FORM 11-K
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the year ended December 31, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [NO FEE REQUIRED]
For the transition period from __________ to __________
Commission File Number __________
METASOLV, INC.
(Exact name of registrant as specified in its charter)
Delaware 75-2912166
(State of Incorporation) (I.R.S. Employer
Identification No.)
5560 Tennyson Parkway
Plano, Texas 75024
(Address of principal executive offices)
Registrant's telephone number, including area code: (972) 403-8300
SIGNATURES
The Plan. 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.
MetaSolv, Inc., Employee Stock Purchase Plan
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Date: March 28, 2002
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By: /s/ Glenn A. Etherington
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Glenn A. Etherington
Chief Financial Officer
ITEM 8. FINANCIAL STATEMENTS
Page
Independent Auditors' Report............................................. 2
Statements of Financial Condition as of December 31, 2001 and 2000....... 3
Statements of Operations and Changes in Participants' Equity for
the years ended December 31, 2001 and 2000, and the period from
August 24, 1999 (inception) through December 31, 1999................. 4
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INDEPENDENT AUDITORS' REPORT
MetaSolv, Inc. as Administrator
MetaSolv, Inc. Employee Stock Purchase Plan:
We have audited the accompanying statements of financial condition of the
MetaSolv, Inc. Employee Stock Purchase Plan ("Plan") as of December 31, 2001,
and 2000, and the related statements of operations and changes in participants'
equity for the years then ended and the period from August 24, 1999 (inception)
through 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 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 financial condition of the Plan as of December 31,
2001 and 2000, and the results of its operations for the years then ended and
the period from August 24, 1999 (inception) through December 31, 1999, in
conformity with accounting principles generally accepted in the United States of
America.
/s/ KPMG LLP
Dallas, Texas
March 26, 2002
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MetaSolv, Inc.
----------------------
Employee Stock Purchase Plan
Statements of Financial Condition
December 31, 2001 and 2000
2001 2000
---- ----
ASSETS
Employer account receivable $313,873 $471,712
======== ========
LIABILITIES AND PARTICIPANTS' EQUITY
Liabilities $ -- $ --
Participants' equity 313,873 471,712
-------- --------
Total liabilities and participants' equity $313,873 $471,712
======== ========
See accompanying notes to financial statements.
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MetaSolv, Inc.
----------------------
Employee Stock Purchase Plan
Statements of Operations and Changes in
Participants' Equity
Years ended December 31, 2001 and 2000, and the period from August 24, 1999
(inception) through December 31, 1999.
2001 2000 1999
---- ---- ----
Participant contributions................. $2,623,578 $4,110,761 $ 425,118
Employer contributions.................... 381,819 2,640,944 --
---------- ---------- ----------
Total additions.................... 3,005,397 6,751,705 425,118
---------- ---------- ----------
Stock purchases........................... 2,545,466 6,479,495 --
Participant withdrawals................... 617,770 224,359 1,257
---------- ---------- ----------
Total deductions................... 3,163,236 6,703,854 1,257
---------- ---------- ----------
Net additions (withdrawals)........ (157,839) 47,851 423,861
Participants' equity, beginning of period. 471,712 423,861 --
---------- ---------- ----------
Participants' equity, end of period....... $ 313,873 $ 471,712 $ 423,861
========== ========== ==========
See accompanying notes to financial statements.
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MetaSolv, Inc.
Employee Stock Purchase Plan
Notes to Financial Statements
1. DESCRIPTION OF THE PLAN:
The following description of the MetaSolv, Inc. ("Company") Employee Stock
Purchase Plan ("Plan") provides only general information. Participants should
refer to the Plan document for a more complete statement of the Plan's
provisions.
a. General Description
The Plan is an employee stock purchase plan that allows participants to
purchase shares of MetaSolv, Inc. common stock ("Stock") through payroll
deductions. The Plan has two six-month contribution periods beginning in May and
November. Participant contributions are accumulated during each of those
periods. At the end of each period ("Contribution Period"), the participants'
accumulated contributions are used to purchase shares of Stock. The number of
employees who participated in the plan during 2001, 2000, and 1999 were 502,
524, and 372, respectively.
The Plan was approved by the Company's stockholders on August 24, 1999. The
Stock issuable under the Plan shall be authorized but unissued common stock,
treasury shares or shares purchased on the open market. At December 31, 2001,
participants of the Plan had purchased 550,450 shares of Stock since the Plan's
inception.
The Plan at its adoption authorized the issuance of up to 600,000 shares of
Stock. The number of shares issuable under the plan increases by 1% of the
Company's outstanding common stock as of January 1 of each of the first five
calendar years following the establishment of the Plan. At December 31, 2001,
there were 753,657 additional shares available to be issued under the Plan. As
of January 1, 2002, the plan was amended to increase the number of shares
available under the Plan to 1,678,333.
The Plan is neither qualified under Section 401 (a) of the Internal Revenue
Code of 1986, as amended, nor subject to any of the provisions of the Employee
Retirement Income Security Act of 1974 ("ERISA").
b. Eligibility
All employees of the Company and affiliates who work more than twenty hours
per week are eligible to participate in the plan on the first to occur of (i)
the offering date coincident with or next offering date following the employee's
first day of employment, or (ii) if the company so determines, on a uniformly
applied basis, the first day of any calendar month coincident with or next
offering date following the employee's first day of employment. However, no
employee shall be entitled to participate in the Plan if,
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immediately after the purchase of Stock under the Plan, the employee would own
stock aggregating five percent or more of the total combined voting power or
value of all classes of stock of the Company or an affiliate.
c. Stock Purchases
The amount of each participant's accumulated contributions as of the last
trading day of each Contribution Period is applied towards the purchase of the
maximum number of whole shares of stock possible, determined by dividing the
participant's accumulated contributions by the per share purchase price
applicable for that Contribution Period. The maximum dollar value of shares that
may be acquired by any single employee during one calendar year is $25,000,
measured using the lower of (1) the closing price of a share of common stock on
the offering date (generally the last trading date on or after May 15th and
November 15th), or (2) the closing price of a share of common stock on the
purchase date (generally the last trading date on or before May 15th and
November 15th). Participants' purchase price is 85% of the designated market
price. However, the purchase price for those participants who enrolled in the
initial contribution period is the lower of 85% of $19.00 or 85% of the closing
price of a share of stock on the purchase date for Contribution Periods
beginning during the first two years of the Plan's operation. Purchased shares
of stock are transferred to a brokerage account in the name of the participant
at a securities brokerage firm approved by a committee appointed by the Board of
Directors of the Company.
d. Participant Contributions
Participants may elect to have 1% to 15% of their "Base Salary" (as defined
in the Plan) deducted on an after-tax basis for the purchase of Stock.
Participants may decrease their deduction percentages at any time during a
Contribution Period but can increase their deduction percentages only at the
beginning of a Contribution Period. No interest accrues or is paid on
participants' accumulated contributions. Once made, the Company may use the
accumulated contributions for any corporate purpose, and the Company has no
obligation to segregate participant's contributions from any other funds of the
Company.
e. Employer Contributions
The discount from market value granted to Plan participants on the purchase
of shares of Stock at the end of each Contribution Period represents the
Company's non-cash contribution to the Plan. These non-cash contributions
amounted to $381,819 for 2001, and $2,640,944 for 2000. There were no non-cash
contributions in 1999.
f. Participant Refunds
Plan participants may withdraw from or reduce their participation in the
Plan at any time prior to the last day of a Contribution Period by properly
notifying the Company. If a participant withdraws from the Plan their
accumulated contributions will be refunded without interest (unless required by
law).
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Participants who terminate their employment relationship with the Company
are not eligible to continue in the Plan. All contributions accumulated through
the date of termination are refunded to the employee or, in the event of
employee's death, to his or her estate.
g. Administrative Expenses
The Company bears all costs in connection with the Plan including
administrative fees and all fees associated with the issuance of Stock.
Administrative expenses related to the Plan were immaterial for 2001, 2000, and
1999.
h. Plan Termination
The Plan may be terminated at any time by the Company's Board of Directors
but such termination shall not become effective until the end of the
Contribution Period then in effect. If at any time shares of Stock reserved for
the purpose of the Plan remain available for purchase but not in sufficient
number to satisfy all then unfilled purchase requirements, the available shares
shall be apportioned among participants in proportion to the amount of payroll
deductions accumulated on behalf of each participant that would otherwise be
used to purchase Stock, and the Plan shall terminate. Upon such termination or
any other termination of the Plan, all accumulated contributions not used to
purchase stock will be refunded, without interest (unless required by law).
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
a. Basis of Presentation
The accompanying financial statements have been prepared on the accrual
basis of accounting and present the Plan's assets and liabilities using fair
values, which approximate their carrying value.
b. 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
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of additions and deductions during the
reporting period. Actual results could differ from those estimates.
c. Participant's Equity
Participant's equity represents the interests of participants in the assets
of the Plan.
3. INCOME TAX STATUS:
The plan fulfills the requirements of an "employee stock purchase plan" as
defined in Section 423 of the Internal Revenue Code. As such, the Plan is not
required to file
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income tax returns or pay income taxes. Under Section 423, a participating
employee will not recognize taxable income, and the Company will not be entitled
to a tax deduction for federal income tax purposes when an employee enrolls in
the Plan or when a participant purchases shares of Stock under the Plan.
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