UNITED STATES
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 0-26844
RadiSys Corporation 401(k) Savings Plan
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(Full title of the plan)
RADISYS CORPORATION
5445 NE Dawson Creek Drive
Hillsboro, OR 97124
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(Name of issuer of the securities held pursuant to the
plan and the address of its principal executive office)
REQUIRED INFORMATION
ITEM 4.
PAGE
Report of Independent Accountants.......................................... 3
Financial Statements:
Statement of Net Assets Available for Benefits
December 31, 2001 and 2000........................................ 4
Statement of Changes in Net Assets Available for Benefits
For the Year Ended December 31, 2001.............................. 5
Notes to the Financial Statements..................................... 6
Supplemental Schedule: *
Schedule H, line 4i - Schedule of Assets (Held at End of Year)
December 31, 2001................................................. 12
Signature.................................................................. 13
Exhibit 23.1 - Consent of Independent Accountants.......................... 15
* Other schedules required by Section 2520.103-10 of the Department of
Labor's Rules and Regulations for Reporting and Disclosure under ERISA have
been omitted because they are not applicable.
2
REPORT OF INDEPENDENT ACCOUNTANTS
To the Participants and Administrator of the
RadiSys Corporation 401(k) Plan
In our opinion, the accompanying statement of net assets available for benefits
and the related statement of changes in net assets available for benefits
present fairly, in all material respects, the net assets available for benefits
of the RadiSys Corporation 401(k) Plan (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 of America. 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 of these
statements in accordance with auditing standards generally accepted in the
United States of America, which 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, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
Our audits were conducted 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) 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/ PricewaterhouseCoopers LLP
June 6, 2002
3
RADISYS CORPORATION 401(K) PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 2001 AND 2000
2001 2000
ASSETS ---- ----
Investments, at fair value:
Cash and cash equivalents $ 27,664 $ 20,993,001
Common or collective trust funds 4,368,212 -
Registered investment companies 19,797,299 -
Employer securities 112,528 -
Participant loans 822,299 668,853
------------ ------------
Total investments 25,128,002 21,661,854
Receivables:
Employer's matching contribution 889,290 1,093,663
Participants' contributions - 97,372
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Net assets available for benefits $ 26,017,292 $ 22,852,889
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The accompanying notes are an integral part of the financial statements.
4
RADISYS CORPORATION 401(K) PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 2001
Additions:
Assets transferred from predecessor benefit plan (Note 1):
Transferred assets $ 3,495,725
Investment income:
Depreciation in fair value of investments (3,449,050)
Interest income 70,103
Contributions:
Employee contributions 3,421,082
Employee rollovers 725,876
Employer match 961,718
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Total additions 5,225,454
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Deductions:
Benefit payments and hardship withdrawals 2,054,450
Excess contributions 5,886
Third-party administrative expenses 715
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Total deductions 2,061,051
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Net depreciation in fair value of investments 3,164,403
Net assets available for benefits:
Beginning of year 22,852,889
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End of year $26,017,292
============
The accompanying notes are an integral part of this financial statement.
5
RADISYS CORPORATION 401(K) PLAN
NOTES TO FINANCIAL STATEMENTS
1. DESCRIPTION OF PLAN
GENERAL
The RadiSys Corporation 401(k) Plan (the Plan) was established by RadiSys
Corporation (the Company) on January 1, 1989 to provide a means for savings
and investment by employees for retirement purposes. Participation in the
Plan, which is a defined contribution plan, is voluntary. Currently, all
employees of the Company who are age twenty-one or older are eligible to
participate in the Plan. Qualifying employees may begin to participate in
the Plan on the date of employment with the Company. The Plan is subject to
the provisions of the Employee Retirement Income Security Act of 1974
(ERISA).
Under the terms of a trust agreement between the Company and Putnam
Corporate Services (the trustee), all investments of the Plan are held in a
trust fund by the trustee. Certain accounting and other administrative
services for the Plan are performed by Putnam Corporate Services. The Plan
is administered by a committee composed of management employees of the
Company.
During 2001, the Company acquired Microware Systems Corporation. On October
1, 2001, the Microware Systems Corporation 401(k) Plan was merged into the
Plan. Participants in the Microware Systems Corporation 401(k) Plan
transferred $3,495,725 of investment account balances into the Plan. On
October 1, 2001, eligible Microware Systems Corporation employees were
allowed to participate in the Plan under the current Plan document.
On January 1, 2001, the Company began offering employer stock as an option
for participants. Investments in employer stock amounted to $112,528 at
December 31, 2001.
The following description of the Plan provides only general information.
Participants should refer to the Plan document for a more complete
description of the Plan's provisions.
CONTRIBUTIONS
Participants may contribute up to 20% of annual compensation to the Plan as
pre-tax contributions, subject to the maximum allowed by the Internal
Revenue Code ($10,500 for the years ended December 31, 2001 and 2000,
respectively). Participants may also contribute up to 5% of compensation on
an after-tax basis, up to an annual maximum of $10,000. No more than 20% of
annual compensation may be contributed in the aggregate between pre-tax and
after-tax contributions. Participants may also contribute amounts
representing distributions from other qualified defined-benefit or
contribution plans. Taxes on these contributions are deferred under Section
401(k) of the Internal Revenue Code. The employer may make discretionary
matching contributions equal to a percentage of the amount of the salary
deferral. Participants must complete 1,000 hours of service and be employed
on the last day of the Plan year to share in the discretionary matching
contribution. Participants direct the investment of their contributions
into various investment options available within the Plan.
6
RADISYS CORPORATION 401(K) PLAN
NOTES TO FINANCIAL STATEMENTS, CONTINUED
1. DESCRIPTION OF PLAN (CONTINUED)
PARTICIPANT ACCOUNTS
The account of each participant who meets Plan eligibility requirements and
is employed as defined above is credited with the participant's
contribution and an allocation of discretionary employer matching
contributions. Allocations are based on participant earnings or account
balances, as defined in the Plan. The benefit to which a participant is
entitled is the benefit that can be provided from the participant's vested
account.
VESTING
Participants are fully vested at all times in their own individual
contributions, including earnings thereon. Vesting in the employer
discretionary matching contribution is based on continuous years of service
ranging from 1 to 3 years. Employees are automatically 100% vested upon
death or disability. If an employee terminates before becoming fully
vested, the unvested portion of his or her account is forfeited and such
amount is used to reduce the employer discretionary matching contribution.
Remaining amounts will be reallocated to the accounts of participants based
on employees' proportionate contributions.
PAYMENT OF BENEFITS
One hundred percent (100%) of the employee's vested benefits, including his
or her allocation of plan earnings, may be paid to the employee upon
retirement, or prior to retirement, on death, disability, resignation, or
discharge. The employee salary deferral pre-tax contribution accounts,
including a pro rata share of investment earnings, may be withdrawn to the
extent approved by the Plan's administrative committee because of financial
hardship. Benefits shall be paid in a lump sum, as provided by the Plan.
Terminated participants may keep their vested balance in the Plan subject
to a minimum $5,000 threshold. Vested balances less than $5,000 are
distributed to the participant as a lump sum distribution. The trustee
distributes all such amounts.
PARTICIPANT LOANS
The Plan allows for loans up to 50% of the total vested value of a
participant's account, but not more than $50,000, reduced by the highest
outstanding loan balance from the previous 12 months. Loan terms range from
one to five years, unless the loan qualifies as a home loan. The term for a
home loan is not to exceed 15 years. The loans are secured by the balance
in the participant's account and bear interest based upon the prime
interest rate (as listed in the Wall Street Journal) at the time the loan
is issued, plus 2%. Principal and interest are paid ratably through
semi-monthly payroll deductions.
FORFEITED ACCOUNTS
At December 31, 2001 and 2000, forfeited nonvested accounts totaled $63,732
and $86,484, respectively. These amounts are used to reduce future employer
contributions.
7
RADISYS CORPORATION 401(K) PLAN
NOTES TO FINANCIAL STATEMENTS, CONTINUED
1. DESCRIPTION OF PLAN (CONTINUED)
ADMINISTRATION OF PLAN ASSETS
The trustee of the Plan holds the Plan's assets. Certain administrative
functions are performed by officers or employees of the Company or its
subsidiaries. No such officer or employee receives compensation from the
Plan. Recordkeeping expenses are paid directly by the Company.
2. SUMMARY OF ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The financial statements of the Plan are prepared under the accrual method
of accounting and present the net assets available for plan benefits and
changes in those net assets.
USE OF 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 disclosure of contingent assets and
liabilities at the date of the financial statements and changes in net
assets available for plan benefits during the reporting period. Actual
results could differ from those estimates.
INVESTMENT VALUATION AND INCOME RECOGNITION
The Plan's investments in Putnam Corporate Services funds, employer stock
and self-directed brokerage funds are stated at fair value, which is based
on the quoted market price of the underlying investments. Participant loans
are valued at cost, which 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.
PAYMENTS OF BENEFITS
Benefits are recorded when paid.
CONCENTRATION OF CREDIT RISK
The Plan has short-term investments of cash in the form of money market
funds, which may exceed depository insurance limits. The Plan makes such
investments with high credit quality entities and has not incurred any
credit related losses.
8
RADISYS CORPORATION 401(K) PLAN
NOTES TO FINANCIAL STATEMENTS, CONTINUED
2. SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
RISKS AND UNCERTAINTIES
The Plan provides for investment options in various investment securities.
Investment securities are exposed to various risks, such as interest rate,
market and credit risk. Due to the level of risk associated with certain
investment securities and the level of uncertainty related to changes in
the value of 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 statement of net assets
available for plan benefits and the statement of changes in net assets
available for plan benefits.
3. INVESTMENTS REPRESENTING GREATER THAN 5% OF NET ASSETS AVAILABLE FOR PLAN
BENEFITS
The following investments represented 5% or more of net assets available
for plan benefits:
CURRENT VALUE
DESCRIPTION OF INVESTMENT 2001 2000
------------------------------------ ---------- -----------
Cash and cash equivalents $ - $20,993,001
Putnam New Opportunities Fund 2,156,481 -
Putnam Stable Value Fund 2,213,937 -
PIMCO Innovation A 1,738,767 -
Weitz Partners Value Fund 2,265,880 -
Putnam Growth Opportunities Fund 3,510,958 -
Putnam Asset Allocation - Growth Portfolio 2,637,564 -
Putnam Asset Allocation - Conservative Portfolio 1,591,990 -
Putnam S&P 500 Index Fund 2,154,275 -
4. 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. The Company may elect, at its discretion, to either make a complete
distribution of the assets or to continue the trust created by the Plan and
distribute benefits in such a manner as though the Plan had not been
terminated.
9
RADISYS CORPORATION 401(K) PLAN
NOTES TO FINANCIAL STATEMENTS, CONTINUED
5. TAX STATUS
The Internal Revenue Service has determined and informed the Company by a
letter dated May 11, 1993 that the Plan is qualified and the trust
established under the Plan is tax-exempt, under the appropriate sections of
the Code. The Plan has been amended since receiving the determination
letter. However, the Plan Administrator and the Plan's tax counsel believe
that the Plan is currently designed and being operated in compliance with
the applicable requirements of the Code. Therefore, they believe that the
Plan was qualified and the related trust was tax-exempt as of December 31,
2001.
6. RELATED-PARTY TRANSACTIONS
Certain Plan investments are shares of mutual funds managed by the trustee.
These transactions qualify as party-in-interest. Fees paid by the Plan to
the trustee for investment management services amounted to $715 for the
year ended December 31, 2001.
10
SUPPLEMENTAL SCHEDULE
11
RADISYS CORPORATION 401(K) PLAN
SCHEDULE H, LINE 4I - SCHEDULE OF ASSETS (HELD AT END OF YEAR)
DECEMBER 31, 2001
DESCRIPTION OF INVESTMENT, INCLUDING
IDENTITY OF ISSUE, BORROWER, MATURITY DATE, RATE OF INTEREST, CURRENT
LESSOR, OR SIMILAR PARTY COLLATERAL, PAR, OR MATURITY VALUE COST* VALUE
---------------------------------------- ------------------------------------- ------------ --------------
Putnam Money Market Fund Money market fund $ 21,920
Pending Account Non-interest bearing cash 5,744
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27,664
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PIMCO Innovation A Mutual fund 1,738,767
PIMCO Total Return Mutual fund 1,278,945
Janus Enterprise Fund Mutual fund 537,517
Janus Balanced Fund Mutual fund 593,821
New Berger & Berman Genesis Trust Mutual fund 569,457
Weitz Partners Value Fund Mutual fund 2,265,880
Franklin Small-Mid Cap Growth Fund Mutual fund 200,725
Putman Vista Fund Mutual fund 249,925
Putnam Growth Opportunities Fund Mutual fund 3,510,958
Putnam New Opportunities Fund Mutual fund 2,156,481
Putnam Asset Allocation - Growth Portfolio Mutual fund 2,637,564
Putnam Asset Allocation - Balanced Portfolio Mutual fund 1,096,780
Putnam Asset Allocation - Conservative Portfolio Mutual fund 1,591,990
Putnam International Growth Fund Mutual fund 902,113
Putnam Balanced Fund Mutual fund 414,780
HarrisDirect Securities Account Self-directed brokerage 51,596
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19,797,299
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Putnam S&P 500 Index Fund Common/collective trust 2,154,275
Putnam Stable Value Fund Common/collective trust 2,213,937
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4,368,212
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Company stock Employer securities - common shares 112,528
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Loan Fund Partnership loans, maturities ranging
from 2002 to 2015, at interest rates
ranging from 7% to 11% 822,299
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$ 25,128,002
==============
* Cost information is omitted as permitted under ERISA regulations as these
investments are participant directed.
12
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the trustees (or other persons who administer the employee benefit plan) have
duly caused this annual report to be signed on its behalf by the undersigned
hereunto duly authorized.
RADISYS CORPORATION 401(k)
SAVINGS PLAN
Date: June 26, 2002 By:/s/TERRI L. TIMBERMAN
-------------------------------------
Name: Terri L. Timberman
Title: Administrative Committee Member
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Exhibit Index
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23.1 Consent of Independent Accountants
14