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, 2003 and December 31, 2002 and
for the year ended December 31, 2003
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)
- - - -
Independent Auditors'report 1
FINANCIAL STATEMENTS:
Statements of Net Assets Available for Benefits as of
December 31, 2003 and 2002 2
Statement of Changes in Net Assets Available
for Benefits 3
Notes to Financial Statements 4-7
Schedule of Assets Held for Investment 8
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Report of Independent Accountants
Benefits Committee
Twin Disc, Incorporated--
Accelerator 401(k) Savings Plan
Racine, Wisconsin
We have audited the accompanying statements of net assets available for benefits
of the Twin Disc Accelerator 401(k) Savings Plan as of December 31, 2003, and
the related statements of changes in net assets available for benefits for the
year then ended. 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 audit. The financial statements of the Plan as of
December 31, 2002 were audited by other auditors whose report dated June 16,
2003, expressed an unqualified opinion on those statements.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America and in accordance with the standards of the
Public Company Accounting Oversight Board (United States). 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
include 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 audit provides 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 benefits of the Plan as of
December 31, 2003 and the changes in its net assets available for benefits for
the year then ended in conformity with accounting principles generally accepted
in the United States of America.
/s/ Reilly, Penner, & Benton LLP
May 17, 2004
Milwaukee, Wisconsin
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Twin Disc, Incorporated
The Accelerator 401(k) Savings Plan
Racine, Wisconsin
Statements of Net Assets Available for Benefits
December 31, 2003 and 2002
Assets 2003 2002
- - - - - - - - - - -
Investment options at fair value $ 44,841,177 $ 39,098,109
Receivables:
Employer's match contribution 17,637 13,996
Participants' contributions 58,569 34,249
- - - - - - - - - - - -
Total receivables 76,206 48,245
- - - - - - - - - - - -
Net assets available for benefits $44,917,383 $ 39,146,354
- - - - - - - - - - - -
- - - - - - - - - - - -
The accompanying notes are an integral part of these financial statements
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Twin Disc, Incorporated
The Accelerator 401(k) Savings Plan
Racine, WI
Statement of Changes in Net Assets Available for Benefits
Years Ended December 31, 2003 and 2002
2003 2002
Additions - - - - - -
Additions to net assets attributed to:
Investment income(loss):
Net appreciation (depreciation)
in fair value of investments $ 7,180,049 $ (6,553,734)
Interest 76,853 111,182
Dividends 702,277 716,521
- - - - - - - - - - - -
Net investment gain (loss) 7,964,179 (5,726,031)
Contributions:
Employer's 832,703 1,020,423
Participants' 2,176,136 2,351,288
Rollovers 3,659 97,960
- - - - - - - - - - - -
Total contributions 3,012,498 3,469,671
- - - - - - - - - - - -
Total additions (deductions) 10,976,677 (2,256,360)
Deductions
Deductions from net assets attributed to:
Benefits paid to participants 5,205,648 2,555,139
- - - - - - - - - - - -
Change in net assets available for plan benefits 5,771,029 (4,811,499)
Net assets available for plan benefits, 39.146,354 43,957,853
begininng of year - - - - - - - - - - - -
Net assets available for benefits,
End of year 44,917,383 39,146,354
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- - - - - - - - - - - -
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, 2003 and 2002
1. Basis of Presentation and Significant Accounting Policies
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General
- - - -
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.
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 pre-tax basis up to 100% of
annual gross income with contributions limited under provisions of the
Internal Revenue Code.
For participants who are employed by Twin Disc, Inc., the Company
contributes an amount equal to a percentage of each participant's 401(k)
contributions, up to 6% of compensation.The contribution percentages for
the years ended December 31, 2003 and 2002 were 50% and 75% respectively.
For participants who are employed by the Twin Disc South East subsidiary,
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,
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
Internal Revenue Code has set a maximum of $12,000 and $11,000 for
tax-deferred contributions that may be excluded for any individual
participant in 2003 and 2002, respectively. The Internal Revenue Code
also allows additional catch-up contributions for participants over age
fifty. The maximum additional contribution allowed was $2,000 and $1,000
in 2003 and 2002, respectively. No federal income tax is paid on the
tax-deferred contributions and growth thereon until the participant
withdraws from the Plan.
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.
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 Trustee. Pre-tax contributions may only be
withdrawn, prior to employment termination, in the event of severe
financial hardship or once annually upon attainment of age 59 1/2.
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.
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1. Basis of Presentation and Significant Accounting Policies (continued)
- --------------------------------------------------------------
Participation Accounts
- - - - - - - - - - - -
As of January 1, 2002, the Company authorized the transfer of trusteeship
of the Plan from Firstar Bank, N.A. ("Firststar") to UMB Bank, N.A.,
and recordkeeping services for the Plan from Firstar to Strong
Retirement Plan Services ("Strong"). Strong maintains individual accounts
for each participant for their respective investment in each of
fourteen available investment funds. For all investment programs which
are mutual funds or collective trust funds, participant balances are
maintained on a share or unit method, as appropriate. Participant
investments in the Twin Disc, Inc. Stock Fund, a unitized fund, were
accounted for on a unit value method. Units and unit values for the
fund as of December 31, 2003 and 2002 were as follows:
Units Unit Value
December 31, December 31,
2003 2002 2003 2002
- - - - - - - - - - - - - - - - - -
Twin Disc, Inc. Stock Fund 81,285 120,231 $12.05 $7.67
Participation 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 principle
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.
Basis of Accounting
- - - - - - - - - -
The financial statements of the Plan are prepared under the accrual
method of accounting.
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.
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1. Basis of Presentation and Significant Accounting Policies (continued)
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Investment Valuation
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Investments 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 collective trust funds, other than the Strong Stable
Value Fund (see below), are valued at redemption prices established
by the trustee of the funds based on the quoted market prices of the
underlying investments. 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.
The fair value of the Strong Stable Value Fund is determined by Strong
Investments, Inc. The collective trust fund invests in short-term and
long-term conventional and synthetic investments contracts issued by
insurance companies and other institutions that meet the high credit
quality standards established by Strong Investments, Inc. The investment
contracts are recorded at contract value (which represents contributions
recieved, plus interest, less plan withdrawals), which approximates fair
value at December 31, 2003.
2. Investments
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The following presents investments that represent 5 percent or more of
the Plan's net assets:
December 31,
- - - - - - - - - - -
2003 2002
- - - - - - - - - - -
Mutual Funds:
Davis NY Venture $ 2,659,062 $ 2,223,193
Strong Institutional Growth 11,313,394 9,276,436
Strong Opportunity 7,009,488 5,510,665
Strong Advisor Bond Institutional 4,478,708 5,050,023
Strong Stable Value Fund 10,410,405 10,655,690
During 2003 and 2002, the Plan's investments (including ganins and losses
on investments bought and sold as well as held during the year) appreciated
(depreciated) in value by $7,180,049 and $(6,553,734), respectively, as follows:
December 31,
- - - - - - - - - - -
2003 2002
- - - - - - - - - - -
Mutual funds $ 6,457,009 $ (6,200,617)
Common stock 472,762 (74,896)
Common trust fund 250,278 (278,221)
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$ 7,180,049 $ (6,553,734)
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3. Income Tax Status
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The Plan obtained its latest determination letter on March 19, 2002, in
which the Internal Revenue Service stated the Plan as then designed, was
in compliance with the applicable requirements of the Internal Revenue
Code. 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. Therefore, no
provision for income taxes has been included in the Plan's financial
statements.
4. Termination of Plan
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Although the Company has not expressed any intent to terminate the Plan,
it may do so at any time.
5. Party-in-Interest Transactions
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Transactions involving employer securities, funds administered by
UMB Bank, N.A., the current trustee of the Plan,respectively, funds
administered by Strong, the recordkeeper 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.
6. Amounts Allocated to Withdrawn Participants
- - - - - - - - - - - - - - - - - - - - - -
Plan assets of $8,608,508 and $7,079,167 have been allocated to the
accounts of persons who are no longer active participants of the Plan as
of December 31, 2003 and 2002, respectively, but who have not yet
received distributions as of that date.
7. 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 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.
8. Risks and Uncertainities
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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 resonably 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 Statements of Changes in Net Assets
Available for Benefits.
9. Subsequent Events
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On March 1, 2004, the Company authorized the transfer of trusteeship of
the Plan from UMB Bank, N.A., to T. Rowe Price Retirement Plan Services,
Inc. and recordkeeping services for the Plan from Strong Retirement Plan
Services to T. Rowe Price Retirement Plan Services, Inc.
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Twin Disc, Incorporated
The Accelerator 401(k) Savings Plan
Racine, Wisconsin
Employer Identification #39-0667110
Plan 005
Schedule of Assets Held for Investment Purposes - Schedule H, Line 4i
December 31, 2003
Description of Asset Shares/Units Value
- - - - - - - - - - - - - - - - - - - - - -
Barclay Globabl Equity Index Fund 119,405 $ 1,201,215
Columbia Small Cap Fund 29,679 698,046
Davis NY Venture Fund 96,623 2,659,062
Dodge & Cox Balanced Fund 26,004 1,899,342
MFS Midcap Growth Fund 34,289 267,801
* Strong Advisor Small Cap Value Fund 61,284 1,687,150
* Strong Institutional Growth Fund 640,985 11,313,394
* Strong Opportunity Fund 177,680 7,009,488
Templeton Foreign Fund 101,107 1,075,781
* Strong Advisor Bond Institutional Fund 406,048 4,478,708
* Strong Stable Value Fund 10,410,405 10,410,405
* Twin Disc, Inc. - Common Stock 48,549 924,255
* Strong Money Market Fund 55,249 55,249
* Participant Loans, interest rates ranging
between 5.0% and 10.5%, maturities ranging
from 2004 to 2017 1,161,281
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$ 44,841,177
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- - - - - - -
$11,408,043
- - - - - -
- - - - - -
* The party involved is known to be a party-in-interest to the Plan.
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
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
23 Consent of Independent Accountants, filed herewith.
99.1 Section 906 Certification
99.2 Section 906 Certification
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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
June 25, 2004 /s/ Christopher J. Eperjesy
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Christopher J. Eperjesy
Vice President-Finance/Treasurer
Benefits Committee Member
/s/ FRED H. TIMM
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Fred H. Timm
Vice President-Administration/Secretary
Benefits Committee Member
/s/ DENISE L. WILCOX
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Denise L. Wilcox
Director, Corporate Human Resources
Benefits Committee Member