UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
FOR ANNUAL REPORTS OF EMPLOYEE STOCK PURCHASE, SAVINGS
AND SIMILAR PLANS PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2000
-------------------------------------------------------
DIGITAL BIOMETRICS, INC. RETIREMENT PLAN
(Exact name of the plan)
Visionics Corporation
(Name of issuer.)
5600 Rowland Road, Minnetonka, Minnesota 55343
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
1
FINANCIAL STATEMENTS
AND SUPPLEMENTAL SCHEDULES
DIGITAL BIOMETRICS, INC. RETIREMENT PLAN
YEARS ENDED DECEMBER 31, 2000 AND 1999
TABLE OF CONTENTS
Page
----
Independent Auditors' Report 3
Statements of Net Assets Available for Plan Benefits 4
Statements of Changes in Net Assets Available for Plan Benefits 5
Notes to Financial Statements 6
Supplemental Schedules
- ----------------------
Schedule of Assets Held for Investment Purposes 12
2
INDEPENDENT AUDITORS' REPORT
The Plan Trustees
Digital Biometrics, Inc. Retirement Plan:
We have audited the statements of net assets available for plan benefits of
Digital Biometrics, Inc. Retirement 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 Digital
Biometrics, Inc. Retirement Plan as of December 31, 2000 and 1999, and the
changes in its 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 performed 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 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. This supplemental schedule is the responsibility of the Plan's management.
The supplemental schedule has been subjected to the auditing procedures applied
in the audits 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/ KPMG LLP
Minneapolis, Minnesota
May 25, 2001
3
DIGITAL BIOMETRICS, INC. RETIREMENT PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
DECEMBER 31, 2000 AND 1999
2000 1999
------------ ------------
Assets:
Investments, at fair value:
Visionics Corporation, common stock $ 792,017 $ 802,167
Mutual funds 1,813,022 1,650,675
Money market accounts 37,904 46,639
Participant loans 115,075 96,413
------------ ------------
2,758,018 2,595,894
------------ ------------
Receivables:
Employee contributions 0 404
Employer match receivable 218,065 154,774
Other receivable 0 850
------------ ------------
Total receivables 218,065 156,028
------------ ------------
Total assets 2,976,083 $ 2,751,922
Liabilities 898 2,407
------------ ------------
Net assets available for plan benefits $ 2,975,185 $ 2,749,515
============ ============
See accompanying notes to the financial statements.
4
DIGITAL BIOMETRICS, INC. RETIREMENT PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
FOR THE YEARS ENDED December 31, 2000 AND 1999
2000 1999
----------- -----------
Additions to net assets:
Investment income (loss):
Net (depreciation) appreciation in fair value of
mutual funds $ (334,080) $ 355,946
Net (depreciation) appreciation in fair value of
common stock (41,152) 469,070
Interest and dividends 1,807 2,125
Loan interest income 9,080 6,620
----------- -----------
(364,345) 833,761
----------- -----------
Contributions:
Employer 218,065 154,774
Participants 510,418 371,967
Rollovers 30,756 165,261
----------- -----------
759,239 692,002
----------- -----------
Total additions 394,894 1,525,763
----------- -----------
Deductions from net assets:
Benefits paid to participants 168,863 296,003
Administrative expenses 361 402
----------- -----------
Total deductions from net assets: 169,224 296,405
----------- -----------
Net increase in net assets available for plan benefits 225,670 1,229,358
Net assets available for plan benefits at beginning of year 2,749,515 1,520,157
----------- -----------
Net assets available for plan benefits at end of year $ 2,975,185 $ 2,749,515
=========== ===========
See accompanying notes to the financial statements.
5
Digital Biometrics, Inc. Retirement Plan
Notes to Financial Statements
December 31, 2000 and 1999
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PLAN INFORMATION AND BASIS OF PRESENTATION
The accompanying financial statements of Digital Biometrics, Inc. Retirement
Plan (the Plan) have been prepared on the accrual basis of accounting and are
subject to the provisions of the Employee Retirement Income Security Act of 1974
(ERISA).
The Plan is a defined contribution plan incorporating the provisions of Section
401(k) of the Internal Revenue Code and covering substantially all employees of
Visionics Corporation, formally known as Digital Biometrics, Inc. (Employer or
Company). The Employer may make matching contributions equal to a discretionary
percentage, to be determined by the Employer, of the Participant's salary
reductions. Contributions by and on behalf of participants are invested in
accordance with the participants' investment designations in one or more
investment options. Plan participants have nine investment options in which they
may choose to have their funds invested. Employees of the Company or its wholly
owned subsidiary may elect to participate in the Plan upon becoming eligible,
which is on the first day of the month after one entire month from their hire
date. Employees may also be permitted to deposit distributions from other
qualified plans into the Plan at the discretion of the Plan administrator.
Participants should refer to the Plan Document for more complete information.
The Plan is administered by the Company, which also acts as trustee for the
Plan. Tax Sheltered Compensation, Inc. (the Plan Administrator) provides
third-party administration services, including recordkeeping, and Dain Rauscher
Investment Services provides brokerage services for the Plan.
ADMINISTRATIVE FEES
The Employer pays most of the Plan's administrative expenses. These expenses
include, but are not limited to, legal, accounting and recordkeeping fees.
However, loan fees are paid by participants.
INVESTMENTS
Investments are reported at fair value, using quoted market prices at December
31, 2000 and 1999. Shares of mutual funds are valued at the net asset value of
shares held by the Plan at December 31, 2000 and 1999. Participant loans are
reported at amounts owed by the participants.
The Company's common stock is traded on The Nasdaq National Market. The Plan's
investment in the Company's common stock is stated at quoted market value. At
December 31, 2000 and 1999, the quoted market value of the Company's common
stock was $2.938 and $3.375 per share, respectively.
6
Purchases and sales of securities are recorded on a trade-date basis. Interest
income is recorded on the accrual basis. Dividends are recorded on the
ex-dividend date.
INCOME TAXES
The Internal Revenue Service has issued a determination letter that the Plan is
qualified, and the trust established under the Plan is tax-exempt, under
Sections 401(a) and 501(a) of the Internal Revenue Code. The Plan has been
amended since receiving the determination letter. An updated determination
letter has not been requested; however, the Plan Administrator and the Plan's
tax counsel believe the Plan is currently designed and being operated in
compliance with the applicable requirements of the Internal Revenue Code.
Therefore, they believe the Plan was qualified and the related trust was
tax-exempt as of December 31, 2000 and 1999. Future qualification of the Plan
will depend on continuing operation in compliance with the Internal Revenue
Code.
USE OF ESTIMATES
The preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America requires the Plan to make
estimates and assumptions that affect amounts reported in the financial
statements and accompanying notes. Actual results could differ from these
estimates.
2. CONTRIBUTIONS
Each participant can contribute 1% to 20% of compensation, in whole percentages,
on a pretax basis to the Plan up to an annual maximum determined by the Internal
Revenue Code, by means of regular payroll deductions. Participants may change
their contribution percentages monthly during the Plan year. In addition, they
may elect to stop making contributions entirely at any time. During 2000 and
1999, the Company matched participant pretax contributions on a 50% basis up to
5.0% of compensation, as defined by the Plan Agreement. Matching contributions
made by the Company are paid in common stock of Visionics Corporation and are
immediately available for transfer to the other fund options of the Plan subject
to the Company's insider trading policy limitations.
Participants are immediately vested in their pretax contributions and Employer
matching contributions plus actual earnings thereon.
3. PARTICIPANT ACCOUNTS
Each participant's account is credited with the participant's and the employer's
contributions and an allocation of the Plan's earnings. Allocations are based on
the balance of each investment type in the participant's account. The benefit to
which a participant is entitled is the benefit that can be provided from the
participant's account.
Participants can choose to invest their contributions in common stock Visionics
Corporation, Great Hall Money Market Fund and various mutual funds including
Oppenheimer Main Street Growth & Income Fund, Oppenheimer Global Fund,
Oppenheimer Quest Opportunity Value Fund, Fidelity Advisor Growth Opportunities
Fund, Seligman Communications & Information Fund, MFS Emerging Growth Fund and
Alliance Bond Fund. Participants can allocate their investment among the common
stock of Visionics Corporation, subject to the Company's insider trading policy,
or any of the funds at their discretion. Investment options are selected by the
trustees of the Plan.
7
DESCRIPTIONS OF INVESTMENT OPTIONS
Visionics Corporation common stock is the common stock of the Company, which is
in the business of providing worldwide identification technologies and systems.
Visionics Corporation common stock is traded on the Nasdaq stock exchange under
the symbol VSNX.
The Oppenheimer Main Street Growth & Income Fund is an Oppenheimer mutual fund
that seeks high total return from equity and debt securities.
The Oppenheimer Global Fund is an Oppenheimer mutual fund that invests mainly in
foreign and domestic equities of companies considered to have growth potential.
Income is not a consideration in selecting portfolio securities, and the fund's
intention is to invest largely in foreign issues.
The Oppenheimer Quest Value Fund is an Oppenheimer mutual fund that seeks
capital appreciation through investments in mainly equity securities of
companies believed to be undervalued in the marketplace.
The Fidelity Advisor Growth Opportunities Fund is a Fidelity Advisor mutual fund
that invests primarily in common stocks of domestic and foreign issuers and
tends to buy "growth" stocks or "value" stocks, or a combination of both.
The Seligman Communications & Information Fund is a Seligman Group mutual fund
that seeks capital growth through investment in common stocks of large, as well
as small to mid-sized companies in the communications, information, or related
industries.
The MFS Emerging Growth Fund is an MFS Investment Management mutual fund that
invests in common stock and related securities such as preferred stock,
convertible securities and depositary receipts of companies that are early in
their life cycle but have the potential to become major enterprises, or are
major enterprises whose earnings growth are expected to accelerate.
The Alliance Bond Corporate Bond is an Alliance Capital series fund that seeks
income through holdings in investment-grade senior securities where the majority
of assets are invested in fixed-income securities.
8
The Great Hall Money Market Fund is a Great Hall Investment mutual fund that
invests in short-term securities consistent with the preservation of capital and
the maintenance of liquidity. Investments are divided into 3 main funds: Prime
Fund, Government Fund, and Tax-Free Fund, which include: commercial paper,
corporate debt obligations, bank securities, certificates of deposit, U.S.
Treasury bills, bonds, notes, and other high quality debt obligations that are
tax-exempt from interest.
4. PAYMENT OF BENEFITS
Upon termination of service, a participant may generally elect to receive the
value of his or her account in a lump-sum amount or they may leave their funds
in the Plan. Benefits become payable to participants upon their termination of
employment with the Employer or in the event of elective withdrawal as permitted
by the Plan.
5. PLAN TERMINATION
Although it has not expressed any intention to do so, the Employer has the right
under the Plan to terminate the Plan subject to the provisions set forth in
ERISA. Should the Plan terminate, or should contributions be discontinued, at
some future time, the rights of each affected participant to the entire amount
credited to his or her account on the date of such termination or discontinuance
shall be non-forfeitable and fully vested. Payment of such amounts to each
participant or beneficiary, upon the termination of the Plan or upon the
complete discontinuance of contributions under the Plan, shall be made by the
Plan administrator at such time and in such manner as the Plan administrator
shall state, provided, however, that all participants and beneficiaries.
9
6. INVESTMENTS
The fair values of the investments of the Plan at December 31, 2000 and 1999
were as follows:
2000 1999
----------- -----------
Visionics Corporation common stock $ 792,017* 802,167*
Oppenheimer Main Street Growth & Income Fund 377,167* 346,861*
Oppenheimer Global Fund 381,956* 258,089*
Oppenheimer Quest Opportunity Value Fund 57,252 41,735
Fidelity Advisor Growth Opportunities Fund 302,536* 307,293*
Seligman Communications & Information Fund 264,534* 296,774*
MFS Emerging Growth Fund 255,611* 259,201*
Alliance Bond Fund 173,966* 140,721*
Great Hall Money Market Fund 37,904 46,640
Loan Account 115,075 96,413
----------- -----------
$ 2,758,018 2,595,894
=========== ===========
* Represents 5% or more of the fair value of net assets available for
benefits.
7. NET (DEPRECIATION) APPRECIATION IN FAIR VALUE OF INVESTMENTS
During the years ended December 31, 2000 and 1999, the Plan's investments
(including investments bought, sold, as well as held during the period)
(depreciated) appreciated in value by $(592,603) and $697,492, respectively, as
follows:
2000 1999
----------- -----------
Visionics Corporation common stock $ (41,152) $ 469,070
Mutual funds (551,451) 228,422
----------- -----------
$ (592,603) $ 697,492
=========== ===========
8. LOANS TO PARTICIPANTS
The Plan has a loan feature available to all Plan participants. All loans will
be treated as directed investments. Loans are made from the participant's
account, reducing the investment balance and creating a receivable in the Loan
Account. Loans are secured by the participant's vested account balance. Loans to
terminated participants and loans in default are treated as distributions to the
participant. Loans are generally repaid through payroll deduction including
principal and interest. The principal portion reduces the receivable from
participants and both principal and interest are transferred to the
participant's investment account as repayments are received.
10
Participants may obtain loans based on the vested value of their accounts. New
loans cannot exceed 50% of the participant's account value or a maximum of
$50,000 in accordance with the Department of Labor's regulations on loans to
participants. Loans bear a rate of interest equal to the prime rate and are
repaid over a period not to exceed five years unless used to purchase the
participant's primary residence, in which case the loan must be repaid over a
reasonable period.
9. PARTY-IN-INTEREST TRANSACTIONS
Transactions resulting in the Plan's assets being transferred to or used by a
related party are prohibited under ERISA unless a specific exemption applies.
Dain Rauscher Investment Services is a party-in-interest as a result of the
brokerage service it provides. Tax Sheltered Compensation, Inc. is a
party-in-interest as a result of their receiving plan assets and making benefit
payments as administrative agent. However, such transactions are exempt under
Section 408(b)(8) and are not prohibited by ERISA.
11
Schedule 1
Digital Biometrics, Inc. Retirement Plan
Schedule of Assets Held for Investment Purposes
December 31, 2000
Fair
Description Market Value
- -------------------------------------------------------------- --------------
Visionics Corporation Common Stock(1) $ 792,017
Oppenheimer Main Street Growth & Income Fund 377,167
Oppenheimer Global Fund 381,956
Oppenheimer Quest Opportunity Value Fund 57,252
Fidelity Advisor Growth Opportunities Fund 302,536
Seligman Communications & Information Fund 264,534
MFS Emerging Growth Fund 255,611
Alliance Bond Fund 173,966
Great Hall Money Market Fund 37,904
Participant Loans(1)
Interest rates of 10% to 10.50% 115,075
-------------
$ 2,758,018
=============
(1) Party-in-interest to the Plan.
See accompanying Independent Auditors' Report.
12
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.
Digital Biometrics, Inc. Retirement Plan
Date: June 28, 2001
Minneapolis, Minnesota
By: /s/ Robert F. Gallagher
---------------------------
Robert F. Gallagher
Chief Financial Officer
Visionics Corporation
13