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
Commission file number 0-016473
A. Full title of the plan and the address of the plan, if different from that
of the issuer named below:
SSE TELECOM, INC.
401(k) PROFIT SHARING PLAN
B. Name of issuer of the securities held pursuant to the plan and the address
of its principal executive office:
SSE TELECOM, INC.
47823 WESTINGHOUSE DRIVE
FREMONT, CA 94539
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.
SSE TELECOM, INC.
Date: July 31, 2001 By /s/ LEON BLACHOWICZ
--------------------------------------
Title: on behalf of the Administrator of the
SSE Telecom, Inc.
401(k) Profit Sharing Plan
Page 1 of 14
SSE TELECOM, INC.
401(k) PROFIT SHARING PLAN
FINANCIAL STATEMENTS
DECEMBER 31, 2000 AND 1999
Page 2 of 14
SSE TELECOM, INC.
401(k) PROFIT SHARING 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..............................12
Schedule of Assets Held for Investment Purposes............................13
Page 3 of 14
INDEPENDENT ACCOUNTANTS' REPORT
TO THE PARTICIPANTS AND
PLAN ADMINISTRATOR OF THE
SSE TELECOM, INC.
401(k) PROFIT SHARING PLAN
We have audited the financial statements of the SSE Telecom, Inc. 401(k) Profit
Sharing 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 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.
MOHLER, NIXON & WILLIAMS
Accountancy Corporation
Campbell, California
July 12, 2001
Page 4 of 14
SSE TELECOM, INC.
401(k) PROFIT SHARING PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
--------------------------------------------------------
DECEMBER 31,
2000 1999
---------- ----------
Assets:
Investments, at fair value .............. $4,964,300 $5,135,948
Investments, at contract value .......... 198,502 251,205
Participant loans ....................... 235,266 197,152
---------- ----------
Net assets available for benefits ............ $5,398,068 $5,584,305
========== ==========
See notes to financial statements.
Page 5 of 14
SSE TELECOM, INC.
401(k) PROFIT SHARING PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
--------------------------------------------------------------------------------
YEARS ENDED
DECEMBER 31,
2000 1999
----------- -----------
Additions to net assets attributed to:
Investment income:
Dividends and interest ................................................... $ 219,410 $ 443,310
Net realized and unrealized appreciation
(depreciation) in fair value of investments .............................. (506,378) 722,830
----------- -----------
(286,968) 1,166,140
Contributions:
Participants' ............................................................ 515,055 622,826
Employer's ............................................................... 78,841 109,849
----------- -----------
593,896 732,675
----------- -----------
Total additions .......................................................... 306,928 1,898,815
Deductions from net assets attributed to:
Withdrawals and distributions ............................................. (479,702) (2,258,102)
Administrative expenses ................................................... (13,463) (22,833)
----------- -----------
Total deductions ......................................................... (493,165) (2,280,935)
----------- -----------
Net decrease in net assets................................................ (186,237) (382,120)
----------- -----------
Net assets available for benefits:
Beginning of year ......................................................... 5,584,305 5,966,425
----------- -----------
End of year ............................................................... $ 5,398,068 $ 5,584,305
=========== ===========
See notes to financial statements
Page 6 of 14
SSE TELECOM, INC.
401(k) PROFIT SHARING 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 SSE Telecom, Inc. 401(k) Profit
Sharing 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 1981 by SSE
Telecom, Inc. (the Company) to provide benefits to eligible employees, as
defined in the Plan document. The Plan administrator believes that the Plan is
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.
On May 17, 2001, the Company filed for protection under Chapter 11 of the
federal bankruptcy statutes. In conjunction with this action, the Board of
Directors intends to terminate the Plan. In accordance with ERISA provisions for
terminating plans, participants were made fully vested in their accounts as of
April 1, 2001.
ADMINISTRATION - The Company has appointed an Administrative Committee (the
Committee) to manage the operation and administration of the Plan. The Company
contracted with Union Bank of California (Union Bank) to act as the custodian
and trustee of the Plan and to process and maintain the records of participant
data. 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 in accordance with accounting principles generally
accepted in the United States of America.
Page 7 of 14
INVESTMENTS - Investments of the Plan are held by Union Bank and invested based
solely upon instructions received from participants. The Committee added the SSE
Telecom, Inc. Stock Fund (SSET Stock Fund) as an additional investment option in
1997. The fund was invested in shares of the Company's common stock.
Participants' investments in the SSET Stock Fund were restricted to a maximum of
10% of their total account value. Effective July 1, 1999, the fund was frozen by
the Committee. Henceforth, participants were permitted to transfer their
investments from the SSET Stock Fund but no new contributions or transfers into
the fund were permitted.
The Plan's investment in mutual funds and SSET Stock Fund are valued at fair
value as of the last day of the Plan year, as measured by quoted market prices.
As of July 12, 2001, the SSET Stock Fund was valued at $0.06 per share. The
Union Bank Stable Value fund is a collective trust fund invested primarily in a
diversified portfolio of guaranteed insurance contracts and was valued at
contract value (purchase price plus interest) as of the last day of the Plan
year as reported by Union Bank. The yield fluctuates daily and was 6.05% and
5.83% at December 31, 2000 and 1999, respectively. Participant loans are valued
at cost, which approximates fair value.
INCOME TAXES - The Plan applied for and received a favorable determination
letter dated October 23, 1998. In connection with the termination of the Plan,
the Committee intends to apply for an approved termination letter from the
Internal Revenue Service stating that the termination of the Plan does not
adversely affect its qualifications for federal tax purposes. 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.
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 14 different funds offered by the Plan. 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 have materially affected 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 - PARTICIPATION AND BENEFITS
PARTICIPANT CONTRIBUTIONS - Participants may elect to have the Company
contribute a percentage, from 1% 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 agreed to accept an equivalent reduction in taxable
compensation. Contributions withheld are invested in accordance with the
participant's direction.
Page 8 of 14
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.
EMPLOYER CONTRIBUTIONS - The Company is allowed to make matching contributions
as defined in the Plan and as approved by the Board of Directors. In 2000 and
1999, the Company matched 50% of each eligible participant's contribution up to
a maximum of 6% of the participant's compensation, not to exceed $1,000 per
year. The Plan also allows for a discretionary profit sharing contribution. No
discretionary contribution has been made for the years ended December 31, 2000
and 1999.
VESTING - Participants are immediately vested in their contributions.
Participants are fully vested in the employer's profit sharing and matching
contributions allocated to their account after five years of credited service.
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, and forfeitures of terminated participants'
nonvested accounts. Allocation of the Company's contribution is based on
participant contributions or eligible employee compensation, as defined in the
Plan.
PAYMENT OF BENEFITS - Upon termination, the participant or beneficiary may elect
to leave their account balance in the Plan, or receive their total benefits in a
lump sum amount equal to the value of the participant's vested interest in their
account. 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 not less than
$1,000 and 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 extended.
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 9.5% to 10.5%.
Page 9 of 14
NOTE 3 - INVESTMENTS
The following table includes the contract or fair values of investments and
investment funds that represent 5% or more of the Plan's net assets at December
31:
2000 1999
---- ----
T. Rowe Price:
Small-Cap Value Fund ............ $ 224,772 $ 259,721
Spectrum Income Fund ............ 145,798 122,316
Highmark Diversified Money Market Fund 169,175 194,994
Union Bank Stable Value Fund ......... 198,502 251,205
Strong Corporate Bond Fund ........... 149,992 208,099
Vanguard Total Stock Market Fund ..... 541,359 469,613
Vanguard Asset Allocation Fund ....... 539,521 673,165
Highmark Value Momentum Fund ......... 201,561 303,429
Vanguard Primecap Fund ............... 1,280,544 1,231,723
Dreyfus Appreciation Fund ............ 664,391 752,310
Templeton World I Fund ............... 399,184 531,802
Invesco Dynamics Fund ................ 341,900 91,820
Janus Twenty Fund .................... 294,065 169,099
SSET Stock Fund ...................... 11,945 127,857
Cash ................................. 93
Participant loans .................... 235,266 197,152
---------- ----------
Assets held for investment
purposes ................. $5,398,068 $5,584,305
========== ==========
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
---- ----
SSET Stock . ($113,338) $ 134,084
Mutual funds (393,040) 588,746
--------- ---------
($506,378) $ 722,830
========= =========
Page 10 of 14
NOTE 4 - RELATED PARTY TRANSACTIONS
Certain Plan investments in a collective trust are managed by Union Bank, 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. As allowed in the
Plan up to July 1, 1999, participants could elect to invest a portion of their
accounts in the common stock of the Company. Aggregate investment in Company
common stock was as follows at December 31, 2000 and 1999:
DATE NUMBER OF SHARES FAIR VALUE COST
---- ---------------- ---------- --------
2000 13,721 $ 11,945 $ 45,505
======== ========
1999 13,736 $127,857 $ 46,131
======== ========
Page 11 of 14
SUPPLEMENTAL SCHEDULE
Page 12 of 14
SSE TELECOM, INC. EIN: 52-1466297
401(k) PROFIT SHARING PLAN PLAN #002
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 2000
------------------------------------------------------------------------------------------------------------------
IDENTITY OF ISSUE, BORROWER, DESCRIPTION OF INVESTMENT INCLUDING MATURITY DATE, CURRENT
LESSOR OR SIMILAR PARTY RATE OF INTEREST, COLLATERAL, PAR OR MATURITY VALUE VALUE
----------------------------------------- --------------------------------------------------- ----------
Cash Cash $93
T. Rowe Price:
Small-Cap Value Fund Mutual fund 224,772
Spectrum Income Fund Mutual fund 145,798
* Highmark Diversified Money Market Fund Mutual fund 169,175
* Union Bank Stable Value Fund Collective trust fund 198,502
Strong Corporate Bond Fund Mutual fund 149,992
Vanguard Total Stock Market Fund Mutual fund 541,359
Vanguard Asset Allocation Fund Mutual fund 539,521
* Highmark Value Momentum Fund Mutual fund 201,561
Vanguard Primecap Fund Mutual fund 1,280,544
Dreyfus Appreciation Fund Mutual fund 664,391
Templeton World I Fund Mutual fund 399,184
Invesco Dynamics Fund Mutual fund 341,900
Janus Twenty Fund Mutual fund 294,065
* SSET Stock Fund Common stock fund 11,945
* Participant loans Interest rates ranging from 9.5% - 10.5% 235,266
----------
Total $5,398,068
==========
* Parties-in-interest
Page 13 of 14
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statement on
Form S-8 (No. 33-52072 and No. 333-31289) of SSE Telecom, Inc. of our report
dated July 12, 2001, relating to the financial statements and schedule of the
SSE Telecom, Inc. 401(k) Profit Sharing Plan included in this Annual Report Form
11-K.
By /s/ Mohler, Nixon & Williams
---------------------------------------
MOHLER, NIXON & WILLIAMS
Accountancy Corporation
Campbell, California
July 31, 2001
Page 14 of 14