SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 [X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] For the fiscal year ended December 31, 1999 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the transition period ended __________________ to ___________________ Commission file number 0-12448 Flow International Corporation Voluntary Pension and Salary Deferral Plan FLOW INTERNATIONAL CORPORATION VOLUNTARY PENSION AND SALARY DEFERRAL PLAN FENANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES DECEMBER 31, 1999 1 FLOW INTERNATIONAL CORPORATION VOLUNTARY PENSION AND SALARY DEFERRAL PLAN FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE DECEMBER 31, 1999 2 FLOW INTERNATIONAL CORPORATION VOLUNTARY PENSION AND SALARY DEFERRAL PLAN FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE DECEMBER 31, 1999 INDEX PAGE Report of independent accountants 1 Statement of net assets available for benefits 2 Statement of changes in net assets available for benefits 3 Notes to financial statements 4-6 SUPPLEMENTAL SCHEDULE (1) Schedule I - Form 5500, Schedule H, Line 4i, Schedule of assets held for investment purposes at year end 7 (1) Other schedules required by 29 CFR 2520.103-10 of the Department of Labor's Rules and Regulations for Reporting and Disclosure under ERISA have been omitted because such schedules are not applicable. 3 REPORT OF INDEPENDENT ACCOUNTANTS To the Participants and Administrative Committee of the Flow International Corporation Voluntary Pension and Salary Deferral Plan In our opinion, the accompanying statement of net assets available for plan benefits and the related statement of changes in net assets available for plan benefits present fairly, in all material respects, the net assets available for plan benefits of the Flow International Corporation Voluntary Pension and Salary Deferral Plan (the "Plan") at December 31, 1999 and 1998, and the changes in its net assets available for plan benefits for the year ended December 31, 1999, in conformity with accounting principles generally accepted in the United States. 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, 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 made for the purpose of forming an opinion on the basic financial statements taken as a whole. The additional information listed in the accompanying supplemental schedule is presented for purposes of additional analysis and is not a required part of the basic financial statements but is additional information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. Such information has been subjected to the auditing procedures applied in the audit 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 PricewaterhouseCoopers LLP Seattle, Washington June 9, 2000 4 FLOW INTERNATIONAL CORPORATION VOLUNTARY PENSION AND SALARY DEFERRAL PLAN STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS - -------------------------------------------------------------------------------- DECEMBER 31, 1999 1998 ASSETS Cash ................................................... $ 5,041 $ 376,418 Investments, at market Alliance Premier Growth Fund Class A ............... 4,654,603 2,882,148 American Century 20th Ultra Advisor Class Fund ..... 3,104,813 1,674,873 GAM International Fund ............................. 1,027,689 1,102,914 Janus Worldwide Fund ............................... 3,982,404 2,075,447 Fidelity Advisor Prime Money Market Fund ........... 2,046,330 Fidelity Daily Money Fund .......................... 1,550,037 Fidelity Inst. Cash Domestic Money Market Class 1... 63,710 Firstar Bond Immdex. Fund .......................... 288,000 341,586 Gabelli Westwood Balanced Fund ..................... 746,884 954,867 Loomis Sayles Bond Fund Retail ..................... 309,869 423,066 MFS MA Investors Trust - Class A Fund .............. 848,601 816,478 Pimco Foreign Bond Fund Class A .................... 178,431 203,230 Safeco Growth Fund ................................. 998,451 1,076,777 Stagecoach Lifepath 2010 Class A Fund .............. 174,428 333,765 Stagecoach Lifepath 2020 Class A Fund .............. 211,830 146,957 Stagecoach Lifepath 2030 Class A Fund .............. 265,465 217,191 Stagecoach Lifepath 2040 Class A Fund .............. 201,931 144,639 Vanguard Index 500 Fund ............................ 2,916,186 1,606,525 Vanguard Extended Market Portfolio Fund ............ 675,492 369,091 FLOW Fund .......................................... 937,710 365,015 Participant loans .................................. 495,646 272,882 Contributions receivable ............................... 281,037 241,861 Loan payments receivable ............................... 11,670 3,023 Interest and dividends receivable ...................... 233,823 255,007 ----------- ----------- 24,163,751 17,930,090 =========== =========== LIABILITIES Accrued liabilities .................................... -- 4,054 ----------- ----------- Net assets available for benefits ...................... $24,163,751 $17,926,036 =========== =========== The accompanying notes are an integral part of these financial statements. 5 FLOW INTERNATIONAL CORPORATION VOLUNTARY PENSION AND SALARY DEFERRAL PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS - -------------------------------------------------------------------------------- YEAR ENDED DECEMBER 31, 1999 Additions to net assets attributed to: Investment income Net appreciation in fair value of investments ........... $ 4,117,961 Interest ................................................ 92,513 Dividends ............................................... 943,675 ----------- 5,154,149 Employer contributions .................................... 776,731 Employee contributions .................................... 1,939,355 Participant rollovers from other qualified retirement plans ................................................... 339,128 ----------- Total additions ....................................... 8,209,363 ----------- Deductions from net assets attributed to: Benefits paid to participants ............................. 1,971,473 Administrative expenses ................................... 175 ----------- Total deductions ...................................... 1,971,648 ----------- Net increase .......................................... 6,237,715 Net assets available for benefits: Beginning of year ......................................... 17,926,036 ----------- End of year ............................................... $24,163,751 ----------- The accompanying notes are an integral part of these financial statements. 6 FLOW INTERNATIONAL CORPORATION VOLUNTARY PENSION AND SALARY DEFERRAL PLAN NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1999 - -------------------------------------------------------------------------------- 1. DESCRIPTION OF THE PLAN The Flow International Corporation Voluntary Pension and Salary Deferral Plan (the "Plan") is a defined contribution plan for the benefit of nonbargaining employees of Flow International Corporation (the "Company"), effective October 1, 1986. The Plan is administered by the Advisory Committee appointed by the Board of Directors of the Company. Qualified employees may elect to contribute any amount between 1% and 15% of their salary. For employees meeting certain employment criteria, the Company shall contribute an amount equal to 50% of the first 6% of employee compensation contributed for employees with less than five years of service with the Company or 75% of the first 6% of employee compensation contributed for employees with five years or more of service. Contributions to the Plan are paid to a trust administered by the plan trustees under the terms of a trust agreement. The funds must be used for the exclusive benefit of plan participants and their beneficiaries. Employees are eligible for participation in the Plan upon the first quarterly open enrollment period after commencement of employment and are eligible for the employer match one year following that date. Employer contributions and earnings thereon vest with individual participants based upon years of service with the Company; participants achieve 100% vesting after five years of service or at a normal retirement age. Unvested employer contributions relating to terminated participants are forfeited and used to reduce the Company's future contributions to the Plan. Participants are immediately vested in their voluntary contributions plus actual earnings thereon. Vested benefits are payable upon the retirement, death, disability or request at termination of a participant's employment with the Company. 2. SIGNIFICANT ACCOUNTING POLICIES VALUATION OF INVESTMENTS The accompanying financial statements have been prepared using the accrual basis of accounting. Investments are stated at the quoted market value. RECOGNITION OF INCOME AND EXPENSES Administrative expenses, including trustee and investment manager fees, are paid by the investment manager out of commissions and, therefore, are not reflected in these financial statements. Investment transactions are recorded on the date of the purchase or sale. Gains or losses are determined based on the fair market value of investments on the date of a transaction. The Plan presents in the statement of changes in net assets available for plan benefits the net appreciation in the fair value of its investments which consists of the realized gains and losses and the unrealized appreciation and depreciation on those investments. 7 ROLLOVERS The Plan allows transfers in from other qualified retirement plans. Rollovers or plan-to-plan transfers are included as a separate line item in the accompanying statement of changes in net assets available for benefits. PARTICIPANT LOANS The Plan provides loans to participants, which are considered a participant-directed investment of their account. The loans represent a trust investment, but only the borrowing participants' accounts shall share in the interest paid on the loans or bear any expense or risk of loss because of the loans. Participant loans are secured by the vested portion of each borrower's account, and are limited to the lesser of 50% of the participants' vested balance or $50,000. The rate charged on the loan is the prime rate as of the date of the loan's approval. The prime rate at December 31, 1999 was 8.5%. Net borrowings totaled $222,764 for the year ended December 31, 1999. 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 and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of additions to and deductions from net assets during the period. Actual results could differ from those estimates. 3. INVESTMENTS All plan investments are held in trust by Northwestern Trust and Investors Advisory Company (the Trustee). Prior to November 19, 1998, Plan participants directed their salary deferral and employer matching contributions to one or a combination of nine investment selections. Effective November 19, 1998, Plan participants began directing their salary deferral and employer matching contributions to one or a combination of nineteen investment selections, known as the Alliance Premier Growth Fund Class A, the American Century 20th Ultra Advisor Fund, the GAM International Fund, the Janus Worldwide Fund, the Fidelity Advisor Prime Money Market Fund, the Fidelity Daily Money Fund, the Fidelity Inst. Cash Domestic Money Market Class 1, the Firstar Bond Immdex. Fund, the Gabelli Westwood Balanced Fund, the Loomis Sayles Bond Fund Retail, the MFS MA Investors Trust Class A Fund, the PIMCO Foreign Bond Fund Class A, the Safeco Growth Fund, the Stagecoach Lifepath 2010 Class A Fund, the Stagecoach Lifepath 2020 Class A Fund, the Stagecoach Lifepath 2030 Class A Fund, the Stagecoach Lifepath 2040 Class A Fund, the Vanguard Index 500 Fund, the Vanguard Extended Market Portfolio Fund and the FLOW Fund described below. The Alliance Premier Growth Fund Class A and the American Century Ultra Advisor funds consist of investments in large companies that exhibit the potential for a high rate of earnings growth. The GAM International Fund consists of investments in securities of companies located outside the United States. The Janus Worldwide Fund invests primarily in foreign and domestic common stocks. The Fidelity Daily Money Fund, the Fidelity Inst. Cash Domestic Money Market Class 1 Fund and the Fidelity Advisor Prime Money Market Fund consist of investments in U.S.-dollar-denominated money market securities of domestic and foreign issuers, government securities and repurchase agreements. The Firstar Bond Immdex. Fund consists of investments in 8 fixed-income securities with a dollar-weighted average portfolio maturity of more than five years. The Gabelli Westwood Balanced Fund consists of investments in common stocks or convertibles issued by seasoned companies with above-average historical earnings growth, or by smaller companies with outstanding potential for capital appreciation and in investment-grade U.S. dollar or foreign currency-denominated debt. The Loomis Sayles Bond Fund Retail consists of investments in debt securities and preferred stocks that provide investment return through a combination of current income and capital appreciation. The MFS MA Investors Trust Class A Fund consists of investments in common stocks and convertibles, emphasizing securities that management considers to be of high or improving quality. The PIMCO Foreign Bond Fund Class A consists of investments in fixed-income securities issued in at least three foreign countries. The SAFECO Growth Fund consists of investments in common stocks selected primarily for their capital appreciation potential. The Stagecoach Lifepath 2010, 2020, 2030 and 2040 Class A Funds consist of investments in a mix of equities, debt securities and cash. The investment mix or allocation for each fund is dependent upon the projected year of retirement; 2010, 2020, 2030 or 2040 and becomes more conservative as the fund nears its maturation. The Vanguard Index 500 Fund consists of investments in securities included in the S&P 500 Index. The Vanguard Extended Market Portfolio Fund consists of investments in a statistically selected sample of more than 5,000 medium and small capitalization stocks included in the Wilshire 4500 Index. Participants may transfer balances between funds as well as change the investment allocation daily. 4. FEDERAL INCOME TAXES The Plan received an updated favorable determination letter from the Internal Revenue Service dated February 10, 1995 as to the qualified status of the Plan. The Company is of the opinion that the Plan continues to fulfill the requirements of a qualified plan under Section 401(a) of the Internal Revenue Code and that the trust, which forms a part of the Plan, is not subject to tax. Accordingly, no provision for federal or state income taxes has been provided. 9 SUPPLEMENTAL SCHEDULE 10 FLOW INTERNATIONAL CORPORATION VOLUNTARY PENSION AND SALARY DEFERRAL PLAN SUPPLEMENTAL SCHEDULE - SCHEDULE I - FORM 5500, SCHEDULE H, LINE 4I SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AT YEAR END DECEMBER 31, 1999 - -------------------------------------------------------------------------------- IDENTITY OF ISSUE DESCRIPTION FAIR VALUE Alliance Premier Growth Fund Class A Mutual Fund $4,654,603 American Century 20th Ultra Advisor Class Fund Mutual Fund 3,104,813 Fidelity Daily Money Fund Mutual Fund 1,550,037 Fidelity Inst. Cash Domestic Money Market Class 1 Mutual Fund 63,710 Firstar Bond Immdex. Fund Mutual Fund 288,000 FLOW Fund FLOW International Common Stock Common Stock 937,710 Gabelli Westwood Balanced Fund Mutual Fund 746,884 GAM International Fund Mutual Fund 1,027,689 Janus Worldwide Fund Mutual Fund 3,982,404 Loomis Sayles Bond Fund Retail Mutual Fund 309,869 MFS MA Investors Trust - Class A Fund Mutual Fund 848,601 Pimco Foreign Bond Fund Class A Mutual Fund 178,431 Safeco Growth Fund Mutual Fund 998,451 Stagecoach Lifepath 2010 Class A Fund Mutual Fund 174,428 Stagecoach Lifepath 2020 Class A Fund Mutual Fund 211,830 Stagecoach Lifepath 2030 Class A Fund Mutual Fund 265,465 Stagecoach Lifepath 2040 Class A Fund Mutual Fund 201,931 Vanguard Extended Market Portfolio Fund Mutual Fund 675,492 Vanguard Index 500 Fund Mutual Fund 2,916,186 Participant loans Due through September, 2016 495,646 Interest rates 8.5%-9% 11 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (No. 33-57100) and on Forms S-8 (No. 33-40397 and No. 33-44776) of Flow International Corporation of our report dated June 9, 2000, relating to the financial statements of Flow International Corporation Voluntary Pension and Salary Deferral Plan, which appears in this form 11-K. /s/ PricewaterhouseCoopers LLP PricewaterhouseCoopers LLP Seattle, Washington June 28, 2000