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FORM 11-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
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
For the fiscal year ended December 31, 2000
OR
[ ] Transition report pursuant to Section 15(d) of the Securities Exchange
Act of 1934
For the transition period from _________ to ________
Commission file number 000-25783
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 held pursuant to the plan and the
address of its principal executive office:
SCIENT CORPORATION
860 Broadway
New York, NY 10003
SIGNATURE
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934,
the administrator has duly caused this annual report to be signed on its behalf
by the undersigned hereunto duly authorized.
SCIENT 401(k) PLAN
Date: June 28, 2001 By /s/ Robert M. Howe
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ROBERT M. HOWE, TRUSTEE
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SCIENT 401(k) PLAN
Financial Statements
December 31, 2000 and 1999
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SCIENT 401(k) PLAN
FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE
DECEMBER 31, 2000 AND 1999
TABLE OF CONTENTS
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PAGE
Independent Accountants' Report ...................................... 4
Financial Statements:
Statements of Net Assets Available for Benefits ...................... 5
Statements of Changes in Net Assets Available for Benefits ........... 6
Notes to Financial Statements ........................................ 7
Supplemental Schedule as of December 31, 2000 ........................ 11
Schedule of Assets Held for Investment Purposes
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INDEPENDENT ACCOUNTANTS' REPORT
TO THE PARTICIPANTS AND
PLAN ADMINISTRATOR OF THE
SCIENT 401(k) PLAN
We have audited the financial statements of the Scient 401(k) Plan (the Plan) as
of December 31, 2000 and 1999, and for the years 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 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 the Plan's 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 then ended, in conformity with accounting principles generally
accepted in the United States of America.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule is presented
for the purpose of additional analysis 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, is fairly stated in all material respects in
relation to the basic financial statements taken as a whole.
MOHLER, NIXON & WILLIAMS
Accountancy Corporation
Campbell, California
June 14, 2001
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SCIENT 401(k) PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
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DECEMBER 31,
2000 1999
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Assets:
Investments, at fair value $12,140,535 $ 4,832,420
Participant loans 217,632 204,462
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Assets held for investment purposes 12,358,167 5,036,882
Participants' contributions receivable 194,420 330,425
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Net assets available for benefits $12,552,587 $ 5,367,307
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See notes to financial statements.
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SCIENT 401(k) PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
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YEARS ENDED
DECEMBER 31,
2000 1999
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Additions to net assets attributed to:
Investment income:
Dividends and interest $ 1,027,921 $ 182,727
Net realized and unrealized appreciation
(depreciation) in fair value of investments (4,143,548) 648,515
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(3,115,627) 831,242
Contributions:
Participants' 10,721,803 3,941,667
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Total additions 7,606,176 4,772,909
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Deductions from net assets attributed to:
Withdrawals and distributions (410,173) (27,142)
Administrative fees (10,723) --
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Total deductions (420,896) (27,142)
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Net increase in net assets 7,185,280 4,745,767
Net assets available for benefits:
Beginning of year 5,367,307 621,540
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End of year $ 12,552,587 $ 5,367,307
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See notes to financial statements.
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SCIENT 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2000 AND 1999
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NOTE 1 - THE PLAN AND ITS SIGNIFICANT ACCOUNTING POLICIES
GENERAL - The following description of the Scient 401(k) Plan (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 Corporation (the Company) to provide benefits to eligible employees, as
defined in 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), as amended.
ADMINISTRATION - The Company has appointed an Administrative Committee (the
Committee) to manage the operation and administration of the Plan. The Company
has contracted with a third-party administrator who processes and maintains the
records of participant data and Putnam Fiduciary Trust Company (Putnam) to act
as the custodian and trustee. Substantially all expenses incurred for
administering the Plan are paid by the Company.
ESTIMATES - The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
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.
BASIS OF ACCOUNTING - The financial statements of the Plan are prepared on the
accrual method of accounting.
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
Scient Common Stock.
The Plan's 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.
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INCOME TAXES - The Plan has 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.
RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500 - The differences between
the information reported in the financial statements and the information
reported in the Form 5500 arise primarily from presenting the financial
statements on the accrual basis of accounting.
RECLASSIFICATIONS - Certain reclassifications were made in the 1999 financial
statements to conform with the 2000 presentation.
RISKS AND UNCERTAINTIES - The Plan provides for various investment options in
any combination of eleven investment funds, each with different investment goals
and levels 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 statements of changes in net assets
available for benefits.
NOTE 2 - RELATED PARTY TRANSACTIONS
Certain Plan investments in mutual funds are managed by Putnam. Putnam is also
the trustee of the Plan. Any purchases and sales of these funds are performed in
the open market at fair value and qualify as party-in-interest. Such
transactions, while considered party-in-interest transactions under ERISA
regulations, are permitted under the provisions of the Plan and are specifically
exempt from the prohibition of party-in-interest transactions under ERISA.
NOTE 3 - PARTICIPATION AND BENEFITS
PARTICIPANT CONTRIBUTIONS - Participants may elect to have the Company
contribute a percentage up to 20% of their eligible pre-tax compensation not to
exceed the 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.
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 contributions and any
related earnings.
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PARTICIPANT ACCOUNTS - Each participant's account is credited with the
participant's contribution and Plan earnings or losses.
PAYMENT OF BENEFITS - Upon termination, the participant or beneficiary may
receive the benefits in a lump sum amount equal to the value of the
participant's vested interest in his or her account, or equal installments that
will not extend past a participant's, or a 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.
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, 2000 carry interest rates which range from 9.25% to 10.50%.
NOTE 4 - 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:
2000 1999
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The George Putnam Fund of Boston $ 192,737 $ 18,821
The Putnam Fund for Growth and Income 810,302 258,252
Putnam Investors Fund 1,450,681 673,948
Putnam Vista Fund 1,656,728 785,209
Putnam Voyager Fund 1,584,227 311,130
Putnam OTC and Emerging Growth Fund 1,316,637 498,351
S&P 500 Fund 2,883,913 1,463,118
Putnam International Growth Fund 1,124,930 278,861
Putnam Money Market Fund 684,171 318,619
Putnam US Government Income Trust 293,053 166,491
Scient Common Stock 143,156 59,620
Participant loans 217,632 204,462
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Assets held for investment
purposes $12,358,167 $5,036,882
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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 (depreciated) in value as
follows for the years ended December 31:
2000 1999
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Common stock ($1,128,864) $ 8,709
Mutual funds (3,014,684 639,806
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($4,143,548) $648,515
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NOTE 5 - PARTY-IN-INTEREST TRANSACTIONS
As allowed by 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, 2000 and 1999 was as follows:
Date Number of shares Fair value Cost
---- ---------------- ---------- ----
2000 44,048 $143,156 $1,263,311
1999 690 59,620 50,911
NOTE 6 - PLAN TERMINATION AND/OR MODIFICATION
The Company intends to continue the Plan indefinitely for the benefit of its
participants; 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 - SUBSEQUENT EVENT
As of June 14, 2001, the Dow Jones Industrial Average and Nasdaq Composite
indices have decreased by 1% and 27%, respectively, from their December 31, 2000
levels. As a consequence, the Plan's assets may have significantly decreased in
value.
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SUPPLEMENTAL SCHEDULE
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SCIENT EIN: 94-3288107
401(k) PLAN PLAN #001
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 2000
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DESCRIPTION OF INVESTMENT
INCLUDING
IDENTITY OF ISSUE, BORROWER, MATURITY DATE, RATE OF INTEREST, CURRENT
LESSOR OR SIMILAR PARTY COLLATERAL, PAR OR MATURITY VALUE VALUE
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* The George Putnam Fund of Boston Mutual Fund $ 192,737
* The Putnam Fund for Growth and Income Mutual Fund 810,302
* Putnam Investors Fund Mutual Fund 1,450,681
* Putnam Vista Fund Mutual Fund 1,656,728
* Putnam Voyager Fund Mutual Fund 1,584,227
* Putnam OTC and Emerging Growth Fund Mutual Fund 1,316,637
* S&P 500 Fund Collective Trust Fund 2,883,913
* Putnam International Growth Fund Mutual Fund 1,124,930
* Putnam Money Market Fund Mutual Fund 684,171
* Putnam US Government Income Trust Mutual Fund 293,053
* Scient Common Stock Common Stock 143,156
* Participant loans Interest rates ranging from 217,632
9.25%-10.50%
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Total $12,358,167
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* Party-in-interest
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CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statement on
Form S-8 (No. 333-61320) of Scient Corporation of our report dated June 14,
2001, relating to the financial statements and schedule of the Scient 401(k)
Plan included in this Annual Report on Form 11-K.
By /s/ Mohler, Nixon & Williams
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MOHLER, NIXON & WILLIAMS
Accountancy Corporation
Campbell, California
June 28, 2001
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