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, 2005
or
o TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 000-20008
A. Full title of the plan and the address of the plan, if different from that of the issuer named below:
Forgent Networks 401(k) Plan
B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:
Forgent Networks, Inc.
108 Wild Basin Road
Austin, Texas 78746
Forgent Networks 401(k) Plan
December 31,
2005 and 2004 and year ended December 31, 2005 with Report of
Independent Registered Public Accounting Firm
Forgent Networks 401(k) Plan
Financial Statements
and Supplemental Schedules
December 31, 2005 and 2004 and year ended December 31, 2005
Contents
|
|
|
|
|
|
|
|
Financial Statements |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Schedule H, line 4a Schedule of Delinquent Participant Contributions |
|
|
|
Schedule H, line 4i Schedule of Assets (Held at End of Year) |
|
|
|
Report of Independent Registered Public Accounting Firm
The
Trustees
Forgent Networks 401(k)
We have audited the accompanying statements of net assets available for benefits of the Forgent Networks 401(k) Plan as of December 31, 2005 and 2004, and the related statement of changes in net assets available for benefits for the year ended December 31, 2005. These financial statements are the responsibility of the Plans management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (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. We were not engaged to perform an audit of the Plans internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plans internal control over financial reporting. Accordingly, we express no such opinion. An audit also 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 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, 2005 and 2004, and the changes in its net assets available for benefits for the year ended December 31, 2005, in conformity with U.S. generally accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the financial statements for the Plan taken as a whole. The accompanying supplemental schedules of assets (held at end of year) as of December 31, 2005, and delinquent participant contributions for the year ended are presented for purposes of additional analysis and are not a required part of the financial statements but are supplementary information required by the Department of Labors Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. These supplemental schedules are the responsibility of the Plans management. The supplemental schedules have been subjected to the auditing procedures applied in our audits of the financial statements and, in our opinion, are fairly stated in all material respects in relation to the financial statements taken as a whole.
Austin, Texas
June 26, 2006
1
Forgent Networks 401(k) Plan
Statements of Net Assets Available for Benefits
|
|
December 31 |
|
||||
|
|
2005 |
|
2004 |
|
||
|
|
|
|
|
|
||
Assets |
|
|
|
|
|
||
Investments at fair value |
|
$ |
10,781,726 |
|
$ |
11,334,156 |
|
Net assets available for benefits |
|
$ |
10,781,726 |
|
$ |
11,334,156 |
|
See accompanying notes.
2
Forgent Networks 401(k) Plan
Statement of Changes in Net Assets Available for Benefits
Year ended December 31, 2005
Additions: |
|
|
|
|
Employee contributions |
|
$ |
114,966 |
|
Employer contributions |
|
6,549 |
|
|
Net appreciation in fair value of investments |
|
753,511 |
|
|
Interest income |
|
38,943 |
|
|
|
|
|
|
|
Total additions |
|
913,969 |
|
|
|
|
|
|
|
Deductions: |
|
|
|
|
Benefit payments |
|
1,465,371 |
|
|
Administrative expenses |
|
1,028 |
|
|
|
|
|
|
|
Total deductions |
|
1,466,399 |
|
|
|
|
|
|
|
Net decrease in net assets available for benefits |
|
(552,430 |
) |
|
|
|
|
|
|
Net assets available for benefits at beginning of year |
|
11,334,156 |
|
|
|
|
|
|
|
Net assets available for benefits at end of year |
|
$ |
10,781,726 |
|
See accompanying notes.
3
Forgent Networks 401(k) Plan
December 31, 2005
1. Description of Plan
The Forgent Networks 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 Forgent Networks, Inc. (the Company). It is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA).
Eligibility
Employees are eligible for participation in the Plan after obtaining 21 years of age.
Contributions
Eligible employees may contribute from 1% up to 20% of 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 matched 25% of employee deferrals up to a maximum of 6% of employee earnings.
All contributions are invested at the direction of the participants.
4
Forgent Networks 401(k) Plan
Notes to Financial Statements (continued)
1. Description of Plan (continued)
Vesting
Participants are immediately vested in their contributions and actual earnings thereon. Company matching contributions and actual earnings thereon vest based on years of service completed by participants. Vesting is determined in accordance with the following schedule:
2 Years of Service |
|
Percentage |
|
|
|
|
|
Less than 1 |
|
0% |
|
1 but less than 2 |
|
20% |
|
2 but less than 3 |
|
40% |
|
3 but less than 4 |
|
60% |
|
4 but less than 5 |
|
80% |
|
5 or more |
|
100% |
|
Payment of Benefits
Participants are entitled to receive benefit payments at the normal retirement age of 65, in the event of the participants death or disability, or in the event of termination under certain circumstances other than those listed or if the participant reaches age 70½ while still employed. Benefits may be paid in a lump-sum distribution or by an annuity.
Plan Termination
Although the Company has not expressed any intent to terminate the Plan, it reserves the right to do so at any time, as subject to the provisions of ERISA. Upon such termination, each participant becomes fully vested and all benefits shall be distributed to the participants or their beneficiaries.
Participant Accounts
Each participants account is credited with the participants contributions and allocations of (a) the Companys contributions and (b) 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 participants account.
5
Forgent Networks 401(k) Plan
Notes to Financial Statements (continued)
1. Description of Plan (continued)
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 vested account balance or $50,000. Loans are amortized over a maximum of 60 months unless they are used to purchase a participants principal residence, and repayment is made through payroll deductions. The amount of the loan is deducted from the participants investment accounts and bears interest at a rate commensurate with local rates for similar plans.
Forfeitures
Forfeitures, if any, under the Plan are either applied to payment of certain administrative expenses of the Plan or the Companys matching contribution to the Plan for the Plan year in which the forfeitures occur. During 2005, $10,005 in forfeitures were used to reduce the Companys contribution.
Administration
The Plan is administered by trustees consisting of officers and employees of the Company. Certain administrative expenses of the Plan are paid by the Company.
2. Summary of Significant Accounting Policies
Basis of Presentation
The Plans financial statements have been prepared on the accrual basis of accounting. Benefits are recorded when paid.
6
Forgent Networks 401(k) Plan
Notes to Financial Statements (continued)
2. Summary of Significant Accounting Policies (continued)
Valuation of Investments
Effective January 1, 1998, the Plan entered into a group annuity contract with Connecticut General Life Insurance Company (a CIGNA company) (CGLIC). On April 1, 2005, these contracts were assumed by Prudential. The contract includes the Prudential Guaranteed Income Fund and Guaranteed Governmental Securities Fund, which are invested in Prudentials general portfolio and are recorded at contract value, which approximates fair value. The Guaranteed Income Fund does not have a maturity date or penalties for early withdrawals. Participant directed transfers among investment options and distributions are normally made immediately; however, Prudential may exercise its contractual right to defer a transfer or distribution from the Guaranteed Income Fund. It has seldom been necessary for Prudential to invoke this deferral provision. The rate of credited interest for any period of time will be determined by Prudential and is guaranteed for six-month periods (January 1 through June 30 and July 1 through December 31). The average yield for the Guaranteed Income Fund and the Guaranteed Governmental Securities Fund was approximately 3.7% and 2.50% and 1.72% and .67% for the years ended December 31, 2005 and 2004, respectively. The crediting interest rate (i.e., the rate at which interest was accrued to the contract balance) for the Guaranteed Income Fund and the Guaranteed Governmental Securities Fund was 3.75% and 3.50% and 2.00% and 1.04% as of December 31, 2005 and 2004, respectively.
The contract also includes pooled separate accounts. Prudential determines the fair value of the pooled separate accounts based on the quoted market values of the underlying assets in the separate accounts. Participant loans are stated at cost, which approximates fair value. Investments in Company common stock are reported at fair value, based on quoted prices in active markets.
Use of Estimates
The preparation of financial statements in conformity with United States generally accepted accounting principles requires management to make estimates that affect the amounts reported in the financial statements and the accompanying notes and schedules. Actual results could differ from those estimates.
7
Forgent Networks 401(k) Plan
Notes to Financial Statements (continued)
2. Summary of Significant Accounting Policies (continued)
Risks and Uncertainties
The Plan provides for investments in various investment securities which, in general, are exposed to various risks, such as interest rate, credit, and overall market volatility risks. Due to the level of risk associated with certain investment securities, it is reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect the amounts reported in the statements of net assets available for benefits and participant account balances.
3. Investments
Individual investments that represent 5% or more of the Plans net assets at December 31, 2005 or 2004, are as follows:
|
December 31 |
|
|||||
|
|
2005 |
|
2004 |
|
||
|
|
|
|
|
|
||
Prudential Retirement
Insurance and |
|
|
|
|
|
||
Timesquare Corporate Bond/BSAM Fund |
|
$ |
639,380 |
|
$ |
714,965 |
|
Fidelity Advisors Growth Opportunities Fund |
|
825,505 |
|
899,169 |
|
||
Dreyfus Founders Growth Fund |
|
590,946 |
|
715,232 |
|
||
Neuberger & Berman Partners Trust Fund |
|
1,100,874 |
|
1,052,515 |
|
||
Balanced I/Wellington Management Fund |
|
1,158,356 |
|
1,190,995 |
|
||
Templeton Foreign Account Fund |
|
650,074 |
|
682,654 |
|
||
State Street Russell 3000 Fund |
|
559,124 |
|
609,537 |
|
||
Small Cap Growth/Timesquare Fund |
|
1,873,717 |
|
1,762,190 |
|
||
Small Cap Value/Perkins Wolf McDonnell |
|
719,206 |
|
837,405 |
|
||
Guaranteed Income Fund |
|
1,380,689 |
|
1,565,623 |
|
||
8
Forgent Networks 401(k) Plan
Notes to Financial Statements (continued)
3. Investments (continued)
During 2005, the Plans investments (including investments purchased, sold, as well as held during the year) appreciated in fair value as follows:
Pooled separate accounts |
|
$ |
738,098 |
|
Common stock |
|
15,413 |
|
|
|
|
$ |
753,511 |
|
4. Income Tax Status
The Plan has received a determination letter from the Internal Revenue Service dated April 13, 2004, stating that the Plan is qualified under Section 401(a) of the Internal Revenue Code (the Code) and, therefore, the related trust is exempt from taxation. Subsequent to this determination by the Internal Revenue Service, the Plan was amended. 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, as amended, is qualified and the related trust is exempt.
9
Forgent Networks 401(k) Plan
Schedule H, Line 4a
Schedule of Delinquent Participant Contributions
EIN: 74-2415696 PN: 001
Year ended December 31, 2005
Year Ended |
|
Participant Contributions Transferred Late to Plan |
|
Total that Constitute Nonexempt |
2003 |
|
$2,480 |
|
$2,480 |
10
Forgent Networks 401(k) Plan
Schedule H, line 4i
Schedule of Assets (Held at End of Year)
EIN: 74-2415696 Plan Number 001
December 31, 2005
Identity of Issue |
|
Description of Asset |
|
Current |
|
|
|
|
|
|
|
*Prudential Retirement Insurance and Annuity Company |
|
Guaranteed Income Fund |
|
$ |
1,380,689 |
*Prudential Retirement Insurance and Annuity Company |
|
Guaranteed Government Securities Fund |
|
1,178 |
|
*Prudential Retirement Insurance and Annuity Company |
|
Timesquare Corporate Bond/BSAM Fund |
|
639,380 |
|
*Prudential Retirement Insurance and Annuity Company |
|
Lifetime 20 Fund |
|
71,546 |
|
*Prudential Retirement Insurance and Annuity Company |
|
Lifetime 30 Fund |
|
182,080 |
|
*Prudential Retirement Insurance and Annuity Company |
|
Lifetime 40 Fund |
|
86,654 |
|
*Prudential Retirement Insurance and Annuity Company |
|
Lifetime 60 Fund |
|
13,203 |
|
*Prudential Retirement Insurance and Annuity Company |
|
Fidelity Advisors Growth Opportunities Fund |
|
825,505 |
|
*Prudential Retirement Insurance and Annuity Company |
|
Dreyfus Founders Growth Fund |
|
590,946 |
|
*Prudential Retirement Insurance and Annuity Company |
|
Neuberger & Berman Partners Trust Fund |
|
1,100,874 |
|
*Prudential Retirement Insurance and Annuity Company |
|
Balanced I/Wellington Management Fund |
|
1,158,356 |
|
*Prudential Retirement Insurance and Annuity Company |
|
Lazard Equity Portfolio Account Fund |
|
96,657 |
|
*Prudential Retirement Insurance and Annuity Company |
|
Janus Worldwide Account Fund |
|
236,560 |
|
*Prudential Retirement Insurance and Annuity Company |
|
Templeton Foreign Account Fund |
|
650,074 |
11
Forgent Networks 401(k) Plan
Schedule H, line 4i Schedule of Assets (Held at
End of Year) (continued)
EIN: 74-2415696 Plan Number 001
December 31, 2005
Identity of Issue |
|
Description of Asset |
|
Current |
|
|
|
|
|
|
|
*Prudential Retirement Insurance and Annuity Company |
|
State Street Russell 3000 Fund |
|
$ |
559,124 |
*Prudential Retirement Insurance and Annuity Company |
|
Small Cap Growth/Timesquare Fund |
|
1,873,717 |
|
*Prudential Retirement Insurance and Annuity Company |
|
Small Cap Value/Perkins Wolf McDonnell |
|
719,206 |
|
*Prudential Retirement Insurance and Annuity Company |
|
Mid Cap Value/Cooke & Bieler Fund |
|
85,464 |
|
*Prudential Retirement Insurance and Annuity Company |
|
Mid Cap Growth/Artisan Partners |
|
37,378 |
|
*Prudential Retirement Insurance and Annuity Company |
|
High Yield Bond/Caywood-Scholl Fund |
|
447 |
|
*Prudential Retirement Insurance and Annuity Company |
|
T. Rowe Price EQ Inc.-ADV SH |
|
52,584 |
|
*Prudential Retirement Insurance and Annuity Company |
|
Oppenheimer Global-CLA |
|
86,803 |
|
*Prudential Retirement Insurance and Annuity Company |
|
International Equity/Julius Baer |
|
143,454 |
|
*Prudential Retirement Insurance and Annuity Company |
|
Large Cap/LSV Asset Management |
|
65,535 |
|
*Prudential Retirement Insurance and Annuity Company |
|
Large Cap/Waddel & Reed |
|
19,230 |
|
*Prudential Retirement Insurance and Annuity Company |
|
AM Cent Ultra Advisor |
|
302 |
|
*Forgent Networks, Inc. |
|
Forgent Common Stock Fund |
|
77,610 |
|
*Participant Loans |
|
Varying maturity dates and interest rates at 7.25% |
|
27,170 |
|
Total |
|
|
|
$ |
10,781,726 |
*Indicates a party-in-interest to the Plan.
12
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.
|
Forgent Networks |
|||
|
|
401(k) Plan |
||
|
|
|
||
|
|
|
|
|
Date: June 29, 2006 |
|
By: |
|
/s/ Paul Tesluk |
|
|
Name: |
|
Paul Tesluk |
|
|
Title: |
|
Plan Advisor |
Exhibit Index
Exhibit |
|
|
Number |
|
Document Description |
|
|
|
23.1 |
|
Consent of Ernst & Young |
13
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in the Registration Statement (Form S-8 No. 333-44533) pertaining to the Forgent Networks 401(k) Plan of our report dated June 26, 2006, with respect to the financial statements and supplemental schedules of the Forgent Networks 401(k) Plan included in this Annual Report (Form 11-K) for the year ended December 31, 2005.
Austin, TX |
|
|
July 26, 2006 |
|
/s/ Ernst & Young, LLP |