<PAGE> 1
THIS DOCUMENT IS A COPY OF THE 11-K FILED ON JULY 15, 1999
PURSUANT TO A RULE 201 TEMPORARY HARDSHIP EXEMPTION.
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K/A
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1998
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _________________ to ___________________
Commission file number ____________
A. Full title of the plan and the address of the plan, if different
from that of the issuer named below:
VTEL Corporation 401(k) Plan
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
VTEL Corporation
108 Wild Basin Road
Austin, Texas 78746
<PAGE> 2
VTEL CORPORATION
401(k) PLAN
FINANCIAL STATEMENTS AND ADDITIONAL INFORMATION
DECEMBER 31, 1998 AND 1997
<PAGE> 3
REPORT OF INDEPENDENT ACCOUNTANTS
To the Participants and Administrator
of the VTEL Corporation 401(k) Plan
In our opinion, the accompanying statements of net assets available for
benefits with fund information and the related statements of changes in net
assets available for benefits with fund information present fairly, in all
material respects, the net assets available for benefits of the VTEL
Corporation 401(k) Plan (the "Plan") at December 31, 1998 and 1997, and the
changes in net assets available for benefits for the years ended December 31,
1998 and 1997, in conformity with generally accepted accounting principles.
These financial statements are the responsibility of the Plan's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for the
opinion expressed above.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets
held for investment purposes and of 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. The fund information in
the statements of net assets available for benefits and the statements of
changes in net assets available for benefits is presented for purposes of
additional analysis rather than to present the net assets available for plan
benefits and changes in net assets available for benefits of each fund. These
supplemental schedules and fund information are the responsibility of the
Plan's management. The supplemental schedules and fund information have been
subjected to the auditing procedures applied in the 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.
As further discussed in Note 1 to the financial statements, the Board of
Directors of VTEL Corporation, the Plan's sponsor, merged the Plan with the
Compression Labs, Incorporated Savings and Retirement Plan (the "CLI Plan")
effective December 31, 1997.
PricewaterhouseCoopers LLP
May 28, 1999
<PAGE> 4
VTEL CORPORATION 401(k) PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
DECEMBER 31, 1998
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CIGNA RETIREMENT SERVICES
------------------------------------------------------------------------------------------
GUARANTEED GUARANTEED CORPORATE CIGNA CIGNA CIGNA
INCOME FUND* GOV'T SECURITIES BOND FUND* LIFETIME 20 LIFETIME 30 LIFETIME 40
------------ ---------------- ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments at
fair market value $2,677,152 $ 15,994 $1,262,942 $ 10,254 $ 92,247 $ 91,464
Contributions receivable -- -- -- -- -- --
Loans receivable -- -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ----------
NET ASSETS
AVAILABLE
FOR BENEFITS $2,677,152 $ 15,994 $1,262,942 $ 10,254 $ 92,247 $ 91,464
========== ========== ========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
CIGNA RETIREMENT SERVICES
-----------------------------------------------------------------------
CIGNA CIGNA FIDELITY GROWTH FOUNDERS N&B PARTNERS
LIFETIME 50 LIFETIME 60 OPPORTUNITES* GROWTH* TRUST*
----------- ----------- --------------- --------- -------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments at
fair market value $ 4,444 $ 20,037 $4,729,168 $2,466,858 $2,943,396
Contributions receivable -- -- -- -- --
Loans receivable -- -- -- -- --
---------- ---------- ---------- ---------- ----------
NET ASSETS
AVAILABLE
FOR BENEFITS $ 4,444 $ 20,037 $4,729,168 $2,466,858 $2,943,396
========== ========== ========== ========== ==========
</TABLE>
* Identifies investments that represent 5% or more of net assets available
for benefits.
The accompanying notes are an integral part of these financial statements.
2
<PAGE> 5
VTEL CORPORATION 401(k) PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
(CONTINUED)
DECEMBER 31, 1998
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CIGNA RETIREMENT SERVICES
---------------------------------------------------------------------------------------------
INVESCO LAZARD JANUS STATE STREET SMALL COMPANY TEMPLETON
TOTAL RETURN* EQUITY WORLDWIDE* RUSSELL 3000* STOCK FUND FOREIGN
------------- ----------- ----------- ------------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments at
fair market value $ 2,462,497 $ 78,155 $ 1,315,760 $ 1,847,679 $ 2,452,755 $ 1,034,136
Contributions receivable -- -- -- -- -- --
Loans receivable -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
NET ASSETS AVAILABLE
FOR BENEFITS $ 2,462,497 $ 78,155 $ 1,315,760 $ 1,847,679 $ 2,452,755 $ 1,034,136
=========== =========== =========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
CIGNA RETIREMENT SERVICES
-------------
SMALL COMPANY VTEL
STOCK GROWTH STOCK RECEIVABLE LOANS TOTAL
------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments at
fair market value $ 120,272 $ 77,607 $ -- $ -- $23,702,817
Contributions receivable -- -- 61,793 -- 61,793
Loans receivable -- -- -- 785,985 785,985
----------- ----------- ----------- ----------- -----------
NET ASSETS AVAILABLE
FOR BENEFITS $ 120,272 $ 77,607 $ 61,793 $ 785,985 $24,550,595
=========== =========== =========== =========== ===========
</TABLE>
* Identifies investments that represent 5% or more of net assets available
for benefits.
The accompanying notes are an integral part of these financial statements.
3
<PAGE> 6
VTEL CORPORATION 401(k) PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR
BENEFITS, WITH FUND INFORMATION
DECEMBER 31, 1997
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FIDELITY ADVISORS FUNDS
--------------------------------------------------------------------------------
DAILY MONEY LIMITED TERM INCOME & GROWTH OPPOR- EQUITY PORTFOLIO
FUND BOND FUND GROWTH FUND* TUNITIES FUND* GROWTH FUND*
----------- ------------ ----------- ------------- ----------------
<S> <C> <C> <C> <C> <C>
ASSETS
Cash $ - $ - $ - $ - $ -
Investments at
fair market value 539,577 692,989 1,368,498 4,120,909 3,549,958
Contributions receivable - - - - -
Dividends & interest receivable - - - 20,386 32,245
Loans receivable - - - - -
----------- ----------- ------------ ------------ -----------
NET ASSETS AVAILABLE
FOR BENEFITS $ 539,577 $ 692,989 $ 1,368,498 $ 4,141,295 $ 3,582,203
=========== =========== ============ ============ ===========
<CAPTION>
FIDELITY
ADVISORS
FUNDS
-------------
OVERSEAS
FUND RECEIVABLE OTHER** LOANS TOTAL
------------ ----------- ------------ ------------ -----------
<C> <C> <C> <C> <C>
ASSETS
Cash $ - $ - $ 9,319,247 $ - $ 9,319,247
Investments at
fair market value 833,955 - - - 11,105,886
Contributions receivable - 40,890 - - 40,890
Dividends & Interest receivable - - - - 52,631
Loans receivable - - - 558,809 558,809
----------- ----------- ------------ ------------ ------------
NET ASSETS AVAILABLE
FOR BENEFITS $ 833,955 $ 40,890 $ 9,319,247 $ 558,809 $ 21,077,463
=========== =========== ============ ============ ============
</TABLE>
* Identifies investments that represent 5% or more of net assets available
for benefits.
** Identifies investments transferred in as of December 31, 1997 from the
Compressions Labs, Inc. Savings and Retirement Plan (Note 1).
The accompanying notes are an integral part of these financial statements.
4
<PAGE> 7
VTEL CORPORATION 401(k) PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FIDELITY ADVISOR FUNDS
-------------------------------------------------------------------------------------------
DAILY MONEY LIMITED TERM INCOME & GROWTH OPPOR- EQUITY PORTFOLIO OVERSEAS
FUND BOND FUND GROWTH FUND TUNITIES FUND GROWTH FUND FUND
----------- ----------- ----------- ------------- ---------------- -----------
<S> <C> <C> <C> <C> <C> <C>
ADDITIONS
Employee contributions $ -- $ -- $ -- $ -- $ -- $ --
----------- ----------- ----------- ----------- ----------- -----------
-- -- -- -- -- --
Income:
Interest & dividends 279 374 734 2,213 1,896 447
Net realized & unrealized
gains/(losses) (4,849) 5,230 1,504 (9,760) (41,662) 1,044
Interfund transfers -- -- -- -- -- --
Transfer of assets to new
trustee (Note 1) (535,007) (698,593) (1,370,736) (4,133,748) (3,542,437) (835,446)
Loan repayments - principal -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Total additions (539,577) (692,989) (1,368,498) (4,141,295) (3,582,203) (833,955)
----------- ----------- ----------- ----------- ----------- -----------
DEDUCTIONS
Withdrawals -- -- -- -- -- --
New participant loans -- -- -- -- -- --
Administrative expenses -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Total deductions -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease) (539,577) (692,989) (1,368,498) (4,141,295) (3,582,203) (833,955)
Net assets available for benefits
at the beginning of the year 539,577 692,989 1,368,498 4,141,295 3,582,203 833,955
----------- ----------- ----------- ----------- ----------- -----------
Net assets available for benefits
at the end of the year $ -- $ -- $ -- $ -- $ -- $ --
=========== =========== =========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
CIGNA RETIREMENT SERVICES
--------------------------------------------
GUARANTEED GUARANTEED CORPORATE
INCOME FUND GOV'T SECURITIES BOND FUND
----------- ---------------- -----------
<S> <C> <C> <C>
ADDITIONS
Employee contributions $ 202,865 $ 23,974 $ 126,982
----------- ----------- -----------
202,865 23,974 126,982
Income:
Interest & dividends 127,139 496 2,963
Net realized & unrealized
gains/(losses) -- -- 71,788
Interfund transfers 270,286 (26) 104,368
Transfer of assets to new
trustee (Note 1) 2,577,366 -- 1,106,157
Loan repayments - principal 17,120 591 10,505
----------- ----------- -----------
Total additions 3,194,776 25,035 1,422,763
----------- ----------- -----------
DEDUCTIONS
Withdrawals 495,683 -- 142,531
New participant loans 21,269 9,012 16,941
Administrative expenses 672 29 349
----------- ----------- -----------
Total deductions 517,624 9,041 159,821
----------- ----------- -----------
Net increase (decrease) 2,677,152 15,994 1,262,942
Net assets available for benefits
at the beginning of the year -- -- --
----------- ----------- -----------
Net assets available for benefits
at the end of the year $ 2,677,152 $ 15,994 $ 1,262,942
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE> 8
VTEL CORPORATION 401(k) PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND
INFORMATION (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CIGNA Retirement Services
---------------------------------------------------------------------------
CIGNA CIGNA CIGNA CIGNA CIGNA
Lifetime 20 Lifetime 30 Lifetime 40 Lifetime 50 Lifetime 60
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
ADDITIONS
Employee contributions $ 2,633 $ 28,942 $ 32,375 $ 5,763 $ 296
----------- ----------- ----------- ----------- -----------
2,633 28,942 32,375 5,763 296
Income:
Interest & dividends 127 211 470 - -
Net realized & unrealized
gains/(losses) 613 4,943 10,237 516 1,194
Interfund transfers 6,413 57,405 46,603 1,994 18,547
Transfer of assets to new
trustee (Note 1) - - - - -
Loan repayments - principal 468 746 3,801 - -
----------- ----------- ----------- ----------- -----------
Total additions 10,254 92,247 93,486 8,273 20,037
----------- ----------- ----------- ----------- -----------
DEDUCTIONS
Withdrawals - - - 3,829 -
New participant loans - - 1,924 - -
Administrative expenses - - 98 - -
----------- ----------- ----------- ----------- -----------
Total deductions - - 2,022 3,829 -
----------- ----------- ----------- ----------- -----------
Net increase (decrease) 10,254 92,247 91,464 4,444 20,037
Net assets available for benefits
at the beginning of the year - - - - -
----------- ----------- ----------- ----------- -----------
Net assets available for benefits
at the end of the year $ 10,254 $ 92,247 $ 91,464 $ 4,444 $ 20,037
=========== =========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
CIGNA Retirement Services
---------------------------------------------------------------------------
Fidelity N&B
Growth Founders Partners Invesco Lazard
Opportunities Growth Trust Total Return Equity
------------- ----------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C>
ADDITIONS
Employee contributions $ 767,109 $ 297,452 $ 550,982 $ 316,913 $ 18,769
------------- ----------- ----------- ------------ -----------
767,109 297,452 550,982 316,913 18,769
Income:
Interest & dividends 12,055 2,950 12,849 5,965 288
Net realized & unrealized
gains/(losses) 1,001,382 422,161 316,306 339,816 910
Interfund transfers (540,165) 353,407 (890,387) (278,552) 59,234
Transfer of assets to new
trustee (Note 1) 4,133,748 1,582,310 3,542,437 2,577,360 -
Loan repayments - principal 56,133 30,251 41,070 29,560 966
------------- ----------- ----------- ------------ -----------
Total additions 5,430,262 2,688,531 3,573,257 2,991,062 80,167
------------- ----------- ----------- ------------ -----------
DEDUCTIONS
Withdrawals 606,460 176,663 554,465 490,940 2,012
New participant loans 93,359 44,509 74,490 37,085 -
Administrative expenses 1,275 501 906 540 -
------------- ----------- ----------- ------------ -----------
Total deductions 701,094 221,673 629,861 528,565 2,012
------------- ----------- ----------- ------------ -----------
Net increase (decrease) 4,729,168 2,466,858 2,943,396 2,462,497 78,155
Net assets available for benefits
at the beginning of the year - - - - -
------------- ----------- ----------- ------------ -----------
Net assets available for benefits
at the end of the year $ 4,729,168 $ 2,466,858 $ 2,943,396 $ 2,462,497 $ 78,155
============= =========== =========== ============ ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE> 9
VTEL CORPORATION 401(k) PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR
BENEFITS, WITH FUND INFORMATION (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CIGNA RETIREMENT SERVICES
---------------------------------------------------------------------------------
STATE STREET SMALL SMALL
JANUS RUSSELL COMPANY TEMPLETON COMPANY
WORLDWIDE 3000 STOCK FUND FOREIGN STOCK GROWTH
----------- ------------ ---------- --------- ------------
<S> <C> <C> <C> <C> <C>
ADDITIONS
Employee contributions $ 345,368 $ 251,897 $ 368,005 $ 202,986 $ 39,548
----------- ----------- ----------- ----------- ---------
345,368 251,897 360,005 202,986 39,548
Income:
Interest & dividends 3,416 3,344 2,755 2,432 152
Net realized & unrealized
gains/(losses) 23,810 304,464 252,072 (10,811) (8,355)
Interfund transfers 953,183 372,746 (100,449) (492,772) 89,464
Transfer of assets to new
trustee (Note 1) -- 957,042 2,156,290 1,516,279 --
Loan repayments - principal 26,404 24,651 8,406 12,543 855
----------- ----------- ----------- ----------- ---------
Total additions 1,352,181 1,914,144 2,687,079 1,230,657 121,664
----------- ----------- ----------- ----------- ---------
DEDUCTIONS
Withdrawals 880 31,319 209,136 187,964 869
New participant loans 35,346 34,915 24,758 8,381 499
Administrative expenses 195 231 430 176 24
----------- ----------- ----------- ----------- ---------
Total deductions 36,421 66,465 234,324 196,521 1,392
----------- ----------- ----------- ----------- ---------
Net increase (decrease) 1,315,760 1,847,679 2,452,755 1,034,136 120,272
Net assets available for benefits
at the beginning of the year -- -- -- -- --
----------- ----------- ----------- ----------- ---------
Net assets available for benefits
at the end of the year $ 1,315,760 $ 1,847,679 $ 2,452,755 $ 1,034,136 $ 120,272
=========== =========== =========== =========== =========
<CAPTION>
VTEL
STOCK RECEIVABLE OTHER LOANS TOTAL
----------- ------------ ---------- --------- ------------
<S> <C> <C> <C> <C> <C>
ADDITIONS
Employee contributions $ 20,220 $ 61,793 $ -- $ -- $ 3,664,872
----------- ----------- ----------- ----------- -----------
20,220 61,793 -- -- 3,664,872
Income:
Interest & dividends 115 -- 13,990 -- 197,660
Net realized & unrealized
gains/(losses) (113,256) -- 33,573 -- 2,602,870
Interfund transfers 28,052 (40,890) (18,461) -- --
Transfer of assets to new
trustee (Note 1) 148,143 -- (9,346,504) 165,339 --
Loan repayments - principal 336 -- -- (264,406) --
----------- ----------- ----------- ----------- -----------
Total additions 83,610 20,903 (9,317,402) (99,067) 6,465,402
----------- ----------- ----------- ----------- -----------
DEDUCTIONS
Withdrawals 3,896 -- -- 78,305 2,984,952
New participant loans 2,060 -- -- (404,548) --
Administrative expenses 47 -- 1,845 -- 7,318
----------- ----------- ----------- ----------- -----------
Total deductions 6,003 -- 1,845 (326,243) 2,992,270
----------- ----------- ----------- ----------- -----------
Net increase (decrease) 77,607 20,903 (9,319,247) 227,176 3,473,132
Net assets available for benefits
at the beginning of the year -- 40,890 9,319,247 558,809 21,077,463
----------- ----------- ----------- ----------- -----------
Net assets available for benefits
at the end of the year $ 77,607 $ 61,793 $ -- $ 785,985 $24,550,595
=========== =========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
7
<PAGE> 10
VTEL CORPORATION 401(k) PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR
BENEFITS, WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FIDELITY ADVISOR FUNDS
--------------------------------------------------------------------------------------
DAILY MONEY LIMITED TERM INCOME & GROWTH OPPOR- EQUITY PORTFOLIO
FUND BOND FUND GROWTH FUND TUNITIES FUND GROWTH FUND
----------- ------------ ----------- ------------- ----------------
<S> <C> <C> <C> <C> <C>
ADDITIONS
Employee contributions $ 79,510 $ 114,377 $ 221,250 $ 655,822 $ 554,091
Income:
Interest & dividends 45,259 39,269 131,878 293,046 430,207
Net realized & unrealized
gains/(losses) -- 6,401 116,729 663,746 252,011
Interfund transfers 20,166 26,431 (14,559) (43,949) 87,692
Transfer of assets from CLI
plan (Note 1) -- -- -- -- --
Loan repayments - principal 20,762 12,085 28,360 73,948 60,129
----------- ----------- ----------- ----------- ------------
Total additions 165,697 198,563 483,658 1,642,613 1,384,130
----------- ----------- ----------- ----------- ------------
DEDUCTIONS
Withdrawals 620,727 66,786 103,541 405,052 334,292
New participant loans 15,343 30,247 46,343 172,498 74,382
----------- ----------- ----------- ----------- ------------
Total deductions 636,070 97,033 149,884 577,550 408,674
----------- ----------- ----------- ----------- ------------
Net increase (decrease) (470,373) 101,530 333,774 1,065,063 975,456
Net assets available for benefits
at the beginning of the year 1,009,950 591,459 1,034,724 3,076,232 2,606,747
----------- ----------- ----------- ----------- ------------
Net assets available for benefits
at the end of the year $ 539,577 $ 692,989 $ 1,368,498 $ 4,141,295 $ 3,582,203
=========== =========== =========== =========== ============
<CAPTION>
FIDELITY ADVISOR FUNDS
----------------------
OVERSEAS
FUND RECEIVABLE OTHER LOANS TOTAL
----------- ------------ ---------- --------- ------------
<S> <C> <C> <C> <C> <C>
ADDITIONS
Employee contributions $ 176,236 $ 40,890 $ -- $ -- $ 1,842,176
Income:
Interest & dividends 57,911 -- -- -- 997,570
Net realized & unrealized
gains/(losses) 32,391 -- -- -- 1,071,278
Interfund transfers (75,781) -- -- -- --
Transfer of assets from CLI
plan (Note 1) -- -- 9,319,247 -- 9,319,247
Loan repayments - principal 29,834 -- -- (225,118) --
----------- ----------- ----------- ----------- -----------
Total additions 220,591 40,890 9,319,247 (225,118) 13,230,271
----------- ----------- ----------- ----------- -----------
DEDUCTIONS
Withdrawals 113,904 -- -- 8,737 1,653,039
New participant loans 29,063 -- -- (367,876) --
----------- ----------- ----------- ----------- -----------
Total deductions 142,967 -- -- (359,139) 1,653,039
----------- ----------- ----------- ----------- -----------
Net increase (decrease) 77,624 40,890 9,319,247 134,021 11,577,232
Net assets available for benefits
at the beginning of the year 756,331 -- -- 424,788 9,500,231
----------- ----------- ----------- ----------- -----------
Net assets available for benefits
at the end of the year $ 833,955 $ 40,890 $ 9,319,247 $ 558,809 $21,077,463
=========== =========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
8
<PAGE> 11
VTEL CORPORATION 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
1. DESCRIPTION OF PLAN:
The following description of the VTEL Corporation (the "Company")
401(k) Plan (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 is a defined contribution retirement plan covering all
regular employees of the Company who are age twenty-one or older. It
is subject to the provisions of the Employee Retirement Income
Security Act of 1974 ("ERISA").
PLAN MERGER
Effective December 31, 1997, the Company merged its Plan with the
assets of Compression Labs, Inc. Savings and Retirement Plan as a
result of the Company's merger with Compression Labs, Inc. ("CLI")
which occurred on May 23, 1997. All assets from the CLI Savings and
Retirement Plan were transferred into the Company's Plan as of
December 31, 1997.
Effective December 31, 1997, the Company changed to a new service
provider. The service organization provides both recordkeeping and
trustee services for the Company. The Company began the transfer of
all Plan assets, amounting to over $21 million, to the new trustee on
January 5, 1998 and completed the transfer on February 25, 1998.
CONTRIBUTIONS
Employee contributions are recorded in the period during which the
Company makes payroll deductions from the Plan participants' earnings.
Participants may contribute up to 20% of their annual wages subject to
limitations as provided by the Internal Revenue Code. The Company may
make matching contributions up to specified amounts at its discretion.
The Company has not made matching contributions since the Plan's
inception.
PARTICIPANT ACCOUNTS
Each participant's account is credited with the participant's
contribution and allocation of Plan earnings. Allocations are based on
participant earnings or account balances, as defined. The benefit to
which a participant is entitled is the benefit that can be provided
from the participant's vested account.
VESTING
Participants are 100% vested in their voluntary contributions plus
actual earnings thereon. Should the Company decide to match
contributions, the contributions would vest based on years of service
completed by participants.
PARTICIPANT LOANS
Upon written application of a participant and approval by the Plan's
Advisory Committee, the Plan may make a loan to a participant. The
amount of the loan may not be less than $1,000 and may not be greater
than the lesser of $50,000 or 50% of the participant's vested balance.
These loans are secured by the balance of the
9
<PAGE> 12
VTEL CORPORATION 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
participant's account and bear interest at a rate commensurate with
local rates for similar loans.
10
<PAGE> 13
VTEL CORPORATION 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
TERMINATION OF EMPLOYMENT
If a participant's employment terminates and the total vested account
balance is not greater than $5,000, the participant will receive a
distribution of the value of the vested portion of the account
balance.
In the event that the vested account balance is greater than $5,000,
the participant may elect to receive a distribution of the vested
amount. If the participant does not elect to receive a distribution,
the vested portion will continue to be maintained in accordance with
the Plan until such time as the participant attains age 65. At that
time, a distribution may be made to the participant.
There were no significant termination distribution amounts which had
been approved and processed prior to year-end, but not yet paid at
that date.
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
of Plan termination, participants will become 100% vested in their
accounts.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
METHOD OF ACCOUNTING
The Plan's financial statements are prepared on the accrual basis of
accounting in accordance with generally accepted accounting
principles.
INVESTMENTS
Plan investments are stated at fair market value. The fair market
value of investments, other than loans, is based on the net asset
value quoted in an active market as of the last business day of the
Plan year. Net appreciation/depreciation in fair market value of
investments consists of realized gains or losses and unrealized
appreciation/depreciation on those investments. Participant loans are
stated at cost, which approximates fair market value.
EXPENSES
Certain expenses incidental to the administration of the Plan are paid
by the Company. The total of these expenses were $32,876 and $30,715
for December 31, 1998 and 1997, respectively. These consist primarily
of recordkeeping and audit fees for the Plan. These fees do not
include any allocation of payroll or overhead costs incurred by the
Plan or the Company.
11
<PAGE> 14
VTEL CORPORATION 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
RISKS AND UNCERTAINTIES
Financial instruments which potentially subject the Plan to
concentrations of credit risk consist primarily of securities in which
the Plan invests. Investment securities are exposed to various risks,
such as interest rate, market and credit risks. Due to the level of
risk associated with certain investment securities, it is at least
reasonably possible that changes in the near-term could materially
affect participants' account balances and the amounts reported in the
statement of net assets available for plan benefits.
3. DESCRIPTION OF INVESTMENT FUNDS:
Prior to December 31, 1997, a participant, upon enrollment in the
Plan, could direct contributions in any of the following six Fidelity
Advisor investment options:
Fidelity Advisor Daily Money Fund: Funds are invested in high-quality
U.S. government securities and repurchase agreements backed by the
U.S. government.
Fidelity Advisor Limited Term Bond Fund: Funds are invested primarily
in corporate bonds rated high or upper-medium quality by such rating
agencies as Standard & Poor's Corporation and Moody's Investors
Services, Inc., as well as U.S. government or agency obligations.
Fidelity Advisor Income & Growth Fund: Funds are invested primarily in
common stock, securities convertible into common stocks and debt
obligations of varying maturities and quality ratings.
Fidelity Advisor Growth Opportunities Fund: Funds are invested in
common and preferred stocks, securities convertible into common stock,
bonds and foreign securities.
Fidelity Advisor Equity Portfolio Growth: Funds are invested in common
and preferred stocks, securities convertible into common stock and, to
a lesser degree, bonds and foreign securities.
Fidelity Advisor Overseas Fund: Funds are invested primarily in common
and preferred stock of foreign corporations, as well as debt
securities.
As of December 31, 1997, the Plan was amended, allowing a participant
to direct subsequent employee contributions in any of the following
nineteen investment options:
CIGNA Guaranteed Income Fund: Funds are invested in a diversified
portfolio of high quality, fixed income instruments.
CIGNA Guaranteed Government Securities Fund: Funds are invested in
short-term, guaranteed government securities.
CIGNA Corporate Bond Fund: Funds are invested primarily in
investment-grade, publicly traded U.S. dollar-dominated corporate
bonds.
12
<PAGE> 15
VTEL CORPORATION 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
CIGNA Lifetime 20: Funds are invested in a balanced portfolio of
bonds, stocks, and cash equivalent investments, depending on
progressive age groups (age 20 to 29), time horizons (time frame 35 to
45 years) and investment risk tolerance.
CIGNA Lifetime 30: Funds are invested in a balanced portfolio of
bonds, stocks, and cash equivalent investments, depending on
progressive age groups (age 30 to 39), time horizons (time from 25 to
35 years) and investment risk tolerance.
CIGNA Lifetime 40: Funds are invested in a balanced portfolio of
bonds, stocks, and cash equivalent investments, depending on
progressive age groups (age 40 to 49), time horizons (time frame 15 to
25 years) and investment risk tolerance.
CIGNA Lifetime 50: Funds are invested in a balanced portfolio of
bonds, stocks, and cash equivalent investments, depending on
progressive age groups (age 50 to 59), time horizons (time frame 5 to
15 years) and investment risk tolerance.
CIGNA Lifetime 60: Funds are invested in a balanced portfolio of
bonds, stocks, and cash equivalent investments, depending on
progressive age groups (age 60 to 69), time horizons (time frame less
than 5 years) and investment risk tolerance.
Fidelity Advisors Growth Opportunities Fund: Funds are invested in
common and preferred stocks, securities convertible into common stock
and, to a lesser degree, bonds and foreign securities.
Founders Growth: Funds are invested in common and preferred stocks,
securities convertible into common stock, bonds, foreign securities
and, to a lesser degree, currency exchange contracts and repurchase
agreements.
Neuberger & Berman Partners Trust: Funds are invested in common stocks
of established medium to large capitalization companies.
Invesco Total Return Fund: Funds are invested in a combination of
equity and fixed income securities.
Lazard Equity Portfolio Account: Funds are invested primarily in the
equity securities of companies with relatively large capitalizations
that the portfolio managers believe are inexpensively priced relative
to the return on total capital or equity.
Janus Worldwide: Funds are invested primarily in common stocks of
foreign and domestic issuers.
State Street Russell 3000 Fund: Funds are invested primarily in the
equity securities of the largest 3,000 U.S. companies.
CIGNA Charter Small Company Stock Fund: Funds are invested in the
common stocks of small companies with market capitalizations of less
than $1 billion at the time of initial purchase, with emphasis on
stocks with market capitalizations under $600 million, that are
undervalued by the market.
13
<PAGE> 16
VTEL CORPORATION 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
Templeton Foreign: Funds are invested primarily in common stocks,
including American, European and Global Depository Receipts.
CIGNA Charter Small Company Stock Growth Fund: Funds are invested
primarily in common and preferred stocks of U.S. companies with market
capitalizations between $30 million and $3 billion with a focus on
growing companies involved in new product development and
technological breakthroughs.
VTEL Common Stock: Funds are invested in VTEL Corporation's common
stock.
4. RELATED PARTY TRANSACTIONS:
Certain Plan investments are units of funds managed by CIGNA
Retirement and Investment Services ("CIGNA"). CIGNA is the trustee as
defined by the Plan and, therefore, these transactions quality as
party-in-interest. Fees paid by the employer for the investment
management services amounted to $20,876 for the year ended December
31, 1998.
5. INCOME TAXES:
Management believes that the Plan is qualified under section 401(a) of
the Internal Revenue Code and, therefore, the Plan is exempt from
taxation under section 501(a). Generally, contributions to a qualified
plan are deductible by the Company when made. Earnings of the Plan are
tax exempt and participants are not taxed on their benefits until
withdrawn from the Plan.
The Plan received a favorable determination letter dated March 31,
1995 from the Internal Revenue Service concerning the March 1993 Plan
amendment. The Plan Administrator filed for a new determination letter
in April 1999 for the newly merged Plan.
* * *
14
<PAGE> 17
ADDITIONAL INFORMATION
<PAGE> 18
VTEL CORPORATION 401(k) PLAN
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1998
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION OF INVESTMENT
IDENTITY OF ISSUER BORROWER, LESSOR INCLUDING MATURITY DATE, RATE OF CURRENT
OR SIMILAR PARTY INTEREST OR PAR VALUE COST VALUE
- ---------------------------------------------- --------------------------------------------- ------------ ------------
<S> <C> <C> <C>
Connecticut General Life Insurance Company CIGNA Guaranteed Income Fun;
101,754 units, unit value $26.31 $ 2,677,152 $ 2,677,152
Connecticut General Life Insurance Company CIGNA Guaranteed Government
Securities; 1,257 units, unit value $12.72 15,994 15,994
Connecticut General Life Insurance Company CIGNA Corporate Bond Fund;
111,666 units, unit value $11.31 1,199,764 1,262,942
Connecticut General Life Insurance Company CIGNA Lifetime 20; 542 units,
unit value $18.92 9,642 10,254
Connecticut General Life Insurance Company CIGNA Lifetime 30; 4,907 units,
unit value 18.80 87,082 92,247
Connecticut General Life Insurance Company CIGNA Lifetime 40; 5,017 units,
unit value $18.23 83,310 91,464
Connecticut General Life Insurance Company CIGNA Lifetime 50; 250 units,
unit value $17.80 4,136 4,444
Connecticut General Life Insurance Company CIGNA Lifetime 60; 1,232 units,
unit value $16.27 18,843 20,037
Connecticut General Life Insurance Company Fidelity Advisors Growth Opportunities;
60,755 units, unit value $21.52 3,869,850 4,729,168
Connecticut General Life Insurance Company Founders Growth; 90,527 units,
unit value $27.25 2,085,894 2,466,858
Connecticut General Life Insurance Company Neuberger & Berman Partners Trust;
136,775 units, unit value $21.52 2,735,365 2,943,396
Connecticut General Life Insurance Company Invesco Total Return Fund; 62,579 units,
unit value $39.35 2,193,817 2,462,497
Connecticut General Life Insurance Company Lazard Equity Portfolio Account;
2,786 units, unit value $28.05 74,661 78,155
Connecticut General Life Insurance Company Janus Worldwide; 24,169 units,
unit value $54.44 1,249,236 1,315,760
Connecticut General Life Insurance Company State Street Russell 3000 Fund;
99,821 units, unit value $18.51 1,567,434 1,847,679
Connecticut General Life Insurance Company CIGNA Charter Small Company Stock
Fund; 219,978 units, unit value $11.15 2,223,696 2,452,755
Connecticut General Life Insurance Company Templeton Foreign; 94,098 units,
unit value $10.99 1,076,672 1,034,136
Connecticut General Life Insurance Company CIGNA Charter Small Company Stock
Growth Fund; 11,700 units,
unit value $10.28 124,483 120,272
Connecticut General Life Insurance Company VTEL Common Stock; 30,315 units,
unit value $2.56 167,014 77,607
Participant Loans Loaned funds of various maturities (1999-
2012) and rates from 7.75% to 10.50% 785,985 785,985
------------ ------------
$ 22,250,030 $ 24,488,802
============ ============
</TABLE>
14
<PAGE> 19
VTEL CORPORATION 401(k) PLAN
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PURCHASE SELLING COST OF NET GAIN/
IDENTITY OF PARTY INVOLVED DESCRIPTION OF ASSETS PRICE PRICE ASSET (LOSS)
- ------------------------------------------ ----------------------------- ----------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C>
PURCHASES:
Connecticut General Life Insurance Company CIGNA Guaranteed Income Fund $ 3,405,625 $ -- $ 3,405,625 $ --
Connecticut General Life Insurance Company CIGNA Corporate Bond Fund 1,558,085 -- 1,558,085 --
Connecticut General Life Insurance Company Fidelity Advisors Growth
Opportunities Fund 5,334,437 -- 5,334,437 --
Connecticut General Life Insurance Company Founders Growth 2,595,359 -- 2,595,359 --
Connecticut General Life Insurance Company Neuberger & Berman Partners
Trust 4,287,962 -- 4,287,962 --
Connecticut General Life Insurance Company Invesco Total Return Fund 3,065,986 -- 3,065,986 --
Connecticut General Life Insurance Company Janus Worldwide 1,610,980 -- 1,610,980 --
Connecticut General Life Insurance Company Templeton Foreign 1,767,744 -- 1,767,744 --
Connecticut General Life Insurance Company State Street Russell 3000 Fund 1,827,863 -- 1,827,863 --
Connecticut General Life Insurance Company CIGNA Charter Small Company 2,708,047 -- 2,708,047 --
SALES:
Connecticut General Life Insurance Company CIGNA Guaranteed Income Fund -- 852,010 852,010 --
Connecticut General Life Insurance Company CIGNA Corporate Bond Fund -- 366,930 358,320 8,610
Connecticut General Life Insurance Company Fidelity Advisors Growth
Opportunities Fund -- 1,613,584 1,464,587 148,997
Connecticut General Life Insurance Company Founders Growth -- 550,662 509,465 41,197
Connecticut General Life Insurance Company Neuberger & Berman Partners
Trust -- 1,660,872 1,552,597 108,275
Connecticut General Life Insurance Company Invesco Total Return Fund -- 943,306 872,170 71,136
Connecticut General Life Insurance Company Janus Worldwide -- 326,030 361,744 (35,714)
Connecticut General Life Insurance Company Templeton Foreign -- 722,798 691,073 31,725
Connecticut General Life Insurance Company State Street Russell 3000 Fund -- 284,648 260,429 24,219
Connecticut General Life Insurance Company CIGNA Charter Small Company
Stock Growth Fund -- 507,364 484,351 23,013
</TABLE>
15
<PAGE> 20
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the trustees (or other persons who administer the employees benefit plan) have
duly caused this annual report to be signed on its behalf by the undersigned
thereunto duly authorized.
VTEL Corporation 401(k) Plan
Date: July 14, 1999 /s/ Paul Tesluk
-----------------------------------
Paul Tesluk
Plan Advisor
<PAGE> 21
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Document Description
- ------- --------------------
<S> <C>
23(b) Consent of PricewaterhouseCoopers LLP
</TABLE>
<PAGE> 1
EXHIBIT 23(b)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 333-44533) of VTEL Corporation of our report dated
May 28, 1999 relating to the financial statements of the VTEL Corporation 401(k)
Plan, which appears in this Form 11-K/A.
PricewaterhouseCoopers LLP
Austin, TX
July 14, 1999
