UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: December 31, 2000
OR
[ ] TRANSITION REPORT PURSANT TO SECTION 13 OR (15d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from _____ to _____
Commission File No.: 0-11927
MOTO PHOTO, INC. SALARY SAVINGS PLAN
(Full title of the plan)
Moto Photo, Inc.
(Name of issuer)
4444 Lake Center Drive, Dayton, Ohio 45426
(Address and principal executive office)
Moto Photo, Inc. Salary Savings Plan
Contents
Page(s)
Report of Independent Auditors 1
Statements of Net Assets Available for Benefits
as of December 31, 2000 and 1999 2
Statement of Changes in Net Assets Available for Benefits
for the Year Ended December 31, 2000 3
Notes to Financial Statements 4-6
Schedule 4(i) - Schedule of Assets Held for Investment Purposes
as of December 31, 2000 7
Signature 8
Exhibits
Consent of Arthur Andersen LLP, Independent Auditors Exhibit 23.1
Report of Independent Public Accountants
To the Administrative Committee of the
Moto Photo, Inc. Salary Savings Plan:
We have audited the accompanying Statements of Net Assets Available for Benefits and Statement of Changes in Net Assets Available for Benefits and supplemental schedule of the Moto Photo, Inc. Salary Savings Plan (the Plan) as of December 31, 2000 and 1999 and for the year ended December 31, 2000. These financial statements and supplemental schedule are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audit.
We conducted our audits 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 audits provide a reasonable basis for our opinion.
As described in Note 2, these financial statements and supplemental schedule were prepared on a modified cash basis method of accounting, which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States.
In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits as of December 31, 2000 and 1999 and the changes in its net assets available for benefits for the year ended December 31, 2000 on the modified cash basis of accounting described in Note 2.
Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental Schedule of Assets Held for Investment Purposes as of December 31, 2000 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 has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects on the basis of accounting described in Note 2 in relation to the basic financial statements taken as a whole.
Dayton, Ohio,
July 20, 2001
Moto Photo, Inc.
Salary Savings Plan
Statements of Net Assets Available for Benefits
As of December 31, 2000 and 1999
ASSETS | 2000 | 1999 |
INVESTMENTS, at fair value (Notes 1, 2 and 3): | ||
Pooled separate accounts | $3,414,832 | $3,677,036 |
Employer stock | 24,347 | 47,516 |
Participant loans | 81,305 | 68,680 |
3,520,484 | 3,793,232 | |
NET ASSETS AVAILABLE FOR BENEFITS | $3,520,484 | $3,793,232 |
The accompanying notes to financial statements are an integral part of these statements.
Moto Photo, Inc.
Salary Savings Plan
Statement of Changes in Net Assets Available for Benefits
For the Year Ended December 31, 2000
ADDITIONS TO NET ASSETS ATTRIBUTED TO: | ||
Investment income (losses): | ||
Interest and dividends | $ 28,095 | |
Realized and unrealized gains (losses), net: | ||
Pooled separate accounts | (239,052) | |
Employer stock | (33,272) | |
Net investment income (losses) | (244,229) | |
Contributions: | ||
Participant | 325,099 | |
Company | 101,134 | |
Total contributions | 426,233 | |
Total additions | 182,004 | |
DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO: | ||
Benefits paid to participants | 419,160 | |
Administrative expenses | 27,167 | |
Employee loans distributed | 8,425 | |
Total deductions | 454,752 | |
NET DECREASE | (272,748) | |
NET ASSETS AVAILABLE FOR BENEFITS: | ||
Beginning of year | 3,793,232 | |
End of year | $3,520,484 |
The accompanying notes to financial statements are an integral part of this statement.
(1) Plan Description-
The following description of the Moto Photo, Inc. Salary Savings Plan (the Plan) is provided for general information only. Participants should refer to the Summary Plan Description for a more complete description of the Plan's provisions.
(a) General--The Plan is a defined contribution plan covering substantially all employees of Moto Photo, Inc. (the Company) who have attained age 20-1/2 and have completed six months of service. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA), as amended.
The audit opinion on the financial statements of MotoPhoto, Inc. (the Plan Sponsor) for the year ended December 31, 2000 included a "going concern" paragraph that stated the accompanying financial statements have been prepared assuming that the Plan Sponsor will continue as a going concern. As discussed in Note C to the Plan Sponsor financial statements, the Plan Sponsor has suffered losses from continuing operations in the current year, has negative working capital at December 31, 2000, and is in default of several covenants in their borrowing arrangements with both their primary bank and a major vendor that raises substantial doubt about its ability to continue as a going concern. The ability of the Plan Sponsor to continue as a going concern depends upon, among other things, (i) the Plan Sponsor's ability to obtain satisfactory repayment terms on the Plan Sponsor's indebtedness to Fuji, (ii) the Plan Sponsor's obtaining an amendment or waiver from the bank concerning its financial covenants or the bank refraining from accelerating repayment of the Plan Sponsor's indebtedness to the bank, and (iii) the Plan Sponsor's ability to generate sufficient cash from operations and/or other sources to meet its obligations. The Plan Sponsor believes that its revised organizational structure, adherence to its operational plan, and the closure of unprofitable company stores will provide liquidity to allow the Plan Sponsor to repay its obligations as they become due, assuming no acceleration of indebtedness and no significant decrease in future revenue. The Plan Sponsor's ability to continue as a going concern directly affects its ability to make matching or profit sharing contributions to the Plan and directly affects the value of Plan Sponsor common shares held by participants of the Plan. There were no amounts receivable from the Plan Sponsor at December 31, 2000. See Note 2(b) regarding the value of the Plan Sponsor common shares held in the Plan.
(b) Contributions--Participants may elect to contribute from 1% to 20% of their compensation to the Plan. In addition, the Company, at its discretion, may make matching and/or profit sharing contributions to the Plan. Participants may direct their contribution among various investment alternatives, including 23 different pooled separate accounts and Moto Photo, Inc. common stock, that provide varying investment strategies.
(e) Participant Loans--Participants may borrow from their fund accounts a minimum of $1,000 up to a maximum of the lesser of $50,000 or 50 percent of their vested balance. Such loans bear interest at the prime rate at the date of the loan plus 1-1/2 percent. Principal and interest is paid ratably through monthly payroll deductions.
(f) Payment of Benefits--Upon termination of service due to death, disability or retirement, a participant may elect to receive an amount equal to the vested value of his or her account in either a lump sum payout, or in the form of an annuity. Benefit payments to participants are recorded when paid.
(2) Significant Accounting Policies-
(a) Basis of Accounting and Presentation--The accompanying financial statements have been prepared on the modified cash basis of accounting. The modified cash basis reflects the accounting records on a cash basis, with an adjustment of investments to fair value. Such accounting practices are permitted by the Department of Labor; however, this practice differs from accounting principles generally accepted in the United States. Accordingly, the accompanying financial statements and supplemental schedule are not intended to present net assets and changes in net assets of the Plan on the accrual basis in conformity with accounting principles generally accepted in the United States.
Purchases and sales of investments are recorded on a trade date basis. Dividend income is recorded on the ex-dividend date and interest income is recorded on a cash basis.
The following table presents individual investments that represented 5 percent or more of the fair value of assets available for benefits as of December 31:
2000 | 1999 | |
TA Stable Value Fund | $299,812 | $423,578 |
TA Fidelity Equity Income II Fund | 268,226 | 219,701 |
TA Fidelity Low Price Stock Fund | 186,235 | < 5% |
TA Janus Fund | 231,173 | 314,319 |
TA Janus Worldwide Fund | 323,120 | 553,425 |
TA Putnam Asset Allocation Balanced | 263,633 | 367,559 |
TA Balanced Fund | 362,720 | 387,740 |
TA Equity Fund | 398,794 | 590,893 |
TA Equity Index Fund | 369,118 | 238,548 |
(4) Tax Status-
The Internal Revenue Service has determined and informed the Company by a letter dated December 19, 1996, that the Plan and related trust, as amended effective December 15, 1994, are designed in accordance with applicable sections of the Internal Revenue Code (IRC). The Plan has subsequently been amended; however, the Plan's administrator and the Plan's tax counsel believe that the Plan is designed and is currently being operated in compliance with the applicable requirements of the IRC.
(5) Related Party Transactions-
The Plan invests in pooled separate accounts (mutual funds) which are sponsored by or managed by the Plan's asset custodian, Transamerica (TA) Insurance and Investments. The Plan also invests in the common stock of the Plan sponsor. These transactions qualify as party-in-interest transactions.
(6) 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, as amended. In the event of Plan termination, participants will become 100% vested in their accounts.
Identity of Issuer/ Description of Investment | Units/Shares | Fair Value |
Pooled separate accounts: | ||
* TA Stable Value Fund | 299,812 | $ 299,812 |
* TA Aim Constellation Fund | 411 | 22,992 |
* TA Brandywine Fund | 1,234 | 75,590 |
* TA Fidelity ContraFund | 1,495 | 94,639 |
* TA Fidelity Equity Income II Fund | 4,994 | 268,226 |
* TA Fidelity Low Price Stock Fund | 3,452 | 186,235 |
* TA Janus Fund | 4,528 | 231,173 |
* TA Janus WorldwideFund | 5,894 | 323,120 |
* TA Loomis Sayles Bond Fund | 1,140 | 29,167 |
* TA Putnam Asset Allocation Balanced | 12,758 | 263,633 |
* TA Putnam Asset Allocation Conservative | 722 | 12,184 |
* TA Putnam Asset Allocation Growth | 2,722 | 59,095 |
* TA PBHG Emerging Growth Fund | 1,862 | 56,295 |
* TA PBHG Growth Fund | 2,635 | 163,151 |
* TA Putnam Diversified Income Fund | 520 | 10,775 |
* TA Strong Government Securities Fund | 616 | 13,348 |
* TA Stein Roe Capital Opportunities Fund | 155 | 7,519 |
* TA Balanced Fund | 10,894 | 362,720 |
* TA Bond Fund | 1,925 | 34,041 |
* TA Equity Fund | 5,938 | 398,794 |
* TA Equity Index Fund | 10,454 | 369,118 |
* TA Templeton Foreign Fund | 4,773 | 124,975 |
* TA T. Rowe Price International Bond Fund | 437 | 8,230 |
Common stock: | ||
* Moto Photo, Inc. common stock | 64,926 | 24,347 |
*Participant loans with interest rates from 8.75% to 10.50% | 81,305 | |
$3,520,484 |
* Denotes party-in-interest transaction.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Moto Photo, Inc. Salary Savings Plan Committee has duly caused this annual report to be signed by the undersigned thereunto duly authorized.
Moto Photo, Inc. Salary Savings Plan
By: /s/
Trustee
Date: July 26, 2001
EXHIBIT INDEX
No. Description
23.1 Consent of Arthur Andersen LLP, Independent Auditors
