<PAGE> 1
EXHIBIT 1.
AUDITED FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES
World Access, Inc. Retirement and Savings Plan
Years ended December 31, 1999 and 1998 with Report of Independent Auditors
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World Access, Inc.
Retirement and Savings Plan
Audited Financial Statements
and Supplemental Schedules
Years ended August 31, 1999 and 1998
CONTENTS
<TABLE>
<S> <C>
Report of Independent Auditors ............................................ 1
Audited Financial Statements
Statements of Net Assets Available for Benefits ........................... 2
Statements of Changes in Net Assets Available for Benefits ................ 3
Notes to Financial Statements ............................................. 4
Supplemental Schedules
Line 27a - Schedule of Assets Held for Investment Purposes ................ 11
Line 27d - Schedule of Reportable Transactions ............................ 12
Line 27f - Schedule of Non-Exempt Transactions ............................ 13
</TABLE>
<PAGE> 3
Report of Independent Auditors
Plan Administrator
World Access, Inc. Retirement and Savings Plan
We have audited the accompanying statements of net assets available for benefits
of World Access, Inc. Retirement and Savings Plan as of August 31, 1999 and
1998, and the related statements of changes in net assets available for benefits
for the years then ended. These financial statements are the responsibility of
the Plan's management. Our responsibility is to express an opinion on these
financial statements based on our 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 at
August 31, 1999 and 1998, and the changes in its net assets available for
benefits for the years then ended, in conformity with accounting principles
generally accepted in the United States.
Our audits were performed for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedules of assets
held for investment purposes as of August 31, 1999, reportable transactions and
non-exempt transactions for the year then ended are presented for purposes of
additional analysis and are not a required part of the 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 our audits of the financial statements and, in
our opinion, are fairly stated in all material respects in relation to the
financial statements taken as a whole.
/s/ Ernst & Young LLP
Atlanta, Georgia
June 7, 2000
1
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World Access, Inc.
Retirement and Savings Plan
Statements of Net Assets Available for Benefits
<TABLE>
<CAPTION>
AUGUST 31,
1999 1998
-------------------------
<S> <C> <C>
ASSETS
Investments, at fair value $6,217,140 $2,722,682
Receivables:
Participants' contributions 111,904 62,497
Employer's contribution 27,525 18,693
Interest income 1,718 --
-------------------------
Total receivables 141,147 81,190
-------------------------
Total assets 6,358,287 2,803,872
LIABILITIES
Due to broker 48,227 --
-------------------------
Net assets available for benefits $6,310,060 $2,803,872
=========================
</TABLE>
See accompanying notes.
2
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World Access, Inc.
Retirement and Savings Plan
Statements of Changes in Net Assets Available for Benefits
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31
1999 1998
------------------------------
<S> <C> <C>
Additions to net assets attributed to:
Contributions:
Participants $ 1,503,744 $ 658,225
Employer 431,368 171,858
------------------------------
1,935,112 830,083
Transfer from related plans 2,282,765 --
Investment income 157,709 39,946
Net appreciation (depreciation) in fair value of
investments (19,030) (598,302)
------------------------------
4,356,556 271,727
Deductions from net assets attributed to:
Benefit payments 849,768 96,270
Administrative expenses 600 --
------------------------------
850,368 96,270
------------------------------
Net increase 3,506,188 175,457
Net assets available for benefits at beginning of
year 2,803,872 2,628,415
------------------------------
Net assets available for benefits at end of year $ 6,310,060 $ 2,803,872
==============================
</TABLE>
See accompanying notes.
3
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World Access, Inc.
Retirement and Savings Plan
Notes to Financial Statements
August 31, 1999
1. DESCRIPTION OF THE PLAN
The following description of World Access, Inc. (the "Company") Retirement and
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 Company established the Plan effective July 1, 1989 as a defined
contribution plan as defined under Section 401(k) of the Internal Revenue Code
(the "Code"). The Plan is subject to the provisions of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"). Company representatives
served as trustee of the Plan for the first three quarters of the 1998 Plan
year. The Plan was amended and restated to appoint Merrill Lynch Trust Company
(the "trustee") as trustee of the Plan's investments effective June 1, 1998.
In 1999, the Company merged NACT 401(k) Plan (the "NACT Plan") and The Cherry
Communications 401(k) Plan (the "Resurgens Plan") into the Plan. The net assets
of the NACT Plan and Resurgens Plan were transferred in-kind and were allocated
by the trustee to the participant accounts in accordance with the direction of
the participants. Such contributed funds from the merged plans totaled
approximately $2.3 million.
ELIGIBILITY
The Plan covers all employees of the Company and certain participating
affiliates who have attained 21 years of age and completed one-half year of
service, as defined in the Plan document. Prior to June 1, 1998, employees were
required to complete one year of service, as defined. Participating affiliates
in the Plan include AIT, Westec, Sunrise, NACT, ATI Wireless, Galaxy, CIS, and
Cherry Communications (Resurgens).
CONTRIBUTIONS
Participation is voluntary and eligible employees may elect to contribute up to
15% of their compensation through payroll deductions, as defined by the Plan
document and subject to statutory limitations. The Company matches 50 percent of
all participant contributions up to and including 6 percent of each
participant's compensation for those
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World Access, Inc.
Retirement and Savings Plan
Notes to Financial Statements (continued)
1. DESCRIPTION OF THE PLAN (CONTINUED)
CONTRIBUTIONS (CONTINUED)
participants credited with a year of service, as defined by the Plan document.
The Company match is provided through the issuance of Company stock. An annual
profit sharing contribution may be contributed at the option of the Company's
Board of Directors. No profit sharing contribution was made during the years
ended August 31, 1999 and 1998.
PARTICIPANT ACCOUNTS
Each participant's account is credited with the participant's contribution and
allocations of the Company's contribution and Plan earnings. Allocations are
based on participant earnings or account balances, as defined in the Plan
agreement. The benefit to which a participant is entitled is the benefit that
can be provided from the participant's vested account.
VESTING
Participants are immediately vested in their contributions plus actual earnings
thereon. Vesting in the Company match portion of their accounts is based on the
number of years of credited service with the Company. A participant is 100
percent vested after four years of credited service (25% per year). Non-vested
account balances are forfeited and are used to reduce future Company
contributions. Approximately $0 and $8,200 of forfeited account balances were
used to reduce Company contributions during the years ended August 31, 1999 and
1998, respectively. Forfeited account balances were approximately $31,700 and $0
at August 31, 1999 and 1998, respectively.
PARTICIPANT LOANS
Participants may borrow from their fund accounts a minimum of $1,000 up to a
maximum equal to the lesser of $50,000 or 50% of their vested account balances.
5
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World Access, Inc.
Retirement and Savings Plan
Notes to Financial Statements (continued)
1. DESCRIPTION OF THE PLAN (CONTINUED)
PARTICIPANT LOANS (CONTINUED)
Loan terms range from one to five years or twenty years if the loan is used for
a primary residence. The loans are secured by the balance in the participant's
account and bear interest at a rate commensurate with the local prevailing
interest rates. Principal and interest are paid ratably through monthly payroll
deductions.
BENEFITS AND WITHDRAWALS
Benefits are available to Plan participants upon reaching the normal retirement
age (age 65), date of disability, or after termination of service for any other
reason. The participant's entire vested interest in the Plan shall be available
to be distributed in a lump-sum cash payment or installment forms of
distribution, as provided for in the Plan agreement. Participant contributions
to the Plan may be withdrawn upon approval by the Plan administrator and subject
to Code requirements in cases in which a participant has suffered a financial
hardship.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The accompanying financial statements have been prepared on the accrual basis of
accounting.
RECLASSIFICATIONS
Certain amounts in the 1998 financial statements have been reclassified to
conform to the 1999 presentation.
INVESTMENT VALUATION
Investments in mutual funds, collective trust funds, and equity securities are
stated at fair value based on quoted prices in an active market. Securities
traded on a national securities exchange are valued at the last reported sales
price on the last business day of the Plan year. The participant loans are
valued at their outstanding balances, which approximate fair value.
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World Access, Inc.
Retirement and Savings Plan
Notes to Financial Statements (continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INVESTMENT INCOME
Dividend income is recorded on the ex-dividend date. Interest income is recorded
as earned. Purchases and sales of securities are recorded on a trade date basis.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates that affect the
reported amounts in the financial statements and accompanying notes. Actual
results could differ from those estimates.
ADMINISTRATIVE EXPENSES
Administrative expenses for the Plan are paid directly by the Company with the
exception of loan fees which are charged directly to participant accounts.
BENEFIT PAYMENTS
Benefits are recorded when paid.
3. INCOME TAX STATUS
The Plan has not received a determination letter from the Internal Revenue
Service stating that the Plan is qualified under Section 401(a) of the Internal
Revenue Code (the "Code"). The Plan Sponsor has indicated that it will take the
necessary steps, if any, to maintain the Plan's qualified status.
4. TRANSACTIONS WITH PARTIES-IN-INTEREST
At August 31, 1999 and 1998, the Plan held 123,754 and 74,981 shares of World
Access, Inc. Common Stock, respectively. The fair value of this stock at August
31, 1999 and 1998 was $1,539,127 and $1,434,017, respectively.
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World Access, Inc.
Retirement and Savings Plan
Notes to Financial Statements (continued)
4. TRANSACTIONS WITH PARTIES-IN-INTEREST (CONTINUED)
Certain Plan investments are shares of mutual and collective trust funds managed
by the trustee, therefore, these investment transactions qualify as
party-in-interest. The Plan sponsor paid administrative expenses on behalf of
the Plan with the exception of loan fees, for the year ended August 31, 1999.
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% vested in their entire account balance.
6. INVESTMENTS
The fair value of individual investments that represent 5% or more of the Plan's
net assets are as follows:
<TABLE>
<CAPTION>
AUGUST 31
1999 1998
-----------------------------
<S> <C> <C>
Merrill Lynch Retirement Preservation Trust Fund $ 989,281 $ 428,890
Merrill Lynch Capital Fund Class D 754,655 406,490
Merrill Lynch Growth Fund Class D 325,733 --
Merrill Lynch Special Value Fund Class D 520,744 **
Oppenheimer Global Growth and Income Fund 748,886 **
AIM Blue Chip Fund Class A 1,020,408 338,400
World Access, Inc. common stock* 1,539,127 1,434,017
</TABLE>
* Nonparticipant-directed investment
** Individual investment does not represent 5% or more of the Plan's net assets.
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World Access, Inc.
Retirement and Savings Plan
Notes to Financial Statements (continued)
6. INVESTMENTS (CONTINUED)
During 1999, the Plan's investments (including investments purchased, sold as
well as held during the year) appreciated (depreciated) in fair value as
determined by quoted market prices as follows:
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31
1999 1998
-----------------------------
<S> <C> <C>
Mutual funds $ 393,988 $ (10,247)
Equity securities (413,018) (588,055)
-----------------------------
$ (19,030) $ (598,302)
=============================
</TABLE>
7. NONPARTICIPANT-DIRECTED INVESTMENTS
Information about the net assets and the significant components of the changes
in net assets relating to the nonparticipant-directed investments is as follows:
<TABLE>
<CAPTION>
AUGUST 31
1999 1998
-----------------------------
<S> <C> <C>
World Access, Inc. Common stock $ 1,539,127 $ 1,434,017
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31
1999 1998
-----------------------------
<S> <C> <C>
Changes in Net Assets:
Contributions $ 713,582 $ 445,111
Investment income 1,053 --
Net depreciation in fair value of investments (413,018) (588,055)
Benefit payments (225,083) (43,296)
Administrative fees (202) --
Net transfers 28,778 43,782
-----------------------------
$ 105,110 $ (142,458)
=============================
</TABLE>
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World Access, Inc.
Retirement and Savings Plan
Notes to Financial Statements (continued)
8. SUBSEQUENT EVENTS
During December 1999, the Company merged FaciliCom International 401(k) Plan
(the "FaciliCom Plan") into the Plan. The net assets of the FaciliCom Plan were
sold at fair value and the funds were allocated by the trustee to the
participant accounts in accordance with the direction of the participants. Such
contributed funds totaled approximately $2.3 million.
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<PAGE> 13
Supplemental Schedules
<PAGE> 14
World Access, Inc.
Retirement and Savings Plan
EIN: 65-0044204
Plan No.: 001
Line 27a - Schedule of Assets Held for Investment Purposes
August 31, 1999
<TABLE>
<CAPTION>
(E)
(B) (C) (D) CURRENT
(A) IDENTITY OF ISSUE DESCRIPTION OF INVESTMENT COST VALUE
--- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MUTUAL FUNDS
* Merrill Lynch Trust
Company Capital Fund Class D $ 771,727 $ 754,655
* Merrill Lynch Trust
Company Corporate Bond Fund Class D 163,582 154,666
* Merrill Lynch Trust
Company Special Value Fund Class D 506,485 520,744
* Merrill Lynch Trust
Company Growth Fund Class D 280,247 325,733
AIM Funds, Inc. Blue Chip Fund Class A 941,174 1,020,408
OppenheimerFunds, Inc. Global Growth and Income Fund 569,432 748,886
---------------------------------
3,232,647 3,525,092
COMMON STOCK
* World Access, Inc. Common stock 2,624,503 1,539,127
---------------------------------
2,624,503 1,539,127
COMMON TRUST FUND
* Merrill Lynch Trust
Company Retirement Preservation Trust Fund 989,281 989,281
---------------------------------
989,281 989,281
Participant loans Interest rates range from 8.0% to
10.0% -- 163,640
---------------------------------
Total $ 6,846,431 $ 6,217,140
=================================
</TABLE>
* Indicates a party-in-interest to the Plan.
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<PAGE> 15
World Access, Inc.
Retirement and Savings Plan
EIN: 65-0044204
Plan No.: 001
Line 27d - Schedule of Reportable Transactions
Year ended August 31, 1999
<TABLE>
<CAPTION>
(H)
CURRENT VALUE
(C) (D) (G) OF ASSET ON (I)
(A) (B) PURCHASE SELLING COST OF TRANSACTION NET GAIN
IDENTITY OF PARTY INVOLVED (DESCRIPTION OF ASSET PRICE PRICE ASSET DATE OR (LOSS)
----------------------------------------------------------------------------------------------------------------------------------
CATEGORY (III) - A SERIES OF SECURITY TRANSACTIONS WHICH EXCEEDS 5% OF PLAN ASSETS.
<S> <C> <C> <C> <C> <C> <C>
World Access, Inc. Common Stock $ 865,264 $ -- $ 865,264 $ 865,264 $ --
World Access, Inc. Common Stock -- 347,136 578,963 347,136 (231,827)
</TABLE>
THERE WERE NO CATEGORY (I), (II) OR (IV) TRANSACTIONS DURING THE YEAR ENDED
AUGUST 31, 1999.
Note: The information to be presented in columns (e) and (f) is not applicable.
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World Access, Inc.
Retirement and Savings Plan
EIN: 65-0044204
Plan No.: 001
Line 27f - Schedule of Non-Exempt Transactions
Year ended August 31, 1999
<TABLE>
<CAPTION>
(C)
(B) DESCRIPTION OF TRANSACTIONS,
RELATIONSHIP TO PLAN, INCLUDING MATURITY DATE, RATE
(A) EMPLOYER, OR OTHER PARTY- OF INTEREST, COLLATERAL, PAR, OR
IDENTITY OF PARTY INVOLVED IN-INTEREST MATURITY VALUE
-------------------------------------------------------------------------------------------------
<S> <C> <C>
World Access, Inc. Employer/Plan Sponsor Contributions of $99,710 for the
January 1999 payroll period
remitted March 2, 1999.
World Access, Inc. Employer/Plan Sponsor Contributions of $106,001 for the
March 1999 payroll period
remitted April 26, 1999.
World Access, Inc. Employer/Plan Sponsor Contributions of $163,993 for the
April 1999 payroll period
remitted June 8, 1999.
World Access, Inc. Employer/Plan Sponsor Contributions of $29,150 for the
July 1999 payroll period
remitted August 27, 1999
World Access, Inc. Employer/Plan Sponsor Contributions of $30,316 for the
July 1999 payroll period not
yet remitted.
</TABLE>
Note: The information to be presented in columns (d), (e), (f), (g), (h), (i),
or (j) is not applicable.
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