1
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
As of December 31, 2001 and December 31, 2000 and
for the year ended December 31, 2001
Commission file number 1-7635
A. Full title of the plan and the address of the plan if
different from that of the issuer named below:
TWIN DISC, INCORPORATED - THE
ACCELERATOR 401(K) SAVINGS PLAN
B. Name of issuer of the securities held pursuant to the
Plan and the address of its principal executive office:
TWIN DISC, INCORPORATED
1328 Racine Street, Racine, Wisconsin 53403
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TWIN DISC, INCORPORATED - THE ACCELERATOR 401(K) SAVINGS PLAN
INDEX TO FINANCIAL STATEMENTS, SUPPLEMENTAL SCHEDULES AND EXHIBITS
Page(s)
- - - -
Report of Independent Accountants 1
FINANCIAL STATEMENTS:
Statements of Net Assets Available for Benefits as of
December 31, 2001 and 2000 2
Statement of Changes in Net Assets Available for Benefits
for the year ended December 31, 2001 3
Notes to Financial Statements 4-7
SUPPLEMENTAL SCHEDULES:
Form 5500, Schedule of Assets (Held at End of Year)
as of December 31, 2001 8
Form 5500, Schedule of Nonexempt Transactions for
the year ended December 31, 2001 9
Exhibits to Annual Report on Form 11-K 10
Signatures 11
Consent of Independent Accountants 12
NOTE: Supplemental schedules required by the Employee Retirement Income
Security Act of 1974 that have not been included herein are not applicable.
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Report of Independent Accountants
To the Participants and Administrator
of the Twin Disc, Incorporated - The
Accelerator 401(k) Savings 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 Twin Disc, Incorporated - The Accelerator 401(k) Savings
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 schedules as listed
in the accompanying index 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 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.
/s/ PricewaterhouseCoopers LLP
August 13, 2002
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Twin Disc, Incorporated
The Accelerator 401(k) Savings Plan
Statements of Net Assets Available for Benefits
December 31, 2001 and 2000
Assets 2001 2000
- - - - - - - - - - -
Cash $ 32,334,253 $ -
Participant directed plan investments at fair value 11,408,043 47,314,603
Receivables:
Employer's contribution 61,877 606
Participants' contributions 137,786 1,331
Accrued income 15,894 579
- - - - - - - - - - - -
Total receivables 215,557 2,516
- - - - - - - - - - - -
Net assets available for benefits $ 43,957,853 $47,317,119
- - - - - - - - - - - -
- - - - - - - - - - - -
The accompanying notes are an integral part of these financial statements
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Twin Disc, Incorporated
The Accelerator 401(k) Savings Plan
Statement of Changes in Net Assets Available for Benefits
December 31, 2001 and 2000
Additions
Additions to net assets attributed to:
Investment (loss) income:
Net depreciation in fair value of investments $ (3,937,314)
Interest 123,192
Dividends 433,892
- - - - - -
Net investment loss (3,380,230)
Contributions:
Employer's 1,106,567
Participants' 2,499,056
- - - - - -
Total contributions 3,605,623
- - - - - -
Total additions 225,393
Deductions
Deductions from net assets attributed to:
Benefits paid to participants 3,580,230
Administrative expenses 4,429
- - - - - -
Total deductions 3,584,659
- - - - - -
Net decrease (3,359,266)
Net assets available for benefits:
Beginning of year 47,317,119
- - - - - -
End of year $43,957,853
- - - - - -
- - - - - -
The accompanying notes are an integral part of these financial statements
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Twin Disc, Incorporated
The Accelerator 401(k) Savings Plan
Notes to Financial Statements
December 31, 2001 and 2000
1. Description of Plan
- - - - - - - - -
The following brief description of the Twin Disc, Incorporated The
Accelerator 401(k) Savings Plan (the "Plan") is provided for general
information purposes only. Participants should refer to the plan
agreement for a more complete description of the Plan's provisions.
General
- - - -
The Plan, established April 1, 1986, is a defined contribution plan
covering substantially all Twin Disc, Incorporated (the "Company")
domestic employees and is subject to the provisions of the Employee
Retirement Income Security Act of 1974 ("ERISA").
Eligibility
- - - - - -
An employee of the Company is eligible for plan participation after
completing two months of employment.
Contributions
- - - - - - -
Participants may elect to contribute on a before-tax basis up to 16% of
annual gross income with contributions limited to $10,500 in 2001 under
provisions of the Internal Revenue Code.
For participants who are employed by Twin Disc, Inc., the Company
contributes an amount equal to 75% of each participant's 401(k)
contributions, up to 6% of compensation. For participants who are
employed by the Twin Disc South East subsidiary of the Company, the
Company contributes a matching contribution equal to 25% of each
participant's 401(k) contributions, up to 6% of compensation, and a
profit sharing contribution equal to 2.5% of each participant's
compensation. For participants who are employed by the TD Electronics
subsidiary of the Company, the Company contributes an amount equal to 50%
of each participant's 401(k) contributions, up to 3% of compensation plus
25% of each participant's 401(k) contributions on the next 3% of
compensation.
The Plan enables participants to allocate their contributions and account
balances among various investment options offered by the Plan. Assets of the
Plan are segregated and invested based upon the total allocation of the
participants' accounts. Participants may direct such allocations in any whole
percentage increment and allocations can be changed at any time.
Participant Accounts
- - - - - - - - - -
Participant recordkeeping was performed by Firstar Bank, N.A. ("Firstar")
through December 31, 2001 (see Note 8), who maintained individual
accounts for each participant for their respective investment in each of
nine available investment funds. For all investment programs which are
mutual funds, Firstar maintained participant balances on a share method.
Participant investments in the Twin Disc, Inc. Stock Fund were accounted
for on a unit value method. Units and unit values for the fund as of
December 31, 2001 and 2000 were as follows:
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Units Unit Value
December 31, December 31,
2001 2000 2001 2000
- - - - - - - - - - - - - - - - - -
Twin Disc, Inc. Stock Fund 108,813 109,344 $8.35 $8.21
Vesting
- - - -
Participants are immediately 100% vested in their individual account
balances.
Withdrawals
- - - - - -
After-tax contributions may be withdrawn at any time upon receipt of
written notice by the Company. Before-tax contributions may only be
withdrawn, prior to employment termination, in the event of severe
financial hardship. A final distribution is paid to the participant upon
termination of employment with the Company. Final distributions in excess
of $5,000 may be deferred as elected by the participant until age 70 1/2.
Participant Loans
- - - - - - - - -
Participants may be granted a loan against their individual account
balance limited to the lesser of $50,000 or 50% of the account balance.
Loans are granted in a uniform and nondiscriminatory manner based on the
loan policy as set forth by the Benefits Committee. The loan proceeds
are made pro-rata from the investment elections of the participant. Each
participant's individual account and the interest and principal paid on
the loan shall be credited only to such participant's account balance.
Any such loan shall be repaid over a period not exceeding five years
unless the loan is used to purchase a principal residence, in which case
the loan shall be repaid over a period not exceeding fifteen years.
2. Summary of Accounting Policies
- - - - - - - - - - - - - - - -
Basis of Accounting
- - - - - - - - - -
The financial statements of the Plan are prepared under the accrual
method of accounting.
Investments
- - - - - -
Investment of the Plan are stated at fair value. The values of
investments in mutual funds and common stocks are determined by the last
reported market price on the last business day of the year. Investments
in common trust funds are valued at redemption prices established by the
Trustee. Participant loans are valued at cost which approximates fair
value. The Plan presents in the statement of changes in net assets 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. Purchases and sales of
investments are recorded on a trade-date basis. Dividends are recorded on
the ex-dividend date. Interest is recognized when earned.
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Administrative Expenses
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Certain administrative expenses of the Plan are paid by the Company at
its discretion. The remaining administrative expenses are paid by the
Plan.
Benefit Payments
- - - - - - - - -
Benefits are recorded when paid.
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 and liabilities at
the dates of the financial statements and the reported amounts of
additions and deductions during the reporting periods. Actual amounts
could differ from those estimates.
Risks and Uncertainties
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The Plan's investments are exposed to various risks, such as interest
rate, market and credit risks. Due to the level of risk associated with
certain investments and the level of uncertainty related to changes in
the values of investments, 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 Statements of Net Assets
Available for Benefits and the Statement of Changes in Net Assets
Available for Benefits.
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3. Investments
- - - - - -
The following presents investments that represent 5 percent or more of
the Plan's net assets:
December 31,
2001 2000
- - - - - - - - - - -
Mutual Funds:
Firstar Growth and Income Fund $ - $ 15,458,704
Firstar Midcap Core Equity Fund - 7,390,421
Firstar Intermediate Bond Market Fund - 3,731,540
MFS Emerging Growth Fund - 4,834,634
Vanguard Windsor Fund, Inc.,
Windsor II Equity Fund - 2,756,400
Firstar Investment Trust for Employee Benefit Plans-
Stable Asset Common Trust Fund - 8,828,652
First American Prime Obligation Fund 9,473,965 -
During 2001, the Plan's investments (including gains and losses on
investments bought and sold as well as held during the year) depreciated
in value by $3,937,314, as follows:
Mutual funds $ (4,375,769)
Common stock (9,766)
Common trust fund 448,221
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$ (3,937,314)
- - - - - -
- - - - - -
4. Tax Status
- - - - - -
The Internal Revenue Service has determined and informed the Company by a
letter dated March 19, 2002, that the Plan is designed in accordance with
applicable sections of the Internal Revenue Code ("IRC"). The Plan
administrator believes that the Plan is currently being operated in
compliance with the appropriate requirements of the IRC.
5. Termination of Plan
- - - - - - - - - -
Although the Company has not expressed any intent to terminate the Plan,
it may do so at any time.
6. Party-in-Interest Transactions
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Transactions involving employer securities, funds administered by
Firstar, the trustee of the Plan, and participant loans are considered
party-in-interest transactions. These transactions are not, however,
considered prohibited transactions under 29 CFR 408(b) of the ERISA
regulations.
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7. Amounts Allocated to Withdrawn Participants
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Plan assets of $8,031,340 and $8,982,659 have been allocated to the
accounts of persons who are no longer active participants of the Plan as
of December 31, 2001 and 2000, respectively, but who have not yet
received distributions as of that date.
8. Subsequent Event
- - - - - - - -
Effective January 1, 2002, the Company authorized the transfer of
trusteeship of the Plan from Firstar to UMB Bank, n.a., and recordkeeping
services for the Plan from Firstar to Strong Retirement Plan Services.
As part of the transition, the majority of investments held by Firstar
were sold at the end of the plan year, resulting in a cash balance for
the Plan of $32,334,253 at December 31, 2001. The cash balance was used
to purchase investments offered under the new trust arrangement in
January, 2002.
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Twin Disc, Incorporated
The Accelerator 401(k) Savings Plan
Form 5500, Schedule of Assets (Held at End of Year)
December 31, 2001
Current
Description of Asset Shares Cost Value
- - - - - - - - - - - - - - - - - - - - - -
* Twin Disc, Inc. - Common Stock 58,441 979,326 $ 817,590
* First American Prime Obligation Fund 9,473,965 9,473,965 9,473,965
* Participant Loans, interest rates ranging
between 6.5% and 10.5%, maturities ranging
from 2002 to 2016 1,116,488
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$11,408,043
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- - - - - -
* The party involved is known to be a party-in-interest to the Plan.
See Report of Independent Accountants
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Twin Disc, Incorporated
The Accelerator 401(k) Savings Plan
Form 5500, Schedule of Nonexempt Transactions
For the Year Ended December 31, 2001
Relationship Description of Purchase Current Value Net Gain
Identity of Party to the Plan Transaction Date Price of Asset or (Loss)
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Twin Disc, Inc. Plan Sponsor Late remittance Dec. 22, 2000 $1,578 $1,627 $49
of participant
contributions
See Report of Independent Accountants
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EXHIBITS TO ANNUAL REPORT ON FORM 11-K
The exhibits listed below are filed as part of this Annual Report on Form
11-K. Each exhibit is listed according to the number assigned to it in the
Exhibit Table of Item 601 of Regulation S-K.
Exhibit
Number Description
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
4 Twin Disc, Incorporated - The Accelerator 401(k) Savings Plan
(Incorporated by reference to Exhibit 99 to the company's filing of
Form S-8 dated September 6, 2002.)
23 Consent of Independent Accountants, filed herewith.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
members of the Committee which administers the Plan have duly caused this
annual report to be signed by the undersigned hereunto duly authorized.
TWIN DISC, INCORPORATED -
THE ACCELERATOR 401(K) SAVINGS PLAN
September 6, 2002 /s/ JAMES O. PARRISH
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
James O. Parrish
Vice President-Finance/Treasurer
Benefits Committee Member
/s/ FRED H. TIMM
- - - - - - - - - - - - - - - - - - - - - -
Fred H. Timm
Vice President-Administration/Secretary
Benefits Committee Member
/s/ DENISE L. WILCOX
- - - - - - - - - - - - - - - - - - - - - -
Denise L. Wilcox
Director, Corporate Human Resources
Benefits Committee Member