<PAGE>
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES AND EXCHANGE
ACT OF 1934 (FEE REQUIRED)
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES AND
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
COMMISSION FILE NUMBER 1-11566
A. FULL TITLE OF THE PLAN AND THE ADDRESS OF THE PLAN, IF DIFFERENT FROM THAT
OF THE ISSUER NAMED BELOW:
CompSavings Plan for Employees of CompUSA Inc.
B. NAME OF ISSUER OF THE SECURITIES HELD PURSUANT TO THE PLAN AND THE ADDRESS
OF ITS PRINCIPAL EXECUTIVE OFFICES:
CompUSA Inc.
14951 North Dallas Parkway
Dallas, Texas 75240
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
CompSavings Plan for Employees of CompUSA Inc.
Financial Statements
and Supplemental Schedules
Years ended December 31, 1998 and 1997
CONTENTS
<S> <C>
Report of Independent Auditors....................................................................... 1
Audited Financial Statements
Statements of Net Assets Available for Benefits...................................................... 2
Statements of Changes in Net Assets Available for Benefits........................................... 3
Notes to Financial Statements........................................................................ 4
Supplemental Schedules
Line 27(a) - Schedule of Assets Held for Investment Purposes......................................... 16
Line 27(d) - Schedule of Reportable Transactions..................................................... 17
Line 27(e) - Schedule of Nonexempt Transactions...................................................... 18
</TABLE>
<PAGE>
Report of Independent Auditors
The CompSavings Plan Committee
CompSavings Plan for Employees of CompUSA Inc.
We have audited the accompanying statements of net assets available for benefits
of the CompSavings Plan for Employees of CompUSA Inc. as of December 31, 1998
and 1997, and the related statements of changes in net assets available for
benefits for the years then ended. 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 benefits of the Plan at
December 31, 1998 and 1997, and the changes in its net assets available for
benefits for the years then ended in conformity with generally accepted
accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental schedules
of assets held for investment purposes as of December 31, 1998, and reportable
transactions and nonexempt transactions for the year then ended, are presented
for 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 our audits
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/ ERNST & YOUNG LLP
-----------------------
Ernst & Young LLP
June 24, 1999
Dallas, Texas
1
<PAGE>
<TABLE>
<CAPTION>
CompSavings Plan for Employees of CompUSA Inc.
Statements of Net Assets Available for Benefits
DECEMBER 31
1998 1997
-----------------------------------
<S> <C> <C>
ASSETS
Investments at fair value $28,319,341 $21,170,267
Contributions receivable:
Participants 749,164 334,544
Employer 1,439,490 2,035,231
-----------------------------------
2,188,654 2,369,775
Employee loans receivable 1,631,064 1,066,490
-----------------------------------
Total assets 32,139,059 24,606,532
LIABILITIES
Excess contributions payable to participants 399,329 336,847
-----------------------------------
Net assets available for benefits $31,739,730 $24,269,685
===================================
SEE ACCOMPANYING NOTES.
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
CompSavings Plan for Employees of CompUSA Inc.
Statements of Changes in Net Assets Available for Benefits
YEAR ENDED DECEMBER 31
1998 1997
--------------------------------------
<S> <C> <C>
Investment income (loss):
Net appreciation (deprecation) in fair value of
investments $(3,209,667) $ 4,156,631
Interest and other 289,668 153,511
--------------------------------------
(2,919,999) 4,310,142
Contributions:
Participants - pretax 10,053,678 6,304,845
Participants - rollover 1,062,018 916,992
Employer - participant directed 355,166 480,509
Employer - non-participant directed 1,084,324 1,554,722
Transfer of assets from another benefit plan 1,447,562 -
--------------------------------------
14,002,748 9,257,068
Total additions 11,082,749 13,567,210
Withdrawals by participants (3,612,704) (2,411,108)
--------------------------------------
Net increase 7,470,045 11,156,102
Net assets available for benefits:
Beginning of year 24,269,685 13,113,583
--------------------------------------
End of year $31,739,730 $24,269,685
======================================
SEE ACCOMPANYING NOTES.
</TABLE>
3
<PAGE>
CompSavings Plan for Employees of CompUSA Inc.
Notes to Financial Statements
December 31, 1998 and 1997
1. DESCRIPTION OF THE PLAN
The following description of the CompSavings Plan for Employees of CompUSA Inc.
(the Plan) provides only general information. Participants should refer to the
Plan agreement for a more complete description of the Plan's provisions.
GENERAL
The Plan was adopted by CompUSA Inc. (the Company) effective January 1, 1995,
for eligible employees of the Company. The Plan is a defined contribution plan
designed to comply with the Employee Retirement Income Security Act of 1974
(ERISA). Merrill Lynch Group Employee Services (the Trustee), formerly known as
MasterWorks, acts as trustee for the Plan pursuant to a trust agreement between
the Trustee and the Company.
ADMINISTRATION
The Plan is administered by the CompSavings Plan Committee appointed by the
Board of Directors of the Company.
PARTICIPATION
Prior to April 1, 1998 employees became eligible to participate in the Plan
after they have reached the age of 21 and have completed 500 hours of service
during the previous six months. Effective April 1, 1998, employees become
eligible to participate on the first day of the calendar quarter following the
first day of employment or upon reaching the age of 21. Eligible employees can
enroll in the Plan on the first day of the next payroll period after meeting the
age requirement. Eligible employees who desire to participate in the Plan must
elect to participate on the form or forms provided by the CompSavings Plan
Committee and authorize the Company to make payroll deductions for contributions
to the Plan.
CONTRIBUTIONS
Each year, participants must contribute at least 1% and may contribute up to 15%
of pretax annual compensation, as defined in the Plan, provided their
contribution for any one year does not exceed the Internal Revenue Service (IRS)
maximum dollar limitation which was $10,000 for 1998 and $9,500 for 1997. The
Company contributes 25% of the first 5% of base compensation that a participant
contributes to the Plan (Required Contribution). Additional amounts may be
contributed (Discretionary Contribution) at the
4
<PAGE>
CompSavings Plan for Employees of CompUSA Inc.
Notes to Financial Statements (continued)
1. DESCRIPTION OF THE PLAN (CONTINUED)
option of the Company's management based on the Company's profitability for the
fiscal year that ends within the plan year. The Company may also make an
additional discretionary contribution (Incentive Contribution) to encourage new
participation in the Plan. To receive an employer contribution, an employee must
be eligible to participate in the plan on the last day of the Plan year and must
have completed at least 1000 hours of service for the plan year. For 1998, the
Company's management did not authorize a Discretionary Contribution or Incentive
Contribution. For 1997, the Company's management authorized a Discretionary
Contribution equal to 25% of the first 5% of base compensation that participants
contributed to the Plan and did not make an Incentive Contribution.
Under the provisions of the Plan, 75% of the Company's Required, Discretionary,
and Incentive Contributions are invested in the CompUSA Stock Fund, with the
remaining 25% paid in cash and invested based on the participants' elections. In
1998, the Company's Required Contribution to the Plan aggregated $1,439,490. In
1997, the Company's Required and Discretionary Contributions to the Plan
aggregated $1,017,615 and $1,017,616, respectively. The Company funded the 1998
and 1997 contributions in March 1999 and February 1998, respectively.
PARTICIPANT ACCOUNTS
Each participant's account is credited with the participant's contributions and
allocations of (a) the Company's contributions and (b) Plan earnings.
Allocations of earnings are based upon the ratio of a participant's account
balance to the aggregate of all participant account balances.
Forfeited balances of terminated participants' nonvested accounts may be used to
restore nonvested account balances for employees who are rehired, to pay Plan
fees and expenses, or to reduce Company contributions. Forfeitures aggregated
$251,268 and $353,772 in 1998 and 1997, respectively. These funds are maintained
in a money market account pending expenditure by the Plan in the future. The
money market account invests in interest bearing cash equivalents and is
included in the CompUSA Stock Fund.
VESTING
Participants are immediately vested in their pretax and rollover contributions
plus actual earnings thereon. The Company's contributions allocated to
participants' accounts, plus
5
<PAGE>
CompSavings Plan for Employees of CompUSA Inc.
Notes to Financial Statements (continued)
1. DESCRIPTION OF THE PLAN (CONTINUED)
the actual earnings thereon, vest to the participants based on years of
continuous service. Participants vest at a rate of 25% per year and are 100%
vested after four years of continuous credited service.
INVESTMENT OPTIONS
Participants may elect the investment of their employee contributions and
Company cash contributions in any of the following investment options:
(a) Asset Allocation Fund - Invests in a changing mix of stocks, bonds, and
money market securities.
(b) Income Accumulation Fund - Invests in a mix of short- and medium-term
fixed-income securities that produce income for the fund, mostly from
interest payments.
(c) Growth Stock Fund - Invests in the stocks of companies that the fund
manager believes have potential for above-average long-term capital
appreciation. As of December 18, 1998, investment in the Growth Stock
Fund was no longer an option for participants. All previous
contributions to this fund were transferred to other available funds at
the direction of the participants.
(d) S&P 500 Stock Fund - Invests in the companies included in the
Standard & Poor's 500 Index.
(e) CompUSA Stock Fund - Invests primarily in the stock of CompUSA Inc.
Participants may not elect to have more than 50% of their employee
contributions and Company cash contributions invested in this fund.
Additional investment options added in 1998:
(f) Franklin Mutual Beacon Z - Invests in inexpensive stocks based on asset
value, mergers, recapitalizations, and spin-offs.
(g) H&W International Fund - Invests primarily in the stock of companies
located in multiple countries around the world.
6
<PAGE>
CompSavings Plan for Employees of CompUSA Inc.
Notes to Financial Statements (continued)
1. DESCRIPTION OF THE PLAN (CONTINUED)
(h) MFS Capital Opportunities A - Invests primarily in moderate-growth
companies that are attractively valued relative to their growth
prospects.
(i) PIMCO Total Return Class A - Invests exclusively in intermediate term
bonds with ratings of BBB or better.
INCOME TAX STATUS
The Plan has received a determination letter from the IRS dated February 10,
1999, stating that the Plan is qualified under Section 401(a) of the Internal
Revenue Code (IRC) and, therefore, the related trust is exempt from taxation.
Once qualified, the Plan is required to operate in conformity with the IRC to
maintain its qualification. The CompSavings Plan Committee believes that the
Plan is being operated in compliance with the applicable requirements of the IRC
and, therefore, believes that the Plan is qualified and the related trust is tax
exempt.
Because the Plan did not initially meet the tests limiting contributions of
certain highly compensated employees, as defined by the IRC, excess
contributions for 1998 and 1997 were refunded to certain participants, along
with investment earnings on those excess contributions, in accordance with the
Plan agreement. Those amounts are recorded in the accompanying balance sheet as
"Excess contributions payable to participants."
TERMINATION OF THE PLAN
While the Company has not expressed any intent to do so, it may terminate the
Plan at any time. In the event the Plan is terminated, the participants would
become fully vested as to their account balances and the net assets of the Plan
would be distributed to the participants in proportion to their respective
account balances.
WITHDRAWALS
Upon termination of service, a participant may receive a lump-sum payment equal
to his or her vested account balance. Participants who are employees can elect
to withdraw a portion of their Plan account balance, subject to certain
conditions and restrictions.
7
<PAGE>
CompSavings Plan for Employees of CompUSA Inc.
Notes to Financial Statements (continued)
1. DESCRIPTION OF THE PLAN (CONTINUED)
LOANS
The Plan provides that participants may request a loan from the Plan in an
amount generally not to exceed the lesser of $50,000 or 50% of the participant's
vested account balance. The minimum loan amount is $500 and must be repaid,
through payroll deductions, within five years. The interest rate charged on
participant loans is a fixed rate of interest determined by the CompSavings Plan
Committee. The average rate charged on participant loans was 9.1% and 9.4% in
1998 and 1997, respectively.
EXPENSES AND FORFEITURES
The Company pays all administrative fees and expenses related to maintaining the
Plan to the extent such fees and expenses exceed forfeitures. Such expenses were
fully offset by forfeitures in 1998. The amount of such expenses paid by the
Company in 1997 was approximately $21,000. The Company also furnishes the Plan
with administrative and clerical services and use of Company office space and
supplies at no charge. Certain special fees, such as fees for changing
investment fund elections more than four times per year and loan maintenance
fees, are charged to individual participants' accounts.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS
The preparation of financial statements in conformity with generally accepted
accounting principles requires the Company to make estimates that affect the
amounts reported in the financial statements and accompanying notes. Actual
results could differ from those estimates.
INVESTMENT VALUATION AND INCOME RECOGNITION
Plan investments in various investment funds are stated at fair value as
determined by the Trustee based upon the quoted market prices of the underlying
securities comprising the investment funds. Investments in the Company's common
stock are valued at the last reported sales price on the last business day of
the Plan year. Employee loans receivable are valued at cost which approximates
fair value.
Purchases and sales of securities are recorded on a trade-date basis.
Contributions and interest income are recorded on the accrual basis.
8
<PAGE>
CompSavings Plan for Employees of CompUSA Inc.
Notes to Financial Statements (continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
ROLLOVER OF PCS COMPLEAT BALANCES
Effective February 26, 1998, a defined contribution plan sponsored by CompUSA
Direct, formerly PCs Compleat, a wholly-owned subsidiary of the Company, was
consolidated with the Company's Plan. As a result, $1,447,562 was transferred to
the Plan representing the net assets available for benefits held by those
employees in the plan sponsored by PCs Compleat.
9
<PAGE>
CompSavings Plan for Employees of CompUSA Inc.
Notes to Financial Statements (continued)
3. ALLOCATION OF NET ASSETS AVAILABLE FOR BENEFITS TO INVESTMENT FUNDS
At December 31, 1998, the Plan's assets and liabilities were held in the
following funds:
<TABLE>
<CAPTION>
PARTICIPANT DIRECTED
-----------------------------------------------------------------------------------------
FRANKLIN ASSET INCOME S&P 500 H&W MFS
MUTUAL ALLOCATION ACCUMULATION STOCK INTERNATIONAL CAPITAL
TOTAL FUND FUND FUND FUND FUND FUND
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments at fair value $28,319,341 $179,440 $4,771,974 $2,425,687 $9,028,970 $108,138 $6,250,000
Contributions receivable:
Participants 749,164 15,835 96,485 65,068 230,461 10,968 153,198
Employer 1,439,490 4,817 42,320 25,094 93,906 3,767 61,160
-----------------------------------------------------------------------------------------
2,188,654 20,652 138,805 90,162 324,367 14,735 214,358
Employee loans receivable 1,631,064 - - - - - -
-----------------------------------------------------------------------------------------
Total assets 32,139,059 200,092 4,910,779 2,515,849 9,353,337 122,873 6,464,358
-----------------------------------------------------------------------------------------
LIABILITIES
Excess contributions payable
to participants 399,329 1,277 56,004 31,759 149,483 1,428 117,284
-----------------------------------------------------------------------------------------
Net assets available for
benefits $31,739,730 $198,815 $4,854,775 $2,484,090 $9,203,854 $121,445 $6,347,074
=========================================================================================
<CAPTION>
NON-
PARTICIPANT
DIRECTED
-----------------------------------------------------
PIMCO COMPUSA EMPLOYEE COMPUSA
TOTAL RETURN STOCK LOAN STOCK
FUND FUND FUND FUND
-----------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Investments at fair value $87,587 $3,285,737 $ - $2,181,808
Contributions receivable:
Participants 8,810 168,339 - -
Employer 3,191 69,013 - 1,136,222
-----------------------------------------------------
12,001 237,352 - 1,136,222
Employee loans receivable - - 1,631,064 -
-----------------------------------------------------
Total assets 99,588 3,523,089 1,631,064 3,318,030
-----------------------------------------------------
LIABILITIES
Excess contributions payable
to participants 3,866 38,228 - -
-----------------------------------------------------
Net assets available for
benefits $95,722 $3,484,861 $1,631,064 $3,318,030
=====================================================
</TABLE>
10
<PAGE>
CompSavings Plan for Employees of CompUSA Inc.
Notes to Financial Statements (continued)
3. ALLOCATION OF NET ASSETS AVAILABLE FOR BENEFITS TO INVESTMENT FUNDS
(CONTINUED)
At December 31, 1997, the Plan's assets and liabilities were held in the
following funds:
<TABLE>
<CAPTION>
NON-
PARTICIPANT
PARTICIPANT DIRECTED DIRECTED
---------------------------------------------------------------------------------------------------
ASSET INCOME GROWTH S&P 500 COMPUSA EMPLOYEE COMPUSA
ALLOCATION ACCUMULATION STOCK STOCK STOCK LOAN STOCK
TOTAL FUND FUND FUND FUND FUND FUND FUND
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments at fair value $21,170,267 $2,735,143 $1,427,312 $4,086,963 $4,264,846 $4,944,581 $ - $3,711,422
Contributions receivable:
Participants 334,544 42,347 28,656 82,497 90,411 90,633 - -
Employer 2,035,231 66,223 44,242 119,769 119,386 - - 1,685,611
--------------------------------------------------------------------------------------------------
2,369,775 108,570 72,898 202,266 209,797 90,633 - 1,685,611
Employee loans receivable 1,066,490 - - - - - 1,066,490 -
--------------------------------------------------------------------------------------------------
Total assets 24,606,532 2,843,713 1,500,210 4,289,229 4,474,643 5,035,214 1,066,490 5,397,033
LIABILITIES
Excess contributions payable
to participants 336,847 47,117 26,974 100,219 85,077 77,460 - -
--------------------------------------------------------------------------------------------------
Net assets available for
benefits $24,269,685 $2,796,596 $1,473,236 $4,189,010 $4,389,566 $4,957,754 $1,066,490 $5,397,033
==================================================================================================
</TABLE>
11
<PAGE>
CompSavings Plan for Employees of CompUSA Inc.
Notes to Financial Statements (continued)
4. ALLOCATION OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS TO
INVESTMENT FUNDS
The changes in net assets available for benefits for the year ended
December 31, 1998, by fund are as follows:
<TABLE>
<CAPTION>
PARTICIPANT DIRECTED
-------------------------------------------------------------------------------------------
FRANKLIN ASSET INCOME GROWTH S&P 500 H&W
MUTUAL ALLOCATION ACCUMULATION STOCK STOCK INTERNATIONAL
TOTAL FUND FUND FUND FUND FUND FUND
------------- ---------- ----------- --------------- ----------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Investment income (loss):
Net appreciation
(depreciation) in fair
value of investments $ (3,209,667) $ (17,743) $ 868,444 $ - $ 23,892 $1,651,682 $ (2,516)
Interest and other 289,668 14,259 - 119,114 - - 2,916
------------- ---------- ----------- ------------ ----------- ----------- -----------
(2,919,999) (3,484) 868,444 119,114 23,892 1,651,682 400
Contributions:
Participants - pretax 10,053,678 112,621 1,286,712 845,304 2,247,799 2,958,595 74,874
Participants - rollover 1,062,018 29,901 121,505 109,328 209,263 348,555 8,856
Employer:
Participant directed 355,166 4,818 49,896 30,050 15,060 107,430 3,767
Non-participant directed 1,084,324 - - - - - -
Transfer of assets from
another benefit plan 1,447,562 - 117,958 408,909 360,364 420,752 -
------------- ---------- ----------- ------------ ----------- ----------- -----------
14,002,748 147,340 1,576,071 1,393,591 2,832,486 3,835,332 87,497
------------- ---------- ----------- ------------ ----------- ----------- -----------
Total additions 11,082,749 143,856 2,444,515 1,512,705 2,856,378 5,487,014 87,897
------------- ---------- ----------- ------------ ----------- ----------- -----------
Withdrawals by participants (3,612,704) (6,987) (406,686) (396,188) (666,620) (796,937) (4,597)
Net interfund transfers and
loan activity - 61,946 20,350 (105,663) (6,378,768) 124,211 38,145
------------- ---------- ----------- ------------ ----------- ----------- -----------
Net increase 7,470,045 198,815 2,058,179 1,010,854 (4,189,010) 4,814,288 121,445
Net assets available for
benefits:
Beginning of year 24,269,685 - 2,796,596 1,473,236 4,189,010 4,389,566 -
------------- ---------- ----------- ------------ ----------- ----------- ------------
End of year $ 31,739,730 $198,815 $4,854,775 $2,484,090 $ - $9,203,854 $ 121,445
============= ========== =========== ============ =========== =========== ============
<CAPTION>
NON-
PARTICIPANT
PARTICIPANT DIRECTED DIRECTED
----------------------------------------------------- ------------
MFS PIMCO COMPUSA EMPLOYEE COMPUSA
CAPITAL TOTAL RETURN STOCK LOAN STOCK
FUND FUND FUND FUND FUND
----------- -------------- ------------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Investment income (loss):
Net appreciation
(depreciation) in fair
value of investments $ 332,817 $ (2,529) $(3,323,791) $ - $(2,739,923)
Interest and other - 4,430 - 128,749 20,200
----------- -------------- ------------- ----------- ------------
332,817 1,901 (3,323,791) 128,749 (2,719,723)
Contributions:
Participants - pretax 37,705 38,803 2,451,265 - -
Participants - rollover 13,074 6,765 214,771 - -
Employer:
Participant directed 61,205 3,191 79,749 - -
Non-participant directed - - - - 1,084,324
Transfer of assets from
another benefit plan - - 82,374 6,901 50,304
----------- -------------- ------------- ----------- ------------
111,984 48,759 2,828,159 6,901 1,134,628
----------- -------------- ------------- ----------- ------------
Total additions 444,801 50,660 (495,632) 135,650 (1,585,095)
----------- -------------- ------------- ----------- ------------
Withdrawals by participants (17,446) (1,122) (552,167) (262,946) (501,008)
Net interfund transfers and
loan activity 5,919,719 46,184 (425,094) 691,870 7,100
----------- -------------- ------------- ----------- ------------
Net increase 6,347,074 95,722 (1,472,893) 564,574 (2,079,003)
Net assets available for
benefits:
Beginning of year - - 4,957,754 1,066,490 5,397,033
----------- -------------- ------------- ----------- ------------
End of year $6,347,074 $ 95,722 $ 3,484,861 $ 1,631,064 $ 3,318,030
=========== ============== ============= =========== ============
</TABLE>
12
<PAGE>
CompSavings Plan for Employees of CompUSA Inc.
Notes to Financial Statements (continued)
4. ALLOCATION OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS TO INVESTMENT
FUNDS (CONTINUED)
The changes in net assets available for benefits for the year ended December 31,
1997, by fund are as follows:
<TABLE>
<CAPTION>
PARTICIPANT DIRECTED
---------------------------------------------------------------------------
ASSET INCOME GROWTH S&P 500
ALLOCATION ACCUMULATION STOCK FUND STOCK FUND
TOTAL FUND FUND
--------------- ------------- ----------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Investment income:
Net appreciation in
fair value of investments $ 4,156,631 $ 432,793 $ - $ 172,408 $ 808,459
Interest and other 153,511 - 69,307 - -
--------------- ------------- ----------------- ------------ ------------
4,310,142 432,793 69,307 172,408 808,459
Contributions:
Participants - pretax 6,304,845 879,248 596,151 1,734,364 1,555,880
Participants - rollover 916,992 135,035 93,652 156,009 248,380
Employer:
Participant directed 480,509 66,542 44,556 120,006 119,931
Non-participant directed 1,554,722 - - - -
--------------- ------------- ----------------- ------------ ------------
9,257,068 1,080,825 734,359 2,010,379 1,924,191
--------------- ------------- ----------------- ------------ ------------
Total additions 13,567,210 1,513,618 803,666 2,182,787 2,732,650
--------------- ------------- ----------------- ------------ ------------
Withdrawals by participants (2,411,108) (301,525) (197,042) (435,146) (414,067)
Net interfund transfers and loan activity - (73,146) (92,086) (263,014) 2,447
--------------- ------------- ----------------- ------------ ------------
Net increase 11,156,102 1,138,947 514,538 1,484,627 2,321,030
Net assets available for benefits:
Beginning of year 13,113,583 1,657,649 958,698 2,704,383 2,068,536
--------------- ------------- ----------------- ------------ ------------
End of year $24,269,685 $2,796,596 $1,473,236 $4,189,010 $4,389,566
=============== ============= ================= ============ ============
<CAPTION>
NON-
PARTICIPANT
PARTICIPANT DIRECTED DIRECTED
-------------------------------- -------------
COMPUSA EMPLOYEE COMPUSA
STOCK LOAN STOCK
FUND FUND FUND
------------------- ------------- -------------
<S> <C> <C> <C>
Investment income:
Net appreciation in
fair value of investments $1,442,155 $ - $1,300,816
Interest and other - 72,902 11,302
------------------- ------------- -------------
1,442,155 72,902 1,312,118
Contributions:
Participants - pretax 1,539,202 - -
Participants - rollover 283,916 - -
Employer: -
Participant directed 129,474 - -
Non-participant directed - - 1,554,722
------------------- ------------- -------------
1,952,592 - 1,554,722
------------------- ------------- -------------
Total additions 3,394,747 72,902 2,866,840
------------------- ------------- -------------
Withdrawals by participants (437,496) (230,962) (394,870)
Net interfund transfers and loan activity (270,342) 656,691 39,450
------------------- ------------- -------------
Net increase 2,686,909 498,631 2,511,420
Net assets available for benefits:
Beginning of year 2,270,845 567,859 2,885,613
------------------- ------------- -------------
End of year $4,957,754 $1,066,490 $5,397,033
=================== ============= =============
</TABLE>
13
<PAGE>
CompSavings plan for Employees of CompUSA Inc.
Notes to Financial Statements (continued)
5. INVESTMENTS
The Plan's investments are held by the Trustee. Investments at fair value
as of December 31, 1998 and 1997, are as follows:
<TABLE>
<CAPTION>
DECEMBER 31
1998 1997
------------------------------------
<S> <C> <C>
Franklin Mutual Beacon Z Fund:
Merrill Lynch Mutual Fund for Employee Retirement
Plans $ 179,440 $ -
Asset Allocation Fund:
Merrill Lynch Allocation Fund for Employee
Retirement Plans* 4,771,974 2,735,143
Income Accumulation Fund:
Merrill Lynch Income Accumulation Fund for
Employee Retirement Plans* 2,425,687 1,427,312
Growth Stock Fund:
Merrill Lynch Growth Stock Fund for Employee
Retirement Plans* - 4,086,963
S&P 500 Stock Fund:
Merrill Lynch S&P 500 Stock Fund for Employee
Retirement Plans* 9,028,970 4,264,846
H&W International Fund:
Merrill Lynch Mutual Fund for Employee Retirement
Plans 108,138 -
MFS Capital Opportunities A Fund:
Merrill Lynch Mutual Fund for Employee Retirement
Plans* 6,250,000 -
PIMCO Total Return Class A Fund:
Merrill Lynch Mutual Fund for Employee Retirement
Plans 87,587 -
CompUSA Stock Fund:
CompUSA Common Stock* 5,144,584 8,306,419
Merrill Lynch Money Market Fund 322,961 349,584
------------------------------------
$28,319,341 $21,170,267
====================================
</TABLE>
* Investment represents 5% or more of the Plan's net assets.
14
<PAGE>
CompSavings Plan for Employees of CompUSA Inc.
Notes to Financial Statements (continued)
6. NONEXEMPT TRANSACTION
For two payroll periods during 1998, the Company failed to remit Participant
contributions in a timely manner. This failure constitutes a prohibited
transaction under Section 4975 of the Internal Revenue Code. The Company has
plans to take the corrective actions required.
7. YEAR 2000 (UNAUDITED)
The Company has determined that it will be necessary to take certain steps in
order to ensure that the Plan's information systems are prepared to handle
year 2000 dates. The recordkeeping for the Plan as well as the processing of
participant payroll and the related contributions to the Plan is performed by
third party service providers. As a result, Plan management established
formal communications with its third party service providers to determine
that they have developed plans to address their own year 2000 issues as they
relate to the Plan's operations. All third party service providers have
indicated that they will be year 2000 compliant by June 1999.
However, if the third party service providers for the Plan fail to identify
their year 2000 issues properly, or fail to properly assess, modify, and test
their identified year 2000 issues on a timely basis, the year 2000 issue
could have a material impact on the operations of the Plan. Plan management
has not developed a contingency plan with respect to any year 2000 issues
related to the Plan based upon its communications with third party service
providers and their representations to the Company that their systems will be
year 2000 ready.
15
<PAGE>
SUPPLEMENTAL SCHEDULES
<PAGE>
CompSavings Plan for Employees of CompUSA Inc.
Line 27(a) - Schedule of Assets Held for Investment Purposes
EIN: 75-2261497 PN: 001
December 31, 1998
<TABLE>
<CAPTION>
(b) (c)
IDENTITY OF ISSUER, DESCRIPTION OF INVESTMENT INCLUDING
BORROWER, LESSOR, OR MATURITY DATE, RATE OF INTEREST, (d) (e)
(a) SIMILAR PARTY COLLATERAL, PAR, OR MATURITY VALUE COST CURRENT VALUE
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
* Merrill Lynch Franklin Mutual Beacon Z -
Invests in inexpensive stocks
based on asset value, mergers,
recapitalizations, and spin-offs $ 194,215 $ 179,440
* Merrill Lynch Asset Allocation Fund - Invests
in stocks, bonds, and money
market securities 3,460,978 4,771,974
* Merrill Lynch Income Accumulation Fund -
Invests in short- and medium-
term fixed income securities 2,425,687 2,425,687
* Merrill Lynch S&P 500 Stock Fund - Invests in
equity of S&P 500 companies 6,579,143 9,028,970
* Merrill Lynch H&W International Fund -
Invests primarily in the stock of
companies located in multiple
countries around the world. 110,383 108,138
* Merrill Lynch MFS Capital Opportunities A -
Invests primarily in moderate-
growth companies that are
attractively valued relative to
their growth prospects 5,917,175 6,250,000
* Merrill Lynch PIMCO Total Return Class A -
Invests exclusively in
intermediate term bonds with
ratings of BBB or better 90,142 87,587
* CompUSA Inc. Common Stock 7,219,710 5,144,584
* Merrill Lynch Money Market Fund 322,961 322,961
* Participant Loans 8.75%-9.5% - 1,631,064
-----------------------------
$26,320,394 $29,950,405
=============================
* Party-in-interest
</TABLE>
16
<PAGE>
CompSavings Plan for Employees of CompUSA Inc.
Line 27(d) - Schedule of Reportable Transactions
EIN: 75-2261497 PN: 001
Year Ended December 31, 1998
<TABLE>
<CAPTION>
(h)
CURRENT
VALUE OF (i)
(c) (d) (g) ASSET ON NET
(a) (b) PURCHASE SELLING COST OF TRANSACTION GAIN OR
IDENTITY OF PARTY INVOLVED DESCRIPTION OF ASSET PRICE PRICE ASSET DATE (LOSS)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Category (i) - Single transactions in excess of 5% of beginning Plan assets
- ---------------------------------------------------------------------------
CompUSA Inc.* Common Stock $1,620,956 $ - $1,620,956 $1,620,956 $ -
Merrill Lynch* MFS Capital Opportunities 5,924,978 - 5,924,978 5,924,978 -
Merrill Lynch* Growth Stock Fund - 5,926,120 5,661,981 5,926,120 264,139
Category (iii) - Series of transactions in excess of 5% of beginning Plan assets
- --------------------------------------------------------------------------------
Merrill Lynch * Asset Allocation $1,716,718 $ - $1,716,718 $1,716,718 $ -
Merrill Lynch * Asset Allocation - 554,080 427,173 554,080 126,907
Merrill Lynch * ML Income Accumulation 1,934,707 - 1,934,707 1,934,707 -
Merrill Lynch * ML Income Accumulation - 936,331 936,331 936,331 -
Merrill Lynch * Growth Stock Fund 3,077,530 - 3,077,530 3,077,530 -
Merrill Lynch * Growth Stock Fund - 7,192,181 6,815,975 7,192,181 376,206
Merrill Lynch * S&P 500 Stock Fund 4,127,459 - 4,127,459 4,127,459 -
Merrill Lynch * S&P 500 Stock Fund - 1,022,578 790,324 1,022,578 232,254
Merrill Lynch * MFS Capital Opportunities 5,945,642 - 5,945,642 5,945,642 -
Merrill Lynch * MFS Capital Opportunities - 29,818 28,466 29,818 1,352
CompUSA Inc. * Common Stock 4,430,757 - 4,430,757 4,430,757 -
CompUSA Inc. * Common Stock - 1,581,191 1,456,997 1,581,191 124,194
</TABLE>
There were no category (ii) or (iv) transactions during the plan year.
Columns (e) and (f) are not applicable.
*Party-in-interest
17
<PAGE>
CompSavings Plan for Employees of CompUSA Inc.
Line 27(e) - Schedule of Nonexempt Transactions
EIN: 75-2261497 PN: 001
Year Ended December 31, 1998
<TABLE>
<CAPTION>
(c)
(b) DESCRIPTION OF TRANSACTIONS
(a) RELATIONSHIP TO PLAN, INCLUDING MATURITY DATE, RATE
IDENTITY OF PARTY EMPLOYER OR OTHER PARTY- OF INTEREST, COLLATERAL, PAR OR
INVOLVED IN-INTEREST MATURITY VALUE
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
CompUSA Inc. Employer/Plan Sponsor Contributions of $452,419 for the
payroll period ending 2/21/98 were
deposited on 3/23/98
CompUSA Inc. Employer/Plan Sponsor Contributions of $2,045 for the
payroll period ending 12/31/98 were
deposited on 1/28/99
</TABLE>
Columns (d) through (j) are not applicable
18
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
CompSavings Plan Committee for the CompSavings Plan for Employees of CompUSA
Inc. has duly caused this annual report to be signed on its behalf by the
undersigned hereunto duly authorized.
CompSavings Plan for Employees of CompUSA Inc.
By CompSavings Plan Committee appointed pursuant to the Plan:
Date: June 29, 1999 By: /s/ HAROLD F. COMPTON
-------------------------------------
Harold F. Compton, Committee Member
Date: June 29, 1999 By: /s/ JAMES E. SKINNER
-------------------------------------
James E. Skinner, Committee Member
Date: June 29, 1999 By: /s/ MELVIN D. MCCALL
-------------------------------------
Melvin D. McCall, Committee Member
19
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement
(Form S-8 No. 33-86314) pertaining to the CompSavings Plan for the Employees
of CompUSA Inc. of our report dated June 24, 1999, with respect to the
financial statements and supplemental schedules of the CompSavings Plan for
Employees of CompUSA Inc. included in this Annual Report (Form 11-K) for the
year ended December 31, 1998.
/s/ ERNST & YOUNG LLP
---------------------
Ernst & Young LLP
Dallas, Texas
June 24, 1999
20
