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
(FEE REQUIRED)
For the fiscal year ended December 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from __________ to __________
Commission file number 1-9014
A. Full title of the plan and the address of the plan, if
different from that of the issuer named below:
CHYRON CORPORATION EMPLOYEES' 401(K) PLAN
B. Name of issuer of the securities held pursuant to the plan and
the address of its principal executive office:
CHYRON CORPORATION
5 Hub Drive
Melville, NY 11747
(516) 845-2000
REQUIRED INFORMATION
CHYRON CORPORATION EMPLOYEES' 401(k) PLAN
INDEX
Page
Report of Independent Accountants 1
Financial Statements:
Statements of Net Assets Available for Plan Benefits
with Fund Information as of December 31, 1998 and 1997 2
Statement of Changes in Net Assets Available for Plan
Benefits with Fund Information for the Year Ended
December 31, 1998 3
Statement of Changes in Net Assets Available for Plan
Benefits with Fund Information for the Year Ended
December 31, 1997 4
Notes to the Financial Statements 5
Supplemental Schedules:
Line 27a - Schedule of Assets Held for Investment Purposes
as of December 31, 1998 9
Line 27d - Schedule of Reportable Transactions for the Year
Ended December 31, 1998 10
Signatures 11
The following exhibit is filed as part of this report:
Consent of Independent Accountants
REPORT OF INDEPENDENT ACCOUNTANTS
To the Participants and Administrator
of Chyron Corporation Employees' 401(k) Plan
In our opinion, the accompanying statements of net assets available for plan
benefits and of changes in net assets available for plan benefits present
fairly, in all material respects, the net assets available for plan benefits
of Chyron Corporation Employees' 401(k) Plan (the "Plan") at December 31,
1998 and 1997 and the changes in net assets available for plan benefits for
the years then ended 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 performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules listed in
the Index 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, as amended. The fund information in the statements of net assets
available for plan 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 plan benefits of each fund. These
supplemental schedules and fund information are the responsibility of the
Plan's management. The supplemental schedules and the 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.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
New York, New York
June 18, 1999
CHYRON CORPORATION EMPLOYEES' 401(k) PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
WITH FUND INFORMATION
December 31,
1998 1997
Assets:
Investments, at fair value
Merrill Lynch sponsored funds:
Capital Fund $644,783 $ 555,178
Federal Securities Trust 172,063 142,243
Global Allocation Fund 563,239 623,020
Global Value Fund 104,672
Growth Fund for Investment
and Retirement 5,398 1,051,034
Pacific Fund 23,175
Retirement Preservation Trust 450,966 251,555
Alliance Premier Growth Fund 1,022,273
Chyron Corporation Common Stock 47,093
Massachusetts Investors Trust 137,763
Employee loans receivable 130,566 90,712
Total investments 3,278,816 2,736,917
Contributions receivable 53,421 42,073
Cash equivalents 312 312
Net assets available for plan benefits $3,332,549 $2,779,302
The accompanying notes are an integral part
of these financial statements
CHYRON CORPORATION EMPLOYEES' 401(k) PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1998
Federal Global
Capital Securities Allocation
Fund Trust Fund
Additions to net assets
attributed to:
Contributions:
Employee contributions $148,797 $29,504 $122,512
Employer contributions 7,462 1,875 6,995
Participant rollovers 11,998 39,377
Loan repayments 3,127 1,398 4,163
171,384 32,777 173,047
Investment income:
Interest and dividends 34,457 8,913 61,560
Net realized and unrealized
appreciation (depreciation)
in fair value of investments (6,205) 504 (59,110)
28,252 9,417 2,450
Total additions 199,636 42,194 175,497
Deductions from net assets
attributed to:
Distributions to participants 66,883 5,253 128,881
Employee loans 884 3,668
Total deductions 67,767 5,253 132,549
Net increase (decrease) prior
to interfund transfers 131,869 36,941 42,948
Interfund transfers (42,264) (7,121) (102,729)
Net increase (decrease) 89,605 29,820 (59,781)
Net assets available for plan
benefits:
Beginning of year 555,178 142,243 623,020
End of year $644,783 $172,063 $563,239
Growth
Fund for
Global Investment
Value and Pacific
Fund Retirement Fund
Additions to net assets
attributed to:
Contributions:
Employee contributions $48,944 $238,468 $4,913
Employer contributions 1,620 15,002 330
Participant rollovers 71,722
Loan repayments 2,088 7,414 39
52,652 332,606 5,282
Investment income:
Interest and dividends 7,884 6,481 14
Net realized and unrealized
appreciation (depreciation)
in fair value of investments (3,763) (240,663) (404)
4,121 (234,182) (390)
Total additions 56,773 98,424 4,892
Deductions from net assets
attributed to:
Distributions to participants 352 148,483 426
Employee loans 31,407
Total deductions 352 179,890 426
Net increase (decrease) prior
to interfund transfers 56,421 (81,466) 4,466
Interfund transfers 48,251 (964,170) (27,641)
Net increase (decrease) 104,672 (1,045,636) (23,175)
Net assets available for plan
benefits:
Beginning of year 1,051,034 23,175
End of year $104,672 $ 5,398 $ 0
Alliance Chyron
Retirement Premier Corporation
Preservation Growth Common
Trust Fund Stock
Additions to net assets
attributed to:
Contributions:
Employee contributions $65,031 $36,933
Employer contributions 3,354 $54,940
Participant rollovers 28,533
Loan repayments 4,569 2,009
101,487 38,942 54,940
Investment income:
Interest and dividends 23,513 22,098
Net realized and unrealized
appreciation (depreciation)
in fair value of investments (786) 140,503 (6,033)
22,727 162,601 (6,033)
Total additions 124,214 201,543 48,907
Deductions from net assets
attributed to:
Distributions to participants 55,189 67,269 1,465
Employee loans 22,476 330
Total deductions 77,665 67,269 1,795
Net increase (decrease) prior
to interfund transfers 46,549 134,274 47,112
Interfund transfers 152,862 887,999 (19)
Net increase (decrease) 199,411 1,022,273 47,093
Net assets available for plan
benefits:
Beginning of year 251,555
End of year $450,966 $1,022,273 $47,093
Massachusetts CMA
Investors Money Contributions
Trust Fund Receivable
Additions to net assets
attributed to:
Contributions:
Employee contributions $57,795 $7,022
Employer contributions 1,303 4,326
Participant rollovers 28,793
Loan repayments 1,597
89,488 11,348
Investment income:
Interest and dividends 5,820
Net realized and unrealized
appreciation (depreciation)
in fair value of investments 5,576
11,396
Total additions 100,884 11,348
Deductions from net assets
attributed to:
Distributions to participants 3,427
Employee loans 14,526
Total deductions 17,953
Net increase (decrease) prior
to interfund transfers 82,931 11,348
Interfund transfers 54,832
Net increase (decrease) 137,763 11,348
Net assets available for plan
benefits:
Beginning of year $ 312 42,073
End of year $137,763 $ 312 $53,421
Employee
Loans
Receivable Total
Additions to net assets
attributed to:
Contributions:
Employee contributions $759,919
Employer contributions 97,207
Participant rollovers 180,423
Loan repayments $(26,404)
(26,404) 1,037,549
Investment income:
Interest and dividends 170,740
Net realized and unrealized
appreciation (depreciation)
in fair value of investments (170,381)
359
Total additions (26,404) 1,037,908
Deductions from net assets
attributed to:
Distributions to participants 7,033 484,661
Employee loans (73,291)
Total deductions (66,258) 484,661
Net increase (decrease) prior
to interfund transfers 39,854 553,247
Interfund transfers
Net increase (decrease) 39,854 553,247
Net assets available for plan
benefits:
Beginning of year 90,712 2,779,302
End of year $130,566 $3,332,549
CHYRON CORPORATION EMPLOYEES' 401(k) PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1997
Federal Global
Capital Securities Allocation
Fund Trust Fund
Additions to net assets
attributed to:
Contributions:
Employee contributions $121,425 $28,185 $136,981
Employer contributions 10,596 2,783 11,745
Participant rollovers 21,545 0 31,050
Loan repayments 5,024 861 2,989
158,590 31,829 182,765
Investment income:
Interest and dividends 39,899 6,804 75,287
Net realized and unrealized
appreciation (depreciation)
in fair value of investments 41,410 2,378 (19,587)
81,309 9,182 55,700
Total additions 239,899 41,011 238,465
Deductions from net assets
attributed to:
Distributions to participants 38,880 979 103,251
Employee loans 6,022 5,643 20,205
Total deductions 44,902 6,622 123,456
Net increase prior
to interfund transfers 194,997 34,389 115,009
Interfund transfers 21,709 15,377 31,580
Net increase (decrease) 216,706 49,766 146,589
Net assets available for plan
benefits:
Beginning of year 338,472 92,477 476,431
End of year $555,178 $142,243 $623,020
Growth
Fund for
Investment Retirement
and Pacific Preservation
Retirement Fund Trust
Additions to net assets
attributed to:
Contributions:
Employee contributions $284,556 $11,630 $58,508
Employer contributions 24,046 883 5,269
Participant rollovers 87,390 0 3,389
Loan repayments 5,092 170 2,052
401,084 12,683 69,218
Investment income:
Interest and dividends 80,564 3,497 12,610
Net realized and unrealized
appreciation (depreciation)
in fair value of investments 62,552 (6,001) 0
143,116 (2,504) 12,610
Total additions 544,200 10,179 81,828
Deductions from net assets
attributed to:
Distributions to participants 99,924 1,790 57,458
Employee loans 21,412 205 8,161
Total deductions 121,336 1,995 65,619
Net increase prior
to interfund transfers 422,864 8,184 16,209
Interfund transfers (37,502) (4,213) 18,082
Net increase (decrease) 385,362 3,971 34,291
Net assets available for plan
benefits:
Beginning of year 665,672 19,204 217,264
End of year $1,051,034 $23,175 $251,555
CMA Employee
Money Contributions Loans
Fund Receivable Receivable
Additions to net assets
attributed to:
Contributions:
Employee contributions $38,531
Employer contributions 3,542
Participant rollovers
Loan repayments $(16,188)
42,073 (16,188)
Investment income:
Interest and dividends $251
Net realized and unrealized
appreciation (depreciation)
in fair value of investments
251
Total additions 251 42,073 (16,188)
Deductions from net assets
attributed to:
Distributions to participants
Employee loans (61,648)
Total deductions (61,648)
Net increase prior
to interfund transfers 251 42,073 45,460
Interfund transfers 0 (45,033)
Net increase (decrease) 251 (2,960) 45,460
Net assets available for plan
benefits:
Beginning of year 61 45,033 45,252
End of year $312 $42,073 $90,712
Total
Additions to net assets
attributed to:
Contributions:
Employee contributions $679,816
Employer contributions 58,864
Participant rollovers 143,374
Loan repayments
882,054
Investment income:
Interest and dividends 218,912
Net realized and unrealized
appreciation (depreciation)
in fair value of investments 80,752
299,664
Total additions 1,181,718
Deductions from net assets
attributed to:
Distributions to participants 302,282
Employee loans
Total deductions 302,282
Net increase prior
to interfund transfers 879,436
Interfund transfers
Net increase (decrease) 879,436
Net assets available for plan
benefits:
Beginning of year 1,899,866
End of year $2,779,302
CHYRON CORPORATION EMPLOYEES' 401(k) PLAN
NOTES TO THE FINANCIAL STATEMENTS
1. Plan Description and Benefits
The Chyron Corporation Employees' 401(k) Plan (the "Plan") was adopted
on January 1, 1994, and amended through July 1, 1998, for the benefit of the
employees of Chyron Corporation (the "Company"). The following is a brief
description of the Plan. A more complete description of the provisions of
the Plan is available in the Plan document and in individual statements of
benefits provided to each Plan participant. The Plan is subject to the
provisions of the Employee Retirement Income Security Act of 1974 ("ERISA"),
as amended.
The Plan is a defined contribution plan which provides benefits to
participants based upon amounts contributed to the participants' accounts
by the employees and employer and investment income or loss. Under the
Plan, the participant is not provided with any defined benefit.
Contributions made to the Plan are credited to participants' individual
accounts in the name of each participant. The ultimate benefit received
depends on the aggregate amount contributed by the participants and the
employer and the income, gains and losses associated with those
contributions which are allocated to the participants' individual accounts.
Participants are entitled to make contributions up to a maximum of 20%
of their current compensation subject to limitations of Section 401(k) of
the Internal Revenue Code ($10,000 in 1998 and $9,500 in 1997). The total
employee compensation that can be considered for contribution purposes was
limited to $160,000. Contribution percentages may be increased or decreased
at quarterly intervals throughout the Plan year. For purposes of determining
contributions, compensation is defined as total wages and salary of an
employee, including any overtime pay, bonuses and commissions, but excluding
deferred compensation. The Company can elect to make a contribution to the
Plan on behalf of those participants who have made salary deferral
contributions. For 1997, the Company contributed 10% of the first 10% of
compensation that a participant contributed to the Plan. Effective July 1,
1998, the matching contribution was raised to 20% of the first 10% of
compensation and will only be made in shares of the Company's common stock.
CHYRON CORPORATION EMPLOYEES' 401(k) PLAN
NOTES TO THE FINANCIAL STATEMENTS
The participants of the Plan may elect to have their accounts invested
in any combination (in 5% increments) of the following investment
alternatives:
Alliance Premier Growth Fund
Chyron Corporation Common Stock
Massachusetts Investors Trust
Merrill Lynch Capital Fund
Merrill Lynch Federal Securities Trust
Merrill Lynch Global Allocation Fund
Merrill Lynch Global Value Fund
Merrill Lynch Growth Fund for Investment and Retirement
Merrill Lynch Retirement Preservation Trust
Employees are eligible for participation in the Plan on the first day
of the month following the performance of one hour of service. Prior to July
1, 1998 employees were eligible for participation in the Plan on a quarterly
basis following the completion of one-quarter of a year of service.
Employees are 100% vested in their salary deferral contributions upon entry
into the Plan. All participants in the Plan on June 30, 1998 were 100%
vested in their employer matching contributions. Effective July 1, 1998,
employees are vested in employer matching contributions in accordance with
the following schedule:
Years of Service Vested Percentage
1 33%
2 67%
3 100%
The full value of the vested interest of participants in Plan assets
is distributable to them or their beneficiaries upon retirement, disability
or death. The normal retirement date is the first day of the month
following the attainment of age 65. Participants or beneficiaries may elect
to have such interest distributed in either one lump sum or in monthly
installments. An employee can also withdraw all or a portion of his/her
investment under certain special distribution events as defined in the Plan.
The special distribution events include in-service distributions, where a
participant in the Plan may withdraw all or a portion of his/her account
balance upon reaching age 59 1/2 and hardship withdrawals, as defined in the
Plan. These special distributions may be subject to ordinary income taxes
or early distribution penalties. Active participants may also apply to the
Plan administrator for a loan from the Plan. Participants may borrow an
amount that would not exceed the lesser of 50% of each participant's vested
account balance or $50,000 reduced by the highest outstanding balance during
the prior 12 months. Loan terms range from one to five years or up to
twenty-five years for the purchase of a primary residence. All loans must
be repaid with interest (currently at rates ranging from 8.71%-9.23%) and
are subject to certain requirements as outlined in the Plan.
CHYRON CORPORATION EMPLOYEES' 401(k) PLAN
NOTES TO THE FINANCIAL STATEMENTS
If a participant leaves the Company for any reason other than
retirement, disability or death, the participant may elect to receive
distribution of his/her vested benefit. If the participant's balance is less
than $3,500, the distribution will be made immediately following the
employee's termination.
2. Summary of Significant Accounting Policies
Basis of accounting
The Plan's financial statements are prepared under the accrual method
of accounting.
Investments
All Plan investments are held by the Plan's custodian, Merrill Lynch,
Pierce, Fenner & Smith, Inc. ("Merrill Lynch" or the "Custodian") and are
stated at fair value, principally based on the last sales price reported on
the last business day of the Plan year.
Investment earnings are automatically reinvested into the fund from
which they are derived. Participants can elect to change their current or
future investments on a daily basis.
Realized and unrealized gains and losses on Plan assets are based on
the value of the assets at the beginning of the year or at the time of
purchase during the year. Dividend income is recorded on the ex-dividend
date. Interest income is accrued when earned.
Cash equivalents
Cash equivalents consist of investments in highly liquid Merrill Lynch
money funds which are temporary in nature.
Benefit payments to employees
Benefit payments to employees are recorded on a cash basis. Amounts
allocated to accounts of persons who have elected to withdraw from the Plan
but who have not yet been paid must be reported as a liability on ERISA Form
5500.
Loans
Employee loans receivable consist of remaining principal outstanding.
Administrative expenses
Expenses related to the administration of the Plan are paid by the
Company, at its option. For the years ended December 31, 1998 and 1997, the
Company paid all administrative expenses.
CHYRON CORPORATION EMPLOYEES' 401(k) PLAN
NOTES TO THE FINANCIAL STATEMENTS
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 at
the date of the Statement of Net Assets Available for Plan Benefits and the
reported amount of net additions and deductions in the Statement of Changes
in Net Assets Available for Plan Benefits. Actual results could differ from
those estimates.
3. Tax Status
The Plan obtained its latest determination letter on September 29,
1995 in which the Internal Revenue Service stated that the Plan, as then
designed, qualified under Section 401(a) of the Internal Revenue Code (the
"Code"). The related trust is exempt from federal income taxes under Section
501(a) of the Code. The Plan and related trust must be operated in
conformity with the Code to maintain qualification. The Company is not aware
of any course of action, series of events or amendments that might adversely
affect the qualified status of the Plan.
4. Termination Priorities
While the Company has not expressed any intent to do so, the Company
has the right under the Plan to discontinue its contribution at any time and
to terminate the Plan subject to the provisions of ERISA. In the event that
the Plan is terminated all participants will remain 100% vested in their
total account balances under the Plan.
5. Reconciliation of Financial Statements to Form 5500
Amounts allocated to withdrawing participants are recorded on Form
5500 for benefit claims that have been processed and approved for payment
prior to December 31 but not yet paid as of that date. As of December 31,
1998 and 1997, there were no outstanding benefit payments to withdrawing
participants and, therefore, the amounts presented as net assets available
for plan benefits were the same in the financial statements as on the Form
5500.
CHYRON CORPORATION EMPLOYEES' 401(k) PLAN
Line 27a - Schedule of Assets Held for Investment Purposes
December 31, 1998
(a) (b) (c)
Identity of Issue Description
* Merrill Lynch Capital Fund Mutual Fund
* Merrill Lynch Federal Securities Trust Mutual Fund
* Merrill Lynch Global Allocation Fund Mutual Fund
* Merrill Lynch Global Value Fund Mutual Fund
* Merrill Lynch Growth Fund for Investment
and Retirement Mutual Fund
* Merrill Lynch Retirement Preservation Trust Mutual Fund
Alliance Premier Growth Fund Mutual Fund
* Chyron Corporation Common Stock Common Stock
Massachusetts Investors Trust Mutual Fund
Employee loans receivable Loans issued for terms of
1-10 years, with 8.71% to
9.23% interest
(d) (e)
Cost Current Value
$650,614 $644,783
171,952 172,063
623,740 563,239
114,022 104,672
6,587 5,398
450,968 450,966
954,267 1,022,273
54,931 47,093
134,128 137,763
130,566 130,566
$3,278,816
*=Party in Interest
CHYRON CORPORATION EMPLOYEES' 401(k) PLAN
Line 27d - Schedule of Reportable Transactions
For the Year Ended December 31, 1998
(a) (b)
Identity of Party Involved Description of Asset
Merrill Lynch Capital Fund Mutual Fund
Merrill Lynch Capital Fund Mutual Fund
Merrill Lynch Federal Securities Trust Mutual Fund
Merrill Lynch Federal Securities Trust Mutual Fund
Merrill Lynch Global Allocation Fund Mutual Fund
Merrill Lynch Global Allocation Fund Mutual Fund
Merrill Lynch Growth Investment/Retirement Mutual Fund
Merrill Lynch Growth Investment/Retirement Mutual Fund
Merrill Lynch Retirement Preservation Trust Mutual Fund
Merrill Lynch Global Value Fund Mutual Fund
Massachusetts Investors Trust Mutual Fund
Alliance Premier Growth Fund Mutual Fund
(c) (d) (g) (h) (i)
Purchase Selling Cost of Current Value Net Gain
Price Price Asset of Asset on or (Loss)
Transaction
Date
$279,688 $279,688 $279,688
$184,148 184,159 184,148 $(11)
178,501 178,501 178,501
149,225 148,793 149,225 432
282,302 282,302 282,302
283,490 281,592 283,490 1,898
445,656 445,656 445,656
1,251,099 1,530,008 1,251,099 (278,909)
256,074 256,074 256,074
185,409 185,409 185,409
150,138 150,138 150,138
954,266 954,266 954,266
SIGNATURES
The Plan. Pursuant to the requirements of the Securities and Exchange Act
of 1934, the trustees (or other persons who administer the employee benefit
plan) have duly caused this annual report to be signed by the undersigned
thereunto duly authorized.
Chyron Corporation Employees' 401(k) Plan
/s/ Dawn R. Johnston
Dawn R. Johnston
Sr. Vice President Finance
June 25, 1999