SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 For the fiscal year ended December 31, 2001
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the transition period from _________________ to
_______________________
Commission file number
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A. Full title of the plan and the address of the plan, if different
from that of the issuer named below:
VTEL Corporation 401(k) Plan
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
Forgent Networks, Inc. (f/k/a VTEL Corporation)
108 Wild Basin Road
Austin, Texas 78746
Financial Statements and Supplemental Schedule
VTEL Corporation 401(k) Plan
Year ended December 31, 2001 with Report of Independent Auditors
VTEL Corporation 401(k) Plan
Financial Statements
and Supplemental Schedule
Year ended December 31, 2001
Contents
Report of Independent Auditors...............................................1
Financial Statements
Statements of Net Assets Available for Benefits..............................3
Statement of Changes in Net Assets Available for Benefits....................4
Notes to Financial Statements................................................5
Supplemental Schedule
Schedule H, line 4i, Schedule of Assets (Held at End of Year)...............10
Report of Independent Auditors
The Trustees
VTEL Corporation 401(k) Plan
We have audited the accompanying statements of net assets available for benefits
of the VTEL Corporation 401(k) Plan as of December 31, 2001 and 2000 and the
related statement of changes in net assets available for benefits for the year
ended December 31, 2001. 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. 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 benefits of the Plan at
December 31, 2001 and 2000 and the changes in net assets available for benefits
for the year ended December 31, 2001, in conformity with accounting principles
generally accepted in the United States.
Our audits were performed for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedule of assets
(held at end of year) as of December 31, 2001, is presented for purposes 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.
1
The supplemental schedule is the responsibility of the Plan's management. The
supplemental schedule has been subjected to the auditing procedures applied in
our audits of the basic financial statements and, in our opinion, is fairly
stated in all material respects in relation to the financial statements taken as
a whole.
June 10, 2002
2
VTEL Corporation 401(k) Plan
Statements of Net Assets Available for Benefits
December 31
2001 2000
-------------------------------------------
Assets
Investments at fair value $18,294,591 $23,021,889
Cash - 3,193
Employee contributions receivable 24,292 39,649
Employer contribution receivable 3,691 8,106
-------------------------------------------
Net assets available for benefits $18,322,574 $23,072,837
===========================================
See accompanying notes.
3
VTEL Corporation 401(k) Plan
Statement of Changes in Net Assets Available for Benefits
Year ended December 31, 2001
Additions:
Employee contributions $ 1,267,848
Employer contributions 97,067
Rollover contributions 167,105
Interest income 156,527
------------------------
Total additions 1,688,547
Deductions:
Benefit payments 4,717,903
Net depreciation in fair value of investments 1,706,669
Administrative expense 14,238
------------------------
Total deductions 6,438,810
------------------------
Net decrease in net assets available for benefits (4,750,263)
Net assets available for benefits at beginning of year 23,072,837
------------------------
Net assets available for benefits at end of year $18,322,574
========================
See accompanying notes.
4
VTEL Corporation 401(k) Plan
Notes to Financial Statements
December 31, 2001
1. Description of Plan
The VTEL Corporation 401(k) Plan (the Plan) became effective January 1, 1990.
The following brief description of the Plan is provided for general purposes
only. Participants should refer to the Plan agreement for more complete
information.
General
On January 15, 2002, the name of VTEL Corporation was changed to Forgent
Networks, Inc.
The Plan is a defined contribution profit sharing plan covering substantially
all employees of Forgent Networks, Inc. (the Company). It is subject to the
provisions of the Employee Retirement Income Security Act of 1974 (ERISA).
Contributions
Eligible employees may contribute to the Plan an elected portion of their
eligible compensation, as defined in the Plan, up to the statutory annual
deferral limit.
The Company may make matching contributions up to specified amounts at its
discretion.
All contributions are invested at the direction of the participants.
Eligibility
Employees are eligible for participation in the Plan after obtaining 21 years of
age as defined in the Plan, up to the statutory annual deferral limit.
Vesting
Participants are immediately vested in their contributions and earnings thereon.
Company matching contributions vest based on years of service completed by
participants.
5
VTEL Corporation 401(k) Plan
Notes to Financial Statements (continued)
1. Description of Plan (continued)
Payment of Benefits
Participants are entitled to receive benefit payments at the normal retirement
age of 65, in the event of the participant's death or disability, or in the
event of termination under certain circumstances other than normal retirement,
disability or death or if the participant reaches age 70 1/2 while still
employed. Benefits may be paid in a lump-sum distribution or by an annuity.
Plan Termination
Although the Company has not expressed any intent to terminate the Plan, it
reserves the right to do so at any time. Upon such termination, each participant
becomes fully vested and all benefits shall be distributed to the participants
or their beneficiaries.
Participant Accounts
Discretionary employer matching contributions, if any, are allocated annually to
participant accounts based upon the percentage determined and authorized by the
Company's board of directors.
Investment earnings or losses are allocated among the participants' accounts
based upon the percentage of the balance of each such account to the total
balance of all such accounts within each investment option.
Participant Loans
Upon written application of a participant, the Plan may make a loan to a
participant. Participants are allowed to borrow no less than $1,000 and no
greater than the lesser of 50% of the participant's vested account balance or
$50,000. Loans are amortized over a maximum of 60 months unless it is used to
purchase participant's principal residence and repayment is made through payroll
deductions. The amount of the loan is deducted from the participant's investment
accounts and bears interest at a rate commensurate with local rates for similar
plans.
6
VTEL Corporation 401(k) Plan
Notes to Financial Statements (continued)
1. Description of Plan (continued)
Forfeitures
Forfeitures, if any, under the Plan are first applied to payment of
administrative expenses of the Plan and then to the Company's matching
contribution to the Plan for the Plan year in which the forfeitures occur.
Administration
The Plan is administered by trustees consisting of officers and employees of the
Company. Certain administrative expenses of the Plan are paid by the Company.
2. Summary of Significant Accounting Policies
Basis of Presentation
The Plan's financial statements have been prepared on the accrual basis of
accounting.
Valuation of Investments
Effective January 1, 1998, the Plan entered into a group annuity contract with
Connecticut General Life Insurance Company (a CIGNA company) ("CGLIC"). The
contract includes the CIGNA Guaranteed Income Fund and Guaranteed Governmental
Securities Fund which are invested in CGLIC's general portfolio and are fully
benefit-responsive and, therefore, recorded at contract value. The rate of
credited interest for any period of time will be determined by CGLIC and may be
changed monthly. The average yield for the Guaranteed Income Fund was
approximately 5.05% and 5.15% and for the Guaranteed Governmental Securities
Fund was approximately 5.05% and 5.15% for the year ended December 31, 2001 and
2000, respectively. The crediting interest rate (i.e., the rate at which
interest was accrued to the contract balance) for the Guaranteed Income Fund was
4.95% and 5.15% and for the Guaranteed Governmental Securities Fund was .70% and
4.25% as of December 31, 2001 and 2000, respectively.
The contract also includes pooled separate accounts. CGLIC determines the fair
value of the pooled separate accounts based on the quoted market values of the
underlying assets in the separate accounts. Participant loans are stated at
cost, which approximates fair value.
7
2. Summary of Significant Accounting Policies (continued)
Use of Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
that affect the amounts reported in the financial statements and the
accompanying notes and schedule. Actual results could differ from those
estimates.
3. Investments
The following presents investments that represent five percent or more of the
Plan's net assets:
December 31, 2001
---------------------
Connecticut General Life Insurance Company Pooled
Separate Accounts:
Charter Corporate Bond - CIGNA $1,334,500
Fidelity Advisors Growth Opportunities 1,815,213
Dreyfus Founders Growth 1,267,102
Neuberger & Berman Partners Trust 1,589,471
Invesco Total Return Fund 1,255,191
Janus Worldwide Account 1,593,686
State Street Russell 3000 Fund 1,258,491
Charter Small Company Stock Growth-Fiduciary 2,328,755
Charter Guaranteed Income Fund 2,921,201
8
3. Investments (continued)
December 31, 2000
---------------------
Connecticut General Life Insurance Company Pooled
Separate Accounts:
Fidelity Advisors Growth Opportunities $2,580,420
Dreyfus Founders Growth 2,489,058
Neuberger & Berman Partners Trust 1,931,180
Invesco Total Return Fund 1,576,998
Janus Worldwide Account 2,820,812
State Street Russell 3000 Fund 2,023,610
Charter Small Company Stock Growth-Fiduciary 3,579,410
Charter Guaranteed Income Fund 2,696,879
During 2001, the Plan's investments (including investments purchased, sold as
well as held during the year) appreciated (depreciated) in fair value as
follows:
Pooled separate accounts $(2,318,933)
Common stock 612,264
-------------------
$(1,706,669)
===================
4. Income Tax Status
The Plan has received a determination letter from the Internal Revenue Service
dated January 26, 2000, stating that the Plan is qualified under Section 401(a)
of the Internal Revenue Code (the "Code") and, therefore, the related trust is
exempt from taxation. Once qualified, the Plan is required to operate in
conformity with the Code to maintain its qualification. The Plan Administrator
believes the Plan is being operated in compliance with the applicable
requirements of the Code and, therefore, believes that the Plan is qualified and
the related trust is tax exempt.
9
Supplemental Schedule
11
VTEL Corporation 401(k) Plan
Schedule H, line 4i, Schedule of Assets (Held at End of Year)
EIN: 74-2415696 Plan Number 001
December 31, 2001
Current
Identity of Issue Description of Asset Value
-----------------------------------------------------------------------------------------------------------
*Connecticut General Life
Insurance Company Charter Guaranteed Income Fund $2,921,201
*Connecticut General Life Charter Guaranteed Government
Insurance Company Securities 14,506
*Connecticut General Life
Insurance Company Charter Corporate Bond - CIGNA 1,334,500
*Connecticut General Life
Insurance Company CIGNA Lifetime 20 93,391
*Connecticut General Life
Insurance Company CIGNA Lifetime 30 105,870
*Connecticut General Life
Insurance Company CIGNA Lifetime 40 54,784
*Connecticut General Life
Insurance Company CIGNA Lifetime 50 86,872
*Connecticut General Life
Insurance Company CIGNA Lifetime 60 13,249
*Connecticut General Life Fidelity Advisors Growth
Insurance Company Opportunities 1,815,213
*Connecticut General Life
Insurance Company Dreyfus Founders Growth 1,267,102
*Connecticut General Life
Insurance Company Neuberger & Berman Partners Trust 1,589,471
*Connecticut General Life
Insurance Company Invesco Total Return Fund 1,255,191
*Connecticut General Life
Insurance Company Lazard Equity Portfolio Account 73,042
*Connecticut General Life
Insurance Company Janus Worldwide Account 1,593,686
*Connecticut General Life
Insurance Company Templeton Foreign Account 863,366
10
VTEL Corporation 401(k) Plan
Schedule H, line 4i, Schedule of Assets (Held at End of Year) (continued)
EIN: 74-2415696 Plan Number 001
December 31, 2001
Current
Identity of Issue Description of Asset Value
-----------------------------------------------------------------------------------------------------------
*Connecticut General Life
Insurance Company State Street Russell 3000 Fund 1,258,491
*Connecticut General Life Charter Small Company Stock
Insurance Company Growth-Fiduciary 2,328,755
*Connecticut General Life Charter Small Company Stock
Insurance Company Value I-Berger 732,856
*National Financial Services Forgent Common Stock 704,314
*Connecticut General Life
Insurance Company Cash Transaction Account (GST) 534
*Participant Loans Loaned funds of various maturities (years)
and rates from 7.75% to 8.50% 188,197
------------------
Total $18,294,591
==================
*Indicates a party-in-interest to the Plan.
11
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the trustees (or other persons who administer the employees benefit plan) have
duly caused this annual report to be signed on its behalf by the undersigned
thereunto duly authorized.
----------------------------------
VTEL Corporation 401(k) Plan
Date: June 28, 2002 /s/ Paul Tesluk
----------------------------------
Paul Tesluk
Plan Advisor
Exhibit Index
Exhibit
Number Document Description
23.1 Consent of Ernst & Young