UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 11-K
ANNUAL REPORT
PURSUANT TO SECTION 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
[X] ANNUAL REPORT PURSUANT TO SECTION 15 (d) OF THE SECURITIES EXCHANGE ACT
OF 1934 (NO FEE REQUIRED, EFFECTIVE OCTOBER 7, 1996).
For the fiscal year ended DECEMBER 31, 1999
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [NO FEE REQUIRED].
For the transition period from to
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Commission file number 0-27414
REMEC, Inc. Profit Sharing 401(k) Plan
9404 Chesapeake Drive
San Diego, CA 92123
(Full title of the plan and the address of the plan)
REMEC, Inc.
9404 Chesapeake Drive
San Diego, CA 92123
(Name of issuer of the securities held pursuant to the plan
and the address of its principal executive office)
REMEC, Inc.
Profit Sharing 401(k) Plan
Audited Financial Statements and
Supplemental Schedules
Year ended December 31, 1999
CONTENTS
Report of Independent Auditors.......................................................................... 1
Financial Statements
Statements of Net Assets Available for Benefits as of
December 31, 1999 and 1998........................................................................... 2
Statement of Changes in Net Assets Available for Benefits for the year ended
December 31, 1999.................................................................................... 3
Notes to Financial Statements........................................................................... 4
Schedule
Schedule H, Line 4i - Schedule of Assets Held for Investment Purposes as of
December 31, 1999....................................................................................10
Exhibits................................................................................................11
Signature...............................................................................................11
Report of Independent Auditors
REMEC, Inc. as Plan Administrator of
REMEC, Inc. Profit Sharing 401(k) Plan
We have audited the accompanying statements of net assets available for benefits
of REMEC, Inc. Profit Sharing 401(k) Plan as of December 31, 1999 and 1998, and
the statement of changes in net assets available for benefits for the year ended
December 31, 1999. 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. 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 at
December 31, 1999 and 1998, and the changes in its net assets available for
benefits for the year ended December 31, 1999, in conformity with accounting
principles generally accepted in the United States.
Our audits were performed for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedules of assets
held for investment purposes as of December 31, 1999 is presented for purpose of
additional analysis and are not a required part of the 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. This supplemental schedule is the responsibility of
management. The supplemental schedule has been subjected to the auditing
procedures applied in our audits of the financial statements and, in our
opinion, is fairly stated in all material respects in relation to the financial
statements taken as a whole.
/s/ Ernst & Young LLP
---------------------
ERNST & YOUNG LLP
May 17, 2000
1
REMEC, Inc.
Profit Sharing 401(k) Plan
Statements of Net Assets Available for Benefits
DECEMBER 31,
1999 1998
----------------- ----------------
Investments, at fair value based on market price:
Mutual funds $ 28,006,986 $ 19,568,513
Common Stock 5,006,900 3,926,700
Investments, at estimated fair value:
Participant loans 1,280,708 1,083,218
----------------- ----------------
Total investments 34,294,594 24,578,431
Receivables:
Employee contributions receivable 111,000 140,824
Employer contributions receivable - 8,863
Income receivable 169 152
Due from sales of securities 187,775 84,856
----------------- ----------------
298,944 234,695
----------------- ----------------
Net assets available for benefits $ 34,593,538 $ 24,813,126
================= ================
SEE ACCOMPANYING NOTES.
2
REMEC, Inc.
Profit Sharing 401(k) Plan
Statement of Changes in Net Assets Available for Benefits
Year ended December 31, 1999
ADDITIONS:
Employee contributions $ 3,134,934
Rollover contributions 301,517
Employer contributions (net of forfeitures) 126,236
Interest and dividends 2,194,320
Net appreciation in fair value of investments 4,980,508
--------------------
Total additions 10,737,515
DEDUCTIONS:
Distributions to participants 938,928
Administrative expenses 18,175
--------------------
Total deductions 957,103
Net increase 9,780,412
Net assets available for benefits at:
Beginning of year 24,813,126
--------------------
End of year $ 34,593,538
====================
SEE ACCOMPANYING NOTES.
3
REMEC, Inc.
Profit Sharing 401(k) Plan
Notes to Financial Statements
1. SIGNIFICANT ACCOUNTING POLICIES
GENERAL
The financial statements of REMEC, Inc. Profit Sharing 401(k) Plan (the "Plan")
are prepared on the accrual basis of accounting.
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
that affect the amounts reported in the financial statements and accompanying
notes. Actual results could differ from those estimates.
RECLASSIFICATION
Certain amounts from the previous year have been reclassified to conform to
current year presentation.
INVESTMENT VALUATION AND INCOME RECOGNITION
Investments in registered investment company mutual funds are valued at quoted
market prices, which represent the net asset value of shares held by the Plan at
year-end. The shares of REMEC, Inc. common stock are valued at quoted market
prices at year-end. The participant loans are valued at their outstanding
balance, which approximates fair value.
The REMEC, Inc. Common Stock Fund consists of the underlying company stock and a
short-term cash component, Fidelity Institutional Money Market Fund, to provide
liquidity for daily trading.
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.
The realized gain or loss on investments is included with unrealized
appreciation or depreciation in the current value of investments.
4
REMEC, Inc.
Profit Sharing 401(k) Plan
Notes to Financial Statements (continued)
2. DESCRIPTION OF THE PLAN
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 provision.
GENERAL
The Plan is a defined contribution profit sharing and retirement plan covering
all eligible employees of REMEC, Inc. (the "Company"). The effective date of the
Plan is January 1, 1997. The Plan is subject to the provisions of the Employee
Retirement Income Security Act of 1974 (ERISA).
The Company pays most administrative expenses of the Plan. Certain investment
management fees and other charges paid to the trustee are offset against fund
performance in the net appreciation (depreciation) section of the statement of
changes in net assets available for benefits and are not, therefore, separately
reflected as administrative expenses.
The Plan is exposed to credit risk in the event of default by the issuers of the
investments to the extent of amounts recorded on the Statement of Net Assets
Available for Benefits.
ELIGIBILITY
The Plan covers all employees of the Company who have attained age 18. There is
no service requirement. Employees may elect to join the Plan quarterly on
January 1, April 1, July 1, and October 1.
CONTRIBUTIONS
Each year, participants may contribute from 1% to 15% of pretax compensation, as
deferred in the Plan and subject to the annual limits of the Internal Revenue
Code.
The Company may make a discretionary profit-sharing contribution in an amount to
be determined annually by the Sponsor. A participant must be employed on the
last day of the Plan year and have earned at least 500 hours of service to be
eligible for any profit-sharing contributions. The profit-sharing contributions
to the Plan are allocated based on
5
REMEC, Inc.
Profit Sharing 401(k) Plan
Notes to Financial Statements (continued)
the ratio of each participant's compensation to total compensation of all
eligible participants. There were no discretionary profit-sharing contributions
during 1999.
6
REMEC, Inc.
Profit Sharing 401(k) Plan
Notes to Financial Statements (continued)
2. DESCRIPTION OF THE PLAN (CONTINUED)
The Company may also make a discretionary matching contribution. The matching
contribution is an amount equal to the percentage determined by the Sponsor of
all or a portion of the tax deferred contributions of eligible participants for
the contribution period up to a maximum match of $600 annually. There was no
Company match for 1999.
PARTICIPANT ACCOUNTS
Each participant's account is credited with the participant's contributions, the
participant's share of the employer's contributions, if any, and Plan earnings
or losses. The benefit to which a participant is allowed is limited to the
balance in his account.
FORFEITURES
Forfeited balances of terminated participants' non-vested accounts are retained
in the Plan and will first be applied against the Plan expenses for the Plan
year, and will then be used to reduce future employer contributions. The balance
of forfeited non-vested accounts was not material as of December 31, 1999 or
1998.
VESTING
Participants are immediately vested in their elective contributions, plus actual
earnings thereon, and such amounts are non-forfeitable. With regard to employer
matching and discretionary contributions, participants are 50% vested after one
year and 100% vested after two years of service.
PARTICIPANTS NOTES RECEIVABLE
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% of their vested account balance.
Loan transactions are treated as a transfer from (to) the investment fund to
(from) the loan fund. Loan terms range from 1-5 years or up to 10 years for the
purchase of a primary residence. The loans are secured by the balance in the
participant's account and bear interest at a rate commensurate with local
prevailing rates. Interest rates range from 6.50% - 12%. Principal and interest
is paid through bi-weekly payroll deductions.
7
REMEC, Inc.
Profit Sharing 401(k) Plan
Notes to Financial Statements (continued)
2. DESCRIPTION OF THE PLAN (CONTINUED)
PAYMENT OF BENEFITS
Upon termination of service for any reason, a participant's account is generally
distributed in a single lump-sum payment upon request. At the Plan sponsor's
option, if the account balance is $5,000 or less, the entire balance may be
distributed.
Amounts allocated to withdrawn participants at December 31, 1999 and 1998, for
claims that have been processed and approved for payment prior to year-end but
not yet paid, are $58,798 and $25,039, respectively.
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 will become fully vested in their accounts.
3. INVESTMENTS
Fidelity Management Trust Company, the Trustee of the Plan, holds the Plan's
investments and executes all investment transactions. During 1999, the Plan's
investments (including investments purchased, sold, as well as held during the
year) appreciated in fair value as determined by quoted market prices as
follows:
NET REALIZED AND
UNREALIZED APPRECIATION
IN FAIR VALUE OF
INVESTMENTS
-------------------------
Common stock $2,113,917
Mutual funds 2,866,591
-------------------------
Total $4,980,508
=========================
8
REMEC, Inc.
Profit Sharing 401(k) Plan
Notes to Financial Statements (continued)
3. INVESTMENTS (CONTINUED)
The fair value of individual investments that represent 5% or more of the Plan's
net assets is as follows:
DECEMBER 31,
1999 1998
---------------- -----------------
Fidelity Magellan Fund $ 5,928,515 $ 4,001,916
Fidelity Contrafund 3,680,023 2,624,279
Fidelity Growth Company Fund 5,726,395 2,199,620
Fidelity Growth and Income Fund 4,713,631 4,627,921
Fidelity Asset Manager Fund 2,447,596 2,137,373
Fidelity Retirement Money Market Fund 3,729,854 2,565,705
REMEC, Inc. Common Stock Fund 5,006,900 3,926,700
4. INCOME TAX STATUS
The Plan has received a determination letter from the Internal Revenue Service
dated May 26, 1995, stating that the Plan is qualified, in form, under Section
401(a) of the Internal Revenue Code (the "Code") and, therefore, the related
trust is exempt from taxation. Once qualified, the Plan is required to operate
in conformity with the Code to maintain its qualification. The Plan
Administrator believes the Plan is being operated in compliance with the
applicable requirements of the Code and, therefore, believes that the Plan
qualifies and the related trust is tax exempt. Subsequent amendments have been
structured to, and are intended to, maintain the Plan's tax qualified status.
5. SUBSEQUENT EVENT
During 1999, REMEC, Inc. acquired Airtech plc and WACOM Products. Both of these
companies have 401(k) plans, which will be merged into the REMEC, Inc. Profit
Sharing 401(k) Plan in early 2000.
9
Supplemental Schedule
Remec, Inc.
Profit Sharing 401(k) Plan
Employer ID #95-3814301, Plan 001
Schedule H, Line 4i - Schedule of Assets Held for Investment Purposes
December 31, 1999
(e)
(b) (c) (d) CURRENT
(a) IDENTITY OF ISSUE DESCRIPTION OF ASSET COST VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
* Fidelity Management Trust Company
Fidelity Magellan Fund 43,391.021 shares $ 4,656,895 $ 5,928,515
Fidelity Contrafund 61,313.273 shares 3,243,143 3,680,023
Fidelity Growth Company Fund 67,928.764 shares 3,763,644 5,726,395
Fidelity Investment Grade Bond Fund 147,737.237 shares 1,063,146 1,017,910
Fidelity Growth and Income Fund 99,949.767 shares 3,875,188 4,713,631
Fidelity Asset Manager Fund 133,166.286 shares 2,308,774 2,447,596
Fidelity Retirement Money Market Fund 3,729,854.360 shares 3,729,854 3,729,854
Fidelity Diversified International Fund 6,546.562 shares 127,314 167,723
Spartan US Equity Index Fund 11,405.861 shares 476,976 594,131
Fidelity Institutional Money Market Fund 1,208.490 shares 1,208 1,208
* REMEC, Inc. Common Stock 196,349.000 shares 2,585,170 5,006,900
* Participant loans 6.50% to 12.00% interest, various maturities 1,280,708
---------------
$ 34,294,594
===============
* Indicates party-in-interest
10
EXHIBITS
23.1. Consent of Independent Auditors
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
REMEC, Inc., as the administrator of the Plan, has duly caused this annual
report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: June 28, 2000
REMEC, Inc. PROFIT SHARING 401(k) PLAN
By: REMEC, Inc.
By: /s/ Michael McDonald
---------------------------------
Michael McDonald
Senior Vice President,
Chief Financial Officer and
Secretary
11