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