SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
(Mark One)
[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_______________
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
Financial Statements and Supplemental Schedule
VTEL Corporation 401(k) Plan
Years ended December 31, 1999 and 1998 with Report of Independent Auditors
VTEL Corporation 401(k) Plan
Financial Statements
and Supplemental Schedule
Years ended December 31, 1999 and 1998
Contents
Reports of Independent Auditors.........................................................................1-3
Financial Statements
Statements of Net Assets Available for Benefits.........................................................4
Statement of Changes in Net Assets Available for Benefits...............................................5
Notes to Financial Statements...........................................................................6-11
Supplemental Schedule
Schecule H, Line 4I - Schedule of Assets Held for Investment Purposes at End of Year...................13-15
Exhibits...............................................................................................18-19
Consent of Independent Public Accountants
Report of Independent Auditors
The Trustees
VTEL Corporation 401(k) Plan
We have audited the accompanying statement of net assets available for benefits
of the VTEL Corporation 401(k) Plan (the Plan) as of December 31, 1999 and the
related statement of changes in net assets available for benefits for the year
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 audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides 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, 1999 and the changes in net assets available for benefits for the
year then ended in conformity with generally accepted accounting principles.
Our audit was performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental schedule of
assets held for investment purposes
1
at end of year as of December 31, 1999, is presented for purposes of additional
analysis and is not a required part of the basic financial statements but is
supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974.
The supplemental schedule is the responsibility of the Plan's management. The
supplemental schedule has been subjected to auditing procedures applied in our
audit of the basic financial statements and, in our opinion, is fairly stated in
all material respects in relation to the basic financial statements taken as a
whole.
Austin, Texas Ernst & Young LLP
June 30, 2000
2
Report of Independent Accountants
To the Participants and Administrator
of the VTEL Corporation 401(k) Plan
In our opinion, the accompanying statement of net assets available for benefits
presents fairly, in all material respects, the net assets available for benefits
of the VTEL Corporation 401(k) Plan (the "Plan") at December 31, 1998 in
conformity with accounting principles generally accepted in the United States.
This financial statement is the responsibility of the Plan's management; our
responsibility is to express an opinion on this financial statement based on our
audit. We conducted our audit of this statement in accordance with auditing
standards generally accepted in the United States which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statement is free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statement, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for the opinion expressed
above. We have not audited the financial statements of the Plan for any period
subsequent to December 31, 1998.
PricewaterhouseCoopers LLP
Austin, Texas
July 10, 1999
3
VTEL Corporation 401(k) Plan
Statements of Net Assets Available for Benefits
December 31
1999 1998
------------------------------------------
Assets
Investments at fair value $ 26,633,743 $ 24,488,802
Cash 9,915 -
Employee contributions receivable 48,488 61,793
-----------------------------------------
Net assets available for benefits $ 26,692,146 $ 24,550,595
=========================================
See accompanying notes.
4
VTEL Corporation 401(k) Plan
Statement of Changes in Net Assets Available for Benefits
Year ended December 31, 1999
Additions:
Contributions:
Employees $ 2,477,483
Investment income:
Interest and dividends 177,210
Net appreciation in fair value of investments 4,384,650
Total additions 7,039,343
Deductions:
Benefit payments 4,888,762
Administrative expense 9,030
-------------
Net increase in net assets available for benefits 2,141,551
Net assets available for benefits at beginning of year 24,550,595
-------------
Net assets available for benefits at end of year $ 26,692,146
=============
See accompanying notes.
5
1. Description of Plan
The VTEL Corporation 401(k) Plan (the Plan) became effective January 1, 1990.
The following brief description of the Plan is provided for general purposes
only. Participants should refer to the Plan agreement for more complete
information.
General
The Plan is a defined contribution profit sharing plan covering substantially
all employees of VTEL Corporation (the Company). It is subject to the provisions
of the Employee Retirement Income Security Act of 1974 (ERISA).
Contributions
Eligible employees may contribute to the Plan an elected portion of their
eligible compensation, as defined in the Plan, up to the statutory annual
deferral limit.
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.
All contributions are invested at the direction of the participants.
Eligibility
Employees are eligible for participation in the Plan after obtaining 21 years of
age, as defined in the Plan. An employee may enter the Plan anytime after the
employee satisfies the eligibility requirements.
Vesting
Participants are immediately vested in their contributions and earnings thereon.
Should the Company decide to match contributions, the contributions would vest
based on years of service completed by participants.
6
VTEL Corporation 401(k) Plan
Notes to Financial Statements (continued)
Payment of Benefits
Participants are entitled to receive benefit payments at the normal retirement
age of 65, in the event of the participant's death or disability, or in the
event of termination under certain circumstances other than normal retirement,
disability or death or if the participant reaches age 70 1/2 while still
employed. Benefits may be paid in a lump-sum distribution or by an annuity. At
December 31, 1999, there were benefits payable by the Plan of $1,178,061, which
represent benefit claims that have been processed and approved for payment prior
to year-end but not yet paid.
Plan Termination
Although the Company has not expressed any intent to terminate the Plan, it
reserves the right to do so at any time. Upon such termination, each participant
becomes fully vested and all benefits shall be distributed to the participants
or their beneficiaries.
Participant Accounts
Discretionary employer matching contributions, if any, are allocated annually to
participant accounts based upon a percentage determined and authorized by the
Company's board of directors.
Investment earnings or losses are allocated among the participants' accounts
based upon the percentage of the balance of each such account to the total
balance of all such accounts within each investment option.
Participant Loans
Upon written application of a participant, the Plan may make a loan to a
participant. Participants are allowed to borrow no less than $1,000 and no
greater than the lesser of 50% of the participants
7
VTEL Corporation 401(k) Plan
Notes to Financial Statements (continued)
vested account balance or $50,000. Loans are amortized over a maximum of 60
months unless it is used to purchase participant's principal residence and
repayment is made through payroll deductions. The amount of the loan is deducted
from the participant's investment accounts and bears interest at a rate
commensurate with local rates for similar plans.
Forfeitures
Forfeitures, if any, under the Plan are first applied to payment of
administrative expenses of the Plan and then to the Company's matching
contribution to the Plan for the Plan year in which the forfeitures occur.
Administration
The Plan is administered by trustees consisting of officers and employees of the
Company. Some of the administrative expenses of the Plan are paid by the
Company.
2. Summary of Significant Accounting Policies
Basis of Presentation
The Plan's financial statements have been prepared on the accrual basis of
accounting.
Valuation of Investments
Investments are stated at fair value, which is determined based on quoted market
prices. Participant loans are stated at cost which approximates fair value.
8
VTEL Corporation 401(k) Plan
Notes to Financial Statements (continued)
Use of Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
the accompanying notes and schedule. Actual results could differ from those
estimates.
Reclassifications
Certain prior year amounts have been reclassified to conform to the current year
presentation.
3. Investments
The following presents investments that represent five percent or more of the
Plan's net assets:
December 31
1999
-----------
Charter Guaranteed Income Fund $2,844,531
Fidelity Advisors Growth 3,943,000
Dreyfus Founders Growth 3,545,284
Neuberger & Berman Partners Trust 2,509,352
Invesco Total Return Fund 2,063,851
Janus WorldWide Account 2,809,857
State Street Russell 3000 Fund 2,262,251
Charter Small Company Stock Growth-Fiduciary 3,097,495
9
VTEL Corporation 401(k) Plan
Notes to Financial Statements (continued)
December 31
1998
-----------
Charter Guaranteed Income Fund $2,677,152
Charter Corporate Bond - CIGNA 1,262,942
Fidelity Advisors Growth 4,729,168
Dreyfus Founders Growth 2,466,858
Neuberger & Berman Partners Trust 2,943,396
Invesco Total Return Fund 2,462,497
Janus WorldWide Account 1,315,760
State Street Russell 3000 Fund 1,847,679
Charter Small Company Stock Growth-Fiduciary 2,452,755
During 1999, the Plan's investments (including investments purchased, sold as
well as held during the year) appreciated (depreciated) in fair value as
follows:
Pooled separate accounts $4,374,302
Common Stock 10,348
----------
$4,384,650
==========
4. Income Tax Status
The Plan has received a determination letter from the Internal Revenue Service
dated January 26, 2000 stating that the Plan is qualified under Section 401(a)
of the Internal Revenue Code (the
10
VTEL Corporation 401(k) Plan
Notes to Financial Statements (continued)
"Code") and, therefore, the related trust is exempt from taxation. Once
qualified, the Plan is required to operate in conformity with the Code to
maintain its qualification. The Plan Administrator believes the Plan is being
operated in compliance with the applicable requirements of the Code and,
therefore, believes that the Plan is qualified and the related trust is tax
exempt.
11
Supplemental Schedule
12
VTEL Corporation 401(k) Plan
Schedule H, Line 4I - Schedule of Assets Held
for Investment Purposes at End of Year
EIN: 74-2415696 Plan Number 001
December 31, 1999
Current
Identity of Issue Description of Asset Value
- ----------------------------------------------------------------------------------------------------------
Connecticut General Life Insurance Charter Guaranteed Income Fund;
Company 102,860 units, unit value $27.65 $ 2,844,531
Connecticut General Life Insurance Charter Guaranteed Government
Company Securities; 2,063 units, unit value
$13.08 26,986
Connecticut General Life Insurance Charter Corporate Bond - CIGNA;
Company 81,390 units, unit value $11.16 908,100
Connecticut General Life Insurance CIGNA Lifetime 20; 1,922 units,
Company unit value $23.51 45,186
Connecticut General Life Insurance CIGNA Lifetime 30; 5,681 units,
Company unit value $22.52 127,932
Connecticut General Life Insurance CIGNA Lifetime 40; 2,878 units,
Company unit value $21.64 62,240
Connecticut General Life Insurance CIGNA Lifetime 50; 2,081 units,
Company unit value $20.24 42,118
Connecticut General Life Insurance CIGNA Lifetime 60; 753 units,
Company unit value $17.38 13,083
Connecticut General Life Insurance Fidelity Advisors Growth
Company Opportunities; 48,764 units
unit value $80.86 3,943,000
Connecticut General Life Insurance Dreyfus Founders Grpwth; 93,553
Company units, unit value $37.90 3,545,284
Connecticut General Life Insurance Neuberger & Berman Partners Trust;
Company 108,264 units, unit value $23.18 2,509,352
13
Current
Identity of Issue Description of Asset Value
- ----------------------------------------------------------------------------------------------------------
Connecticut General Life Insurance Invesco Total Return Fund; 53,228
Company units, unit value $38.77 2,063,851
Connecticut General Life Insurance Lazard Equity Portfolio Account;
Company 3,645 units, unit value $29.15 106,233
Connecticut General Life Insurance Janus Worldwide Account; 31,403
Company units, unit value $89.48 2,809,857
Connecticut General Life Insurance Templeton Foreign Account; 81,850
Company units, unit value $15.30 1,251,994
14
Current
Identity of Issue Description of Asset Value
- ----------------------------------------------------------------------------------------------------------
Connecticut General Life Insurance State Street Russell 3000 Fund;
Company 99,826 units, unit value $22.66 2,262,251
Connecticut General Life Insurance Charter Small Company Stock
Company Growth-Fiduciary; 175,527 units,
unit value $17.65 3,097,495
Connecticut General Life Insurance Charter Small Company Stock Value
Company I-Berger; 10,487 units, unit value
$12.11 127,020
National Financial Services* VTEL Common Stock; 87,742 units,
unit value $3.28 287,904
Participant Loans* Loaned funds of various maturities
(years) and rates from 7.75% to
10.50% 559,326
-----------
$26,633,743
===========
*Indicates a party-in-interest to the Plan.
15
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 13, 2000 /s/ Paul Tesluk
----------------------------
Paul Tesluk
Plan Advisor
Exhibit Index
Exhibit
Number Document Description
- ------- --------------------
23(a) Consent of Ernst & Young LLP
23(b) Consent of PricewaterhouseCoopers LLP
Exhibit 23(a)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statement on
Form S-8 (File No. 333-44533) of VTEL Corporation of our report dated June 30,
2000, with respect to the financial statements and schedule of the VTEL
Corporation 401(k) Plan included in the Plan's Annual Report on Form 11-K for
the year ended December 31, 1999.
Ernst & Young LLP
Austin, TX
July 10, 2000
Exhibit 23(b)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (File 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.
PricewaterhouseCoopers LLP
Austin, TX
July 10, 2000