EX-99.1 2 dex991.txt ANNUAL FINANCIAL STATEMENTS EXHIBIT 99.1 AMERICAN SOFTWARE, INC. 401(K) PROFIT SHARING PLAN Financial Statements and Supplemental Schedule December 31, 2000 and 1999 (With Independent Auditors' Report Thereon) AMERICAN SOFTWARE, INC. 401(K) PROFIT SHARING PLAN Table of Contents
Page Independent Auditors' Report 3 Statements of Net Assets Available for Plan Benefits as of December 31, 2000 and 1999 4 Statements of Changes in Net Assets Available for Plan Benefits - Years ended December 31, 2000 and 1999 5 Notes to Financial Statements 6 Schedule of Assets Held for Investment Purposes at End of Year - December 31, 2000 10
2 Independent Auditors' Report The Plan Administrator and Trustee American Software, Inc. 401(k) Profit Sharing Plan: We have audited the accompanying statements of net assets available for plan benefits of American Software, Inc. 401(k) Profit Sharing Plan (the "Plan") as of December 31, 2000 and 1999, and the related statements of changes in net assets available for plan benefits for the years then ended. 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 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 of assets held for investment purposes at end of year 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. This 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 Atlanta, Georgia June 8, 2001 3 AMERICAN SOFTWARE, INC. 401(K) PROFIT SHARING PLAN Statements of Net Assets Available for Plan Benefits December 31, 2000 and 1999
2000 1999 ------------ ------------ Assets: Investments: American Software, Inc. common stock $ 36,882 348,250 Mutual funds (note 3) 34,298,028 41,340,266 Loans to participants 237,611 374,194 ------------ ------------ Total investments 34,572,521 42,062,710 Employer contributions receivable 88,793 92,176 Employee contributions receivable 123,066 163,696 ------------ ------------ Total assets 34,784,380 42,318,582 Liabilities - refundable excess contributions payable -- (57,198) ------------ ------------ Net assets available for plan benefits $ 34,784,380 42,261,384 ============ ============
See accompanying notes to financial statements. 4 AMERICAN SOFTWARE, INC. 401(k) PROFIT SHARING PLAN Statements of Net Assets Available for Plan Benefits December 31, 2000 and 1999
2000 1999 ----------- ----------- Additions to (depreciation of) net assets attributed to: Employer contributions $ 406,619 434,967 Employee contributions 2,855,675 2,961,214 Employee rollover contributions 134,437 483,906 Interest and dividends 3,366,626 2,345,809 Interest on loans to participants 21,305 30,490 Net (depreciation) appreciation in fair value of investments (note 6) (8,226,204) 6,808,938 ----------- ----------- Total (decreases) additions (1,441,542) 13,065,324 ----------- ----------- Deductions from net assets attributed to: Benefits paid to participants 6,019,404 3,297,222 Administrative expenses 16,058 5,686 ----------- ----------- Total deductions 6,035,462 3,302,908 ----------- ----------- Net change (7,477,004) 9,762,416 Net assets available for plan benefits at beginning of year 42,261,384 32,498,968 ----------- ----------- Net assets available for plan benefits at end of year $34,784,380 42,261,384 =========== ===========
See accompanying notes to financial statements. 5 (1) The Plan The following description of the American Software, Inc. 401(k) Profit Sharing Plan (the "Plan") provides only general information. Participants should refer to the Plan agreement, as restated and amended, for a more complete description of the Plan's provisions. The Company intends to continue the Plan but reserves the right to amend, modify, or restate the Plan from time to time and to suspend, terminate, or discontinue contributions under the Plan. If the Plan is terminated, benefits will be distributed in accordance with provisions of the Plan. (a) General The Plan is a defined contribution plan covering all full-time employees of American Software, Inc. and its subsidiaries (the "Company"). In December 1997, the Plan was amended by changing the service requirement from one year of service to no service requirement. It is subject to certain provisions of the Employee Retirement Income Security Act of 1974 ("ERISA"). The purpose of the Plan is to provide eligible employees of the Company a qualified retirement plan which meets the requirements of Section 401(k) of the Internal Revenue Code with respect to which contributions will be excluded from the employee's income. (b) Contributions Participants may elect to contribute 1% to 15% of their annual compensation to the Plan (subject to the limitations of Section 401(k) of the Internal Revenue Code). The Company's profit sharing contribution to the Plan is determined at the discretion of the Board of Directors. Effective January 1, 1999, the Plan was amended whereby the Company makes matching contributions equal to 25% of the first 6% of eligible compensation contributed by the participant. In no event shall the annual contributions (i.e., participant and Company contributions) made with respect to a participant under all defined contribution plans maintained by the Company, together with forfeitures allocated to that participant, exceed the lesser of $30,000 or 25% of the participant's annual compensation. Participant contributions may be invested in one or more of the investment options available under the Plan. (c) Participant Rollovers Employees are allowed, under the provisions of the Plan, to transfer to the Plan account balances from other eligible retirement plans with the consent of the plan administrator and provided that the transfer will not jeopardize the tax-exempt status of the Plan. (d) Participant Accounts Each participant's account is credited with the participant's contribution, if any, and an allocation of (a) the Company's contribution, if any, and (b) Plan earnings (loss). Allocations are based on participant earnings or account balances, as defined. Forfeitures of terminated participants' nonvested accounts are retained in the Plan and used to reduce future Company contributions. 6 (e) Vesting Participants are immediately vested in their voluntary contributions plus actual earnings thereon. Vesting in the remainder of their accounts is based on years of continuous service. For employer matching contributions, participants vest 25% per year after years one, two, and three, and are 100% vested after four years of credited service. For employer profit sharing contributions, participants vest 20% per year after years two, three, four, and five and are 100% vested after six years of credited service. Although it has not expressed any intent to do so, the Company has the right to terminate the Plan at any time, subject to the provisions of ERISA. In the event of Plan termination, participants become 100% vested in their accounts. (f) Payment of Benefits Upon termination of service, retirement, or reaching age 59-1/2, a participant may elect to receive either a lump-sum amount equal to the value of his or her account or a series of approximately equal installments for a specified period of time not exceeding the participant's life expectancy if the account exceeds $5,000. The Plan also provides for death benefits to the participant's beneficiary equal to the amount in the participant's account and disability benefits to the participant equal to the amount in the participant's account if the participant becomes totally and permanently disabled. In addition, the Plan provides for hardship withdrawals as defined in the Plan. (g) Participant Loans The Plan provides for loans against a participant's account from $1,000 to $50,000 but limited to 50% of the participant's account balance. Participants can apply for one loan per year and are limited to one loan outstanding. Loans bear interest at a rate determined by the Plan. Loans are repayable over a five-year period unless for the purchase of a principal residence which is repayable over a 10-year period. Loans are repayable upon death, disability, or termination of employment. (2) Summary of Significant Accounting Policies (a) Basis of Accounting The accounts are maintained, and the accompanying financial statements are presented, on the accrual basis of accounting. (b) Investment Valuation and Income Recognition Investments in American Software, Inc. common stock and mutual funds are carried at fair value as determined by the Trustee of the Plan based primarily on the latest nationally quoted market prices. Loans to participants are interest-bearing and stated at cost, which based on discounted cash flows, approximates fair value. Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date. (c) Payment of Benefits Benefits are recorded when paid. 7 (d) Use of Estimates Management of the Plan has made a number of estimates and assumptions relating to the reporting of assets, liabilities and changes therein, and the disclosure of contingent assets and liabilities to prepare these financial statements in conformity with accounting principles generally accepted in the United States of America. Actual results could differ from those estimates and assumptions. (3) Investments The fair values of investments that represent 5% or more of the Plan's net assets are as follows:
December 31, ---------------------------------- 2000 1999 ------------ ------------- Mutual Funds: Fidelity Retirement Government Money Market $3,095,778 3,653,561 Fidelity Blue Chip Growth 9,226,590 10,701,095 Fidelity Magellan 5,647,647 6,875,430 Fidelity Fund 4,509,911 5,690,244 Fidelity Capital Appreciation 2,164,550 2,674,714 Fidelity OTC Portfolio 4,009,302 5,187,869
(4) Income Tax Status The Plan has obtained a determination letter from the Internal Revenue Service stating that the Plan qualifies under the appropriate section of the Internal Revenue Code ("IRC") and, therefore, is not subject to tax under present income tax law. Once qualified, the Plan sponsor is required to operate in conformity with the IRC to maintain its qualification. The Plan sponsor believes that the Plan continues to qualify and to operate as designed. (5) Administrative Expenses Substantially all legal, accounting, and administrative fees related to the Plan are paid by the Company. Administrative expenses paid by the Plan represent fees paid to the trustee for trust services. (6) Net (Depreciation) Appreciation in Fair Value of Investments Investments held by the Plan had net (depreciation) appreciation in fair value during the years ended December 31, 2000 and 1999 as follows:
2000 1999 ----------- ---------- American Software, Inc. common stock $ (205,914) 276,176 Mutual funds (8,020,290) 6,532,762 ----------- ---------- $(8,226,204) 6,808,938 =========== ==========
The change in fair value of American Software, Inc. common stock is primarily attributable to net (depreciation) appreciation. 8 AMERICAN SOFTWARE, INC. 401(K) PROFIT SHARING PLAN Schedule of Assets Held for Investment Purposes at End of Year December 31, 2000
Description of Current Identity of issue investment value --------------------------------------------- --------------------------------- ----------------------------- Common stock: *American Software, Inc. 26,794 shares $ 36,882 ----------------------------- Mutual funds: *Fidelity Fund 137,665.166 units 4,509,911 *Fidelity Magellan 47,339.872 units 5,647,647 *Fidelity Intermediate Bond 132,961.342 units 1,334,932 *Fidelity OTC Portfolio 97,668.749 units 4,009,302 *Fidelity Overseas 25,885.206 units 889,675 *Fidelity Capital Appreciation 97,370.670 units 2,164,550 *Fidelity Blue Chip Growth 179,052.792 units 9,226,590 *Fidelity Asset Manager Portfolio 67,575.626 units 1,136,622 *Fidelity International Bond 25,771.425 units 215,449 *Fidelity Retirement Government Money Market 3,095,777.770 units 3,095,778 *Fidelity Real Estate Investment Trust 11,154.162 units 206,352 *Fidelity Contrafund 10,866.932 units 534,327 *Fidelity Small Capital Stock 20,076.243 units 325,837 *Fidelity Europe Capital Appreciation 19,286.993 units 370,117 *Fidelity Latin American 739.346 units 9,656 *Fidelity Southeast Asia 3,013.547 units 34,445 *Fidelity Balanced 9,768.325 units 148,381 Morgan Stanley Emerging Market Portfolio 7,232.418 units 81,437 *Fidelity Japan 9,309.710 units 128,008 Invesco High Yield 44,904.319 units 229,012 ----------------------------- Total mutual funds 34,298,028 ----------------------------- Loans to participants: American Software Loan Fund Loans with terms of 5-10 years with interest rates ranging from 9.25% to 10.00% 237,611 ----------------------------- Total investments $ 34,572,521 =============================
*Represents a party-in-interest to the Plan. See accompanying independent auditors' report. 9