UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
(Mark One)
|
|
|
|
|
þ
|
|
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE
FISCAL YEAR ENDED DECEMBER 31, 2008
|
OR
|
|
|
|
|
o
|
|
TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE
TRANSITION PERIOD FROM ____________ TO _____________
|
COMMISSION FILE NUMBER 0-14120
|
A.
|
|
Full title of the plan and the address of the plan, if different from that of the issuer
named below:
|
Advanta Corp. Employee Savings Plan
|
B.
|
|
Name of issuer of the securities held pursuant to the plan and the address of its principal
executive office:
|
Advanta Corp.
Welsh and McKean Roads
P.O. Box 844
Spring House, PA 19477-0844
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Committee which
administers the Plan has duly caused this annual report to be signed on its behalf by the
undersigned hereunto duly authorized.
|
|
|
|
|
|
|
|
Advanta Corp.
Employee Savings Plan
|
|
|
Date: June 29, 2009
|
By:
|
/s/ Philip M. Browne
|
|
|
|
|
Philip M. Browne
|
|
|
|
|
Member of the Committee Administering
the Plan
|
|
Advanta Corp.
Employee Savings Plan
Index to Financial Statements and Schedule
|
|
|
|
|
|
|
|
|
|
4
|
|
|
|
|
|
|
|
|
FINANCIAL STATEMENTS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5
|
|
|
|
|
|
|
|
|
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
7
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL SCHEDULE:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16
|
|
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Advanta Corp. Employee Savings Plan
Administrative Committee:
We have audited the accompanying statements of assets available for benefits of Advanta Corp.
Employee Savings Plan (the “Plan”) as of December 31, 2008 and 2007, and the related statement of
changes in assets available for benefits for the year ended December 31, 2008. 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, 2008 and 2007, and the
changes in its assets available for benefits for the year ended December 31, 2008, in conformity
with U.S. generally accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic financial statements
taken as a whole. The supplemental schedule, Schedule H, Line 4i — Schedule of Assets (Held at
End of Year) December 31, 2008, 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. This supplemental schedule is the responsibility of the
Plan’s management. The supplemental schedule has been subjected to the auditing procedures applied
in the audits of the basic financial statements and, in our opinion, is fairly stated in all
material respects in relation to the basic financial statements taken as a whole.
/s/ KPMG LLP
Philadelphia, PA
June 29, 2009
4
Advanta Corp.
Employee Savings Plan
Statements of Assets Available for Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments (at fair value)
|
|
$
|
32,050,592
|
|
|
$
|
56,638,445
|
|
|
|
|
|
|
|
|
|
|
|
|
Participant loans receivable
|
|
|
803,394
|
|
|
|
899,328
|
|
|
|
|
|
|
|
|
|
|
|
|
Receivable from sale of T. Rowe Price
Stable Value Common Trust Fund
|
|
|
6,186,357
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
Employer contribution receivable
|
|
|
115,332
|
|
|
|
971,168
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividend and other receivable
|
|
|
30,259
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
1,826
|
|
|
|
26,786
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets reflecting investments
at fair value
|
|
|
39,187,760
|
|
|
|
58,535,727
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustment from fair value to
contract value for fully
benefit-responsive investment
contracts held by stable value funds
|
|
|
39,305
|
|
|
|
(33,703
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets available for benefits
|
|
$
|
39,227,065
|
|
|
$
|
58,502,024
|
|
|
|
|
|
|
|
|
|
See accompanying notes to financial statements.
5
Advanta Corp.
Employee Savings Plan
Statement of Changes in Assets Available for Benefits
Year Ended December 31, 2008
|
|
|
|
|
|
|
Increases:
|
|
|
|
|
|
Interest and dividend income
|
|
$
|
2,426,966
|
|
|
Employee contributions
|
|
|
3,622,611
|
|
|
Employer contributions
|
|
|
1,059,581
|
|
|
Rollover contributions
|
|
|
132,309
|
|
|
|
|
|
|
|
Total increases
|
|
|
7,241,467
|
|
|
|
|
|
|
|
|
Decreases:
|
|
|
|
|
|
Net decrease in fair value of investments
|
|
|
(22,759,574
|
)
|
|
Distributions to participants
|
|
|
(3,756,852
|
)
|
|
|
|
|
|
|
Total decreases
|
|
|
(26,516,426
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net decrease in assets available for benefits
|
|
|
(19,274,959
|
)
|
|
|
|
|
|
|
|
Assets available for benefits, beginning of year
|
|
|
58,502,024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets available for benefits, end of year
|
|
$
|
39,227,065
|
|
|
|
|
|
|
See accompanying notes to financial statements.
6
Advanta Corp.
Employee Savings Plan
Notes to Financial Statements
December 31, 2008 and 2007
Note 1) Description of Plan and Recent Developments
The Advanta Corp. Employee Savings Plan (the “Plan”), as amended, was adopted effective July 1,
1983 and is a defined contribution plan available to all employees of Advanta Corp. and its
subsidiaries (“Advanta”) who have reached age 21 with six months of service.
Recent Developments
In response to the current economic environment and its negative impact on Advanta’s business,
results of operations and financial condition, on May 11, 2009, Advanta announced a plan designed
to dramatically limit its credit loss exposure and maximize its capital and its liquidity measures.
The Plan included early amortization of Advanta’s securitization transactions in June 2009 and
closing all of its customers’ accounts to future use effective May 30, 2009. The Plan also
included the execution of cash tender offers for the outstanding trust preferred securities issued
by Advanta Capital Trust I and a portion of the AdvantaSeries notes at prices below their par
value. Advanta purchased approximately 10.8% of the $100 million outstanding trust preferred
securities of Advanta Capital Trust I through the trust preferred securities tender offer.
However, the AdvantaSeries notes tender offer was terminated on June 8, 2009 because it was
determined that a regulatory condition to the tender offer would not be satisfied. As a result of
the termination of the AdvantaSeries notes tender offer, Advanta will not be able to complete all
of the components of its previously announced plan. Although Advanta does not expect to fully
realize its objectives of maximizing its capital and its liquidity measures, it still expects to
realize the limitation of its credit loss exposure to be achieved as a result of early amortization
of the securitization transactions and the closing of all customer accounts to future use that was
effective May 30, 2009. Advanta expects its bank subsidiary, Advanta Bank Corp., to enter into an
agreement with its regulators in the near term about its operations.
Description of Plan
The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974, as
amended (“ERISA”). The following description of the Plan as of December 31, 2008 provides only
general information. Participants should refer to the Plan document for a more complete
description of the Plan’s provisions. Participants may elect to defer a portion of their
compensation before certain taxes are deducted. Advanta may elect to limit the maximum percentage
a participant may contribute to the extent it determines that such limitation is necessary in order
to comply with the rules for plan qualification under Sections 401(a) and (k) of the Internal Revenue
Code. In 2008, eligible participants could elect to contribute up to 75% of their eligible
compensation, subject to the limits under Section 401 of the Internal Revenue Code. Advanta also
makes matching contributions to the Plan, a portion of which is made on a per pay period basis. In
2008, such employer contributions were equal to 50% of each employee’s contributions to the Plan up
to 5% of the employee’s eligible compensation
7
Advanta Corp.
Employee Savings Plan
Notes to Financial Statements
December 31, 2008 and 2007
(so that the initial maximum matching contribution by
Advanta would be 2.5% of an employee’s eligible compensation) subject to certain limitations on
matching contributions to highly compensated employees under applicable provisions of the Internal
Revenue Code. Advanta may make an additional matching contribution as of the end of the Plan year
for the benefit of participants who are employed as of the last day of the Plan year. An
additional matching contribution for the 2008 Plan year had not been made as of June 2009. The
Plan’s management can not determine when or if such contribution will be made. Eligible
participants aged 50 or over may also elect to make additional catch-up contributions subject to
the dollar limits under Section 414(v) of the Internal Revenue Code. These catch-up contributions
are not eligible for employer matching contributions.
The Plan is subject to certain non-discrimination standards under Section 401(k) of the Internal
Revenue Code. In order to comply with these standards, certain participants who are highly
compensated employees (as defined in the Internal Revenue Code) may have a portion of their
contributions refunded to them after the end of the Plan year or their contributions may be limited
during the year. In March 2009, $117,713 of employee contributions made in the 2008 Plan year were
refunded to certain participants who are highly compensated employees. The Plan also permits
Advanta to make qualified non-elective contributions.
The Plan was restated effective January 1, 2009. The Plan, as restated, provides for matching
contributions equal to 100% of employee contributions up to 4% of an employee’s eligible
compensation. It is intended that such contributions will constitute design-based “safe harbor”
contributions.
Because contributions made under Section 401 of the Internal Revenue Code cannot be included in the
income of participants when made, they are fully taxable when distributed unless rolled over into
another qualified plan or individual retirement account. Participants are fully vested as to
employer, employee and rollover contribution accounts at all times.
Plan participants may invest their contributions in one or more investment funds and in shares of
Advanta’s Class B Common Stock. The Plan invests cash related to pending trades in a short-term
money market fund.
As provided for in the Plan document, loans are available to participants under certain specified
conditions. The principal amount of a Plan loan to a participant may not exceed the lesser of
$50,000 (reduced by the maximum amount of any Plan loans outstanding anytime during the preceding
year) or 50% of a participant’s accrued benefit in the Plan. Plan loans are
generally limited to a term of five years (or, in the case of a loan used to finance the
acquisition of a principal residence, fifteen years) and bear an interest rate of the prime rate as
of the date the loan is requested plus 1%. Plan loans are collateralized by the participant’s
accrued benefit in the Plan.
On October 1, 2008, Schwab Retirement Plan Services, Inc.
replaced Wilmington Trust Company as the Trustee of the Plan.
While it is Advanta’s intention to continue the Plan indefinitely, any termination of the Plan or
discontinuance of contributions, subject to the provisions of ERISA, will not result in the use or
diversion of Plan assets for any purposes other than the exclusive benefit of Plan participants and their beneficiaries.
8
Advanta Corp.
Employee Savings Plan
Notes to Financial Statements
December 31, 2008 and 2007
Note 2) Summary of Significant Accounting Policies
Basis of Accounting
The accompanying financial statements have been prepared using the accrual basis of accounting.
Use of Estimates
The preparation of financial statements in accordance with U.S. generally accepted accounting
principles requires management to make estimates and assumptions that affect the reported amounts
of assets available for benefits and changes therein, and disclosure of contingent assets and
liabilities. Actual results could differ from those estimates.
Investment Valuation and Income Recognition
Investments are stated at estimated fair value. Fair values for investments, other than the Schwab
Stable Value Institutional Fund- Class I Shares and the T. Rowe Price Stable Value Common Trust
Fund (the “Stable Value Funds”), are based on quoted market prices. The Stable Value Funds invest
principally in traditional investment contracts and synthetic investment contracts. The fair
values of the Stable Value Funds are based on the net assets at fair value as reported by the
Stable Value Funds.
In accordance with Financial Accounting Standards Board (“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
, investment contracts are required to be reported at fair value.
However, contract value is the relevant measurement attribute for that portion of the net assets
attributable to 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
defined contribution plan. As required by the FSP, the statements of assets available for benefits
present Stable Value Funds, which invest in investment contracts, at fair value as well as an
adjustment to contract value for fully benefit-responsive investment contracts held by the Stable
Value Funds. The statement of changes in assets available for benefits is prepared on a contract
value basis for fully benefit-responsive investment contracts in the Stable Value Funds. Due to
the nature of the investments held by the Stable Value Funds, changes in market conditions and the economic
environment may significantly impact the net asset value (“NAV”) of the Stable Value Funds and,
consequently, the fair value of the Plan’s interests in the Stable Value Funds. Furthermore, changes to
the liquidity provisions of the Stable Value Funds may significantly impact the fair value of the
Plan’s interest in the Stable
9
Advanta Corp.
Employee Savings Plan
Notes to Financial Statements
December 31, 2008 and 2007
Value Funds. Although a secondary market exists for these
investments, it is not active and individual transactions are typically not observable. When
transactions occur in this limited secondary market, they may occur at discounts to the reported
NAV. Therefore, if the redemption rights in the Stable Value Funds were restricted or eliminated
and the Plan were to sell these investments in the secondary market, it is reasonably possible that
a buyer in the secondary market may require a discount to the reported NAV, and the discount could
be significant. The FASB recently added a project to its agenda to
provide guidance on applying fair value to investments in alternative investment funds. The
guidance resulting from this project may impact the carrying amount of such investments in future
periods.
Purchases and sales of securities are recorded on a trade-date basis. Dividends are recorded on
the ex-dividend date.
Participant Loans and Other Receivables
Participant loans are recorded at their unpaid principal balances plus accrued interest, which
approximates fair value. The carrying values of other receivables approximate fair value due to
their relatively short-term nature.
Participant Accounts
Plan participants may invest their contributions and employer contributions in one or more of the
investment options offered by the Plan. Investment income, representing interest and dividends, and changes in the fair value of investments, are credited to each participant on a daily basis based upon individual investment options selected.
Administrative Expenses
Some of the investment fund providers charge 12b-1 fees and similar service fees at the fund level
before earnings are paid to investors. The Plan receives fund service fees from certain of these
fund providers. All such fund service fees received are directed by the Plan’s fiduciaries to be
used to reduce expenses of the Plan, such as recordkeeping expenses. All other administrative
expenses of the Plan and other fees incident to the management of the Plan are paid for by Advanta,
except for brokerage commissions and transfer taxes, if any.
10
Advanta Corp.
Employee Savings Plan
Notes to Financial Statements
December 31, 2008 and 2007
Distributions to Participants
Distributions to participants are recorded when paid.
Recently Issued Accounting Standards
Effective January 1, 2008, the Plan adopted Statement of Financial Accounting Standards (“SFAS”)
No. 157,
Fair Value Measurements
. SFAS No. 157 defines fair value as 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 statement also establishes a framework for measuring
fair value by creating a three-level fair value hierarchy that ranks the quality and reliability of
information used to determine fair value, and requires new disclosures of assets and liabilities
measured at fair value based on their level in the hierarchy. The initial adoption of SFAS No. 157
did not have a material impact on the Plan’s assets available for benefits or changes in assets
available for benefits. See Note 4 for disclosures about assets and liabilities measured at fair
value.
Note 3) Investments
The fair values of individual investments that represent more than 5% of the Plan’s assets
available for benefits were as follows as of December 31:
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
2007
|
|
Vanguard Institutional Index Fund —
Institutional Class Shares
|
|
$
|
7,161,742
|
|
|
$
|
11,517,203
|
|
|
Dodge & Cox Stock Fund
|
|
|
6,115,442
|
|
|
|
11,367,027
|
|
|
Dodge & Cox Balanced Fund
|
|
|
4,913,032
|
|
|
|
7,779,003
|
|
|
Vanguard International Growth Fund — Admiral
Class Shares
|
|
|
3,562,342
|
|
|
|
6,436,471
|
|
|
American Funds — The Growth Fund of America
— Class R-5 Shares
|
|
|
2,225,794
|
|
|
|
3,544,903
|
|
|
T. Rowe Price Stable Value Common Trust Fund
|
|
|
0
|
|
|
|
5,702,391
|
|
The net decrease in fair value of investments, including gains and losses on investments bought and
sold, as well as held during the year, was comprised of the following for the year ended December
31, 2008:
|
|
|
|
|
|
|
Dodge & Cox Stock Fund
|
|
$
|
(5,357,179
|
)
|
|
Vanguard
Institutional Index Fund — Institutional Class Shares
|
|
|
(4,580,944
|
)
|
|
Vanguard International Growth Fund — Admiral Class Shares
|
|
|
(3,319,347
|
)
|
|
Dodge & Cox Balanced Fund
|
|
|
(3,018,495
|
)
|
|
American Funds — The Growth Fund of America — Class R-5
Shares
|
|
|
(1,480,376
|
)
|
|
Royce Value Plus Fund
|
|
|
(494,156
|
)
|
|
Managers Special Equity Fund — I Class Shares
|
|
|
(446,386
|
)
|
|
Columbia Mid Cap Value Fund — Class Z Shares
|
|
|
(334,652
|
)
|
11
Advanta Corp.
Employee Savings Plan
Notes to Financial Statements
December 31, 2008 and 2007
|
|
|
|
|
|
|
Columbia Small Cap Value II Fund — Class Z Shares
|
|
|
(274,826
|
)
|
|
JP Morgan Mid Cap Value Fund — Class A Shares
|
|
|
(210,889
|
)
|
|
Western Asset Core Bond Portfolio — Institutional Class
Shares
|
|
|
(165,554
|
)
|
|
Munder Mid Cap Core Growth Fund — Class A Shares
|
|
|
(145,738
|
)
|
|
PIMCO Real Return Fund — Institutional Class Shares
|
|
|
(137,746
|
)
|
|
American Beacon Funds Small-Cap Value Fund — Planahead
Class Shares
|
|
|
(113,829
|
)
|
|
Goldman Sachs Growth Opportunities Fund — Class A Shares
|
|
|
(107,494
|
)
|
|
PIMCO Total Return Fund — Institutional Class Shares
|
|
|
(19,304
|
)
|
|
T. Rowe Price Retirement 2030 Fund
|
|
|
(7,205
|
)
|
|
Schwab* Stable Value Institutional Fund — Class I Shares
|
|
|
3,763
|
|
|
T. Rowe Price Retirement 2025 Fund
|
|
|
1,970
|
|
|
T. Rowe Price Retirement 2045 Fund
|
|
|
(1,545
|
)
|
|
T. Rowe Price Retirement 2055 Fund
|
|
|
(460
|
)
|
|
T. Rowe Price Retirement 2050 Fund
|
|
|
(398
|
)
|
|
T. Rowe Price Retirement 2020 Fund
|
|
|
(133
|
)
|
|
T. Rowe Price Retirement Income Fund
|
|
|
(67
|
)
|
|
T. Rowe Price Retirement 2035 Fund
|
|
|
(50
|
)
|
|
T. Rowe Price Retirement 2040 Fund
|
|
|
27
|
|
|
T. Rowe Price Retirement 2015 Fund
|
|
|
(27
|
)
|
|
T. Rowe Price Retirement 2010 Fund
|
|
|
(4
|
)
|
|
Advanta Corp.* Class A Common Stock
|
|
|
(84,001
|
)
|
|
Advanta
Corp.* Class B Common Stock
|
|
|
(2,464,529
|
)
|
|
|
|
|
|
|
Total net decrease in fair value of investments
|
|
$
|
(22,759,574
|
)
|
|
|
|
|
|
|
|
|
|
|
*
|
|
Party-in-interest to the Plan
|
Note 4) Fair Value of Financial Instruments
Fair Value Hierarchy
SFAS No. 157 specifies a hierarchy of valuation techniques based on whether the inputs to those
valuation techniques are observable or unobservable. Observable inputs reflect market data
obtained from independent sources, while unobservable inputs reflect our market assumptions. The
level within the fair value hierarchy to measure the financial instrument shall be determined based
on the lowest level input that is significant to the fair value measurement. The three levels of
the fair-value hierarchy are as follows:
|
|
•
|
|
Level 1 — Quoted prices for identical instruments in active markets accessible
at the measurement date.
|
|
|
|
|
•
|
|
Level 2 — Quoted prices for similar instruments in active markets; quoted
prices for identical or similar instruments in markets that are not active; and
valuations in which all significant inputs are observable in active markets.
Inputs are observable for substantially the full term of the financial instrument.
|
12
Advanta Corp.
Employee Savings Plan
Notes to Financial Statements
December 31, 2008 and 2007
|
|
•
|
|
Level 3 — Valuations derived from one or more significant inputs that are unobservable.
The Plan’s management has concluded that the Plan has no Level 3 valuations.
|
Assets and Liabilities Measured at Fair Value on a Recurring Basis
Assets measured at fair value on a recurring basis at December 31, 2008 are categorized in the
table below based upon the lowest level of significant input to the valuations.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quoted Prices
|
|
|
|
|
|
|
|
|
|
in Active
|
|
Significant
|
|
|
|
|
|
|
|
Markets for
|
|
Other
|
|
Significant
|
|
|
|
|
|
Identical
|
|
Observable
|
|
Unobservable
|
|
|
|
|
|
Instruments
|
|
Inputs
|
|
Inputs
|
|
|
|
|
|
(Level 1)
|
|
(Level 2)
|
|
(Level 3)
|
|
Total
|
|
|
|
Investments
|
|
$
|
31,240,982
|
|
|
$
|
809,610
|
|
|
$
|
0
|
|
|
$
|
32,050,592
|
|
We use the following valuation methodologies for investments measured at fair value.
Common stocks
: Common stocks are valued at the closing price reported in the active market in
which the stock is traded and are classified as Level 1.
Mutual funds and money market funds
: These investments are public investment vehicles valued using
the NAV provided by the administrator of the fund and are classified as Level 1. The NAV is a
quoted price in an active market.
Stable Value Funds
: Stable Value Funds are public investment vehicles valued using the NAV
provided by the administrator of the fund. The Plan held one Stable Value Fund, the Schwab Stable
Value Institutional Fund, as of December 31, 2008. Per review of the Schwab Stable Value
Institutional Fund audited financial statements as of December 31, 2008, substantially all of the
fund’s investment valuations used to determine its NAV are Level
2 valuations. Therefore, the
Plan’s management classified the valuation of the Schwab Stable Value Institutional Fund as Level
2.
Note 5) Federal Income Taxes
The Internal Revenue Service issued a favorable determination letter dated December 1, 2003,
concerning the Plan as qualifying under applicable provisions of the Internal Revenue Code. The
favorable determination letter was issued subject to the adoption of a technical amendment to the
Plan. The technical amendment was adopted by the Plan on February 19, 2004. Although the Plan has been
amended, including the technical amendment, since receiving the determination letter, the Plan
administrator and management believe that the Plan is currently designed and being operated in
compliance with the applicable requirements of the Internal Revenue Code. Therefore, they believe
that the Plan was qualified and the related trust was tax-exempt for
13
Advanta Corp.
Employee Savings Plan
Notes to Financial Statements
December 31, 2008 and 2007
the year ended December 31, 2008. Accordingly, no provision for income taxes is shown in the accompanying financial
statements.
Note 6) 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 value of
investment securities will occur in the near term and that such changes could materially affect
participants’ account balances and the amounts reported on the statements of assets available for
benefits.
Note 7) Subsequent Event
In the first quarter of 2009, Advanta reduced its workforce by approximately 35% in order to reduce
staffing to a level more commensurate with the portfolio size and scale of business activities that
it anticipated for 2009. In addition, in the first quarter of 2009, Advanta continued a reduction
of workforce in connection with initiatives to outsource business processes within the areas of
information technology, customer service, collections, and accounting and finance. As a result of
these activities, the number of active participants in the Plan decreased from 591 as of December
31, 2008 to 300 as of May 31, 2009. There were $3,282,624 of distributions to participants in the
period from January 1, 2009 to May 31, 2009.
Note 8) Reconciliation of Financial Statements to Form 5500
The following represents reconciliations between the amounts shown on the accompanying financial
statements and the amounts reported on the Plan’s Form 5500.
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
Assets available for benefits at
December 31, as reported in the
financial statements
|
|
$
|
39,227,065
|
|
|
$
|
58,502,024
|
|
|
Adjustment from contract value to fair
value for fully benefit-responsive
investment contracts held by the Schwab
Stable Value Institutional Fund
|
|
|
(39,305
|
)
|
|
|
0
|
|
|
Adjustment from contract value to fair
value for fully benefit-responsive
investment contracts held by the T.
Rowe Price Stable Value Common Trust Fund
|
|
|
(57,453
|
)
|
|
|
33,703
|
|
|
|
|
|
|
|
|
|
|
Assets available for benefits at
December 31, as reported in the Plan’s
Form 5500
|
|
$
|
39,130,307
|
|
|
$
|
58,535,727
|
|
|
|
|
|
|
|
|
|
14
Advanta Corp.
Employee Savings Plan
Notes to Financial Statements
December 31, 2008 and 2007
|
|
|
|
|
|
|
|
|
2008
|
|
|
Net decrease in assets available for benefits for the year
ended December 31, as reported in the financial statements
|
|
$
|
(19,274,959
|
)
|
|
Adjustment from contract value to fair value for fully
benefit-responsive investment contracts held by the Schwab
Stable Value Institutional Fund at December 31, 2008
|
|
|
(39,305
|
)
|
|
Adjustment from contract value to fair value for fully
benefit-responsive investment contracts held by the T. Rowe
Price Stable Value Common Trust Fund at December 31, 2008
|
|
|
(57,453
|
)
|
|
Adjustment from contract value to fair value for fully
benefit-responsive investment contracts held by the T. Rowe
Price Stable Value Common Trust Fund at December 31, 2007
|
|
|
(33,703
|
)
|
|
|
|
|
|
|
Net decrease in assets available for benefits for the year
ended December 31, as reported in the Plan’s Form 5500
|
|
$
|
(19,405,420
|
)
|
|
|
|
|
|
15
Advanta Corp.
Employee Savings Plan
EIN 23-1462070
Schedule H, Line 4i — Schedule of Assets (Held at End of Year)
December 31, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Description
|
|
Cost**
|
|
|
Current Value
|
|
|
|
|
Schwab* Retirement Advantage Money Fund
|
|
Money Market Fund
|
|
|
|
|
$
|
12,857
|
|
|
Schwab* Stable Value Institutional Fund — Class I Shares
|
|
Common Collective Trust Fund
|
|
|
|
|
|
809,610
|
|
|
Vanguard Institutional Index Fund — Institutional Class Shares
|
|
Mutual Fund
|
|
|
|
|
|
7,161,742
|
|
|
Dodge & Cox Stock Fund
|
|
Mutual Fund
|
|
|
|
|
|
6,115,442
|
|
|
Dodge & Cox Balanced Fund
|
|
Mutual Fund
|
|
|
|
|
|
4,913,032
|
|
|
Vanguard International Growth Fund — Admiral Class Shares
|
|
Mutual Fund
|
|
|
|
|
|
3,562,342
|
|
|
American Funds — The Growth Fund of America — Class R-5 Shares
|
|
Mutual Fund
|
|
|
|
|
|
2,225,794
|
|
|
PIMCO Real Return Fund — Institutional Class Shares
|
|
Mutual Fund
|
|
|
|
|
|
833,507
|
|
|
Royce Value Plus Fund
|
|
Mutual Fund
|
|
|
|
|
|
1,170,762
|
|
|
Schwab* U.S. Treasury Money Fund
|
|
Mutual Fund
|
|
|
|
|
|
4,435
|
|
|
PIMCO Total Return Fund — Institutional Class Shares
|
|
Mutual Fund
|
|
|
|
|
|
1,496,381
|
|
|
Columbia Mid Cap Value Fund — Class Z Shares
|
|
Mutual Fund
|
|
|
|
|
|
867,915
|
|
|
Columbia Small Cap Value II Fund — Class Z Shares
|
|
Mutual Fund
|
|
|
|
|
|
867,353
|
|
|
Munder Mid Cap Core Growth Fund — Class A Shares
|
|
Mutual Fund
|
|
|
|
|
|
507,730
|
|
|
T. Rowe Price Retirement Income Fund
|
|
Mutual Fund
|
|
|
|
|
|
3,566
|
|
|
T. Rowe Price Retirement 2010 Fund
|
|
Mutual Fund
|
|
|
|
|
|
140
|
|
|
T. Rowe Price Retirement 2015 Fund
|
|
Mutual Fund
|
|
|
|
|
|
3,666
|
|
|
T. Rowe Price Retirement 2020 Fund
|
|
Mutual Fund
|
|
|
|
|
|
1,518
|
|
|
T. Rowe Price Retirement 2025 Fund
|
|
Mutual Fund
|
|
|
|
|
|
116,488
|
|
|
T. Rowe Price Retirement 2030 Fund
|
|
Mutual Fund
|
|
|
|
|
|
393,890
|
|
|
T. Rowe Price Retirement 2035 Fund
|
|
Mutual Fund
|
|
|
|
|
|
6,854
|
|
|
T. Rowe Price Retirement 2040 Fund
|
|
Mutual Fund
|
|
|
|
|
|
6,171
|
|
|
T. Rowe Price Retirement 2045 Fund
|
|
Mutual Fund
|
|
|
|
|
|
13,111
|
|
|
T. Rowe Price Retirement 2050 Fund
|
|
Mutual Fund
|
|
|
|
|
|
4,842
|
|
|
T. Rowe Price Retirement 2055 Fund
|
|
Mutual Fund
|
|
|
|
|
|
4,390
|
|
|
Advanta Corp.
*
Class A Common Stock
|
|
Common Stock
|
|
|
|
|
|
14,745
|
|
|
Advanta Corp.
*
Class B Common Stock
|
|
Common Stock
|
|
|
|
|
|
932,309
|
|
|
Participant loans receivable
*
, bearing interest from 5.00% to 9.75%
|
|
|
|
|
|
|
|
|
803,394
|
|
|
|
|
|
|
|
|
|
|
$
|
32,853,986
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
|
Party-in-interest to the Plan
|
|
|
|
**
|
|
Cost information is not required as investments are participant-directed.
|
See Report of Independent Registered Public Accounting Firm.
16
EXHIBIT INDEX
|
|
|
|
|
|
Exhibit
|
|
Description
|
|
|
|
|
23.1
|
|
Consent of Independent Registered Public Accounting Firm
|
Register for real-time alerts, custom portfolio, and market movers
Hot Features
Premium
