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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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]
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
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 000-25893
A. FULL TITLE OF THE PLAN AND THE ADDRESS OF THE PLAN, IF DIFFERENT
FROM THAT OF THE ISSUER NAMED BELOW:
SCIENT 401(k) PLAN
B. NAME OF ISSUER OF THE SECURITIES PURSUANT TO THE PLAN AND THE
ADDRESS OF ITS PRINCIPAL EXECUTIVE OFFICE:
SCIENT CORPORATION
THE LANDMARK @ ONE MARKET
ONE MARKET STREET, 5TH FLOOR
SAN FRANCISCO, CA 94105
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SCIENT 401(k) PLAN
Financial Statements and
Supplemental Schedules
Year ended December 31, 1999
Table of Contents
Independent Accountants' Report...............................................1
Financial Statements:
Statements of Net Assets Available for Benefits as of December 31, 1999.......2
Statement of Changes in Net Assets Available for Benefits.....................3
Notes to Financial Statements.................................................4
Supplemental Schedules as of and for the year ended
December 31, 1999.........................................................10
Schedule of Assets Held for Investment Purposes
Schedule of Nonexempt Transactions
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To the Participants and
Plan Administrator of the
Scient 401(k) Plan
INDEPENDENT ACCOUNTANTS' REPORT
We have audited the financial statements and supplemental schedules of
the Scient 401(k) Plan (the Plan) as of December 31, 1999, and for the year then
ended, as listed in the accompanying table of contents. 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 in accordance with generally accepted auditing
standards. 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 the
Plan's management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides 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, 1999, and the changes in net assets available for
benefits for the year then ended, in conformity with generally accepted
accounting principles.
We have compiled the accompanying statement of net assets available for
benefits of the Plan as of December 31, 1998, in accordance with Statements on
Standards for Accounting and Review Services issued by the American Institute of
Certified Public Accountants.
A compilation is limited to presenting in the form of financial
statements information that is the representation of management. We have not
audited or reviewed the accompanying statement of net assets available for
benefits as of December 31, 1998 and, accordingly, do not express an opinion or
any other form of assurance on it.
MOHLER, NIXON & WILLIAMS
Accountancy Corporation
Campbell, California
September 18, 2000
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SCIENT 401(k) PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
December 31,
----------------------------------------
1999 1998
(unaudited)
----------------- -----------------
Investments, at fair value $5,036,882 $488,470
Cash 103,335
----------------- -----------------
Assets held for investment purposes 5,036,882 591,805
Participants' contributions receivable 330,425 29,735
----------------- -----------------
Net assets available for benefits $5,367,307 $621,540
================= =================
See independent accountants' report and
accompanying notes to financial statements.
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SCIENT 401(k) PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
For the year ended December 31, 1999
Additions to net assets attributed to:
Investment income:
Dividends and interest $182,727
Net realized and unrealized appreciation
in fair value of investments 648,515
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831,242
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Participants' contributions 3,941,667
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Total additions 4,772,909
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Deductions from net assets attributed to:
Withdrawals and distributions 27,142
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Total deductions 27,142
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Net increase 4,745,767
Net assets available for benefits:
Beginning of year 621,540
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End of year $5,367,307
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See independent accountants' report and
accompanying notes to financial statements.
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SCIENT 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
NOTE 1 - THE PLAN AND ITS SIGNIFICANT ACCOUNTING POLICIES:
The following description of the Scient 401(k) Plan and Trust (the
Plan) provides only general information. Participants should refer to the Plan
document for a more complete description of the Plan's provisions.
The Plan is a defined contribution plan that was established in January
1998 by Scient (the Company) to provide benefits to eligible employees. The Plan
covers all employees of the Company except independent contractors. Participant
may enter the Plan as soon as administratively possible per the Plan document.
The Plan administrator believes that the Plan is currently designed and
operated in compliance with the applicable requirements of the Internal Revenue
Code and the provisions of the Employee Retirement Income Security Act of 1974
(ERISA).
ADMINISTRATION -
The Company has appointed an Administrative Committee (the Committee)
to manage the operation and administration of the Plan. A third-party
administrator processes and maintains the records of participant data. The
Committee has contracted with Putnam Fiduciary Trust Company (Putnam) to act
as the custodian of Plan investments as of November 1, 1999. Prior to that
time, Dai-Ichi Kangyo Bank (DKB) was the custodian. Substantially all expenses
incurred for administering the Plan are paid by the Company.
BASIS OF ACCOUNTING -
The financial statements of the Plan are prepared on the
accrual method of accounting. Participants' contributions are recorded in the
period during which the Company makes payroll deductions from participant's
earnings. Employer contributions are recorded for the period declared by the
Company. Benefits are recorded when paid.
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INVESTMENTS -
Investments of the Plan are held by Putnam and invested based solely
upon instructions received from participants. Participants may elect to allocate
their investments among nine mutual funds, a collective trust fund or the
Scient, Inc. Common Stock Fund (Scient Stock Fund).
Plan investments are valued at fair value as of the last day of the
Plan year, as measured by quoted market prices. Participant loans are valued at
cost, which approximates fair value.
INCOME TAXES -
The Company adopted a prototype plan which has received an opinion
letter from the Internal Revenue Service dated April 16, 1997. The Company
believes that the Plan is operated in accordance with, and qualifies under, the
applicable requirements of the Internal Revenue Code and related state statutes,
and that the trust, which forms a part of the Plan, is exempt from federal
income and state franchise taxes.
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
changes therein, and disclosure of contingent assets and liabilities. Actual
results could differ from those estimates.
RISKS AND UNCERTAINTIES -
The Plan provides for various investment options in any combination
from among seven investment funds, each with a different investment goal and
level of risk. Investment securities are exposed to various risks, such as
interest rate, market fluctuations and credit risks. Due to the level of risk
associated with certain investment securities, it is at least reasonably
possible that changes in risks in the near term would materially affect
participants' account balances and the amounts reported in the statements of net
assets available for benefits and the statement of changes in net assets
available for benefits.
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NOTE 2 - PARTICIPATION AND BENEFITS:
PARTICIPANT CONTRIBUTIONS -
Participants may elect to have the Company contribute a percentage, up
to 20%, of their eligible pre-tax compensation up to the maximum amount
allowable under current income tax regulations. Participants who elect to have
the Company contribute a portion of their compensation to the Plan agree to
accept an equivalent reduction in taxable compensation. Contributions withheld
are invested in accordance with the participant's direction and are allocated to
funds in 5% increments.
Participants are also allowed to make rollover contributions of amounts
received from other tax-qualified employer-sponsored retirement plans. Such
contributions are deposited in the appropriate investment funds in accordance
with the participant's direction and the Plan's provisions.
VESTING -
Participants are immediately vested in their salary deferral, rollover
contributions and related earnings.
PARTICIPANT ACCOUNTS -
Each participant's account is credited with the participant's
contribution, Plan earnings or losses and an allocation of the Company's
contribution, if any. Allocation of the Company's contribution is based on
participant contributions or employee eligible compensation, as defined in the
Plan.
PAYMENT OF BENEFITS -
Upon termination, the participant or beneficiary will receive the
benefits in a lump sum amount equal to the value of the participant's vested
interest in his or her account, or annual installments for a period which shall
not extend beyond a participant's, or participant and designated beneficiary's
life expectancy. The Plan allows for automatic lump sum distribution of
participant vested account balances that do not exceed $5,000.
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LOANS TO PARTICIPANTS -
The Plan allows participants to borrow up to the lesser of $50,000 or
50% of their vested account balance. The loans are secured by the participant's
vested balance. Such loans bear interest at the available market financing rates
and must be repaid to the Plan within a five-year period, unless the loan is
used for the purchase of a principal residence in which case the maximum
repayment period may be longer than five years. The specific terms and
conditions of such loans are established by the Committee. Outstanding loans at
December 31, 1999 carry interest rates which range from 9.25% to 10.0%.
NOTE 3 - INVESTMENTS:
The following table includes the fair values of investments and
investment funds that represent 5% or more of the Plan's net assets at December
31:
1999 1998
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(UNAUDITED)
PUTNAM:
The George Putnam Fund $ 18,821
Putnam Growth and Income Fund 258,252
Putnam Investor Fund 673,948
Putnam Vista Fund 785,209
Putnam Voyager Fund 311,130
Putnam OTC Fund 498,351
S&P 500 Fund 1,463,118
Putnam International Growth Fund 278,861
Putnam Money Market Fund 318,619
Putnam U.S. Government Income Fund 166,491
Scient Stock Fund 59,620
Participant loans 204,462
DKB:
Van Kampen Emerging Growth Fund A $ 44,169
Fidelity Advance Growth Opportunity Fund 104,779
Fidelity Advance High Yield Fund 50,608
Franklin Balance Sheet Investment Fund 43,469
Franklin Cash Reserve 47,997
Franklin Small Cap Growth Fund 49,131
Vanguard Index 500 Fund 143,473
Other 101,878
Participant loans 36,036
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Assets held for investment
purposes $5,036,882 $621,540
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Year ended
December 31, 1999
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Dividends and interest $182,727
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The Plan's investments (including gains and losses on investments
bought and sold, as well as held during the year) appreciated in value as
follows:
Year ended
December 31, 1999
-----------------
Common stock $ 8,709
Mutual funds 639,806
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$648,515
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NOTE 4 - PARTY-IN-INTEREST TRANSACTIONS:
Certain Plan investments are mutual funds managed by the Putnam, which
are considered party-in-interest transactions under ERISA regulations. Any
purchases and sales of these funds are open market transactions at fair market
value. Such transactions are permitted under the provisions of the Plan and are
specifically exempted from the prohibition of party-in-interest transactions
under ERISA.
As allowed in the Plan, participants may elect to invest a portion of
their accounts in the common stock of the Company. Aggregate investment in
Company common stock at December 31, 1999 was as follows:
Date Number of shares Fair value Cost
---- ---------------- ---------- ----
1999 690 $59,620 $50,911
NOTE 5 - NONEXEMPT TRANSACTIONS:
Certain contributions disclosed in the supplementary Schedule of
Nonexempt Transactions were not deposited with the Plan custodian in accordance
with Department of Labor regulations. Due to the delay in the deposit of the
participants' contributions, these contributions are considered prohibited
transactions under Internal Revenue Code Section 4975. The Company subsequently
remitted all late deposits to the trust and submitted an additional employer
contribution to compensate participants for lost earnings thereon.
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NOTE 6 - PLAN TERMINATION AND/OR MODIFICATION:
The Company intends to continue the Plan indefinitely for the benefit
of its employees; however, it reserves the right to terminate and/or modify the
Plan at any time by resolution of its Board of Directors and subject to the
provisions of ERISA.
NOTE 7 - EVENT (UNAUDITED) SUBSEQUENT TO THE DATE OF THE INDEPENDENT
AUDITOR'S REPORT:
As of May 15, 2001, the Plan's assets decreased from their December 31,
1999 value by approximately $1.3 million due to market fluctuations.
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SCIENT 401(k) PLAN
SUPPLEMENTAL SCHEDULES
DECEMBER 31, 1999
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EIN: 94-3288107
PLAN #: 001
SCIENT 401(k) PLAN
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AT END OF YEAR
December 31, 1999
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(a) (b) (c) (e)
Identity of issue, borrower, Description of investment including maturity date, Current
lessor or similar party rate of interest, collateral, par or maturity value Value
- ------- -------------------------------------- --------------------------------------------------- ---------------
* The George Putnam Fund Mutual Fund $ 18,821
* Putnam Growth and Income Fund Mutual Fund 258,252
* Putnam Investor Fund Mutual Fund 673,948
* Putnam Vista Fund Mutual Fund 785,209
* Putnam Voyager Fund Mutual Fund 311,130
* Putnam OTC Fund Mutual Fund 498,351
* S&P 500 Fund Collective Trust Fund 1,463,118
* Putnam International Growth Fund Mutual Fund 278,861
* Putnam Money Market Fund Mutual Fund 318,619
* Putnam U.S. Government Income Fund Mutual Fund 166,491
* Scient Stock Fund Mutual Fund 59,620
* Participant loans 9.25%-10.0% 204,462
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Total $5,036,882
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* Parties-in-interest
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EIN: 94-3288107
PLAN #: 001
SCIENT 401(k) PLAN
SCHEDULE OF NONEXEMPT TRANSACTIONS
December 31, 1999
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(a) (b)
Identity of party involved Relationship Description Amount
- ----------------------------- ----------------- ----------------------------------------------- ------------
SCIENT CORPORATION PLAN SPONSOR LATE DEPOSIT OF EMPLOYEE DEFERRALS FOR 6/30/99 ** $ 73,585
SCIENT CORPORATION PLAN SPONSOR LATE DEPOSIT OF EMPLOYEE DEFERRALS FOR 7/31/99 ** 80,639
SCIENT CORPORATION PLAN SPONSOR LATE DEPOSIT OF EMPLOYEE DEFERRALS FOR 8/15/99 ** 77,200
SCIENT CORPORATION PLAN SPONSOR LATE DEPOSIT OF EMPLOYEE DEFERRALS FOR 8/31/99 ** 84,068
SCIENT CORPORATION PLAN SPONSOR LATE DEPOSIT OF EMPLOYEE DEFERRALS FOR 12/31/99 ** 168,347
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TOTAL $483,839
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** All late deposits have been transmitted to the Plan.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the trustees have duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of San
Francisco, State of California on this 17th day of May, 2001.
SCIENT 401(K) PLAN
By: /s/ Robert M. Howe
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Robert M. Howe, Trustee
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INDEX TO EXHIBITS
Exhibit No. Description
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23 Consent of Mohler, Nixon & Williams