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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 [FEE REQUIRED].
For the fiscal year ended December 31, 1999
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED].
For the transition period from to
Commission File No. ________
A. Full title of the plan if different from that of the issuer named
below:
TeleSpectrum Worldwide Inc. 401(k) Retirement Savings Plan.
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office: TeleSpectrum Worldwide
Inc., 443 South Gulph Road, King of Prussia, PA 19406.
<PAGE>
TELESPECTRUM WORLDWIDE INC.
---------------------------
401(k) RETIREMENT SAVINGS PLAN
------------------------------
INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE
-------------------------------------------------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS 1
FINANCIAL STATEMENTS:
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS AS OF DECEMBER 31, 1999 AND 1998. 2
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS FOR THE YEAR ENDED 3
DECEMBER 31, 1999
NOTES TO FINANCIAL STATEMENTS 4
SUPPLEMENTAL SCHEDULE:
I. ITEM 27(a)--SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AS OF DECEMBER 31,
1999 10
</TABLE>
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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Trustees of
TeleSpectrum Worldwide Inc.
401(k) Retirement Savings Plan:
We have audited the accompanying statements of net assets available for plan
benefits of the TeleSpectrum Worldwide Inc. 401(k) Retirement Savings Plan ("the
Plan") as of December 31, 1999 and 1998, and the related statement of changes in
net assets available for benefits for the year ended December 31, 1999. These
financial statements and the schedule referred to below 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 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 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 Plan as of
December 31, 1999 and 1998, and the changes in net assets available for benefits
for the year ended December 31, 1999, in conformity with accounting principles
generally accepted in the United States.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of assets held
for investment purposes is presented for the purpose of additional analysis and
is not a required part of the basic financial statements but 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 schedule has been subjected to the auditing procedures
applied in the audit 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/ARTHUR ANDERSEN LLP
Philadelphia, Pa.
June 23, 2000
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TELESPECTRUM WORLDWIDE INC.
---------------------------
401(K) RETIREMENT SAVINGS PLAN
------------------------------
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
-----------------------------------------------
December 31,
------------------------------
1999 1998
------------- ------------
ASSETS:
Investments $7,488,284 $5,922,266
Contributions receivable 105,245 91,520
Interest receivable -- 841
---------- ----------
7,593,529 6,014,627
LIABILITIES:
Excess contributions payable (8,518) (37,117)
---------- ----------
NET ASSETS AVAILABLE FOR BENEFITS $7,585,011 $5,977,510
========== ==========
The accompanying notes are an integral part of these statements.
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TELESPECTRUM WORLDWIDE INC.
---------------------------
401(K) RETIREMENT SAVINGS PLAN
------------------------------
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
---------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1999
------------------------------------
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year $5,977,510
----------
ADDITIONS:
Interest and dividend income 632,210
Net appreciation 1,472,119
----------
2,104,329
----------
CONTRIBUTIONS:
Participants 991,079
Employer 200,080
Rollover 200,150
----------
1,391,309
----------
Total additions and contributions 3,495,638
----------
DEDUCTIONS:
Benefits paid to participants 1,098,656
Transfer to other qualified contribution benefit plan 740,194
Refunds to participants 8,518
Loan distributions 8,262
Forfeitures, net 32,507
----------
Total deductions 1,888,137
----------
Net increase in assets 1,607,501
----------
NET ASSETS AVAILABLE FOR BENEFITS:
End of year $7,585,011
==========
The accompanying notes are an integral part of this statement.
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TELESPECTRUM WORLDWIDE INC.
---------------------------
401(K) RETIREMENT SAVINGS PLAN
------------------------------
notes to financial statements
-----------------------------
DECEMBER 31, 1999
-----------------
1. DESCRIPTION OF THE PLAN:
------------------------
The following brief description of the TeleSpectrum Worldwide 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.
TeleSpectrum Worldwide Inc. (the "Company") established the Plan effective
January 1, 1997. The Plan was formed by merging the net assets of four
Predecessor Plans - the Somar 401(k) Profit Sharing Plan, the Response Center,
Inc. 401(k) Profit Sharing Plan, the NBG Services, Inc. 401(k) Savings Plan and
the TeleSpectrum, Inc. 401(k) Plan. The Plan is a defined contribution plan
covering employees who have completed one year of service and have attained the
age of 21. Additionally, the Plan covers employees who were participants in the
Predecessor Plans immediately prior to January 1, 1997. The Plan is
administered by a committee of Company employees appointed by the Board of
Directors whose members are not compensated for administrative services
rendered. The Plan is subject to the provisions of the Employee Retirement
Income Security Act of 1974 ("ERISA"), as amended.
Contributions
-------------
Participants may make salary reduction contributions up to 15% of pre-tax
compensation as defined in the Plan. Annual pre-tax salary deferrals are
limited to the maximum allowable under the Internal Revenue Code ($10,000 in
1999). Qualified distributions from other retirement plans can also be
transferred into the Plan and retained as a rollover contribution. The Company
makes a matching contribution of 25% of the first 6% of participant-elected pre-
tax salary deferral and may also elect to contribute a separately designated
discretionary profit sharing contribution. Effective July 1, 1998, the Plan was
amended to allow the Company to change the rate of employer matching
contributions to the Plan. The matching contribution cannot exceed 6% of each
participant's compensation. The Company elected not to make a discretionary
contribution for the Plan year ended December 31, 1999. The Plan's committee
may limit the amount of contributions if it is determined that such limitation
is necessary to satisfy the requirements of the Internal Revenue Code.
Vesting
-------
Participants are immediately vested in 100% of their elected salary deferrals,
rollover contributions and earnings thereon. The vesting of employer matching
contributions and earnings on these amounts are based on years of credited
service.
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Participants are 100% vested after four years of credited service or attainment
of normal retirement age, as defined. A participant who was actively employed
by a sponsor of a Predecessor Plan on December 31, 1996 and was an employee of
the Company on January 1, 1997 is 100% vested in their matching contribution and
profit sharing accounts that were part of their Predecessor Plan account as of
January 1, 1997.
Forfeitures
-----------
Upon termination of employment, the non-vested portion of a participant's
interest in the Plan attributable to employer contributions will be forfeited.
These forfeitures are then used to reduce the Company's future contributions to
the Plan. As of December 31, 1999, there was $28,436 of unused forfeitures.
During 1999, forfeitures of $32,507 were used to reduce Company contributions to
the Plan.
Benefits
--------
Upon termination of service, a participant may elect to receive benefits either
in a lump-sum payment or an annuity, as defined.
Participant Loans
-----------------
Participant loans may be obtained upon written application of any participant.
Loans shall be made available to all participants in a uniform non-
discriminatory manner and are limited to a maximum of 50% of the vested account
balance of the participant or $50,000 less the participant's highest outstanding
loan balance over the past 12 months divided by the outstanding loan balance on
the date of the new loan, subject to a minimum of $1,000. Each loan will be
evidenced by a promissory note setting forth the repayment terms and secured by
the balance of the participant's account. The principal amount of each loan to
a participant will be charged against the participant's account in the Plan.
The interest rate charged is determined by the committee and is commensurate
with the rate that would be charged by a bank or other professional lender for
making a loan under similar circumstances. For all loans outstanding as of
December 31, 1999 and 1998, this rate ranged from 6.7% to 10.0%.
Administrative Expenses
-----------------------
Expenses and charges incurred in the administration of the Plan may be paid by
the Plan to the extent not paid by the Company. During 1999, the Company on
behalf of the Plan paid administrative expenses of $73,200.
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Investment Options
------------------
Participants may choose to invest their salary deferrals, along with the
employer matching contribution, in six investment options with Putnam
Investments or, starting on July 1, 1998, TeleSpectrum Worldwide Inc. common
stock. Investment options at December 31, 1999, include the following:
<TABLE>
<CAPTION>
Fund Name Description
------------------------------------- ---------------------------------------------------------
<S> <C>
Putnam Fund for Growth & Income Seeks capital growth and current income by investing in
bargain stocks of established companies.
Putnam Vista Fund Seeks capital appreciation by investing primarily in the
common stocks of midcap companies whose market value is
between $300 million and $5 billion.
Putnam Diversified Income Trust Fund Seeks high current income and preservation of capital by
investing in a diversification of U.S. Government, foreign
government, and higher-yielding lower-rated bonds.
Putnam New Opportunities Fund Seeks long-term capital appreciation by targeting rapidly
expanding sectors of the economy and then selecting stocks
of fast-growing companies within these sectors.
Putnam Asset Allocation Fund Seeks capital appreciation and total return by shifting
assets as markets change to take advantage of investing
opportunities.
Putnam Money Market Fund Seeks a high rate of current income and preservation of
capital, maintenance of liquidity, and stability of
principal by investing in short-term, high-quality investments.
</TABLE>
Participant Accounts
--------------------
Each participant's account is credited with the employee elected salary
deferral, qualified distributions from other retirement plans, employer
contributions and an allocation of Plan earnings/losses, including market
appreciation/depreciation. Allocations are based on either the participant's
compensation, account balances or contributions, as defined.
Transfer to Other Qualified Benefit Contribution Plan
-----------------------------------------------------
On January 16, 1998, NCO Teleservices, Inc. ("NCO") purchased the response
center from the Company. Pursuant to this acquisition agreement, the employees
who ceased to be employees of the Company and became employees of NCO were fully
vested in the Company's Plan and transferred to the accounts of such employees
under NCO's tax-qualified, individual account, defined contribution retirement
plan. The transfer of these accounts was completed on May 4, 1999 with a lump-
sum transfer of $740,194.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
-------------------------------------------
Basis of Accounting
-------------------
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<PAGE>
The accompanying financial statements have been prepared on the accrual basis of
accounting.
Use of Estimates
----------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires the plan administrator to make estimates and
assumptions that affect the reported amounts of net assets available for plan
benefits, disclosure of contingent assets and obligations at the date of the
financial statements and the reported amounts of changes in net assets available
for plan benefits during the reporting period. Actual results could differ from
those estimates.
Investment Valuation and Income Recognition
-------------------------------------------
The Plan's investments are stated at fair market value and unrealized
appreciation/ depreciation of the assets is based on the market value of the
assets at the beginning of the period or at the date of purchase, if purchased
during the current period. Fair market value is determined primarily based upon
the fair market value of the underlying assets. Securities traded on the public
markets are valued at their quoted market prices. Purchases and sales of
securities are reflected on a trade-date basis.
3. INVESTMENTS:
--------------
The following investments represent 5% or more of the Plan's net assets.
<TABLE>
<CAPTION>
December 31,
----------------------------
1999 1998
---------- ----------
<S> <C> <C>
Putnam Fund for Growth & Income, 58,190 and 52,946
shares, respectively $1,091,058 $1,084,872
Putnam Vista Fund, 97,384 and 87,448 shares,
respectively $1,700,322 $1,142,947
Putnam New Opportunities Fund, 34,197 and 39,618
shares, respectively $3,110,521 $2,314,874
Putnam Asset Allocation Fund, 51,291 and 53,503 shares
respectively $ 664,735 $ 642,579
Putnam Money Market Fund, 445,206 and 449,246 shares
respectively $ 445,206 $ 449,246
</TABLE>
During 1999, the Plan's investments (including gains and losses on investments
bought and sold, as well as held during the year) appreciated in value by
$1,472,119 as follows:
Mutual Funds $1,457,383
Common Stock 14,736
----------
$1,472,119
==========
4. PLAN TERMINATION:
-----------------
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Although there is no intention to do so, the Company has the right to terminate
the Plan at any time, subject to the provisions of ERISA. In the event of
termination of the Plan, participants become vested in all amounts credited to
their accounts.
5. DISTRIBUTIONS/BENEFITS PAID TO PARTICIPANTS:
--------------------------------------------
Distributions/benefits paid to participants are generally made on a monthly
basis for those requests processed in the previous month. There were no
distributions/benefits payable to participants as of December 31, 1999.
6. INCOME TAX STATUS:
------------------
The trust established under the Plan is qualified under the Internal Revenue
Code as exempt from federal income taxes under Section 501 (a). The Plan has
received a favorable determination letter from the Internal Revenue Service
(IRS) maintaining the Plan's qualified status under the applicable Internal
Revenue Service requirements.
The Plan did not meet certain requirements to qualify as non-discriminatory. In
order to meet these requirements, the Company refunded $8,518 and $37,117 to
participants subsequent to December 31, 1999 and 1998, respectively. Such
amounts have been reflected as excess contributions payable in the accompanying
statement of net assets available for plan benefits.
7. NONEXEMPT TRANSACTIONS:
-----------------------
There were no nonexempt transactions in 1999. However, in 1998, the Company
failed to remit certain employee and employer contributions to the Plan within
15 business days of the month following the month in which the Company withheld
the contributions. These transactions were deemed to be loans from the Plan to
the Company and were identified as nonexempt transactions on Schedule IV in the
prior year's financial statements. The Company paid the deemed loans to the
Plan on the maturity dates noted in Schedule IV in the prior year's financial
statements. The Company paid interest of $841 on these deemed loans to the Plan
in 1999.
8. SUBSEQUENT EVENTS:
------------------
On June 30, 1999, the Company merged with International Data Response
Corporation ("IDRC"). Effective July 1, 2000, the IDRC 401(k) Retirement
Savings Plan (the "IDRC Plan") shall be merged into the Plan, with all assets
and liabilities of the IDRC Plan thereupon becoming assets and liabilities of
the Plan, with the IDRC Plan thereupon ceasing to exist as an independent
entity. The investment funds under the IDRC Plan will be mapped to the closest
corresponding funds under the Plan. After the plan merger, the Company will
fund the accrued match of former IDRC Plan participants for the period between
January 1, 2000 and June 30, 2000.
Effective April 1, 2000, the Putnam Money Market Fund will be replaced with, and
balances mapped to, the Putnam Stable Value Fund and the Putnam Diversified
Income Trust Fund will be replaced with, and balances mapped to, the Putnam
American Government Fund. In order to improve the Plan's diversification and
performance, the Putnam Investors Fund, the Putnam International Growth Fund and
the Putnam Small Cap Value Fund will be added to the investment options offered
by the Plan. These additions are also effective April 1, 2000.
-8-
<PAGE>
SCHEDULE I
E.I.N. #23-2845501
PLAN #001
TELESPECTRUM WORLDWIDE INC.
---------------------------
401(K) RETIREMENT SAVINGS PLAN
------------------------------
ITEM 27(a)--SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
-----------------------------------------------------------
DECEMBER 31, 1999
-----------------
<TABLE>
<CAPTION>
Market
Description of Investment Shares Cost Value
------------------------------------------------- -------------- ---------- -----------
<S> <C> <C> <C>
*Putnam Fund for Growth & Income 58,190 $1,197,195 $1,091,058
*Putnam Vista Fund 97,384 1,255,045 1,700,322
*Putnam Diversified Income Trust Fund 20,496 240,203 220,744
*Putnam New Opportunities Fund 34,197 1,834,108 3,110,521
*Putnam Asset Allocation Fund 51,291 605,968 664,735
*Putnam Money Market Fund 445,206 445,206 445,206
*TeleSpectrum Worldwide Inc. Common Stock 15,569 92,602 110,933
*Loans to participants with interest rates of 6.7% N/A 144,765 144,765
to 10.0% ---------- ----------
Total Investments $5,815,092 $7,488,284
========== ==========
*Represents a party-in-interest.
</TABLE>
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SIGNATURES
THE PLAN. Pursuant to the requirements of the Securities Exchange Act of 1934,
the trustees (or other persons who administer the employee benefit plan) have
duly caused this annual report to be signed on its behalf by the undersigned
hereunto duly authorized.
TELESPECTRUM WORLDWIDE INC.
401(K) RETIREMENT SAVINGS PLAN
Date: June 29, 2000 By: /s/ Francis Pennella
---------------------------------------
Name: Francis Pennella
Title: Executive V.P. of Human Resources
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EXHIBIT INDEX
Exhibit No. Description
----------- -----------
23.1 Consent of Arthur Andersen LLP, independent public accountants
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