SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 11-K
ANNUAL REPORT
PURSUANT TO SECTION 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One):
[ X ] ANNUAL REPORT PURSUANT TO SECTION 15 (d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended December 31, 2000
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[ ] TRANSITION REPORT PURSUANT TO SECTION 15 (de) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from __________ to __________
Commission file number 0-17156
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A. Full title of the plan and address of the plan, if different from that of
the issuer named below: Merisel, Inc. 401(k) Retirement Savings Plan
B. Name of issuer of the securities held pursuant to the plan and the address
of its principal executive office: Merisel, Inc. 200 Continental Blvd.,
El Segundo, California 90245
Merisel, Inc.
401(k) Retirement Savings Plan
Financial Statements as of and for the
Years Ended December 31, 2000 and 1999, Supplemental Schedules for the Year
Ended December 31, 2000, and
Independent Auditors' Report
MERISEL, INC.
401(k) RETIREMENT SAVINGS PLAN
TABLE OF CONTENTS
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Page
INDEPENDENT AUDITORS' REPORT 1
FINANCIAL STATEMENTS:
Statements of Net Assets Available for Plan Benefits as of December
31, 2000 and 1999 2
Statements of Changes in Net Assets Available for Plan Benefits for the
Years Ended December 31, 2000 and 1999 3
Notes to Financial Statements 4-7
SUPPLEMENTAL SCHEDULES:
Schedule of Assets Held for Investment Purposes as of December 31, 2000 8
Schedule of Reportable Transactions for the Year Ended December 31, 2000 9
INDEPENDENT AUDITORS' REPORT
Merisel, Inc.
401(k) Retirement Savings Plan:
We have audited the accompanying statements of net assets available for plan
benefits of the Merisel, Inc. 401(k) Retirement Savings Plan (the "Plan") as of
December 31, 2000 and 1999, and the related statements of changes in net assets
available for plan benefits for the years 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 audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of the Plan as
of December 31, 2000 and 1999, and the changes in net assets available for plan
benefits for the years then ended in conformity with accounting principles
generally accepted in the United States of America.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of (1) assets
held for investment purposes as of December 31, 2000, and (2) reportable
transactions for the year ended December 31, 2000, 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. These supplemental schedules are the
responsibility of the Plan's management. The supplemental schedules 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.
May 30, 2001
MERISEL, INC.
401(k) RETIREMENT SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
DECEMBER 31, 2000 AND 1999
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2000 1999
ASSETS:
Investments (Notes 3):
Participant directed $14,789,811 $18,690,302
Nonparticipant directed (Note 4) 291,799 1,020,032
Participant loans 396,704 636,697
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Total investments 15,478,314 20,347,031
Accounts receivable - employer and employee contribution 127,647 1,403,162
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NET ASSETS AVAILABLE FOR PLAN BENEFITS $15,605,961 $21,750,193
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See accompanying notes to financial statements.
MERISEL, INC.
401(k) RETIREMENT SAVINGS PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
YEARS ENDED DECEMBER 31, 2000 AND 1999
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2000 1999
ADDITIONS TO NET ASSETS:
Investment (loss) income (Notes 3):
Net (depreciation) appreciation in fair value of investments $(4,167,870) $2,061,182
Interest income 136,072 111,891
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Total investment (loss) income (4,031,798) 2,173,073
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Contributions:
Employee 3,045,081 4,015,924
Employer 922,682 1,252,524
Rollover 96,728 292,872
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Total contributions 4,064,491 5,561,320
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Total additions 32,693 7,734,393
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DEDUCTIONS TO NET ASSETS:
Benefit paid to participants 6,005,411 1,296,441
Contract administrator fees 171,514 57,085
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Total deductions 6,176,925 1,353,526
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(DECREASE) INCREASE IN NET ASSETS (6,144,232) 6,380,867
NET ASSETS AVAILABLE FOR PLAN BENEFITS:
BEGINNING OF YEAR 21,750,193 15,369,326
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END OF YEAR $15,605,961 $21,750,193
==================== ====================
See accompanying notes to financial statements.
MERISEL, INC.
401(k) RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2000 AND 1999
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1. PLAN DESCRIPTION AND RELATED INFORMATION
General - The Merisel, Inc. 401(k) Retirement Savings Plan (the "Plan") is
a qualified defined contribution plan established to provide retirement
benefits to Merisel, Inc. (the "Company" or the "Plan Sponsor") employees.
The following description of the Plan provides only general information.
Participants should refer to the plan agreement for a more complete
description of the Plan's provisions.
Risk and Uncertainties - In 2000, the Plan Sponsor incurred a net loss of
$96 million, increasing its accumulated deficit to $275 million. Effective
December 2000, the Plan Sponsor announced its decision to wind down the
U.S. distribution business, excluding software licensing. The Company has
developed an operating plan for 2001, which, if successfully implemented,
will provide sufficient cash flow to support its operations throughout
2001. If the Company is unable to successfully implement its business
plan, it could have a material impact on the Company's ability to continue
as a going concern. By virtue of the Company being the Plan Sponsor, such
a material impact could also impact the Plan's ability to continue as a
going concern.
Contributions, Participant Accounts, and Vesting - Under provisions of the
Plan, all full-time employees of the Company who have completed 30 days of
service and are at least 21 years of age are eligible to participate in
the Plan. Total annual participant contributions are limited to the lesser
of $10,500 or 15 percent of the participant's pretax annual compensation.
Participants may also make rollover contributions from other qualified
plans. The amount of the Company matching contributions is determined by
the Board of Directors.
Each participant's account is credited with the participant's contribution
and an allocation of the Company's contribution and plan earnings.
Participant contributions are invested in any of ten available investment
funds or Company common stock, as directed by the participant. Company
contributions are invested as directed by the Company. Plan earnings are
allocated to participants based upon participant account balances.
Forfeitures of terminated participants' nonvested accounts are used to
reduce future Company expenses, which included $5,606 and $9,309 as of
December 31, 2000 and 1999, respectively.
Participants are immediately vested in their voluntary contributions plus
actual earnings thereon. Vesting in the Company's contributions is based
on years of continuous service. A participant is fully vested after four
years of credited service.
Payments of Benefits - A participant's plan benefits will be distributed
at retirement, death, disability, or termination of employment. The
participant or beneficiary may elect to receive such benefits in an
annuity or lump-sum payment. Benefit payments to participants are recorded
upon distribution, and therefore amounts allocated to accounts of persons
who have elected to withdraw from the plan but have not yet been paid are
included in plan assets.
Termination - Although it has not expressed any intent to do so, the
Company has the right to terminate the Plan subject to the provisions of
the Employee Retirement Income Security Act of 1974. In the event of
termination, participants would become 100 percent vested in their
employer contributions.
Tax Status - The Internal Revenue Service ("IRS") has determined and
informed the Company by letter that the Plan is qualified under Section
401 of the Internal Revenue Code ("IRC") and therefore is not subject to
tax under present income tax law. Although the Plan has been amended since
receiving the determination letter, the plan 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.
Management believes that the Plan is designed and currently being operated
within the applicable requirements of the IRC.
Administrative Expenses - Administrative expenses are allocated to plan
participants on a pro rata basis based on individual account values.
Participant Loans - 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 the participant's vested account balance. The term of
participant loans may not exceed five years, except where the proceeds of
the loan are used to purchase the principal residence of the participant.
The loans bear interest at the rate of two percent above the prime rate as
published in the Wall Street Journal on the day the loan is made.
Related Party Transactions - Certain plan investments are shares of funds
managed by CIGNA Retirement & Investment Services. CIGNA Retirement &
Investment Services is the trustee as defined by the Plan, and therefore,
these transactions qualify as party-in-interest. Fees paid by the Plan for
the investment management services amounted to $171,514 for the year ended
December 31, 2000 and $57,085 for the year ended December 31, 1999. Also,
the Plan invests in common stock of the plan sponsor (see Note 4).
2. SUMMARY OF ACCOUNTING POLICIES
Basis of Accounting - The accompanying financial statements have been
prepared using the accrual basis of accounting.
Use of Estimates - The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities, and changes therein, and
disclosure of contingent assets and liabilities. Actual results may differ
from estimates.
Investment Valuation and Income Recognition - The Plan's investments are
stated at fair value. Shares of registered investment companies and the
Company stock are valued at quoted market prices. Investments in pooled
separate accounts are recorded at fair value, as determined by the unit
value as reported by the Connecticut General Life Insurance Company.
Investments in the CIGNA Guaranteed Income Fund are non-fully benefit
responsive guaranteed investment contracts, which are recorded at fair
value. Participant loans 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.
3. INVESTMENT INFORMATION BY FUND
The following presents investments that represent five percent or more of
the Plan's net assets:
December 31,
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2000 1999
CIGNA Guaranteed Income Fund $ 2,414,321 $2,638,322
CIGNA Large Company Stock Index Fund 2,231,717 3,179,810
Fidelity Advisor Growth Opportunities Fund 2,100,854 3,379,777
Fidelity Advisor Equity Growth Account 4,091,725 5,408,428
CIGNA Lifetime 20 Fund 855,555 943,685
CIGNA Lifetime 30 Fund 866,472 1,179,606
Janus Worldwide Fund 1,268,578 632,509
During 2000, the Plan's investments (including gains and losses on
investments bought and sold, as well as held during the year) depreciated
in value by $4,168,388 as follows:
December 31,
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2000 1999
Investment funds $ (1,751,152) $ 2,765,085
Common stock (2,417,236) (703,678)
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$ (4,168,388) $ 2,061,407
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NONPARTICIPANT-DIRECTED INVESTMENTS
Information about the net assets and the significant components of the
changes in net assets relating to the nonparticipant-directed investments
is as follows:
December 31,
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2000 1999
Net assets -
Merisel, Inc. common stock $ 291,799 $1,020,032
====================== ====================
Year Ended
December 31,
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2000 1999
Increase (decrease) in net assets:
Contributions $2,233,265 $1,170,787
Net depreciation (2,417,236) (703,678)
Benefits paid to participants (311,299) (163,184)
Fund transfers (86,728) 21,755
Contract administrator fees (141,082) (40,475)
Other (5,153) (10,682)
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$(728,233) $274,523
====================== ====================
5. GUARANTEED INVESTMENT CONTRACTS
The Plan participates in contracts with Connecticut General Life Insurance
Company via investments in the CIGNA Guaranteed Income Fund. Connecticut
General Life Insurance Company commingles the assets of the CIGNA
Guaranteed Income Fund with other assets. The contracts are non-fully
benefit responsive, with average yields of 5.5 percent and 5.45 percent,
with interest rates of 5.5 percent and 5.45 percent for 2000 and 1999,
respectively, and estimated fair values of $2,414,321 at December 31, 2000
and $2,638,322 at December 31, 1999.
6. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
The following is a reconciliation of net assets available for benefits per
the financial statements to the Form 5500:
December 31,
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2000 1999
Net assets available for benefits per the financial statements $15,605,961 $21,750,193
Accounts receivable - employer and employee contribution (127,647) (1,403,162)
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Net assets available for benefits per the Form 5500 $15,478,314 $20,347,031
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MERISEL, INC.
401 (k) RETIREMENT SAVINGS PLAN
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 2000
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(a) (b) (c) (d) (e)
Description of Investment,
Identity of Issue, Including Maturity Date,
Borrower, Lessor or Interest Rate, Collateral Fair
Similar Party and Par or Maturity Value Cost Value
* Connecticut General Life
Insurance Company Cash Transaction Account (GST) $127 $127
* Connecticut General Life
Insurance Company CIGNA Guaranteed Income Fund 2,414,321 2,414,321
* Connecticut General Life CIGNA Large Company Stock Index
Insurance Company Fund 1,763,871 2,231,717
* Connecticut General Life Fidelity Advisor Growth Opportunities
Insurance Company Fund 1,888,259 2,100,854
* Connecticut General Life
Insurance Company Fidelity Advisor Equity Growth Account 2,864,555 4,091,725
* Connecticut General Life
Insurance Company CIGNA Lifetime 20 Fund 685,971 855,555
* Connecticut General Life
Insurance Company CIGNA Lifetime 30 Fund 654,499 866,472
* Connecticut General Life
Insurance Company CIGNA Lifetime 40 Fund 469,052 619,445
* Connecticut General Life
Insurance Company CIGNA Lifetime 50 Fund 225,211 306,354
* Merisel, Inc. Merisel, Inc. common stock 2,972,287 291,799
* Connecticut General Life
Insurance Company Janus Worldwide Fund 1,458,215 1,268,578
* Connecticut General Life CIGNA Foreign Stock
Insurance Company Bank of Ireland Asset Management 36,085 34,663
* Participant loans Loans to participants, maturities up
to 10 years, 9.5%-11% interest - 396,704
* Indicates an identified person known to be a party-in-interest.
MERISEL, INC.
401(k) RETIREMENT SAVINGS PLAN
SCHEDULE OF REPORTABLE TRANSACTIONS
YEAR ENDED DECEMBER 31, 2000
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(a) (b) (c) (d) (g) (h) (i)
Identity Current Value Net
of Party Description Purchases Selling Cost on Transaction Gain
Involved of Asset Price Price of Asset Date (Loss)
-------- -------- ----- ----- -------- ---- ------
Merisel, Inc. Common stock $1,948,851 Not applicable $1,948,851 $1,948,851 $ -
Merisel, Inc. Common stock Not applicable $283,145 816,846 283,145 (533,701)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons who administer the employee benefit plan) have duly
caused this annual report to be signed on its behalf by the undersigned hereunto
duly authorized.
Date: June 30, 2001 Merisel, Inc. 401(k) Retirement Savings Plan
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(Name of plan)
By:/s/Timothy N. Jenson
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Timothy N. Jenson
CEO and President