<PAGE> 1
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 fiscal year ended December 31, 1999
-----------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
---------------- ----------------
Commission file number 000-24931
---------
A. Full title of the plan and the address of the plan, if
different from that of the issuer named below: S1 Corporation 401(k) Savings
Plan.
B. Name of issuer of the securities held pursuant to the plan
and the address of its principal executive office: S1 Corporation, 3390
Peachtree Road, NE, Suite 1700, Atlanta, Georgia 30326
<PAGE> 2
SECURITY FIRST TECHNOLOGIES, INC. 401(k) SAVINGS PLAN
Table of Contents
<TABLE>
<CAPTION>
Page(s)
<S> <C>
Report of Independent Accountants
Financial Statements 1
Statements of Net Assets Available for Plan Benefits at December 31, 1999 and
1998 2
Statement of Changes in Net Assets Available for Plan Benefits For the Year Ended
December 31, 1999 3
Notes to Financial Statements 4-7
Supplemental Schedules (see note below)
Schedule H, Line 4i - Schedule of Assets Held for Investment Purposes at 8
December 31, 1999
Schedule H, Line 4j - Schedule of Reportable Transactions For the Year Ended 9
December 31, 1999
Exhibit 23 - Consent of PricewaterhouseCoopers LLP
Note: Certain schedules required by the Department of Labor have not been included
because they are not applicable.
</TABLE>
<PAGE> 3
REPORT OF INDEPENDENT ACCOUNTANTS
To the Participants and Plan Administrator of the
Security First Technologies, Inc.
401(k) Savings Plan
In our opinion, the accompanying statements of net assets available for benefits
and the related statement of changes in net assets available for benefits
present fairly, in all material respects, the net assets available for benefits
of the Security First Technologies, Inc. 401(k) Savings Plan (the "Plan") at
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. 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
of these statements in accordance with auditing standards generally accepted in
the United States, which 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, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for the opinion expressed above. The financial
statements of the Plan for the year ended December 31, 1998 were audited by
other independent accountants whose report dated June 11, 1999 expressed an
unqualified opinion on those statements.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets held
for investment purposes and reportable transactions 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. 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.
/s/ PricewaterhouseCoopers LLP
Atlanta, Georgia
June 21, 2000
<PAGE> 4
SECURITY FIRST TECHNOLOGIES, INC.
401(k) SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER 31,
1999 1998
<S> <C> <C>
ASSETS
Investments $ 21,294,853 $ 5,485,988
Receivables
Accrued dividends - 44,743
Participant contributions 86,260 40,656
Employer contributions 23,288 14,436
------------ -----------
Total receivables 109,548 99,835
------------ -----------
Net assets available for plan benefits $ 21,404,401 $ 5,585,823
============ ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE> 5
SECURITY FIRST TECHNOLOGIES, INC.
401(k) SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE
YEAR ENDED
DECEMBER 31,
1999
<S> <C>
Additions to net assets attributed to
Investment income
Net appreciation in fair value of investments $ 14,889,902
Interest and dividends 20,802
-------------
Total investment income 14,910,704
Contributions
Participant 1,463,896
Employer 980,957
-------------
Total contributions 2,444,853
-------------
Total additions 17,355,557
-------------
Deductions from net assets attributed to
Benefits paid to participants (1,474,965)
Administrative expenses (62,014)
-------------
Total deductions (1,536,979)
-------------
Net increase in net assets available for plan benefits 15,818,578
Net assets available for plan benefits
Beginning of period 5,585,823
-------------
End of period $ 21,404,401
=============
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE> 6
SECURITY FIRST TECHNOLOGIES, INC.
401(k) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
1. DESCRIPTION OF THE PLAN
The following description of the Security First Technologies, Inc. 401(k)
Savings Plan (the "Plan") provides only general information. Participants
should refer to the Plan agreement for a more complete description of the
Plan's provisions.
GENERAL
The Plan, which commenced on July 1, 1996, is a defined contribution plan
covering all eligible employees of S1 Corporation (the "Company").
Employees are eligible to participate after three months of service.
Enrollment in the Plan is on the first day of each month. The Plan is
subject to certain provisions of the Employee Retirement Income Security
Act of 1974 (ERISA), as amended.
REORGANIZATION
The Company changed its name from Security First Technologies Corporation
to S1 Corporation in November 1999. Security First Technologies
Corporation is the successor company to Security First Network Bank as a
result of the reorganization completed on September 30, 1998. Also on
September 30, 1998, the Company completed the sale of its banking
operations to the Royal Bank of Canada.
CONTRIBUTIONS
Participants may contribute from 1% to 15% of their pretax earnings up to
a maximum of $10,000 in 1999 and 1998. Rollover contributions from other
qualified plans are permitted. The Company makes matching contributions
of $.25 for every dollar that participants elect to contribute to
investments other than the S1 Corporation Common Stock Fund up to a
defined limit. The Company makes matching contributions of $1.00 for
every dollar that participants elect to contribute to the S1 Corporation
Common Stock Fund up to a defined limit. Employer contributions are
limited to the first 4% of the employee's eligible compensation.
PARTICIPANT ACCOUNTS
All contributions made to the selected investment funds are participant
directed. Each participant's account is credited with the participant's
contribution and allocations of (a) the Company's contribution and (b)
Plan earnings. Allocations are based on participant earnings or account
balances, as defined. The benefit to which a participant is entitled is
the benefit that can be provided from the participant's vested account.
INVESTMENTS
The Plan assets are invested in guaranteed investment contracts, pooled
separate accounts, mutual funds and S1 Corporation common stock.
Participants may change their investment allocation, as well as elections
on future investments, at any time. Investment transfers from the S1
Corporation Common Stock Fund are subject to certain restrictions, as
defined in the Plan agreement. On a quarterly basis, the Plan allocates
earnings to participants based on the ratio of the participant's account
balance in each investment fund to the total of all participants' account
balances in each investment fund. For a description of the Plan's
investment options, participants should refer to the Plan document and
each fund's most current prospectus.
4
<PAGE> 7
SECURITY FIRST TECHNOLOGIES, INC.
401(k) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
VESTING
Participants are immediately vested in their contributions plus earnings
thereon. Company contributions plus earnings thereon become fully vested
after five years of service. Company contributions are vested at the
rate of 33-1/3% per year starting with the third year of participation.
Participants become fully vested in Company contributions upon reaching
normal retirement age, total and permanent disability, or death.
DISTRIBUTION OF BENEFITS
Participants who separate from service for any reason other than
retirement will have the value of their contributions and earnings and
the Company elective contributions and earnings, in which they are
vested, distributed to them in a lump sum. Distribution of benefits to
retired participants can be made in either lump-sum or periodic
payments. If a participant dies before receiving distribution of their
account, the full amount of their account will be paid to their
designated beneficiary.
FORFEITURES
Participants forfeit the nonvested portion of the employer matching
contributions upon the earlier of (a) the distribution of the vested
portion of the participant's accounts, or (b) the participant incurs
five consecutive years with a break in service. Forfeitures are used by
the Company to pay administrative expenses. Forfeitures remaining at the
end of the Plan year are distributed ratably to participants on the last
day of the Plan year. Forfeitures amounted to $166,000 and $159,000 in
1999 and 1998, respectively.
ADMINISTRATIVE EXPENSES
Administrative expenses in excess of forfeitures are paid by the
Company.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying financial statements have been prepared on the modified
accrual basis. Certain prior year amounts have been reclassified to
conform to the current year presentation.
INVESTMENTS
Investments are stated at fair value. Guaranteed investment contracts
are valued at fair market value which represents the value paid when
funds are withdrawn prior to their maturity. Investments in pooled
separate accounts are valued at fair value which is the net asset value
per unit as reported on the last business day of the year. Shares of
registered investment companies are valued at quoted market prices which
represent the net asset value of shares held by the Plan at year-end.
The Company's stock is valued at its quoted market price. Purchases and
sales of investments are recorded on a trade-date basis.
Net appreciation in fair value of investments, including realized gains
and losses, represent the change in fair value during the year and
realized gains and losses on investments sold or distributed during the
year.
5
<PAGE> 8
SECURITY FIRST TECHNOLOGIES, INC.
401(k) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
CONTRIBUTIONS
Employee and employer contributions are generally recorded in the period
after the Company makes payroll deductions from the participants'
earnings. At period end, receivables are recorded to reflect
contributions made but not yet received.
USE OF ESTIMATES
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets, liabilities, and
changes therein, and disclosures of contingent assets and liabilities.
Actual results could differ from those estimates.
PAYMENT OF BENEFITS
Benefits are recorded when paid.
RISKS AND UNCERTAINTIES
The Plan's investments are subject to market risk due to changes in
securities prices. In particular, the Plan's investments in S1
Corporation common stock are exposed to significant market risk due to
the high volatility of the Company's common stock price. At December 31,
1999 and 1998, the Plan has a significant investment balance in S1
Corporation common stock, as discussed in Note 3. Depending on the
Company's common stock price, the Plan could experience significant
fluctuations in asset values due to market volatility.
3. INVESTMENTS
The following table presents investments that represent 5 percent or
more of the Plan's net assets:
<TABLE>
<CAPTION>
DECEMBER 31,
1999 1998
------------- -------------
<S> <C> <C>
S1 Corporation Common Stock Fund $ 17,905,474 $ 3,399,090
Vanguard Primecap Fund 677,600 375,797
</TABLE>
4. PLAN MERGERS
In November 1999, the Company completed the acquisitions of Edify
Corporation ("Edify"), FICS Group, N.V. ("FICS") and VerticalOne
Corporation ("VerticalOne"). The assets of Edify's, FICS' (domestic
operations only) and VerticalOne's employee retirement plans were merged
into the Plan in January 2000.
6
<PAGE> 9
SECURITY FIRST TECHNOLOGIES, INC.
401(k) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
During 1998, Plan assets totaling $125,752 from the Solutions By Design,
Inc. 401(k) Plan were merged into Plan as a result of the Company's
acquisition of Solutions By Design, Inc. on November 24, 1997.
Generally, the participants in these plans are given full credit for
their service with their previous employers for purposes of both
eligibility and vesting in the Plan.
5. PLAN TERMINATION
Although it has not expressed any intent to do so, the Company has the
right under the Plan to discontinue its contributions at any time and to
terminate the Plan subject to the provisions of ERISA. In the event of
plan termination, participants will become 100 percent vested in their
accounts.
6. TAX STATUS
The Internal Revenue Service has determined and informed the Company by
a letter dated August 2, 1999, that the Plan and related trust are
designed in accordance with applicable sections of the Internal Revenue
Code (IRC). Although the Plan has been amended since receiving the
determination letter, the Plan administrator and the Plan's tax counsel
believe that the Plan is designed and is currently being operated in
compliance with the applicable requirements of the IRC.
7. RELATED PARTY TRANSACTIONS
Certain Plan investments are shares of mutual funds managed by Principal
Life Insurance Company ("Principal"). Principal is a custodian and the
recordkeeper of the Plan and, therefore, these transactions qualify as
party-in-interest transactions. Fees paid by the Plan for administrative
expenses amounted to $62,000 and $21,000 for the years ended December
31, 1999 and 1998, respectively.
8. SUBSEQUENT EVENTS
Effective January 2000, the trustee, custodian and recordkeeper of the
Plan was changed to T. Rowe Price Trust Company.
Effective January 2000, all contributions made by Plan participants will
be matched by the employer dollar for dollar up to the first 4% of the
participant's compensation.
Effective January 2000, participants will vest in employer contributions
of 25% after one year of service, 50% after two years of service, 75%
after three years of service and 100% after four years of service.
Effective January 2000, the Company changed the name of the Plan from
Security First Technologies, Inc. 401(k) Savings Plan to the S1
Corporation 401(k) Savings Plan.
In April 2000, the Company completed the acquisitions of Q-Up Systems,
Inc. and Davidge Data Systems. The two companies terminated their
employee benefit plans prior to the closing of the transactions, and
their employees became eligible as of the closings to participate in the
Plan.
7
<PAGE> 10
SECURITY FIRST TECHNOLOGIES, INC.
401(k) SAVINGS PLAN
SCHEDULE H, LINE 4i SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1999
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF CURRENT
IDENTITY OF ISSUE/DESCRIPTION OF INVESTMENT UNITS/SHARES COST VALUE
<S> <C> <C> <C>
Principal Guaranteed Interest Investment N/A $ 76,352 $ 74,174
Principal Money Market Separate Account* 3,927 148,492 152,281
Principal Government Securities Separate Account* 428 6,064 6,105
Principal Stock Emphasis Balanced Separate Account* 6,229 115,960 131,852
Principal Bond Emphasis Balanced Separate Account* 748 12,314 12,894
Principal Stock Index 500 Separate Account* 16,065 658,519 828,953
Principal U.S. Stock Separate Account* 83 36,782 38,019
Principal Medium Company Value Separate Account* 3,463 122,465 118,850
Principal Medium Company Blend Separate Account* 532 17,874 19,698
Principal Small Company Blend Separate Account* 4,539 158,266 168,885
Principal International Stock Separate Account* 4,215 137,346 176,253
Principal International Emerging Markets
Separate Account* 11,202 164,254 222,346
T. Rowe Price Growth and Income Fund 5,641 151,339 137,854
Vanguard Health Care Fund 3,573 308,194 340,171
Vanguard U.S. Growth Fund 7,944 283,490 345,799
Vanguard Primecap Fund 10,796 508,606 670,096
S1 Corporation Common Stock Fund* 228,488 9,886,028 17,850,623
------------ -------------
$ 12,792,345 $ 21,294,853
============ =============
</TABLE>
*Party-in-interest to the Plan
8
<PAGE> 11
SECURITY FIRST TECHNOLOGIES, INC.
401(k) SAVINGS PLAN
SCHEDULE H, LINE 4j - SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CURRENT
VALUE OF
ASSET ON
PURCHASE SELLING COST OF TRANSACTION
IDENTITY OF ISSUE/DESCRIPTION OF ASSET PRICE PRICE ASSET DATE NET GAIN
<S> <C> <C> <C> <C> <C>
Principal Money Market Separate Account* $ 564,070 $ - $ 564,070 $ 564,070 $ -
Principal Money Market Separate Account* - 499,926 492,819 499,926 7,107
Principal Stock Index 500 Separate Account* 414,833 - 414,833 414,833 -
Principal Stock Index 500 Separate Account* - 119,444 99,100 119,444 20,344
Vanguard U.S. Growth Fund 196,248 - 196,248 196,248 -
Vanguard U.S. Growth Fund - 119,591 101,501 119,591 18,090
Vanguard Primecap Fund 254,856 - 254,856 254,856 -
Vanguard Primecap Fund - 79,082 63,157 79,082 15,925
S1 Corporation Common Stock Fund 14,839,656 - 14,839,656 14,839,656 -
S1 Corporation Common Stock Fund - 14,734,813 6,201,296 14,734,813 8,533,517
</TABLE>
*Party-in-interest to the Plan
9
<PAGE> 12
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.
S1 Corporation 401(k) Savings Plan
401(k) Plan Committee
Date: June 28, 2000 By: /s/ ROBERT F. STOCKWELL
----------------------------------
Name: Robert F. Stockwell
Title: Committee Member
<PAGE> 13
Exhibit Index
Exhibit No. Exhibit
23 Consent of Independent Accountants
