Securities and Exchange Commission
Washington, D.C. 20549
FORM 11-K
ANNUAL REPORT
PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 [NO FEE REQUIRED, EFFECTIVE OCTOBER 7, 1996].
For the fiscal year ended DECEMBER 31, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [NO FEE REQUIRED].
For the transition period from ________________ to ___________________
COMMISSION FILE NUMBER 001-05620
A. Full title of the plan and the address of the plan,
if different from that of the issuer named below:
SAFEGUARD SCIENTIFICS, INC.
RETIREMENT PLAN
(FORMERLY KNOWN AS SAFEGUARD SCIENTIFICS, INC. STOCK SAVINGS PLAN)
B. Name of issuer of the securities held pursuant to the plan
and the address of its principal executive office:
SAFEGUARD SCIENTIFICS, INC.
800 THE SAFEGUARD BUILDING
435 DEVON PARK DRIVE
WAYNE, PA 19087
SAFEGUARD SCIENTIFICS, INC.
RETIREMENT PLAN
(FORMERLY KNOWN AS SAFEGUARD SCIENTIFICS, INC. STOCK SAVINGS PLAN)
Financial Statements and Supplemental Schedules
December 31, 2001 and 2000
(WITH INDEPENDENT AUDITORS' REPORT THEREON)
REQUIRED INFORMATION
(1) Financial Statements
The following statements, including Independent Auditors' Report thereon,
of Safeguard Scientifics, Inc. Retirement Plan are submitted herewith:
Statements of Net Assets Available for Plan Benefits, December 31, 2001
and 2000
Statements of Changes in Net Assets Available for Plan Benefits, Years
ended December 31, 2001, 2000, and 1999
Notes to Financial Statements
Schedule I - Schedule of Assets (Held at End of Year)
Schedule II - Reportable Transactions, Year Ended December 31, 2001
The Schedules for which provisions are made in the applicable accounting
regulations of the Securities and Exchange Commission are included in the
aforementioned financial statements of the Safeguard Scientifics, Inc.
Retirement Plan.
(2) Exhibits
The following Exhibits are submitted herewith:
Exhibit 23 - Consent of Independent Auditors
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the members
of the Safeguard Scientifics, Inc. Retirement Plan Committee have duly caused
this Annual Report to be signed on its behalf by the undersigned hereunto duly
authorized.
SAFEGUARD SCIENTIFICS, INC.
RETIREMENT PLAN COMMITTEE
Date: June 27, 2002 By: /s/ Joseph R. DeSanto
-------------------------------
Trustee
SAFEGUARD SCIENTIFICS, INC. RETIREMENT PLAN
(Formerly known as Safeguard Scientifics, Inc. Stock Savings Plan)
TABLE OF CONTENTS
PAGE
Independent Auditors' Report 1
Statement of Net Assets Available for Plan Benefits,
December 31, 2001 and 2000 2
Statements of Changes in Net Assets Available for Plan
Benefits, Years ended December 31, 2001, 2000, and 1999 3
Notes to Financial Statements 4
SCHEDULES
1 Schedule of Assets (Held at End of Year),
December 31, 2001 12
2 Schedule of Reportable Transactions, Year ended
December 31, 2001 13
INDEPENDENT AUDITORS' REPORT
The Trustees of Safeguard Scientifics, Inc.
Retirement Plan:
We have audited the accompanying statements of net assets available for plan
benefits of Safeguard Scientifics, Inc. Retirement Plan, formerly known as the
Safeguard Scientifics, Inc. Stock Savings Plan, as of December 31, 2001 and
2000, and the related statements of changes in net assets available for plan
benefits for each of the years in the three-year period 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 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 Safeguard
Scientifics, Inc. Retirement Plan as of December 31, 2001 and 2000, and the
changes in net assets available for plan benefits for each of the years in the
three-year period ended December 31, 2001, 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 schedules of assets
(held at end of year) and reportable transactions are presented for the purpose
of additional analysis and are not a required part of the basic financial
statements but are 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. These supplemental schedules are the
responsibility of the Plan's management. The supplemental schedules have been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, are fairly stated in all material respects in
relation to the basic financial statements taken as a whole.
/S/ KPMG LLP
June 13, 2002
Philadelphia, Pennsylvania
SAFEGUARD SCIENTIFICS, INC. RETIREMENT PLAN
(Formerly known as Safeguard Scientifics, Inc. Stock Savings Plan)
Statements of Net Assets Available for Plan Benefits
December 31, 2001 and 2000
2001 2000
----------- ----------
Investments $ 8,501,220 12,304,631
Contributions receivable:
Employer's contribution 285,253 28,097
Participant contributions 22,488 89,081
Loans to participants 45,528 101,019
----------- ----------
Net assets available for plan benefits $ 8,854,489 12,522,828
=========== ==========
See accompanying notes to financial statements.
2
SAFEGUARD SCIENTIFICS, INC. RETIREMENT PLAN
(Formerly known as Safeguard Scientifics, Inc. Stock Savings Plan)
Statements of Changes in Net Assets Available for Plan Benefits
Years ended December 31, 2001, 2000, and 1999
2001 2000 1999
------------ ------------ ------------
Additions:
Participant contributions $ 1,002,144 1,746,004 815,956
Employer contributions 729,920 316,915 213,291
Dividends and interest 82,884 231,684 400,530
Net appreciation in fair value of investments -- -- 45,797,568
Loan interest 6,744 7,374 13,197
------------ ------------ ------------
Total additions 1,821,692 2,301,977 47,240,542
------------ ------------ ------------
Deductions:
Administrative expenses 30,076 -- --
Benefits paid 1,789,368 993,606 9,158,186
Net depreciation in fair value of investments 4,954,498 42,596,390 --
------------ ------------ ------------
Total deductions 6,773,942 43,589,996 9,158,186
------------ ------------ ------------
Net (decrease) increase (4,952,250) (41,288,019) 38,082,356
Transfers out of the plan to the TL Ventures
benefit plan (note 1) (4,648,866) -- --
Transfers out of the plan to the aligne, inc.
401(k) plan (note 1) (181,145) -- --
Transfers to the plan 6,113,922 -- --
Transfer from the aligne, inc. 401(k) plan -- 473,671 --
Net assets available for plan benefits:
Beginning of year 12,522,828 53,337,176 15,254,820
------------ ------------ ------------
End of year $ 8,854,489 12,522,828 53,337,176
============ ============ ============
See accompanying notes to financial statements.
3
SAFEGUARD SCIENTIFICS, INC. RETIREMENT PLAN
(Formerly known as Safeguard Scientifics, Inc. Stock Savings Plan)
Notes to Financial Statements
December 31, 2001 and 2000
(1) DESCRIPTION OF THE PLAN
The following description of the Safeguard Scientifics, Inc. Retirement
Plan (the Plan), formerly known as the Safeguard Scientifics, Inc. Stock
Savings Plan, provides general information only. Participants should refer
to the Plan agreement for more complete information.
(a) GENERAL
The Plan is a contributory defined contribution plan established in
1981 by Safeguard Scientifics, Inc. (the Company). The Plan is
subject to the provisions of the Employee Retirement Income Security
Act of 1974 (ERISA). The Company has the right under the Plan to
amend, modify, suspend, or terminate the Plan at any time. A
committee of individuals (Plan Trustees) appointed by the Plan
administrator is generally responsible for the operations of the
Plan.
(b) ELIGIBILITY
Eligible employees in 2001 and 2000 included salaried and hourly
employees of the Company, Technology Leaders Management, Inc.,
Safeguard International Group, Inc., Penn-Sylvan Management, Inc.,
and aligne, inc. (aligne), subsidiaries of the Company
(collectively, the Employers). However, any person whose terms and
conditions of employment are determined through collective
bargaining is not an eligible employee unless the collective
bargaining agreement provides for the inclusion of such person in
the Plan. The Employers do not have any collective bargaining
agreements at December 31, 2001.
Effective as of January 2001, Technology Leaders Management, Inc.
d/b/a TL Ventures spun off the assets and liabilities representing
the interests and entitlements of the employees of TL Ventures into
its own retirement plan. Effective as of April 2001, aligne spun off
the assets and liabilities representing the interests and
entitlements of the employees of aligne into its own retirement
plan.
Effective June 1, 2000, the aligne, inc. 401(k) plan merged into the
Plan. As a result, all account balances under the aligne, inc.
401(k) plan became account balances under the Plan. aligne, a wholly
owned subsidiary of the Company, became a participating affiliate in
the Plan, and employees of aligne became eligible to participate in
the Plan.
(c) CONTRIBUTIONS
As of January 1, 2001, participants may defer from 1% to 15% of
eligible compensation plus up to 100% of any Employer paid cash
bonus. The amount of deferred compensation is treated as a salary
reduction and is not subject to federal income tax until withdrawn
from the Plan. During 2000, participants could contribute from 2% to
14% of eligible compensation immediately upon hire.
The Plan also permits participants to roll over certain amounts
received from another qualified retirement plan.
Before October 1, 1991, the Plan allowed after-tax contributions
which became part of a participant's After-Tax Voluntary
Contribution Sub account. Although after-tax contributions are no
longer allowed under the Plan, such contributions made to the Plan
prior to October 1, 1991 continue to be held in the Plan.
4 (Continued)
SAFEGUARD SCIENTIFICS, INC. RETIREMENT PLAN
(Formerly known as Safeguard Scientifics, Inc. Stock Savings Plan)
Notes to Financial Statements
December 31, 2001 and 2000
Effective January 1, 2001, contributions by the Employers were made
on a matched basis dollar for dollar on salary deferrals up to 3% of
compensation and then 50 cents on the dollar on salary deferrals
from 3% to 5% of compensation. Plan participants are eligible to
join the Plan effective as of the first day of the month following
their hire date, and Plan participants are eligible for the Employer
matching contributions immediately upon joining the Plan.
During 2000, contributions by the Employers were made on a matched
basis at a rate of 75% of participant deferred compensation up to a
maximum of 3% of eligible compensation and Plan participants were
eligible for the employer contributions one year after their date of
hire.
Total contributions in a plan year may not exceed maximum allowable
contributions as prescribed by the Internal Revenue Service (IRS).
(d) PLAN AMENDMENTS
Effective January 1, 2001, all contributions under the former Money
Purchase Pension Plan ceased and the Plan added a profit sharing
feature, which will allow the Employers to make annual discretionary
contributions to eligible employees. The vesting period for
discretionary profit sharing contributions is five years. The
discretionary profit sharing contributions vest at a rate of 20% of
each year of service, with full vesting occurring after five years
of service.
Effective January 1, 2001, the Employers' matching contribution
became equal to 100% of the first 3% contributed by participants and
50% of the next 2%, and the eligibility requirements were amended to
make participants eligible for participation in the matching
contributions as of the first day of the month following their date
of hire.
During 2000, the Plan adopted a prototype plan document. As a
result, a number of changes were made to the Plan.
Effective November 1, 2000, all participants were immediately vested
in Employers' current and previous nondiscretionary matching
contributions, and the vesting schedule for contributions under the
Money Purchase Pension Plan, which was merged into the Retirement
Plan on January 1, 2001, was modified from a seven-year vesting
schedule to a five-year vesting schedule.
(e) PARTICIPANT ACCOUNTS
At December 31, 2001 and 2000, participant contributions were
invested as directed by each participant in 14 separate investment
alternatives, one of which was a self-directed brokerage account.
Participants may change investment options daily and can change
their contribution percentage monthly.
In the event a participant fails to submit written notice of
allocation, contributions will be invested at the discretion of the
Plan administrator.
Interest, dividends, and other income earned by the investment funds
are reinvested in the same funds. Such amounts are allocated to
participants based upon the proportion of a participant's balance to
that total fund balance.
5 (Continued)
SAFEGUARD SCIENTIFICS, INC. RETIREMENT PLAN
(Formerly known as Safeguard Scientifics, Inc. Stock Savings Plan)
Notes to Financial Statements
December 31, 2001 and 2000
(f) PARTICIPANT LOANS
Eligible participants may borrow up to 50% of their account balance.
The minimum and maximum loan amount is $1,000 and $50,000,
respectively. Loans bear interest at a rate equal to prime plus 2%
and must be repaid within five years or, when the proceeds of a loan
are used to purchase a dwelling unit, 15 years.
(g) VESTING
Participants are immediately vested in all contributions they make
to the Plan as well as all earnings (losses) on such investments.
Prior to November 1, 2000, Employers' nondiscretionary matching
contributions became fully vested after the earlier of three years
of employment; two years of participation in the Plan; or upon
death, disability, or retirement, and contributions under the former
Money Purchase Pension Plan vested over a seven-year period.
Effective November 1, 2000, participants were immediately vested in
Employers' nondiscretionary matching contributions and the vesting
of the contributions under the former Money Purchase Pension Plan
was accelerated to a five-year vesting schedule at a rate of 20% for
each year of service. There is a five-year vesting period for
discretionary profit sharing contributions in which participants
vest at a rate of 20% for each year of service, with full vesting
occurring after five years of service.
(h) PAYMENT OF BENEFITS
Upon retirement, death, disability, or termination of service
(subject to vesting requirements), participants or beneficiaries are
entitled to a distribution equal to the total value of their
accounts, and under certain circumstances the Plan administrator may
distribute all of a participant's account if that participant is no
longer eligible to make contributions to the Plan. Participants
experiencing serious financial hardships may also be entitled to a
distribution upon approval of the Plan administrator. Such
distributions may be made:
(1) in cash as a lump-sum payment;
(2) in common stock for the value of an individual's investment in
that common stock;
(3) in the form of installments over a fixed period; or
(4) under other methods of payment that may be adopted and applied
uniformly among all Plan participants by the Plan
administrator.
Request for distribution of a participant's account will be
processed as soon as possible following the event (i.e.,
termination, retirement, disability, or death) that calls for
distribution.
(i) FORFEITURES
Forfeited amounts of $38,424, $12,934, and $15,108 were used to
reduce Employers' contributions under the Plan in 2001, 2000, and
1999, respectively, and were allocated to participant accounts as if
they were contributed by the Employers.
6 (Continued)
SAFEGUARD SCIENTIFICS, INC. RETIREMENT PLAN
(Formerly known as Safeguard Scientifics, Inc. Stock Savings Plan)
Notes to Financial Statements
December 31, 2001 and 2000
(j) PLAN TERMINATION
Although it has not expressed any intent to do so, the Company has
the right under the Plan to terminate the Plan subject to the
provisions of ERISA. In the event of termination of the Plan, each
participant will immediately become fully vested and be entitled to
full distribution of its share of the Plan. In addition, each of the
Employers has the right to discontinue its contributions at any
time. None of the Employers has expressed any intent to discontinue
contributions.
(k) ADMINISTRATIVE EXPENSES
Effective January 1, 2001, administrative expenses have been paid by
both the Company and the Plan. During 2000, the administrative
expenses have been paid by the Company.
(2) SALE OF PIONEER METAL FINISHING
In 1997, Pioneer Metal Finishing (Pioneer) was sold to its management
group. The Plan granted immediate 100% vesting to those Pioneer employees
who were employed on the sale date. Approximately $54,000 and $33,000 and
in benefit distributions from the Plan relating to the sale of Pioneer
were paid in 2001 and 2000, respectively.
(3) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) BASIS OF ACCOUNTING
The accompanying financial statements of the Plan have been prepared
on the accrual basis of accounting. Purchases and sales of
securities are recorded on a trade-date basis, with average cost
used in determining gains or losses on sales of investments.
Dividends are recorded on ex-dividend dates.
(b) INVESTMENT VALUATION
Plan investments are stated at fair market value using quoted market
prices. Shares of mutual funds are valued at the net asset value to
shares held by the plan at year-end.
Effective November 2000, and upon enrollment in the Plan, a
participant may direct contributions to any of the funds listed
below. The investment funds at December 31, 2001 were as follows:
The Calvert Income Fund A seeks to maximize income, to the extent
consistent with prudent investment management and preservation of
capital, through investment in bonds and other income-producing
securities. The fund typically invests at least 65% of its assets in
investment grade debt securities. The fund may invest up to 30% of
its net assets in foreign securities, 35% of its net assets in
below-investment grade bonds, up to 15% of its net assets in
illiquid securities, up to 5% of its total assets in currency
contracts, and up to 5% of its net assets in futures contracts. The
fund is also permitted to use certain other investment techniques
and strategies that have higher risks associated with them. At
December 31, 2001, 28 plan participants were invested in the fund.
At December 31, 2001, the value per share and number of shares were
$16.69 and 13,413, respectively.
The Pin Oak Aggressive Stock Fund seeks long-term growth of capital
and normally invests at least 80% of its assets in equity
securities. The fund invests primarily in companies with market
7 (Continued)
SAFEGUARD SCIENTIFICS, INC. RETIREMENT PLAN
(Formerly known as Safeguard Scientifics, Inc. Stock Savings Plan)
Notes to Financial Statements
December 31, 2001 and 2000
capitalizations between $500 million and $5 billion. At December 31,
2001, 44 plan participants were invested in the fund. At December
31, 2001, the value per share and number of shares were $23.89 and
7,390, respectively.
The Plan offers a Self-Directed Brokerage Account, whereby the
participant invests his or her account balance in any investment
desired, within certain specific limitations. For purposes of the
Plan, participants are allowed to direct their investments at their
own discretion. The total number of shares was 2,866,084 and there
were 134 plan participants at December 31, 2001.
The American Century International Growth Fund seeks capital growth
and primarily invests in securities of issuers located in at least
three developed countries (excluding the United States) that meet
certain fundamental and technical standards and have potential for
capital appreciation. Under normal market conditions, the fund's
managers keep the fund essentially fully invested in stocks and,
when prudent, may invest a portion of the assets in other
securities. At December 31, 2001, 14 plan participants were invested
in the fund. At December 31, 2001, the value per share and number of
shares were $7.97 and 6,257, respectively.
The Excelsior Value and Restructuring Fund seeks long-term capital
appreciation by investing in companies that will benefit from their
restructuring or redeployment of assets and operations in order to
become more competitive or profitable. The fund normally invests at
least 65% of its assets in common stock of U.S. and, to a lesser
extent, foreign companies whose share price, in the opinion of the
advisor, does not reflect the economic value of the company's
assets, but where the advisor believes restructuring efforts or
industry consolidation will serve to highlight the true value of the
company. At December 31, 2001, 69 plan participants were invested in
the fund. At December 31, 2001, the value per share and number of
shares were $32.06 and 28,229, respectively.
The Fremont U.S. Micro-Cap Fund seeks long-term capital
appreciation. The fund ordinarily invests at least 80% of its total
assets in the stocks of U.S. micro-cap companies (companies that
fall within the smallest 5% of market capitalization of companies
listed on U.S. exchanges or on the over-the-counter market). The
fund seeks to identify companies early in their growth cycle that
possess various characteristics, such as a leading market position,
an entrepreneurial management team, and a focused business plan, or
whose growth potential has been enhanced by new products, new market
opportunities, or new management. At December 31, 2001, 19 plan
participants were invested in the fund. At December 31, 2001, the
value per share and number of shares were $28.29 and 4,359,
respectively.
The Janus Worldwide Fund seeks long-term growth of capital in a
manner consistent with the preservation of capital. The fund invests
primarily in common stocks of companies of any size located
throughout the world. The fund normally invests in issuers from at
least five different countries, including the United States, but may
at times invest in fewer than five countries or even a single
country. At December 31, 2001, 51 plan participants were invested in
the fund. At December 31, 2001, the value per share and number of
shares were $43.84 and 6,857, respectively.
The White Oak Growth Stock Fund seeks long-term growth of capital.
The fund normally invests at least 80% of assets in equity
securities. It invests primarily in companies with market
capitalizations
8 (Continued)
SAFEGUARD SCIENTIFICS, INC. RETIREMENT PLAN
(Formerly known as Safeguard Scientifics, Inc. Stock Savings Plan)
Notes to Financial Statements
December 31, 2001 and 2000
of greater than $5 billion. At December 31, 2001, 40 plan
participants were invested in the fund. At December 31, 2001, the
value per share and number of shares were $38.44 and 5,425,
respectively.
The Schwab Institutional Advantage Money Fund is designed for
retirement plans, plan participants, and other institutional
investors who seek maximum current income consistent with liquidity
and stability of capital, for investment of their own funds or funds
for which they act in a fiduciary, agency, or custodial capacity. At
December 31, 2001, 29 plan participants were invested in the fund.
The number of shares was 246,369 at December 31, 2001.
The Strong Growth 20 Fund - Investor Class seeks capital growth and
focuses, under normal conditions, on stocks of 20 to 30 companies
that its manager believes have favorable prospects for accelerating
growth of earnings but are selling at reasonable valuations based on
earnings, cash flow, or asset value, and can include stocks of any
size. The fund can also write put and call options and, to a limited
extent, may also invest in foreign securities. At December 31, 2001,
99 plan participants were invested in the fund. At December 31,
2001, the value per share and number of shares were $14.74 and
67,423, respectively.
The Schwab S&P 500 Fund - Select Shares seeks to track the total
return of the S&P 500 Index. The fund normally invests at least 80%
of its assets in the stocks that compose the index. The fund
generally gives the same weight to a given stock as the index does.
The fund also may invest in futures contracts and lend securities to
minimize the gap in performance that naturally exists between any
index fund and its index. At December 31, 2001, 24 plan participants
were invested in the fund. At December 31, 2001, the value per share
and number of shares were $17.71 and 49,269, respectively.
The Turner Midcap Growth Fund seeks capital appreciation. The fund
normally invests at least 80% of its assets in common stocks and
other equity securities of U.S. companies with medium market
capitalizations, which are defined as companies within the range of
companies included in the Russell Midcap Growth Index. The fund
invests in securities of companies that are diversified across
economic sectors and attempts to maintain sector concentrations that
approximate those of the Russell Midcap Growth Index. At December
31, 2001, 45 plan participants were invested in the fund. At
December 31, 2001, the value per share and number of shares were
$21.91 and 34,610, respectively.
The Value Line Asset Allocation Fund seeks high total investment
return (current income and capital appreciation) consistent with
reasonable risk. The fund may invest in a broad range of common
stocks, bonds, and money-market instruments. There are no limits on
the percentage of the fund's assets that can be invested in equity,
debt, or money market securities. At December 31, 2001, 50 plan
participants were invested in the fund. At December 31, 2001, the
value per share and number of shares were $17.23 and 28,186,
respectively.
The Weitz Partners Value Fund's primary investment objective is
capital appreciation. The fund invests primarily in common stocks
and various securities convertible into common stocks, such as
rights, warrants, convertible preferred stock, and convertible
bonds, of sound, growing, well-managed businesses. The fund also may
invest in other securities of a company not convertible into common
stock, such as bonds and preferred stock. The fund may, with respect
to 50% of its total
9 (Continued)
SAFEGUARD SCIENTIFICS, INC. RETIREMENT PLAN
(Formerly known as Safeguard Scientifics, Inc. Stock Savings Plan)
Notes to Financial Statements
December 31, 2001 and 2000
assets, concentrate its investments by investing more than 5% of its
total assets in the security of one issuer. At December 31, 2001, 27
plan participants were invested in the fund. At December 31, 2001,
the value per share and number of shares were $20.87 and 13,928,
respectively.
(4) INVESTMENTS
The following presents investments, at fair market value, that
represent 5% or more of the Plan's net assets:
2001 2000
------------- -------------
Safeguard Scientifics, Inc.
(463,262 and 646,129 shares, respectively) $ 1,621,417 * 4,280,606 *
Excelsior Value and Restructuring Fund - Class A
(28,229 and 22,560 shares, respectively) 905,025 * 762,989 *
Strong Growth 20 Fund - Investor Class
(67,423 and 76,800 shares, respectively) 993,813 * 1,929,985 *
Schwab S&P 500 Fund
(49,269 and 9,035 shares, respectively) 872,545 * 184,034
Turner Midcap Growth Fund
(34,610 and 24,314 shares, respectively) 758,306 * 743,770 *
Value Line Asset Allocation Fund
(28,186 and 16,412 shares, respectively) 485,650 * 310,446
* Represents 5% or more of the Plan's net assets available for
benefits.
10 (Continued)
SAFEGUARD SCIENTIFICS, INC. RETIREMENT PLAN
(Formerly known as Safeguard Scientifics, Inc. Stock Savings Plan)
Notes to Financial Statements
December 31, 2001 and 2000
During 2001, 2000, and 1999, the Plan's investments (including gains and
losses on investments bought and sold, as well as held during the years)
(depreciated) appreciated in value by $(4,954,498), $(42,596,390), and
$45,797,568, respectively, as follows:
YEARS ENDED DECEMBER 31
--------------------------------------------------
INVESTMENT 2001 2000 1999
-------------- ------------ ------------ ------------
Mutual funds $ (648,694) (438,790) 74,156
Common stock (4,305,804) (42,157,600) 45,723,412
------------ ------------ ------------
$ (4,954,498) (42,596,390) 45,797,568
============ ============ ============
In March 2000, the Company paid a three-for-one split of its common shares.
The accompanying financial statements reflect this stock split.
(5) INCOME TAX STATUS
Participant contributions are made from compensation before income tax
deductions in accordance with Section 401(k) of the Internal Revenue Code.
Participants are not subject to income tax on contributions to the Plan,
appreciation in Plan assets, or income earned thereon until their funds are
withdrawn from the Plan.
The IRS has determined and informed the Company by a letter dated July 15,
1995 that the Plan is designed in accordance with the applicable sections
of the Internal Revenue Code. The Plan has been amended since receiving the
determination letter. However, the Plan administrator believes that the
Plan is designed and is currently being operated in compliance with the
applicable requirements of the Internal Revenue Code. In 2000, the Plan
adopted a prototype plan that has received an opinion letter from the IRS
that the prototype satisfies the applicable sections of the Internal
Revenue Code.
11
SCHEDULE 1
SAFEGUARD SCIENTIFICS, INC. RETIREMENT PLAN
(Formerly known as Safeguard Scientifics, Inc. Stock Savings Plan)
Schedule of Assets (Held at End of Year)
December 31, 2001
IDENTITY OF ISSUE, DESCRIPTION OF INVESTMENT INCLUDING
BORROWER, LESSOR, MATURITY DATE, RATE OF INTEREST, CURRENT
OR SIMILAR PARTY COLLATERAL, PAR, OR MATURITY VALUE COST VALUE
-------------------------- ------------------------------------------------------- ------------ ----------
Calvert Group Calvert Income Fund A $ 222,853 $ 223,857
Oak Associates Funds Pin Oak Aggressive Stock Fund 330,967 176,555
Various * Self-Directed Brokerage Account 2,866,084 2,866,084
American Century
Investments American Century International Growth Fund 71,357 49,866
Excelsior Funds Excelsior Value and Restructuring Fund 945,237 905,025
Fremont Funds Fremont U.S. Micro-Cap Fund 132,307 123,307
Janus Janus Worldwide Fund 417,541 300,628
Oak Associates Funds White Oak Growth Stock Fund 335,146 208,521
Schwab Funds Schwab Institutional Advantage Money Fund 246,369 246,369
Strong Funds Strong Growth 20 Fund - Investor Class 1,665,260 993,813
Schwab Funds Schwab S&P 500 Fund - Select Shares 1,035,750 872,545
Turner Turner Midcap Growth Fund 1,122,760 758,306
Value Line Mutual Funds Value Line Asset Allocation Fund 558,438 485,650
Weitz Funds Weitz Partners Value Fund 296,147 290,694
----------
8,501,220
Participant loans Interest rates ranging from 8.5% to 10.5%,
maturity dates ranging from September 2003
to August 2011 45,528
----------
$8,546,748
==========
* Includes the stock of Safeguard Scientifics, Inc., which is the plan
administrator, and therefore, any transactions related to this investment are
party-in-interest transactions.
See accompanying independent auditors' report.
12
SCHEDULE 2
SAFEGUARD SCIENTIFICS, INC. RETIREMENT PLAN
(Formerly known as Safeguard Scientifics, Inc. Stock Savings Plan)
Schedule of Reportable Transactions
Year ended December 31, 2001
A reportable transaction is a transaction or a series of transactions of the
same security that involves an amount in excess of 5% of the current value of
the net assets at the beginning of the period.
CURRENT VALUE
DESCRIPTION OF ASSET (INCLUDING EXPENSES OF ASSET ON
IDENTITY OF INTEREST RATE AND MATURITY IN PURCHASE SELLING LEASE INCURRED WITH COST OF TRANSACTION NET GAIN
PARTY INVOLVED CASE OF A LOAN) PRICE PRICE RENTAL TRANSACTION ASSET DATE (LOSS)
-------------- ------------------------------------------ ---------- ------- ------ ------------- --------- ------------- --------
Aggregate*:
Calvert Income Fund A $ 270,810 -- -- -- 270,810 270,810 --
Pin Oak Aggressive Stock Fund 260,468 -- -- -- 260,468 260,468 --
Self-Directed Brokerage Account 6,538,917 -- -- -- 6,538,917 6,538,917 --
American Century International Growth Fund 262,345 -- -- -- 262,345 262,345 --
Excelsior Value and Restructuring Fund 1,505,464 -- -- -- 1,505,464 1,505,464 --
Fremont U.S. Micro-Cap Fund 118,025 -- -- -- 118,025 118,025 --
Janus Worldwide Fund 355,412 -- -- -- 355,412 355,412 --
White Oak Growth Stock Fund 418,108 -- -- -- 418,108 418,108 --
Schwab Institutional Advantage Money Fund 249,500 -- -- -- 249,500 249,500 --
Strong Growth 20 Fund - Investor Class 3,001,395 -- -- -- 3,001,395 3,001,395 --
Schwab S&P 500 Fund - Select Shares 2,239,141 -- -- -- 2,239,141 2,239,141 --
Turner Midcap Growth Fund 1,185,791 -- -- -- 1,185,791 1,185,791 --
Value Line Asset Allocation Fund 721,110 -- -- -- 721,110 721,110 --
Weitz Partners Value Fund 201,134 -- -- -- 201,134 201,134 --
See accompanying independent auditors' report.
* Represents the aggregate transfer of assets from the Safeguard Scientifics,
Inc. Money Purchase Pension Plan to the Safeguard Scientifics, Inc. Retirement
Plan.
13
SCHEDULE 2
SAFEGUARD SCIENTIFICS, INC. RETIREMENT PLAN
(Formerly known as Safeguard Scientifics, Inc. Stock Savings Plan)
Schedule of Reportable Transactions
Year ended December 31, 2001
A reportable transaction is a transaction or a series of transactions of the
same security that involves an amount in excess of 5% of the current value of
the net assets at the beginning of the period.
CURRENT VALUE
DESCRIPTION OF ASSET (INCLUDING EXPENSES OF ASSET ON
IDENTITY OF INTEREST RATE AND MATURITY IN PURCHASE SELLING LEASE INCURRED WITH COST OF TRANSACTION NET GAIN
PARTY INVOLVED CASE OF A LOAN) PRICE PRICE RENTAL TRANSACTION ASSET DATE (LOSS)
-------------- ------------------------------------------ -------- ------- ------ ------------- --------- ------------- --------
Aggregate**:
Calvert Income Fund A $ -- 82,461 -- -- 81,302 -- 1,159
Pin Oak Aggressive Stock Fund -- 63,823 -- -- 90,604 -- (26,781)
Self-Directed Brokerage Account -- 557,236 -- -- 557,236 -- --
American Century International Growth Fund -- 142,969 -- -- 212,683 -- (69,714)
Excelsior Value and Restructuring Fund -- 303,317 -- -- 313,889 -- (10,572)
Fremont U.S. Micro-Cap Fund -- 76,539 -- -- 70,897 -- 5,642
Janus Worldwide Fund -- 74,136 -- -- 98,224 -- (24,088)
White Oak Growth Stock Fund -- 83,480 -- -- 108,621 -- (25,141)
Schwab Institutional Advantage Money Fund -- 24,005 -- -- 24,005 -- --
Strong Growth 20 Fund - Investor Class -- 864,947 -- -- 1,522,247 -- (657,300)
Schwab S&P 500 Fund - Select Shares -- 274,927 -- -- 312,832 -- (37,905)
Turner Midcap Growth Fund -- 227,741 -- -- 313,340 -- (85,599)
Value Line Asset Allocation Fund -- 158,367 -- -- 179,987 -- (21,620)
Weitz Partners Value Fund -- 75,752 -- -- 76,327 -- (575)
See accompanying independent auditors' report.
** Represents the aggregate transfer of assets from the Safeguard
Scientifics, Inc. Retirement Plan to the TL Ventures Retirement Plan.
14