SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
(Mark One)
/X/ Annual Report Pursuant to Section 15(d) of the Securities
Exchange Act of 1934
For the fiscal year ended December 31, 1997
/ / Transition Report Pursuant to Section 15(d) of the Securities
Exchange Act of 1934
For the transition period from _____ to ____
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:
TRO 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:
TRO Learning, Inc.
1721 Moon Lake Boulevard
Suite 555
Hoffman Estates, IL 60194
This document contains 17 pages.
1
INDEX
Report of Independent Public Accountants.........................3
Statements of Net Assets Available For Benefits
as of December 31, 1997 and 1996...............................4
Statement of Changes in Net Assets Available For
Benefits, With Fund Information, for the year
ended December 31, 1997......................................5-6
Statement of Changes in Net Assets Available For
Benefits, With Fund Information, for the year
ended December 31, 1996......................................7-8
Notes To Financial Statements.................................9-13
Item 27a - Schedule of Assets Held For Investment
Purposes as of December 31, 1997..............................14
Item 27d - Schedule of Reportable Transactions for
the year ended December 31, 1997..............................15
Consent of Independent Public Accountants.......................16
Signatures......................................................17
2
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Plan Administrator of the
TRO Learning, Inc. Savings/Retirement Plan:
We have audited the accompanying statements of net assets available for benefits
of the TRO LEARNING, INC. SAVINGS/RETIREMENT PLAN as of December 31, 1997 and
1996, and the related statements of changes in net assets available for benefits
for the years then ended. In our report dated September 24, 1997, we expressed
a disclaimer of opinion on the December 31, 1996, statement of net assets
because the plan administrator, as permitted by the Department of Labor's Rules
and Regulations, instructed us not to audit the information certified by the
trustee. This report on the December 31, 1996, statement of net assets reflects
having performed sufficient audit procedures to render an opinion on the
December 31, 1996, statement of net assets. Accordingly, our present opinion on
the 1996 financial statements, as presented herein, is unqualified. 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 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
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, 1997 and 1996, and the changes in net assets available for benefits
for the years then ended.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets
held for investment purposes and reportable transactions are presented for
purposes of additional analysis and are not a required part of the basic
financial statements, but are 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 fund information in
the statements of net assets available for benefits is presented for purposes of
additional analysis rather than to present the net assets available for benefits
and changes in net assets available for Plan benefits of each fund. The
supplemental schedules and fund information have been subjected to the auditing
procedures applied in the audits 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.
The schedule of assets held for investment purposes that accompanies the Plan's
financial statements does not disclose the historical cost of certain plan
assets held by the Plan's asset custodian. Disclosure of this information is
required by the Department of Labor's Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of 1974.
ARTHUR ANDERSEN LLP
Chicago, Illinois
June 10, 1998
3
TRO LEARNING, INC.
SAVINGS/RETIREMENT PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
As of December 31, 1997 and 1996
Employer Identification Number 41-1646390, Plan Number 001
1997 1996
INVESTMENTS, at fair market value (Note 1):
Scudder Cash Investment Trust $ 223,374 $ 363,689
Scudder Income Fund 241,678 182,810
Scudder Growth & Income Fund 1,389,224 929,221
Scudder Large Company Value Fund 804,773 650,615
Scudder Global Fund 449,607 407,052
Scudder Global Discovery Fund 288,566 246,453
Scudder International Fund 53,215 23,815
Scudder Managed Retirement Trust - 165,835
TRO Learning, Inc. Company Stock 285,203 429,501
American Century Ultra Fund 399,740 238,641
Pathway Series--Balanced Fund 174,827 -
Participant loans 80,613 86,781
---------- ----------
NET ASSETS AVAILABLE FOR BENEFITS $4,390,820 $3,724,413
---------- ----------
---------- ----------
The accompanying notes are an integral part of these financial statements.
4
TRO LEARNING, INC.
SAVINGS/RETIREMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
For the Year Ended December 31, 1997
Employer Identification Number 41-1646390, Plan Number 001
Scudder
Scudder Scudder Large
Cash Scudder Growth & Company
Investment Income Income Value
Trust Fund Fund Fund
ADDITIONS:
Participant contributions $ 90,404 $53,730 $ 257,869 $ 171,482
Net appreciation (depreciation)
in fair value of investments - 4,822 176,422 168,268
Interest and dividend income 18,174 13,828 135,154 59,556
-------- -------- ---------- --------
Total additions 108,578 72,380 569,445 399,306
DEDUCTIONS:
Benefits paid (77,082) (2,593) (217,502) (227,974)
OTHER ADDITIONS (DEDUCTIONS):
Interfund transfers (165,504) (9,816) 98,291 (14,217)
Loan withdrawals (6,895) (3,475) (3,833) (12,543)
Loan principal payments 588 2,372 13,602 9,586
-------- -------- ---------- --------
Net increase (decrease) in
net assets (140,315) 58,868 460,003 154,158
BALANCE, December 31, 1996 363,689 182,810 929,221 650,615
-------- -------- ---------- --------
BALANCE, December 31, 1997 $223,374 $241,678 $1,389,224 $804,773
-------- -------- ---------- --------
-------- -------- ---------- --------
Scudder
Scudder Global Scudder
Global Discovery International
Fund Fund Fund
ADDITIONS:
Participant contributions $ 113,708 $ 63,420 $ 26,169
Net appreciation (depreciation)
in fair value of investments 4,342 1,789 (2,860)
Interest and dividend income 78,081 27,447 5,829
-------- -------- --------
Total additions 196,131 92,656 29,138
DEDUCTIONS:
Benefits paid (146,494) (35,887) -
OTHER ADDITIONS (DEDUCTIONS):
Interfund transfers (8,500) (16,897) (817)
Loan withdrawals (3,517) (1,079) -
Loan principal payments 4,935 3,320 1,079
-------- -------- --------
Net increase (decrease) in
net assets 42,555 42,113 29,400
BALANCE, December 31, 1996 407,052 246,453 23,815
-------- -------- --------
BALANCE, December 31, 1997 $ 449,607 $ 288,566 $ 53,215
-------- -------- --------
-------- -------- --------
The accompanying notes to financial statements are an
integral part of this statement.
5
TRO LEARNING, INC.
SAVINGS/RETIREMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
For the Year Ended December 31, 1997
Employer Identification Number 41-1646390, Plan Number 001
TRO
Scudder Learning, American Pathway
Managed Inc. Century Series--
Retirement Company Ultra Balanced Participant
Trust Stock Fund Fund Loans Total
ADDITIONS:
Participant contributions $ 11,304 $ 101,732 $ 111,313 $ 48,547 $ - $1,049,678
Net appreciation (depreciation)
in fair value of investments 2,523 (272,132) (34,831) 10,580 - 58,923
Interest and dividend income 12 1,274 80,273 7,830 - 427,458
-------- -------- -------- -------- ------- ----------
Total additions 13,839 (169,126) 156,755 66,957 - 1,536,059
DEDUCTIONS:
Benefits paid (25) (38,147) (95,270) (26,458) (2,220) (869,652)
OTHER ADDITIONS (DEDUCTIONS):
Interfund transfers (179,835) 58,925 100,836 137,534 - -
Loan withdrawals - - (6,912) (3,846) 42,100 -
Loan principal payments 186 4,050 5,690 640 (46,048) -
-------- -------- -------- -------- ------- ----------
Net increase (decrease)
in net assets (165,835) (144,298) 161,099 174,827 (6,168) 666,407
BALANCE, December 31, 1996 165,835 429,501 238,641 - 86,781 3,724,413
-------- -------- -------- -------- ------- ----------
BALANCE, December 31, 1997 $ - $ 285,203 $ 399,740 $ 174,827 $ 80,613 $4,390,820
-------- -------- -------- -------- ------- ----------
-------- -------- -------- -------- ------- ----------
The accompanying notes to financial statements are an
integral part of this statement.
6
TRO LEARNING, INC.
SAVINGS/RETIREMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS,
WITH FUND INFORMATION
For the Year Ended December 31, 1996
Employer Identification Number 41-1646390, Plan Number 001
Scudder
Scudder Scudder Large Scudder
Cash Scudder Growth Company Scudder Global
Investment Income & Income Value Global Discovery
Trust Fund Fund Fund Fund Fund
ADDITIONS:
Participant contributions $ 62,521 $ 34,180 $ 189,264 $145,797 $ 79,471 $ 43,105
Net appreciation (depreciation) in
fair value of investments - (6,085) 109,830 28,039 24,506 29,557
Interest and dividend income 14,933 12,323 58,255 70,723 24,279 11,914
-------- -------- -------- -------- -------- --------
Total additions 77,454 40,418 357,349 244,559 128,256 84,576
DEDUCTIONS:
Benefits paid (4,270) (19,694) (163,704) (24,739) (58,040) (39,365)
OTHER ADDITIONS (DEDUCTIONS):
Interfund transfers (70,330) (5,689) 97,714 (16,102) (49,796) (4,585)
Loan withdrawals (13,138) (10,873) (14,944) (12,470) (10,460) (3,481)
Loan principal payments 932 6,572 9,773 12,748 3,198 1,168
-------- -------- -------- -------- -------- ---------
Net increase (decrease) in
net assets (9,352) 10,734 286,188 203,996 13,158 38,313
BALANCE, December 31, 1995 373,041 172,076 643,033 446,619 393,894 208,140
-------- -------- -------- -------- -------- --------
BALANCE, December 31, 1996 $363,689 $182,810 $ 929,221 $650,615 $407,052 $246,453
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
The accompanying notes to financial statements are an
integral part of this statement.
7
TRO LEARNING, INC.
SAVINGS/RETIREMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS,
WITH FUND INFORMATION
For the Year Ended December 31, 1996
Employer Identification Number 41-1646390, Plan Number 001
TRO
Scudder Learning, American
Scudder Managed Inc. Century
International Retirement Company Ultra Participant
Fund Trust Stock Fund Loans Total
ADDITIONS:
Participant contributions $ 23,987 $ 54,448 $ 73,780 $ 55,445 $ - $ 761,998
Net appreciation (depreciation) in
fair value of investments 3,187 18,853 (104,285) 38,361 - 141,963
Interest and dividend income 1,441 30 551 16,509 - 210,958
------- -------- -------- -------- ------- ----------
Total additions 28,615 73,331 (29,954) 110,315 - 1,114,919
DEDUCTIONS:
Benefits paid (15,674) (38,139) (1,470) (362) - (365,457)
OTHER ADDITIONS (DEDUCTIONS):
Interfund transfers (14,849) 54,600 51,367 (42,330) - -
Loan withdrawals (1,410) (1,135) - (1,410) 69,321 -
Loan principal payments 387 215 3,269 516 (38,778) -
------- ------- -------- -------- ------- ----------
Net increase (decrease) in
net assets (2,931) 88,872 23,212 66,729 30,543 749,462
BALANCE, December 31, 1995 26,746 76,963 406,289 171,912 56,238 2,974,951
------- -------- -------- -------- ------- ----------
BALANCE, December 31, 1996 $ 23,815 $ 165,835 $ 429,501 $ 238,641 $ 86,781 $3,724,413
------- -------- -------- -------- ------- ----------
------- -------- -------- -------- ------- ----------
The accompanying notes to financial statements are an
integral part of this statement.
8
TRO LEARNING, INC.
SAVINGS/RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 1997 and 1996
Employer Identification Number 41-1646390, Plan Number 001
1. DESCRIPTION OF PLAN
A brief description of the TRO 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.
General
The Plan is a defined contribution plan covering all eligible employees of
the Company. Employees of the Company must complete 90 days of service to
be eligible to participate. The Company employs Scudder Trust Company as
the Plan's investment manager, asset custodian and record keeper.
The Plan is subject to the provisions of the Employee Retirement Income
Security Act of 1974 ("ERISA"), as amended.
Contributions
Participants may defer the lesser of $9,500 or 20% of their compensation.
These contributions are deducted from participants' salaries before income
taxes are withheld. The Company may also make contributions to the Plan at
its discretion. Any such amount must be designated by Company resolution.
There were no Company contributions in 1997 or 1996.
Participant Accounts
Individual participant accounts are maintained by Scudder Trust Company,
investment manager and record keeper. Each participant's account is
credited with the participant's contribution and an allocation of the
Company's contribution and Plan earnings. Allocations, when applicable,
are determined by the Company. Forfeitures are used to reduce future
contributions made by the Company.
Vesting
Participants are immediately vested in their salary deferral contribution
accounts plus actual earnings thereon.
9
Vesting in the discretionary Company contribution account is 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
-------
-------
A participant will also become fully vested upon permanent disability or
attainment of normal or early retirement as defined in the Plan.
Benefit Payments
Upon termination, participants receive lump-sum distributions of the vested
amounts in their accounts, less any outstanding loans at the time of
termination. If participants elect not to receive their distributions
immediately after termination, interest and dividends continue to accrue on
their employee contribution balances until final distribution.
Loans
Participants may borrow from the Plan, as defined in the Plan agreement and
subject to appropriate limitations. The rate of interest will be the
current prime rate plus 1%. The terms of all such loans are set by the
Company and the maximum payment term is generally five years.
Investment Options
For the 1997 Plan year, there are 10 different investment options included
in the Plan. In addition to 9 mutual funds, participants also have the
option to allocate a portion of their contributions to Company stock. Per
the Plan agreement, a maximum of 30% of employee contributions can be
allocated to Company stock. Plan participants direct the investment of
their accounts into these ten options. The options are as follows:
Scudder Cash Investment Trust--Cash Investment Trust is like a money
market account. Assets invested in this fund are not at risk as the
per share cost remains constant.
Scudder Income Fund--Income Fund seeks to provide a high level of
current income by investing primarily in bonds. Intended for the
investor who desires flexibility, higher than money market rates of
interest and who can accept some principal fluctuation.
Scudder Growth & Income Fund--Growth & Income Fund seeks to provide
long-term growth of capital, current income and growth of income.
Intended for the conservative, growth-oriented investor who can accept
a moderate degree of risk.
Scudder Large Company Value Fund--Large Company Value Fund seeks
maximum long-term growth of capital through a broad and flexible
investment
10
strategy. This fund is intended for the investor willing to accept
above-average risk for potential of above-average growth.
Scudder Global Fund--Global Fund seeks long-term capital growth
through investments in economic securities of mainly large,
established companies which are expected to derive the greatest
benefits from global economic trends. This fund is designed for
long-term investors who can accept risks of international volatility
and fluctuating foreign exchange rates.
Scudder Global Discovery Fund--Global Discovery Fund seeks
above-average, long-term growth of capital by investing in small
companies with strong growth potential worldwide. Intended for the
investor who can assume a greater risk in return for potentially
greater rewards. This fund should be considered as a complement to a
portfolio that also holds other types of funds.
Scudder International Fund--International Fund focuses on long-term
capital growth and international diversification. This fund invests
in foreign stocks and bonds.
Scudder Managed Retirement Trust--Managed Retirement Trust spreads
assets among several funds with different objectives. Investments are
selected to complement one another so that they work together in an
integrated fashion. Intended for the investor who wants a good
measure of income and growth with less fluctuation than stock or bond
funds. Effective March 1, 1997, the fund name changed to Scudder
Pathway Series Portfolio.
TRO Learning, Inc. Company Stock--The Company is a publicly held
international training and education company with annual revenues of
more than $40 million. Trading on the national market system under
the NASDAQ symbol TUTR, the Company is a leading developer and
marketer of microcomputer-based, interactive, self-paced instructional
systems used in a wide variety of training and educational settings.
American Century Ultra Fund--The fund seeks capital growth and
typically invests at least 90% of assets in equity securities selected
for their appreciation potential. The majority of these securities
are common stocks issued by midcap companies that meet management's
standards for earnings and revenue trends. The fund may purchase
securities only of companies that have operated continuously for three
or more years.
Trustees
The trustees of the Plan during 1997: William R. Roach, Andrew Peterson
and Patricia Hawver, officers of the Company. The trustees of the Plan
during 1996: William R. Roach and Sharon Fierro, officers for the Company.
2. SUMMARY OF ACCOUNTING POLICIES
Basis of Accounting
The accompanying financial statements have been prepared using the accrual
basis of accounting.
11
Use of Estimates
The preparation of the financial statements in conformity with generally
accepted accounting principles requires the Plan's management to use
estimates and assumptions that affect the accompanying financial statements
and disclosures. Actual results could differ from these estimates.
Valuation of Investments
Investments are stated at market value, as determined by the investment
manager/record keeper. The increase (decrease) in unrealized appreciation
(depreciation) of investments and realized gain (loss) on sale of
investments are determined based on an average cost basis of the assets.
The average cost basis is composed of the market values of assets: (a) on
hand at the beginning of the year rather than the original cost at the time
of purchase and (b) values on the date of purchase during the year.
Administrative Expenses
All administrative expenses are paid by the Company. Therefore, Plan
assets are not required to cover administrative expenses unpaid at year-end
nor are they needed to reimburse the Company for expenses paid by them
prior to year-end.
3. 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, and the Plan assets remaining in the trust after
payment of all applicable expenses shall be distributed to the participants
or their beneficiaries.
4. TAX STATUS
The Plan obtained its latest determination letter on January 12, 1996, in
which the Internal Revenue Service stated that the Plan, as then designed,
was in compliance with the requirements of the Internal Revenue Code. The
plan administrator believes that the Plan is currently designed and is
being operated in compliance with the applicable requirements of the
Internal Revenue Code. Therefore, the plan administrator believes that the
Plan was qualified and the related trust was tax-exempt as of the financial
statement dates.
5. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
As of December 31, 1997 and 1996, the Plan had approximately $126,546 and
$0, respectively, of pending distributions to participants who elected to
withdraw from the Plan. These amounts are recorded as a liability in the
Plan's Form 5500; however, these amounts are not recorded as a liability in
the accompanying statements of net assets available for benefits in
accordance with generally accepted accounting principles.
12
The following table reconciles net assets available for benefits per the
financial statements to the Form 5500 as filed by the Company for the years
ended December 31, 1997 and 1996:
Benefits Net Assets Available
Payable to Benefits for Plan Benefits
Participants Paid 1997 1996
Per financial statements $ - $869,652 $4,390,820 $3,724,413
1997 amounts pending
distribution to
participants 126,546 126,546 (126,546) -
1996 amounts pending
distribution to
participants - - - -
-------- -------- ---------- ----------
Per Form 5500 $126,546 $996,198 $4,264,274 $3,724,413
-------- -------- ---------- ----------
-------- -------- ---------- ----------
6. RECLASSIFICATION
Certain information in the accompanying statement of changes in net assets
available for benefits, with fund information as of December 31, 1996, and
for the year then ended, has been reclassified with the December 31, 1997,
presentation.
13
Schedule I
TRO LEARNING, INC.
SAVINGS/RETIREMENT PLAN
ITEM 27a--SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
As of December 31, 1997
Employer Identification Number 41-1646390, Plan Number 001
Market
Description of Investment Cost (1) Value
*Scudder Mutual Funds-
Cash Investment Trust $ - $ 223,374
Income Fund - 241,678
Growth & Income Fund - 1,389,224
Large Company Value Fund - 804,773
Global Fund - 449,607
Global Discovery Fund - 288,566
International Fund - 53,215
Managed Retirement Trust - -
American Century Ultra Fund - 399,740
Pathway Series--Balanced Fund - 174,827
*TRO Learning, Inc. Company Stock - 285,203
Participant loans** - 80,613
------ ----------
$ - $4,390,820
------ ----------
------ ----------
*Represents party-in-interest.
**Participant loan interest rates-
Highest--8%
Lowest--7%
(1) Historical cost information could not be obtained from the Plan's
trustee.
The accompanying notes are an integral part of this schedule.
14
TRO LEARNING, INC.
SAVINGS/RETIREMENT PLAN
ITEM 27d--SCHEDULE OF REPORTABLE TRANSACTIONS (1)
For the Year Ended December 31, 1997
Employer Identification Number 41-1646390, Plan Number 001
(2)
Purchases Sales
Purchase Selling Cost of Net Gain
Description Price Price Asset (Loss)
*Scudder Mutual Funds-
Cash Investment Trust $589,875 $742,057 $ - $ -
Growth & Income Fund 418,636 279,978 - -
Large Company Value Fund 180,849 251,559 - -
Global Fund 160,965 202,251 - -
Managed Retirement Trust 11,304 179,860 - -
*TRO Learning, Inc. Company Stock 828,930 706,420 - -
American Century Ultra Fund 978,913 862,034 - -
Pathway Series--Balanced Fund 186,280 26,457 - -
------- ------- ------- -------
------- ------- ------- -------
*Represents party-in-interest transaction.
(1) Represents transactions or a series of transactions in excess of 5% of
the fair value of plan assets at the beginning of the year.
(2) Historical cost information could not be obtained from the Plan's
trustee.
The accompanying notes are an integral part of this schedule.
15
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
included in the registration statement and to the incorporation by reference in
the registration statement of our report dated June 10, 1998, included in the
TRO Learning, Inc.'s Form 11-K for the year ended December 31, 1997, and to all
references to our firm included in the registration statement.
ARTHUR ANDERSEN LLP
Chicago, Illinois
June 10, 1998
16
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 June 25, 1998.
TRO LEARNING, INC. SAVINGS/RETIREMENT PLAN
By: /s/Andrew N. Peterson
----------------------
Trustee
17