EX-99.1 3 dex991.txt ANNUAL FINANCIAL STATEMENTS Exhibit 99.1 AMERICAN SOFTWARE, INC. 401(k) PROFIT SHARING PLAN Financial Statements and Supplemental Schedule December 31, 2001 and 2000 (With Independent Auditors' Report Thereon) AMERICAN SOFTWARE, INC. 401(k) PROFIT SHARING PLAN Table of Contents
Page Independent Auditors' Report 1 Statements of Net Assets Available for Plan Benefits as of December 31, 2001 and 2000 2 Statements of Changes in Net Assets Available for Plan Benefits - Years ended December 31, 2001 and 2000 3 Notes to Financial Statements 4 Schedule H, Line 4i - Schedule of Assets (Held at End of Year) - December 31, 2001 9
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, 2001 and 2000 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, 2001 and 2000 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 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. 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. /s/ KPMG LLP Atlanta, Georgia May 17, 2002 AMERICAN SOFTWARE, INC. 401(k) PROFIT SHARING PLAN Statements of Net Assets Available for Plan Benefits December 31, 2001 and 2000
2001 2000 -------------- -------------- Assets: Investments: American Software, Inc. common stock $ 62,160 36,882 Mutual funds (note 3) 29,129,697 34,298,028 Loans to participants 263,404 237,611 -------------- -------------- Total investments 29,455,261 34,572,521 Employer contributions receivable 52,625 88,793 Employee contributions receivable 97,174 123,066 -------------- -------------- Net assets available for plan benefits $ 29,605,060 34,784,380 ============== ==============
See accompanying notes to financial statements. 2 AMERICAN SOFTWARE, INC. 401(k) PROFIT SHARING PLAN Statements of Changes in Net Assets Available for Plan Benefits Years ended December 31, 2001 and 2000
2001 2000 ------------ ------------ Additions to (depreciation of) net assets attributed to: Employer contributions $ 285,228 406,619 Employee contributions 2,038,459 2,855,675 Employee rollover contributions 22,240 134,437 Interest and dividends 449,167 3,366,626 Interest on loans to participants 15,158 21,305 Net depreciation in fair value of investments (note 6) (4,334,735) (8,226,204) ------------ ------------ Total decreases (1,524,483) (1,441,542) ------------ ------------ Deductions from net assets attributed to: Benefits paid to participants 3,652,378 6,019,404 Administrative expenses 2,459 16,058 ------------ ------------ Total deductions 3,654,837 6,035,462 ------------ ------------ Net change (5,179,320) (7,477,004) Net assets available for plan benefits at beginning of year 34,784,380 42,261,384 ------------ ------------ Net assets available for plan benefits at end of year $ 29,605,060 34,784,380 ============ ============
See accompanying notes to financial statements. 3 AMERICAN SOFTWARE, INC. 401(k) PROFIT SHARING PLAN Notes to Financial Statements December 31, 2001 and 2000 (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 (see note 7). 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. 4 (Continued) AMERICAN SOFTWARE, INC. 401(k) PROFIT SHARING PLAN Notes to Financial Statements December 31, 2001 and 2000 (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 one to 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. 5 (Continued) AMERICAN SOFTWARE, INC. 401(k) PROFIT SHARING PLAN Notes to Financial Statements December 31, 2001 and 2000 (c) Payment of Benefits Benefits are recorded when paid. 6 (Continued) AMERICAN SOFTWARE, INC. 401(k) PROFIT SHARING PLAN Notes to Financial Statements December 31, 2001 and 2000 (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 -------------------------- 2001 2000 ------------ ------------ Mutual Funds: Fidelity Retirement Government Money Market $ 3,919,723 3,095,778 Fidelity Blue Chip Growth 6,925,188 9,226,590 Fidelity Magellan 4,793,477 5,647,647 Fidelity Fund 3,564,553 4,509,911 Fidelity Capital Appreciation 1,962,565 2,164,550 Fidelity OTC Portfolio 2,748,448 4,009,302 (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, 2001 and 2000 as follows: 2001 2000 ------------ ------------ American Software, Inc. common stock $ 25,279 (205,914) Mutual funds (4,360,014) (8,020,290) ------------ ------------ $ (4,334,735) (8,226,204) ============ ============ 7 (Continued) (7) Subsequent Event The Plan was amended, effective January 1, 2002, whereby the Company will no longer make matching contributions equal to 25% of the first 6% of eligible compensation contributed by the participant. The Plan was further amended to allow the Company to make a discretionary matching contribution at a rate to be determined by the Company. 8 AMERICAN SOFTWARE, INC. 401(k) PROFIT SHARING PLAN Schedule H, Line 4i - Schedule of Assets (Held at End of Year) December 31, 2001
Description of Current Identity of issue investment value --------------------------------------------- ------------------------------- ---------------- Common stock: *American Software, Inc. 26,793 shares $ 62,160 ---------------- Mutual funds: *Fidelity Fund 123,426.345 units 3,564,553 *Fidelity Magellan 45,993.828 units 4,793,477 *Fidelity Intermediate Bond 129,291.216 units 1,334,285 *Fidelity OTC Portfolio 88,176.057 units 2,748,448 *Fidelity Overseas 20,387.530 units 559,026 *Fidelity Capital Appreciation 95,501.943 units 1,962,565 *Fidelity Blue Chip Growth 161,275.913 units 6,925,188 *Fidelity Asset Manager Portfolio 68,459.068 units 1,061,116 *Fidelity International Bond 24,686.571 units 196,999 *Fidelity Retirement Government Money Market 3,919,723.290 units 3,919,723 *Fidelity Real Estate Investment Trust 15,864.228 units 293,805 *Fidelity Contrafund 12,088.900 units 517,042 *Fidelity Small Capital Stock 25,833.898 units 434,009 *Fidelity Europe Capital Appreciation 5,736.084 units 94,645 *Fidelity Latin American 873.022 units 10,485 *Fidelity Southeast Asia 2,791.603 units 30,652 *Fidelity Balanced 23,974.070 units 357,214 Morgan Stanley Emerging Market Portfolio 4,955.920 units 53,227 *Fidelity Japan 6,827.072 units 62,126 Invesco High Yield 57,838.958 units 211,112 ---------------- Total mutual funds 29,129,697 ---------------- Loans to participants: American Software Loan Fund Loans with terms of 1-10 years with interest rates ranging from 9.25% to 10.00% 263,404 ---------------- Total investments $ 29,455,261 ================
*Represents a party-in-interest to the Plan. See accompanying independent auditors' report. 9