UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

 

FORM 11-K

 

 

For the fiscal year ended December 31, 2013

 

  

 

For the transition period from ________ to __________

 

Commission file number 001-15169

 

 

The Perficient, Inc. 401(k) Employee Savings Plan

 

 

Perficient, Inc.

  555 Maryville University Drive, Suite 600

Saint Louis, Missouri 63141

 

 

---

Financial Statements and Supplemental Schedules

Years ended December 31, 2013 and 2012

 

Table of Contents

 

 

* Other schedules required by 29 C.F.R. § 2520.103-10 of the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974 have been omitted because they are not applicable.

  

 

 

 

---

Report of Independent Registered Public Accounting Firm

 

 

To Administrative Committee and Administrator of

The Perficient, Inc. 401(k) Employee Savings Plan

We have audited the accompanying statements of net assets available for benefits of The Perficient, Inc. 401(k) Employee Savings Plan (the "Plan") as of December 31, 2013 and 2012, and the related statement of changes in net assets available for benefits for the year ended December 31, 2013. Plan management is responsible for these financial statements. 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.  The Plan is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit 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 company'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, 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 Perficient, Inc. 401(k) Employee Savings Plan as of December 31, 2013 and 2012, and the changes in its net assets available for benefits for the year ended December 31, 2013 in conformity with accounting principles generally accepted in the United States of America.

Our audits were conducted 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) 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 and Disclosure under the Employee Retirement Income Security Act of 1974. Such information is the responsibility of the Plan's management. The information 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/ Brown Smith Wallace, LLC

St. Louis, Missouri

June 19, 2014

---

Statements of Net Assets Available for Benefits

As of December 31, 2013 and 2012

 

 

The accompanying notes are an integral part of these financial statements.

   

 

 

---

Statement of Changes in Net Assets Available for Benefits

For the Year Ended December 31, 2013

 

The accompanying notes are an integral part of these financial statements.

   

  

---

Notes to Financial Statements

 

 

The following description of The Perficient, Inc. 401(k) Employee Savings Plan (the "Plan") is provided for general information purposes only.  Participants should refer to the Plan Document for a more complete description of the Plan's provisions.

 

General

 

The Plan is a defined contribution plan covering all full-time United States employees of Perficient, Inc. (the "Company") who are age 21 or older, except any employee that is a non-resident alien.  Employees may participate in the Plan on the first day of the month on or after they are determined to meet these conditions. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 ("ERISA").

Effective May 1, 2012, the Plan changed 401(k) service providers. The Company's current provider is Transamerica Retirement Services (formerly known as Diversified Retirement Corporation and/or Diversified Investment Advisors) (“Transamerica”), which is a part of the Aegon group. As a result of this change, the Plan's investment options changed, effective May 1, 2012.

Contributions

 

For 2013, participants could contribute from a percentage of their pre-tax annual compensation to any of the investment funds up to a maximum of $17,500, subject to the Internal Revenue Code of 1986, as amended (the “Code”).  Participants who had attained age 50 before the end of the year were eligible to make catch-up contributions of an additional $5,500.  Participants could also contribute amounts representing distributions from other qualified defined benefit or contribution plans.

 

The Company made matching contributions of 50% (25% in cash and 25% in Company common stock) of the first 6% of eligible compensation deferred by the participant. The Company made matching contributions of $1,518,821 in Company common stock during 2013.

 

Participant Accounts

 

Each participant's account is credited with the participant's contribution, the Company's matching contribution, and an allocation of 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 vested immediately in their contributions plus actual earnings thereon. The Company contributions plus earnings thereon vest based on years of service as follows: 

 

Notes Receivable – Participants

 

Upon written application of a participant, the Plan may make a loan to the participant.  Participants may borrow no less than $1,000 and no greater than the lesser of (i) 50% of the participant's vested account balance, or (ii) $50,000.  The loans are secured by the balance in the participant's account and bear interest at a rate commensurate with local rates for similar plans.  Loans are amortized over a maximum of 60 months unless used to purchase the participant's principal residence. Repayment is made through payroll deductions.  Participant loans are measured at the unpaid principal balance plus any accrued but unpaid interest.  Participant loans outstanding were $1,061,568 and $519,088 as of December 31, 2013 and 2012, respectively.

 

Payment of Benefits

 

Participants are entitled to receive benefit payments at the normal retirement age of 65, participant's death or disability, in the event of termination, or if the participant reaches age 70½ while still employed.  Benefits may be paid in a lump-sum distribution or installment payments.

---

Forfeitures

 

As of December 31, 2013 and 2012, all forfeitures were utilized to offset employer contributions.  In accordance with the Plan provisions, forfeitures are used to reduce employer contributions.  During the year ended December 31, 2013, employer contributions were reduced by forfeitures of $284,701, which included account balances forfeited during the year.

 

Participant-Directed Investments

 

All assets of the Plan are participant-directed investments.

 

Participants have the option of directing their account balance to one or more different investment options.  The investment options include various mutual funds, collective trusts, a guaranteed investment contract, and Company common stock.  As a result of the change in service providers, as of May 1, 2012, all funds which were held in the investment contract were frozen and no longer an option for participants.  Although this did not impact the benefit-responsive classification of the investment, participants did not have the ability to direct the investments which were held in this account as of the date of change.  The funds were liquidated and transferred to the new service provider on January 17, 2013, which allowed participants to direct their investments based on the current investment options.  See Notes 4 and 5 for additional quantitative disclosures.

 

 

Basis of Accounting

 

The financial statements of the Plan have been prepared on the accrual basis of accounting.

 

Investment contracts held by a defined contribution plan are required to be reported at fair value.  However, contract value is the relevant measurement attribute for fully benefit-responsive investment contracts because contract value is the amount participants would receive if they were to initiate permitted transactions under the terms of the Plan.  The Statements of Net Assets Available for Benefits present the fair value of the investment contract as well as the adjustment of the fully benefit-responsive investment contract from fair value to contract value.  The Statement of Changes in Net Assets Available for Benefits is prepared on a contract value basis.

 

Use of Estimates

 

The preparation of the accompanying financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

 

Investment Valuation and Income Recognition

 

The Plan's investments are reported at fair value.  Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.  The fully benefit-responsive investment contract held at December 31, 2012 was valued at contract value. The funds were liquidated and transferred to the new service provider on January 17, 2013, which allowed participants to direct their investments based on the current investment options.See Note 4 for discussion of fair value measurement.

 

Purchases and sales of investments and realized gains and losses are accounted for on the trade date. Interest income is recorded as earned and dividend income is recorded on the ex-dividend date.  Net appreciation includes the Plan's gains and losses on investments bought and sold as well as held during the year.

 

Payment of Benefits

 

Benefits are recorded when paid.

 

Expenses

 

Operating expenses of maintaining the Plan are paid by the Company.  Administrative expenses for participant-directed transactions are paid by the Plan.

 

Adoption of New Accounting Standards

 

None.

---

 

 

The following investments represented 5% or more of the Plan's net assets:

* Not an investment option representing 5% or more of the Plan net assets in the respective year

During the year ended December 31, 2013, the Plan's investments (including investments bought and sold, as well as held during the year) appreciated in value as follows:

 

 

ASC Topic 820 provides the framework for measuring fair value.  That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value.  The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).  The three levels of the fair value hierarchy under ASC Topic 820 are described as follows:

The following is a description of the valuation methodologies used for assets measured at fair value.  There have been no changes in the methodologies used at December 31, 2013 and 2012.

---

Cash and temporary investments

 

The carrying value of cash equivalents approximates fair value as maturities are less than three months and measured at fair value using observable inputs in an active market and therefore are classified as Level 1.

Mutual Funds

 

Mutual funds available for investment in the Plan are valued at quoted prices available in an active market and are classified within Level 1 of the valuation hierarchy.

Collective Trusts

The Plan's investment options are structured as commingled pools, or funds—this encompasses the target retirement funds, risk-based funds (conservative, moderate, moderately conservative, moderately aggressive and aggressive), and the stable value fund. These funds are comprised of other broad asset category types, such as common and preferred stock, debt securities, and cash and temporary investments.  These investment options are valued at the net asset value of the units of the individual collective trust.  The net asset value, as provided by the trustee, is used as a practical expedient to estimate fair value.  The Plan's collective trust investments may be redeemed on a daily basis.  Irrespective of the underlying securities that comprise these collective funds, the funds themselves lack a formal listed market or publicly available quotes.  The Plan's collective trust investments are therefore all classified as Level 2.

Common Stock

 

Company common stock is valued at the closing price reported on the Nasdaq Global Select Market and is classified within Level 1 of the valuation hierarchy.

 

Investment Contract

 

The Principal Life Insurance Company ("Principal") Fixed Income Option 401(a)/401(k) is a general account-backed stable value contract.  This investment guarantees principal and provides a stated rate of return.  The fair value represents the amount received upon withdrawal or transfer of funds prior to their maturity, which is the contract value less a withdrawal charge.  Since the investment is based on the provisions of the investment contract, it is classified within Level 3 of the valuation hierarchy.

 

The preceding methods described may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values.  Furthermore, although the Plan believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

 

The following table sets forth by level, within the fair value hierarchy, the Plan's assets at fair value:

---

 

The table below sets forth a summary of changes in the fair value of the Plan's investment contract classified within Level 3 of the valuation hierarchy:

 

 

The table below details the valuation techniques and the unobservable inputs which are utilized in the valuation of Level 3 investments:

* The amount the Plan participant will receive if they transfer or surrender their funds out of the investment account (contract value) less the discontinuance value which is detailed within the group contract and is not subject to market conditions.

Gains and losses (realized and unrealized) included in changes in net assets for the period above are reported in net appreciation in fair value of investments in the Statement of Changes in Net Assets Available for Benefits.

---

As of December 31, 2012, the Plan had a fully-benefit responsive investment contract with Principal. Principal maintained the contributions in a general account.  The funds were liquidated and transferred to Transamerica on January 17, 2013, which allowed participants to direct their investments based on the current investment options.

Prior to liquidation, the account was credited with earnings on the underlying investments and charged for participant withdrawals and administrative expenses. The contract was included in the financial statements at contract value as reported to the Plan by Principal. Contract value represents contributions made by participants, plus interest at a specified rate determined semiannually, less withdrawals or transfers by participants.  Participants may ordinarily direct the withdrawal or transfer of all or a portion of their investment at contract value.

 

There were no reserves against the contract value for credit risk of the contract issuer or otherwise.  The fair value of the investment contract as of December 31, 2012 was $4,062,648.  The stated rate of return of the contract as of December 31, 2012 was 2.35%.

 

As of December 31, 2013 and 2012, the Plan held 602,662 and 572,493 shares, respectively, of Company common stock.  Total outstanding Company common stock as of December 31, 2013, was approximately 31 million shares.

 

During the year ended December 31, 2013, the Plan had the following transactions involving Company common stock:

 

 

Certain Plan investments were managed by Principal during 2012.  Principal was the trustee and custodian as defined by the Plan through April 30, 2012; therefore, these transactions qualify as exempt party-in-interest activity.

 

 

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 will become 100% vested in their employer contributions.

 

The Plan administrator has concluded that as of December 31, 2013, there are no uncertain positions taken or expected to be taken that would require recognition of a liability or disclosure in the financial statements.  The Plan is subject to routine audits by taxing jurisdictions. The Plan administrator believes the Plan is no longer subject to examination for the years prior to 2012.

 

The Internal Revenue Service has determined and informed the Company by a letter dated November 9, 2009 that the Plan is established in accordance with applicable sections of the Code, and therefore, the Plan qualifies as tax-exempt under Section 401(a) of the Code.

 

 

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 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 Statements of Net Assets Available for Benefits.

---

Supplemental Schedule

 

The Perficient, Inc. 401(k) Employee Savings Plan

FEIN: 74-2853258; Plan No. 001

Schedule of Assets (Held at End of Year)

December 31, 2013

 

Form 5500, Schedule H, Part IV, Line 4(i)

        * Party-in-interest transaction considered exempt by the Department of Labor.

     ** Cost omitted for participant-directed investments.

---

SIGNATURES

 

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 thereunto duly authorized.

 

                                                         

 

 

  

---

EXHIBITS INDEX