<PAGE>
EXHIBIT 99
ISCO, INC. RETIREMENT PLU$ PLAN
Financial Statements As Of
And For The Years Ended
July 31, 2000 And 1999
And Supplemental Schedule
As Of
July 31, 2000
And Independent Auditors' Report
34
<PAGE>
ISCO, INC. RETIREMENT PLU$ PLAN
FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE
AND INDEPENDENT AUDITORS' REPORT
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
FINANCIAL STATEMENTS:
Independent Auditors' Report 36
Statements of Net Assets Available for Benefits 37
Statements of Changes in Net Assets Available for Benefits 38
Notes to Financial Statements 39
SUPPLEMENTAL SCHEDULE:
Form 5500 Schedule H Part IV, Line 4 (i) -
Schedule of Assets Held for Investment Purposes - July 31, 2000 44
Schedules not filed herein are omitted because of the absence of the
conditions under which they are required.
</TABLE>
35
<PAGE>
INDEPENDENT AUDITORS' REPORT
Plan Committee
Isco, Inc. Retirement Plu$ Plan
Lincoln, Nebraska
We have audited the accompanying statements of net assets available for
benefits of the Isco, Inc. Retirement Plu$ Plan as of July 31, 2000 and 1999
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 the
financial statements based on our audits.
We conducted our audit in accordance with auditing standards generally
accepted in the United States of America. 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, such financial statements present fairly, in all material
respects, the net assets available for benefits of the Isco, Inc. Retirement
Plu$ Plan as of July 31, 2000 and 1999, and the changes in net assets
available for benefits for the years then ended in conformity with accounting
principles generally accepted in the United States of America.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of assets
held for investment purposes as of July 31, 2000 is 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 schedule is the
responsibility of the Plan's management. Such supplemental schedule has been
subjected to the auditing procedures applied in our audit of the basic
financial statements and, in our opinion, are fairly stated in all material
respects when considered in relation to the basic financial statements taken
as a whole.
Deloitte & Touche LLP
Lincoln, Nebraska
October 16, 2000
36
<PAGE>
ISCO, INC. RETIREMENT PLU$ PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
(Amounts in thousands)
<TABLE>
<CAPTION>
July 31, 2000 July 31, 1999
------------- -------------
<S> <C> <C>
Investments, at fair value as
determined by quoted
market prices (Note C):
Money market funds $ 1,667 $ 2,695
Mutual funds 28,871 24,201
Isco, Inc. common stock 345 464
Investments, at estimated fair value (Note C):
Other investments -- 13
------- -------
Total investments at fair value 30,883 27,373
Participant loans 436 450
------- -------
Total investments 31,319 27,823
------- -------
Employer contribution receivable 345 --
------- -------
Net assets available for benefits $31,664 $27,823
======= =======
</TABLE>
The accompanying notes are an integral part of the financial statements.
37
<PAGE>
ISCO, INC. RETIREMENT PLU$ PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
(Amounts in thousands)
<TABLE>
<CAPTION>
Year Ended Year Ended
July 31, 2000 July 31, 1999
------------- -------------
<S> <C> <C>
Investment income (Note C):
Dividends, interest and other income $ 2,145 $ 2,885
Net realized and unrealized
appreciation in fair
value of investments 2,433 581
-------- --------
Net investment income 4,578 3,466
-------- --------
Contributions:
Employer annual profit sharing 345 --
Employer 401(k) matching 161 163
Participant 847 857
-------- --------
1,353 1,020
-------- --------
Total additions 5,931 4,486
Benefits paid (2,090) (984)
-------- --------
Increase in net assets
available for benefits 3,841 3,502
Net assets available for benefits:
Beginning of year 27,823 24,321
-------- --------
End of year $ 31,664 $ 27,823
======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
38
<PAGE>
ISCO, INC. RETIREMENT PLU$ PLAN
NOTES TO FINANCIAL STATEMENTS
Years ended July 31, 2000 and 1999
(Columnar amounts in thousands, except share/unit data)
NOTE A. DESCRIPTION OF PLAN
GENERAL. The following brief description of the Isco, Inc. Retirement Plu$
Plan (the Plan) is provided for general information purposes only.
Participants should refer to the Plan document for more complete information.
The Plan was established, effective August 1, 1972, to provide retirement
benefits for the employees of Isco, Inc. The Plan was last amended effective
August 1, 1995. Effective August 1, 1987, a 401(k) salary reduction option
was incorporated into the Plan. Employees are eligible for participation
after they have completed one year of service and are at least 21 years of
age. A year of service is defined as the accumulation of 1,000 hours of
credited service during a one-year period beginning on the employment date.
Participant contributions, Employer 401(k) matching contributions, and
Employer profit sharing contributions, are invested at American Century
Investments under the direction of the plan participants.
CONTRIBUTIONS. Contributions to the Plan are provided from the following
sources:
EMPLOYER ANNUAL PROFIT SHARING CONTRIBUTION. The Employer is required to
contribute an amount equal to the lesser of 7% of the current net profit of
the Company or the maximum amount allowed by the Internal Revenue Code. The
contributed amount received by each participant is based on their percentage
of total eligible compensation.
PARTICIPANT CONTRIBUTIONS. Plan participants may elect to reduce their
compensation by a maximum of 12%, subject to IRS limitations. The Employer
then contributes the amount of reduction in compensation to the Plan on
behalf of each participant.
EMPLOYER 401(k) MATCHING CONTRIBUTION. The Employer is required to match 20%
of the contribution made on behalf of each participant electing salary
reductions up to a maximum of 10% of the participant's eligible compensation.
PARTICIPANT ACCOUNTS. Each participant's account is credited with the
participant's contribution, the Employer's matching contribution and the
allocated portion of the Employer's annual profit sharing contribution and
the forfeited portion of terminated participants' non-vested account
balances. Any 401(k) forfeitures are allocated, based on a participant's
contributions to the 401(k) plan during the plan year. The Employer's annual
profit sharing contribution and related forfeitures are allocated to each
participant's account based on the percentage of the participant's eligible
compensation for the plan year to the total compensation of all eligible
participants for the plan year. Earnings are credited directly to each
investment option in which the participant had an investment on the record
date of the dividend or interest distribution.
VESTING. Participant contributions (i.e. employee salary reduction amounts)
are immediately fully vested and nonforfeitable. Employer profit sharing
contributions and the Employer 401(k) matching contributions vest 20% upon
completion of three years of credited service, increasing 20% per year until
fully vested upon completion of seven years of credited service.
PAYMENT OF BENEFITS. On termination of service due to death, disability or
retirement, a participant with a vested balance greater than $5,000 may elect
to receive either a lump sum equal to the participant's vested interest in
his or her account, or monthly installments. A participant with a vested
balance less than $5,000 will receive a lump sum payment equal to the
participant's vested account balance.
39
<PAGE>
Plan participants are eligible for normal retirement at age 65 but may elect
to retire at a later date. Upon attainment of 65 years of age, death, or
determination of disability, a participant becomes 100% vested regardless of
the number of credited years of service completed.
PLAN EXPENSES. The employer pays for all costs to administer the plan with
the exception of loan origination and loan maintenance fees. This provides an
additional benefit to the participant. The administration costs are not
reflected in the Plan's financial statements.
EMPLOYER DIRECTED. As of July 31, 2000, there are no employer directed funds
invested in the Restricted Fund. Prior to July 31, 2000, investments in the
Restricted Fund were transferred into the Unrestricted Fund, as directed by
the Plan Committee. Employer directed funds were previously invested in the
Restricted Fund, which was managed by the Employer. Assets in the Restricted
Fund at July 31, 1999 include: Balcor Pension Investors II and III, Benham
Stable Value Government Fund, and Scout Prime Pooled Investment.
PARTY IN INTEREST TRANSACTIONS. Certain investments are in funds managed by
the trustee of the Plan and therefore, qualify as party in interest.
INVESTMENT OPTIONS:
PARTICIPANT DIRECTED. Participants may select to invest in one or more of the
following thirteen funds. A brief summary description of each investment
option follows:
BENHAM STABLE VALUE GOVERNMENT FUND. A fund that seeks to provide current
income while maintaining a stable share price. It is managed by SEI Trust Co.
BENHAM PREMIUM BOND FUND. A fund that seeks a high level of income from a
portfolio of longer-term bonds and other debt obligations.
AMERICAN CENTURY BALANCED FUND. A fund that seeks capital growth and current
income by investing in equity securities with prospects for growth and in
investment grade bonds and other fixed income securities.
AMERICAN CENTURY SELECT FUND. A fund comprised primarily of income-producing
equity securities of larger companies with the potential for appreciation.
AMERICAN CENTURY ULTRA FUND. A fund comprised primarily of equity securities
of medium and smaller companies with the potential for appreciation.
AMERICAN CENTURY INTERNATIONAL GROWTH FUND. A fund that seeks capital growth
by investing primarily in an internationally diversified portfolio of common
stocks.
AMERICAN CENTURY EQUITY INDEX FUND. A fund that seeks long-term capital
growth by investing in stocks that comprise of the S&P 500 Index.
AMERICAN CENTURY STRATEGIC ALLOCATION: CONSERVATIVE. A fund seeking to
provide regular income through emphasizing investment in bonds and money
market securities combined with the potential for moderate long-term return
as the result of its stake in equity securities.
AMERICAN CENTURY STRATEGIC ALLOCATION: MODERATE. A fund emphasizing
investment in equity securities but maintaining a sizable stake in bonds and
money market securities.
40
<PAGE>
AMERICAN CENTURY STRATEGIC ALLOCATION: AGGRESSIVE. A fund emphasizing
investment in equity securities, but maintaining a smaller portion of its
assets in bonds and money market securities.
AMERICAN CENTURY VALUE FUND. A fund investing primarily in equity securities
of well established companies with intermediate to large market
capitalizations that are believed by fund management to be undervalued at the
time of purchase.
AMERICAN CENTURY VISTA FUND. A fund investing primarily in medium sized and
smaller companies with above average prospects for appreciation.
ISCO, INC. COMMON STOCK. Assets invested primarily in Isco, Inc. common
stock. Isco, Inc. is a party-in-interest and sponsor of the Plan.
NOTE B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING. The financial statements of the Plan are prepared under
the accrual method of accounting.
USE OF ESTIMATES. The preparation of the financial statements in accordance
with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the
reported amounts of net assets available for benefits and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of changes in net assets available for benefits during
the reporting period. Actual results could differ from those estimates.
INVESTMENT VALUATION AND INCOME RECOGNITION. Investments are stated at fair
value. Fair value of marketable securities is determined by reference to the
closing quoted price by the exchange on which the security is listed or the
closing net asset value as reported by the mutual fund. Participant loans are
stated at their outstanding principal balance. The amounts shown in Note C
for securities that do not have a quoted market price represent fair value
estimated by an independent third party.
Investment transactions are recognized on a settlement date basis. The net
realized and unrealized appreciation (depreciation) of investments is
recognized in the statements of changes in net assets available for benefits.
The fair value at the beginning of the plan year, or the purchased cost if
acquired during the year, is used in determining realized and unrealized
gains and losses on the sale of each investment.
PAYMENT OF BENEFITS. The Plan's policy is to record benefit payments upon
distribution to the participants. Benefits payable to retired and terminated
participants were $56,508 and $303,388 at July 31, 2000 and 1999,
respectively.
CONTRIBUTIONS. The employer profit sharing contribution is computed as of the
end of the Employer's fiscal year and is recorded by the Plan in the
corresponding period, but is allocated to participants' accounts in the plan
quarter in which the profit sharing contribution is made to the Plan.
Participant contributions are recorded in the period in which the bi-weekly
payroll deductions are made. The Employer 401(k) matching contributions are
also recorded in the period that the payroll deductions are made.
RECLASSIFICATIONS. Certain reclassifications have been made to the prior
years' financial statements to conform to the current years' presentation.
41
<PAGE>
NOTE C. INVESTMENTS
The following schedule presents the fair values of investments that represent 5
percent or more of the Plan's net assets.
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
2000 1999
Fair Value Fair Value
---------- ----------
<S> <C> <C>
Investments at fair value as determined by quoted market price:
Money Market:
Benham Stable Value Government Fund $ 1,667 $ 2,660
Mutual Funds:
American Century International Growth Fund 2,891 1,625
American Century Ultra Fund 9,256 7,006
American Century Select Fund 10,157 9,539
American Century Balanced Fund 3,140 3,179
Other Investments 3,772 3,364
--------- -------
Total Investments at Fair Value $30,883 $27,373
========= =======
---------------------------------------------------------------------------------------------------------------------
</TABLE>
The net appreciation (depreciation) in fair value of investments for the years
ended July 31, 2000 and 1999 are summarized as follows:
<TABLE>
<CAPTION>
2000 1999
------- -------
<S> <C> <C>
Mutual Funds $ 2,569 $ 558
Bank Collective Funds -- 57
Isco, Inc. Common Stock (136) (34)
------- ------
$ 2,433 $ 581
======= =======
</TABLE>
NOTE D. EMPLOYER DIRECTED INVESTMENTS
Information about the net assets and the significant components of the changes
in net assets relating to the employer directed investments is as follows:
<TABLE>
<CAPTION>
2000 1999
------- ------
<S> <C> <C>
Net Assets
Money Market Funds $ -- $ 132
Investments At Estimated Fair Value -- 13
------- ------
$ -- $ 145
======= ======
</TABLE>
During the year ended July 31, 2000, the Plan Committee transferred all of
the net assets in the employer directed investments to the participant
directed investments. Changes in net assets for the years ended July 31, 2000
and 1999 are summarized as follows:
<TABLE>
<CAPTION>
Year Ended Year Ended
Changes In Net Assets July 31, 2000 July 31, 1999
------------- -------------
<S> <C> <C>
Dividends $ 9 $ 11
Benefits Paid (7) (16)
Transfers (147) (101)
----- -----
Decrease In Net Assets $(145) $ (96)
===== =====
-------------------------------------------------------------------------------------------
</TABLE>
42
<PAGE>
NOTE E. PLAN TERMINATION
Although Isco, Inc. has not expressed any intent to terminate the Plan, it
may do so at any time by giving 30 days notice to the Plan Committee, the
Plan Administrator, and the Trustee. In the event of such termination, Plan
assets would be valued and participants' accounts would be adjusted to
reflect the allocation of net gains and losses of the underlying investments.
At that time, participants' accounts would become fully vested and
nonforfeitable.
NOTE F. FEDERAL INCOME TAX STATUS
The Plan has received a determination letter from the Internal Revenue
Service dated September 7, 1995, which states that the Plan, as amended June
17, 1994, meets the requirements of Section 401(a) of the Internal Revenue
Code and is, therefore, exempt from Federal income tax under Section 501(a)
of the Code. The Plan administrator believes that the Plan is in compliance
with current regulations. Therefore, no provision for income taxes is
provided in the financial statements of the Plan.
43
<PAGE>
ISCO, INC. RETIREMENT PLU$ PLAN
PN 001
EIN #47-0461807
(Amounts in thousands, except per share/unit data)
Form 5500 Schedule H Part IV, Line 4(i) - SCHEDULE OF ASSETS HELD FOR
INVESTMENT PURPOSES
July 31, 2000
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
Column B Column C Column E
---------------------------------------------------- -------------------------- ---------------
Description of
investment including
collateral, rate of
interest, maturity date, Current
Identity of Issue, Borrower, Lessor or Similar Party Par or Maturity Value Value
---------------------------------------------------- -------------------------- ---------------
<S> <C> <C>
MONEY MARKET:
*Benham Stable Value Government Fund 1,666,906 Shares $ 1,667
MUTUAL FUNDS:
*American Century Select Fund 191,355 Shares 10,157
*American Century Balanced Fund 183,866 Shares 3,140
*Benham Premium Bond Fund 75,452 Shares 725
*American Century Ultra Fund 210,609 Shares 9,256
*American Century International Growth Fund 207,721 Shares 2,891
*American Century Vista Fund 46,603 Shares 1,072
*American Century Equity Index Fund 92,996 Shares 532
*American Century Value Fund 99,466 Shares 521
*American Century Strategic Allocation: Conservative 12,322 Shares 70
*American Century Strategic Allocation: Moderate 36,352 Shares 262
*American Century Strategic Allocation: Aggressive 28,763 Shares 245
OTHER INVESTMENTS:
*Isco, Inc. Common Stock 80,670 Shares 345
*Participant loans Interest rates ranging
from 9.00% to 10.87%
maturing August 2000
through June 2005 436
-------
$31,319
=======
</TABLE>
*Party-in-interest
44
