MedPlus, Inc. 401(k) Plan
Financial Statements and Schedules
December 31, 1998 and 1997
With Independent Auditors' Report Thereon
MedPlus, Inc. 401(k) Plan
December 31, 1998 and 1997
Table of Contents
Page
Independent Auditors' Report 1
Statements of Assets Available for Plan Benefits,
with Fund Information -
December 31, 1998 2
Statements of Assets Available for Plan Benefits,
with Fund Information -
December 31, 1997 3
Statements of Changes in Assets Available for Plan
Benefits, with Fund Information - for the year ended
December 31, 1998 4
Statements of Changes in Assets Available for Plan
Benefits, with Fund Information - for the year ended
December 31, 1997 5
Notes to Financial Statements 6
Schedules
1 Item 27a, Schedule of Assets Held for Investment
Purposes - December 31, 1998 11
2 Item 27d, Schedule of Reportable Transactions -
December 31, 1998 12
Independent
Auditors' Report
The Trustees
MedPlus, Inc. 401(k) Plan
We have audited the accompanying statements of assets available
for plan benefits of the MedPlus, Inc. 401(k) Plan as of December
31, 1998 and 1997, and the related statements of changes in 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 generally accepted
auditing standards. Those standards require that we plan and
perform the audits 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 assets available for plan
benefits of the MedPlus, Inc. 401(k) Plan as of December 31, 1998
and 1997, and the changes in assets available for plan benefits
for the years then ended in conformity with generally accepted
accounting principles.
Our audits were performed for the purpose of forming an opinion on
the basic financial statements taken as a whole. The supplemental
schedules of Assets Held for Investment Purposes and Reportable
Transactions 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. The fund
information in the statements of assets available for benefits and
the statements of changes in assets available for plan benefits is
presented for purposes of additional analysis rather than to
present the assets available for plan benefits and changes in plan
assets available for plan benefits of each fund. The supplemental
schedules and fund information 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.
/s/ KPMG LLP
June 18, 1999
MedPlus Inc. 401(k) Plan
Statement of Assets Available for Plan Benefits, with Fund Information
Year ended December 31, 1998
Fund Information
_____________________________________________________________________________________________
Smith
Barney Putnam Putnam Putnam
Money Diversified Putnam Putnam Putnam Global New MedPlus Participant
Market Income Balance Investors Vista Growth Opportunities Stock Notes Total
________ __________ ________ _________ _________ _______ _____________ ________ __________ _________
Assets:
Investments, at fair
value (note 3):
Interest-bearing
cash $ 59,047 -- -- -- -- -- -- -- -- 59,047
Mutual funds -- 52,310 118,895 365,591 269,476 140,637 469,221 -- -- 1,416,130
Common stock -- -- -- -- -- -- -- 121,639 -- 121,639
________ __________ ________ _________ _________ _______ _____________ ________ __________ _________
Total investments 59,047 52,310 118,895 365,591 269,476 140,637 469,221 121,639 -- 1,596,816
Receivables:
Loan receivable -- -- -- -- -- -- -- -- 2,728 --
Participant contributions 973 993 (622) 3,390 3,406 3,118 6,279 7,999 -- 25,536
Employer contributions
(note 4): -- -- -- -- -- -- -- 23,633 -- 23,633
________ __________ ________ _________ _________ _______ _____________ ________ __________ _________
Total receivables 973 993 (622) 3,390 3,406 3,118 6,279 31,632 2,728 51,897
Liabilities:
Due to custodian 8,595 -- -- -- -- -- -- -- -- 8,595
________ __________ ________ _________ _________ _______ _____________ ________ __________ _________
Assets available
for plan benefits $ 51,425 53,303 118,273 368,981 272,882 143,755 475,500 153,271 2,728 1,640,118
________ __________ ________ _________ _________ _______ _____________ ________ __________ _________
________ __________ ________ _________ _________ _______ _____________ ________ __________ _________
See accompanying notes to financial statements.
MedPlus Inc. 401(k) Plan
Statement of Assets Available for Plan Benefits, with Fund Information
Year ended December 31, 1997
Fund Information
___________________________________________________________________________________
Smith
Barney Putnam Putnam Putnam
Money Diversified Putnam Putnam Putnam Global New MedPlus
Market Income Balance Investors Vista Growth Opportunities Stock Total
________ __________ ________ _________ _________ _______ _____________ ________ __________
Assets:
Investments, at fair
value (note 3):
Interest-bearing
cash $ 50,985 -- -- -- -- -- -- -- 50,985
Mutual funds -- 35,113 126,633 238,849 246,330 94,314 381,735 -- 1,122,974
Common stock -- -- -- -- -- -- -- 155,892 155,892
________ __________ ________ _________ _________ _______ _____________ ________ __________
Total investments 50,985 35,113 126,633 238,849 246,330 94,314 381,735 155,892 1,329,851
Receivables:
Participant contributions 6,164 461 2,179 4,181 5,657 2,816 5,776 1,811 29,045
Employer contributions
(note 4): -- -- -- -- -- -- -- 213,495 213,495
________ __________ ________ _________ _________ _______ _____________ ________ __________
Assets available
for plan benefits $ 57,149 35,574 128,812 243,030 251,987 97,130 387,511 371,198 1,572,391
________ __________ ________ _________ _________ _______ _____________ ________ __________
________ __________ ________ _________ _________ _______ _____________ ________ __________
See accompanying notes to financial statements.
MedPlus Inc. 401(k) Plan
Statement of Changes in Assets Available for Plan Benefits, with Fund Information
Year ended December 31, 1998
Smith Barney
_____________________________________________________________________________________________
Smith
Barney Putnam Putnam Putnam
Money Diversified Putnam Putnam Putnam Global New MedPlus Participant
Market Income Balance Investors Vista Growth Opportunities Stock Notes Total
________ __________ ________ _________ _________ _______ _____________ ________ __________ _________
Assets available for
plan benefits,
December 31, 1997 $ 57,149 35,574 128,812 243,030 251,987 97,130 387,511 371,198 -- 1,572,391
Contributions:
Employer -- -- -- -- -- -- -- 23,633 -- 23,633
Employee 14,955 17,025 50,052 95,760 78,872 56,756 128,863 76,255 -- 518,538
Rollovers from other
benefit plans 3,132 3,132 806 4,268 2,550 5,374 9,843 2,395 -- 31,500
Investment income:
Interest and dividends 2,900 3,009 4,771 130 88 602 152 89 275 12,016
Net appreciation
(depreciation) in
fair value of
investments (note 3) -- (3,994) 6,735 93,036 46,459 29,660 94,441 (286,311) -- (19,974)
Benefits paid to
participants (2,013) (2,478) (90,330) (81,677) (93,275) (47,506) (135,108) (45,569) -- (497,956)
Administrative expenses -- -- -- -- -- -- -- (30) -- (30)
Interfund transfers, net (24,698) 1,035 17,427 14,434 (13,799) 1,739 (10,202) 11,611 2,453 __
________ __________ ________ _________ _________ _______ _____________ ________ __________ _________
Assets available for
plan benefits,
December 31, 1998 $ 51,425 53,303 118,273 368,981 272,882 143,755 475,500 153,271 2,728 1,640,118
See accompanying notes to financial statements.
MedPlus Inc. 401(k) Plan
Statement of Changes in Assets Available for Plan Benefits, with Fund Information
Year ended December 31, 1997
Merrill Lynch Smith Barney
____________________________________________ _____________________________________________________________________
Pimco Smith Putnam
Pimco U.S. Pimco Barney Divers- Putnam Putnam Putnam
Money Govern- Equity Pimco MedPlus Money fied Putnam Inves- Putnam Global New MedPlus
Market ment Income Target Stock Market Income Balance tors Vista Growth Opp. Stock Total
________ ________ _________ _________ ________ _______ _______ _______ _______ _______ ______ _______ _______ ________
Assets
Avail-
able
for
plan
bene-
fits,
Dec.
31,
1996 $48,338 22,069 201,763 332,947 49,567 -- -- -- -- -- -- -- -- 654,684
Contri-
butions:
Employer -- -- -- -- -- -- -- -- -- -- -- -- 213,495 213,495
Employee -- -- -- -- -- 13,908 11,368 33,177 72,689 106,315 50,129 166,294 77,978 531,858
Rollovers
from other
benefit
plans -- -- -- -- -- 13,482 -- 28,555 27,735 40,526 1,626 39,174 29,104 180,202
Investment
income:
Interest
and
divi-
dends -- -- -- -- -- 2,707 1,861 6,101 3,271 2,196 6,635 1,848 632 25,251
Net appre-
ciation
(depre-
ciation)
in fair
value of
invest-
ments
(note
3) -- -- -- -- -- -- 533 8,925 40,176 31,061 (844) 49,173 4,516 133,540
Benefits
paid to
parti-
cipants -- -- -- -- -- (31,264) (13,597) (20,124) (36,217) (28,328) (4,306) (26,184) (6,619) (166,639)
Interfund
Trans-
fers,
net (43,338) (22,069) (201,763) (332,947) (49,567) 58,316 35,409 72,178 135,376 100,217 43,890 157,206 52,092 654,684
________ ________ _________ _________ ________ _______ _______ _______ _______ _______ ______ _______ _______ ________
Assets
Avail-
able
for plan
bene-
fits,
Dec.
31,
1998 $ -- -- -- -- -- 57,149 35,574 128,812 243,030 251,987 97,130 387,511 371,198 1,572,391
________ ________ _________ _________ ________ _______ _______ _______ _______ _______ ______ _______ _______ ________
________ ________ _________ _________ ________ _______ _______ _______ _______ _______ ______ _______ _______ ________
See accompanying notes to financial statements.
MedPlus, Inc. 401(k) Plan
Financial Statements and Schedules
December 31, 1998 and 1997
(With Independent Auditors' Report Thereon)
(1) Description of Plan
The following description of the MedPlus, Inc. 401(k) Plan (the
Plan) provides only general information. Participants should refer
to the Plan agreement for a more complete description of the
Plan's provisions.
(a) General
The Plan is a defined contribution plan covering all employee
classifications except those employees leased by MedPlus, Inc.
(The Company). The Plan is subject to the provisions of the
Employee Retirement Income Security Act of 1974 (ERISA). Employees
are eligible for participation in the Plan after attainment of age
21. Effective January 1, 1998, the Plan was amended and restated.
(b) Contributions
A participant may make contributions to the Plan by authorizing a
deferral of pretax annual compensation, as defined in the Plan, up
to a maximum of 15%, subject to limitations of the Internal
Revenue Code. The Company may provide a matching contribution
equal to such percentage of the participant's contribution as
determined by the employer in its discretion for each Plan year.
An additional discretionary contribution may also be made by the
Company. Both the matching contribution and the additional
discretionary contribution are non-participant directed.
(c) Participant Accounts
Each participant's account is credited with the participant's
contribution and allocation of the Company's contribution and Plan
earnings. Earnings and gains and losses of each investment fund
are allocated among the accounts of all participants in each fund
in the ratio each participant account bears to the total account
balance. Participants have the ability to self-direct the
investments of funds allocated to their accounts.
(d) Vesting
Participants are immediately vested in their voluntary
contributions plus actual earnings thereon. Participants become
20% vested in Company contributions after two years of service.
Thereafter, participants become vested at a rate of 20% per year
of service and become fully vested after six years of service.
(e) Participant Loans Receivable
Participants may borrow from their accounts not less than $1,000
and not more than 50% of their vested balance not to exceed
$50,000 for the following hardships:
- - Purchase of primary residence
- - Foreclosure or eviction from primary residence
- - College tuition for participant or dependents
- - Medical expenses incurred from prolonged illness, disability, or
death in immediate family.
Loan terms provide for repayment over a period not to exceed five
years. The loans are secured by the balances in the participants'
accounts and bear interest at 2% over the prime interest rate.
Principal and interest amounts are paid ratably through payroll
deductions.
(f) Payment of Benefits
Under the terms of the Plan, upon termination of employment a
participant's account is distributed upon written request of the
participant. A participant or participant's estate is entitled to
receive 100% of the related account balance if termination results
from reaching normal retirement age, death or permanent
disability. As of December 31, 1998, there were no amounts
allocated to accounts of persons who have withdrawn from
participation in the earnings and operations of the Plan.
(g) Forfeitures
Forfeitures of Company contributions by terminated participants
were used to reduce Company contributions. As of December 31,
1998, forfeitures of approximately $17,427 are available to reduce
future employer contributions.
(h) Investment Options
Upon enrollment in the Plan, a participant may direct employee-
deferred contributions to any of the following eight investment
options:
- - Money Market Fund
Funds are invested in a portfolio of fixed income
securities, including U.S. Treasuries and related repurchase
agreements and obligations of U.S. Government Agencies and
Instrumentalities.
- - Diversified Income Fund
Funds are invested in a portfolio of three fixed income
sectors, which are comprised of U.S. Government securities, lower
rated, high-yield debt securities, and international investing.
(h) Investment Options, Continued
- - Balance Fund
Funds are invested in a portfolio of stocks and bonds.
- - Investors Fund
Funds are invested primarily in quality, long-term growth
stocks.
- - Global Growth Fund
Funds are invested in a portfolio of common stocks traded
in securities markets, located in foreign countries and in the
United States.
- - Vista Fund
Funds are invested in a portfolio of stocks of medium-
sized growth companies.
- - New Opportunities Fund
Funds are invested in dynamic, rapidly growing sectors of
the economy.
- - MedPlus Stock
Funds are invested in the Company's common stock.
(2) Summary of Significant Accounting Policies
(a) Basis of Presentation
The accompanying financial statements of the Plan have been
prepared on the accrual basis of accounting.
(b) Investments
Money market accounts are valued at cost, which approximates fair
value. All other investments are recorded at fair value based on
quotations obtained from national securities exchanges.
Purchases and sales of investments are recorded on a trade-date
basis. Gains or losses on the sales of investments are calculated
on the specific identification method.
(c) Expenses
All administrative and investment expenses incurred by the Plan
have been paid by the Company.
(d) Use of Estimates
The Plan administrator has made a number of estimates and
assumptions relating to the preparation of these financial
statements in accordance with generally accepted accounting
principles. Actual results could differ from those estimates and
assumptions.
(3) Investments
Prior to January 1, 1997, the custodian of the Plan was Merrill
Lynch. Effective January 1, 1997, Smith Barney Shearson (now
Salomon Smith Barney) assumed the role as custodian for the Plan.
In this capacity, the custodian is to receive and invest the
contributions made by the participants and the employer, the
interest, dividends, and other income earned on investments and to
pay benefits and expenses as provided by the Plan.
The following table presents the fair values of investments at
December 31, 1998 and 1997 that represent five percent or more of
the Plan's assets:
1998 1997
____________ ____________
Balance Fund $ 118,895 126,633
Investors Fund 365,591 238,849
Vista Fund 269,476 246,330
Global Growth Fund 140,637 94,314
New Opportunities Fund 469,221 381,735
MedPlus Stock 121,639 155,892
During 1998 and 1997, the Plan's investments (including
investments bought, sold, and held during the year) appreciated
(depreciated) in value as follows:
1998 1997
____________ ____________
Mutual funds $ 266,337 129,024
Common stock (286,311) 4,516
____________ ____________
Net change in fair value $ (19,974) 133,540
____________ ____________
____________ ____________
(4) Employer Contributions
At December 31, 1998, there was a receivable from the Company
consisting of the matching contribution for the 1998 Plan Year.
The Company elected to make this contribution in MedPlus, Inc.
Common Stock. The Company did not elect to make the additional
discretionary contribution for the 1998 plan year.
(5) Plan Termination
Although it is currently not the Company's intent, 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 100%
vested in their accounts.
(6) Tax Status
The Internal Revenue Service issued its latest determination
letter on August 2, 1993, which stated that the Plan and its
underlying trust qualify under the applicable provisions of the
Internal Revenue Code and, therefore, are exempt from Federal
income tax. The plan has been amended and restated since receiving
the determination letter. The Company has requested a new
determination letter. In the opinion of the Plan trustee and the
Company, the Plan and its underlying trust have operated within
the terms of the Plan and remain qualified under the applicable
provisions of the Internal Revenue Code.
(7) Subsequent Event
Effective January 1, 1999, the Plan was amended. Participants
will become 25% vested in Company contributions after one year of
service. Thereafter, participants become vested at a rate of 25%
per year of service and become fully vested after four years of
service.
Schedule 1
MedPlus, Inc. 401(k) Plan
Item 27a, Schedule of Assets Held for Investment Purposes
December 31, 1998
Fair
Issuer Description Cost value
_________________________________ ____________________________________________ __________________________ _________________
Money Market Fund
* Smith Barney Money market fund (59,047 units) $ 59,047 59,047
Putnam Mutual Funds
Diversified Income Fund Mutual fund (4,548 units) 56,021 52,310
Balance Fund Mutual fund (6,590 units) 121,350 118,895
Investors Fund Mutual fund (24,668 units) 338,107 365,591
Vista Fund Mutual fund (20,617 units) 245,505 269,476
Global Growth Fund Mutual fund (11,296 units) 127,475 140,637
New Opportunities Fund Mutual fund (8,030 units) 372,438 469,221
______________ ________________
Total Putnam Mutual Funds 1,260,896 1,416,130
______________ ________________
Common Stock
* MedPlus, Inc. Common stock (58,935 shares) 356,640 121,639
______________ ________________
Total Investments $ 1,676,583 1,596,816
______________ ________________
______________ ________________
* Denotes party-in-interest.
See accompanying independent auditors' report.
Schedule 2
MedPlus, Inc. 401(k) Plan
Item 27d, Schedule of Reportable Transactions
Year ended December 31, 1998
Cost
Identity of ssuer Description Purchase Selling of asset Net
party involved of investment price price sold gain/(loss)
_________________________________ ________________________________ ____________ ____________ _____________ ____________
Putnam Balance Fund Mutual fund $ 76,662 83,682 79,110 4,572
Putman Investors Fund Mutual fund 432,243 389,148 316,612 72,536
Putnam Vista Fund Mutual fund 91,926 95,721 82,383 13,338
Putnam New Opportunities Fund Mutual fund 13,5788 124,669 100,714 23,955
* MedPlus Stock Common stock 301,830 57,721 103,182 (45,461)
* Smith Barney Money Market Fund Money market fund 562,848 554,786 554,786 --
* Denotes party-in-interest.