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 0-016473
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 26, 2000 By /s/ John Marsh
--------------------------
John Marsh
Corporate Controller
1 of 13
<PAGE>
SSE TELECOM, INC.
401(k) PROFIT SHARING PLAN
FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
2 of 13
<PAGE>
SSE TELECOM, INC.
401(k) PROFIT SHARING PLAN
Financial Statements
Years ended December 31, 1999 and 1998
Table of Contents
Independent Accountants' Report................................................4
Financial Statements:
Statements of Net Assets Available for Benefits................................5
Statements of Changes in Net Assets Available for Benefits.....................6
Notes to Financial Statements..................................................7
3 of 13
<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, 1999 and 1998, 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 audits 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 benefits of the
Plan as of December 31, 1999 and 1998, and the changes in net assets available
for benefits for the years then ended, in conformity with generally accepted
accounting principles.
By /s/Mohler, Nixon & Williams
------------------------
MOHLER, NIXON & WILLIAMS
Accountancy Corporation
Campbell, California
May 17, 2000
4 of 13
<PAGE>
SSE TELECOM, INC.
401(k) PROFIT SHARING PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
December 31,
------------------------------
1999 1998
---------- ----------
Investments, at fair value $5,333,100 $5,648,934
Investments, at contract value 251,205 317,491
---------- ----------
Net assets available for benefits $5,584,305 $5,966,425
========== ==========
See independent accountants' report and
accompanying notes to financial statements.
5 of 13
<PAGE>
SSE TELECOM, INC.
401(k) PROFIT SHARING PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
For the years ended
December 31,
--------------------------
1999 1998
----------- -----------
Additions to net assets attributed to:
Investment income:
Dividends and interest $ 443,310 $ 30,963
Net realized and unrealized appreciation
in fair value of investments 722,830 746,270
----------- -----------
1,166,140 777,233
----------- -----------
Contributions:
Participants' 622,826 972,850
Employer's 109,849 150,576
----------- -----------
732,675 1,123,426
----------- -----------
Total additions 1,898,815 1,900,659
----------- -----------
Deductions from net assets attributed to:
Withdrawals and distributions 2,258,102 1,252,563
Administrative expenses 22,833 16,888
----------- -----------
Total deductions 2,280,935 1,269,451
----------- -----------
Net increase (decrease) (382,120) 631,208
Net assets available for benefits:
Beginning of year 5,966,425 5,335,217
----------- -----------
End of year $ 5,584,305 $ 5,966,425
=========== ===========
See independent accountants' report and
accompanying notes to financial statements.
6 0f 13
<PAGE>
SSE TELECOM, INC.
401(k) PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 1999 and 1998
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. The Plan covers all
regular employees of the Company who are not otherwise covered by a collective
bargaining agreement.
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 contracted
with the Union Bank of California (Union Bank) to act as the custodian and
trustee of Plan investments and to maintain the records of participant data.
Substantially all expenses incurred for administering the Plan are paid by the
Company.
Basis of accounting -
The financial statements of the Plan are prepared on the accrual method
of accounting. Participants and Company contributions are recorded in the period
during which the Company makes payroll deductions from participant's earnings.
Benefits are recorded when paid.
Investments -
Investments of the Plan are held by Union Bank and invested based
solely upon instructions received from participants. The Committee added the SSE
Telecom, Inc. Stock Fund (SSET Stock Fund) as an additional investment option in
1997. The fund is invested in shares of the Company's common stock.
Participants' investments in the SSET Stock Fund were restricted to a maximum of
10% of their total account value.
7 of 13
<PAGE>
Effective July 1, 1999, the fund was frozen by the Committee.
Henceforth, participants are permitted to transfer their investments from the
SSET Stock Fund but no new contributions or transfers into the fund are
permitted.
The Plan's investment in mutual funds and the SSET Stock Fund 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 5.83% and 5.93% at December 31, 1999 and 1998, respectively. Participant
loans are valued at cost, which approximates fair value.
Income taxes -
The Plan has applied for and received a favorable determination letter
dated October 23, 1998. The Company believes that the Plan is operated in
accordance with, and qualifies under, the applicable requirements of the
Internal Revenue Code and related state statutes, and that the Trust, which
forms a part of the Plan, is exempt from federal income and state franchise
taxes.
Reclassifications -
Certain reclassifications were made in the 1998 financial statements to
conform with the 1999 presentation.
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
from among 14 different funds including the SSET 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 benefits and the
statements of changes in net assets available for benefits.
8 of 13
<PAGE>
New accounting pronouncement -
In September 1999, the Accounting Standards Executive Committee of the
American Institute of Certified Public Accountants issued Statement of Position
(SOP) 99-3, "Accounting for and Reporting of Certain Defined Contribution
Benefit Plan Investments and Other Disclosure Matters." This SOP eliminates the
previous requirement for a defined contribution plan to disclose
participant-directed investment programs by fund. SOP 99-3 is effective for
financial statements for plan years ended after December 15, 1999. The Plan has
adopted SOP 99-3 in its financial statements for the years ended December 31,
1999 and 1998.
Note 2 - Participation and benefits:
Participant 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. In 1999 and 1998, 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 per year. The Plan also
allows for a discretionary profit sharing contribution. No discretionary
contribution has been made for the years ended December 31, 1999 and 1998.
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, and forfeitures of terminated participants' nonvested
accounts. Allocation of the Company's contribution is based on participant
contributions.
9 of 13
<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 which 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 principal
residence in which case the maximum repayment period may be extended. The
specific terms and conditions of such loans are established by the Committee.
Outstanding loans at December 31, 1999 carry interest rates, which range from
8.78% to 9.91%.
Vesting -
Participants are immediately vested in their salary deferral, rollover
contributions and related earnings. 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%
10 of 13
<PAGE>
Note 3 - Investments:
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:
1999 1998
---- ----
T. Rowe Price:
International Stock Fund $ 12,342
Small-Cap Value Fund $ 259,721 384,261
Science and Technology Fund 110,797
Balanced Fund 11,929
Spectrum Income Fund 122,316 192,831
Highmark Diversified Money Market Fund 194,994 223,053
Union Bank Stable Value Fund 251,205 317,491
Strong Corporate Bond Fund 208,099 188,115
Vanguard Total Stock Market Fund 469,613 662,780
Vanguard Asset Allocation Fund 673,165 750,422
Highmark Value Momentum Fund 303,429 374,327
Vanguard Primecap Fund 1,231,723 1,016,647
Dreyfus Appreciation Fund 752,310 931,775
Templeton World I Fund 531,802 555,560
Invesco Dynamics Fund 91,820
Janus Twenty Fund 169,099
SSET Stock Fund 127,857 17,679
Participant Loans 197,152 216,416
-------------- --------------
Assets held for investment
purposes $ 5,584,305 $ 5,966,425
============== ==============
During 1999, the Plan's investments (including gains and losses on
investments bought and sold, as well as held during the year) appreciated in
value as follows:
Years ended December 31,
1999 1998
---- ----
SSET Stock $ 134,084 ($ 39,798)
Mutual Funds 588,746 786,068
------------- -----------
$ 722,830 $ 746,270
============= ===========
11 of 13
<PAGE>
Note 4 - Related party transactions:
Certain Plan investments are in a collective trust managed by the Plan
trustee, Union Bank. These transactions qualify as party-in-interest. Any
purchases and sales of these funds are open market transactions at fair market
value. Such transactions are permitted under the provisions of the Plan and are
exempt from the prohibition of party-in-interest transactions under ERISA and
applicable exemptions promulgated thereunder.
As allowed in the Plan up to July 1, 1999, participants could elect to
invest a portion of their accounts in the common stock of the Company. Aggregate
investment in Company common stock was as follows at December 31, 1999 and 1998:
Date Number of shares Fair value Cost
---- ---------------- ---------- ----
1999 13,736 $ 127,857 $46,131
========== =======
1998 12,263 $ 16,173 $56,670
Cash in stock liquidity fund 1,506 1,683
---------- -------
$ 17,679 $58,353
========== =======
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.
Due to a reduction in force of 54 employees in 1999, the Plan
experienced a partial termination. By resolution of the Board of Directors of
the Company and in accordance with ERISA regulations, affected participants were
immediately 100% vested in their entire account balance.
Note 6 - Subsequent event:
As of May 17, 2000, Plan assets have decreased in value since December
31, 1999 by approximately $63,000 due to market fluctuations.
12 of 13
<PAGE>
Exhibit 1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration
Statements on Form S-8 (No. 33-52072 and No. 333-31289) of SSE Telecom, Inc. of
our report dated May 17, 2000, with respect to the financial statements of the
SSE Telecom, Inc. 401(k) Profit Sharing Plan included in this Annual Report Form
11-K.
MOHLER, NIXON & WILLIAMS
Accountancy Corporation
Campbell, California
June 26, 2000
13 of 13
