<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 11-K
Annual Report Pursuant to Section 15(d)
of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 1998
A. Full title of the plan and the address of the plan, if different from that of
the issuer named below:
COMPUCOM SYSTEMS, INC.
401(k) MATCHED SAVINGS PLAN
B. Name of issuer of the securities held pursuant to the plan and the address of
its principal executive office:
COMPUCOM SYSTEMS, INC.
7171 Forest Lane
Dallas, Texas 75230
Registrant's telephone number, including area code (972) 856-3600
<PAGE>
SIGNATURE
- ---------
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934,
the plan administrator of CompuCom Systems, Inc. 401(k) Matched Savings Plan has
duly caused this annual report to be signed on its behalf by the undersigned
hereunto duly authorized.
COMPUCOM SYSTEMS, INC.
401(k) MATCHED SAVINGS PLAN
6/30/99
Date:____________ By: /s/ M. Lazane Smith
-----------------------
M. Lazane Smith
Senior Vice President-Finance
Chief Financial Officer
<PAGE>
COMPUCOM SYSTEMS, INC.
401(K) MATCHED SAVINGS PLAN
Financial Statements
and Supplemental Schedules
December 31, 1998 and 1997
(With Independent Auditors' Report Thereon)
<PAGE>
COMPUCOM SYSTEMS, INC.
401(K) MATCHED SAVINGS PLAN
Table of Contents
<TABLE>
<CAPTION>
Page
<S> <C>
Independent Auditors' Report 1
Statement of Net Assets Available for Benefits as of
December 31, 1998 2-3
Statement of Net Assets Available for Benefits as of
December 31, 1997 4-5
Statement of Changes in Net Assets Available for Benefits
for the year ended December 31, 1998 6-7
Statement of Changes in Net Assets Available for Benefits
for the year ended December 31, 1997 8-9
Notes to Financial Statements 10
Schedules
1 Item 27a - Schedule of Assets Held for Investment Purposes as of
December 31, 1998 16
2 Item 27d - Schedule of Reportable Transactions for the year ended
December 31, 1998 17
</TABLE>
<PAGE>
Independent Auditors' Report
The Participants and Plan Administrator
CompuCom Systems, Inc. 401(k) Matched Savings Plan:
We have audited the accompanying statements of net assets available for benefits
of CompuCom Systems, Inc. 401(k) Matched Savings Plan as of December 31, 1998
and 1997, 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 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
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 CompuCom
Systems, Inc. 401(k) Matched Savings Plan as of December 31, 1998 and 1997, and
the changes in net assets available for 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 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 Fund Information
in the statements of net assets available for benefits and the statements of
changes in net assets available for benefits is presented for purposes of
additional analysis rather than to present the net assets available for benefits
and changes in net assets available for benefits of 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.
/s/ KPMG Peat Marwick LLP
Dallas, Texas
June 11, 1999
<PAGE>
COMPUCOM SYSTEMS, INC.
401(k) MATCHED SAVINGS PLAN
Statement of Net Assets Available for Benefits
December 31, 1998
<TABLE>
<CAPTION>
CompuCom Fidelity Fidelity Fidelity U.S.
Stock Magellan Puritan Equity
Fund Fund Fund Index Fund
--------------- ------------- ------------ ---------------
<S> <C> <C> <C> <C>
Assets:
Investments (note 3):
CompuCom Systems, Inc. common stock, at fair
value (1,001,323 shares; cost of $5,717,480) $ 3,504,631 -- -- --
Fidelity Magellan Fund, at fair value (105,149 units;
cost of $9,709,836) -- 12,704,102 -- --
Fidelity Puritan Fund, at fair value (372,323 units;
cost of $6,864,015) -- -- 7,472,528 --
Fidelity U.S. Equity Index fund, at fair value
(148,181 units; cost of $4,941,551) -- -- -- 6,514,046
Fidelity Growth Company Fund, at fair value
(71,986 units; cost of $1,985,823) -- -- -- --
Fidelity Short-Intermediate Government Fund, at
fair value (147,360 units; cost of $1,457,570) -- -- -- --
Fidelity Broadly Diversified International Equity
Fund, at fair value (47,050 units; cost of $810,591) -- -- -- --
Fidelity Retirement Money Market Fund, at fair value
(2,473,480 units; cost of $2,473,480) -- -- -- --
Participant loans (unpaid principal balance
approximates fair value) -- -- -- --
--------------- ------------- ------------ ---------------
Total investments 3,504,631 12,704,102 7,472,528 6,514,046
Cash 65,331 -- -- --
--------------- ------------- ------------ ---------------
3,569,962 12,704,102 7,472,528 6,514,046
Receivables:
Employer's contributions 70,489 174,761 98,893 129,857
Employees' contributions 37,451 96,569 53,561 73,355
--------------- ------------- ------------ ---------------
Total assets 3,677,902 12,975,432 7,624,982 6,717,258
Liabilities:
Refunds payable (21,189) (73,716) (36,025) (49,842)
--------------- ------------- ------------ ---------------
Net assets available for benefits $ 3,656,713 12,901,716 7,588,957 6,667,416
=============== ============= ============ ===============
<CAPTION>
Fidelity Fidelity Fidelity
Fidelity Short- Broadly Retirement
Growth Intermediate Diversified Money
Company Government International Market
Fund Fund Fund Fund
------------- ------------- ------------- --------------
<S> <C> <C> <C> <C>
Assets:
Investments (note 3):
CompuCom Systems, Inc. common stock, at fair
value (1,001,323 shares; cost of $5,717,480) -- -- -- --
Fidelity Magellan Fund, at fair value (105,149 units;
cost of $9,709,836) -- -- -- --
Fidelity Puritan Fund, at fair value (372,323 units;
cost of $6,864,015) -- -- -- --
Fidelity U.S. Equity Index fund, at fair value
(148,181 units; cost of $4,941,551) -- -- -- --
Fidelity Growth Company Fund, at fair value
(71,986 units; cost of $1,985,823) 2,286,999 -- -- --
Fidelity Short-Intermediate Government Fund, at
fair value (147,360 units; cost of $1,457,570) -- 1,494,231 -- --
Fidelity Broadly Diversified International Equity
Fund, at fair value (47,050 units; cost of $810,591) -- -- 833,734 --
Fidelity Retirement Money Market Fund, at fair value
(2,473,480 units; cost of $2,473,480) -- -- -- 2,473,480
Participant loans (unpaid principal balance
approximates fair value) -- -- -- --
------------- ------------- ------------- --------------
Total investments 2,286,999 1,494,231 833,734 2,473,480
Cash -- -- -- --
------------- ------------- ------------- --------------
2,286,999 1,494,231 833,734 2,473,480
Receivables:
Employer's contributions 72,793 79,253 32,125 44,446
Employees' contributions 48,412 15,086 17,599 20,085
------------- ------------- ------------- --------------
Total assets 2,401,204 1,538,570 833,458 2,538,011
Liabilities:
Refunds payable (11,435) (7,825) (5,467) (5,189)
------------- ------------- ------------- --------------
Net assets available for benefits 2,389,769 1,538,745 877,991 2,532,022
============= ============= ============= ==============
<CAPTION>
Participants
Loans Totals
------------------ ---------------
<S> <C> <C>
Assets:
Investments (note 3):
CompuCom Systems, Inc. common stock, at fair
value (1,001,323 shares; cost of $5,717,480) -- 3,504,631
Fidelity Magellan Fund, at fair value (105,149 units;
cost of $9,709,836) -- 12,704,102
Fidelity Puritan Fund, at fair value (372,323 units;
cost of $6,864,015) -- 7,472,528
Fidelity U.S. Equity Index fund, at fair value
(148,181 units; cost of $4,941,551) -- 6,514,046
Fidelity Growth Company Fund, at fair value
(71,986 units; cost of $1,985,823) -- 2,286,999
Fidelity Short-Intermediate Government Fund, at
fair value (147,360 units; cost of $1,457,570) -- 1,494,231
Fidelity Broadly Diversified International Equity
Fund, at fair value (47,050 units; cost of $810,591) -- 833,734
Fidelity Retirement Money Market Fund, at fair value
(2,473,480 units; cost of $2,473,480) -- 2,473,480
Participant loans (unpaid principal balance
approximates fair value) 1,301,633 1,301,633
------------------ ---------------
Total investments 1,301,633 38,585,384
Cash -- 65,331
------------------ ---------------
1,301,633 38,650,715
Receivables:
Employer's contributions -- 652,617
Employees' contributions -- 355,118
------------------ ---------------
Total assets 1,301,633 39,658,450
Liabilities:
Refunds payable -- (210,688)
------------------ ---------------
Net assets available for benefits 1,301,633 39,447,762
================== ===============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
COMPUCOM SYSTEMS, INC.
401(k) MATCHED SAVINGS PLAN
Statement of Net Assets Available for Benefits
December 31, 1997
<TABLE>
<CAPTION>
CompuCom Fidelity Fidelity Fidelity U.S.
Stock Magellan Puritan Equity
Fund Fund Fund Index Fund
-------------- -------------- -------------------------------
<S> <C> <C> <C> <C>
Assets:
Investments (note 3):
CompuCom Systems, Inc. common stock, at fair
value (724,925 shares; cost of $4,359,863) $ 5,980,631 -- -- --
Fidelity Magellan Fund, at fair value (87,363 units;
cost of $7,469,318) -- 8,323,079 -- --
Fidelity Puritan Fund, at fair value (304,220 units;
cost of $5,448,512) -- -- 5,895,790 --
Fidelity U.S. Equity Index fund, at fair value
(97,859 units; cost of $2,826,032) -- -- -- 3,423,107
Fidelity Growth Company Fund, at
fair value (30,374 units; cost of $822,214) -- -- -- --
Fidelity Short-Intermediate Government Fund, at
fair value (86,388 units; cost of $833,706) -- -- -- --
Fidelity Broadly Diversified International Equity
Fund, at fair value (21,601 units; cost of $355,063) -- -- -- --
Fidelity Retirement Money Market Fund, at fair value
(1,984,973 units; cost of $1,984,973) -- -- -- --
Participant loans (unpaid principal balance
approximates fair value) -- -- -- --
-------------- ------------- --------------- --------------
Total investments 5,980,631 8,323,079 5,895,790 3,423,107
Cash 141,199 -- -- --
-------------- ------------- --------------- --------------
6,121,830 8,323,079 5,895,790 3,423,107
Receivables:
Employer's contributions 296,213 422,355 303,730 303,730
Employees' contributions 38,408 56,977 39,193 41,911
-------------- ------------- --------------- --------------
Total assets 6,456,451 8,802,411 6,238,713 3,768,748
Refunds payable (39,276) (61,072) (42,742) (30,146)
-------------- ------------- --------------- --------------
Net assets available for benefits $ 6,417,175 8,741,339 6,195,971 3,738,602
============== ============= =============== ==============
<CAPTION>
Fidelity Fidelity Fidelity
Fidelity Short- Broadly Retirement
Growth Intermediate Diversified Money
Company Government International Market
Fund Fund Equity Fund Funds
-------------- ------------- --------------- --------------
<S> <C> <C> <C> <C>
Assets:
Investments (note 3):
CompuCom Systems, Inc. common stock, at fair
value (724,925 shares; cost of $4,359,863) -- -- -- --
Fidelity Magellan Fund, at fair value (87,363 units;
cost of $7,469,318) -- -- -- --
Fidelity Puritan Fund, at fair value (304,220 units;
cost of $5,448,512) -- -- -- --
Fidelity U.S. Equity Index fund, at fair value
(97,859 units; cost of $2,826,032) -- -- -- --
Fidelity Growth Company Fund, at
fair value (30,374 units; cost of $822,214) 721,391 -- -- --
Fidelity Short-Intermediate Government Fund, at
fair value (86,388 units; cost of $833,706) -- 856,101 -- --
Fidelity Broadly Diversified International Equity
Fund, at fair value (21,601 units; cost of $355,063) -- -- 348,431 --
Fidelity Retirement Money Market Fund, at fair value
(1,984,973 units; cost of $1,984,973) -- -- -- 1,984,973
Participant loans (unpaid principal balance
approximates fair value) -- -- -- --
-------------- ------------- --------------- --------------
Total investments 721,391 856,101 348,431 1,984,973
Cash -- -- --
-------------- ------------- --------------- --------------
721,391 856,101 348,431 1,984,973
Receivables:
Employer's contributions 67,573 83,335 34,174 154,313
Employees' contributions 12,888 10,353 6,704 17,834
-------------- ------------- --------------- --------------
Total assets 801,852 949,789 389,309 2,157,120
Refunds payable (3,188) (9,277) (2,038) (10,250)
-------------- ------------- --------------- --------------
Net assets available for benefits 798,664 940,512 387,271 2,146,870
============== ============= =============== ==============
<CAPTION>
Participant
Loans Totals
---------------- ----------------
<S> <C> <C>
Assets:
Investments (note 3):
CompuCom Systems, Inc. common stock, at fair
value (724,925 shares; cost of $4,359,863) -- 5,980,631
Fidelity Magellan Fund, at fair value (87,363 units;
cost of $7,469,318) -- 8,323,079
Fidelity Puritan Fund, at fair value (304,220 units;
cost of $5,448,512) -- 5,895,790
Fidelity U.S. Equity Index fund, at fair value
(97,859 units; cost of $2,826,032) -- 3,423,107
Fidelity Growth Company Fund, at
fair value (30,374 units; cost of $822,214) -- 721,391
Fidelity Short-Intermediate Government Fund, at
fair value (86,388 units; cost of $833,706) -- 856,101
Fidelity Broadly Diversified International Equity
Fund, at fair value (21,601 units; cost of $355,063) -- 348,431
Fidelity Retirement Money Market Fund, at fair value
(1,984,973 units; cost of $1,984,973) -- 1,984,973
Participant loans (unpaid principal balance
approximates fair value) 1,021,838 1,021,838
---------------- ----------------
Total investments 1,021,838 28,555,341
Cash -- 141,199
---------------- ----------------
1,021,838 28,696,540
Receivables:
Employer's contributions -- 1,665,423
Employees' contributions -- 224,268
---------------- ----------------
Total assets 1,021,838 30,586,231
Refunds payable -- (197,989)
---------------- ----------------
Net assets available for benefits 1,021,838 30,388,242
================ ================
</TABLE>
<PAGE>
COMPUCOM SYSTEMS, INC.
401(k) MATCHED SAVINGS PLAN
Statement of Changes in Net Assets Available for Benefits
Year ended December 31, 1998
<TABLE>
<CAPTION>
Fidelity
CompuCom Fidelity Fidelity Fidelity U.S. Growth
Stock Magellan Puritan Equity Company
Fund Fund Fund Index Fund Fund
----------- ----------- ---------- ------------- ---------
<S> <C> <C> <C> <C> <C>
Additions to net assets attributed to:
Employer's contributions $ 312,594 634,924 385,297 400,274 216,345
Employees' contributions 1,130,439 2,361,013 1,443,155 1,738,374 864,459
Investment income:
Interest and dividends 32,218 596,008 765,658 123,637 139,849
Net appreciation (depreciation) in fair value
of investments (3,892,255) 2,511,315 286,904 1,147,923 408,533
---------- --------- -------- --------- ---------
Net investment income (3,860,037) 3,107,323 1,052,562 1,271,560 548,382
----------- ---------- --------- --------- ---------
Total additions (2,417,004) 6,103,260 2,881,014 3,490,208 1,629,386
Deductions from net assets attributed to:
Administrative fees (3,870) (4,850) (6,163) (1,977) (679)
Withdrawals (698,531) (1,526,486) (728,235) (642,676) (172,053)
---------- ---------- --------- --------- ---------
Total deductions (702,401) (1,531,336) (734,398) (644,653) (172,732)
---------- ---------- --------- --------- ---------
Net increase (decrease) prior to interfund
transfers (3,119,405) 4,571,924 2,146,616 2,845,555 1,456,654
Interfund transfers 358,943 (411,547) (753,630) 134,451 (17,019)
---------- ---------- --------- --------- ---------
Net increase (decrease) (2,760,462) 4,160,377 1,392,986 2,928,814 1,591,105
Net assets available for benefits:
Beginning of year 6,417,175 8,741,339 6,195,971 3,738,602 798,664
---------- ---------- --------- --------- ---------
End of year $ 3,656,713 12,901,716 7,588,957 6,667,416 2,389,769
========== ========== ========= ========= =========
<CAPTION>
Fidelity Fidelity Fidelity
Short- Broadly Retirement
Intermediate Diversified Money
Government International Market Participant
Fund Equity Fund Fund Loans Totals
------------ -------------- ---------- ------------ -------
<S> <C> <C> <C> <C> <C>
Additions to net assets attributed to:
Employer's contributions $ 107,148 97,945 167,080 -- 2,401,807
Employees' contributions 408,472 394,634 663,427 -- 9,003,973
Investment income:
Interest and dividends 80,690 34,087 130,064 -- 1,902,211
Net appreciation (depreciation) in fair value
of investments 22,045 33,885 -- -- 518,350
--------- -------- --------- --------- ----------
Net investment income 102,735 67,972 130,064 -- 2,428,561
--------- -------- --------- --------- ----------
Total additions 618,355 560,551 960,571 -- 13,826,341
Deductions from net assets attributed to:
Administrative fees (1,869) -- (147,066) -- (166,474)
Withdrawals (117,829) (81,929) (410,534) (222,074) (4,600,347)
-------- ------- --------- --------- ----------
Total deductions (119,698) (81,929) (557,600) (222,074) (4,766,821)
-------- ------- --------- --------- -----------
Net increase (decrease) prior to interfund
transfers 498,657 478,622 402,971 (222,074) 9,059,520
Interfund transfers 91,376 12,098 (17,019) 501,869 --
--------- ------- --------- --------- ----------
Net increase (decrease) 590,233 490,720 385,952 279,795 9,059,520
Net assets available for benefits:
Beginning of year 940,512 387,271 2,146,870 1,021,838 30,388,242
--------- ------- --------- --------- ----------
End of year 1,530,745 877,991 2,532,822 1,301,633 39,447,762
========= ======= ========= ========= ==========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
COMPUCOM SYSTEMS, INC.
401(k) MATCHED SAVINGS PLAN
Statement of Changes in Net Assets Available for Benefits
Year ended December 31, 1997
<TABLE>
<CAPTION>
CompuCom Fidelity Fidelity Fidelity U.S.
Stock Magellan Puritan Equity
Fund Fund Fund Index Fund
------------- ------------- -----------------------------
<S> <C> <C> <C> <C>
Additions to net assets attributed to:
Employer's contributions $ 296,213 422,355 303,730 303,730
Employees' contributions 1,200,350 1,872,100 1,282,285 1,310,251
Investment income:
Interest and dividends 21,188 547,247 490,309 73,394
Net appreciation (depreciation) in fair value
of investments (1,529,667) 1,173,999 572,005 583,342
------------- ------------- -----------------------------
Net investment income (1,508,479) 1,721,246 1,062,314 656,736
------------- ------------- -----------------------------
Total additions (11,916) 4,015,701 2,648,329 2,270,717
Deductions from net assets attributed to:
Administrative fees (1,388) (2,325) (5,681) (1,963)
Withdrawals (948,237) (1,709,409) (941,808) (438,402)
------------- ------------- -----------------------------
Total deductions (949,625) (1,711,734) (947,489) (440,365)
------------- ------------- -----------------------------
Net increase (decrease) prior to interfund
transfers (961,541) 2,303,967 1,700,840 1,830,352
Interfund transfers (1,036,368) 20,111 (134,345) 344,133
------------- ------------- -----------------------------
Net increase (decrease) (1,997,909) 2,324,078 1,566,495 2,174,485
Net assets available for benefits:
Beginning of year 8,415,084 6,417,261 4,629,476 1,564,117
------------- ------------- -----------------------------
End of year $ 6,417,175 8,741,339 6,195,971 3,738,602
============= ============= =============================
<CAPTION>
Fidelity Fidelity Fidelity
Fidelity Short- Broadly Retirement
Growth Intermediate Diversified Money
Company Government International Market
Fund Fund Equity Fund Fund
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Additions to net assets attributed to:
Employer's contributions 67,573 83,335 34,174 154,313
Employees' contributions 327,781 347,479 161,775 744,238
Investment income:
Interest and dividends 137,621 49,260 13,429 113,799
Net appreciation (depreciation) in fair value
of investments (93,879) 19,117 (6,560) --
------------- ------------- ------------- -------------
Net investment income 43,742 68,377 6,869 113,799
------------- ------------- ------------- -------------
Total additions 439,096 499,191 202,818 1,012,350
Deductions from net assets attributed to:
Administrative fees (644) (1,606) -- (5,263)
Withdrawals (18,426) (116,722) (16,763) (580,722)
------------- ------------- ------------- -------------
Total deductions (19,070) (118,328) (16,763) (585,985)
------------- ------------- ------------- -------------
Net increase (decrease) prior to interfund
transfers 420,026 380,863 186,055 426,365
Interfund transfers 365,079 (41,891) 192,331 (119,053)
------------- ------------- ------------- -------------
Net increase (decrease) 785,105 338,972 378,386 307,312
Net assets available for benefits:
Beginning of year 13,559 601,540 8,885 1,839,558
------------- ------------- ------------- -------------
End of year 798,664 940,512 387,271 2,146,870
============= ============= ============= =============
<CAPTION>
Participant
Loans Totals
------------- -------------
<S> <C> <C>
Additions to net assets attributed to:
Employer's contributions -- 1,665,423
Employees' contributions -- 7,246,259
Investment income:
Interest and dividends -- 1,446,247
Net appreciation (depreciation) in fair value
of investments -- 718,357
------------- -------------
Net investment income -- 2,164,604
------------- -------------
Total additions -- 11,076,286
Deductions from net assets attributed to:
Administrative fees -- (18,870)
Withdrawals (167,886) (4,938,375)
------------- -------------
Total deductions (167,886) (4,957,245)
------------- -------------
Net increase (decrease) prior to interfund
transfers (167,886) 6,119,041
Interfund transfers 410,003 --
------------- -------------
Net increase (decrease) 242,117 6,119,041
Net assets available for benefits:
Beginning of year 779,721 24,269,201
------------- -------------
End of year 1,021,838 30,388,242
============= =============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
COMPUCOM SYSTEMS, INC.
401(k) MATCHED SAVINGS PLAN
Notes to Financial Statements
December 31, 1998 and 1997
(1) Description of the Plan
(a) General
The CompuCom Systems, Inc. 401(k) Matched Savings Plan (the Plan)
is a defined contribution plan covering substantially all
employees of CompuCom Systems, Inc. ("CompuCom" or the
"Company/Employer"). For the plan year ended December 31,1997
employees were eligible to participate in the plan after six
months of qualifying service. The following description of the
Plan is provided for general informational purposes only.
Participants should refer to the Plan documents for more complete
information.
The Plan is subject to the provisions of the Employee Retirement
Income Security Act of 1974, as amended (ERISA). The Plan is
subject to those provisions of Title I and II of ERISA which,
among other things, require that each participant be furnished
with an annual financial report and a comprehensive description of
the participant's rights under the Plan, set minimum standards of
responsibility applicable to fiduciaries of the Plan, and
establish minimum standards for participation and vesting.
The Company serves as the Plan Administrator; however, the Plan
operates under a contract administration agreement, whereby an
independent third party investment firm ("Investment Firm")
assists the Company in this capacity. The Investment Firm
maintains a separate account for each participant reflecting the
participant's cost and market value of investments. The Investment
Firm also serves as the trustee and makes distributions from a
participant's account in accordance with the terms of the Plan
document.
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 accounts.
(b) Vesting
Participants are fully vested in their individual contributions to
the Plan. Employer's matching contributions vest 50% after two
years of service and 100% after three years of service. A year of
service is a consecutive 12-month period during which an employee
has completed 1,000 hours of service.
(c) Contributions
The Company matches 50% of each participant's qualifying
contribution up to 4% of the participant's basic compensation. The
Company also matches an additional 25% on each participant's next
2% of (over and beyond the first 4%) qualifying contributions.
During 1998 and 1997, the Company contributed $2,401,807 and
$1,665,423, respectively, to participants' accounts.
10
<PAGE>
COMPUCOM SYSTEMS, INC.
401(k) MATCHED SAVINGS PLAN
Notes to Financial Statements
December 31, 1998 and 1997
Contributions are invested in one or more investment funds, one of
which includes the Company's Common Stock. The funds allocated to
a participant's account are received by the Trustee in cash and
are held in cash until they are invested in the appropriate funds.
At December 31, 1998 and 1997, there is no unallocated cash.
(d) Participants' Accounts
Each participant's account is credited with the participant's
contribution and allocations of the Company's contribution and
Plan earnings. Forfeited balances of terminated participants'
nonvested accounts may be used to reduce future Company
contributions or pay administrative expenses of the plan. The
benefit to which a participant is entitled is the benefit that can
be provided from the participant's vested account.
(e) Withdrawals
Participants may request a withdrawal of all or a portion of their
elective contribution account balances if the withdrawal qualifies
as a "Financial Hardship" as defined by the Internal Revenue
Service. The Plan Administrator must approve the request and the
hardship withdrawal will be taxed to the participant as ordinary
income and may be subject to an additional government imposed
penalty tax. Upon the attainment of age 59-1/2, participants may
withdraw without penalty from their participant's account an
amount which is equal to any whole percentage of their vested
interest.
(f) Loans to Participants
Upon request of a participant, the Plan Administrator, in its sole
discretion, may make a loan to the participant. Participant loan
amounts may not exceed $50,000 or 50% of the participant's vested
account balance. The maximum term for any loan is five years.
Loans bear interest at rates determined by the Plan Administrator
ranging from 10.25% to 11.50% in 1998.
(g) Expenses of Plan
The expenses for administration of the Plan, including the
expenses of the administration and fees of the Trustee, shall be
paid from the Plan, unless CompuCom (the Sponsor) elects to make
payment. The Sponsor paid approximately $166,000 in fees relating
to the Plan during 1998 and $12,000 in 1997.
(2) Summary of Significant Accounting Policies
The accompanying financial statements have been prepared on an accrual
basis using quoted market for determining fair value of investments. The
investments in mutual funds and Company common stock are stated at fair
value and are based on closing market quotations. The investment in
participant loans is stated at the unpaid principal balance of the loans,
which approximates fair value. Purchases and sales of securities are
recorded on a trade date basis. Expenses relating to the purchase or sale
of investment securities are added to the cost or deducted from the
proceeds, respectively.
11
<PAGE>
COMPUCOM SYSTEMS, INC.
401(k) MATCHED SAVINGS PLAN
Notes to Financial Statements
December 31, 1998 and 1997
The net increase (decrease) in fair values of investments held during the
years ended December 31, 1998 and 1997 (including investments bought,
sold, as well as held during the year) is reflected in the statements of
changes in net assets available for benefits as net appreciation
(depreciation) in fair value of investments.
The preparation of financial statements in conformity with generally
accepted accounting principles requires the Plan to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements, and the reported amounts of additions and
deductions during the reporting period. Because of the use of estimates
inherent in the financial reporting process, actual results could differ
from those estimates.
(3) Investment Programs
The Company's matching contributions to the Plan are invested in
CompuCom's common stock and investment funds in proportion to the
participants' contributions in connection with the matching provision of
the Plan. Funds from previous companies' plans and rollovers from
qualified plans are invested in the investment funds at the participants'
direction. Provisions of the Plan allow participant contributions in 1%
increments to be invested in any of the funds, including CompuCom common
stock.
Certain Plan investments are shares of mutual funds managed by Fidelity
Investments. Fidelity Investments is the trustee as defined by the Plan
and, therefore, these transactions qualify as party-in-interest.
The investment programs of the Plan are as follows:
(a) CompuCom Stock Fund
Contributions are invested in the Company's common stock. The
Company has entered into a contractual agreement for the purchase
and liquidation of shares of Employer stock.
(b) Fidelity Magellan Fund
Contributions are invested in a pooled fund of common stocks and
securities convertible to common stock. The performance of the
fund is related to market gains and losses. The return on this
fund may be higher or lower than the return of other funds.
(c) Fidelity Puritan Fund
Contributions are invested in a pooled fund of a broad list of
securities, including common stocks, preferred stocks and bonds,
including high-yield, low-quality bonds. The value of this fund
depends on the performance of the stocks and bonds in which this
fund is invested. The return on this fund may be higher or lower
than the return of other funds.
12
<PAGE>
COMPUCOM SYSTEMS, INC.
401(k) MATCHED SAVINGS PLAN
Notes to Financial Statements
December 31, 1998 and 1997
(d) Fidelity U.S. Equity Index Fund
Contributions are invested in a pooled fund of common stocks
publicly traded in the United States. The fund attempts to
duplicate the composition and return of the Standard & Poors 500.
The performance of the fund is related to market gains and losses.
The return of this fund may be higher or lower than the return of
other funds.
(e) Fidelity Growth Company Fund
Contributions are invested in a pooled fund of common stocks and
securities convertible into common stock. The performance of the
fund is related to market gains and losses. The return on this
fund may be higher or lower than the return of other funds.
(f) Fidelity Short-Intermediate Government Fund
Contributions are invested in a pooled fund of U.S. Government
securities and instruments related to U.S. Government securities.
The fund normally maintains a dollar weighted average maturity of
two to five years. The return on this fund may be higher or lower
than the return of other funds.
(g) Fidelity Broadly Diversified International Equity Fund
Contributions are invested in a pooled fund of securities of any
issuer, including companies and other business organizations as
well as governments and government agencies. The fund tends to
focus on the equity securities of both large and small companies.
The performance of the fund is related to market gains and losses.
The return of this fund may be higher or lower than the return of
other funds.
(h) Fidelity Retirement Money Market Fund
Contributions are invested in a pooled fund of high-quality U.S.
dollar denominated money market securities of domestic and foreign
issuers, including U.S. Government securities and repurchase
agreements.
The following table presents the fair values of investments. Investments that
represents 5% or more of the Plan's net assets available for benefits are
separately identified:
<TABLE>
<CAPTION>
December 31, December 31,
1998 1997
------------------- -------------------
<S> <C> <C>
Investments at estimated fair value determined
by quoted market price
CompuCom Systems, Inc.
common stock $ 3,504,631 5,980,631
Fidelity Magellan Fund 12,704,102 8,323,079
Fidelity Puritan Fund 7,472,528 5,895,790
Fidelity U.S. Equity Index Fund 6,514,046 3,423,107
Fidelity Growth Company Fund 2,286,999 721,391
</TABLE>
13
<PAGE>
COMPUCOM SYSTEMS, INC.
401(k) MATCHED SAVINGS PLAN
Notes to Financial Statements
December 31, 1998 and 1997
<TABLE>
<S> <C> <C>
Fidelity Retirement Money
Market Fund 2,473,480 1,984,973
Other 2,327,965 1,204,532
------------------- -------------------
37,283,751 27,533,503
Investments at estimated fair value -
participant loans 1,301,633 1,021,838
------------------- -------------------
$ 38,585,384 28,555,341
=================== ===================
</TABLE>
14
<PAGE>
COMPUCOM SYSTEMS, INC.
401(K) MATCHED SAVINGS PLAN
Notes to Financial Statements
December 31, 1998 and 1997
The Plan's investments (including investments bought, sold, as well as
those held during the year) appreciated (depreciated) in fair value as
follows:
<TABLE>
<CAPTION>
December 31, December 31,
1998 1997
------------------- -------------------
<S> <C> <C>
CompuCom Systems, Inc. common stock $ (3,892,255) (1,529,667)
Fidelity Magellan Fund 2,511,315 1,173,999
Fidelity Puritan Fund 286,904 572,005
Fidelity U.S. Equity Index Fund 1,147,923 583,342
Fidelity Growth Company Fund 408,533 (93,879)
Other 55,930 12,557
==================== =====================
$ 518,350 718,357
==================== =====================
</TABLE>
(4) Tax Status
The Internal Revenue Service has determined and informed the Company by a
letter dated November 3, 1997 that the Plan is designed in accordance
with applicable sections of the Internal Revenue Code (IRC). 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.
The federal income tax status of the participants with respect to their
contributions to the Plan is described in information submitted to the
participants and, subject to certain limitations, such contributions are
tax deferred.
(5) Refunds Payable
At December 31, 1998 and 1997, the Plan has recorded refunds payable of
$210,688, and $197,989, respectively. The refunds relate to amounts due
to certain employees of the Company based upon nondiscrimination tests
for deferrals and employee after-tax contributions to the Plan.
(6) Year 2000 (unaudited)
The Plan could be adversely affected if the computer systems and those of
service providers used by the Plan or the Trustee do not properly process
and calculate date related information from and after January 1, 2000.
This is commonly known as the "Year 2000 Problem." The Company is taking
steps that it believes are reasonably designed to address the Year 2000
Problem with respect to the computer systems that it uses and to obtain
satisfactory assurances that comparable steps are being taken by each of
the Plan's other major service providers. At this time, however, there
can be no assurance that these steps will be sufficient to avoid any
material adverse effect on the Plan's activities and, accordingly, its
net assets available for benefits and changes therein.
15
<PAGE>
Schedule 1
COMPUCOM SYSTEMS, INC.
401(k) MATCHED SAVINGS PLAN
Item 27a - Schedule of Assets Held for Investment Purposes
as of December 31, 1998
<TABLE>
<CAPTION>
Description Current
Identity of issue of investment Cost value
- ------------------------------------ ------------------ ----------------- ----------------
<S> <C> <C> <C>
CompuCom Stock Fund:
CompuCom Systems, Inc.
common stock* 1,001,323 units $ 5,717,480 3,504,631
Fidelity Magellan Fund* 105,149 units 9,709,836 12,704,102
Fidelity Puritan Fund* 372,323 units 6,864,015 7,472,528
Fidelity U.S. Equity Index Fund* 148,181 units 4,941,551 6,514,046
Fidelity Growth Company Fund* 71,986 units 1,985,823 2,286,999
Fidelity Short-Intermediate
Government Fund* 147,360 units 1,457,570 1,494,231
Fidelity Broadly Diversified International
Equity Fund* 47,050 units 810,591 833,734
Fidelity Retirement Money Market Fund* 2,473,480 units 2,473,480 2,473,480
Participant loans 10.25% to 11.50 % -- 1,301,633
------------- -------------
$ 33,960,346 38,585,384
============= =============
</TABLE>
*Party-in-interest
See accompanying independent auditors' report.
16
<PAGE>
COMPUCOM SYSTEMS, INC.
401(k) MATCHED SAVINGS PLAN
Item 27a - Schedule of Reportable Transaction
For the year ended December 31, 1998
<TABLE>
<CAPTION>
Aggregate
Description number of Purchase Selling
Identity of party involved of transaction transactions price price
- -------------------------------- ------------------------- ----------------- ------------------ --------------
<S> <C> <C> <C> <C>
Purchases:
Fidelity Short-
Intermediate
Government Fund U.S. securities fund 183 $ 1,441,225 --
Fidelity Magellan Fund Common stock fund 238 4,573,955 --
Fidelity Puritan Fund Variable security fund 229 3,112,497 --
Fidelity Growth
Company Fund Common stock fund 186 1,508,305 --
Fidelity Retirement
Money Market Fund Money market fund 198 2,012,983 --
Fidelity U.S. Equity
Index Fund Common stock fund 227 3,132,235 --
Sales:
Fidelity Short-
Intermediate
Government Fund U.S. securities fund 127 -- 825,139
Fidelity Magellan Fund Common stock fund 180 -- 2,704,246
Fidelity Puritan Fund Variable security fund 186 -- 1,822,663
Fidelity Growth
Company Fund Common stock fund 98 -- 351,229
Fidelity Retirement
Money Market Fund Money market fund 185 -- 1,524,476
Fidelity U.S. Equity
Index Fund Common stock fund 165 -- 1,189,219
<CAPTION>
Current
Expense value of
incurred asset on Net
Lease with Cost of transaction gain
Identity of party involved rental transaction asset date (loss)
- ------------------------------- -------------- --------------- ------------- --------------- ----------
<S> <C> <C> <C> <C> <C>
Purchases:
Fidelity Short-
Intermediate
Government Fund -- -- 1,441,225 1,441,225 --
Fidelity Magellan Fund -- -- 4,573,955 4,573,955 --
Fidelity Puritan Fund -- -- 3,112,497 3,112,497 --
Fidelity Growth
Company Fund -- -- 1,508,305 1,508,305 --
Fidelity Retirement
Money Market Fund -- -- 2,012,983 2,012,983 --
Fidelity U.S. Equity
Index Fund -- -- 3,132,235 3,132,235 --
Sales:
Fidelity Short-
Intermediate
Government Fund -- -- 817,362 825,739 7,777
Fidelity Magellan Fund -- -- 2,333,437 2,704,246 370,809
Fidelity Puritan Fund -- -- 1,696,975 1,822,663 125,668
Fidelity Growth
Company Fund -- -- 344,695 351,229 6,534
Fidelity Retirement
Money Market Fund -- -- 1,524,476 1,524,476 --
Fidelity U.S. Equity
Index Fund -- -- 1,016,717 1,189,219 172,502
</TABLE>
See accompanying independent auditors' report.
17
<PAGE>
Exhibit 23
Consent Of Independent Auditors
The Board of Directors
CompuCom Systems, Inc.:
We consent to the incorporation by reference in Registration Statements (No. 33-
30056 No. 33-30175, No. 33-43275 and No. 33-76382) on Form S-8 of CompuCom
Systems, Inc. of our report dated June 11, 1999 relating to the statements of
net assets available for benefits of CompuCom Systems, Inc. 401(k) Matched
Savings Plan as of December 31, 1998 and 1997, and the related statements of
changes in net assets available for benefits for the years then ended, and the
related supplemental schedules, which report appears in the December 31, 1998
annual report on Form 11-K of the CompuCom Systems, Inc. 401(k) Matched Savings
Plan filed by CompuCom Systems, Inc.
/s/ KPMG Peat Marwick
Dallas, Texas
June 30, 1999
