As filed with the Securities and Exchange Commission on June 23, 1998
FORM 11-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
ANNUAL REPORT
PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
(X) Annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934
Commission file number 0-8664
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
Circle International Group Savings Plan
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
Circle International Group, Inc.
260 Townsend Street
San Francisco, CA 94107
SIGNATURE
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934,
the administrator has duly caused this annual report to be signed on its behalf
by the undersigned hereunto duly authorized.
CIRCLE INTERNATIONAL
GROUP SAVINGS PLAN
Date: June 4, 1999 By /s/Robert H. Kennis
----------------------------------
Robert H. Kennis
Page 1 of 17
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CIRCLE INTERNATIONAL GROUP
SAVINGS PLAN
FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
--------------------------
Page 2 of 17
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CIRCLE INTERNATIONAL GROUP
SAVINGS PLAN
Financial Statements and
Form 5500 Supplemental Schedule G
Years ended December 31, 1998 and 1997
--------------------------------------
Table of Contents
Independent Accountants' Report............................................4-5
Financial Statements:
Statements of Net Assets Available for Plan Benefits.........................7
Statements of Changes in Net Assets Available for Plan Benefits
With Fund Information.....................................................8
Notes to Financial Statements................................................9
Form 5500 Supplemental Schedules as of and for the year ended
December 31, 1998........................................................14
27a, Part I - Schedule of Assets Held for Investment Purposes
27d, Part V - Schedule of Reportable Transactions
Page 3 of 17
<PAGE>
To the Participants and
Plan Administrator of the
Circle International Group
Savings Plan
INDEPENDENT ACCOUNTANTS' REPORT
-------------------------------
We have audited the financial statements and supplemental schedules of the
Circle International Group Savings Plan (the Plan) as of December 31, 1998 and
1997, and for the years then ended, as listed in the accompanying table of
contents. These financial statements and supplemental schedules are the
responsibility of the Plan's management.
We conducted our audits in accordance with generally accepted auditing
standards. 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 the
Plan's 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 plan benefits of the Plan
as of December 31, 1998 and 1997, and the changes in net assets available for
plan benefits for the years then ended, in conformity with 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 schedules are
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. The supplemental
information in Schedule G is the responsibility of the Plan's management.
Page 4 of 17
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The fund information in the statement of changes in net assets available
for plan benefits is presented for purposes of additional analysis rather than
to present the changes in net assets available for plan benefits for each fund.
The supplemental schedules and fund information have been subjected to the
auditing procedures applied in the audits 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.
MOHLER, NIXON & WILLIAMS
Accountancy Corporation
Campbell, California
June 4, 1999
Page 5 of 17
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the use of our name on our report, dated June 4, 1999, with
respect to the financial statements and schedules of the Circle International
Group Savings Plan for the years ended December 31, 1998 and 1997, included in
the Annual Report on Form 11-K which is filed electronically with the Securities
and Exchange Commission.
MOHLER, NIXON & WILLIAMS
Accountancy Corporation
Campbell, California
June 4, 1999
Page 6 of 17
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CIRCLE INTERNATIONAL GROUP
SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
December 31,
------------------------------
1998 1997
------------ ------------
Cash $ 404,439 $ 287,048
Investments, at fair value 33,334,037 25,674,207
------------ ------------
Total assets held for investment purposes 33,738,476 25,961,255
Employer's contribution receivable 164,597
Participants' contributions receivable 50,094
------------ ------------
Net assets available for plan benefits $33,953,167 $25,961,255
============ ============
See independent accountants' report and
accompanying notes to financial statements.
Page 7 of 17
<PAGE>
<TABLE>
CIRCLE INTERNATIONAL GROUP
SAVINGS PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS WITH FUND INFORMATION
For the years ended December 31, 1998 and 1997
----------------------------------------------
BZW Barclays Global Investors National Association, Merrill Lynch Investments
-----------------------------------------------------------------------------
<CAPTION>
Circle
International S & P 500 3-Way Asset Income International
Group Money Market Index Allocation Accumulation Bond Index Equity
Stock Fund Fund Fund Fund Fund Fund Fund
------------- ------------ ----------- ----------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net assets available for plan
benefits at December 31, 1996 $3,431,891 $2,887,853 $6,294,756 $4,440,502 $58,240 $1,471 $1,866,925
----------- ----------- ------------ ----------- --------- --------- -----------
Employer's contribution 89,733 154,106 360,423 200,385 110,302
Participants' contributions/rollovers 237,920 444,534 1,106,753 552,249 307,806
Withdrawals/distributions (330,180) (608,211) (1,080,688) (588,294) (250,902)
Dividends and interest 150,184 333,452 677,658 3,604 102
Net appreciation (depreciation) in
fair value of investments (30,946) 12,490 1,936,354 324,281 41 20,205
Administrative fees (932) (1,640) (3,385) (1,845) (799)
Transfers in (out) (112,700) (71,092) 623,282 (121,711) (296,710)
----------- ----------- ------------ ----------- --------- --------- -----------
Increase (decrease) in net assets (147,105) 80,371 3,276,191 1,042,723 3,604 143 (110,098)
----------- ----------- ------------ ----------- --------- --------- -----------
Net assets available for plan
benefits at December 31, 1997 3,284,786 2,968,224 9,570,947 5,483,225 61,844 1,614 1,756,827
----------- ----------- ------------ ----------- --------- --------- -----------
Employer's contribution 82,705 139,563 384,366 196,897 91,937
Participants' contributions/rollovers 259,027 398,781 1,145,601 574,890 259,452
Withdrawals/distributions (243,917) (857,406) (1,045,511) (569,553) (199) (790) (253,702)
Dividends and interest 175,352 729,201 836,212 3,808 102
Net appreciation (depreciation) in
fair value of investments (471,615) 122,809 2,014,781 625,605 45 360,474
Administrative fees (789) (1,555) (3,168) (1,748) (700)
Transfers in (out) (11,532) 1,887,293 (229,354) 224,221 (18) (214,618)
----------- ----------- ------------ ----------- --------- --------- -----------
Increase (decrease) in net assets (386,121) 1,864,837 2,995,916 1,886,524 3,609 (661) 242,843
----------- ----------- ------------ ----------- --------- --------- -----------
Net assets available for plan
benefits at December 31, 1998 $2,898,665 $4,833,061 $12,566,863 $7,369,749 $65,453 $953 $1,999,670
=========== =========== ============ =========== ========= ========= ===========
<CAPTION>
U.S.
Treasury Excess
Allocation Participant Contribution contributions
Fund Cash loans receivable refundable Total
----------- --------- ----------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net assets available for plan
benefits at December 31, 1996 $1,389,524 $143,773 $1,167,294 $255,470 ($35,837) $21,901,862
----------- --------- ----------- --------- --------- ------------
Employer's contribution 69,700 (68,630) 916,019
Participants' contributions/rollovers 177,823 (186,840) 35,837 2,676,082
Withdrawals/distributions (133,195) (6,215) (186,756) (3,176) (3,187,617)
Dividends and interest 90,536 10,697 123,660 1,389,893
Net appreciation (depreciation) in
fair value of investments 11,967 2,274,392
Administrative fees (726) (49) (9,376)
Transfers in (out) (116,767) 138,842 (46,320) 3,176 -
----------- --------- ----------- --------- --------- ------------
Increase (decrease) in net assets 99,338 143,275 (109,416) (255,470) 35,837 4,059,393
----------- --------- ----------- --------- --------- ------------
Net assets available for plan
benefits at December 31, 1997 1,488,862 287,048 1,057,878 - - 25,961,255
----------- --------- ----------- --------- --------- ------------
Employer's contribution 60,479 (10,016) 50,094 996,025
Participants' contributions/rollovers 160,269 164,597 2,962,617
Withdrawals/distributions (87,514) (4,344) (172,220) (3,235,156)
Dividends and interest 88,553 19,366 111,547 1,964,141
Net appreciation (depreciation) in
fair value of investments 15,541 26,109 2,693,749
Administrative fees (621) (725) (9,306)
Transfers in (out) 634,491 87,001 242,358 2,619,842
----------- --------- ----------- --------- --------- ------------
Increase (decrease) in net assets 871,198 117,391 181,685 214,691 - 7,991,912
----------- --------- ----------- --------- --------- ------------
Net assets available for plan
benefits at December 31, 1998 $2,360,060 $404,439 $1,239,563 $214,691 $ - $33,953,167
=========== ========= =========== ========= ========= ============
See independent accountants' report and
accompanying notes to financial statements.
</TABLE>
Page 8 of 17
<PAGE>
CIRCLE INTERNATIONAL GROUP
SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 1998 and 1997
--------------------------
Note 1 - The Plan and its significant accounting policies:
The following description of the Circle International Group Savings Plan
(the Plan) provides only general information. Participants should refer to the
Plan document for a more complete description of the Plan's provisions.
The Plan is a defined contribution plan that was established in 1973 by The
Harper Group, Inc. to provide benefits to eligible employees. The Plan covers
all full-time employees of Circle International Group, Inc. and its affiliated
companies: Circle International, Inc., J R Michels, Inc., Alrod International
and Circle Trade Services Ltd. (collectively referred to as the Company), who
have a minimum of six months of service and are age 18 or older.
During 1998, the Company purchased Alrod International and approximately
$2,620,000 was transferred into the Plan. Effective October 1, 1998, Alrod
International employees were eligible to join the Plan.
During 1998, the Plan was amended to eliminate the waiting period for
Company matching contributions, to eliminate the six month service requirement
to join the Plan, to allow for participants to make changes to their deferral
percentages anytime during the year, to increase the automatic distribution
limit from $3,500 to $5,000 and to change the definition of eligible
compensation.
The Plan administrator believes that the Plan is currently designed and
operated in compliance with the applicable requirements of the Internal Revenue
Code and the provisions of the Employee Retirement Income Security Act of 1974
(ERISA).
Administration -
The Company has appointed an Administrative Committee (the Committee) to
manage the operation and administration of the Plan. The Company has contracted
with Merrill Lynch Investments (Merrill Lynch), to act as the trustee.
Substantially all expenses incurred for administering the Plan are paid by the
Company and investment fees are paid by the Plan.
Page 9 of 17
<PAGE>
Investments -
Investments of the Plan are held by Merrill Lynch and invested in mutual
and money market funds and the common stock of Circle International Group, Inc.
based solely upon instructions received from participants. Plan assets are
valued at fair value as of the last day of the Plan year, as measured by quoted
market prices.
Cash and cash equivalents -
All highly liquid investments purchased with an original maturity of three
months or less (generally money market funds) are considered to be cash
equivalents. These investments are usually held for a short period of time,
pending long-term investment.
Vesting -
Participants are immediately vested in their salary deferral, rollover
contributions and related earnings. Participants vest ratably in the employer's
matching contributions allocated to their account and are fully vested after
four years of credited service.
Income taxes -
The Plan has been amended since receiving its favorable determination
letter dated August 1995. However, the Company intends that the Plan continue to
qualify under the applicable requirements of the Internal Revenue Code and
related state statutes, and is exempt from federal income and state franchise
taxes.
Estimates -
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities, and
changes therein, and disclosure of contingent assets and liabilities. Actual
results could differ from those estimates.
Risks and uncertainties -
The Plan provides for various investment options in any combination of
stocks, bonds, fixed income securities, mutual funds and other investment
securities. Investment securities are exposed to various risks, such as interest
rate, market fluctuations and credit risks. Due to the level of risk associated
with certain investment securities, it is at least reasonably possible that
changes in risks in the near term would materially affect participants' account
balances and the amounts reported in the statements of net assets available for
plan benefits and the statements of changes in net assets available for plan
benefits.
Page 10 of 17
<PAGE>
Note 2 - Participation and benefits:
Employee contributions -
Participants may elect to have the Company contribute a percentage, up to
15%, of their eligible pre-tax compensation up to the amount allowable under
current income tax regulations, with the exception of highly compensated
employees who are limited to 10% of pre-tax compensation. Participants who elect
to have the Company contribute a portion of their compensation to the Plan agree
to accept an equivalent reduction in taxable compensation.
Participants are also allowed to make rollover contributions of amounts
received from other tax-qualified employer-sponsored retirement plans. Such
contributions are deposited in the appropriate investment funds in accordance
with the participant's direction and the Plan's provisions.
Employer contributions -
The Company is allowed to make matching contributions as defined in the
Plan and as approved by the Board of Directors. The Company matches 50% of each
participant's contribution up to a maximum of 6% of the eligible gross income.
The Company's actual contribution is reduced by certain available forfeitures,
if any, during the Plan year. Additional elective contributions may be made by
the Company. No additional elective contributions were made by the Company
during the years ended December 31, 1998 and 1997.
Participant accounts -
Each participant's account is credited with the participant's contribution,
Plan earnings or losses and an allocation of the Company's contribution, if any.
Allocation of the Company's contribution is based on participant contributions.
Payment of benefits -
Upon termination the participant or beneficiary will receive benefits in a
lump-sum amount equal to the value of the participant's vested interest in his
or her account, or annual installments over a period not to exceed the life
expectancy of the participant and his or her beneficiary. Effective 1998, the
Plan is allowed to automatically make lump-sum distributions to terminated
participants for vested account balances of less than $5,000.
Page 11 of 17
<PAGE>
Loans to participants -
The Plan allows participants to borrow not less than $1,000 and up to the
lesser of $50,000 or 50% of their vested account balance. The loans are secured
by the participant's vested balance. Such loans bear interest at the available
market financing rates and must be repaid to the Plan within a five year period.
The specific terms and conditions of such loans are established by the
Committee.
Note 3 - Party in interest transactions:
As allowed by the Plan, participants may elect to invest a portion of their
accounts in the common stock of the Company. Aggregate investment in Company
common stock at December 31, 1998 and 1997 was as follows:
Date Number of shares Fair value Cost
---- ---------------- ---------- ----
1998 223,835 $2,898,665 $3,286,563
1997 207,635 $3,284,786 $3,548,970
Note 4 - Investments:
The following table includes the fair values of net assets and investment
funds that represent 5% or more of the Plan's net assets at December 31:
1998 1997
---- ----
Certified:
Circle International Group
Stock Fund $2,898,665 $3,284,786
Money Market Fund 4,833,061 2,968,224
S & P 500 Index Fund 12,566,863 9,570,947
3-Way Asset Allocation Fund 7,369,749 5,483,225
Income Accumulation Fund 65,453 61,844
Bond Index Fund 953 1,614
International Equity Fund 1,999,670 1,756,827
U.S. Treasury Allocation Fund 2,360,060 1,488,862
Cash 404,439 287,048
Uncertified:
Participant loans 1,239,563 1,057,878
------------ ------------
Net assets available for plan benefits $33,738,476 $25,961,255
============ ============
Page 12 of 17
<PAGE>
Certified:
Years ended December 31,
1998 1997
---- ----
Dividends and interest $ 1,964,141 $ 1,389,893
=========== ===========
Net realized and unrealized
appreciation in fair value
of investments $ 2,693,749 $ 2,274,392
=========== ===========
In addition, the information in the Form 5500 Supplemental Schedule G has been
certified for the year ended December 31, 1998.
Note 5 - Plan termination and/or modification:
The Company intends to continue the Plan indefinitely for the benefit of
its employees; however, it reserves the right to terminate and/or modify the
Plan at any time by resolution of its Board of Directors and subject to the
provisions of ERISA. In the event the Plan is terminated in the future,
participants would become fully vested in their accounts.
Note 6 - Year 2000 compliance (unaudited):
The Plan, as with most users of computer software, may be required to
modify significant portions of its internally used software to enable it to
function properly in the year 2000. In addition, the Plan must also insure that
its service providers are in compliance with the year 2000 issue. Since the Plan
uses mainly third-party software and service providers, it does not anticipate a
problem in resolving the year 2000 issue in a timely manner.
Page 13 of 17
<PAGE>
CIRCLE INTERNATIONAL GROUP
SAVINGS PLAN
FORM 5500
SUPPLEMENTAL SCHEDULE G
DECEMBER 31, 1998
-----------------
Page 14 of 17
<PAGE>
CIRCLE INTERNATIONAL GROUP
SAVINGS PLAN
E.I.N.: 94 - 1740320
Plan #: 001
ITEM 27a, PART I - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
December 31, 1998
-----------------
(a) (b) (c) (d) (e)
Description of investment
Identity of issue, including maturity date,
borrower, lessor, rate of interest, collateral, Current
or similar party par or maturity value Cost Value
- --- ------------------ ---------------------------- ------------ ------------
Circle Intl Circle Intl Group Stock Fund $ 3,548,970 $ 2,898,665
Merrill Lynch Money Market Fund 2,968,224 4,833,061
Merrill Lynch S&P Index Fund 8,131,419 12,566,863
Merrill Lynch 3-Way Asset Allocation Fund 5,288,591 7,369,749
Merrill Lynch Income Accumulation Fund 61,844 65,453
Merrill Lynch Bond Index Fund 1,572 953
Merrill Lynch International Equity Fund 1,775,405 1,999,670
Merrill Lynch US Treasury Allocation Fund 1,476,408 2,360,060
Merrill Lynch Cash Account 287,048 404,439
* Participant Loans 8.00%-11.00% - 1,239,563
------------
Total assets held for investment $33,738,476
============
* Parties-in-interest
Page 15 of 17
<PAGE>
<TABLE>
CIRCLE INTERNATIONAL GROUP
SAVINGS PLAN
E.I.N.: 94 -1740320
Plan #: 001
ITEM 27d, PART V - SCHEDULE OF REPORTABLE TRANSACTIONS
For the year ended December 31, 1998
------------------------------------
<CAPTION>
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Description of asset Expense Current value
(including interest rate incurred of asset on
Identity of and maturity in case Purchase Selling Lease with Cost of transaction Net gain
party involved of a loan) price price rental transaction asset date or (loss)
- --------------- ------------------------ ----------- ----------- ------ ----------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Merrill Lynch Int'l Equity Fund $ 942,907 $ 942,907
Merrill Lynch Int'l Equity Fund $1,058,738 $ 947,771 1,058,738 $ 110,967
Merrill Lynch Asset Allocation Fund 4,522,019 4,522,019
Merrill Lynch Asset Allocation Fund 3,271,481 2,873,403 3,271,481 398,078
Merrill Lynch Money Market Fund 5,250,934 5,250,934
Merrill Lynch Money Market Fund 3,386,097 3,386,097 3,386,097 0
Merrill Lynch S&P 500 Index Fund 6,080,245 6,080,245
Merrill Lynch S&P 500 Index Fund 5,109,901 3,920,898 5,109,901 1,189,004
Merrill Lynch US Treasury Allocation 1,489,970 1,489,970
Merrill Lynch US Treasury Allocation 634,278 630,297 634,278 3,981
Circle Intl Circle Intl Group 6,759,446 6,759,446
Circle Intl Circle Intl Group 6,708,364 6,848,590 6,708,364 (140,226)
</TABLE>
Page 16 of 17
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Exhibit 1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statement
(Form S-8) pertaining to the Circle International Group Savings Plan of our
report dated June 4, 1999, with respect to the financial statements and
schedules of the Circle International Group Plan included in this Annual Report
(Form 11-K) for the year ended December 31, 1998.
MOHLER, NIXON & WILLIAMS
Accountancy Corporation
Campbell, California
June 4, 1999
Page 17 of 17
