SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to ___________
Commission file number 333-43947
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
Frontstep, Inc. 401(k) Plan
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
Frontstep, Inc.
(fka Symix Systems, Inc.)
2800 Corporate Exchange Drive
Suite 400
Columbus, Ohio 43231
Exhibit Index on Page 4.
Page 1 of 15 Pages.
REQUIRED INFORMATION
The following financial statements and supplemental schedules for the
Frontstep, Inc. 401(K) Plan are being filed herewith:
Description Page No.
- ----------- --------
Table of Contents to Financial Statements Page 6.
Audited Financial Statements:
- ----------------------------
Independent Auditors' Report Page 7.
Statements of Net Assets Available for Page 8.
Plan Benefits, December 31, 2001 and 2000
Statements of Changes in Net Assets Available Page 9.
for Plan Benefits, Year Ended December 31, 2001
Notes to Financial Statements Pages 10
through 13.
Supplemental Schedules:
- ----------------------
Schedule of Assets (Held at End of Year), Page 14.
December 31, 2001
The following exhibit is being filed herewith:
Exhibit No. Description Page No.
- ----------- ----------- --------
1 Consent of Independent Auditors Page 15.
Page 2 of 15 Pages.
SIGNATURES
The Plan. Pursuant to the requirements of the Securities
Exchange Act of 1934, the trustee has duly caused this annual report to be
signed on its behalf by the undersigned hereunto duly authorized.
FRONTSTEP, INC. 401(K) PLAN
Date: June 27, 2002 By: /s/ Daniel P. Buettin
---------------------------------
Daniel P. Buettin, Plan Trustee
Page 3 of 15 Pages.
FRONTSTEP, INC. 401(K) PLAN
ANNUAL REPORT ON FORM 11-K
FOR FISCAL YEAR ENDED DECEMBER 31, 2001
INDEX TO EXHIBITS
Exhibit No. Description Page No.
- ----------- ----------- --------
1 Consent of Independent Auditors Page 15.
Page 4 of 15 Pages.
FRONTSTEP, INC. 401(K) PLAN
Financial Statements and Supplemental Schedule
December 31, 2001 and 2000
(With Independent Auditors' Report Thereon)
Page 5 of 15 Pages.
FRONTSTEP, INC. 401(K) PLAN
TABLE OF CONTENTS
PAGE
Independent Auditors' Report 1
Statements of Net Assets Available for Plan Benefits,
December 31, 2001 and 2000 2
Statement of Changes in Net Assets Available for Plan Benefits,
Year ended December 31, 2001 3
Notes to Financial Statements 4
SUPPLEMENTAL SCHEDULE:
Schedule H, Line 4i - Schedule of Assets (Held at End of Year),
December 31, 2001 8
All other schedules required by the Department of Labor's Rules and Regulations
for Reporting and Disclosure under the Employee Retirement Income Security Act
of 1974 have been omitted because there is nothing to report.
Page 6 of 15 Pages.
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Frontstep, Inc.:
We have audited the accompanying statements of net assets available for plan
benefits of Frontstep, Inc. 401(k) Plan (Plan) as of December 31, 2001 and
2000, and the related statement of changes in net assets available for plan
benefits for the year ended December 31, 2001. 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 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 presented fairly, in
all material respects, the net assets available for plan benefits of the Plan as
of December 31, 2001 and 2000, and the changes in net assets available for plan
benefits for the year ended December 31, 2001 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 of assets (held
at end of year) as of December 31, 2001, 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. The 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.
KPMG LLP
Columbus, Ohio
May 16, 2002
Page 7 of 15 Pages.
FRONTSTEP, INC. 401(K) PLAN
Statements of Net Assets Available for Plan Benefits
December 31, 2001 and 2000
2001 2000
----------- -----------
Assets:
Cash $ 3,431 5,413
Investments, at fair value (note 3) 17,588,282 18,321,925
Investment income receivable 7,093 5,380
----------- -----------
Net assets available for plan benefits $17,598,806 18,332,718
=========== ===========
See accompanying notes to financial statements.
2
Page 8 of 15 Pages.
FRONTSTEP, INC. 401(K) PLAN
Statement of Changes in Net Assets Available for Plan Benefits
Year ended December 31, 2001
Additions:
Additions to net assets attributed to:
Investment income:
Interest and dividends $ 276,755
Net depreciation in fair value of investments (note 3) (2,396,577)
------------
(2,119,822)
------------
Contributions:
Participant 2,517,560
Employer 735,945
Rollover 143,273
------------
3,396,778
------------
Total additions 1,276,956
------------
Deductions:
Deductions from net assets attributed to:
Benefits paid to participants or beneficiaries 2,010,868
------------
Total deductions 2,010,868
------------
Net decrease (733,912)
------------
Net assets available for plan benefits:
Beginning of year 18,332,718
------------
End of year $ 17,598,806
============
See accompanying notes to financial statements
3
Page 9 of 15 Pages.
FRONTSTEP, INC. 401(K) PLAN
Notes to Financial Statements
December 31, 2001 and 2000
(1) PLAN DESCRIPTION
The following description of the Frontstep, Inc. 401(k) Plan (the Plan)
provides only general information. Participants should refer to the
Summary Plan Description for a complete description of the Plan's
provisions.
The Plan is a defined contribution plan established October 1, 1989
covering substantially all employees of Frontstep, Inc. and subsidiaries
(the employer or Plan Sponsor). All employees who have reached the age of
21 are eligible to participate in the Plan. Plan enrollment is the first
day of each quarter of the Plan year. The Plan is subject to the
provisions of the Employee Retirement Income Security Act of 1974
(ERISA). Merrill Lynch serves as both Trustee and recordkeeper for the
Plan.
(A) CONTRIBUTIONS
Each year, participants may contribute the lesser of 18% of their
annual compensation, as defined in the Plan, or the maximum
permitted by the Internal Revenue Code (IRC). The employer
contributes an amount equal to 50% of the first 5% of deferred
compensation the participant contributes to the Plan.
Upon enrollment, participants may direct their contributions into
any of the Plan's investment options, including the employer's
common stock.
The employer matching contribution is allocated according to the
participant's elected investment option allocation percentages.
(B) DISTRIBUTIONS
On termination of service, due to death, disability, or
retirement, or upon attaining age 59 1/2, a participant or
beneficiary may elect to receive a lump-sum amount equal to the
value of the participant's vested interest in their account or
annual installments over a period not to exceed the participants
lifetime, or the joint lifetime of the participant and their
spouse. For termination of service due to other reasons, a
participant may receive the value of the vested interest in the
participant's account as a lump-sum distribution.
(C) VESTING
Amounts contributed by participants and earnings thereon are
immediately vested. Vesting of the employer's contribution and
related earnings becomes 100% vested after five years of
continuous service (20% per year of service with the employer).
(D) PARTICIPANT LOANS
Under the Plan, employees may borrow from their fund accounts up
to the lesser of $50,000 or 50% of their vested account balance.
Loan terms range from 1-5 years or up to 15 years for the purchase
of a primary residence. The loans are secured by the balance in
the participant's account and bear interest at prime interest rate
plus one percent. Principal and interest is paid ratably through
monthly payroll deductions.
4 (Continued)
Page 10 of 15 Pages.
FRONTSTEP, INC. 401(K) PLAN
Notes to Financial Statements
December 31, 2001 and 2000
(E) PARTICIPANTS ACCOUNTS
Each participant's account is credited with the participant's
contributions and allocations of (a) the employer's contributions
and (b) Plan earnings. Earnings of the Plan are allocated to
individual participant's accounts based on the ratio of the
participant's account balance in the appropriate fund as of the
preceding valuation date to the total fund balance as of the
preceding valuation date.
Upon termination of employment, a participant's nonvested portion
of employer contributions and related earnings are forfeited. At
December 31, 2001 and 2000 forfeited nonvested accounts totaled
$398,823 and $265,566 respectively. These amounts are used to
reduce future employer contributions. Also, in 2001, no amounts
were used to reduce employer contributions from forfeited
nonvested accounts.
(F) PLAN TERMINATION
Although it has not expressed any intent to do so, the employer
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 would become
100% vested in their employer contributions.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(A) BASIS OF PRESENTATION
The accompanying financial statements have been prepared in
accordance with accounting principles generally accepted in the
United States of America (GAAP) and present the net assets
available for plan benefits and changes in those net assets.
(B) INVESTMENTS
Plan investments are stated at fair value. The shares of the
employer's common stock are valued at its quoted market price. The
shares of registered investment companies are valued at quoted
market prices which represent the net asset value of shares held
by the Plan at year end. The participant loans are valued at their
outstanding balances, which approximate fair value.
Purchases and sales of securities are recorded on a trade-date
basis. Interest income is recorded on the accrual basis and is
recognized when earned. Dividends are recorded on the ex-dividend
date.
(C) CONTRIBUTIONS
Employee contributions are recognized when withheld and employer
contributions are recognized when due. Rollovers are recognized
when approved by the Plan Sponsor and received by the Plan.
(D) DISTRIBUTIONS
Benefit distributions are recognized when paid.
(E) TRUSTEE AND ADMINISTRATIVE FEES
All costs and expenses of administering the Plan are borne by the
employer.
5
Page 11 of 15 Pages.
FRONTSTEP, INC. 401(K) PLAN
Notes to Financial Statements
December 31, 2001 and 2000
(F) USE OF ESTIMATES
The preparation of financial statements in conformity with GAAP
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 to
net assets available for plan benefits during the reporting
period. Actual results could differ from those estimates.
(3) INVESTMENTS
The following presents investments that represent 5% or more of the
Plan's net assets:
2001 2000
---------- ----------
Frontstep, Inc. Common Stock $1,529,484 --
Merrill Lynch Retirement Preservation Trust 1,879,497 1,444,461
Merrill Lynch Fundamental Growth Fund CL D 5,377,828 5,268,145
GAM International Fund 940,380 1,159,313
Merrill Lynch Balanced Capital Fund 1,373,305 1,466,857
Merrill Lynch Growth Fund -- 1,502,607
Merrill Lynch S&P 500 Index Fund 933,973 926,850
MFS Massachusetts Investors Trust 2,544,253 3,000,759
Davis New York Venture Fund 1,290,775 1,115,841
The following presents 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:
Mutual funds $ (2,894,535)
Frontstep, Inc. common stock 497,958
------------
$ (2,396,577)
============
(4) TAX STATUS
The Internal Revenue Service has determined and informed the Plan Sponsor
by a letter dated October 30, 1996, that the Plan and related trust are
designed in accordance with applicable sections of the IRC. Although the
Plan has been amended since receiving the determination letter, the Plan
Sponsor and the Plan's tax counsel believe that the Plan is designed, and
is currently being operated in compliance with the applicable
requirements of the IRC.
(5) RELATED-PARTY TRANSACTIONS
Certain plan investments are shares of mutual funds managed by Merrill
Lynch, the trustee as defined by the Plan, and common stock of the Plan
Sponsor. Therefore, these transactions qualify as party-in-interest
transactions.
6 (Continued)
Page 12 of 15 Pages.
FRONTSTEP, INC. 401(K) PLAN
Notes to Financial Statements
December 31, 2001 and 2000
(6) PLAN AMENDMENTS
In September 2001, the Plan Sponsor filed a restated plan document which
adopted the Economic Growth and Tax Relief Reconciliation Act and GUST
laws effective January 1, 2002.
7
Page 13 of 15 Pages.
FRONTSTEP, INC. 401(K) PLAN
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)
Plan number: 001
EIN: 31-1093175
December 31, 2001
(A) (E)
- ----- --------------------- ------------------------------------------------------------ -------------
Identity of Description of investment
issue, borrower, including maturity date,
lessor, or rate of interest, collateral, Current
similar party par, or maturity value value
- ----- --------------------- ------------------------------------------------------------ -------------
* Frontstep, Inc. Frontstep, Inc. common stock, 291,330 shares $ 1,529,484
* Merrill Lynch Retirement Preservation Trust, 1,879,497 shares 1,879,497
Munder Future Technology Fund A, 10,915 shares 52,173
* Merrill Lynch Fundamental Growth Fund CL D, 301,110 shares 5,377,828
* Merrill Lynch Fundamental Growth Fund A GM, 857 shares 15,306
GAM International Fund, 62,236 shares 940,380
Munder Micro Cap Equity Fund, 6,590 shares 170,561
* Merrill Lynch Balanced Capital Fund, 51,493 shares 1,373,305
* Merrill Lynch Corporate Bond Fund, 54,761 shares 606,200
* Merrill Lynch Growth Fund, 1,714 shares 18,975
Van Kampen Aggressive Growth Fund, 9,140 shares 122,483
* Merrill Lynch S&P 500 Index Fund, 66,333 shares 933,973
Van Kampen Emerging Growth Fund, 4243 shares 179,547
Alliance Capital Premier Growth Fund, 3701 shares 75,203
AIM Value Fund, 9,728 shares 105,743
MFS Massachusetts Investors Trust, 153,453 shares 2,544,253
Davis New York Venture Fund, 50,758 shares 1,290,775
* Various Participant loans at various rates and due dates 326,573
* Merrill Lynch RCMA Option 46,023
-------------
$ 17,588,282
=============
* Indicates party-in-interest to the Plan.
See accompanying independent auditors' report.
8
Page 14 of 15 Pages.