FORM 11-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
/ X / ANNUAL REPORT PURSUANT TO SECTION 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999
------------------------------
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-24030
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A. Full title of the plan and address of the plan, if
different from that of the issuer named below:
THE PANDA PROJECT, INC.
401(K) PLAN
B. Name of issuer of the securities held pursuant to the
plan and address of its principal executive office:
THE PANDA PROJECT, INC.
951 Broken Sound Parkway, Suite 200
BOCA RATON, FL 33487
<PAGE>
THE PANDA PROJECT, INC.
-----------------------
401(K) PLAN
-----------
(a) Financial Statements and Schedules
The financial statements and schedules included herein are filed
as part of this report.
SIGNATURE
---------
THE PLAN. Pursuant to the requirements of the Securities Exchange
Act of 1934, the trustee (or other persons who administer the
Plan) has duly caused this annual report to be signed on its
behalf by the undersigned hereunto duly authorized.
THE PANDA PROJECT, INC.
401(k) Plan
By: /s/ Melissa F. Crane
--------------------
Melissa F. Crane
Acting Chief Financial Officer
The Panda Project, Inc.
Date: June 18, 1999
<PAGE>
<PAGE>
The Panda Project, Inc. 401(k) Plan
Statement of Net Assets Available for Benefits
(Modified Cash Basis)
Unaudited
-------------------------
December 31, December 31,
1998 1997
----------- -----------
Investments at fair value (Note A and B)
AP Cash Management Fund $ 136,588 $ 121,522
SCB Short Duration Bond Fund 22,380 21,278
Panda Project Inc. Common Stock Fund 4,498 64,173
USTPN Balanced Global 50/50 Fund 18,776 18,189
USTPN Balanced Global 70/30 Fund 105,914 92,604
USTPN Global Value Fund 152,372 149,702
----------- -----------
Total Investments 440,528 467,468
Participant Loan Fund 13,438 2,843
----------- -----------
Net assets available for benefits $ 453,966 $ 470,311
=========== ===========
The accompanying notes are an integral part of these financial
statements.
<PAGE>
<TABLE>
The Panda Project, Inc. 401(k) Plan
Statement of Change in Net Assets Available for Benefits With Fund Information
(Modified Cash Basis)
<CAPTION>
Unaudited
For the Twelve Months Ended December 31, 1998
------------------------------------------------------------------------------------
Panda
Project, USTPN USTPN
SCB Inc. Balanced Balanced USTPN
AP Cash Short Common Global Global Global
Management Duration Stock 50/50 70/30 Value Participant
Fund Bond Fund Fund Fund Fund Fund Loan Fund Total
-------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Additions to net assets attributed to:
Investment income:
Net appreciation in fair value of
investments $ - $ 156 $(54,039) $ 2,171 $ 13,005 $ 15,195 $ 408 $(23,104)
Interest 5,158 1,768 - - - - - 6,926
Loan Repayments - 6 580 158 7 447 (1,198) -
Contributions:
Participants' 567 15,573 19,894 5,061 17,683 32,217 - 90,995
Rollovers - - - - 4,472 4,472 - 8,944
-------- -------- --------- -------- -------- -------- -------- --------
Total additions 5,725 17,503 (33,565) 7,390 35,167 52,331 (790) 83,761
Deductions from net
assets attributed to:
Benefits paid to participants (19,672) (464) (2,267) (2,486) (20,216) (45,981) (1,865) (92,951)
Participant Loans (9,000) - - (4,250) - - 13,250 -
Administrative expenses (7,155) - - - - - - (7,155)
-------- -------- --------- -------- -------- -------- -------- --------
Total deductions (35,827) (464) (2,267) (6,736) (20,216) (45,981) 11,385 (100,106)
Interfund transfers 45,168 (15,937) (23,843) (67) (1,641) (3,680) - -
-------- -------- --------- -------- -------- -------- -------- --------
Net increase (decrease) 15,066 1,102 (59,675) 587 13,310 2,670 10,595 (16,345)
Net assets available for benefits:
Beginning of period 121,522 21,278 64,173 18,189 92,604 149,702 2,843 470,311
-------- -------- --------- -------- -------- -------- -------- --------
End of period $136,588 $ 22,380 $ 4,498 $ 18,776 $105,914 $152,372 $ 13,438 $453,966
======== ======== ========= ======== ======== ======== ======== ========
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
The Panda Project, Inc. 401(k) Plan
Statement of Changes in Net Assets Available for Benefits With Fund Information
(Modified Cash Basis)
<CAPTION>
Unaudited
For the Nine Months Ended December 31, 1997
------------------------------------------------------------------------------------
Panda
Project, USTPN USTPN
SCB Inc. Balanced Balanced USTPN
AP Cash Short Common Global Global Global
Management Duration Stock 50/50 70/30 Value Participant
Fund Bond Fund Fund Fund Fund Fund Loan Fund Total
-------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Additions to net assets attributed to:
Investment income:
Net appreciation in fair value of
investments $ - $ 61 $ 7,308 $ 2,708 $ 12,700 $ 14,824 $ - $ 37,601
Interest 8,736 1,007 - - - - 120 9,863
Loan Repayments - 1,037 - 1,037 2,048 99 (4,221) -
Contributions:
Participants' 168 16,110 12,833 7,739 24,917 41,622 - 103,389
Rollovers - - 33,115 - 20,994 3,776 - 57,885
-------- -------- -------- -------- -------- -------- -------- --------
Total additions 8,904 18,215 53,256 11,484 60,659 60,321 (4,101) 208,738
Deductions from net
assets attributed to:
Benefits paid to participants 209,443 10,488 369 10,369 31,020 12,483 1,234 275,406
Participant Loans - 1,232 - 1,306 2,346 2,069 (6,953) -
Administrative expenses 6,798 (61) (4) (105) (102) (51) - 6,475
-------- -------- -------- -------- -------- -------- -------- --------
Total deductions 216,241 11,659 365 11,570 33,264 14,501 (5,719) (281,881)
Interfund transfers (213,370) 14,722 11,282 18,275 65,209 103,882 - -
-------- -------- -------- -------- -------- -------- -------- --------
Net increase (decrease) (420,707) 21,278 64,173 18,189 92,604 149,702 1,618 (73,143)
Net assets available for benefits:
Beginning of period 542,229 - - - - - 1,225 543,454
-------- -------- -------- -------- -------- -------- -------- --------
End of period $121,522 $ 21,278 $ 64,173 $ 18,189 $ 92,604 $149,702 $ 2,843 $470,311
======== ======== ======== ======== ======== ======== ======== ========
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
The Panda Project, Inc. 401(k) Plan
Statement of Changes in Net Assets Available for Benefits With Fund Information
(Modified Cash Basis)
<CAPTION>
Unaudited
For the Twelve Months Ended December 31, 1998
------------------------------------------------------------------------------------------
Guaranteed Guaranteed
Interest Interest
Accounts Accounts Bond Stock
5 Year 5 Year Money Bond and Emphasis Emphasis Participant
Maturity Maturity Market Mortgage Balanced Balanced Loan
3/31/2000 3/31/2001 Account Account Account Account Fund
----------- ----------- ----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Additions to net assets
attributed to:
Investment income:
Net appreciation in fair
value of investments $ - $ - $ 750 $ 12 $ 5,258 $ 10,538 $ -
Interest 1,465 1,894 - - - - -
Loan Repayments - - - - 317 177 (1,223)
Contributions:
Participants' - 41,635 11,345 - 31,878 57,774 -
Employers - 16,190 2,201 10,998 18,109 -
Rollover - 1,273 703 950 - -
----------- ----------- ----------- ----------- ----------- ----------- ------------
Total additions 1,465 60,992 14,296 715 49,401 86,598 (1,223)
Deductions from net assets
attributed to:
Benefits paid to participants 11,579 17,896 12,800 - 27,743 36,535 -
Participant Loans - - - - 890 429 (2,448)
Administrative expenses 1,278 475 107 1 671 825 -
----------- ----------- ----------- ----------- ----------- ----------- ------------
Total deductions 12,857 18,371 12,907 1 29,304 37,789 (2,448)
Interfund transfers (23,450) (42,621) (7,519) (714) (47,909) (85,050) -
----------- ----------- ----------- ----------- ----------- ----------- ------------
Net increase (decrease) (34,842) - (6,130) - (27,812) (36,241) 1,225
Net assets available for benefits:
Beginning of period 34,842 - 6,130 - 27,812 36,241 -
----------- ----------- ----------- ----------- ----------- ----------- ------------
End of period $ - $ - $ - $ - $ - $ - $ 1,225
=========== =========== =========== =========== =========== =========== ============
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
The Panda Project, Inc. 401(k) Plan
Statement of Changes in Net Assets Available for Panda Project - Benefits With Fund Information
(Modified Cash Basis)
<CAPTION>
Unaudited
For the Twelve Months Ended December 31, 1998
--------------------------------------------------------------------------
Small
Company AP Cash
Stock Index US Stock Blend Intl Stock Management
500 Account Account Account Account Fund Total
----------- ---------- ----------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Additions to net assets attributed to:
Investment income:
Net appreciation in fair value
of investments $ 22,634 $ 273 $ 9,840 $ 8,778 $ - $ 58,083
Interest - - - - - 3,359
Loan Repayments 729 - - - - -
Contributions:
Participants' 65,411 165 90,339 31,212 - 329,759
Employers 28,547 - 39,786 11,005 - 126,836
Rollover 950 1,407 950 380 - 6,613
----------- ---------- ----------- --------- ----------- -----------
Total additions 118,271 1,845 140,915 51,375 - 524,650
Deductions from net assets attributed to:
Benefits paid to participants 50,962 1,552 77,830 32,120 - 269,017
Participant Loans 1,946 - - - - 817
Administrative expenses 2,618 5 2,232 835 - 9,047
----------- ---------- ----------- --------- ----------- -----------
Total deductions 55,526 1,557 80,062 32,955 - 278,881
Interfund transfers (121,348) (288) (169,442) (43,888) 542,229 -
----------- ---------- ----------- --------- ----------- -----------
Net increase (decrease) (58,603) - (108,589) (25,468) 542,229 245,769
Net assets available for benefits:
Beginning of period 58,603 - 108,589 25,468 - 297,685
----------- ---------- ----------- --------- ----------- -----------
End of period $ - $ - $ - $ - $ 542,229 $ 543,454
=========== ========== =========== ========= =========== ===========
The accompanying notes are an integral part of these financial statements.
</TABLE>
The Panda Project, Inc. 401(k) Plan
Notes to Financial Statements (unaudited)
A. Description of Plan
The following description of The Panda Project, Inc. ("Company")
401(k) Plan ("Plan"), as amended effective April 1, 1997, 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 plan covering all
permanent fulltime or part-time United States (U.S.) Payroll-
based employees of the Company who have six months of service,
are age twenty-one or older and worked 1000 hours in a plan
year. It is subject to the provisions of the Employee
Retirement Income Security Act of 1974 (ERISA).
Change in Fiscal Year
The Plan was implemented effective April 1, 1995 with a fiscal
year ending on March 31. During 1997, the Plan s fiscal year
was changed from April 1 through March 31 to January 1 through
December 31. The accompanying financial statements are as of
December 31, 1998 and December 31, 1997 for the year ended
December 31, 1998, for the transition period April 1, 1997
through December 31, 1997, and for the year ended March 31,
1997.
CONTRIBUTIONS. Each plan year, participants may contribute up
to 15 percent of their pretax annual compensation, as defined in
the Plan. Participants may also contribute amounts representing
distributions from other qualified defined benefit or
contribution plans. At the discretion of the Company, matching
contributions and other nonelective contributions may be made to
the Plan.
PARTICIPANT ACCOUNTS. Each participant's account is credited
with the participant's contribution and allocations of (a) the
Company's contribution, if any, and, (b) Plan earnings.
Allocations are based on participant eligible contributions or
account balances, as defined.
VESTING. Participants are immediately vested in their
contributions plus actual earnings thereon. Vesting in the
Company's discretionary matching and other contributions plus
actual earnings thereon is based on years of continuous service.
A participant is 100 percent vested after five years of credited
service, and vests 20% per year prior to 5 years.
INVESTMENT OPTIONS. Upon enrollment in the Plan, a participant
may direct employee contributions in five percent increments in
any of the following six investment options, all of which are
U.S. Trust Companies of the Pacific Northwest Collective
Investment Funds ("USTPN") with the exception of The Panda
Project, Inc. Common Stock Fund, Sanford C. Bernstein ("SCB")
Short Duration Bond Fund and American Performance ("AP") Cash
Management Fund:
AP Cash Management Fund: Invests in U.S. Dollar-Denominated,
high quality, short-term debt and other short-term obligations
of high quality which have remaining maturities of 397 days of
less.
SCB Short Duration Bond Fund: Invests in a wide variety of
fixed income securities including U.S. Treasury, agency and
corporate bonds, high-quality money market securities and
others.
USTPN Balanced Global 50/50 Fund: Target investment allocation
is 50% of its assets invested in Intermediate Duration Portfolio
(high-grade fixed-income securities with an effective duration
of three to six years), 40% of its assets invested in the
Diversified Value Fund (invests in stocks of well-established
companies primarily listed on the New York Stock Exchange that
the Trustee considers undervalued), and 10% of its assets
invested in the International Value Portfolio (invests primarily
in equity securities of established foreign companies).
USTPN Balanced Global 70/30 Fund: Target investment allocation
is 55% of its assets invested in the Diversified Value Fund, 15%
of its assets invested in the International Value Portfolio, and
30% of its assets invested in Intermediate Duration Portfolio.
USTPN Global Value Fund: Target investment allocation is 65% of
its assets invested in a portfolio of approximately 50 to 75
U.S. traded stocks, 30% of its assets invested in the
International Value Portfolio, and 5% of its assets invested in
the Emerging Markets Value Portfolio (invests primarily in
equity securities of companies headquartered in countries that
are considered to be developing countries).
The Panda Project, Inc. Common Stock Fund: Funds are invested in
common stock of The Panda Project, Inc.
Participants may change their investment options at any time.
PARTICIPANT LOAN FUND. Participants may borrow from their fund
accounts a minimum of $1,000 up to a maximum equal to the lesser
of $50,000 or 50 percent of their account balance. Loan terms
may be up to five years under normal circumstances or up to 25
years for the purchase of a primary residence. The loans are
secured by the balance in the participant's account and bear
interest equal to the prime rate as documented in the Wall
Street Journal plus one percent. Principal and interest is
paid ratably through semi-monthly payroll deductions.
PAYMENT OF BENEFITS. Upon termination of service due to death,
disability, retirement or due to other reasons, a participant
will receive a lump-sum amount equal to the value of the
participant's vested interest in his or her account or may stay
in the plan indefinitely so long as they meet the minimum funds
requirement.
FORFEITED ACCOUNTS. At December 31, 1998, forfeited nonvested
accounts totalled $45,837. These accounts may be used to pay
administrative expenses of the Plan and/or reduce future
employer contributions.
ADMINISTRATIVE EXPENSES. Administrative expenses of the Plan
are generally paid from forfeitures. In the event such expenses
exceed amounts available from forfeitures, the Company will be
responsible for the payment of the excess amount.
B. Summary of Accounting Policies
BASIS OF ACCOUNTING
The unaudited financial statements of the Plan have been prepared
using the modified cash basis of accounting. Under the modified
cash basis of accounting, contributions and transfers among
investment options are recorded when received or paid,
distributions are recorded when paid, and interest is accrued when
earned.
INVESTMENT VALUATION AND INCOME RECOGNITION
The Plan's investments are stated at fair value. Shares of
registered investment companies are valued at quoted market prices
which represent the net asset value of shares held by the Plan at
year-end. The Company s common stock is valued at its quoted
market price, within the Company's Common Stock Fund. The
Company's Common Stock Fund is valued at its net asset value.
Participant notes receivable are valued at cost which approximates
fair value.
Purchases and sales of securities are recorded on a trade-date
basis. Interest income is recorded on the accrual basis. Dividends
are recorded on the ex-dividend date.
PAYMENT OF BENEFITS
Benefits are recorded when paid.
C. Benefit Obligations
Benefit obligations for persons who withdrew from participation in
the plan by investment option are as follows:
December 31, December 31,
1998 1997
----------------------------
AP Cash Management Fund $ 90,841 $ 65,613
SCB Short Duration Bond Fund 4,033 492
Panda Project, Inc. Common Stock Fund 4,075 2,816
USTPN Balanced Global 50/50 Fund 6,063 524
USTPN Balanced Global 70/30 Fund 51,170 13,063
USTPN Global Value Fund 56,356 8,931
Participant Loan Fund 9,773 1,136
----------------------------
$ 222,310 $ 92,575
============================
D. Plan Termination
The Company has the right under the Plan to discontinue its
discretionary 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 percent vested in their
accounts.
During the plan year ended March 31, 1997 a partial termination of
the plan occurred related to a reduction of workforce. Due to the
partial termination of the plan, amounts previously forfeited were
paid out or added to the accounts of terminated employees during
the plan year ended December 31, 1997.
E. Tax Status
The Internal Revenue Services has determined and informed the
Company by a letter dated September 9, 1996 that the Plan is
designed in accordance with applicable sections of the Internal
Revenue Code (IRC). The Plan has been amended since receiving the
determination letter. However, the Plan administrator believes
that the Plan, as written, is designed and is currently being
operated in compliance with the applicable requirements of the IRC.
F. The plan was amended April 1, 1997 to allow issuance of the
Company's common stock as an investment option. Additionally, new
trustees and investment managers were named as of April 1, 1997.
<TABLE>
Schedule I
The Panda Project, Inc. 401(k) Plan
Schedule of Assets Held for Investment Purposes
As of December 31, 1998
<CAPTION>
Current
Identity of Issue Description of Investment Cost Value
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
AP Cash Management Fund Money Market Fund 136,588 Shares $136,588 $136,588
SCB Short Duration Bond Fund Bond Fund 1,777 Shares 22,298 22,380
Panda Project, Inc. Common Stock Fund Company Stock Fund 717 Shares 7,850 4,498
USTPN Balanced Global 50/50 Fund Mutual Fund 1,215 Shares 16,378 18,776
USTPN Balanced Global 70/30 Fund Mutual Fund 6,357 Shares 87,986 105,914
USTPN Global Value Fund Mutual Fund 11,570 Shares 131,470 152,372
Participant Loan Fund Interest Rates 8.75%-10.5% 13,438 13,438
------------------------
$416,008 $453,966
========================
</TABLE>
<TABLE>
Schedule II
The Panda Project, Inc. 401(k) Plan
Schedule of Reportable Transactions
For the Nine Months Ended December 31, 1998
<CAPTION>
Current
Value of
Asset on
Identity Purchase Selling Cost of Transaction Net Gain
of Issue Description of Asset Price Price Asset Date or (Loss)
- -----------------------------------------------------------------------------------------------------------------
Category (iii) A Series of Transactions in Excess of 5% of Plan Benefits
<S> <C> <C> <C> <C> <C> <C>
AP Cash Management Fund Money Market Fund $ , $27,335 $ 27,335 $ 27,335 -
Panda Common Stock Fund Company Stock Fund , 21,319 22,682 21,319 (1,363)
USTPN Global Value Fund Mutual Fund , 29,706 25,118 29,706 4,588
</TABLE>
