SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE YEAR ENDED DECEMBER 31, 2001
COMMISSION FILE NUMBER 0-20842
A. Full title of the plan and the address of the plan, if different from that
of the issuer named below:
PLATO LEARNING, INC. SAVINGS/RETIREMENT PLAN
B. Name of issuer of the securities held pursuant to the plan and the address
of its principal executive office:
PLATO LEARNING, INC.
10801 NESBITT AVENUE SOUTH
BLOOMINGTON, MN 55437
PLATO LEARNING, INC. SAVINGS/RETIREMENT PLAN
INDEX TO FINANCIAL STATEMENTS
PAGE(S)
Reports of Independent Accountants 1-2
Financial Statements:
Statement of Assets Available for Plan Benefits as of December 31, 2001 and 2000 3
Statement of Changes in Assets Available for Plan Benefits for the year ended
December 31, 2001 4
Notes to Financial Statements 5-9
Supplemental Schedule:
Schedule of Assets (Held at End of Year) as of December 31, 2001 10
REPORT OF INDEPENDENT ACCOUNTANTS
To the Participants and Administrator of the
PLATO Learning, Inc. Savings/Retirement Plan:
In our opinion, the accompanying statement of assets available for plan benefits
and the related statement of changes in assets available for plan benefits
present fairly, in all material respects, the assets available for benefits of
PLATO Learning, Inc. Saving/Retirement Plan (the "Plan") at December 31, 2001,
and the changes in assets available for benefits for the year then ended in
conformity with accounting principles generally accepted in the United States of
America. 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 audit. We conducted our audit of these statements in
accordance with auditing standards generally accepted in the United States of
America, which 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, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental Schedule of Assets (Held
at End of Year) 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 audit 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.
PricewaterhouseCoopers LLP
Minneapolis, Minnesota
September 30, 2002
1
THE FOLLOWING REPORT IS A COPY OF A REPORT PREVIOUSLY ISSUED BY ARTHUR ANDERSEN
LLP AND HAS NOT BEEN REISSUED BY ARTHUR ANDERSEN LLP:
Report of Independent Public Accountants
To the Plan Administrator of the
Plato Learning, Inc. Savings/Retirement Plan:
We have audited the accompanying statements of net assets available for benefits
of the PLATO LEARNING, INC. SAVINGS/RETIREMENT PLAN as of December 31, 2000 and
1999, and the related statement of changes in net assets available for benefits
for the years ended December 31, 2000, and 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 as of
December 31, 2000 and 1999, and the changes in net assets available for benefits
for the years ended December 31, 2000 and 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 basic
financial statements taken as a whole. The supplemental schedule of assets held
for investment purposes at end of year is presented for purposes 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.
Arthur Andersen LLP
Chicago, Illinois
June 25, 2001
NOTE REGARDING ARTHUR ANDERSEN LLP:
After reasonable efforts, we have been unable to obtain the written consent of
Arthur Andersen LLP as to the inclusion in this Form 11-K of its audit report
for the plan year ended December 31, 2000. Under these circumstances, Rule 437a
of the Securities Exchange Act of 1933 permits us to file this Form 11-K and
permits us to incorporate by reference the statement of net assets covered by
that report into present and future registration statements without the written
consent of Arthur Andersen LLP. Accordingly, Arthur Andersen LLP will not be
liable to you under Section 11(a) of the Securities Exchange Act of 1933 for any
untrue statements of a material fact contained in, or any omissions to state a
material fact required to be stated in, the financial statements audited by
Arthur Andersen LLP.
2
PLATO LEARNING, INC. SAVINGS/RETIREMENT PLAN
STATEMENT OF ASSETS AVAILABLE FOR PLAN BENEFITS
AS OF DECEMBER 31, 2001 AND 2000
2001 2000
Assets:
Investments, at fair value ............... $7,690,550 $7,289,869
Employer contribution receivable ......... 186,659 --
---------- ----------
Assets available for plan benefits ........... $7,877,209 $7,289,869
========== ==========
The accompanying notes are an integral part of these financial statements.
3
PLATO LEARNING, INC. SAVINGS/RETIREMENT PLAN
STATEMENT OF CHANGES IN ASSETS AVAILABLE FOR PLAN BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 2001
Investment loss:
Net depreciation in fair value of investments $ (465,235)
Interest and dividend income 162,842
-----------
Total investment loss (302,393)
-----------
Contributions:
Participant 1,433,683
Employer 231,861
-----------
Total contributions 1,665,544
-----------
Deductions:
Benefits paid to participants (665,741)
Administration expenses (500)
-----------
Total deductions (666,241)
-----------
Net increase 696,910
Transferred to the PLATO Department of Defense 401(k) Plan (Note 1) (109,570)
Assets available for plan benefits:
Beginning of year 7,289,869
-----------
End of year $ 7,877,209
===========
The accompanying notes are an integral part of these financial statements.
4
PLATO LEARNING, INC. SAVINGS/RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS AND SCHEDULE
DECEMBER 31, 2001 AND 2000
- --------------------------------------------------------------------------------
1. DESCRIPTION OF PLAN
The following description of the PLATO Learning, Inc. (the "Company")
Savings/Retirement Plan (the "Plan") is provided for general informational
purposes only. Participants should refer to the Plan document for a more
complete description of the Plan's provisions.
On February 14, 2001, the Company established the PLATO Department of
Defense 401(k) Plan for its employees who are specifically performing work
on Company projects related to the U.S. Department of Defense. On March 1,
2001, Scudder Trust Company ("Scudder"), the Custodian of the Plan,
transferred participant account balances aggregating $109,570 related to
these employees to the PLATO Department of Defense 401(k) benefit plan.
Scudder is also the plan custodian of the PLATO Department of Defense
401(k) Plan.
GENERAL
The Plan is a contributory defined contribution plan covering all eligible
employees of the Company other than those that are participants of the
PLATO Department of Defense 401(k) Plan. Employees of the Company must
complete 90 days of service to be eligible to participate in the Plan. The
Company utilizes Scudder Trust Company as the Plan's investment manager,
asset custodian and recordkeeper.
The Plan is subject to the provisions of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA").
CONTRIBUTIONS
Participants may contribute up to 20% of their pre-tax compensation, up to
a maximum dollar amount, as defined, subject to certain other Internal
Revenue Service limitations. The Company may also make contributions to
the Plan at its discretion. Any such amount must be designated by Company
resolution. The Company made discretionary contributions of $231,861 in
2001.
PARTICIPANT ACCOUNTS
Individual participant accounts are maintained by Scudder. Each
participant's account is credited with the participant's contribution,
Plan earnings or loss and an allocation of the Company's contribution.
Allocations are based on participant earnings and account balances, as
defined.
VESTING
Participants are immediately vested in their contributions and actual
earnings thereon.
Participants vest in their Company contribution account based on the
following schedule:
VESTED
YEARS OF SERVICE PERCENTAGE
Less than 1 year 0%
1 year but less than 2 20%
2 years but less than 3 40%
3 years but less than 4 60%
4 years but less than 5 80%
5 years or more 100%
5
PLATO LEARNING, INC. SAVINGS/RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS AND SCHEDULE
DECEMBER 31, 2001 AND 2000
- --------------------------------------------------------------------------------
A participant will also become fully vested upon permanent disability or
attainment of normal or early retirement as defined in the Plan.
Forfeitures are used to reduce future contributions made by the Company.
There were no forfeitures during 2001.
BENEFIT PAYMENTS
On termination of service due to death, disability or retirement, 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
installments over a specified time. For termination of service for other
reasons, a participant may receive the value of the vested interest in his
or her account as a lump-sum distribution.
LOANS
Participants may borrow from their fund accounts a minimum of $500 and up
to a maximum equal to the lesser of $50,000 or 50% of their vested account
balance. Loan terms are generally 5 years. The loans are collateralized by
the balance in the participant's account and bear interest at a rate
commensurate with local prevailing rates as determined by the Plan
administrator. Principal and interest is paid ratably through biweekly
payroll deductions. At December 31, 2001, participant notes receivable
totaled $75,576 with interest rate of 7% and were due at various dates
through April 2006.
INVESTMENT OPTIONS
The Plan offers 12 investment options: 9 mutual funds, 2 common and
collective trust funds and a Company stock fund. Pursuant to the Plan
agreement, a maximum of 30% of a participant's account balance can be
allocated to Company stock. Plan participants direct the investment of
their accounts among these 12 options.
TRUSTEES
The trustees of the Plan as of December 31, 2001, were John Murray, John
M. Buske and Patricia Hawver, officers of the Company.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The accompanying financial statements have been prepared using the accrual
basis of accounting.
VALUATION OF INVESTMENTS AND INCOME RECOGNITION
The Plan's investments are stated at fair value except for the Stable
Value Fund, which is a benefit-responsive investment contract that is
valued at contract value. Quoted market prices are used to value
investments. Shares of mutual funds are valued at the asset value of
shares held by the Plan as of year end. Unrealized gains and losses are
determined for assets held at the end of the plan year based upon the
change in their respective fair values during the year.
6
PLATO LEARNING, INC. SAVINGS/RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS AND SCHEDULE
DECEMBER 31, 2001 AND 2000
- --------------------------------------------------------------------------------
The contract value of the benefit-response investment represents the
principal balance of the investment contract, plus accrued interest at the
stated contract rate, less withdrawals and administrative expenses. The
fair value of the investment contract approximates contract value as of
year end. The average yield and crediting interest rates were
approximately 5.8% for 2001.
Purchases and sales of securities are recorded on a trade-date basis.
Interest income is recorded on an accrual basis. Dividend income is
recorded on the ex-dividend date.
ADMINISTRATIVE EXPENSES
Administrative expenses, primarily transaction fees, are paid by the Plan.
Other expenses for professional services and administration costs have
been paid by the Company at its discretion.
PAYMENT OF BENEFITS
Benefits are recorded when paid.
USE OF ESTIMATES
The preparation of the financial statements in conformity with accounting
principles generally accepted in the United States of America requires the
Plan's administrator to make estimates and assumptions that affect the
reported amounts of assets available for plan benefits at the date of the
financial statements and the changes in assets available from plan
benefits during the reporting period and, when applicable, disclosures of
contingent assets and liabilities. Actual results could differ from those
estimates.
RISKS AND UNCERTAINTIES
The Plan provides for various investment fund options. Investment
securities are exposed to various risk factors, such as interest rate,
market and credit risk. Due to the level of risk associated with certain
investment securities, it is at least reasonably possible that changes in
the values of investment securities will occur in the near term and that
such changes could materially affect participants' account balances and
the amounts reported in the Statement of Assets Available for Plan
Benefits.
7
PLATO LEARNING, INC. SAVINGS/RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS AND SCHEDULE
DECEMBER 31, 2001 AND 2000
- --------------------------------------------------------------------------------
3. INVESTMENTS
The following presents investments that represent 5% or more of the Plan's
assets as of December 31, 2001 and 2000:
2001 2000
Mutual funds:
American Century Ultra Fund, 39,536 and 35,467
shares in 2001 and 2000, respectively $1,092,779 $1,148,070
Scudder Global Discovery Fund, 26,302 and 25,830
shares in 2001 and 2000, respectively 616,248 806,662
Scudder Large Company Value Fund, 44,399 and
37,463 shares in 2001 and 2000, respectively 993,652 1,038,477
Scudder Growth and Income Fund, 56,943 and 50,941
shares in 2001 and 2000, respectively 1,199,226 1,230,217
Scudder International Fund, 14,526 and 18,834
shares in 2001 and 2000, respectively 532,541 696,011
Scudder Pathway Moderate Portfolio, 31,528 and
33,450 shares in 2001 and 2000, respectively 335,774 402,733
Common collective trust fund:
Scudder Stable Value Fund, 914,284 and 620,283
shares in 2001 and 2000, respectively 914,284 620,283
Company stock:
PLATO Learning, Inc. stock, 79,354 and 64,840
shares in 2001 and 2000, respectively 1,318,069 973,734
Other 687,977 373,682
---------- ----------
$7,690,550 $7,289,869
========== ==========
During 2001, the Plan's investments (including gains and losses on
investments bought, sold, and held during the year) depreciated in value
by $465,235 as follows:
Mutual funds $ (973,807)
Common/collective trust funds (7,362)
Company stock 515,934
----------
Total $ (465,235)
==========
8
PLATO LEARNING, INC. SAVINGS/RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS AND SCHEDULE
DECEMBER 31, 2001 AND 2000
- --------------------------------------------------------------------------------
4. RELATED PARTY AND PARTY-IN-INTEREST TRANSACTIONS
Scudder Trust Company is authorized under contract provisions and by ERISA
regulations providing an administrative or statutory exemption, to invest
in securities under its control. For the year ended December 31, 2001,
such purchases and sales were $2,552,604 and $1,681,129, respectively.
5. PLAN TERMINATION
Although it has not expressed any intent to do so, the Company has the
right under the Plan 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 has determined and informed the Company by a
letter dated January 12, 1996, that the Plan is 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 believes 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
9
PLATO LEARNING, INC. SAVINGS/RETIREMENT PLAN
SCHEDULE OF ASSETS (HELD AT END OF YEAR)
AS OF DECEMBER 31, 2001
- --------------------------------------------------------------------------------
(C)
(B) DESCRIPTION OF INVESTMENT, (E)
IDENTITY OF ISSUE, INCLUDING MATURITY DATE, FAIR OR
BORROWER, LESSOR RATE OF INTEREST, COLLATERAL, (D) CONTRACT
(A) OR SIMILAR PARTY PAR OR MATURITY DATE COST ** VALUE
* Scudder Trust Company 21st Century Fund $ 117,686
* Scudder Trust Company Development Fund 30,178
* Scudder Trust Company Income Fund 366,853
* Scudder Trust Company Growth and Income Fund 1,199,226
* Scudder Trust Company Large Company Value Fund 993,652
* Scudder Trust Company Global Discovery Fund 616,248
* Scudder Trust Company International Fund 532,541
* Scudder Trust Company Pathway Moderate Portfolio 335,774
American Century Ultra Fund 1,092,779
* Scudder Trust Company Stable Value Fund 914,284
* Scudder Trust Company Stock Index Fund 97,684
* PLATO Learning, Inc. Common Stock 1,318,069
* Participant Loans Interest rate at 7%, due at various 75,576
dates through April 2006 -------------
$ 7,690,550
=============
* Denotes party in interest.
** Cost information no longer required as all investments are
participant-directed.
10
EXHIBIT INDEX
Exhibit 23 Consent of Independent Accountants
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees have duly caused this annual report to be signed on its behalf by the
undersigned hereunto duly authorized on October 24, 2002.
PLATO LEARNING, INC. SAVINGS/RETIREMENT PLAN
By: /s/ John Murray
------------------
Trustee