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
(Mark One)
[X] Annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934 (No fee required, effective October 7, 1996)
For the fiscal year ended October 31, 1999
Or
[ ] Transition report pursuant to Section 15(d) of the Securities Exchange Act
of 1934 (No fee required)
For the transition period from __________ to __________
Commission file number 0-15995
AMENDED AND RESTATED MICROAGE, INC.
RETIREMENT SAVINGS AND EMPLOYEE STOCK
OWNERSHIP PLAN AND TRUST
(A. Full title of the plan and the address of the
plan, if different from that of the issuer named below)
MICROAGE, INC.
1330 W. Southern Ave.
Tempe, Arizona 85282
(B. Name of issuer of the securities held pursuant to
the plan and the address of its principal executive office)
REQUIRED INFORMATION
The following financial statements and other information are furnished
herein for the 401(k) portion of the Amended and Restated MicroAge, Inc.
Retirement Savings and Employee Stock Ownership Plan and Trust:
1. Audited Statement of Net Assets Available for Benefits at October 31,
1999 and November 1, 1998.
2. Audited Statement of Changes in Net Assets Available for Benefits for
the Plan Year ended October 31, 1999.
See the Index to Financial Statements.
See also the Exhibits.
<PAGE>
MICROAGE, INC.
RETIREMENT SAVINGS AND EMPLOYEE STOCK OWNERSHIP PLAN
401(k) PORTION
FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE
OCTOBER 31, 1999 AND NOVEMBER 1, 1998
<PAGE>
MICROAGE, INC.
RETIREMENT SAVINGS AND EMPLOYEE STOCK OWNERSHIP PLAN
401(k) PORTION
INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE
Page
----
Report of Independent Accountants 1
Statement of Net Assets Available for Benefits 2
Statement of Changes in Net Assets Available for Benefits 3
Notes to Financial Statements 4
Schedule of Assets Held for Investment Purposes at October 31, 1999 9
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Participants and Administrator of the
MicroAge, Inc. Retirement Savings and Employee Stock Ownership Plan
In our opinion, the accompanying statement of net assets available for benefits
and the related statement of changes in net assets available for benefits
present fairly, in all material respects, the net assets available for benefits
of the MicroAge, Inc. Retirement Savings and Employee Stock Ownership Plan (the
"Plan") at October 31, 1999 and November 1, 1998 and the changes in net assets
available for benefits for the year ended October 31, 1999 in conformity with
accounting principles generally accepted in the United States. 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 of these statements in accordance with auditing standards
generally accepted in the United States, which 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,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
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 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. This supplemental schedule is the responsibility of the Plan's management.
The supplemental schedule 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.
/s/ PricewaterhouseCoopers LLP
------------------------------
PricewaterhouseCoopers LLP
Phoenix, Arizona
August 11, 2000
1
<PAGE>
MICROAGE, INC.
RETIREMENT SAVINGS AND EMPLOYEE STOCK OWNERSHIP PLAN
401(k) PORTION
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
<TABLE>
<CAPTION>
October 31, November 1,
1999 1998
----------- -----------
<S> <C> <C>
Assets:
Investments, at fair value
MicroAge, Inc. common stock $ 462,596 $ 2,902,484
Mutual funds 33,745,535 19,970,398
Money market securities 1,639,592 947,376
Participant notes receivable 448,010 163,388
----------- -----------
36,295,733 23,983,646
----------- -----------
Contributions receivable
Employee 353,967 25,242
Employer - MicroAge, Inc. common stock 1,357,205 1,043,620
----------- -----------
1,711,172 1,068,862
----------- -----------
Net assets available for benefits $38,006,905 $25,052,508
=========== ===========
</TABLE>
The accompanying notes are an integral
part of these financial statements.
2
<PAGE>
MICROAGE, INC.
RETIREMENT SAVINGS AND EMPLOYEE STOCK OWNERSHIP PLAN
401(k) PORTION
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
<TABLE>
<CAPTION>
Year Ended
October 31,
1999
-----------
<S> <C>
Additions to net assets attributed to:
Investment income
Interest $ 66,761
Dividends 1,991,547
Net change in appreciation/depreciation of investments (494,847)
-----------
1,563,461
-----------
Contributions
Employee 13,299,277
Employer 1,357,205
-----------
14,656,482
-----------
Net additions 16,219,943
-----------
Deductions from net assets attributed to:
Benefits paid to participants 3,265,546
-----------
Net deductions 3,265,546
-----------
Net increase 12,954,397
Net assets available for benefits:
Beginning of the year 25,052,508
-----------
End of the year $38,006,905
===========
</TABLE>
The accompanying notes are an integral
part of these financial statements.
3
<PAGE>
MICROAGE, INC.
RETIREMENT SAVINGS AND EMPLOYEE STOCK OWNERSHIP PLAN
401(k) PORTION
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - DESCRIPTION OF THE PLAN
The following brief description of the MicroAge, Inc. (the Company) Retirement
Savings and Employee Stock Ownership Plan - 401(k) Portion (the Plan) is
provided for general information purposes only. Participants should refer to the
Plan document for more complete information.
The Plan includes an employee stock ownership feature (the ESOT). The ESOT is
funded solely by employer contributions; no employee contributions are
permitted. Additionally, there is a separate ESOT trust under the Plan. ESOT
assets will not be commingled with assets attributable to the 401(k) portion of
the Retirement Savings and Employee Stock Ownership Plan. As of November 3,
1998, the ESOT feature was terminated. All the ESOT shares will remain in the
Plan, with all participants becoming fully vested. The Plan also includes a
non-qualified supplemental executive plan, whose assets are not commingled with
those attributable to the 401(k) or ESOT.
The Plan is a defined contribution plan covering substantially all employees of
the Company who have attained at least 21 years of age and are U.S. citizens.
It is subject to the provisions of the Employee Retirement Income Security Act
of 1974 (ERISA) and is administered by the Company.
The Plan was established to be effective July 1988. Employees are eligible to
join the Plan on the first day of the Plan quarter coincident with or following
the date on which the employee satisfies all of the eligibility requirements.
The Plan year coincides with the Company's fiscal year which ends on the Sunday
nearest October 31 in each calendar year.
If a participant is fully vested under the Plan, the participant may make an
election to invest all or any portion of his Employer Matching Contribution
account (consisting of Company stock) in any of the Plan's investment options.
As of July 1, 1995, participants were no longer permitted to invest new funds
into the Company stock fund.
Participants may elect to contribute 1% to 15% of their total eligible
compensation as a pretax deferral in lieu of receiving such amounts as
compensation. For each year in which the Plan is in effect, the Company may make
a matching contribution with respect to a participant's elective deferrals in an
amount to be determined at the sole discretion of the Company. The Company has
historically matched 25% of a participant's contribution up to the first six
percent of the participant's salary contributed to the Plan. The Company's total
contribution for a Plan year shall not exceed the maximum amount deductible on
account of the Company's contribution for its corresponding taxable year for
federal income tax purposes. A Company matching contribution, if any, will be
credited as of the last day of the Plan year to the accounts of those
participants who are active participants on the last day of each Plan year.
Participants may change their allocations or elections the first day of each
Plan quarter.
4
<PAGE>
The participant's contributions vest immediately. The Company's matching
contributions vest based on years of service as follows:
<TABLE>
<CAPTION>
YEARS OF SERVICE VESTING PERCENTAGE
---------------- ------------------
<S> <C>
Less than 1 0%
1 but less than 2 20%
2 but less than 3 40%
3 but less than 4 60%
4 but less than 5 80%
5 or more 100%
</TABLE>
If a participant terminates before the Company's contribution is fully vested,
the Company can use the forfeited portion to reduce the Company's contribution
to the Plan for the Plan year in which forfeitures occur, or, if such
forfeitures exceed the amount of contribution for the Plan year, such excess
shall be treated as a contribution carryover and applied to reduce future
contributions.
Plan assets are held in a single Trust Fund (the Trust Fund). Each participant
elects from several investment options how the participant's contributions will
be invested. Effective July 1, 1999, the Plan increased the number of fund
options that participants could invest their contributions in to ten.
The Company's matching contributions, if any, can be made in cash or MicroAge,
Inc. common stock. Cash contributions are invested according to each
participant's investment election. Contributions of MicroAge, Inc. common stock
remain invested in the Company Stock Fund unless the participant is fully vested
under the plan. If a participant is fully vested under the plan, they may make
an election to invest all or any portion of their employer matching contribution
account in any of the Plan's investment options. For the year ended October 31,
1999, the Company contributed $1,357,205 in MicroAge, Inc. common stock and made
no cash contributions.
Loan terms range from 1-5 years or up to 15 years for the acquisition or
construction of a primary residence. Participant loans are secured by the vested
balance in the participant's account and bear interest at a rate commensurate
with local prevailing rates as determined by the Advisory Committee. The
interest rate for current loans outstanding is 10.5 percent. Principal and
interest are paid ratably through semi-monthly payroll deductions.
The Plan provides for early withdrawal (prior to the participant obtaining age
59 1/2) under certain circumstances. However, the participant may be subject to
tax penalties under the Internal Revenue Code of 1986, as amended (the Code) on
early withdrawals.
The Plan may be amended at any time; however, no such amendment may adversely
affect the rights of the participants in the Plan with respect to contributions
made prior to the date of the amendment. Company matching contributions may be
discontinued and participation by the Company in the Plan may be terminated at
any time. Although it has not expressed any intent to do so, the Company has the
right under the Plan to terminate the Plan subject to the provisions of ERISA.
In the event the Plan is terminated, each participant will receive the full
amount of Plan assets in his account.
Effective July 1, 1999, Wells Fargo Bank Trust (Wells Fargo Bank) ceased acting
as trustee and investment manager of the Plan. The Plan was transferred to The
Prudential Trust Company (the Trustee) who acts as the Trustee, the investment
manager and the record keeper of the Plan. The Trustee maintains account records
of individual participants and provides quarterly statements to participants.
5
<PAGE>
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
METHOD OF ACCOUNTING
The Plan prepares its financial statements using the accrual method of
accounting. Income is recognized when earned and expenses are recorded when
incurred.
The Plan's investments are presented at fair value. The fair value of the
Company's common stock is based upon the last sales price as reported by the
Nasdaq/National Market System, on the valuation date.
Security transactions are recorded on a trade date basis. Expenses paid by the
Plan in connection with such purchases and sales may include brokerage
commissions and taxes. These expenses, if any, are included in the cost of
securities purchased and deducted from the proceeds of securities sold. The Plan
paid no brokerage commissions during the year ended October 31, 1999. Interest
income is recorded on the accrual basis as earned.
The Plan presents in the statement of changes in net assets available for
benefits the net appreciation (depreciation) in the fair value of its
investments which consists of the realized gains or losses and the unrealized
appreciation (depreciation) on those investments.
PARTICIPANT NOTES RECEIVABLE
A participant's investment funds are reduced and the participant notes
receivable account is increased by the loan amount granted. Principal repayments
reduce the participant notes receivable balance and are reinvested in accordance
with the participant's instructions. Interest collected from participant loans
is also reinvested in the participant's investment fund and is presented as part
of interest and dividends.
CONTRIBUTIONS
The Company's contributions to participants are recognized on the accrual basis
in the Plan year to which they relate.
BENEFIT PAYMENTS
Benefit payments are recorded when paid. In accordance with generally accepted
accounting principles, obligations for distributions processed and approved for
payment prior to the Plan's period-end were not accrued in the Plan's financial
statements. Such amounts at October 31, 1999, and November 1, 1998 were $45,521
and $58,266, respectively.
ADMINISTRATIVE AND TRUSTEE EXPENSES
Prior to July 1, 1999, expenses incurred to administer the Plan were paid
directly by the Company. Subsequently, administrative fees are paid by the
participants of the Plan each fiscal year end. The fee is based on the number of
participants enrolled in the Plan at year end and is equivalent to approximately
$28 per participant, which is withdrawn directly from each participant's
retirement account.
6
<PAGE>
USE OF ESTIMATES
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amount of assets and liabilities at the date of the
financial statements and the reported amount of additions to and deductions from
net assets during the reporting period. Actual results could differ from these
estimates.
NOTE 3 - TAX STATUS OF THE PLAN
The Plan Administrator and Management of the Company believe that the Plan
conforms with the requirements of ERISA. The Internal Revenue Service has
determined and informed the Company by a letter dated May 28, 1997, that the
Plan and related trust are designed in accordance with applicable sections of
the Internal Revenue Code (IRC). The Plan has been amended since receiving the
determination letter. However, 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. Accordingly, no application has
been made for an updated determination letter.
NOTE 4 - INVESTMENTS
The following table presents the market value of investments that represent five
percent or more of the Plan's net assets:
<TABLE>
<CAPTION>
DESCRIPTION OF INVESTMENT OCTOBER 31, 1999 NOVEMBER 1, 1998
------------------------- ---------------- ----------------
<S> <C> <C>
Prudential Government Securities Trust-
Money Market Fund
Money market securities $ -- $2,902,484
The Investment Company of
America Fund
Common stocks -- 7,336,369
EuroPacific Growth Fund
Foreign common stocks 7,149,578 4,356,420
Capital World Growth and Income Fund
Global common stocks 6,888,825 4,200,076
Prudential Stock Index Fund
Common stocks 13,315,471 --
The Income Fund of America
Common stocks, bonds
and money market securities 5,070,798 3,319,807
</TABLE>
During the year ended October 31, 1999, the Plan's investments (including gains
and losses on investments bought and sold, as well as held during the year)
depreciated in value by $494, 847 as follows:
<TABLE>
<S> <C>
MicroAge, Inc. common stock $(3,148,503)
Mutual funds $ 2,653,656
</TABLE>
7
<PAGE>
NOTE 5 - NONPARTICIPANT-DIRECTED INVESTMENTS
Information about the net assets available for benefits and the significant
components of the changes in net assets available for benefits relating to the
nonparticipant-directed investments is as follows:
<TABLE>
<CAPTION>
Year ended Year ended
October 31, November 1,
1999 1998
----------- -----------
<S> <C> <C>
Net assets:
Common stock:
MicroAge, Inc. $ 353,339 $ 1,963,308
=========== ===========
Changes in net assets:
Contributions $ 1,043,620
Net depreciation (2,344,723)
Benefits paid to participants (308,866)
-----------
$(1,609,969)
===========
</TABLE>
NOTE 6 - RELATED PARTY TRANSACTIONS
The Trustee invests in the Company's common stock in accordance with the
provisions of the Plan's Company Stock Fund. The Trustee acquires the Company's
common stock by purchase on the open market.
The following is a summary of transactions in the Company's common stock:
<TABLE>
<CAPTION>
Year ended Year ended
October 31, November 1,
Description 1999 1998
-------------------------------------------- ----------- -----------
<S> <C> <C>
Cost of shares purchased $5,717 $179,618
Number of shares purchased 432 12,893
Average per share cost purchased $13.23 $13.93
</TABLE>
NOTE 7 - SUBSEQUENT EVENTS
On April 13, 2000, the Company filed for Chapter 11 bankruptcy protection. The
final closing price of the Company's stock on the last day of trading (April
13th) was $1.88 per share. The Company's stock was de-listed by Nasdaq on May
22, 2000.
8
<PAGE>
SCHEDULE I
MICROAGE, INC.
RETIREMENT SAVINGS AND EMPLOYEE STOCK OWNERSHIP PLAN
401(k) PORTION
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AT OCTOBER 31, 1999
<TABLE>
<CAPTION>
PARTY
IN
INTEREST DESCRIPTION OF INVESTMENT COST MARKET
-------------- -------------------------------------- ---------- -----------
<S> <C> <C>
* COMPANY STOCK FUND
MicroAge, Inc. common stock $2,430,741 $ 462,596
EUROPACIFIC GROWTH FUND
Foreign common stocks ** 7,149,578
CAPITAL WORLD GROWTH AND INCOME FUND
Global common stocks ** 6,888,825
THE INCOME FUND OF AMERICA
Common stocks and bonds ** 5,070,798
* PRUDENTIAL DIVERSIFIED MODERATE GROWTH
FUND
Common stocks ** 2,680
* PRUDENTIAL GOVERNMENT SECURITIES
TRUST-MONEY MARKET FUND
Money market securities ** 1,639,592
* PRUDENTIAL JENNISON GROWTH FUND
Common stocks ** 27,024
* PRUDENTIAL STOCK INDEX FUND
Common stocks ** 13,315,471
* PRUDENTIAL BOND MARKET INDEX FUND
Marketable debt securities ** 1,288,371
FRANKLIN BALANCE SHEET INVESTMENT FUND
Common stocks ** 2,788
* THE PARTICIPANT NOTES FUND
Participant notes receivable ** 448,010
-----------
Total investments at October 31, 1999 $36,295,733
===========
</TABLE>
** Note: Cost information for participant directed investments is not required
to be presented.
9
<PAGE>
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934,
the trustees (or other persons who administer the employee benefit plan) have
duly caused this annual report to be signed on its behalf by the undersigned
hereunto duly authorized.
AMENDED AND RESTATED MICROAGE, INC.
RETIREMENT SAVINGS AND EMPLOYEE STOCK
OWNERSHIP PLAN AND TRUST
(Name of Plan)
By: MicroAge, Inc., a Delaware corporation,
Plan Administrator
By: /s/ Jeffrey D. McKeever
--------------------------------------
(Signature)
Title: Chairman of the Board and
Chief Executive Officer
Date: September 15, 2000
10
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION PAGE NO.*
----------- ----------- ---------
4.1 Amended and Restated MicroAge, Inc. Retirement
Savings and Employees Stock Ownership Plan and
Trust Agreement (Incorporated by reference to
Exhibit 10.14 to the Annual Report on Form 10-K
for fiscal year ended October 30, 1994)
4.1.1 First Amendment dated May 10, 1995 to the Amended
and Restated MicroAge, Inc. Retirement Savings and
Employees Stock Ownership Plan and Trust Agreement
(Incorporated by reference to Exhibit 10.1 to the
Quarterly Report on Form 10-Q for the quarter
ended April 30, 1995)
4.1.2 Second Amendment dated March 14, 1996 to the
Amended and Restated MicroAge, Inc. Retirement
Savings and Employees Stock Ownership Plan and
Trust Agreement (incorporated by reference to
Exhibit 10.1 to the Annual Report on Form 10-Q for
the quarter ended July 28, 1996)
4.1.3 Third Amendment dated November 4, 1996 to the
Amended and Restated MicroAge, Inc. Retirement
Savings and Employees Stock Ownership Plan and
Trust Agreement (Incorporated by reference to
Exhibit 10.22.3 to the Annual Report on Form 10-K
for fiscal year ended November 3, 1996)
4.1.4 Fourth Amendment dated December 4, 1996 to the
Amended and Restated MicroAge, Inc. Retirement
Savings and Employees Stock Ownership Plan and
Trust Agreement (Incorporated by reference to
Exhibit 10.22.4 to the Annual Report on Form 10-K
for fiscal year ended November 3, 1996)
4.1.5 Fifth Amendment dated January 31, 1997 to the
Amended and Restated MicroAge, Inc. Retirement
Savings and Employees Stock Ownership Plan and
Trust Agreement (Incorporated by reference to
Exhibit 10.1 to the Quarterly Report on Form 10-Q
for the quarter ended February 2, 1997)
4.1.6 Sixth Amendment dated August 1, 1997 to the
Amended and Restated MicroAge, Inc. Retirement
Savings and Employees Stock Ownership Plan and
Trust Agreement (Incorporated by reference to
Exhibit 10.3 to the Quarterly Report on Form 10-Q
for the quarter ended August 3, 1997)
4.1.7 Seventh Amendment dated April 2, 1998 to the
Amended and Restated MicroAge, Inc. Retirement
Savings and Employees Stock Ownership Plan and
Trust Agreement (Incorporated by reference to
Exhibit 10.3 to the Quarterly Report on Form 10-Q
for the quarter ended May 3, 1998)
4.1.8 Eighth Amendment dated April 2, 1998 to the
Amended and Restated MicroAge, Inc. Retirement
Savings and Employees Stock Ownership Plan and
Trust Agreement (Incorporated by reference to
Exhibit 10.3 to the Quarterly Report on Form 10-Q
for the quarter ended May 3, 1998)
4.1.9 Amended and Restated MicroAge, Inc. Retirement
Savings and Employee Stock Ownership Plan and
Trust Agreement, effective as of November 2, 1998.
4.1.10 First Amendment to the MicroAge, Inc. Retirement
Savings Plan, effective as of December 2, 1999.
4.1.11 Second Amendment to the MicroAge, Inc. Retirement
Savings Plan, dated as of March 15, 2000
(Incorporated by reference to Exhibit 10.3 to the
Quarterly Report on Form 10-Q for the quarter
ended January 30, 2000)
23 Consent of Independent Accountants
* Included only in manually signed original.
11
