-----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, KmKiAL6x1B7jTClkViMXkhYCoP1FzZQFQOKFVsW5BHEM1YIfiSRICcj69AxJPM3m syN6oZ2OSTr12VBx/kVHBQ== 0000849043-99-000016.txt : 19990716 0000849043-99-000016.hdr.sgml : 19990716 ACCESSION NUMBER: 0000849043-99-000016 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990715 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NEUROGEN CORP CENTRAL INDEX KEY: 0000849043 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 222845714 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 11-K SEC ACT: SEC FILE NUMBER: 000-18311 FILM NUMBER: 99665038 BUSINESS ADDRESS: STREET 1: 35 NORTHEAST INDUSTRIAL RD CITY: BRANFORD STATE: CT ZIP: 06405 BUSINESS PHONE: 2034888201 MAIL ADDRESS: STREET 1: 35 NORTHEAST INDUSTRIAL RD CITY: BRANFORD STATE: CT ZIP: 06405 11-K 1 FORM 11-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 11-K [X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 0-18311 NEUROGEN CORPORATION 401 (k) RETIREMENT PLAN Full title of plan NEUROGEN CORPORATION 35 Northeast Industrial Road Branford, Connecticut 06405 (203) 488-8201 (Name of issuer of the securities held pursuant to the plan) Neurogen Corporation 401 (k) Retirement Plan FINANCIAL STATEMENTS INDEX Page ---- Report of Independent Accountants 1 Financial Statements: Statements of Net Assets Available for Benefits as of December 31, 1998 and 1997 2 Statement of Changes in Net Assets Available for Benefits for the year ended December 31, 1998 3-4 Notes to Financial Statements 5-8 Supplemental Schedules: Item 27a - Schedule of Assets Held for Investment Purposes as of December 31, 1998 9 Item 27d - Schedule of Reportable Transactions for the Year Ended December 31, 1998 10 Report of Independent Accountants To the Participants and Administrator of the Neurogen Corporation 401 (k) Retirement Plan In our opinion, the accompanying statements 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 Neurogen Corporation 401 (k) Retirement Plan (the "Plan") at December 31, 1998 and December 31, 1997, and the changes in net assets available for benefits for the year ended December 31, 1998 in conformity with generally accepted accounting principles. 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 generally accepted auditing standards 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 the opinion expressed above. 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 for Investment Purposes as of December 31, 1998 and Schedule of Reportable Transactions for the Year Ended December 31, 1998 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 and fund information have been subjected to the auditing procedures applied in the audits 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. The schedule of Assets Held for Investment Purposes and the Schedule of Reportable Transactions that accompany the Plan's financial statements do not disclose the historical cost of certain plan assets held by the Plan's custodians. Disclosure of this information is required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. PricewaterhouseCoopers LLP July 9, 1999 Neurogen Corporation 401(k) Retirement Plan Statements of Net Assets Available for Benefits
December 31, 1998 1997 ---- ---- ASSETS: Employer contribution receivable $ 47,103 Employee contribution receivable 18,954 - Investments at fair market value: Neurogen Corporation common stock 614,327 214,070 Loans to participants 76,379 44,608 Charles Schwab Money Market Funds 7,586 4,198 Investment in Pooled Separate Accounts of Manufacturer's Life Insurance Company: Money Market Fund 260,058 142,815 Short-Term Government Fund 63,776 73,946 Income Fund 53,391 47,517 High Yield Fund 181,785 154,804 Diversified Capital Fund 51,707 31,566 Growth & Income Fund 767,683 629,176 Contra Fund 1,049,217 585,492 Growth Opportunities Fund 1,215,470 886,895 Foreign Fund 190,432 152,002 International Stock Fund 85,930 57,674 --------- --------- 3,919,449 2,761,887 --------- --------- Total investments 4,617,741 3,024,763 --------- --------- Net assets available for benefits $ 4,683,798 $ 3,024,763 ========= ========= The accompanying notes are an integral part of the financial statements.
Neurogen Corporation 401(k) Retirement Plan Statement of Changes in Net Assets Available for Benefits
Plan year ended December 31, 1998 Participant Directed ------------------------------------------------------------------------------------------------- Money Short- High Diversified Growth Growth Market Term Gov't Income Yield Capital & Income Contra Opportunities Fund Fund Fund Fund Fund Fund Fund Fund ----------- ----------- -------- --------- ------------- ---------- ---------- ------------ Additions to net assets available for benefits: Contributions received or receivable from: Employer $ 6,041 $ 980 $ 4,081 $10,000 $ 4,535 $ 19,958 $ 45,374 $ 26,911 Employees 40,602 4,526 16,789 55,939 21,037 96,781 233,144 145,496 ---------- ----------- -------- -------- ------------- ---------- ---------- ------------ Total contributions 46,643 5,506 20,870 65,939 25,572 116,739 278,518 172,407 Net appreciation (depreciation) in fair value of investments 7,086 4,449 3,182 (4,931) (675) 65,103 230,200 229,548 Other income-interest repayments - - - - - - - - Participant loan repayments 63 - 378 875 - 6,242 7,192 6,511 ----------- ----------- -------- -------- ------------- ---------- ---------- ------------ Total income 53,792 9,955 24,430 61,883 24,897 188,084 515,910 408,466 Deductions from net assets available for benefits: Distribution of benefits and payments to provide benefits: Directly to participants and their beneficiaries (87,120) (14,432) (9,796) (1,295) - (26,988) (17,118) (30,992) Participant loans - - (3,152) (6,299) - (10,403) (16,684) (12,682) Administrative expenses (559) (220) (178) (649) (152) (2,367) (2,795) (3,491) ----------- ----------- --------- -------- ------------- ---------- ---------- ------------ Total deductions (87,679) (14,652) (13,126) (8,243) (152) (39,758) (36,597) (47,165) ----------- ----------- --------- -------- ------------- ---------- ---------- ------------ Net increase (decrease) (33,887) (4,697) 11,304 53,640 24,745 148,326 479,313 361,301 Interfund transfers (net) 152,137 (5,345) (4,696) (23,754) (3,712) (4,349) (3,958) (25,624) Net assets available for benefits: Beginning of year 142,816 73,946 47,517 154,804 31,566 629,176 585,492 886,895 ----------- ----------- --------- -------- ------------- ---------- ---------- ------------ End of year $ 261,066 $ 63,904 $ 54,125 $184,690 $ 52,599 $ 773,153 $1,060,847 $ 1,222,572 =========== =========== ========= ======== ============= ========== ========== ============ - ---table continued below The accompanying notes are an integral part of the financial statements.
Neurogen Corporation 401(k) Retirement Plan Statement of Changes in Net Assets Available for Benefits
Plan year ended December 31, 1998 Participant Directed Non-Participant Directed --------------------------------------- ---------------------------------------- Int'l Neurogen Neurogen Participant Foreign Stock Stock - Stock - Notes Fund Fund Unrestricted Restricted Receivables Total ----------- ----------- ------------- ----------- ------------- ---------- Additions to net assets available for benefits: Contributions received or receivable from: Employer $ 12,948 $ 7,737 $ 12,406 $ 302,390 $ - $ 453,361 Employees 76,923 46,246 38,635 - - 776,118 ----------- ----------- ------------ ------------ ------------- ---------- Total contributions 89,871 53,983 51,041 302,390 - 1,229,479 Net appreciation (depreciation) in fair value of investments (9,858) 11,411 70,576 32,353 - 638,444 Other income-interest repayments - - - - 5,499 5,499 Participant loan repayments 2,999 759 868 - (25,887) - ----------- ----------- ------------ ------------ ------------- ---------- Total income 83,012 66,153 122,485 334,743 (20,388) 1,873,422 Deductions from net assets available for benefits: Distribution of benefits and payments to provide benefits: Directly to participants and their beneficiaries (9,443) (1,487) - - (1,637) (200,308) Participant loans (4,283) (293) - - 53,796 - Administrative expenses (568) (237) (2,863) - - (14,079) ----------- ----------- ------------ ------------ ------------- ---------- Total deductions (14,294) (2,017) (2,863) - 52,159 (214,387) ----------- ----------- ------------ ------------ ------------- ---------- Net increase (decrease) 68,718 64,136 119,622 334,743 31,771 1,659,035 Interfund transfers, net (27,857) (34,543) (14,889) (3,410) - - Net assets available for benefits: Beginning of year 152,002 57,674 218,267 - 44,608 3,024,763 ----------- ----------- ------------ ------------ ------------- ---------- End of year $ 192,863 $ 87,267 $ 323,000 $ 331,333 $ 76,379 $4,683,798 =========== =========== ============ ============ ============= ========== The accompanying notes are an integral part of the financial statements.
Neurogen Corporation 401(k) Retirement Plan NOTES TO FINANCIAL STATEMENTS 1. Description of the Plan: General - ------- The Neurogen Corporation 401(k) Retirement Plan (the "Plan") is a defined contribution plan. All regularly employed full-time employees employed by the Company on the first day of a calendar quarter following the date on which the employee first completed an hour of service are eligible to participate. It is subject to the provisions of the Employee Retirement Income Security Act of 1974 ("ERISA") and is intended to meet the requirements of Section 401(a), 401(k), and 501(a) of the Internal Revenue Code of 1986, as amended (the "Code"). The Company as the administrator of the Plan is responsible for determining employer contributions, determining limits if any, on loan requests, reviewing financial hardship requests for participant withdrawals and to set rules and administrative policy as it may deem necessary to carry out the provisions of the Plan. Contributions - ------------- Employees may elect to contribute up to 15% of their earnings or $10,000 whichever is less. Contribution rates may be changed on the first day of a calendar quarter. The Plan provides that the Company will match the employee's contribution in an amount equal to 100% of the participant's contribution up to 6% of the participant's gross pay. The matching contribution is made up of two parts. One third of the contribution is in cash that may be invested in any of the investment funds offered. The other two-thirds is in Neurogen stock and may not be transferred to another investment fund. Participant accounts - -------------------- Each participant's account is credited with the participant's contribution and allocations of the Company's matching contribution, and plan earnings as described in the Plan document. The benefit to which a participant is entitled is the benefit that can be provided from the participant's vested account. Vesting - ------- Participants vest on employer matching contributions at a rate of 25% for each whole year of service and are 100% vested after four years of credited service. Investment Options - ------------------ Upon enrollment in the Plan, a participant may direct employee contributions in 1 percent increments to purchase Neurogen common stock and to the following Manufacturer's Life Insurance Company ("Manulife") pooled separate account fund choices: Aggressive Growth Funds - ----------------------- Manulife International Stock Fund - This fund invests in the T. Rowe Price International Stock Fund. The fund invests primarily in common stocks of foreign companies that have the potential for growth of capital or income or both. Manulife Foreign Fund - This fund invests in the Templeton Foreign Fund. This fund invests using a traditional value strategy. It invests in stocks primarily outside the United States drawn from a list of the world's "cheapest" companies relative to assets and long-term earnings. Growth Funds - ------------ Manulife Contra Fund - Invests in the Fidelity Contra Fund. This fund invests primarily in undervalued common stocks and convertible securities in companies that are currently out of favor with the investing public but that may have a favorable long-term outlook. Manulife Growth Opportunities Fund - Invests in Fidelity Advisor Growth Opportunities Fund. This fund invests primarily in common stocks and securities convertible into common stocks of companies with long-term growth potential. Growth and Income Funds - ----------------------- Manulife Growth & Income Fund - Invests in the T. Rowe Price Growth & Income Fund. This fund invests primarily in common stocks of companies whose earnings are expected to grow at a rate in excess of that of common stocks in general and are adequate to support a growing dividend. Manulife Diversified Capital Fund - Invests in SoGen International Fund. This fund invests in a diversified portfolio of assets, including equity and fixed-income securities of U.S. and foreign companies. Investments in fixed income instruments may be for capital appreciation potential as well as income. Income Funds - ------------ Manulife High Yield Fund - Invests in Fidelity Advisor High-Yield Fund. This fund invests primarily in high-yielding non-investment grade, fixed-income and zero coupon securities, as well as convertible securities and preferred stocks. Manulife Income Fund - Invests in T. Rowe Price Spectrum Income Fund. This fund invests in a diversified group of underlying T. Rowe Price funds, which in turn invest principally in fixed income securities. Manulife short-term Government Fund - Invests in Vanguard Fixed Income Securities Fund. This fund's objective is to maintain a high level of safety of principal and generate returns consistent with an average maturity of two to three years. Conservative Fund - ----------------- Manulife Money Market Fund. This fund's objective is to maintain a high level of safety of principal and generate returns higher than those available on U.S. Treasury bills alone. Participants may change their investment options daily. Loans and Withdrawals - --------------------- Participants may borrow from their fund accounts a minimum of $1,000, up to a maximum equal to the lesser of $50,000, or 50% of their vested account balance. Loan transactions are treated as a transfer to (from) the investment fund from (to) the Participant Notes Receivable fund. Loan terms vary with the maximum being ten years. The loans are collateralized by the balance in the participant's account and bear interest at a rate 1% over the prime rate. A participant may withdraw all or any portion of his vested account resulting from his contributions, subject to proof of hardship due to an immediate and significant financial need as further described in the Plan document. The plan administrator in accordance with nondiscriminatory standards applied uniformly to all participants similarly makes the determination of financial hardship. Payment of Benefits - ------------------- On termination of service due to death, disability or retirement, a participant may elect to receive a lump-sum amount equal to the value of the participant's vested interest in his or her account. If a participant terminates employment but termination is not due to death, disability or retirement, and the participant is not yet 65, the participant may keep his account balance in the plan if it is higher than $5,000. If the participant chooses distribution the distribution will occur as soon as practicable after the participant has completed the proper form providing instruction as to where the funds should be transferred. Forfeited Accounts - ------------------ Any forfeitures will first be applied to pay expenses under the Plan which would otherwise be paid by the employer. Remaining forfeitures, if any, will be deemed to reduce the employer contribution. At December 31, 1998, forfeited nonvested accounts totaled $ 7,465. These accounts will be used to reduce future employer contributions. In 1998 administrative fees for the Plan were reduced by $2,879 from forfeited nonvested accounts. 2. Summary of Accounting Policies: Basis of Accounting - ------------------- The financial statements of the Plan are prepared under the accrual method of accounting. Use of Estimates - ---------------- The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and changes therein, and disclosure of contingent assets and liabilities. Actual results could differ from those estimates. Investment Valuation and Income Recognition - ------------------------------------------- The Company utilizes a third party record-keeper to prepare the records of the plan, to process transfers between investment choices, and to process distributions. The mutual fund accounts are pooled separate accounts through an investment contract with the Manufacturers Life Insurance Company ("Manulife"). Shares of mutual fund accounts are valued at quoted market prices that represent the net asset value of shares held by the Plan at year-end. The Company stock is valued at its quoted market price and held in a brokerage account at Charles Schwab & Company. An administrative maintenance charge is applied to each of the pooled Manulife funds and is outlined in the contract. The Plan presents in the statement of changes in net assets available for benefits the net appreciation (depreciation) in the fair value of its investments which consists of the realized gains or losses and the unrealized appreciation (depreciation) on those investments, and investment income from the pooled separate accounts. Participant notes receivable are valued at cost which approximates fair value. Purchases and sales are recorded at the trade date and interest income is recorded on the accrual basis. Plan Expenses - ------------- Transaction fees are offset by forfeitures, with any expenses in excess of the forfeiture being paid by the Company. The Company incurred expenses of $49,338 and $19,145 for the plan years 1998 and 1997, respectively, which were not charged to the Plan. The Participant pays loan administrative expenses of $100 per loan. Plan Termination - ---------------- Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan, subject to the provisions of ERISA. Reconciliation of Financial Statements to Form 5500 - --------------------------------------------------- Certain items are classified differently in the Plan's annual report Form 5500 than they are presented in the accompanying statements of Net Assets Available for Benefits. These represent classification differences only. Tax Status - ---------- The Internal Revenue Service has determined and informed the Company by a letter dated October 22, 1996, that the plan, as then designed, was in compliance with the applicable requirements of the Internal Revenue 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 Internal Revenue Code. 3. Investments Investments in Neurogen Corporation Stock, Manulife Money Market Fund, Manulife Growth and Income Fund, Manulife Contra Fund, and Manulife Growth Opportunities Fund represent 5 percent or more of the Plan's net assets available for benefits as of December 31, 1998.
Neurogen Corporation 401(k) Retirement Plan Item 27a - Schedule of Assets Held for Investment Purposes December 31, 1998 (a) (b) Issuer (c) Description of Investment (d) Cost (e) Current Value - --- ---------- ----------------------------- -------- ----------------- * Neurogen Corporation Common stock, par value $.025 $ ** $ 614,327 * Participants Participant loans with interest rates between 8.75% and 9.75%, collaterized by participant account balances 76,379 76,379 * Charles Schwab Money Market Fund 7,586 7,586 * Manulife Money Market Fund 260,058 260,058 * Manulife Short-Term Government Fund ** 63,776 * Manulife Income Fund ** 53,391 * Manulife High Yield Fund ** 181,785 * Manulife Diversified Capital Fund ** 51,707 * Manulife Growth and Income Fund ** 767,683 * Manulife Growth Opportunities Fund ** 1,215,470 * Manulife Contra Fund ** 1,049,217 * Manulife Foreign Fund ** 190,432 * Manulife International Stock Fund ** 85,930 ----------------- $ 4,617,741 ================= * Indentified as a party in interest ** Information not available from normal business records
Neurogen Corporation 401(k) Retirement Plan Item 27d - Schedule of Reportable Transactions Plan Year Ended December 31, 1998 Series of transactions exceeding 5% of current value of Plan Assets as of January 1, 1998 Aggregate Aggregate Number of Cost of Number of Proceeds Net Gain Name of Investment Transactions Purchases Transactions from Sales or (Loss) - ------------------ ------------ --------- ------------ ---------- --------- Charles Schwab Money Market Fund 60 $ 246,255 42 $ 242,867 $ - Neurogen Corporation Stock 40 396,752 6 101,784 * Manulife Money Market Fund 76 285,399 30 174,686 * Manulife Contra Fund 76 206,348 30 88,481 * Manulife Growth Opportunities Fund 63 298,719 27 77,729 * Manulife High Yield Fund 64 100,900 11 63,338 * Manulife Growth and Income Fund 69 130,612 21 54,843 * Note: No lease rentals or expenses incurred with transactions * Information not available from normal business records
SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized. Neurogen Corporation 401(k) Plan Administrator: Neurogen Corporation Date: July 15, 1999 By: /s/ STEPHEN R. DAVIS --------------------- Stephen R. Davis Vice President and Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----