% per month 9,178 431 (b)
Deemed loan dated December 20,
2002, maturity January 24, 2003,
with weighted average interest
at 2.17% per month 832 7 (b)
16
Deemed loan dated December 20,
2002, maturity February 4, 2003,
with weighted average interest
at 2.17% per month 576 5 (b)
---------
(a) Represents calculated interest from January 1, 2002 through the date of maturity. $38,428 (c)
=========
(b) Represents calculated interest from the date of the loan through December 31, 2002.
(c) The Plan Sponsor remitted interest to the Plan subsequent to plan year end.
See accompanying independent auditors' report.
17
Schedule 2
INTEGRATED ELECTRICAL SERVICES, INC.
401(k) RETIREMENT SAVINGS PLAN Schedule H,
Line 4i - Schedule of Assets (Held at End of Year)
December 31, 2002
Principal
amount
Identity of issue/ or numbers Current
description of investment of shares value
- ---------------------------------------------------------- ------------------ -------------------
American Growth Fund of America 640,350 $ 11,827,263
Hand Composite
Employee Benefit Trust:
Benefit Trust Equity Index 500 Fund* 936,788 8,906,439
Short-Term Income Fund* 11,191,362 11,191,362
SMART Aggressive Fund* 461,143 4,486,883
SMART Conservative Fund* 293,496 3,279,782
SMART Moderate Fund* 524,072 5,623,971
Fidelity Advisor Government Investment Portfolio 900,206 9,290,123
Fidelity Money Market Fund 122 122
Integrated Electrical Services, Inc., common stock* 773,245 2,976,993
Investment Company of America 230,458 5,411,148
Janus Worldwide Fund 284,663 9,146,218
MFS Capital Opportunities Fund 708,685 6,619,115
Interest-bearing cash $ 6,907 6,907
Participant loans* (interest rates ranging
from 4.0% to 11.5%) $ 3,347,853 3,347,853
-------------------
Total assets (held at end of year) $ 82,114,179
===================
* Indicates a party-in-interest.
See accompanying independent auditors' report.
18
Exhibit 23.1
Independent Auditors' Consent
The Administrative Committee of the
Integrated Electrical Services, Inc.
401(k) Retirement Savings Plan:
We consent to the incorporation by reference in the Registration Statements
(Nos. 333-67113 and 333-68274) on Form S-8 of Integrated Electrical Services,
Inc. of our report dated June 27, 2003, with respect to the statement of net
assets available for plan benefits of Integrated Electrical Services, Inc.
401(k) Retirement Savings Plan as of December 31, 2002, the statement of changes
in net assets available for plan benefits for the year ended December 31, 2002,
the supplemental schedule G, part III - schedule of nonexempt transactions for
the year ended December 31, 2002 and supplemental schedule H, line 4i - schedule
of assets (held at end of year) as of December 31, 2002, which report appears in
the December 31, 2002 Annual Report on Form 11-K of Integrated Electrical
Services, Inc. 401(k) Retirement Savings Plan.
Houston, Texas
June 27, 2003
Exhibit 23.2
NOTICE REGARDING CONSENT OF ARTHUR ANDERSEN LLP
Section 11(a) of the Securities Act of 1933 provides that if any part of a
registration statement at the time it becomes effective contains an untrue
statement of a material fact or an omission to state a material fact required to
be stated therein or necessary to make the statements therein not misleading,
any person acquiring a security pursuant to such registration statement (unless
it is proved that at the time of such acquisition such person knew of such
untruth or omission) may sue, among others, every accountant who has consented
to be named as having prepared or certified any part of the registration
statement or as having prepared or certified any report or valuation which is
used in connection with the registration statement with respect to the statement
in such registration statement, report or valuation which purports to have been
prepared or certified by the accountant. The plan appointed KPMG LLP to replace
Arthur Andersen LLP as the independent auditor of the Integrated Electrical
Service, Inc. 401(k) Retirement Savings Plan (the Plan). Prior to the date of
this Form 11-K (which is incorporated by the reference into the Integrated
Electrical Service, Inc. filing on Forms S-8 File Nos. 333-67113 and 333-68274),
the Arthur Andersen LLP partners who reviewed the most recent audited financial
statements of the Plan as of December 31, 2001 have resigned from Arthur
Andersen LLP. As a result, after reasonable efforts, the Plan has been unable to
obtain Arthur Andersen LLP's written consent to the incorporation by reference
into the Integrated Electrical Service, Inc. filing on Forms S-8 File Nos.
333-67113 and 333-68274 of its audit report with respect to the Plan's financial
statements as of December 31, 2001. Under these circumstances, Rule 437a under
the Securities Act of 1933 permits the Plan to file this Form 11-K without a
written consent from Arthur Andersen LLP. Accordingly, Arthur Andersen LLP will
not be liable to you under Section 11(a) of the Securities Act of 1933 because
it has not consented to the incorporation by reference of its previously issued
report into the Integrated Electrical Service, Inc. filing on Forms S-8 File
Nos. 333-67113 and 333-68274. Integrated Electrical Service, Inc. believes,
however, that other persons who are liable under Section 11(a) of the Securities
Act of 1933, including the Company's officers and directors, may still rely on
Arthur Andersen LLP's audit reports as being made by an expert under the due
diligence defense provision of Section 11.
Exhibit 99.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Integrated Electrical Services, Inc. 401(k) Retirement
Savings Plan (the Plan) Annual Report on Form 11-K for the year ended December
31, 2002 as filed with the Securities and Exchange Commission on the date hereof
(the Report), I, Margery M. Harris, Senior Vice President - Human Resources and
an Advisory Member of the Administrative Committee certify pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, that:
1. The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934, as amended; and
2. The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations
of the Plan.
Date: June 27, 2003 By: /s/ Margery M. Harris
-----------------------------
Margery M. Harris
Senior Vice President - Human
Resources and an Advisory Member
of the Administrative Committee
Exhibit 99.2
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Integrated Electrical Services, Inc. 401(k) Retirement
Savings Plan (the Plan) Annual Report on Form 11-K for the year ended December
31, 2002 as filed with the Securities and Exchange Commission on the date hereof
(the Report), I, William W. Reynolds, Executive Vice President and Chief
Financial Officer of Integrated Electrical Services, Inc. certify pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, that:
1. The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934, as amended; and
2. The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations
of the Plan.
Date: June 27, 2003 By: /s/ William W. Reynolds
-----------------------------
William W. Reynolds
Executive Vice President and Chief
Financial Officer