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, 2003
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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
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, 2003
With Independent Auditors' Report
MERISEL, INC.
401(k) RETIREMENT SAVINGS PLAN
Table of Contents
Page(s)
Independent Auditors' Report 1
Financial Statements:
Statements of Net Assets Available for Plan Benefits at December 31, 2003 and
2002 2
Statement of Changes in Net Assets Available for Plan Benefits for the year
ended December 31, 2003 3
Notes to Financial Statements 4-8
Supplemental Schedule:
Schedule of Assets (Held at End of Year) as of
December 31, 2003 9
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.
Independent Auditors' Report
To the Plan Administrator of the
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, 2003, and the related statement of changes in net assets
available for plan benefits for the year ended December 31, 2003. 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. The financial statements of the Merisel, Inc. 401(k)
Retirement Savings Plan as of December 31, 2002 were audited by other
auditors whose report dated June 25, 2003, expressed an unqualified opinion
on those statements.
We conducted our audit 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. 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 principals used and significant estimates made by management,
as well as evaluating the overall financial statement presentation. We
believe that our audit provides 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 as of
December 31, 2003, and the changes in the net assets available for plan
benefits for the year ended December 31, 2003 in conformity with accounting
principles generally accepted in the United States of America.
Our audit was performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule, as listed
in the accompanying index, 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.
/s/ Holthouse Carlin & Van Trigt LLP
Westlake Village, California
June 16, 2004
MERISEL, INC.
401(k) RETIREMENT SAVINGS PLAN
Statements of Net Assets Available for Plan Benefits
December 31, 2003 and 2002
2003 2002
---- ----
Investments (participant-directed):
Connecticut General Life Insurance Company
group annuity contract:
Pooled separate accounts $5,048,477 $4,214,546
Guaranteed income general account 2,296,663 2,428,780
Merisel, Inc. common stock 741,541 298,530
Participant loans 6,664 16,700
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Total investments 8,093,345 6,958,556
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Receivables:
Employer contribution - 19,494
Participant contributions - -
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Total receivables - 19,494
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Net assets available for plan benefits $8,093,345 $6,978,050
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See accompanying notes to financial statments.
MERISEL, INC.
401(k) RETIREMENT SAVINGS PLAN
Statement of Changes in Net Assets Available for Plan Benefits
Year ended December 31, 2003
Additions to net assets attributed to:
Investment income
Interest income $ 67,000
Net appreciation in fair value of pooled separate accounts 1,167,526
Net appreciation in fair value of Merisel, Inc. common stock 561,464
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Total investment income 1,795,990
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Contributions:
Employer matching 58,472
Participant salary reduction 178,139
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Total contributions 236,611
------------
Total additions 2,032,601
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Deductions from net assets attributed to:
Benefits paid to participants 897,077
Deemed distributions 7,683
Administrative expenses 12,546
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Total deductions 917,306
------------
Net increase 1,115,295
Net assets available for plan benefits:
Beginning of year 6,978,050
------------
End of year $8,093,345
==========
See accompanying notes to financial statments.
MERISEL, INC.
401(k) RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 2003
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 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.
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 an
interest rate equal to 2 percentage points more than the prime rate stated in
the Wall Street Journal on the day the loan is made. The interest rates for
loans outstanding range from 6.0 percent to 11.0 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, 2003, forfeited nonvested accounts totaled $3,700. These
accounts may be used to reduce future employer contributions to the Plan. Also,
in 2003, employer contributions were reduced by $252 from forfeited nonvested
accounts.
2. Summary of Significant Accounting Policies
Use of Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires the Plan
Administrator 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.
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 4.29 percent and 4.25 percent during 2003 and 2002, 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 2003, the Plan paid $12,546 to CIGNA
for administrative and transaction charges, as well as for fees related to the
purchase and sale of Merisel, Inc. stock. The Company at its discretion, decided
to pay the fees of the qualified independent public accountant.
Concentration of Risk
The Plan has exposure to risk to the extent that its investments are subject to
market fluctuations and interest rate fluctuations that may materially affect
the value of the investment balances.
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.
4. Investments
The following presents investments that represent five percent or more of the
Plan's net assets at December 31, 2003:
CIGNA group annuity contract accounts:
Guaranteed Income Fund $2,296,663
S&P 500 Index Fund 993,654
Fidelity Advisor Equity Growth Account 1,823,038
Merisel, Inc. Common Stock 741,541
Strong Advisor Small Cap Value Fund 427,556
For the year ended December 31, 2003 the net appreciation of investments in
mutual funds was $1,167,526 and the net appreciation of the investment in the
Merisel, Inc. Common Stock was $561,464.
5. Tax Status
The Plan is an individually designed plan. The Internal Revenue Service has
determined and informed the Company by a letter dated September 30, 2002, 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.
6. Party-In-Interest Transactions
CIGNA is the Custodian of the Plan and holds and manages investments.
Transactions with CIGNA are party-in-interest transactions.
7. Subsequent Events
Effective April 1, 2004, Prudential Financial, Inc. acquired CIGNA Retirement &
Investment Services.
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, 2003
Identity of issuer Current
or borrower Description of investment value
----------- ------------------------- ------------
*Connecticut Group annuity contract (GA-37125)
General Life Insurance
Company
Guaranteed Income Fund $2,296,663
S&P Index Fund 993,655
Fidelity Advisor Growth Opportunities Account 61
Fidelity Advisor Equity Growth Account 1,823,038
CIGNA Lifetime20 Fund 362,639
CIGNA Lifetime30 Fund 358,072
CIGNA Lifetime40 Fund 380,481
CIGNA Lifetime50 Fund 249,185
International Blend/Bank of Ireland Fund 41,426
Mid Cap Value Fund (Wellington Mgmt.) 360,588
Strong Advisor Small Cap Value Fund 427,556
Alliance Growth & Income Fund 51,777
*Merisel, Inc. Shares of plan sponsor common stock 741,541
*Participant loans Loans to participants, maturities up
to 5 years, interest rates between
6.0% to 11.0% 6,664
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$8,093,345
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*Indicates a party-in-interest to the Plan.
See auditors' report and accompanying notes to financial statments.
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 29, 2004 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