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 0-16473
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
SSE Telecom, Inc. 401(k) Profit Sharing Plan
B. Name of issuer of the securities held pursuant to the plan and the address of
its principal executive office:
SSE Telecom, Inc.
47823 Westinghouse Drive
Fremont, CA 94539
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.
SSE TELECOM, INC.
401(k) PROFIT SHARING PLAN
Date: June 25, 1999 By /s/ James J. Commendatore
-----------------------------
James J. Commendatore
Chief Financial Officer
<PAGE>
SSE TELECOM, INC.
401(k) PROFIT SHARING PLAN
FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
<PAGE>
SSE TELECOM, INC.
401(k) PROFIT SHARING PLAN
Financial Statements
Years ended December 31, 1998 and 1997
Table of Contents
Independent Accountants' Report...............................................4
Consent of Independent Accountants............................................5
Financial Statements:
Statements of Net Assets Available for Plan Benefits..........................6
Statement of Changes in Net Assets Available for Plan Benefits,
With Fund Information, for the Year Ended December 31, 1998................7
Statement of Changes in Net Assets Available for Plan Benefits,
With Fund Information, for the Year Ended December 31, 1997...............10
Notes to Financial Statements................................................12
Consent of Independent Accountants...........................................18
<PAGE>
To the Participants and
Plan Administrator of the
SSE Telecom, Inc.
401(k) Profit Sharing Plan
INDEPENDENT ACCOUNTANTS' REPORT
We have audited the financial statements of the SSE Telecom, Inc.
401(k) Profit Sharing 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 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 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 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. Fund information has been subjected
to the auditing procedures applied in the audits of the basic financial
statements and, in our opinion, is 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 25, 1999
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the use of our name on our report dated June 25, 1999,
with respect to the financial statements of the SSE Telecom, Inc. 401(k) Profit
Sharing Plan for the years ended December 31, 1998 and 1997, including 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 25, 1999
<PAGE>
<TABLE>
SSE TELECOM, INC.
401(k) PROFIT SHARING PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
December 31,
-------------------------------------
1998 1997
----------------- -----------------
<S> <C> <C>
Investments, at fair value $5,648,934 $5,129,759
Investments, at contract value 317,491 205,458
----------------- -----------------
Net assets available for plan benefits $5,966,425 $5,335,217
================= =================
See independent accountants' report and
accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
SSE TELECOM, INC.
401(k) PROFIT SHARING PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS, WITH FUND INFORMATION
For the year ended December 31, 1998
Net assets available Participants Withdrawals
for plan benefit at Employer's contributions/ and
December 31, 1997 contribution rollovers distributions
<S> <C> <C> <C> <C>
T. Rowe Price:
International Stock Fund ................ $ 174,486 $ 5,634 $ 26,832 ($ 12,405)
Small-Cap Value Fund .................... 668,389 12,127 67,748 (235,636)
Science and Technology Fund ............. 496,556 15,308 69,355 (52,118)
Balanced Fund ........................... 272,672 6,301 27,912 (62,240)
Spectrum Income Fund .................... 240,656 3,435 16,035 (4,754)
Highmark Diversified Money Market Fund 176,992 10 31,396 (5,366)
Union Bank Stable Value Fund ................ 205,458 6,525 35,724 (25,598)
Strong Corporate Bond Fund .................. 136,176 4,870 43,567 (37,995)
Vanguard Asset Allocation Fund .............. 345,313 13,213 106,655 (84,217)
Highmark Value Momentum Fund ................ 404,747 10,919 71,231 (93,255)
Vanguard Total Stock Market Fund ............ -- 1,434 12,307 (15,447)
Vanguard Primecap Fund ...................... 770,221 33,745 238,765 (133,076)
Dreyfus Appreciation Fund ................... 794,224 22,533 147,652 (352,085)
Templeton World I Fund ...................... 432,730 12,147 63,730 (124,214)
SSE Telecom, Inc. Common Stock Fund ......... 55,101 2,375 13,941 (9,510)
Participant loans ........................... 161,496 -- -- (4,647)
Totals .................................. $ 5,335,217 $ 150,576 $ 972,850 ($1,252,563)
See independent accountants' report and accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
SSE TELECOM, INC.
401(k) PROFIT SHARING PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS, WITH FUND INFORMATION
For the year ended December 31, 1998
Net appreciation
Dividends (depreciation)
Administration and in fair value Net loan
fees interest investments activities
<S> <C> <C> <C> <C>
T. Rowe Price:
International Stock Fund ................ -- -- $ 40,771 $ 499
Small-Cap Value Fund .................... -- -- (85,426) (2,938)
Science and Technology Fund ............. -- -- 176,965 (470)
Balanced Fund ........................... -- -- 35,864 346
Spectrum Income Fund .................... -- -- 15,099 (3,240)
Highmark Diversified Money Market Fund ($16,888) $12,155 -- (2,606)
Union Bank Stable Value Fund ................ -- -- 12,292 2,105
Strong Corporate Bond Fund .................. -- -- 12,669 (603)
Vanguard Asset Allocation Fund .............. -- -- 91,299 (13,407)
Highmark Value Momentum Fund ................ -- -- 27,237 (5,780)
Vanguard Total Stock Market Fund ............ -- -- 31,292 (5,910)
Vanguard Primecap Fund ...................... -- -- 200,103 (11,182)
Dreyfus Appreciation Fund ................... -- -- 207,781 (6,941)
Templeton World I Fund ...................... -- -- 20,122 (10,404)
SSE Telecom, Inc. Common Stock Fund ......... -- 261 (39,798) 964
Participant loans ........................... -- 18,547 -- 59,567
Totals .................................. ($16,888) $30,963 $ 746,270 $ --
See independent accountants' report and accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
SSE TELECOM, INC.
401(k) PROFIT SHARING PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS, WITH FUND INFORMATION
For the year ended December 31, 1998
Increase Net assets available
Transfers (decrease) for plan benefits at
in (out) in net assets December 31, 1998
<S> <C> <C> <C>
T. Rowe Price:
International Stock Fund ................ ($223,475) ($162,144) $ 12,342
Small-Cap Value Fund .................... (40,003) (284,128) 384,261
Science and Technology Fund ............. (385,759) 110,797
Balanced Fund ........................... (268,926) (260,743) 11,929
Spectrum Income Fund .................... (74,400) (47,825) 192,831
Highmark Diversified Money Market Fund 27,360 46,061 223,053
Union Bank Stable Value Fund ................ 80,985 112,033 317,491
Strong Corporate Bond Fund .................. 29,431 51,939 188,115
Vanguard Asset Allocation Fund .............. 291,566 405,109 750,422
Highmark Value Momentum Fund ................ (40,772) (30,420) 374,327
Vanguard Total Stock Market Fund ............ 639,104 662,780 662,780
Vanguard Primecap Fund ...................... (81,929) 246,426 1,016,647
Dreyfus Appreciation Fund ................... 118,611 137,551 931,775
Templeton World I Fund ...................... 161,449 122,830 555,560
SSE Telecom, Inc. Common Stock Fund ......... (5,655) (37,422) 17,679
Participant loans ........................... (18,547) 54,920 216,416
Totals .................................. $ -- $ 631,208 $ 5,966,425
See independent accountants' report and accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
SSE TELECOM, INC.
401(k) PROFIT SHARING PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS, WITH FUND INFORMATION
For the year ended December 31, 1997
Net assets available Participants' Withdrawals Dividends
for plan benefits Employer's contributions/ and and
December 31, 1996 contribution rollovers distribution interest
<S> <C> <C> <C> <C> <C>
T. Rowe Price:
International Stock Fund ......... $ 447,361 $ 8,877 $ 73,875 ($ 68,397) --
Small-Cap Value Fund ............. 935,640 14,888 131,465 (118,822) --
Science and Technology Fund ...... 1,293,727 26,269 205,263 (150,693) --
Balanced Fund .................... 677,835 12,131 96,992 (144,732) --
Spectrum Income Fund ............. 500,121 6,448 59,238 (66,362) --
Prime Reserve Fund ............... 420,749 975 45,575 (10,104) $ 10,969
International Bond Fund .......... 14,575 375 4,239 (1,111) --
Highmark Diversified Money Market Fund -- 8,387 15,281 (158,096) 7,908
Union Bank Stable Value Fund ......... -- 6,042 12,350 (3,088) --
Strong Corporate Bond Fund ........... -- 3,258 11,902 (1,376) --
Vanguard Asset Allocation Fund ....... -- 11,716 29,293 (1,804) --
Highmark Value Momentum Fund ......... -- 10,562 46,524 (1,380) --
Vanguard Primecap Fund ............... -- 28,507 104,760 (9,386) --
Dreyfus Appreciation Fund ............ -- 20,195 74,198 (39,995) --
Templeton World I Fund ............... -- 15,710 57,624 (12,560) --
SSE Telecom, Inc. Common Stock Fund .. -- 2,733 7,357 (8,069) --
Participant loans .................... 172,236 -- -- (23,195) 14,746
Contributions receivable ............. 52,636 (16,464) (36,172) -- --
Totals ........................... $4,514,880 $ 160,609 $ 939,764 ($ 819,170) $ 33,623
See independent accountants' report and accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
SSE TELECOM, INC.
401(k) PROFIT SHARING PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS, WITH FUND INFORMATION
For the year ended December 31, 1997
Net appreciation
(depreciation) Increase Net assets available
in fair value Net loan Transfers (decrease) for plan benefits at
investments activities in (out) in net assets December 31, 1997
<S> <C> <C> <C> <C> <C>
T. Rowe Price:
International Stock Fund ......... $ 19,079 $ 1,270 ($ 307,579) ($ 272,875) $ 174,486
Small-Cap Value Fund ............. 191,032 (4,512) (481,302) (267,251) 668,389
Science and Technology Fund ...... 104,503 (9,473) (973,040) (797,171) 496,556
Balanced Fund .................... 104,391 (15,616) (458,329) (405,163) 272,672
Spectrum Income Fund ............. 44,357 4,151 (307,297) (259,465) 240,656
Prime Reserve Fund ............... -- 5,667 (473,831) (420,749) --
International Bond Fund .......... (265) 46 (17,859) (14,575) --
Highmark Diversified Money Market Fund -- (195) 303,707 176,992 176,992
Union Bank Stable Value Fund ......... 2,715 2,020 185,419 205,458 205,458
Strong Corporate Bond Fund ........... 5,198 (219) 117,413 136,176 136,176
Vanguard Asset Allocation Fund ....... 4,257 2,678 299,173 345,313 345,313
Highmark Value Momentum Fund ......... 28,844 (4,338) 324,535 404,747 404,747
Vanguard Primecap Fund ............... (20,289) 7,594 659,035 770,221 770,221
Dreyfus Appreciation Fund ............ 32,375 8,404 699,047 794,224 794,224
Templeton World I Fund ............... (7,574) 3,312 376,218 432,730 432,730
SSE Telecom, Inc. Common Stock Fund .. (3,112) 1,502 54,690 55,101 55,101
Participant loans .................... -- (2,291) -- (10,740) 161,496
Contributions receivable ............. -- -- -- (52,636) --
Totals ........................... $ 505,511 $ -- $ -- $ 820,337 $5,335,217
See independent accountants' report and accompanying notes to financial statements.
</TABLE>
<PAGE>
SSE TELECOM, INC.
401(k) PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 1998 and 1997
Note 1 - The Plan and its significant accounting policies:
The following description of the SSE Telecom, Inc. (the Company) 401(k)
Profit Sharing 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 1981 by
the Company to provide benefits to eligible employees. On July 1, 1997, the
Company amended and restated the Plan to remove the age and service requirements
for eligibility. As amended, the Plan covers all employees of the Company who
are not otherwise covered by a collective bargaining agreement. The amended and
restated Plan also provides for accelerated vesting of participant accounts.
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 -
In conjunction with the adoption of the amended and restated Plan, the
Company designated Union Bank of California (Union Bank) trustee and custodian
of Plan investments effective July 1997 and contracted with Union Bank to
maintain the records of participant data. The Company has appointed an
Administrative Committee (the Committee) to manage the operation and
administration of the Plan. Substantially all expenses incurred for
administering the Plan are paid by the Company.
Investments -
From January 1996 through June 1997, T. Rowe Price Services, Inc. (T.
Rowe Price) was Plan custodian and assets were invested in seven funds sponsored
by T. Rowe Price. In conjunction with the July 1997 change in custodian to Union
Bank, T. Rowe Price transferred investments of the Plan to Union Bank. The
Committee eliminated two T. Rowe Price mutual funds and added nine new
investment funds in 1997, including the SSE Telecom, Inc. Stock Fund which is
invested in shares of the Company's common stock. The Committee restricts
participants' investments in the SSE Telecom, Inc. Stock Fund to a maximum of
10% of their total account value. One additional investment fund was added in
1998. Assets are invested based solely upon instructions received from
participants.
<PAGE>
The Plan's investment in mutual funds and the Company's common stock
are valued at fair value as of the last day of the Plan year, as measured by
quoted market prices. The Union Bank Stable Value fund is a collective trust
fund invested primarily in a diversified portfolio of guaranteed insurance
contracts and is valued at contract value (purchase price plus interest) as of
the last day of the Plan year as reported by Union Bank. The yield fluctuates
daily and was 5.93% and 6.01% at December 31, 1998 and 1997, respectively.
Vesting -
Participants are immediately vested in their salary deferral, rollover
contributions and related earnings. Effective July 1, 1997, participants vest in
the Company matching contributions and profit sharing contributions allocated to
their account as follows:
Years of service Vested percentage
One year 20%
Two years 40%
Three years 60%
Four years 80%
Five or more years 100%
Forfeitures of terminated participants non-vested account balances are
first used to pay Plan administrative expenses and then to reduce Company
matching contributions.
Income taxes -
The Plan has applied for and received a favorable determination letter
dated October 23, 1998. The Committee intends that the Plan qualifies 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.
<PAGE>
Risks and uncertainties -
The Plan provides for various investment options in any combination
from among 15 different funds including the Company stock fund. 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.
Note 2 - Participation and benefits:
Employee contributions -
Participants may elect to have the Company contribute a percentage,
from 1% to 20%, of their eligible pre-tax compensation up to the amount
allowable under current income tax regulations. 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. Contributions withheld
are invested in accordance with the participant's direction and are allocated to
funds in 1% increments.
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 matched 50% of each
eligible participant's contribution up to a maximum of 6% of the participant's
compensation, not to exceed $1,000 in 1998 and 1997. The Plan also allows for a
discretionary profit sharing contribution. No discretionary contribution has
been made for 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. Allocation of the Company's contribution is based on participant
contributions.
<PAGE>
Payment of benefits -
Upon termination, the participant or beneficiary will receive the
benefits in a lump sum amount equal to the value of the participant's vested
interest in his or her account. The Plan allows for automatic lump sum
distribution of participant vested account balances that do not exceed $5,000.
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, unless the loan is used for the purchase of a residence in which
case the maximum repayment period may be extended. The specific terms and
conditions of such loans are established by the Committee.
Note 3 - Plan obligations:
Included in net assets available for plan benefits at December 31,
1998, are benefits due to withdrawing participants for benefit claims which have
been processed and approved for payment prior to year end, but not yet paid, of
approximately $88,000.
Note 4 - 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. The aggregate investment in
Company common stock at December 31, 1998 and 1997 was as follows:
<TABLE>
Number
of Shares Fair Value Cost
<S> <C> <C> <C>
1998 12,263 $16,173 $52,013
Cash in stock liquidity fund 1,506 1,506
----------- -----------
$17,679 $53,519
======= =======
1997 11,246 $53,418 $56,670
Cash in stock liquidity fund 1,683 1,683
----------- -----------
$55,101 $58,353
======= =======
</TABLE>
<PAGE>
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 - Investments
<TABLE>
The following table includes the contract or fair values of investments and investment funds that
represent 5% or more of the Plan's net assets at December 31:
1998 1997
---- ----
<S> <C> <C>
T. Rowe Price:
International Stock Fund $ 12,342 $ 174,486
Small-Cap Value Fund 384,261 668,389
Science and Technology Fund 110,797 496,556
Balanced Fund 11,929 272,672
Spectrum Income Fund 192,831 240,656
Highmark Diversified Money Market Fund 223,053 176,992
United Bank Stable Value Fund 317,491 205,458
Strong Corporate Bond Fund 188,115 136,176
Vanguard Total Stock Market Fund 662,780
Vanguard Asset Allocation Fund 750,422 345,313
Highmark Value Momentum Fund 374,327 404,747
Vanguard Primecap Fund 1,016,647 770,221
Dreyfus Appreciation Fund 931,775 794,224
Templeton World I Fund 555,560 432,730
SSE Telecom, Inc. Common Stock Fund 17,679 55,101
Participant Loans 216,416 161,496
-------------- --------------
Assets held for investment purposes $5,966,425 $5,335,217
========== ==========
</TABLE>
Note 7 - 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 service providers, it does not anticipate a problem in
resolving the year 2000 issue in a timely manner.
<PAGE>
Note 8 - Subsequent event:
Due to a reduction in force of approximately 54 employees in 1999, the
Plan experienced a partial termination. The Company intends to amend the Plan to
provide that all affected participants be 100% vested in their accounts as of
June 25, 1999.
<PAGE>
Exhibit 1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration
Statements (Form S-8) pertaining to the SSE Telecom, Inc. 401(k) Profit Sharing
Plan of our report dated June 25, 1999, with respect to the financial statements
of the SSE Telecom, Inc. 401(k) Profit Sharing Plan included in the Annual
Report (Form 11-K) for the year ended December 31, 1998.
MOHLER, NIXON & WILLIAMS
Accountancy Corporation
Campbell, California
June 25, 1999
