<PAGE>
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
For the fiscal year ended DECEMBER 31, 1998
Commission File Number 001-05620
A. Full title of the plan and the address of
the plan, if different from that of the issuer
named below:
SAFEGUARD SCIENTIFICS, INC.
STOCK SAVINGS PLAN
B. Name of issuer of the securities held
pursuant to the plan and the address of its principal
executive office:
SAFEGUARD SCIENTIFICS, INC.
800 THE SAFEGUARD BUILDING
435 DEVON PARK DRIVE
WAYNE, PA 19087
<PAGE>
REQUIRED INFORMATION
(1) FINANCIAL STATEMENTS:
The following financial statements, including Independent Auditors'
Report thereon of Safeguard Scientifics, Inc. Stock Savings Plan are
submitted herewith:
Statements of Net Assets Available for Plan Benefits
as of December 31, 1998 and 1997
Statements of Changes in Net Assets Available for Plan Benefits for the
years ended December 31, 1998, 1997, and 1996
Notes to Financial Statements
Schedule I Item 27a - Schedule of Assets Held for Investment Purposes
Schedule II Item 27d - Schedule of Reportable Transactions
The schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are included in
the aforementioned financial statements of the Safeguard Scientifics,
Inc. Stock Savings Plan.
(2) EXHIBITS:
The following exhibits are submitted herewith:
Exhibit 23 - Consent of Independent Auditors
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the members
of the Safeguard Scientifics, Inc. Stock Savings Plan Committee have duly caused
this annual report to be signed on its behalf by the undersigned hereunto duly
authorized.
SAFEGUARD SCIENTIFICS, INC.
STOCK SAVINGS PLAN COMMITTEE
Date: June 18, 1999 By: /s/Michael W. Miles
-----------------------------------------
Michael W. Miles
Senior Vice President and Chief Financial
Officer
<PAGE>
SAFEGUARD SCIENTIFICS, INC.
STOCK SAVINGS PLAN
Financial Statements and Supplementary Schedules
December 31, 1998 and 1997
(With Independent Auditors' Report Thereon)
<PAGE>
SAFEGUARD SCIENTIFICS, INC.
STOCK SAVINGS PLAN
TABLE OF CONTENTS
DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
PAGE
<S> <C>
Independent Auditors' Report............................................................... 3
Financial Statements:
Statement of Net Assets Available for Plan Benefits
as of December 31, 1998....................................................... 4
Statement of Net Assets Available for Plan Benefits
as of December 31, 1997....................................................... 5
Statements of Changes in Net Assets Available for Plan Benefits
for the years ended December 31, 1998, 1997, and 1996......................... 6
Notes to Financial Statements..................................................... 7
Schedules:
I Item 27a - Schedule of Assets Held for Investment Purposes.................... 19
II Item 27d - Schedule of Reportable Transactions................................ 20
</TABLE>
2
<PAGE>
INDEPENDENT AUDITORS' REPORT
Trustees of Safeguard Scientifics, Inc.
Stock Savings Plan:
We have audited the accompanying statements of net assets available for plan
benefits of Safeguard Scientifics, Inc. Stock Savings Plan as of December 31,
1998 and 1997, and the related statements of changes in net assets available for
plan benefits for each of the years in the three-year period ended December 31,
1998. 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
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 Safeguard
Scientifics, Inc. Stock Savings Plan as of December 31, 1998 and 1997, and the
changes in net assets available for plan benefits for each of the years in the
three-year period ended December 31, 1998, in conformity with generally accepted
accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of Assets Held
for Investment Purposes and Reportable Transactions are presented for the
purpose of additional analysis and are not a required part of the basic
financial statements but are 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. These supplemental
schedules are the responsibility of the Plan's management. The supplemental
schedules have been subjected to the auditing procedures applied in the audit of
the basic financial statements and, in our opinion, are fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
/s/ KPMG LLP
------------
Philadelphia, PA
May 27, 1999
3
<PAGE>
SAFEGUARD SCIENTIFICS, INC. STOCK SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
MUTUAL COMMON
FUNDS STOCK LOANS TOTAL
------------ ----------- ---------- ----------
<S> <C> <C> <C> <C>
INVESTMENTS
Money Market Fund $ 112,765 $ 3,303 $ 116,068
(cost equals fair value)
Safeguard Scientifics, Inc.
299,609 shares (cost $2,598,956) 8,220,672 8,220,672
Cambridge Technology Partners
49,443 shares (cost $97,917) 1,093,926 1,093,926
Tellabs
45,624 shares (cost $67,284) 1,564,059 1,564,059
USDATA Corporation
11,589 shares (cost $58,006) 21,729 21,729
First Consulting Group
9,120 shares (cost $47,262) 186,960 186,960
Sanchez Computer Associates
18,530 shares (cost $102,292) 542,003 542,003
Diamond Technology Partners
21,448 shares (cost $117,963) 410,193 410,193
ChromaVision Medical Systems
46,115 shares (cost $230,594) 230,575 230,575
OAO Technology Solutions
36,374 shares (cost $181,870) 109,122 109,122
DocuCorp
48,840 shares (cost $244,221) 296,117 296,117
Bond Fund
6,009 shares (cost $78,796) 80,640 80,640
Balanced Fund
21,609 shares (cost $359,021) 374,698 374,698
Equity Growth Fund
58,808 shares (cost $1,565,302) 1,827,136 1,827,136
Loans Receivable $ 176,690 176,690
------------ ----------- ---------- ----------
2,395,239 12,678,659 176,690 15,250,588
CONTRIBUTIONS RECEIVABLE - EMPLOYERS 2,013 2,013
- PARTICIPANTS 1,500 719 2,219
------------ ----------- ---------- ----------
NET ASSETS AVAILABLE FOR PLAN BENEFITS $ 2,396,739 $12,681,391 $ 176,690 $15,254,820
------------ ----------- ---------- ----------
------------ ----------- ---------- ----------
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
SAFEGUARD SCIENTIFICS, INC. STOCK SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MUTUAL COMMON
FUNDS STOCK LOANS TOTAL
------------ ----------- ---------- ----------
<S> <C> <C> <C> <C>
INVESTMENTS
Money Market Fund $171,497 $2,681,318 $2,852,815
(cost equals fair value)
Safeguard Scientifics, Inc.
435,336 shares (cost $2,883,860) 13,658,667 13,658,667
Novell, Inc.
1,244 shares (cost $374) 9,330 9,330
Cambridge Technology Partners
65,483 shares (cost $129,676) 2,725,730 2,725,730
Coherent Communications Systems Corp.
48,648 shares (cost $121,615) 1,356,063 1,356,063
USDATA Corporation
15,651 shares (cost $78,356) 72,386 72,386
Integrated Systems Consulting Group
17,699 shares (cost $91,685) 196,901 196,901
Sanchez Computer Associates
30,053 shares (cost $165,318) 875,294 875,294
Diamond Technology Partners
33,406 shares (cost $183,733) 517,793 517,793
ChromaVision Medical Systems
75,094 shares (cost $375,470) 675,846 675,846
OAO Technology Solutions
68,492 shares (cost $342,460) 633,551 633,551
Bond Fund
6,173 shares (cost $80,428) 81,607 81,607
Balanced Fund
24,628 shares (cost $384,952) 437,640 437,640
Equity Growth Fund
53,769 shares (cost $1,146,761) 1,518,974 1,518,974
Loans Receivable $394,854 394,854
------------ ----------- ---------- ----------
2,209,718 23,402,879 394,854 26,007,451
CONTRIBUTIONS RECEIVABLE - EMPLOYERS 13,876 13,876
- PARTICIPANTS 13,391 17,263 30,654
------------ ----------- ---------- -----------
NET ASSETS AVAILABLE FOR PLAN BENEFITS $2,223,109 $23,434,018 $ 394,854 $26,051,981
------------ ----------- ---------- -----------
------------ ----------- ---------- -----------
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
SAFEGUARD SCIENTIFICS, INC. STOCK SAVINGS PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
1998
---------------------------------------------------------------------------
MUTUAL COMMON
FUNDS STOCK LOANS RECEIVABLE TOTAL
------------ ------------- ------------- ------------- ---------------
<S> <C> <C> <C> <C> <C>
ADDITIONS :
Participant Contributions $402,139 $472,439 $ 2,013 $876,591
Employer Contributions 195,061 2,219 197,280
Dividends/Interest 50,500 12,281 62,781
Net Realized Gain 420,190 6,607,216 7,027,406
Net Unrealized Gain (Loss) (146,725) (7,420,023) (7,566,748)
Loan Repayments 37,657 56,722 $(94,379)
Loan Interest 19,979 19,979
------------ ------------- ------------- ------------- ---------------
763,761 (76,304) (74,400) 4,232 617,289
DEDUCTIONS :
Benefits Paid 1,198,373 10,007,993 208,084 11,414,450
Loans Granted 16,295 48,025 (64,320)
Transfers, net (636,428) 591,898 44,530
------------ ------------- ------------- ------------- ---------------
578,240 10,647,916 143,764 44,530 11,414,450
------------ ------------- ------------- ------------- ---------------
NET INCREASE (DECREASE) 185,521 (10,724,220) (218,164) (40,298) (10,797,161)
NET ASSETS AVAILABLE FOR PLAN BENEFITS :
BEGINNING OF YEAR 2,209,718 23,402,879 394,854 44,530 26,051,981
------------ ------------- ------------- ------------- ---------------
END OF YEAR $ 2,395,239 $ 12,678,659 $ 176,690 $ 4,232 $ 15,254,820
------------ ------------- ------------- ------------- ---------------
------------ ------------- ------------- ------------- ---------------
<CAPTION>
1997
------------------------------------------------------------------------------
MUTUAL COMMON
FUNDS STOCK LOANS RECEIVABLE TOTAL
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
ADDITIONS :
Participant Contributions $323,340 $530,801 $30,654 $884,795
Employer Contributions 311,510 13,876 325,386
Dividends/Interest 69,943 3,668 73,611
Net Realized Gain 407,782 3,663,868 4,071,650
Net Unrealized Gain (Loss) 33,969 (1,097,168) (1,063,199)
Loan Repayments 63,163 148,825 $(211,988)
Loan Interest 37,058 37,058
-------------- -------------- -------------- -------------- --------------
898,197 3,561,504 (174,930) 44,530 4,329,301
DEDUCTIONS :
Benefits Paid 300,886 1,701,895 61,437 2,064,218
Loans Granted 46,330 94,745 (141,075)
Transfers, net 672,651 (773,235) 100,584
-------------- -------------- -------------- -------------- --------------
1,019,867 1,023,405 (79,638) 100,584 2,064,218
-------------- -------------- -------------- -------------- --------------
NET INCREASE (DECREASE) (121,670) 2,538,099 (95,292) (56,054) 2,265,083
NET ASSETS AVAILABLE FOR PLAN BENEFITS :
BEGINNING OF YEAR 2,331,388 20,864,780 490,146 100,584 23,786,898
-------------- -------------- -------------- -------------- --------------
END OF YEAR $ 2,209,718 $ 23,402,879 $ 394,854 $ 44,530 $ 26,051,981
-------------- -------------- -------------- -------------- --------------
-------------- -------------- -------------- -------------- --------------
<CAPTION>
1996
---------------------------------------------------------------------------
MUTUAL COMMON
FUNDS STOCK LOANS RECEIVABLE TOTAL
------------- ------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
ADDITIONS :
Participant Contributions $571,230 $566,652 $68,715 $1,206,597
Employer Contributions 295,489 31,869 327,358
Dividends/Interest 79,204 1,154 80,358
Net Realized Gain 244,520 3,138,133 3,382,653
Net Unrealized Gain (Loss) 40,935 2,285,016 2,325,951
Loan Repayments 41,692 46,782 $(88,474)
Loan Interest 27,998 27,998
------------- ------------- -------------- -------------- --------------
977,581 6,333,226 (60,476) 100,584 7,350,915
DEDUCTIONS :
Benefits Paid 457,672 2,990,539 54,661 3,502,872
Loans Granted 105,795 282,087 (387,882)
Transfers, net 236,059 (319,046) 82,987
------------- ------------- -------------- -------------- --------------
799,526 2,953,580 (333,221) 82,987 3,502,872
------------- ------------- -------------- -------------- --------------
NET INCREASE (DECREASE) 178,055 3,379,646 272,745 17,597 3,848,043
NET ASSETS AVAILABLE FOR PLAN BENEFITS :
BEGINNING OF YEAR 2,153,333 17,485,134 217,401 82,987 19,938,855
------------- ------------- -------------- -------------- --------------
END OF YEAR $ 2,331,388 $ 20,864,780 $ 490,146 $ 100,584 $ 23,786,898
------------- ------------- -------------- -------------- --------------
------------- ------------- -------------- -------------- --------------
</TABLE>
See accompanying notes to financial statements.
6
<PAGE>
SAFEGUARD SCIENTIFICS, INC.
STOCK SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
(1) DESCRIPTION OF THE PLAN
The following description of the Safeguard Scientifics, Inc. Stock
Savings Plan (the Plan) provides general information only. Participants
should refer to the Plan agreement for more complete information.
GENERAL
The Plan is a contributory defined contribution plan established in
1981 by Safeguard Scientifics, Inc. (SSI or the Company). The Plan is
subject to the provisions of the Employee Retirement Income Security
Act of 1974 (ERISA). SSI has the right under the Plan to amend, modify,
suspend or terminate the Plan at any time. A committee of individuals
(Plan Administrator) appointed by the Company's Board of Directors is
generally responsible for the administration of Plan operations.
ELIGIBILITY
Eligible employees in 1998 included salaried and hourly employees of
the Company, Technology Leaders Management, Inc., Safeguard
International Group, Inc., Safeguard International Management, LLC, and
Penn-Sylvan Management, Inc., subsidiaries of the Company
(collectively, the Employers). However, any person whose terms and
conditions of employment are determined through collective bargaining
is not an eligible employee unless the collective bargaining agreement
provides for the inclusion of such person in the Plan.
CONTRIBUTIONS
Participants may defer up to 14% of eligible compensation immediately
upon hire. The amount of deferred compensation is treated as a salary
reduction and is not subject to federal income tax until withdrawn from
the Plan. These amounts become part of a participant's Deferral
Contribution Subaccount (DCS).
The Plan also permits participants to roll over certain amounts
received from another qualified retirement plan. These amounts become
part of a participant's Rollover Contribution Subaccount (RCS).
Before October 1, 1991, the Plan allowed after-tax contributions which
became part of a participant's After-Tax Voluntary Contribution
Subaccount (ATVCS). Although after-tax contributions are no longer
allowed under the Plan, such contributions made to the Plan prior to
October 1, 1991 continue to be held in the Plan.
7
<PAGE>
(1) CONTINUED
Contributions by the Employers are made on a matched basis at a rate of
75% of participant deferred compensation up to a maximum of 3% of
eligible compensation. These amounts become part of a participant's
Matching Contribution Subaccount (MCS). Plan participants are eligible
for Employers contributions one year after their date of hire.
Total contributions in a Plan year may not exceed maximum allowable
contributions as prescribed by the Internal Revenue Service.
PARTICIPANT ACCOUNTS
Participant contributions are invested as directed by each participant
in five separate investments. Each participant may designate by written
notice to the Plan Administrator how the contributions to their account
are to be allocated among the funds. Participants are required to
allocate their contributions to the funds in increments of 5%.
In the event a participant fails to submit written notice of
allocation, contributions will be invested at the discretion of the
Plan Administrator.
In addition to the above initial election, participants may, as of the
last day of each calendar quarter, elect by written notice to transfer
all or 5% increments of the total amounts credited to their DCS, RCS or
ATVCS to any one or more of the investment funds.
Employers contributions are invested in SSI common stock for the
account of the participants.
Under certain circumstances, participants may transfer all or 5%
increments of the vested portion of their MCS to any one or more of the
investment funds.
Interest, dividends, and other income earned by the investment funds
are reinvested in the same fund. Such amounts are allocated to
participants based upon the proportion of a participant's balance to
the total fund balance.
PARTICIPANT LOANS
Eligible participants may borrow up to 50% of their account balance.
The minimum and maximum loan amount is $1,000 and $50,000,
respectively. Loans bear interest at a rate equal to prime plus 2% and
must be repaid within five years or, when the proceeds of a loan are
used to purchase a dwelling unit, fifteen years.
VESTING
Participants are immediately vested in all contributions they make to
the Plan as well as all earnings (losses) on such investments.
Employers contributions become fully vested after the earlier of three
years of employment, two years of participation in the Plan, or upon
death, disability or retirement.
8
<PAGE>
(1) CONTINUED
PAYMENT OF BENEFITS
Upon retirement, death, disability, or termination of service (subject
to vesting requirements), participants or beneficiaries are entitled to
a distribution equal to the total value of their accounts, and under
certain circumstances the Plan Administrator may distribute all of a
participant's account if that participant is no longer eligible to make
contributions to the Plan. Participants experiencing serious financial
hardships may also be entitled to a distribution upon approval of the
Plan Administrator. Such distributions may be made:
1) in cash as a lump-sum payment;
2) in common stock for the value of an individual's
investment in that common stock;
3) in the form of installments over a fixed period; or
4) under other methods of payment that may be adopted
and applied uniformly among all Plan participants by
the Plan Administrators.
Request for distribution of a participant's account will be processed
as soon as possible following the event (i.e., termination, retirement,
disability or death) that calls for distribution.
FORFEITURES
Forfeited amounts of $2,435, $11,828, and $11,653 were used to reduce
Employers contributions under the Plan in 1998, 1997, and 1996,
respectively, and were allocated to participant accounts as if they
were contributed by the Employers.
PLAN TERMINATION
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 of termination of the Plan, each participant will
immediately become fully vested and be entitled to full distribution of
its share of the Plan. In addition, each of the Employers has the right
to discontinue its contributions at any time. None of the Employers
have expressed any intent to discontinue contributions.
ADMINISTRATIVE EXPENSES
All administrative expenses have been paid by the Company.
(2) SALE OF PIONEER METAL FINISHING
In 1997, Pioneer was sold to its management group. The Plan granted
immediate 100% vesting to those Pioneer employees who were employed on
the sale date. Approximately $10.9 million in benefit distributions
from the Plan relating to the sale of Pioneer were paid in 1998.
9
<PAGE>
(3) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The accompanying financial statements of the Plan have been prepared on
the accrual basis of accounting. Purchases and sales of securities are
recorded on a trade-date basis, with average cost used in determining
gains or losses on sales of investments.
INVESTMENTS
The Money Market Fund (Vanguard Money Market Prime Portfolio) is stated
at cost which approximates fair value. This fund is designed to seek
current income consistent with the preservation of capital and
liquidity. The fund is invested in money market instruments such as
certificates of deposit, bankers acceptances, commercial paper, and
U.S. government agency securities.
The Legg Mason Money Market Account serves to temporarily hold amounts
intended for investment (as a result of contribution or transfer from
another fund) or distribution (to a withdrawing participant or transfer
to another fund) relative to the various common stocks in the Plan. Its
design and investments are similar to the Vanguard Money Market Prime
Portfolio.
Investments in the common stock of SSI (NYSE:SFE), Cambridge Technology
Partners (Massachusetts), Inc. ("Cambridge") (NASDAQ:CATP), Tellabs,
Inc. ("Tellabs") (NASDAQ:TLAB), USDATA Corporation ("USDATA")
(NASDAQ:USDC), First Consulting Group, Inc. ("First Consulting Group")
(NASDAQ:FCGI), Sanchez Computer Associates, Inc. ("Sanchez")
(NASDAQ:SCAI), Diamond Technology Partners, Incorporated ("Diamond")
(NASDAQ:DTPI), ChromaVision Medical Systems, Inc. ("ChromaVision")
(NASDAQ:CVSN), OAO Technology Solutions, Inc. ("OAO") (NASDAQ:OAOT) and
DocuCorp International, Inc. ("DocuCorp") (NADSAQ:DOCC) are valued at
market based upon the closing prices at the Plan's year-end.
Participants invested in SSI common stock held in trust under the Plan
may participate in rights offerings made to SSI's shareholders by
certain SSI partnership companies, including DocuCorp in 1998, Diamond,
ChromaVision, and OAO in 1997, and Sanchez and ISCG in 1996. Each Plan
participant was offered a one-time election to purchase common stock
(with proceeds from the sale of holdings in the Plan) of the above
companies based upon the number of SSI shares held in the Plan as of
the respective rights offering dates. Generally, no further investments
or reinvestments can be made in common stock other than the Company's
common stock.
All share and per share data related to Tellabs common stock have been
retroactively adjusted to reflect a two-for-one stock split effective
May 17, 1999.
In May 1999, Sanchez announced a two-for-one split of their common
shares effective June 23, 1999. The accompanying financial statements
do not reflect this stock split.
In conjunction with the merger of Coherent and Tellabs, Inc. in August
1998, participants in the Plan received .77 shares of Tellabs common
stock for each share of Coherent stock owned.
10
<PAGE>
(3) CONTINUED
In December 1998, Integrated Systems Consulting Group merged with
First Consulting Group. Participants in the Plan received .72 shares
of FCGI common stock for each share of ISCG stock owned.
The Bond Fund (U.S. Government Securities), Balanced Fund (Income Fund
of America) and the Equity Growth Fund (Investment Company of America)
are stated at fair value which is based on the net asset value per
share at the Plan year-end. Each of these funds is a mutual fund of the
American Funds Group.
The Bond Fund is designed to seek high current income with prudent
investment risk and preservation of capital. The fund invests primarily
in securities guaranteed by the U.S. Government. The fund may also
invest in securities that are issued by U.S. Government agencies or
instrumentalities but are not guaranteed by the U.S. Government. In
addition, the fund may invest in various mortgage-related securities
including securities representing interests in pools of mortgage loans,
collateralized mortgage obligations, and mortgage-backed bonds. The
fund may also invest, to a very limited extent, in inverse floating
rate notes and may purchase securities on a "when-issued" basis, enter
into firm commitment, repurchase, and reverse repurchase agreements,
and enter into "roll" transactions.
The Balanced Fund is designed primarily to emphasize current income
while secondarily striving for capital growth. The fund may invest in
common and preferred stocks, straight debt securities or debt
securities with equity conversion or purchase rights, and cash and cash
equivalents. In addition, the fund may invest in various
mortgage-related securities including securities representing interests
in pools of mortgage loans, collateralized mortgage obligations, and
mortgage-backed bonds. The fund may also invest, to a very limited
extent, in inverse floating rate notes and may purchase securities on a
"when-issued" basis, enter into firm commitment agreements, and enter
into "roll" transactions.
The Equity Growth Fund is designed to seek long-term growth of capital
and income. The fund invests primarily in common stocks, although
assets may be held in securities convertible into common stocks,
straight debt securities, cash or cash equivalents, U.S. Government
securities, and non-convertible preferred stocks.
11
<PAGE>
(3) CONTINUED
The following table summarizes the Plan's investments:
<TABLE>
<CAPTION>
December 31, 1998
----------------------------------------------------------------------------------
Net unrealized
appreciation / Fair value Plan
Investment Cost Fair value (depreciation) Shares per unit Participants
- -------------------- ------------ ------------ -------------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Safeguard $ 2,598,956 $ 8,220,672 $ 5,621,716 299,609 $ 27.44 238
Cambridge 97,917 1,093,926 996,009 49,443 22.13 45
Tellabs 67,284 1,564,059 1,496,775 45,624 34.28 53
USDATA 58,006 21,729 (36,277) 11,589 1.88 49
FCG 47,262 186,960 139,698 9,120 20.50 110
Sanchez 102,292 542,003 439,711 18,530 29.25 133
Diamond 117,963 410,193 292,230 21,448 19.13 135
ChromaVision 230,594 230,575 (19) 46,115 5.00 168
OAO 181,870 109,122 (72,748) 36,374 3.00 142
DocuCorp 244,221 296,117 51,896 48,840 6.06 152
Bond 78,796 80,640 1,844 6,009 13.42 43
Balanced 359,021 374,698 15,677 21,609 17.34 102
Equity Growth 1,565,302 1,827,136 261,834 58,808 31.07 165
Money Market 116,068 116,068 116,068 1.00 35
------------ ------------ --------------
$ 5,865,552 $15,073,898 $9,208,346
------------ ------------ --------------
</TABLE>
<TABLE>
<CAPTION>
December 31, 1997
-----------------------------------------------------------------------------------
Net unrealized
appreciation / Fair value Plan
Investment Cost Fair value (depreciation) Shares per unit Participants
- ------------------- -------------- ------------- -------------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Safeguard $2,883,860 $13,658,667 $10,774,807 435,336 $31.38 323
Novell 374 9,330 8,956 1,244 7.50 2
Cambridge 129,676 2,725,730 2,596,054 65,483 41.63 78
Coherent 121,615 1,356,063 1,234,448 48,648 27.88 93
USDATA 78,356 72,386 (5,970) 15,651 4.63 79
ISCG 91,685 196,901 105,216 17,699 11.13 175
Sanchez 165,318 875,294 709,976 30,053 29.13 211
Diamond 183,733 517,793 334,060 33,406 15.50 215
ChromaVision 375,470 675,846 300,376 75,094 9.00 264
OAO 342,460 633,551 291,091 68,492 9.25 215
Bond 80,428 81,607 1,179 6,173 13.22 105
Balanced 384,952 437,640 52,688 24,628 17.77 198
Equity Growth 1,146,761 1,518,974 372,213 53,769 28.25 316
Money Market 2,852,815 2,852,815 2,852,815 1.00 113
------------ ------------ -------------
$8,837,503 $25,612,597 $16,775,094
------------ ------------ -------------
</TABLE>
12
<PAGE>
(3) CONTINUED
The following table represents aggregate cost and aggregate proceeds
relating to sales of investments for the years ended December 31, 1998,
1997 and 1996. Realized gains below are calculated using the average
cost method and exclude capital gains from securities in underlying
mutual funds of $178,118, $168,144, and $81,090 in 1998, 1997 and 1996,
respectively, and gains on the distributions of stock of $4,137,618,
$55,208, and $1,784,922 in 1998, 1997 and 1996, respectively.
<TABLE>
<CAPTION>
1998
------------------------------------------------------
Aggregate Aggregate Net Realized
Investment Cost Proceeds Gain (Loss)
--------------------------- ---------------- ------------------ ------------------
<S> <C> <C> <C>
Safeguard $ 543,645 $2,364,351 $1,820,706
Novell 374 14,812 14,438
Cambridge 7,698 154,509 146,811
Tellabs 44,568 305,877 261,309
USDATA 6,683 5,929 (754)
FCG 30,050 34,879 4,829
Sanchez 21,626 86,144 64,518
Diamond 32,819 134,486 101,667
ChromaVision 52,515 89,390 36,875
OAO 68,870 97,482 28,612
DocuCorp 91,560 82,151 (9,409)
Bond 25,936 26,439 503
Balanced 219,236 247,426 28,190
Equity Growth 600,250 813,625 213,375
Money Market 1,288,823 1,288,823
---------------- ------------------ ------------------
$3,034,653 $5,746,323 $2,711,670
---------------- ------------------ ------------------
</TABLE>
<TABLE>
<CAPTION>
1997
------------------------------------------------------
Aggregate Aggregate Net Realized
Investment Cost Proceeds Gain (Loss)
--------------------------- ---------------- ------------------ ------------------
<S> <C> <C> <C>
Safeguard $ 674,907 $3,145,978 $2,471,071
Novell 42 1,065 1,023
Cambridge 19,252 334,465 315,213
Coherent 33,178 299,805 266,627
USDATA 52,135 39,801 (12,334)
ISCG 110,265 213,656 103,391
Sanchez 88,798 197,295 108,497
Diamond 93,940 179,379 85,439
ChromaVision 134,845 284,241 149,396
OAO 153,265 273,602 120,337
Bond 81,435 82,497 1,062
Balanced 167,402 198,119 30,717
Equity Growth 476,139 683,998 207,859
Money Market 1,624,804 1,624,804
---------------- ------------------ ------------------
$3,710,407 $7,558,705 $3,848,298
---------------- ------------------ ------------------
</TABLE>
13
<PAGE>
(3) CONTINUED
<TABLE>
<CAPTION>
1996
------------------------------------------------------
Aggregate Aggregate Net Realized
Investment Cost Proceeds Gain
--------------------------- ---------------- ------------------ ------------------
<S> <C> <C> <C>
Safeguard $105,173 $858,066 $752,893
Novell 295 11,439 11,144
Cambridge 17,349 215,463 198,114
Coherent 30,983 265,514 234,531
USDATA 67,955 160,492 92,537
ISCG 18,775 67,398 48,623
Sanchez 23,727 39,096 15,369
Bond 45,489 45,689 200
Balanced 146,913 178,982 32,069
Equity Growth 370,451 501,612 131,161
Money Market 1,630,696 1,630,696
---------------- ------------------ ------------------
$2,457,806 $3,974,447 $1,516,641
---------------- ------------------ ------------------
</TABLE>
(4) INCOME TAX STATUS
Participant contributions are made from compensation before income tax
deductions in accordance with Section 401(k) of the Internal Revenue
Code (IRC). Participants are not subject to income tax on contributions
to the Plan, appreciation in Plan assets, or income earned thereon
until their funds are withdrawn from the Plan.
The Internal Revenue Service has determined and informed the Company by
a letter dated July 19, 1995 that the Plan is designed in accordance
with the applicable sections of the IRC. The Plan has been amended
since receiving the determination letter. However, the Plan
Administrator believes that the Plan is designed and is currently being
operated in compliance with the applicable requirements of the IRC.
(5) RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
The following is a reconciliation of net assets available for benefits
according to the financial statements to Form 5500:
<TABLE>
<CAPTION>
December 31,
1998 1997
------------------ ------------------
<S> <C> <C>
Net assets available for benefits
per the financial statements $ 15,254,820 $ 26,051,981
Amounts allocated to
withdrawing participants (4,377,087)
------------------ ------------------
Net assets available for benefits
per Form 5500 $ 15,254,820 $ 21,674,894
------------------ ------------------
------------------ ------------------
</TABLE>
14
<PAGE>
(5) CONTINUED
The following is a reconciliation of benefits paid to participants
according to the financial statements to Form 5500:
<TABLE>
<CAPTION>
For the year ended December 31,
1998 1997 1996
------------------ ------------------ -------------------
<S> <C> <C> <C>
Benefits paid to participants per
the financial statements $ 11,414,450 $ 2,064,218 $ 3,502,872
Amounts allocated to
withdrawing participants (4,377,087) 4,377,087
------------------ ------------------ -------------------
Benefits paid to participants per
Form 5500 $ 7,037,363 $ 6,441,305 $ 3,502,872
------------------ ------------------ -------------------
------------------ ------------------ -------------------
</TABLE>
Amounts allocated to withdrawing participants are recorded on Form 5500
for benefit claims that have been processed and approved for payment
prior to December 31 but not yet paid as of that date.
15
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(6) ALLOCATION OF PLAN INCOME AND CHANGES IN PLAN EQUITY TO INVESTMENT PROGRAMS
YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
MUTUAL FUNDS MONEY EQUITY
- ------------ MARKET BOND BALANCED GROWTH
FUND FUND FUND FUND TOTAL
---------- --------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
ADDITIONS :
Participant Contributions $68,100 $15,515 $123,502 $195,022 $402,139
Dividends/Interest 5,335 4,571 19,142 21,452 50,500
Net Realized Gain 507 51,924 367,759 420,190
Net Unrealized Gain (Loss) 665 (37,011) (110,379) (146,725)
Loan Repayments 4,006 2,322 9,063 22,266 37,657
---------- --------- ----------- ------------ ------------
77,441 23,580 166,620 496,120 763,761
DEDUCTIONS :
Benefits Paid 136,598 59,410 300,611 701,754 1,198,373
Loans Granted 399 412 870 14,614 16,295
Transfers, net (824) (35,275) (71,919) (528,410) (636,428)
---------- --------- ----------- ------------ ------------
136,173 24,547 229,562 187,958 578,240
---------- --------- ----------- ------------ ------------
NET INCREASE (DECREASE) (58,732) (967) (62,942) 308,162 185,521
NET ASSETS AVAILABLE FOR PLAN BENEFITS :
BEGINNING OF YEAR 171,497 81,607 437,640 1,518,974 2,209,718
---------- --------- ----------- ------------ ------------
END OF YEAR $112,765 $80,640 $374,698 $1,827,136 $2,395,239
---------- --------- ----------- ------------ ------------
---------- --------- ----------- ------------ ------------
</TABLE>
<TABLE>
<CAPTION>
COMMON STOCK
SAFEGUARD NOVELL CTP TELLABS US DATA
<S> <C> <C> <C> <C> <C>
------------ -------------- -------------- -------------- --------------
ADDITIONS :
Participant Contributions $472,439
Employers Contributions 195,061
Dividends/Interest
Net Realized Gain (Loss) 4,604,189 $ 14,438 $ 678,067 $ 664,717 $ (3,353)
Net Unrealized Gain (Loss) (5,153,091) (8,956) (1,600,045) 262,327 (30,307)
Loan Repayments 56,722
------------ -------------- -------------- -------------- --------------
175,320 5,482 (921,978) 927,044 (33,660)
DEDUCTIONS :
Benefits Paid 7,716,812 694,370 559,497 14,941
Loans Granted 4,035 6,591 20,500 315
Transfers, net (2,107,532) 14,812 8,865 139,051 1,741
------------ -------------- -------------- -------------- --------------
5,613,315 14,812 709,826 719,048 16,997
------------ -------------- -------------- -------------- --------------
NET INCREASE (DECREASE) (5,437,995) (9,330) (1,631,804) 207,996 (50,657)
NET ASSETS AVAILABLE FOR PLAN BENEFITS :
BEGINNING OF YEAR 13,658,667 9,330 2,725,730 1,356,063 72,386
------------ -------------- -------------- -------------- --------------
END OF YEAR $ 8,220,672 $ $1,093,926 $ 1,564,059 $ 21,729
------------ -------------- -------------- -------------- --------------
------------ -------------- -------------- -------------- --------------
<CAPTION>
COMMON STOCK
FCG SANCHEZ DIAMOND CHROMAVISION OAO
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
ADDITIONS :
Participant Contributions
Employers Contributions
Dividends/Interest
Net Realized Gain (Loss) $ 23,211 $ 193,942 $ 215,637 $ 97,609 $ 39,255
Net Unrealized Gain (Loss) 34,482 (270,265) (41,830) (300,395) (363,839)
Loan Repayments
-------------- -------------- -------------- -------------- --------------
57,693 (76,323) 173,807 (202,786) (324,584)
DEDUCTIONS :
Benefits Paid 51,113 243,046 226,194 234,454 156,063
Loans Granted 1,082 5,550 4,475 1,651 888
Transfers, net 15,439 8,372 50,738 6,380 42,894
-------------- -------------- -------------- -------------- --------------
67,634 256,968 281,407 242,485 199,845
-------------- -------------- -------------- -------------- --------------
NET INCREASE (DECREASE) (9,941) (333,291) (107,600) (445,271) (524,429)
NET ASSETS AVAILABLE FOR PLAN BENEFITS:
BEGINNING OF YEAR 196,901 875,294 517,793 675,846 633,551
-------------- -------------- -------------- -------------- --------------
END OF YEAR $ 186,960 $ 542,003 $ 410,193 $ 230,575 $ 109,122
-------------- -------------- -------------- -------------- --------------
-------------- -------------- -------------- -------------- --------------
<CAPTION>
COMMON STOCK LEGG MASON
DOCUCORP MONEY MKT. TOTAL
-------------- -------------- --------------
<S> <C> <C> <C>
ADDITIONS :
Participant Contributions $472,439
Employers Contributions 195,061
Dividends/Interest $ 12,281 12,281
Net Realized Gain (Loss) $ 79,504 6,607,216
Net Unrealized Gain (Loss) 51,896 (7,420,023)
Loan Repayments 56,722
-------------- -------------- --------------
131,400 12,281 (76,304)
DEDUCTIONS :
Benefits Paid 111,503 10,007,993
Loans Granted 2,938 48,025
Transfers, net (279,158) 2,690,296 591,898
-------------- -------------- --------------
(164,717) 2,690,296 10,647,916
-------------- -------------- --------------
NET INCREASE (DECREASE) 296,117 (2,678,015) (10,724,220)
NET ASSETS AVAILABLE FOR PLAN BENEFITS:
BEGINNING OF YEAR 2,681,318 23,402,879
-------------- -------------- --------------
END OF YEAR $ 296,117 $ 3,303 $ 12,678,659
-------------- -------------- --------------
-------------- -------------- --------------
</TABLE>
16
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(6) ALLOCATION OF PLAN INCOME AND CHANGES IN PLAN EQUITY TO INVESTMENT PROGRAMS
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
MUTUAL FUNDS MONEY EQUITY
- ------------ MARKET BOND BALANCED GROWTH
FUND FUND FUND FUND TOTAL
----------- ---------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
ADDITIONS :
Participant Contributions $ 31,660 $ 26,438 $ 75,501 $ 189,741 $ 323,340
Dividends/Interest 14,410 7,418 21,393 26,722 69,943
Net Realized Gain 1,062 71,665 335,055 407,782
Net Unrealized Gain 949 1,748 31,272 33,969
Loan Repayments 8,889 5,334 9,885 39,055 63,163
----------- ---------- ----------- ------------ ------------
54,959 41,201 180,192 621,845 898,197
DEDUCTIONS :
Benefits Paid 27,133 3,102 11,552 259,099 300,886
Loans Granted 3,963 2,009 13,567 26,791 46,330
Transfers, net 134,101 61,564 143,401 333,585 672,651
----------- ---------- ----------- ------------ ------------
165,197 66,675 168,520 619,475 1,019,867
----------- ---------- ----------- ------------ ------------
NET INCREASE (DECREASE) (110,238) (25,474) 11,672 2,370 (121,670)
NET ASSETS AVAILABLE FOR PLAN BENEFITS :
BEGINNING OF YEAR 281,735 107,081 425,968 1,516,604 2,331,388
----------- ---------- ----------- ------------ ------------
END OF YEAR $171,497 $81,607 $437,640 $1,518,974 $2,209,718
----------- ---------- ----------- ------------ ------------
----------- ---------- ----------- ------------ ------------
</TABLE>
<TABLE>
<CAPTION>
COMMON STOCK
- ------------
SAFEGUARD NOVELL CTP COHERENT US DATA
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
ADDITIONS :
Participant Contributions $530,801
Employers Contributions 311,510
Dividends/Interest
Net Realized Gain (Loss) 2,508,238 $ 1,023 $ 325,639 $ 271,422 $ (12,338)
Net Unrealized Gain (Loss) (2,749,446) (3,687) 212,537 178,608 (22,045)
Loan Repayments 148,825
-------------- -------------- -------------- -------------- --------------
749,928 (2,664) 538,176 450,030 (34,383)
DEDUCTIONS :
Benefits Paid 1,317,024 130,256 83,263 6,486
Loans Granted 60,490 8,272 12,282 1,050
Transfers, net 1,771,849 1,065 206,884 209,528 30,370
-------------- -------------- -------------- -------------- --------------
3,149,363 1,065 345,412 305,073 37,906
-------------- -------------- -------------- -------------- --------------
NET INCREASE (DECREASE) (2,399,435) (3,729) 192,764 144,957 (72,289)
NET ASSETS AVAILABLE FOR PLAN BENEFITS :
BEGINNING OF YEAR 16,058,102 13,059 2,532,966 1,211,106 144,675
-------------- -------------- -------------- -------------- --------------
END OF YEAR $ 13,658,667 $ 9,330 $ 2,725,730 $ 1,356,063 $ 72,386
-------------- -------------- -------------- -------------- --------------
-------------- -------------- -------------- -------------- --------------
<CAPTION>
COMMON STOCK
- ------------
ISCG SANCHEZ DIAMOND CHROMAVISION OAO
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
ADDITIONS :
Participant Contributions
Employers Contributions
Dividends/Interest
Net Realized Gain (Loss) $ 104,205 $ 108,504 $ 85,991 $ 150,116 $ 121,068
Net Unrealized Gain (Loss) (238,756) 600,094 334,060 300,376 291,091
Loan Repayments
-------------- -------------- -------------- -------------- --------------
(134,551) 708,598 420,051 450,492 412,159
DEDUCTIONS :
Benefits Paid 34,949 43,136 26,702 51,522 8,557
Loans Granted 5,116 2,818 2,541 2,176
Transfers, net 169,010 151,695 (126,985) (279,052) (229,949)
-------------- -------------- -------------- -------------- --------------
209,075 197,649 (97,742) (225,354) (221,392)
-------------- -------------- -------------- -------------- --------------
NET INCREASE (DECREASE) (343,626) 510,949 517,793 675,846 633,551
NET ASSETS AVAILABLE FOR PLAN BENEFITS:
BEGINNING OF YEAR 540,527 364,345
-------------- -------------- -------------- -------------- --------------
END OF YEAR $ 196,901 $ 875,294 $ 517,793 $ 675,846 $ 633,551
-------------- -------------- -------------- -------------- --------------
-------------- -------------- -------------- -------------- --------------
<CAPTION>
COMMON STOCK
- ------------ LEGG MASON
MONEY MKT. TOTAL
-------------- --------------
<S> <C> <C>
ADDITIONS :
Participant Contributions $530,801
Employers Contributions 311,510
Dividends/Interest $ 3,668 3,668
Net Realized Gain (Loss) 3,663,868
Net Unrealized Gain (Loss) (1,097,168)
Loan Repayments 148,825
-------------- --------------
3,668 3,561,504
DEDUCTIONS :
Benefits Paid 1,701,895
Loans Granted 94,745
Transfers, net (2,677,650) (773,235)
-------------- --------------
(2,677,650) 1,023,405
-------------- --------------
NET INCREASE (DECREASE) 2,681,318 2,538,099
NET ASSETS AVAILABLE FOR PLAN BENEFITS:
BEGINNING OF YEAR 20,864,780
-------------- --------------
END OF YEAR $ 2,681,318 $ 23,402,879
-------------- --------------
-------------- --------------
</TABLE>
17
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(6) ALLOCATION OF PLAN INCOME AND CHANGES IN PLAN EQUITY TO INVESTMENT PROGRAMS
YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
MUTUAL FUNDS MONEY EQUITY
- ------------ MARKET BOND BALANCED GROWTH
FUND FUND FUND FUND TOTAL
---------------- -------------- ------------ ------------- ---------------
<S> <C> <C> <C> <C> <C>
ADDITIONS :
Participant Contributions $154,135 $ 43,853 $130,795 $242,447 $571,230
Dividends/Interest 16,881 7,147 21,697 33,479 79,204
Net Realized Gain 198 51,632 192,690 244,520
Net Unrealized Gain (Loss) (4,379) (13,906) 59,220 40,935
Loan Repayments 6,495 4,352 8,838 22,007 41,692
----------- ------------ ---------- ----------- ------------
177,511 51,171 199,056 549,843 977,581
DEDUCTIONS :
Benefits Paid 145,898 12,993 31,530 267,251 457,672
Loans Granted 13,753 7,348 23,172 61,522 105,795
Transfers, net (65,132) 23,969 114,708 162,514 236,059
----------- ------------ ---------- ----------- ------------
94,519 44,310 169,410 491,287 799,526
----------- ------------ ---------- ----------- ------------
NET INCREASE 82,992 6,861 29,646 58,556 178,055
NET ASSETS AVAILABLE FOR PLAN BENEFITS :
BEGINNING OF YEAR 198,743 100,220 396,322 1,458,048 2,153,333
----------- ------------ ---------- ----------- ------------
END OF YEAR $281,735 $107,081 $425,968 $1,516,604 $2,331,388
----------- ------------ ---------- ----------- ------------
----------- ------------ ---------- ----------- ------------
</TABLE>
<TABLE>
<CAPTION>
COMMON STOCK
SAFEGUARD NOVELL CTP COHERENT US DATA
-------------- -------------- -------------- ------------- --------------
<S> <C> <C> <C> <C> <C>
ADDITIONS :
Participant Contributions $566,652
Employers Contributions 295,489
Dividends/Interest
Net Realized Gain 2,080,111 $ 42,372 $ 436,403 $ 368,430 $ 105,760
Net Unrealized Gain (Loss) 1,815,256 (62,442) 785,693 (334,528) (372,817)
Loan Repayments 53,736
-------------- -------------- -------------- ------------- --------------
4,811,244 (20,070) 1,222,096 33,902 (267,057)
DEDUCTIONS :
Benefits Paid 2,308,036 32,140 336,804 203,991 40,655
Loans Granted 282,087
Transfers, net (412,432) 11,439 134,251 216,690 141,185
-------------- -------------- -------------- ------------- --------------
2,177,691 43,579 471,055 420,681 181,840
-------------- -------------- -------------- ------------- --------------
NET INCREASE (DECREASE) 2,633,553 (63,649) 751,041 (386,779) (448,897)
BEGINNING OF YEAR 13,424,549 76,708 1,781,925 1,597,885 593,572
-------------- -------------- -------------- ------------- --------------
END OF YEAR $ 16,058,102 $ 13,059 $ 2,532,966 $ 1,211,106 $ 144,675
-------------- -------------- -------------- ------------- --------------
-------------- -------------- -------------- ------------- --------------
<CAPTION>
COMMON STOCK LEGG MASON
ISCG SANCHEZ MONEY MKT. TOTAL
-------------- -------------- -------------- ---------------
<S> <C> <C> <C> <C>
ADDITIONS :
Participant Contributions $566,652
Employers Contributions 295,489
Dividends/Interest $ 1,154 1,154
Net Realized Gain $ 74,538 $ 30,519 3,138,133
Net Unrealized Gain (Loss) 343,972 109,882 2,285,016
Loan Repayments (6,954) 46,782
-------------- -------------- -------------- ---------------
418,510 140,401 (5,800) 6,333,226
DEDUCTIONS :
Benefits Paid 53,763 15,150 2,990,539
Loans Granted 282,087
Transfers, net (175,780) (239,094) 4,695 (319,046)
-------------- -------------- -------------- ---------------
(122,017) (223,944) 4,695 2,953,580
-------------- -------------- -------------- ---------------
NET INCREASE (DECREASE) 540,527 364,345 (10,495) 3,379,646
BEGINNING OF YEAR 10,495 17,485,134
-------------- -------------- -------------- ---------------
END OF YEAR $ 540,527 $ 364,345 $ $ 20,864,780
-------------- -------------- -------------- ---------------
-------------- -------------- -------------- ---------------
</TABLE>
18
<PAGE>
SAFEGUARD SCIENTIFICS, INC. STOCK SAVINGS PLAN
SCHEDULE I - ITEM 27A - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1998
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
CURRENT
IDENTITY OF ISSUE/DESCRIPTION OF ASSET SHARES COST VALUE
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MUTUAL FUNDS
Vanguard Money Market
Prime Portfolio 112,765 $ 112,765 $ 112,765
U.S. Government Securities Fund
Bond Fund 6,009 78,796 80,640
Income Fund of America
Balanced Fund 21,609 359,021 374,698
Investment Company of America
Equity Growth Fund 58,808 1,565,302 1,827,136
---------- -----------
2,115,884 2,395,239
---------- -----------
COMMON STOCK
Legg Mason Money Market 3,303 3,303 3,303
Safeguard Scientifics, Inc. * 299,609 2,598,956 8,220,672
Cambridge Technology Partners 49,443 97,917 1,093,926
Tellabs 45,624 67,284 1,564,059
USDATA Corporation 11,589 58,006 21,729
First Consulting Group 9,120 47,262 186,960
Sanchez Computer Associates 18,530 102,292 542,003
Diamond Technology Partners 21,448 117,963 410,193
ChromaVision Medical Systems 46,115 230,594 230,575
OAO Technology Solutions 36,374 181,870 109,122
DocuCorp 48,840 244,221 296,117
---------- -----------
3,749,668 12,678,659
---------- -----------
LOANS RECEIVABLE
Interest Rates Ranging From 8% to 11%
Maturity Dates Ranging From 1999 to 2012 176,690 176,690
--------- ---------
$6,042,242 $15,250,588
---------- -----------
---------- -----------
</TABLE>
* This investment is in the stock of Safeguard Scientifics, Inc. which is
the Plan Administrator of the Plan and therefore any transactions
related to this investment are party-in-interest transactions.
19
<PAGE>
SAFEGUARD SCIENTIFICS, INC. STOCK SAVINGS PLAN
SCHEDULE II - ITEM 27D - SCHEDULE OF REPORTABLE TRANSACTIONS*
YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
IDENTITY OF PURCHASE SELLING COST OF
PARTY INVOLVED DESCRIPTION OF ASSET (1) PRICE PRICE ASSET NET GAIN
-------------- ------------------------ ----- ----- ----- --------
<S> <C> <C> <C> <C> <C>
Vanguard Vanguard Money Market $1,230,092 $1,230,092
Vanguard Vanguard Money Market $1,288,823 $1,288,823
The American Investment Company
Fund of America (Equity Growth) $1,018,791 $1,018,791
The American Investment Company
Fund of America (Equity Growth) $813,625 $600,250 $213,375
Legg Mason Safeguard Scientifics, Inc.
Common Stock
30,666 Shares ** $988,753 $988,753
Legg Mason Safeguard Scientifics, Inc.
Common Stock
71,278 Shares ** $2,364,351 $543,645 $1,820,706
</TABLE>
* A reportable transaction is a transaction or a series of transactions of the
same security that involves an amount in excess of 5% of the value of the Plan's
net assets at the beginning of the Plan year.
** These transactions are in the stock of Safeguard Scientifics, Inc. which is
the Plan Administrator of the Plan and therefore these transactions are
party-in-interest transactions.
(1) Represents the aggregate amount of a series of transactions, which
individually may or may not qualify as a reportable transaction.
20
<PAGE>
Exhibit 23
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Safeguard Scientifics, Inc.:
We consent to incorporation by reference in the Registration Statement No.
2-72362 on Form S-8 and the Registration Statement No. 33-48462 on Form S-8 of
Safeguard Scientifics, Inc. of our report dated May 27, 1999 relating to the
statements of net assets available for plan benefits of Safeguard Scientifics,
Inc. Stock Savings Plan as of December 31, 1998 and 1997 and the related
statements of changes in net assets available for plan benefits for each of the
years in the three-year period ended December 31, 1998 which report is included
in the annual report on Form 11-K of Safeguard Scientifics, Inc. Stock Savings
Plan for the year ended December 31, 1998.
/s/ KPMG LLP
------------
Philadelphia, Pennsylvania
June 18, 1999
