-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, N+sg0YV6hX6ADkkNXq8VV0KpFIh/WgI2sqwErW1AxAilCgqzj8CMtOcra6fgkxsy 7KYKusV8RW8fcfmDjL+cDg== 0000891618-01-501402.txt : 20010629 0000891618-01-501402.hdr.sgml : 20010629 ACCESSION NUMBER: 0000891618-01-501402 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20001231 FILED AS OF DATE: 20010628 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NETWORKS ASSOCIATES INC/ CENTRAL INDEX KEY: 0000890801 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 770316593 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 11-K SEC ACT: SEC FILE NUMBER: 000-20558 FILM NUMBER: 1669837 BUSINESS ADDRESS: STREET 1: 3963 FREEDOM CIRCLE CITY: SANTA CLARA STATE: CA ZIP: 95054 BUSINESS PHONE: 4083463832 MAIL ADDRESS: STREET 1: 3963 FREEDOM CIRCLE CITY: SANTA CLARA STATE: CA ZIP: 95054 FORMER COMPANY: FORMER CONFORMED NAME: MCAFEE ASSOCIATES INC DATE OF NAME CHANGE: 19930328 11-K 1 f73756e11-k.txt FORM 11-K 1 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 000-26994 A. Full title of the plan and the address of the plan, if different from that of the issuer named below: NETWORK ASSOCIATES, INC. TAX DEFERRED SAVINGS PLAN B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: NETWORK ASSOCIATES, INC. 3965 FREEDOM CIRCLE SANTA CLARA, CA 95054 2 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. NETWORK ASSOCIATES, INC. TAX DEFERRED SAVINGS PLAN Date: June 28, 2001 By /s/ Stephen C. Richards -------------------------------- Stephen C. Richards Executive Vice President Chief Financial Officer 3 NETWORK ASSOCIATES, INC. TAX DEFERRED SAVINGS PLAN Financial Statements December 31, 2000 and 1999 4 NETWORK ASSOCIATES, INC. TAX DEFERRED SAVINGS PLAN FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE DECEMBER 31, 2000 AND 1999 TABLE OF CONTENTS - --------------------------------------------------------------------------------
PAGE Independent Accountants' Report..............................................1 Financial Statements: Statements of Net Assets Available for Benefits..............................2 Statements of Changes in Net Assets Available for Benefits...................3 Notes to Financial Statements................................................4 Supplemental Schedule as of December 31, 2000................................9 Schedule of Assets Held for Investment Purposes
5 INDEPENDENT ACCOUNTANTS' REPORT TO THE PARTICIPANTS AND PLAN ADMINISTRATOR OF THE NETWORK ASSOCIATES, INC. TAX DEFERRED SAVINGS PLAN We have audited the financial statements of Network Associates, Inc. Tax Deferred Savings 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 audits 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. By /s/ Mohler, Nixon & Williams -------------------------------- MOHLER, NIXON & WILLIAMS Accountancy Corporation Campbell, California May 11, 2001 1 6 NETWORK ASSOCIATES, INC. TAX DEFERRED SAVINGS PLAN STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS - -------------------------------------------------------------------------------- DECEMBER 31, 2000 1999 ------------ ------------ Investments, at fair value $ 60,722,772 $ 61,533,244 ------------ ------------ Assets held for investment purposes 60,722,772 61,533,244 Participants' contributions receivable 584,953 431,279 Employer's contribution receivable 195,012 118,422 ------------ ------------ Total assets 61,502,737 62,082,945 Other liabilities (356,192) ------------ ------------ Net assets available for benefits $ 61,146,545 $ 62,082,945 ============ ============ See notes to financial statements. 2 7 NETWORK ASSOCIATES, INC. TAX DEFERRED SAVINGS 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 $ 3,895,356 $ 3,081,128 Net realized and unrealized appreciation (depreciation) in fair value of investments (11,429,245) 3,425,927 ------------ ------------ (7,533,889) 6,507,055 ------------ ------------ Contributions: Participants' 13,181,547 14,513,653 Employer's 3,926,802 2,879,358 ------------ ------------ 17,108,349 17,393,011 ------------ ------------ Total additions 9,574,460 23,900,066 ------------ ------------ Deductions from net assets attributed to: Withdrawals and distributions 10,459,202 7,143,674 Administrative expenses 51,658 35,865 ------------ ------------ Total deductions 10,510,860 7,179,539 ------------ ------------ Net increase (decrease) (936,400) 16,720,527 Net assets available for benefits: Beginning of year 62,082,945 45,362,418 ------------ ------------ End of year $ 61,146,545 $ 62,082,945 ============ ============
See notes to financial statements. 3 8 NETWORK ASSOCIATES, INC. TAX DEFERRED SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2000 AND 1999 - -------------------------------------------------------------------------------- NOTE 1 - THE PLAN AND ITS SIGNIFICANT ACCOUNTING POLICIES GENERAL - The following description of the Network Associates, Inc. Tax Deferred Savings Plan (the Plan) provides only general information. Participants should refer to the Plan document for a more complete description of the Plan's provisions. If a conflict exists between this document and the provisions of the Plan document, the Plan document will govern. The Plan is a defined contribution plan that was established effective as of September 15, 1988 by Network Associates, Inc. (the Company) to provide benefits to eligible employees, as defined in the Plan document. Effective as of January 1, 1998, the McAfee Associates, Inc. 401(k) and Profit Sharing Plan was merged with and into the Network General Corporation Tax Deferred Savings Plan, which was renamed the Network Associates, Inc. Tax Deferred Savings Plan. The Plan was amended to allow employees to make after-tax contributions to the Plan, effective as of January 1, 2000. The Plan administrator believes that the Plan is currently 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. ADMINISTRATION - The Company has appointed an Administrative Committee (the Committee) to manage the operation and administration of the Plan. The Company has contracted with Fidelity Management Trust Company (Fidelity) to act as the trustee and to provide certain administrative and recordkeeping services for the Plan. 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. FORFEITED ACCOUNTS - Forfeited non-vested accounts totaled $246,300 and will be used to reduce employer contributions. 4 9 INVESTMENTS - Investments of the Plan are held by Fidelity and invested based solely upon instructions received from participants. The Plan is intended to qualify as a Section 404(c) Plan under ERISA. During 1998, the Network Associates Unitized Stock Fund (NAI Stock Fund) became an investment option. The NAI Stock Fund consists primarily of Company common stock, as well as a small percentage of cash or other short-term liquid investments maintained to provide liquidity for participant transactions such as loans or withdrawals. The Plan's investment in mutual funds are valued at fair value as of the last day of the Plan year, as measured by quoted market prices. The Plan's investment in the NAI Stock Fund is valued at the closing stock price as of December 31, 2000 plus the market value of the liquid investments. Participant loans are valued at cost, which approximates fair value. CASH AND CASH EQUIVALENTS - All highly liquid investments purchased with an original maturity of three months or less (generally money market funds) are considered to be cash equivalents. These investments are usually held for a short period of time, pending long-term investment. INCOME TAXES - The Plan has been amended since receiving its latest favorable determination letter dated September 24, 1997. However, the Company believes that the Plan is operated in accordance with, and continues to qualify 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. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500 - The differences between the information reported in the financial statements and the information reported in the Form 5500 arise primarily from presenting the financial statements on the accrual basis of accounting. 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 mutual funds, stocks, bonds, fixed income securities and other investment securities 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 materially affect 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 - RELATED PARTY TRANSACTIONS Certain Plan investments in mutual funds are managed by Fidelity. 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. 5 10 NOTE 3 - PARTICIPATION AND BENEFITS PARTICIPANT CONTRIBUTIONS - Participants may elect to have the Company contribute a percentage from 1% to 15%, 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 agree to accept an equivalent reduction in taxable compensation. Participants also may contribute from 1% to 5% of compensation to the Plan on an after-tax basis. Contributions withheld are invested in accordance with the participant's direction. 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 one dollar for each dollar contributed by an eligible employee to the Plan for the first $1,000 contributed, and 25% of each eligible employee's contribution in excess of $1,000. 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' pre-tax and rollover contributions are 100% vested. The Company's matching contributions and profit sharing contributions, if any, are fully vested after three 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. Allocation of the Company's matching contribution is based on participant contributions, as defined in the Plan. PAYMENT OF BENEFITS - Upon termination of employment, the participant or beneficiary will receive the benefits in a lump sum amount equal to the value of the participant's vested interest in his or her 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 cannot exceed fifteen years. The specific terms and conditions of such loans are established by the Plan administrator. Outstanding loans at December 31, 2000 carry interest rates which range from 7.8% to 9.5%. 6 11 NOTE 4 - INVESTMENTS The following table includes the fair values of investments and investment funds that represent 5% or more of the Plan's net assets at December 31:
2000 1999 ----------- ----------- Fidelity Management Trust Company: Magellan Fund $12,588,135 $13,045,673 Intermediate Bond Fund 1,667,395 1,608,906 Blue Chip Fund 15,450,906 16,025,489 Low Price Stock Fund 1,769,318 1,214,351 Equity Income II Fund 5,523,243 4,925,974 Diversified International Fund 2,185,669 1,738,044 Retired Government Money Market Fund 8,711,051 7,680,526 Spartan U.S. Equity Index Fund 6,869,631 6,857,145 Invesco Total Return Fund 781,837 662,367 Warburg Emerging Growth Fund 2,502,563 1,489,564 NAI Stock Fund 1,930,073 5,477,240 Participant loans 742,951 807,965 ----------- ----------- Assets held for investment purposes $60,722,772 $61,533,244 =========== ===========
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 ------------ ------------ Common stock $ (4,481,753) $ (1,447,288) Mutual funds (6,947,492) 4,873,215 ------------ ------------ $(11,429,245) $ 3,425,927 ============ ============
NOTE 5 - PARTY-IN-INTEREST TRANSACTIONS As allowed by the Plan, participants may elect to invest a portion of their accounts in the NAI Stock Fund which includes common stock of the Company. Aggregate investment in Company common stock included in the NAI Stock Fund at December 31, 2000 and 1999 was as follows:
Date Number of shares Fair value ---- ---------------- ---------- 2000 317,935 $ 1,331,353 1999 195,198 $ 5,209,347
7 12 The NAI Stock Fund invests primarily in the Company's common stock. The remainder of the Fund is invested in Fidelity Money Market Fund Class I Shares to allow for timely handling of exchanges, withdrawals and distributions. Investments in the Money Market Fund were $598,720 and $269,596 at December 31, 2000 and 1999, respectively. NOTE 6 - PLAN TERMINATION AND/OR MODIFICATION The Company intends to continue the Plan indefinitely for the benefit of its participants; however, it reserves the right to terminate and/or modify the Plan at any time by resolution of its Board of Directors or Administrative Committee and subject to the provisions of ERISA. In the event the Plan is terminated in the future, participants would become fully vested in their accounts. NOTE 7 - SUBSEQUENT EVENT Effective January 1, 2001, the Plan was amended to change the eligibility requirements for matching contributions, the rate of matching contributions and the vesting provisions of the Plan. The matching contributions and profit sharing contributions, if any, of eligible employees of the Company on or after January 1, 2001 are 100% vested. The Plan was also amended to comply with recent changes to the relevant provisions of the Internal Revenue Code. 8 13 CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the incorporation by reference in the Registration Statement on Form S-8 (No. 333-43572) of Network Associates, Inc. of our report dated May 11, 2001, relating to the financial statements and schedule of the Network Associates, Inc. Tax Deferred Savings Plan included in this Annual Report on Form 11-K. By /s/ Mohler, Nixon & Williams --------------------------------------- MOHLER, NIXON & WILLIAMS Accountancy Corporation Campbell, California June 28, 2001 14 SUPPLEMENTAL SCHEDULE 9 15 NETWORK ASSOCIATES, INC. EIN: 77-0316593 TAX DEFERRED SAVINGS PLAN PLAN #001 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 - ---- ------------------------------------------------ --------------------------------------------------------- ------------ * Fidelity Warburg Emerging Growth Fund Mutual Fund $ 2,502,563 * Fidelity Invesco Total Return Fund Mutual Fund 781,837 * Fidelity Magellan Fund Mutual Fund 12,588,135 * Fidelity Intermediate Bond Fund Mutual Fund 1,667,395 * Fidelity Blue Chip Fund Mutual Fund 15,450,906 * Fidelity Low Price Stock Fund Mutual Fund 1,769,318 * Fidelity Equity Income II Fund Mutual Fund 5,523,243 * Fidelity Diversified International Fund Mutual Fund 2,185,669 * Fidelity Retirement Govt. Money Market Fund Mutual Fund 8,711,051 * Fidelity Spartan U.S. Equity Index Fund Mutual Fund 6,869,631 * NAI Stock Fund Common Stock 1,930,073 * Participant loans Interest rate (7.8%-9.5%) 742,951 ------------ Total $60,722,772 ============
* Parties in interest -----END PRIVACY-ENHANCED MESSAGE-----