================================================================================
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
[Mark One]
[X] ANNUAL REPORT PURSUANT TO SECTION 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the calendar year ended: December 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________
COMMISSION FILE NUMBER: 0-20330
GARDENBURGER, INC.
401(k) PROFIT SHARING PLAN
(FULL TITLE OF THE PLAN)
GARDENBURGER, INC.
1411 S.W. Morrison Street
Suite 400
Portland, Oregon 97205
(NAME AND ADDRESS OF ISSUER)
================================================================================
<PAGE>
(a) Financial Statements.
--------------------
Page
----
Report of Independent Public Accountants 2
Statements of Net Assets Available for Benefits as of
December 31, 1999 and 1998 3
Statement of Changes in Net Assets Available for Benefits for the
Year Ended December 31, 1999 4
Notes to Financial Statements and Schedule 5
Schedule Supporting Financial Statements
Schedule I: Part IV - Line 4i - Schedule of Assets Held for 9
Investment Purposes as of December 31, 1999
1
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Plan Administrator of
Gardenburger, Inc. 401(k) Profit Sharing Plan:
We have audited the accompanying statements of net assets available for plan
benefits of the Gardenburger, Inc. 401(k) Plan (the Plan) as of December 31,
1999 and 1998, and the related statement of changes in net assets available for
plan benefits for the year ended December 31, 1999. These financial statements
and the schedule referred to below are the responsibility of the Plan's
management. Our responsibility is to express an opinion on these financial
statements and schedule based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. 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 the Plan as of
December 31, 1999 and 1998 and the changes in net assets available for benefits
for the year ended December 31, 1999, in conformity with accounting principles
generally accepted in the United States.
Our audits were performed 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 purposes of additional analysis and is
not a required part of the basic financial statements but is supplementary
information required by the Department of Labor Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. 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/ ARTHUR ANDERSEN LLP
Portland, Oregon
June 13, 2000
2
<PAGE>
GARDENBURGER, INC. 401(k) PROFIT SHARING PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1999 AND 1998
1999 1998
-------- ------
INVESTMENTS, at fair value:
Participant directed-
Shares in a registered investment company:
Fidelity Retirement Money Market Portfolio $ - $ 243,425
Fidelity Small Cap Stock Fund - 8,444
Fidelity Growth and Income Portfolio - 654,694
Fidelity Contra Fund - 334,957
Fidelity Growth Company Fund - 613,862
Fidelity Investment Grade Bond Fund - 147,518
Fidelity Overseas Fund - 169,198
Fidelity Magellan Fund 462,291 328,846
Columbia Daily Income Company 267,395 -
Columbia Fixed Income Securities Fund 158,515 -
Columbia Balanced Fund 19,770 -
Columbia Growth Fund 1,894,988 -
Columbia Small Cap Fund 30,641 -
Galaxy Large Cap Index Fund 29,924 -
Janus Worldwide Fund 307,994 -
Common stock:
Gardenburger, Inc. Common Stock 15,681 -
Participant loans 14,597 41,973
---------- ----------
Total investments 3,201,796 2,542,917
RECEIVABLES:
Participant contributions 11,754 52,353
Employer contributions 3,665 16,070
---------- ----------
Total receivables 15,419 68,423
---------- ----------
NET ASSETS AVAILABLE FOR BENEFITS $3,217,215 $2,611,340
========== ==========
The accompanying notes are an integral part of these statements.
3
<PAGE>
GARDENBURGER, INC. 401(k) PROFIT SHARING PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEAR ENDED DECEMBER 31, 1999
1999
------
ADDITIONS:
Participant contributions $ 530,926
Rollover contributions 121,837
Employer contributions 76,587
Interest income 3,638
----------
Total additions 732,988
DEDUCTIONS:
Administrative expenses 226
Benefits and withdrawals paid to participants 686,633
----------
Total deductions 686,859
----------
Net increase before net realized and unrealized appreciation 46,129
NET REALIZED AND UNREALIZED APPRECIATION IN FAIR VALUE
OF INVESTMENTS 559,746
----------
Net increase 605,875
NET ASSETS AVAILABLE FOR BENEFITS, beginning of year 2,611,340
----------
NET ASSETS AVAILABLE FOR BENEFITS, end of year $3,217,215
==========
The accompanying notes are an integral part of this statement.
4
<PAGE>
GARDENBURGER, INC. 401(k) PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS AND SCHEDULE
DECEMBER 31, 1999 AND 1998
1. PLAN DESCRIPTION:
-----------------
The following description of the Gardenburger, Inc. 401(k) Profit Sharing Plan
(the Plan) is provided for general information purposes only. More complete
information regarding the Plan's provisions may be found in the Plan document.
During 1999, the Plan transferred all assets from Fidelity Trust Company
(Fidelity) to Columbia Trust Company (Columbia). Investments in the funds
contained within the Plan are participant directed. Columbia currently serves as
trustee of the Plan.
GENERAL. The Plan is a defined contribution plan established by Gardenburger,
Inc. (the Company) under the provisions of Section 401(a) of the Internal
Revenue Code (IRC), which includes a qualified cash or deferred arrangement as
described in Section 401(k) of the IRC, for the benefit of eligible employees of
the Company. The Plan is subject to the provisions of the Employee Retirement
Income Security Act of 1974 (ERISA), as amended.
ELIGIBILITY. Employees are eligible to participate in the Plan if the employee
is not a leased employee or a nonresident alien and has attained the age of 17.
CONTRIBUTIONS. Eligible employees may contribute an amount up to 15% of
compensation as defined by the Plan, subject to limits in the IRC. The Company
matches 100% of each participant's elective contribution up to a maximum of 2%
of the participant's eligible compensation.
VESTING. Participants are fully vested in their contributions, transfers from
other qualified plans and the earnings thereon. Vesting in the participant's
share of Company matching contributions and the earnings thereon is based on
years of continuous service, according to the following schedule:
Years of Percentage
Service Vested
-------- ----------
less than 2 0%
2 20%
3 40%
4 60%
5 80%
6 100%
Participants earn one year of credited service for each Plan year in which the
participant is employed by the Company for 1,000 hours of service. In addition,
a participant becomes 100% vested in the participant's share of Company matching
contributions and the earnings thereon upon retirement after reaching age 62,
death, or total and permanent disability while employed.
PARTICIPANT LOANS. Participants may borrow the lesser of $50,000 or 50% of their
vested account balance, subject to a $1,000 minimum and other certain
restrictions. As these loans are repaid by the participant, the proceeds,
including interest, are returned to the participant's account. Loans are
repayable through payroll deductions over periods ranging up to five years or up
to ten years for the purchase of a primary residence. The interest rate is
determined by the plan administrator based on the prevailing interest rate
5
<PAGE>
charged by persons in the business of lending money for loans which would be
made under similar circumstances. The interest rate on outstanding loans at
December 31, 1999 was 9.5% with maturities from 2003 to 2008.
BENEFITS. Upon termination of service, death, disability or retirement, a
participant may elect to receive an amount equal to the value of the
participant's vested interest in his or her account. The normal form of payment
is a lump-sum distribution.
WITHDRAWALS. Except upon death, total disability, termination or retirement,
withdrawal of participant balances requires approval of the Plan Administrator.
Such approval is limited to cases of financial hardship, as allowed by the IRC.
PARTICIPANT ACCOUNTS. Individual accounts are maintained for each of the Plan's
participants to reflect the participant's contributions, the Company's matching
contributions and an allocation of the Plan's net earnings and related
administrative expenses. Allocation of earnings is based on the proportion of
the participant's account balance to the total of all participants' account
balances in that fund.
FORFEITED ACCOUNTS. Participants who terminate employment forfeit the nonvested
portion of Company matching contributions and the earnings thereon after a
one-year break in service. Forfeitures are used to reduce future Company
contributions. During 1999, approximately $70,000 in forfeitures were used to
reduce employer contributions. At December 31, 1999, approximately $19,000 in
forfeitures were available to reduce future employer contributions.
INVESTMENT OPTIONS. Participants may direct their elective contributions,
including Company matching contributions, and any related earnings, into five
Columbia fund options, Galaxy Large Cap Index Fund, Janus Worldwide Fund,
Fidelity Magellan Fund and Gardenburger Stock Fund. Participants may change
their investment elections on a daily basis. A description of each investment
option is provided below:
COLUMBIA DAILY INCOME COMPANY. This fund seeks a high level of income
consistent with the maintenance of liquidity and the preservation of
capital by investing primarily in high quality money market securities.
The fund assets will be invested in short-term debt obligations
maturing within one year.
COLUMBIA FIXED INCOME SECURITIES FUND. This fund seeks a high level of
income by investing in a broad range of debt securities with
intermediate to long-term maturities.
COLUMBIA BALANCED FUND. This fund seeks high total return by investing
in common stocks and debt securities. The fund invests primarily in
stocks of large-cap well-established companies.
COLUMBIA GROWTH FUND. This fund seeks capital appreciation by
investing, under normal market conditions, in stocks of companies
expected to experience long-term, above average earnings growth.
COLUMBIA SMALL CAP FUND. This fund seeks significant capital
appreciation by investing, under normal market conditions, at least 65%
of its assets in stocks, or securities convertible into stocks, of
companies with a market capitalization of less than 250% of the
dollar-weighted median market capitalization of the S&P Small Cap 600
Index.
6
<PAGE>
GALAXY LARGE CAP INDEX FUND. This fund seeks to provide investment
results that, before deduction of operating expense, match the price
and yield performance of U.S. publicly traded common stocks with large
stock market capitalizations, as represented by the S&P 500 Index.
JANUS WORLDWIDE FUND. This fund seeks long-term growth of capital
consistent with preservation of capital. The fund invests primarily in
foreign and domestic common stocks. Investments are usually spread
across at least five different countries, including the United States,
though it may at times invest in a single country.
FIDELITY MAGELLAN FUND. This fund invests primarily in equity
securities of domestic, foreign and multinational issuers of all sizes
that offer potential for growth. The fund seeks long-term capital
appreciation by investing in securities with high growth potential.
GARDENBURGER, INC. COMMON STOCK FUND. This unitized investment consists
of Gardenburger, Inc. common stock and approximately 1% to 5% in cash
investments.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
-------------------------------------------
BASIS OF ACCOUNTING. The accompanying financial statements are prepared on the
accrual basis of accounting. The preparation of financial statements in
conformity with accounting principles generally accepted in the United States
requires the Plan's management to make estimates and assumptions that affect the
accompanying financial statements and disclosures. Actual results could differ
from those estimates.
INVESTMENT VALUATION. Investments of the Plan are stated at fair value. Fair
value for shares in a registered investment company is determined by quoted
prices in an active market. Participant loans are valued at cost which
approximates fair value.
INCOME RECOGNITION. Interest income is recognized as earned on the accrual
basis. Dividend income is recorded on the ex-dividend date. Interest and
dividend income includes capital gain distributions.
NET REALIZED AND UNREALIZED APPRECIATION IN FAIR VALUE OF INVESTMENTS. Net
realized and unrealized appreciation consists of the net change in unrealized
appreciation during the year on investments held at the end of the year and the
realized gain and loss on investments sold during the year.
During 1999, investments appreciated in value as follows:
Shares in registered investment companies $557,322
Gardenburger, Inc. common stock 2,424
--------
$559,746
========
Purchases and sales of securities are recorded on a trade date basis. Brokerage
fees are incorporated within the investments respective returns.
PAYMENT OF BENEFITS. Benefit payments to participants are recorded upon
distribution.
7
<PAGE>
ADMINISTRATIVE EXPENSES. Substantially all administrative expenses are paid by
the Plan.
PARTICIPANT DIRECTED INVESTMENTS. The Accounting Standards Executive Committee
issued Statement of Position 99-3 "Accounting for and Reporting of Certain
Defined Contribution Plan Investments and Other Disclosure Matters" (SOP 99-3)
which eliminates the requirement for a defined contribution plan to disclose
participant directed investment programs. SOP 99-3 was adopted for the 1999
financial statements and as such, the 1998 financial statements have been
reclassified to eliminate the participant directed fund investment program
disclosures.
3. TAX STATUS:
-----------
The Internal Revenue Service issued a determination letter dated January 23,
1996 stating that the Plan was designed in accordance with applicable IRC
requirements as of that date. The Plan has been amended since receiving the
determination letter. However, the plan administrator believes that the Plan is
currently designed and is being operated in compliance with the applicable
requirements of the IRC.
4. PLAN TERMINATION:
-----------------
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 that such discontinuance
results in the termination of the Plan, all amounts credited to participant
accounts become fully vested.
5. RELATED PARTY TRANSACTIONS:
---------------------------
Certain investment funds are managed by Columbia. Columbia is the trustee as
defined by the Plan and, accordingly, these investments and investment
transactions qualify as party-in-interest transactions.
6. RECONCILIATION OF FINANCIAL STATEMENTS TO THE FORM 5500:
--------------------------------------------------------
The following is a reconciliation of net assets available for benefits per the
financial statements to the Form 5500 for the years ended December 31, 1999 and
1998:
1999 1998
---------- ----------
Net assets available for benefits per the financial
statements $3,217,215 $2,611,340
Amounts allocated to withdrawing participants - (20,532)
---------- ----------
Net assets available for benefits per the Form 5500 $3,217,215 $2,590,808
========== ==========
The following is a reconciliation of benefits paid to participants per the
financial statements to the Form 5500 for the year ended December 31, 1999:
Benefits paid to participants per the financial statements $686,633
Less- Amounts allocated to withdrawing participants at
December 31, 1998 (20,532)
--------
Benefits paid to participants per the Form 5500 $666,101
========
8
<PAGE>
SCHEDULE I
GARDENBURGER, INC. 401(k) PROFIT SHARING PLAN
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
EIN 93-0886359 - PLAN NO. 001
PART IV - LINE 4i
DECEMBER 31, 1999
(NOTE 5)
<TABLE>
<CAPTION>
Description of
Investment, Including
Identity of Maturity Date, Rate
Issue, Borrower, of Interest, Collateral, Current
Lessor or Similar Party Par or Maturity Value Cost Value
----------------------- --------------------------------- ---------- ----------
<S> <C> <C> <C>
Shares in a registered investment
company-
Fidelity Investments Fidelity Magellan Fund -
3,383.529 shares $ 445,555 $ 462,291
*Columbia Trust Company Columbia Daily Income
Company - 267,395.050 shares 267,395 267,395
*Columbia Trust Company Columbia Fixed Income
Securities Fund - 12,742.376
shares 166,732 158,515
*Columbia Trust Company Columbia Balanced Fund -
799.742 shares 19,201 19,770
*Columbia Trust Company Columbia Growth Fund -
38,744.388 shares 1,814,177 1,894,988
*Columbia Trust Company Columbia Small Cap Fund -
1,124.012 shares 20,554 30,641
Galaxy Galaxy Large Cap Index
Fund - 724.197 shares 27,904 29,924
Janus Funds Janus Worldwide Fund -
4,029.747 shares 212,083 307,994
*Gardenburger, Inc. Gardenburger, Inc. Common Stock -
2,367.000 shares 16,730 15,681
*Participant Participant loans (interest at
9.50% with maturities between
2003 to 2008) 14,597 14,597
---------- ----------
Total Investments $3,004,928 $3,201,796
========== ==========
</TABLE>
*Represents a party-in-interest transaction as of December 31, 1999.
NOTE: Cost is calculated on a moving average basis.
The accompanying notes are an integral part of this schedule.
9
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 15(d) 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.
Date: June 28, 2000 GARDENBURGER, INC.
401(k) PROFIT SHARING PLAN
By: /s/ Lorraine Crawford
--------------------------------
Lorraine Crawford
Corporate Controller and
Acting Chief Financial Officer
(Principal Accounting Officer)
10
<PAGE>
(b) Exhibits.
--------
The following document is an exhibit to this Form 11-K:
Exhibit No. Document
----------- --------
23 Consent of Independent Public Accountants
E-1
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
report included in this Form 11-K into Gardenburger, Inc.'s previously filed
Registration Statement on Form S-8, File No. 333-92665.
/s/ ARTHUR ANDERSEN LLP
Portland, Oregon
June 22, 2000
