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
For the fiscal year ended December 31, 1996
Commission File No. 1-10697
NON-QUALIFIED STOCK PURCHASE PLAN
OF COMMERCIAL INTERTECH CORP.
COMMERCIAL INTERTECH CORP.
1775 Logan Avenue
Youngstown, Ohio 44505
2
Audited Financial Statements
NON-QUALIFIED STOCK PURCHASE PLAN
OF COMMERCIAL INTERTECH CORP.
Years Ended December 31, 1996, 1995, and 1994
3
Non-Qualified Stock Purchase Plan of Commercial Intertech Corp.
Audited Financial Statements
Years Ended December 31, 1996, 1995, and 1994
CONTENTS
REQUIRED INFORMATION
Report of Independent Auditors ............................................ 1
Statements of Net Assets--December 31, 1996 and 1995 ...................... 2
Statements of Changes in Net Assets--Years Ended December 31, 1996,
1995, and 1994 ........................................................ 3
Notes to Financial Statements ............................................. 4
EXHIBITS
Consent of Independent Auditors ........................................... 8
4
Report of Independent Auditors
Administrative Committee
Non-Qualified Stock Purchase Plan
of Commercial Intertech Corp.
We have audited the accompanying statements of net assets of the Non-Qualified
Stock Purchase Plan of Commercial Intertech Corp. as of December 31, 1996 and
1995, and the related statements of changes in net assets for each of the three
years in the period ended December 31, 1996. 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 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 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 of the Non-Qualified Stock Purchase Plan
of Commercial Intertech Corp. at December 31, 1996 and 1995, and the changes in
its net assets for each of the three years in the period ended December 31,
1996, in conformity with generally accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the financial
statements taken as a whole. The Fund Information in the statements of net
assets and the statements of changes in net assets is presented for purposes of
additional analysis rather than to present the net assets and changes in net
assets of each fund. The Fund Information has been subjected to the auditing
procedures applied in our audits of the financial statements and, in our
opinion, is fairly presented in all material respects in relation to the
financial statements taken as a whole.
Ernst & Young LLP
Cleveland, Ohio
March 21, 1997
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Non-Qualified Stock Purchase Plan of Commercial Intertech Corp.
Statements of Net Assets
DECEMBER 31, 1996 DECEMBER 31, 1995
-------------------------------------- ---------------------------------
COMMERCIAL COMMERCIAL
INTERTECH INTERTECH
CORP. CORP.
MONEY COMMON MONEY COMMON
MARKET STOCK MARKET STOCK
FUND FUND TOTAL FUND FUND TOTAL
-------------------------------------------------------------------------
ASSETS
Cash $ 5,215 $ 5,215 $ 375 $ 375
Company contributions receivable 0 $ 1,259 1,828 3,087
Employee contributions receivable 0 2,517 3,707 6,224
Accrued interest receivable $ 231 231 282 282
------------------------------------------------------------------------
231 5,215 5,446 4,058 5,910 9,968
Investments:
Money Market Fund 58,836 58,836 61,920 61,920
Investment in CIC stock 45,344 45,344 56,351 56,351
Investment in CUNO stock 29,869 29,869 0
------------------------------------------------------------------------
58,836 75,213 134,049 61,920 56,351 118,271
------------------------------------------------------------------------
59,067 80,428 139,495 65,978 62,261 128,239
LIABILITIES
Distributions payable to participants (59,067) (80,054) (139,121) (65,978) (61,915) (127,893)
Payable to the Company (230) (230) (194) (194)
Federal withholdings payable (144) (144) (152) (152)
------------------------------------------------------------------------
(59,067) (80,428) (139,495) (65,978) (62,261) (128,239)
------------------------------------------------------------------------
NET ASSETS $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
=========================================================================
<FN>
See notes to financial statements.
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Non-Qualified Stock Purchase Plan of Commercial Intertech Corp.
Statements of Changes in Net Assets
FOR THE YEAR ENDED
---------------------------------------------------------------------------
DECEMBER 31, 1996 DECEMBER 31, 1995
----------------------------------- ---------------------------------------
COMMERCIAL COMMERCIAL
INTERTECH INTERTECH
CORP. CORP.
MONEY COMMON MONEY COMMON
MARKET STOCK MARKET STOCK
FUND FUND TOTAL FUND FUND TOTAL
---------------------------------------------------------------------------
Contributions:
Company $ 19,160 $ 20,437 $ 39,597 $ 21,295 $ 22,084 $ 43,379
Employee 38,320 41,458 79,778 42,115 44,760 86,875
---------------------------------------------------------------------------
57,480 61,895 119,375 63,410 66,844 130,254
Net investment income:
Interest and dividends 1,587 823 2,410 2,568 843 3,411
Other expenses (124) (124) (2,496) (2,496)
---------------------------------------------------------------------------
1,587 699 2,286 2,568 (1,653) 915
Realized gain (loss) on distribution (272) (272) 51,561 51,561
Realized gain on sales of assets 0 951 951
Unrealized appreciation (depreciation) in
aggregate current value of investments 20,330 20,330 (28,002) (28,002)
Decrease (increase) in Company payable (36) (36) 9,309 9,309
Transfers to Company 0 (9,897) (9,897)
---------------------------------------------------------------------------
Net assets available for distribution 59,067 82,616 141,683 65,978 89,113 155,091
Distribution to participants 59,067 82,616 141,683 65,978 89,113 155,091
---------------------------------------------------------------------------
Net change in net assets 0 0 0 0 0 0
Net assets at beginning of year 0 0 0 0 0 0
---------------------------------------------------------------------------
NET ASSETS AT END OF YEAR $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
===========================================================================
FOR THE YEAR ENDED
-----------------------------------
DECEMBER 31, 1994
-----------------------------------
COMMERCIAL
INTERTECH
CORP.
MONEY COMMON
MARKET STOCK
FUND FUND TOTAL
------------------------------------
Contributions:
Company $ 71,552 $ 90,754 $162,306
Employee 156,231 221,601 377,832
---------------------------------
227,783 312,355 540,138
Net investment income:
Interest and dividends 4,432 4,449 8,881
Other expenses (859) (859)
---------------------------------
4,432 3,590 8,022
Realized gain (loss) on distribution (8,302) (8,302)
Realized gain on sales of assets 0
Unrealized appreciation (depreciation) in
aggregate current value of investments 35,141 35,141
Decrease (increase) in Company payable (3,479) (3,479)
Transfers to Company 0
---------------------------------
Net assets available for distribution 232,215 339,305 571,520
Distribution to participants 232,215 339,305 571,520
---------------------------------
Net change in net assets 0 0 0
Net assets at beginning of year 0 0 0
---------------------------------
NET ASSETS AT END OF YEAR $ 0 $ 0 $ 0
==================================
See notes to financial statements.
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Non-Qualified Stock Purchase Plan of Commercial Intertech Corp.
Notes to Financial Statements
Years Ended December 31, 1996, 1995, and 1994
A. SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The accounting records of the Non-Qualified Stock Purchase Plan of
Commercial Intertech Corp. (the "Plan") are maintained on the accrual basis.
VALUATION OF INVESTMENTS
Investments are stated at the closing sale price on the last business day of the
year. Investments consist of common shares of Commercial Intertech Corp. (the
"Company" or "CIC"), common shares of CUNO Incorporated (See Note D), and Money
Market Fund shares. Generally, purchases of Company shares are made on the open
market; however, purchases may also be made directly from the Company's
treasury. Historical cost is computed based on average cost for purposes of
computing unrealized appreciation (depreciation) in the aggregate current value
of investments, realized gain (loss) on distribution, and realized gain (loss)
on sales of common stock.
PLAN DISTRIBUTIONS
Distributions payable to participants represent the value of participants'
accounts in the Money Market Fund and the number of shares of stock allocated to
participants' accounts times the year end market price per share for the Common
Stock Fund. Realized gains/losses on distributions are calculated based on
historical costs.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires the administrator to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
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Non-Qualified Stock Purchase Plan of Commercial Intertech Corp.
Notes to Financial Statements-Continued
B. DESCRIPTION OF THE PLAN
The Plan provides investment opportunities for eligible employees, including the
opportunity to acquire stock of the Company. Eligible employees include all
employees of Commercial Intertech Corp. and its domestic subsidiaries with a
base salary in excess of $150,000, as adjusted in accordance with Section
401(a)(17) of the Internal Revenue Code (prior to the January 1, 1995 amendment,
eligible employees included all domestic employees with a base salary in excess
of $45,000). Eligible employees also include employees, as designated by the
Compensation Committee of the Board of Directors, of foreign subsidiaries of the
Company. Participants may elect to contribute up to 15% of their eligible
compensation. The Company will make a contribution to each participant's account
equal to 50% of the participant's contributions, up to a maximum of 3% of the
participant's eligible compensation.
Eligible compensation, for employees of the Company and its domestic
subsidiaries, is defined as base wage or salary in excess of $150,000, as
adjusted in accordance with Section 401(a)(17) of the Internal Revenue Code. For
employees of foreign subsidiaries of the Company, eligible compensation consists
of base wage or salary.
Participants may elect to contribute to either the Commercial Intertech Corp.
Common Stock Fund (Stock Fund) or the Money Market Fund. Employee and Company
contributions are allocated directly to each participant's account and vest
immediately. Effective January 1, 1994, the Plan was amended such that for the
Stock Fund, the monthly allocation of shares to a participant's account would be
based on the proportion that the participant's contributions and employer
contributions for that participant bears to such contributions of all
participants who participate in the Stock Fund. Prior to January 1, 1994, Stock
Fund contributions were converted to shares each month using the average daily
stock price for that month. Investment income is allocated proportionally to
each participant's account.
At the beginning of each Plan year, participants may change deduction
percentages or investment funds, suspend contributions, or withdraw from the
Plan.
Distributions are made after the end of each Plan year. Money Market Fund
participants receive the full value of their accounts as of the Plan year end.
Stock Fund distributions are made in whole shares of stock, while fractional
shares less than one-half are forfeited and used as a credit toward future
Company contributions. Distribution of a participant's account is required as
soon as practical after the end of the month in which the participant terminates
employment for any reason, including death, disability, retirement, discharge or
otherwise.
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Non-Qualified Stock Purchase Plan of Commercial Intertech Corp.
Notes to Financial Statements-Continued
B. DESCRIPTION OF THE PLAN--CONTINUED
In 1996, 6 employees participated in the Money Market Fund and 9 employees
participated in the Stock Fund. In 1995, 7 employees participated in the Money
Market Fund and 10 employees participated in the Stock Fund. In 1994, 59
employees participated in the Money Market Fund and 113 employees participated
in the Stock Fund.
The Plan is administered by a committee appointed by the Compensation Committee
of the Board of Directors of the Company. The Company has the sole right to
appoint the Trustee, and to terminate the Plan at any time, subject to Plan
provisions. Administrative expenses that are not paid by the Company, in its
sole discretion, will be paid by the Plan.
The foregoing description of the Plan provides only general information.
Additional information may be obtained from the Plan administrative committee.
C. INCOME TAX STATUS
The Plan maintains its assets in a trust which is not a qualified trust under
Section 401(a) of the Internal Revenue Code. As such, the trust is a taxable
trust under Subchapter J of the Internal Revenue Code and is taxable on
undistributed earnings. Participants are taxed on matching Company contributions
and earnings distributed by the trust.
Since the trust distributed all earnings during 1996, 1995, and 1994, it has no
federal income tax liability for such years.
D. TRANSACTIONS WITH PARTIES-IN-INTEREST
The Plan purchased shares of common stock of Commercial Intertech Corp. during
the years ended December 31, 1996, 1995, and 1994. The Plan received dividends
of $823, $843, and $4,449 on this stock during 1996, 1995, and 1994,
respectively.
On September 10, 1996, the Company spun off CUNO Incorporated, a wholly-owned
subsidiary, as an independent publicly held company. The spin-off was in the
form of a one-for-one share dividend to shareholders of Company common stock as
of August 9, 1996. As a result of the share dividend, Plan participants received
a total of 2,008 common shares of CUNO Incorporated.
Based on the average market value of the respective stocks at the time of the
spin-off, 56% of the cost basis of the 2,008 shares of Company common stock held
in the Plan at that time was allocated to the 2,008 shares of CUNO Incorporated
common stock. The remaining 44% became the adjusted cost basis of the 2,008
shares of Company common stock.
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Non-Qualified Stock Purchase Plan of Commercial Intertech Corp.
Notes to Financial Statements-Continued
E. INVESTMENTS
Identity of Issue
Borrower, Lessor Description of Current
or Similar Party Investment Cost Value
- ---------------------------------------------------------------------------------------------------------------
DECEMBER 31, 1996
Commercial Intertech Corp. Common Stock Fund:
*Commercial Intertech Corp. **3,328 common shares
$13.625 per share $ 33,728 $ 45,344
CUNO Incorporated **2,008 common shares
$14.875 per share 23,816 29,869
Money Market Fund:
Federated Investors Inc. trust for U.S. Treasury
Obligations **58,836 shares 58,836 58,836
-------------------------
$ 116,380 $ 134,049
=========================
DECEMBER 31, 1995
Commercial Intertech Corp. Common Stock Fund:
*Commercial Intertech Corp. **3,109 common shares
$18.125 per share $ 59,012 $ 56,351
Money Market Fund:
Federated Investors Inc. trust for U.S. Treasury
Obligations **61,920 shares 61,920 61,920
-------------------------
$ 120,932 $ 118,271
=========================
Distributions of Investments
During the Year Ended
Identity of Issue ---------------------------------------------------
Borrower, Lessor Aggregate Market Realized
or Similar Party Cost Value Gain (Loss)
- ----------------------------------------------------------------------- ---------------------------------
DECEMBER 31, 1996
Commercial Intertech Corp. Common Stock Fund:
*Commercial Intertech Corp.
$ 64,749 $ 64,477 $ (272)
CUNO Incorporated
NONE NONE NONE
Money Market Fund:
Federated Investors Inc. trust for U.S. Treasury
Obligations 65,978 65,978 0
DECEMBER 31, 1995
Commercial Intertech Corp. Common Stock Fund:
*Commercial Intertech Corp.
$ 313,345 $ 364,906 $ 51,561
Money Market Fund:
Federated Investors Inc. trust for U.S. Treasury
Obligations 232,215 232,215 0
<FN>
* Party-in-interest.
** Individual investment that comprises five percent or more of
the Plan's assets. The fair value of the Plan's investment in
Commercial Intertech Corp. common stock (including shares
bought and distributed, as well as held during the year),
appreciated $14,277 in 1996, depreciated $28,002 in 1995 and
appreciated $35,141 in 1994. The fair value of the Plan's
investment in CUNO Incorporated common stock appreciated
$6,053 in 1996.
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EXHIBIT I
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statement (Form
S-8 No. 33-25795) pertaining to the Non-Qualified Stock Purchase Plan of
Commercial Intertech Corp. and in the related Prospectus of our report dated
March 21, 1997, with respect to the financial statements of the Non-Qualified
Stock Purchase Plan of Commercial Intertech Corp. included in this Annual Report
(Form 11-K) for the year ended December 31, 1996.
Ernst & Young LLP
Cleveland, Ohio
March 21, 1997
8
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons who administer the plan) have duly caused this annual
report to be signed by the undersigned thereunto duly authorized.
Date: March 27, 1997 Non-Qualified Stock Purchase Plan
of Commercial Intertech Corp.
By: James M. Donchess
-----------------------------
James M. Donchess
Corporate Attorney, Benefits