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, 2002
-----------------
[ ] 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
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
and Supplemental Schedule
December 31, 2002
With Independent Auditor's Report
MERISEL, INC.
401(k) RETIREMENT SAVINGS PLAN
Table of Contents
Page(s)
Independent Auditor's Report 1
Financial Statements:
Statements of Net Assets Available for Benefits
at December 31, 2002 and 2001 2
Statement of Changes in Net Assets Available for Benefits
for the year ended December 31, 2002 3
Notes to Financial Statements 4-7
Supplemental Schedule:
Schedule of Assets (Held at End of Year)
as of December 31, 2002 8
Other schedules required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement
Income Security Act of 1974 have been omitted because they are not
applicable.
1
Independent Auditor's Report
To the Plan Administrator and Participants
of the Merisel, Inc. 401(k) Retirement Savings Plan
We have audited the statements of net assets available for benefits of the
Merisel, Inc. 401(k) Retirement Savings Plan as of December 31, 2002 and 2001,
and the related statement of changes in net assets available for benefits for
the year ended December 31, 2002. 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 benefits of the Plan as of
December 31, 2002 and 2001, and the changes in net assets available for benefits
for the year ended December 31, 2002 in conformity with accounting principles
generally accepted in the United States of America.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of assets (held
at end of year) as of December 31, 2002, is presented for the purpose 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 the auditing procedures applied in the 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.
Los Alamitos, California
June 25, 2003
MERISEL, INC.
401(k) RETIREMENT SAVINGS PLAN
Statements of Net Assets Available for Benefits
December 31, 2002 and 2001
2002 2001
---- ----
Investments (participant-directed):
Connecticut General Life Insurance Company
group annuity contract:
Pooled separate accounts $4,214,546 $7,128,138
Guaranteed income general account 2,428,780 1,592,194
Merisel, Inc. common stock 298,530 327,977
Participant loans 16,700 60,295
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Total investments 6,958,556 9,108,604
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Receivables:
Employer contribution 19,494 26,514
Participant contributions - 1,366
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Total receivables 19,494 27,880
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Net assets available for benefits $6,978,050 $9,136,484
========= =========
See accompanying notes to financial statements.
MERISEL, INC.
401(k) RETIREMENT SAVINGS PLAN
Statement of Changes in Net Assets Available for Benefits
Year ended December 31, 2002
Additions to net assets attributed to:
Investment income, excluding net depreciation reflected below:
Interest income $ 87,955
Net appreciation in fair value of Merisel, Inc. common stock 56,738
Other 2,767
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Total investment income, excluding net depreciation 147,460
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Contributions:
Employer matching 75,835
Participant salary reduction 308,382
Participant rollover 14,955
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Total contributions 399,172
------------
Total additions 546,632
------------
Deductions from net assets attributed to:
Net depreciation in fair value of pooled separate accounts 1,444,040
Benefits paid to participants 1,207,201
Deemed distributions of participant loans 35,683
Administrative expenses 18,142
-------------
Total deductions 2,705,066
-----------
Net decrease (2,158,434)
Net assets available for benefits:
Beginning of year 9,136,484
---------
End of year $6,978,050
=========
See accompanying notes to financial statements.
MERISEL, INC.
401(k) RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 2002
1. Description of Plan
The following description of the Merisel, Inc. ("Company") 401(k) Retirement
Savings Plan ("Plan") provides only general information. Participants should
refer to the Plan agreement for a more complete description of the Plan's
provisions.
General
The Plan is a defined contribution plan covering employees of the Company who
have 30 days of service and are twenty-one or older. It is subject to the
provisions of the Employee Retirement Income Security Act of 1974 ("ERISA").
Contributions
Each year, participants may contribute up to 25 percent (prior to October 2002,
15 percent) of pretax annual compensation, as defined by the Plan, except that
highly compensated employees, as defined by the Plan, may only contribute up to
7 percent. Participants may also contribute amounts representing distributions
from other qualified defined benefit or defined contribution plans. The Company
contributes 50 percent of the first 6 percent of annual compensation that a
participant contributes to the Plan. The Company's matching contribution is made
on a quarterly basis and is subject to an annual true up adjustment. To qualify
for the quarterly matching contribution, participants must be employed by the
Company on the last day of the quarter. The amount of the matching contribution
is determined each year by the Board of Directors and at its discretion may even
determine that no matching contribution will be made.
Investment Options
Participants direct the investment of their contributions into various
investment options offered by the Plan. The investment options are included
under the Plan's group annuity contract with Connecticut General Life Insurance
Company ("CIGNA") and includes pooled separate accounts reflecting mutual funds
as well as funds held in the insurance company general account reflecting a
guaranteed income fund. In addition, participants may direct their investments
to a Merisel, Inc. common stock fund.
Participant Accounts
Each participant's account is credited with the participant's contribution and
allocations of (a) the Company's contribution and (b) Plan earnings, and charged
with an allocation of administrative expenses. Allocations are based on
participant earnings or account balances, as specified by the Plan. The benefit
to which a participant is entitled is the benefit that can be provided from the
participant's vested account.
MERISEL, INC.
401(k) RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 2002
1. Description of Plan (continued)
Vesting
Participants are vested immediately in their contributions plus actual earnings
thereon. Vesting in the Company's contribution portion of their accounts is
based on years of continuous service. A participant is 100 percent vested after
four years of credited service.
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 their account balance.
The loans are secured by the balance in the participant's account and bear
interest at rates that range from 9.5 percent to 11 percent. Principal and
interest is paid ratably through payroll deductions.
Payment of Benefits
On termination of service due to death, disability, retirement or other reasons,
a participant may elect to receive either a lump-sum amount equal to the value
of the participant's vested interest in his or her account, or annual
installments over a fixed period of years. Inservice distributions are allowed
under certain conditions.
Forfeited Accounts
At December 31, 2002, forfeited nonvested accounts totaled $6,719. These
accounts will be used to reduce future employer contributions to the Plan. Also,
in 2002, employer contributions were reduced by $50,537 from forfeited nonvested
accounts.
2. Summary of Significant Accounting Policies
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 and changes therein, and
disclosure of contingent assets and liabilities. Actual results could differ
from those estimates.
MERISEL, INC.
401(k) RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 2002
2. Summary of Significant Accounting Policies (continued)
Valuation of Investments
The Plan's investment in the CIGNA group annuity contract is essentially a fully
benefit-responsive contract, and accordingly, the contract is included in the
financial statements at contract value (which represents contributions made
under the contract, plus earnings, less withdrawals and administrative
expenses), as reported to the Plan by CIGNA. Investments in pooled separate
accounts at contract value equal fair value, as it is based on the market value
of the underlying assets of the funds. Investments in the insurance company
general account have been valued at contract value, even though under certain
limited circumstances CIGNA reserves the right to defer transfers or
distributions, because it is the amount a participant would expect to receive
under the terms of an ongoing contract. Under most circumstances contract value
will approximate fair value. The average yield and crediting interest rates were
approximately 4.25 percent and 5.35 percent during 2002 and 2001, respectively;
the crediting interest rate is reset every six months by CIGNA. There are no
reserves against contract value for credit risk of the contract issuer or
otherwise.
The Plan's investment in Merisel, Inc. common stock is stated at fair value as
determined by quoted market prices. Participant loans are stated at cost, which
approximates fair value. Purchases and sales of securities are recorded on a
trade-date basis.
Payment of Benefits
Benefits are recorded when paid.
Expenses
Expenses incurred in the administration of the Plan are paid by the Plan, unless
paid by the Company at its option. During 2002, the Plan paid $18,142 to CIGNA
for administrative and transaction charges, as well as for fees related to the
purchase and sale of Merisel, Inc. stock.
3. 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. In the event of Plan termination,
participants would become 100 percent vested in their employer contributions.
MERISEL, INC.
401(k) RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 2002
4. Investments
The following presents investments that represent five percent or more of the
Plan's net assets at either December 31, 2002 or 2001:
2002 2001
---- ----
CIGNA group annuity contract accounts:
Guaranteed Income Fund $2,428,780 $1,592,194
S&P 500 Index Fund 891,607 1,270,315
Fidelity Advisor Growth Opportunities Account 47 1,207,162
Fidelity Advisor Equity Growth Account 1,520,001 2,441,193
CIGNA Lifetime20 Fund 328,472 559,923
CIGNA Lifetime30 Fund 346,636 495,698
Janus Worldwide Account 303,879 480,123
During the years ended December 31, 2002 and 2001, the Plan had the following
transactions related to the investment in shares of Merisel, Inc. common stock
as directed by participants:
2002 2001
---- ----
Purchases $ 38,708 $228,776
Sales 126,333 217,140
5. Tax Status
The Internal Revenue Service has determined and informed the Company by a letter
dated August 27, 1993, that the Plan and related trust are designed in
accordance with applicable sections of the Internal Revenue Code ("IRC").
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. Therefore, no provision for income taxes has been included in the
Plan's financial statements.
MERISEL, INC.
401(k) RETIREMENT SAVINGS PLAN
(EIN 95-4172359 Plan 004)
Schedule of Assets (Held at End of Year)
(Schedule H, Part IV, Item 4i - Form 5500)
December 31, 2002
(b)Identity of issuer (e)Current
(a) or borrower (c)Description of investment (d)Cost value
- --- ----------- ---------------------------- ------- -----
* Connecticut General Group annuity contract (GA-37125)
Life Insurance
Company Guaranteed Income Fund (A) $2,428,780
S&P Index Fund 891,607
Fidelity Advisor Growth Opportunities Account 47
Fidelity Advisor Equity Growth Account 1,520,001
CIGNA Lifetime20 Fund 328,472
CIGNA Lifetime30 Fund 346,636
CIGNA Lifetime40 Fund 273,600
CIGNA Lifetime50 Fund 204,035
Janus Worldwide Account 303,879
International Blend/Bank of Ireland Fund 20,795
Mid Cap Value Fund (Wellington Mgmt.) 151,944
Strong Advisor Small Cap Value Fund 151,676
Alliance Growth & Income Fund 21,854
* Merisel, Inc. Shares of plan sponsor common stock 298,530
* Participant loans Loans to participants, maturities up
to 5 years, interest rates between
9.5% to 11% 16,700
-----------
$6,958,556
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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 27, 2003 Merisel, Inc. 401(k) Retirement Savings Plan
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(Name of plan)
By: /s/Timothy N. Jenson
-------------------------------
Timothy N. Jenson
CEO and President