EXHIBIT 99
ISCO, INC. RETIREMENT PLU$ PLAN
Financial Statements And Supplemental
Schedules For The Years Ended
July 31, 1995 And 1994
And Independent Auditors' Report
44
ISCO, INC. RETIREMENT PLU$ PLAN
FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES
AND INDEPENDENT AUDITORS' REPORT
TABLE OF CONTENTS
Page
FINANCIAL STATEMENTS:
Independent Auditors' Report 46
Statements of Net Assets Available for Benefits 47
Statements of Changes in Net Assets Available for Benefits 48
Notes to Financial Statements 49
SUPPLEMENTAL SCHEDULES:
Item 27a - Schedule of Assets Held for Investment
Purposes - July 31, 1995 55
Item 27d - Schedule of Reportable Transactions -
Year Ended July 31, 1995 56
45
INDEPENDENT AUDITORS' REPORT
Plan Committee
Isco, Inc. Retirement Plu$ Plan
Lincoln, Nebraska
We have audited the accompanying statements of net assets available for benefits
of the Isco, Inc. Retirement Plu$ Plan as of July 31, 1995 and 1994 and the
related statements of changes in net assets available for benefits for the years
then ended. These financial statements are the responsibility of the Plan's
management. Our responsibility is to express an opinion on the 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 also 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 net assets available for benefits of the Isco, Inc.
Retirement Plu$ Plan as of July 31, 1995 and 1994, and the changes in net assets
available for benefits for the years then ended, in conformity with generally
accepted accounting principles.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of (1) assets
held for investment purposes as of July 31, 1995, and (2) transactions in excess
of 5% of the beginning of year value of plan assets for the year ended July 31,
1995, 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. The supplemental information by fund in the statements of net assets
available for benefits and the statements of changes in net assets available for
benefits is presented for the purpose of additional analysis rather than to
present the net assets available for benefits and changes in net assets
available for benefits of the individual funds. The supplemental schedules and
supplemental information by fund is the responsibility of the Plan's management.
Such supplemental schedules and supplemental information by fund have been
subjected to the auditing procedures applied in our audit of the basic 1995
financial statements and, in our opinion, are fairly stated in all material
respects when considered in relation to the basic financial statements taken as
a whole.
Deloitte & Touche LLP
Lincoln, Nebraska
September 29, 1995
46
ISCO, INC. RETIREMENT PLU$ PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
(amounts in thousands)
July 31, 1995 July 31, 1994
------------------------------------ -------------------------------------
Supplemental Information Supplemental Information
by Fund by Fund
-------------------------- -------------------------
Employer Participant Employer Participant
Directed Directed Total Directed Directed Total
-------- ----------- ----- -------- ----------- -----
Investments, at fair
value (Note C):
Money market mutual
funds $ -- $ -- $ -- $ 428 $ -- $ 428
Mutual funds 226 13,388 13,614 582 9,998 10,580
Isco, Inc. common
stock fund -- 741 741 -- 413 413
Other investments 117 -- 117 129 -- 129
---- ------- ------- ------ ------- -------
343 14,129 14,472 1,139 10,411 11,550
Participant loans -- 442 442 -- 352 352
---- ------- ------- ------ ------- -------
Total investments 343 14,571 14,914 1,139 10,763 11,902
Employer contributions
receivable -- 383 383 -- 378 378
Accrued income 6 -- 6 3 -- 3
---- ------- ------- ------ ------- -------
Net assets available
for benefits $349 $14,954 $15,303 $1,142 $11,141 $12,283
---- ------- ------- ------ ------- -------
---- ------- ------- ------ ------- -------
The accompanying notes are an integral part of the financial statements
47
ISCO, INC. RETIREMENT PLU$ PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
(amounts in thousands)
July 31, 1995 July 31, 1994
--------------------------------- ---------------------------------------
Supplemental Information Supplemental Information
by Fund by Fund
------------------------ --------------------------
Employer Participant Employer Participant
Directed Directed Total Directed Directed Total
-------- -------------------- -------- ------------------------
Investment income (Note C and G):
Dividends, interest, and other income $ 26 $ 719 $ 745 $ 75 $ 821 $ 896
Net realized and unrealized
appreciation(depreciation) in fair
value of investments -- 1,509 1,509 (4) (890) (894)
------- ------- ------ ------- ------- -------
Net investment income(loss) 26 2,228 2,254 71 (69) 2
------- ------- ------ ------- ------- -------
Contributions:
Employer annual profit sharing -- 383 383 -- 378 378
Employer 401(k) matching -- 140 140 -- 146 146
Participant -- 730 730 -- 718 718
Participant rollovers -- -- -- -- 4 4
------- ------- ------ ------- ------- -------
-- 1,253 1,253 -- 1,246 1,246
------- ------- ------ ------- ------- -------
Total additions 26 3,481 3,507 71 1,177 1,248
Benefits paid (15) (472) (487) (13) (259) (272)
Transfers (804) 804 -- (5,842) 5,842 --
------- ------- ------ ------- ------- -------
Increase (decrease)in net assets
available for benefits (793) 3,813 3,020 (5,784) 6,760 976
Net assets available for benefits:
Beginning of year 1,142 11,141 12,283 6,926 4,381 11,307
------- ------- ------ ------- ------- -------
End of year $ 349 $14,954 $15,303 $1,142 $11,141 $12,283
------- ------- ------ ------- ------- -------
------- ------- ------ ------- ------- -------
The accompanying notes are an integral part of the financial statements
48
ISCO, INC. RETIREMENT PLU$ PLAN
NOTES TO FINANCIAL STATEMENTS
Years ended July 31, 1995 and 1994
(Columnar amounts in thousands, except share data)
A. DESCRIPTION OF PLAN
General - The following brief description of the Isco, Inc. Retirement Plu$ Plan
(the Plan) is provided for general information purposes only. Participants
should refer to the Plan document for more complete information. The Plan was
established effective August 1, 1972 to provide retirement benefits for the
employees of Isco, Inc. (the Company). The Plan was last amended effective June
17, 1994. Effective August 1, 1987, a 401(k) salary reduction option was
incorporated into the Plan. Employees are eligible for participation after they
have completed one year of service and are at least 21 years of age. A year of
service is defined as the accumulation of 1,000 hours of credited service during
a one-year period beginning on the employment date.
Participant contributions, employer 401(k) matching contributions, employer
annual profit sharing contributions, and participant rollover contributions are
invested at Twentieth Century Investors under the direction of the plan
participants.
Funding - Contributions to the Plan are provided from the following sources:
Employer Annual Profit Sharing Contribution (Participant Directed) - The
Employer is required to contribute an amount equal to the lesser of 7% of the
current net profit of the Company or the maximum amount allowed by the Internal
Revenue Code. The contributed amount received by each participant is based on
their percentage of total eligible compensation.
Participant Contributions (Participant Directed) - Plan participants may elect
to reduce their compensation by a maximum of 12%, subject to IRS limitations.
The Employer then contributes the amount of reduction in compensation to the
Plan on behalf of each participant.
Employer 401(k) Matching Contribution (Participant Directed) - The Employer is
required to match 20% of the contribution made on behalf of each participant
electing salary reductions up to a maximum of 10% of the participant's eligible
compensation.
Participant Rollover Contributions (Participant Directed) - The Plan allows
participants to make rollover contributions from other qualified plans. This
provision was eliminated as of August 1, 1994.
Participant Accounts - Each participant's account is credited with the
participant's contribution, the Company's matching contribution and the
allocated portion of: the Company's annual contribution, the Plan earnings, and
the forfeited portion of terminated participants' non-vested accounts. 401(k)
forfeitures are allocated, based on a participant's contributions to the 401(k)
plan during the year. The Company's annual contribution and forfeitures are
allocated to each participant's account based on the percentage of the
participant's eligible compensation for the plan year to the total compensation
of all eligible participants for the plan year. Plan
49
earnings are allocated to the individual participant's account based on the
percentage of the participant's account balance to the aggregate account
balances.
Vesting - Participant contributions (i.e. employee salary reduction amounts) and
participant rollover contributions are immediately fully vested and
nonforfeitable. Employer profit sharing contributions and the Employer 401(k)
matching contributions vest 20% upon completion of three years of credited
service, increasing 20% per year until fully vested upon completion of seven
years of credited service.
Plan participants are eligible for normal retirement at age 65 but may elect to
retire at a later date. Upon attainment of 65 years of age, death, or
determination of disability, a participant becomes 100% vested regardless of the
number of credited years of service completed.
Plan Expenses - As an additional benefit to the participants, the Employer,
without reimbursement, pays for all costs required to administer the Plan.
These costs are not reflected in the financial statements.
B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Valuation of Investments - Investments are stated at fair value. Fair value of
marketable securities is determined by reference to the closing quoted price by
the exchange on which the security is listed or the closing net asset value as
reported by the mutual fund. Participant loans are stated at their outstanding
principal balance. The amounts shown in Note C for securities that do not have
a quoted market price represent fair value estimated by an independent third
party.
Investment transactions are recognized on a settlement date basis. The net
realized and unrealized appreciation (depreciation) of investments is recognized
in the statements of changes in net assets available for benefits. The fair
value at the beginning of the plan year, or the purchased cost if acquired
during the year, is used in determining realized and unrealized gains and losses
on the sale of each investment.
Employer Directed - Employer directed funds are invested in the restricted fund,
which is managed by the employer. Assets allocated to the Restricted Fund at
July 31, 1995 include: United States Trust Company - Short-term Fixed Income
Fund, Balcor Pension Investors II and III, and Bankers Trust Stable Value
Government Trust. Transfers from the Restricted Fund to the Unrestricted Fund
are directed by the Plan Committee.
Participant Directed - Participant directed contributions (401(k) assets) may be
invested in seven funds. A summary description of each investment alternative
follows:
Bankers Trust Stable Value Government Trust Fund - A fund which seeks to provide
current income while maintaining a stable share price. It is managed by Bankers
Trust Company Investment Management Group.
Twentieth Century Premium Managed Bond Fund - A fund which seeks a high
50
level of income from a portfolio of longer-term bonds and other debt
obligations. The fund pays a reduced management fee.
Twentieth Century Balanced Investors Fund - A fund which seeks capital growth
and current income by investing in equity securities with prospects for growth
and in investment grade bonds and other fixed income securities.
Twentieth Century Select Investors Fund - A fund comprised primarily of income-
producing equity securities of larger companies possessing potential for
appreciation.
Twentieth Century Ultra Investors Fund - A fund comprised primarily of equity
securities of medium and smaller companies with the potential for appreciation.
Twentieth Century International Equity Fund - A fund which seeks capital growth
by investing primarily in an internationally diversified portfolio of common
stocks.
Isco, Inc. Common Stock Fund - A fund invested primarily in Isco, Inc. common
stock. Isco, Inc. is a related party and sponsor of the Plan.
Benefits Payable - The Plan's policy is to record benefit payments upon
distribution to the participants. Benefits payable to retired and terminated
participants were $34,039 and $352 at July 31, 1995 and 1994, respectively.
Contributions - Employer profit sharing contributions are computed as of the end
of the Employer's fiscal year and are recorded by the Plan in the corresponding
period. Participant contributions are recorded in the period in which the bi-
weekly payroll deductions are made. The Employer 401(k) matching contributions
are also recorded in the period that the payroll deductions are made.
51
C. INVESTMENTS
The following schedule presents the fair values of investments. Investments
that represent 5% or more of the Plan's net assets are separately identified.
July 31, 1995
- -------------------------------------------------------------------------------
Number of
Shares/ Fair
Units Value
--------- -------
Investments at fair value as determined
by quoted market price:
Mutual Funds:
Twentieth Century - International Equity Fund 148,010 $ 1,109
Twentieth Century - Ultra Investors Fund 101,631 2,701
Twentieth Century - Select Investors Fund 119,573 4,772
Twentieth Century - Balanced Investors Fund 148,411 2,594
Twentieth Century - Premium Managed Bond Fund 87,278 860
Bankers Trust Stable Value Government Trust Fund 1,577,744 1,578
Other Investments:
Isco, Inc. Common Stock Fund 69,472 741
Investments at estimated fair value:
Balcor Pension Investors II 101 47
Balcor Pension Investors III 202 70
-------
Total Investments at Fair Value $14,472
-------
-------
July 31, 1994
- -------------------------------------------------------------------------------
Number of
Shares/ Fair
Units Value
--------- -------
Investments at fair value as determined
by quoted market price:
Money Market Mutual Funds:
U.S. Trust Short-term Fixed Income Fund 427,675 $ 428
Mutual Funds:
Twentieth Century - International Equity Fund 86,988 666
Twentieth Century - Ultra Investors Fund 76,207 1,485
Twentieth Century - Select Investors Fund 102,783 3,784
Twentieth Century - Balanced Investors Fund 141,234 2,186
Twentieth Century - Premium Managed Bond Fund 77,725 740
Bankers Trust Stable Value Government Trust Fund 1,718,776 1,719
Other Investments:
Isco, Inc. Common Stock Fund 44,140 413
Investments at estimated fair value:
Balcor Pension Investors II 101 53
Balcor Pension Investors III 202 76
-------
Total Investments at Fair Value $11,550
-------
-------
52
C. INVESTMENTS (continued)
During the years ended July 31, 1995 and 1994, the Plan's investments
appreciated(depreciated) by $1,509,435 and $(894,550) respectively, as follows:
Net Realized and Unrealized Appreciation (Depreciation) in Fair Value
Year Ended July 31,
-------------------
1995 1994
------ ------
Investments at fair value as determined by
quoted market price:
Mutual Funds:
Twentieth Century - International Equity Fund $ 6 $ 45
Twentieth Century - Ultra Investors Fund 682 (120)
Twentieth Century - Select Investors Fund 402 (614)
Twentieth Century - Balanced Investors Fund 294 (45)
Twentieth Century - Premium Managed Bond Fund 30 (57)
Twentieth Century - U.S. Government Fund -- --
Other -- (6)
Other Investments:
Isco, Inc. Common Stock Fund 97 (97)
Investments at estimated fair value:
Other (2) --
------ -----
$1,509 $(894)
------ -----
------ -----
D. CERTIFICATES OF DEPOSIT
During the plan year 1993, the plan had investments in certificates of deposit
from certain financial institutions which matured during plan year 1994. These
certificates of deposit were limited by the Plan Trustee to no more than
$100,000 of face value for each financial institution and were fully insured by
the Federal Deposit Insurance Corporation.
E. PLAN TERMINATION
Although the Company has not expressed any intent to terminate the Plan, it may
do so at any time upon giving 30 days notice to the Plan Committee, the Plan
Administrator, and the Trustee. In the event of termination of the Plan, Plan
assets would be valued and participants' accounts would be adjusted to reflect
the allocation of net gains and losses of the underlying investments. At that
time, participants' accounts would become fully vested and nonforfeitable.
F. FEDERAL INCOME TAX STATUS
The Plan has received a determination letter from the Internal Revenue Service
dated September 7, 1995, which states that the Plan, as amended June 17, 1994,
meets the requirements of Section 401(a) of the Internal Revenue Code and is,
therefore, exempt from Federal income tax under Section 501(a) of the Code.
Therefore, no provision for income taxes is provided in the financial statements
of the Plan.
53
Plan income, participant pretax contributions, and employer contributions
represent taxable income to the participating employees at the time of
distribution.
G. FUND INFORMATION
Participant contributions, benefit payments, and dividends, interest and other
income by fund are as follows for the years ended July 31, 1995 and 1994.
1995 1994
---- ----
Participant contributions:
Stable Value Government Trust $ 65 $ 53
International Equity Fund 89 77
Ultra Investors Fund 198 197
Select Investors Fund 205 214
Balanced Investors Fund 100 105
Premium Managed Bond Fund 30 31
Isco, Inc. Common Stock Fund 43 41
---- ----
Total $730 $718
---- ----
---- ----
Benefits paid:
Stable Value Government Trust $ 7 $ 20
International Equity Fund 22 8
Ultra Investors Fund 49 22
Select Investors Fund 156 57
Balanced Investors Fund 151 116
Premium Managed Bond Fund 50 11
Isco, Inc. Common Stock Fund 26 18
Participant loans 11 7
---- ----
Total $472 $259
---- ----
---- ----
Dividends, interest and other income:
Stable Value Government Trust $ 72 $ 54
International Equity Fund 41 43
Ultra Investors Fund 59 41
Select Investors Fund 346 505
Balanced Investors Fund 107 88
Premium Managed Bond Fund 50 50
Isco, Inc. Common Stock Fund 13 24
Participant loans 31 16
---- ----
Total $719 $821
---- ----
---- ----
54
ISCO, INC. RETIREMENT PLU$ PLAN
PN 001
EIN #47-0461807
(amounts in thousands, except per share/unit data)
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
July 31, 1995
- -----------------------------------------------------------------------------------------------
Column B Column C Column D Column E
- -------- -------- -------- --------
Description of
investment including
collateral, rate of
Identity of issue, borrower, lessor or interest, maturity date, Current
similar party par or maturity value Cost Value
- ------------------------------------------ ------------------------ -------- --------
Mutual Funds:
- -------------
*Twentieth Century Select Investors Fund 119,573 shares $ 4,786 $ 4,772
*Twentieth Century Balanced Investors Fund 148,411 shares 2,273 2,594
*Twentieth Century Premium Managed Bond 87,278 shares 871 860
*Twentieth Century Ultra Investors Fund 101,631 shares 2,128 2,701
*Twentieth Century International
Equity Fund 148,010 shares 1,057 1,109
*Bankers Trust Stable Value Government
Trust Fund 1,577,744 shares 1,578 1,578
Other Investments:
- ------------------
*Isco, Inc. Common Stock Fund 69,472 shares 774 741
Participant loans Interest rates ranging
from 7.25% - 10.25%
maturing October 1995
- June 2000 -- 442
Balcor Pension Investors II 101 units 65 47
Balcor Pension Investors III 202 units 77 70
-------
*Party-in-interest $14,914
-------
-------
55
ISCO, INC. RETIREMENT PLU$ PLAN
PN 001
EIN #47-0461807
(amounts in thousands, except number of transactions data)
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
SERIES OF TRANSACTIONS
FOR THE YEAR ENDED JULY 31, 1995
Column A Column B Column C Column D Column E Column F
- ----------------- ----------------------------------- ----------- ------------ ------------- -----------
Total Dollar
Identity of Number of Value of Total Dollar Net Gain
Party Involved Description of Asset Transactions Purchases Value of Sales or (Loss)
- ----------------- ----------------------------------- ------------ ------------ -------------- ---------
*Twentieth Century Select Investors Fund 46 $1,045 $ -- $ --
*Twentieth Century Select Investors Fund 64 -- 524 (65)
*Twentieth Century Balanced Investors Fund 39 429 -- --
*Twentieth Century Balanced Investors Fund 55 -- 312 3
*Twentieth Century Ultra Investors Fund 51 787 -- --
*Twentieth Century Ultra Investors Fund 48 -- 255 (2)
*Twentieth Century International Equity Fund 49 544 -- --
*Twentieth Century International Equity Fund 32 -- 110 (3)
*Twentieth Century Premium Managed Bond Fund 43 181 -- --
*Twentieth Century Premium Managed Bond Fund 23 -- 99 (8)
*Bankers Trust Stable Value Government Trust Fund 75 943 -- --
*Bankers Trust Stable Value Government Trust Fund 29 -- 1,084 --
*Party-in-interest
56