Exhibit 29
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 (Fee Required)
For the fiscal year ended December 31, 1993
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 1-4663
A. Full title of the Plan and the address of the Plan, if
different from that of the issuer named below:
CROMPTON & KNOWLES CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
B. Name of issuer of the securities held pursuant to the Plan
and the address of its principal executive office:
Crompton & Knowles Corporation
One Station Place - Metro Center
Stamford, Connecticut 06902
11k93A
CROMPTON & KNOWLES CORPORATION
Employee Stock Ownership Plan
EXHIBIT INDEX
Form 11-K for the Fiscal Year Ended December 31, 1993
Exhibit Description
No. of Exhibit
1. Consent of KPMG Peat Marwick, independent certified
public accountants.
CROMPTON & KNOWLES CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
STATEMENTS OF FINANCIAL CONDITION
DECEMBER 31, 1993 AND 1992
PLAN ASSETS AND EQUITY
1993
1992
Fixed C&K
Equity Advisers Mortgage Fixed
C&K Equity Advisers Mortgage
Income Fund Stock Fund
Fund Fund Fund Total Income Fund
Stock Fund Fund Fund Fund Total
Investments:
Common stock of Crompton
& Knowles Corporation -
1,919,290 shares at market
value (cost $ 10,417,226)
in 1993 and 2,056,509
shares at market value
(cost $ 8,768,286) in 1992 $ - $ 42,224,380 $
- $ - $ - $ 42,224,380 $ - $
45,757,325 $ - $ - $ - $ 45,757,325
Hartford Life Insurance
Company group annuity
contract 13,290,019 -
1,760,745 466,213 194,925 15,711,902 12,033,505
- 1,313,388 356,048 142,050 13,844,991
Cash and short-term
investments at cost,
which approximates market 133,705 314,546
55,918 9,121 6,888 520,178 25,164
32,460 25,764 4,563 4,894 92,845
Contribution receivable
from Crompton & Knowles
Corporation 205,991 142,674
983 7,258 7,166 364,072 65,491
268,176 18,591 4,912 3,663 360,833
Plan Assets and Equity $ 13,629,715 $ 42,681,600 $
1,817,646 $ 482,592 $ 208,979 $ 58,820,532 $ 12,124,160 $
46,057,961 $ 1,357,743 $ 365,523 $ 150,607 $ 60,055,994
\11K\93AE
See accompanying notes to
financial statements
CROMPTON & KNOWLES CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
STATEMENTS OF INCOME AND CHANGES IN
PLAN EQUITY
FOR THE YEARS ENDED DECEMBER 31,
1993, 1992 AND 1991
1993
1992
1991
Fixed C&K
Equity Advisers Mortgage Fixed
C&K Equity Advisers Mortgage
Fixed C&K Equity
Income Fund Stock Fund Fund
Fund Fund Total Income Fund Stock
Fund Fund Fund Fund Total Income
Fund Stock Fund Fund
Investment income:
Cash dividends on
investment in common
stock of Crompton &
Knowles Corporation and
interest on short-term
investments $ 1,755 $ 755,945 $
1,371 $ 352 $ 288 $ 759,711 $ 2,822 $
623,066 $ 1,391 $ 98 $ 14 $ 627,391 $
3,985 $ 507,573 $ 951 $
Realized gain on sale
of investments and
withdrawals - 4,614,837 -
- - 4,614,837 -
1,609,135 - - - 1,609,135
- 2,087,917 -
Interest earned - John
Hancock Mutual Life
Insurance Company group
annuity contract - - -
- - - 639,652 -
- - - 639,652
1,039,300 - -
Interest earned - Hartford
Life Insurance Company
group annuity contract 865,918 - -
- - 865,918 357,397 -
- - - 357,397 -
- -
Other expenses - - -
- - 0 - -
- - - -
(18) - (609)
Net investment income 867,673 5,370,782
1,371 352 288 6,240,466 999,871
2,232,201 1,391 98 14 3,233,575
1,043,267 2,595,490 342
Increase (decrease) in unrealized
appreciation of investments - (5,181,885)
206,916 42,937 8,885 (4,923,147) -
(247,893) 112,809 16,268 50 (118,766)
- 24,456,760 157,008
Contributions:
Employee Rollovers 13,566 - -
- - 13,566 73,660 -
- - - 73,660
40,571 - -
Employees 860,790 1,435,118
207,199 67,839 56,070 2,627,016 844,818
1,274,968 137,469 20,158 18,867 2,296,280
867,495 847,569 96,435
Employer - Net of
forfeitures - 1,617,481 -
- - 1,617,481 -
1,276,023 - - - 1,276,023
- 895,208 -
Withdrawals and
Distributions (1,684,871) (5,012,089)
(67,674) (42,839) (3,371) (6,810,844) (1,259,484)
(1,771,906) (32,334) (2,781) (324) (3,066,829)
(2,095,127) (1,858,147) (95,961)
Employee interfund
transfers 1,448,397 (1,605,768)
112,091 48,780 (3,500) 0 (446,172)
(394,098) 376,490 331,780 132,000 0
1,341,896 (1,284,250) (57,646)
Net increase/(decrease) in
Plan Equity for the year 1,505,555 (3,376,361)
459,903 117,069 58,372 (1,235,462) 212,693
2,369,295 595,825 365,523 150,607 3,693,943
1,198,102 25,652,630 100,178
Plan Equity at beginning
of year 12,124,160 46,057,961
1,357,743 365,523 150,607 60,055,994 11,911,467
43,688,666 761,918 - - 56,362,051
10,713,365 18,036,036 661,740
Plan Equity at end of year $ 13,629,715 $ 42,681,600 $
1,817,646 $ 482,592 $ 208,979 $ 58,820,532 $ 12,124,160 $
46,057,961 $ 1,357,743 $ 365,523 $ 150,607 $ 60,055,994
$ 11,911,467 $ 43,688,666 $ 761,918 $
\11K\93INC
See accompanying notes to financial
statements
Advisers Mortgage
Fund Fund Total
- $ - $ 512,509
- - 2,087,917
- - 1,039,300
- - -
- - (627)
- - 3,639,099
- - 24,613,768
- - 40,571
- - 1,811,499
- - 895,208
- - (4,049,235)
- - 0
- - 26,950,910
- - 29,411,141
- $ - $ 56,362,051
CROMPTON & KNOWLES CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
Financial Statements and Schedule
December 31, 1993 and 1992
(With Independent Auditors' Report Thereon)
CROMPTON & KNOWLES CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
DECEMBER 31, 1993 and 1992
1. Basis of Presentation
The accompanying financial statements have been prepared on an
accrual basis. Securities transactions are recorded on the
trade date, and dividend income is recorded on the ex-dividend
date.
2. Plan Description
The Employee Stock Purchase and Savings Plan was adopted by the
Board of Directors of Crompton & Knowles Corporation (the
"Corporation") on January 27, 1976. Effective July 1, 1989 the
Board of Directors amended the Plan to convert it into an
Employee Stock Ownership Plan (the "Plan"). The Plan permits
an eligible employee to elect to participate by authorizing a
withholding of an amount equal to 1%, 2%, 3%, 4%, 5% or 6% of
compensation as the basic contribution to the Plan.
Contributions by the Corporation to the Plan were made at an
amount equal to 66 2/3% of each participating employee's basic
employee contribution to the Plan.
Funds contributed under the Plan are held in a trust fund (the
"Trust") and were invested in five investment funds, the
Crompton & Knowles Stock Fund ("C&K Stock Fund"), the Fixed
Income Fund, the Equity Fund, the Advisers Fund, and the
Mortgage Fund.
The C&K Stock Fund is a fund invested entirely in common stock
of Crompton & Knowles Corporation, and contributions by the
Corporation to the Plan are invested in this fund. The market
value of the common stock is based on quotations from the New
York Stock Exchange.
The Fixed Income Fund is a fund invested under an agreement
with Hartford Life Insurance Company (the "Hartford") pursuant
to which the Hartford guarantees the repayment of principal and
the payment of interest on all amounts on deposit at an
effective annual rate of interest of 7.25% on, and after,
January 1, 1993 (7.50% for the period August 1, 1992 through
December 31, 1992).
Prior to August 1, 1992 the Fund was invested under an
agreement with John Hancock Mutual Life Insurance Company
("John Hancock") pursuant to which John Hancock guaranteed
repayment of principal and the payment of interest on all
amounts on deposit at an effective annual rate of 11.00% for
the period August 1, 1989 to July 31, 1990, and 9.75% for the
period August 1, 1990 to July 31, 1992.
Employee Stock Ownership Plan - Notes Page 2
The value of the Fixed Income Fund is based on contributions
invested and reinvested, interest earned, less withdrawals and
distributions.
The Equity Fund is a fund invested under the terms of a group
annuity contract with the Hartford in the Separate Account A,
which is a pooled separate account maintained by the Hartford
with respect to a portion of its assets, in connection with the
contract and other similar contracts issued by the Hartford.
This fund invests primarily in equity securities such as common
stocks and securities convertible into common stock. The
Equity Fund is valued based on a unit value as determined by
the fund manager as follows:
12/31/93 12/31/92
Unit Value $90.358 $78.779
Total Units Held 19,486.327 16,671.870
The related cost of the Equity Fund at December 31, 1993 was
$1,459,278, and $1,218,975 at December 31, 1992.
Prior to October 31, 1992 the Equity Fund was invested under
the terms of a group annuity contract with John Hancock in the
Pooled Common Stock Class 1L Account of Independence Investment
Associates, Inc., an affiliate of John Hancock. This fund
invested in equity securities such as common stock and
securities convertible into common stock.
The Advisers Fund is a fund invested under the terms of a group
annuity contract with the Hartford in the Separate Account V
which is a pooled separate account maintained by the Hartford
with respect to a portion of its assets, in connection with the
contract and other similar contracts issued by the Hartford.
Assets in the Separate Account V are invested in the HVA
Advisers Fund, Inc. The Hartford Investment Management Company
is an investment advisor to the fund, and Wellington Management
Company is the funds sub-advisor. This fund invests in common
stocks, debt securities, and money market instruments. The
Advisors Fund is valued based on a unit of value as determined
by the fund manager as follows:
12/31/93 12/31/92
Unit Value $1.383 $1.238
Total Units Held 337,151.770 287,585.918
The related cost of the Advisors Fund at December 31, 1993 was
$407,010, and $339,780 at December 31, 1992.
Employee Stock Ownership Plan - Notes
Page 3
The Mortgage Fund is a fund invested under the terms of a group
annuity contract with the Hartford in the Separate Account G
which is a pooled separate account maintained by the Hartford
with respect to a portion of its assets, in connection with the
contract and other similar contracts issued by the Hartford.
The assets in the Separate Account G are invested solely in the
Hartford GNMA/Mortgage Securities Fund. Inc. The Hartford
Investment Management Company is an investment advisor to the
fund. This fund invests in mortgage related securities,
including securities issued by the Government National Mortgage
Association. The Mortgage Fund is valued based on a unit value
as determined by the fund manager as follows:
12/31/93 12/31/92
Unit Value $27.201 $25.706
Total Units Held 7,166.071 5,525.936
The related cost of the Mortgage Fund at December 31, 1993 was
$185,990, and $142,000 at December 31, 1992.
Assets in any of the five funds may be invested in short term
government or other securities pending permanent investment.
Earnings on each fund will be reinvested in that fund.
Each participant is permitted to elect to have his basic
contribution invested in any of the five funds in 10%
increments. As of December 31, 1993 and 1992 the number of
participants by fund were as follows:
1993 1992
C&K Stock Fund 1,240 1,204
Fixed Income Fund 867 861
Equity Fund 312 286
Advisers Fund 102 86
Mortgage Fund 98 90
As of the first day of any month, but not more frequently than
once in any six-month period, a participant may elect to
transfer any part of the value of his basic employee account or
his supplemental employee account, which is invested in one of
the funds, to any of the other funds except the Fixed Income
Fund and the Mortgage Fund. Any such transfer must be in
increments of 5% of the amount invested in the fund from which
the transfer is being made.
3. Income Taxes
The Internal Revenue Service has issued a determination letter
to the effect that the Plan as amended through 1985 is a
qualified plan under Section 401(a) of the Internal Revenue
Code of 1954 (the Code), as amended.
Employee Stock Ownership Plan - Notes
Page 4
Effective as of July 1, 1989, the Board of Directors of the
Corporation amended the Plan to convert it to an employee stock
ownership plan. The amendments to the Plan included both
changes to convert the Plan to an employee stock ownership plan
and other changes required or permitted by the Code.
Management and counsel believe that these amendments will not
effect the qualified status of the Plan.
It is believed that, in general, the Federal income tax
consequences of participation in the Plan under present law
will be as follows:
Participants are not subject to Federal income tax on employer
contributions made under the Plan or on income earned by the
Trust until amounts are withdrawn or distributed. Any
withdrawal from the Plan will be tax free to the extent of the
participant's contributions to the Plan prior to 1987. If the
amount exceeds such pre-1987 contributions of the participant,
the excess will be treated as being in part a tax free return
of the participant's contribution made to the Plan after 1986
and in part as a taxable distribution subject to federal income
tax at ordinary rates based on the ratio at the time of
withdrawal of the total participant's contributions after 1986
to the total value of the participant's accounts. If the
withdrawal or distribution qualifies as a lump sum
distribution, amounts attributable to participation in a
predecessor plan prior to 1974 may qualify for capital gains
treatment (phased out over the years 1987-1991), and the
ordinary income portion attributable to post-1973 participation
may be taxed under a special five-year income averaging
provision if the participant is over age 59 1/2 (or a special
ten-year income averaging provision if the participant turned
50 before January 1, 1986). If a distribution includes shares
of common stock of Crompton & Knowles Corporation, taxation of
any appreciation in the value of such shares over their cost to
the Trust will be deferred until the later sale or exchange of
such shares. Taxable withdrawals or distributions after
January 1, 1987, in addition to being taxed as ordinary income
will be subject to an additional 10% income tax unless the
withdrawal or distribution is on account of the death or
disability of the participant, is made after he turns age 59
1/2 or retires after age 55, or is used for certain deductible
medical expenses. A participant who receives total
distributions from all retirement plans in a single year in
excess of $150,000 ($144,551 in some cases) may be subject to
an excise tax of 15% of the excess amount.
Employee Stock Ownership Plan - Notes
Page 5
The foregoing is only a brief summary of the tax consequences
of participation in the Plan. Each participant should consult
his own personal advisors with respect to the tax consequences
of making any elections under the Plan and for purposes of
determining his own tax liability.
4. Participant Vesting
A participant in the Plan is fully vested in all of his
accounts under the Plan upon his death, retirement, disability,
or attainment of age 65 or upon change in control of the
Corporation. A participant whose employment terminates for any
reason before his death or retirement is entitled to receive
l00% of his own contributions plus earnings thereon and will
receive his employer contribution account plus earnings thereon
based upon a schedule under which the account is 100% vested
after five years of participation in the Plan, or after
completion of five years of service with the Corporation. The
non-vested portion of the employer contribution account will be
forfeited under certain circumstances and held to reduce future
contributions to be made by the Corporation to the Plan.
5. Investments
A. Unrealized appreciation in Crompton & Knowles
Corporation common stock:
12/31/93 12/31/92 12/31/91
Unrealized
apprec. at the
beginning of
the year $36,989,039 $37,236,932 $12,780,172
Unrealized
apprec. at the
end of the year 31,807,154 36,989,039 37,236,932
Increase/(decrease)
in unrealized
appreciation $(5,181,885) $( 247,893) $24,456,760
Employee Stock Ownership Plan - Notes
Page 6
B. Net purchases (sales) of shares of Crompton & Knowles
Corporation common stock consist of the following:
Contributions Net
And Sales and Purchases
Purchases Withdrawals (Sales)
1993
No. of shares 131,841 269,060 (137,219)
Cost amount $2,924,833 $1,275,893 $1,648,940
1992
No. of shares 156,816 105,023 51,793
Cost amount $3,062,632 $ 409,398 $2,653,234
1991
No. of shares 53,568 94,669 (41,101)
Cost amount $1,524,738 $ 498,748 $1,025,990
C. Gain on sale of investments and withdrawals of Crompton &
Knowles Common Stock:
1993 1992 1991
Aggregate
proceeds $5,890,730 $2,018,533 $2,586,665
Aggregate cost
(FIFO) 1,275,893 409,398 498,748
Net gain $4,614,837 $1,609,135 $2,087,917
6. Plan Expenses
Significant costs of Plan administration, which are payable
from the Trust or by the Corporation, are generally paid by the
Corporation.
11k93C
Exhibit No. 1 to Form 11-K
11k93D
1
INDEPENDENT AUDITORS REPORT
The Board of Directors
Crompton & Knowles Corporation:
We have audited the accompanying statements of financial condition
of Crompton & Knowles Corporation Employee Stock Ownership Plan
(the Plan) as of December 31, 1993 and 1992, and the related
statements of income and changes in plan equity for each of the
years in the three-year prior period ended December 31, 1993.
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 generally accepted
auditing standards. 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 financial position of the
Plan as of December 31, 1993 and 1992, and the results of its
operations for each of the years in the three-year period ended
December 31, 1993 in conformity with generally accepted accounting
principles.
/S/KPMG Peat
Marwick
Stamford, Connecticut
March 14, 1994
11k93D
2