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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 Fiscal Year Ended December 31, 2000
A. Full title of the plan and address of the plan, if different from that of the
issuer named below:
COMARCO, Inc.
SAVINGS AND RETIREMENT PLAN
B. Name of issuer of the securities held pursuant to the plan and the address of
its principal executive office:
COMARCO, Inc.
2 Cromwell
Irvine, CA 92618
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COMARCO, INC.
SAVINGS AND RETIREMENT PLAN
FINANCIAL STATEMENTS
(Including Supplemental Schedule)
December 31, 2000 and 1999
(With Independent Auditors' Report Thereon)
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COMARCO, INC.
SAVINGS AND RETIREMENT PLAN
INDEX TO FINANCIAL STATEMENTS
AND SUPPLEMENTAL SCHEDULE
Page
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Independent Auditors' Report 4
Statements of Net Assets Available for Plan Benefits
as of December 31, 2000 and 1999 5
Statements of Changes in Net Assets Available for Plan
Benefits for the Years Ended December 31, 2000, 1999 and 1998 6
Notes to Financial Statements 7
SUPPLEMENTAL SCHEDULE
Schedule 1 - Schedule of Assets Held for Investment Purposes 11
As of December 31, 2000
The additional schedules required under the Employee Retirement Income
Security Act of 1974 and regulations issued by the Department of Labor are
not presented because they are not applicable or are not a required
disclosure.
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INDEPENDENT AUDITORS' REPORT
The Board of Directors
COMARCO, Inc.:
We have audited the accompanying statements of net assets available for plan
benefits of the COMARCO, Inc. Savings and Retirement Plan (the "Plan") as of
December 31, 2000 and 1999, and the related statements of changes in net assets
available for plan benefits for each of the years in the three-year period ended
December 31, 2000. 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 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 plan benefits of the Plan as
of December 31, 2000 and 1999, and the changes in net assets available for plan
benefits for each of the years in the three-year period ended December 31, 2000,
in conformity with accounting principles generally accepted in the United States
of America.
Our audits of the Plan's financial statements as of December 31, 2000 and 1999,
and for each of the years in the three-year period ended December 31, 2000 were
made 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 as of December 31, 2000, 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 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
McLean, Virginia
May 18, 2001
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COMARCO, INC.
SAVINGS AND RETIREMENT PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
December 31, 2000 and 1999
2000 1999
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ASSETS
Investments, at fair or contract value (Note 3) $19,485,000 $26,871,000
Employer's contribution receivable $ 16,000 --
Participants' contributions receivable $ 23,000 --
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Net assets available for plan benefits $19,524,000 $26,871,000
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See accompanying notes to the financial statements.
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COMARCO, INC.
SAVINGS AND RETIREMENT PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
Years Ended December 31, 2000, 1999 and 1998
2000 1999 1998
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Net assets available for plan benefits,
beginning of year $26,871,000 $21,407,000 $18,265,000
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Additions:
Contributions:
Employer 754,000 890,000 828,000
Employee 1,562,000 1,912,000 1,841,000
Rollovers 42,000 129,000 246,000
Interest and dividends 20,000 34,000 218,000
Realized and unrealized appreciation
of investments 546,000 4,339,000 2,356,000
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Total additions 2,924,000 7,304,000 5,489,000
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Deductions:
Plan distributions 7,742,000 1,516,000 2,241,000
Realized and unrealized depreciation
of investments 2,422,000 223,000 20,000
Administrative expenses (Note 4) 107,000 101,000 86,000
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Total deductions 10,271,000 1,840,000 2,347,000
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Net assets available for plan benefits,
end of year $19,524,000 $26,871,000 $21,407,000
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See accompanying notes to the financial statements.
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COMARCO, INC.
SAVINGS AND RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2000, 1999 and 1998
1. Description of the Plan
The following description of the COMARCO, Inc. Savings and Retirement Plan
(Plan) provides only general information. Participants should refer to the Plan
agreement for a more complete description of the Plan's provisions.
General. The Plan is a defined contribution plan covering substantially all
full-time employees of COMARCO, Inc. and subsidiaries ("the Company" or
"the Plan Sponsor") who have at least three months of service and are age
18 or older. It is subject to the provisions of the Employee Retirement
Income Security Act of 1974 (ERISA). For Plan purposes, all participants
are employed in one of three separate business areas; COMARCO, Inc.,
COMARCO Wireless Technologies ("Wireless"), or COMARCO, Inc. Petersburg
("Petersburg").
Contributions. Employee contributions to the Plan may range from 1% to 20%
of eligible earnings for participants of COMARCO, Inc. and Wireless,
subject to certain limitations. The Company contributes 100% of the first
3% of earnings that a participant contributes to the Plan for participants
of COMARCO, Inc. The Company match at Wireless is 100% of the first 5% of
earnings that a participant contributes to the Plan. Employee contributions
to the Plan may range from 1% to 25% of eligible earnings for participants
of Petersburg, subject to certain limitations, with no Company match. All
forfeitures of terminated participants' non-vested accounts are used to
offset Plan expenses. In addition, the Company may, at its discretion, make
an additional contribution each year to the Plan. There were no
discretionary contributions made to the Plan during each of the years in
the three-year period ended December 31, 2000.
Participant Accounts. Each participant's account is credited with the
participant's contribution and the Company's matching contribution plus
Plan earnings less Plan expenses not paid by the Company. Allocations are
based on participant earnings or account balances, as defined. The benefit
to which a participant is entitled is the benefit that can be provided from
the participant's account. At December 31, 2000 and 1999, 530 and 904
participants, respectively, had assets in the Plan.
Loans. Effective January 1, 1995, the Plan permits participants to obtain
loans from their account balances, subject to certain IRS limitations. The
loans are repaid over fixed time periods covering up to 5 years (15 years
for the purchase of a principal residence) with interest rates ranging from
9% to 10%. All loans are secured by the participant's account balance.
Vesting. Participants are vested at all times in their voluntary
contributions plus actual earnings thereon. Company contributions plus
actual earnings thereon generally vest ratably over a four year period for
participants in COMARCO, Inc. and Company contributions plus actual
earnings thereon generally vest over a 7-year graded vesting schedule for
participants of Wireless as follows:
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1. Description of the Plan (Continued)
Year 1 0%
Year 2 0%
Year 3 30%
Year 4 40%
Year 5 60%
Year 6 80%
Year 7 100%
Exceptions to the vesting schedules for COMARCO, Inc. and Wireless are the
Company contributions that are invested in the Company's Stock-100 Fund,
which are immediately 100% vested. (The Stock 100 Fund is no longer an
investment option for the participants). In the event that the Company
makes discretionary contributions to participants of Petersburg, those
contributions vest ratably over 4 years. Forfeited non-vested accounts for
the years ended December 31, 2000, 1999, and 1998 were approximately
$58,000, $33,000, and $36,000, respectively. Forfeited non-vested accounts
are used to reduce plan expenses.
During 2000, the Company divested of all its divisions that constituted the
participants of COMARCO, Inc. and Petersburg such that the only
participants that remained at December 31, 2000 were participants of
Wireless. All participants who were employed in these divisions at the date
of the divestiture were immediately 100% vested in all Company
contributions and the actual earnings thereon.
Payment of Benefits. On termination of service, a participant may elect to
receive either a lump-sum amount equal to the value of his or her account,
annual installments, or monthly annuity payments. Participants with accrued
benefits greater than $5,000 may elect to delay receiving benefits until
reaching age 70 1/2.
Investment Options. Participant contributions to the Plan are made to one
of the nine investment options (Stable Value, Long Term Bond, Small Cap
Growth, Large Cap Growth, Large Cap Value, International, Emerging Markets,
S&P 500 Index or Company Common Stock) as designated by the participant.
All investment options other than COMARCO common shares are provided
through the Smith Barney TRAK program, and consist of fund shares.
2. Significant Accounting Policies
Basis of Accounting - The Plan prepares its financial statements on the
accrual basis of accounting.
Payment of Benefits - Benefits are recorded when paid.
Investment Valuation and Income Recognition - The Plan's investments are
stated at fair value, using the quoted market price, in the accompanying
statements of net assets available for plan benefits except for its
investment in investment contracts (CGCM Stable Value Fund), which are
valued at their respective contract values. Fair value is determined based
on quoted market prices. The difference between cost and fair value of
investments is recognized as a realized gain or loss at the date of
disposition using the first-in, first-out method. Purchases and
dispositions are recorded on a trade-date basis. Participant loans are
valued at cost, which approximates fair value.
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2. Significant Accounting Policies (Continued)
Use of 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 disclosure of contingent
assets and liabilities at the date of the financial statements and the
reported amounts of additions and deductions during the reporting period.
Actual results could differ from those estimates.
3. Investments
All amounts contributed to the Plan have been deposited with the Funding Agent,
Smith Barney Corporate Trust. The following table presents the fair or contract
values of investments. Investments that represent 5% or more of the Plan's net
assets are separately identified.
December 31, 2000 December 31, 1999
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Identity of Party and Carrying Carrying
Description of Asset Shares Value Shares Value
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Cash and Cash Equivalents:
SBS Short Term Investment Fund $ 2,000 $19,000
Mutual Funds:
CGCM Small Cap Growth Fund 226,000 *3,297,000 225,000 *5,083,000
CGCM Large Cap Growth Fund 253,000 *3,768,000 224,000 *6,038,000
CGCM Large Cap Value Fund 285,000 *3,042,000 292,000 *3,428,000
CGCM International Fund 126,000 *1,325,000 151,000 *2,234,000
CGCM Long Term Bond 69,000 554,000 94,000 694,000
CGCM Stable Value Fund 307,000 *3,673,000 401,000 *4,517,000
CGCM S&P 500 77,000 568,000 0 0
CGCM Emerging Market Fund 27,000 156,000 32,000 268,000
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Total Mutual Funds 16,383,000 22,262,000
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Participant Loans 174,000 287,000
COMARCO common stock 217,000 *2,926,000 183,000 *4,303,000
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Total Investments $19,485,000 $26,871,000
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* Represents 5% or more of Plan Net Assets.
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4. Expenses of the Plan
The Plan provides that all reasonable expenses for custodial costs and fees
incurred for the benefit of the Plan are to be paid by the Plan to the extent
that they are not paid by the Company. Total Plan expenses of approximately
$107,000, $101,000, and $86,000 in 2000, 1999 and 1998 respectively, were paid
by the Plan. Plan expenses accrued as of December 31, 2000 and 1999 were $0.
5. Investment Contracts
Investment contracts in the Consulting Group Capital Markets (CGCM) Stable Value
Fund are considered fully benefit responsive as they provide reasonable access
to the Fund by the Plan's participants with a liquidity guarantee. The contracts
are included in the financial statements at contract value. There are no
reserves against contract value for credit risk of the contract issuer or
otherwise. The average yields were 6.45%, 6.13%, and 6.30% for the years ended
December 31, 2000, 1999, and 1998, respectively. The crediting interest rate was
6.30% at December 31, 2000. The crediting interest rate is based upon an agreed
upon formula with the issuer.
6. Income Tax Status
The Internal Revenue Service has determined and informed the Company by letter
dated February 9, 1995, that the Plan and related trust are designed in
accordance with applicable sections of the Internal Revenue Code (IRC). The Plan
has been amended since receiving the determination letter. However, the Plan
administrator believes that the Plan is designed and is currently being operated
in compliance with the applicable requirements of the IRS.
7. Plan Termination
The Company intends to continue the plan indefinitely, but reserves the right at
any time to terminate the Plan subject to the provisions of ERISA. Upon
termination of the Plan, a participant's fund share shall become 100% vested and
shall become payable in accordance with the "payment of benefits" article of the
Plan.
8. Parties-in-Interest
Certain Plan investments are managed by Smith Barney Corporate Trust Company
("SBS Trust") and Consulting Group Capital Markets ("CGCM"), an investment
division of SBS Trust. SBS Trust is the trustee of the Plan and CGCM is a
division of the trustee, and therefore, SBS Trust and CGCM qualify as
parties-in-interest to the Plan in regard to these transactions.
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SCHEDULE 1
COMARCO, INC.
SAVINGS AND RETIREMENT PLAN
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AS OF DECEMBER 31, 2000
IDENTITY OF ISSUE, DESCRIPTION OF INVESTMENT INCLUDING
BORROWER, LESSOR MATURITY DATE, RATE OF INTEREST, CONTRACT OR
OR SIMILAR PARTY COLLATERAL, PAR OR MATURITY VALUE FAIR VALUE
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* SBS TRUST Short Term Investment Fund $ 2,000
* CGCM Consulting Group Cap Mkts Fund 68,905 shares 554,000
of Long Term Bond Investments Fund
* CGCM Consulting Group Cap Mkts Fund 285,345 shares 3,042,000
of Large Cap Value Equity Investments Fund
* CGCM Consulting Group Cap Mkts Fund 126,171 shares 1,325,000
of International Equity Investments Fund
* CGCM Consulting Group Cap Mkts Fund 27,343 shares 156,000
of Emerging Market Equity Investments Fund
* CGCM Consulting Group Cap Mkts Fund 252,714 shares 3,768,000
of Large Cap Growth Equity Investments Fund
* CGCM Consulting Group Cap Mkts Fund 226,127 shares 3,297,000
of Small Cap Growth Equity Investments Fund
* CGCM Consulting Group Cap Mkts Fund 306,849 shares 3,673,000
of Stable Value Investments Fund
* CGCM Consulting Group Cap Mkts Fund 76,629 shares 568,000
of S&P 500 Index Investments Fund
* COMARCO, Inc. COMARCO, Inc. common stock 2,926,000
216,730 shares
* Plan Participants Participant Loans 174,000
COMARCO, Inc.
Various dates and rates of 9% to 10%
Total Investments
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$19,485,000
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* Party-in-interest
See accompanying Independent Auditors' Report.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Administrator has duly caused this annual report to be signed by the undersigned
thereunto duly authorized.
COMARCO, Inc. SAVINGS AND RETIREMENT PLAN
BY: /s/ THOMAS A. FRANZA
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Thomas A. Franza
President & Chief Executive
Officer
COMARCO, Inc.
DATE: June 25, 2001
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EXHIBIT INDEX
Exhibit
Number Description of Exhibits
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23.1 Consent of KPMG LLP Independent Auditors