<PAGE>
FORM 11-K
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
X Annual Report Pursuant to Section 15(d) of the
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Securities Exchange Act of 1934 [Fee Required]
For the Fiscal Year Ended December 31, 1997
Transition Report Pursuant to Section 15(d) of the
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Securities Exchange Act of 1934 [No Fee Required]
For the Transition Period From ___________ To __________
Commission File Number 1-5502
ELJER TAX REDUCTION INVESTMENT PLAN
(Full title of the Plan)
ZURN INDUSTRIES, INC.
14801 Quorum Drive, Addison, Texas 75240-7584
(Name and address of issuer of securities held pursuant to the Plan)
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<PAGE>
Pension Committee
Zurn Industries, Inc.
Dallas, Texas
We have audited the accompanying statement of net assets available for benefits
of the Eljer Tax Reduction Investment Plan as of December 31, 1997, and the
related statement of changes in net assets available for benefits with fund
information 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 and for the year ended December 31, 1996 (from
which certain information has been presented for purposes of comparison) were
audited by other auditors whose report dated September 27, 1997 expressed an
unqualified opinion on those statements.
We conducted our audit 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 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 Eljer Tax
Reduction Investment Plan as of December 31, 1997, and the changes in its net
assets available for benefits for the year then ended, in conformity with
generally accepted accounting principles.
Our audit was made for the purpose of expressing an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets
held for investment purposes at December 31, 1997, and reportable transactions
for the year then ended, are presented for purposes 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 schedules have been subjected to the auditing procedures
applied in the audit of the basic financial statements and, in our opinion, are
fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
/s/ The Pashke Group
Erie, Pennsylvania
May 21, 1998
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<PAGE>
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
ELJER TAX REDUCTION INVESTMENT PLAN
(Thousands)
<TABLE>
<CAPTION>
December 31
1997 1996
------- -------
<S> <C> <C>
ASSETS
Investments:
Fixed Income Fund $ 9,779 $ 7,420
Managed Balanced Fund 5,551 2,618
Managed Growth Fund 7,557 3,747
United States Stock Fund 9,264 3,861
International Stock Fund 2,602 1,316
Household International Stock Fund 3,133 2,581
Eljer Industries Common Stock Fund 11,317
Zurn Industries Common Stock Fund 1,406
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39,292 32,860
Participants' loans 1,689 1,121
Contributions receivable:
Employers' 681 686
Participants' 163 153
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TOTAL ASSETS 41,825 34,820
PARTICIPANTS' REFUNDS 58 32
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NET ASSETS AVAILABLE FOR BENEFITS $41,767 $34,788
======= =======
</TABLE>
See notes to financial statements.
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<PAGE>
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
ELJER TAX REDUCTION INVESTMENT PLAN
Year Ended December 31, 1997
(Thousands)
<TABLE>
<CAPTION>
Fixed Managed Managed United
Income Balanced Growth States International
Fund Fund Fund Stock Fund Stock Fund
------------- ------------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C>
ADDITIONS
Investment income:
Dividends and interest $ 571 $ 333 $ 414 $ 442 $ 124
Net appreciation in
value of investments 375 634 1,271 229
------ ------ ------ ------ ------
571 708 1,048 1,713 353
Participants' contributions 492 397 585 601 257
Employers' contributions 402 223 314 284 126
------ ------ ------ ------ ------
TOTAL ADDITIONS 1,465 1,328 1,947 2,598 736
BENEFITS PAID TO PARTICIPANTS 1,527 432 491 678 301
------ ------ ------ ------ ------
NET ADDITIONS (DEDUCTIONS) (62) 896 1,456 1,920 435
NET ASSETS AVAILABLE FOR BENEFITS
Beginning of year 7,420 2,618 3,747 3,861 1,316
Transfers 2,421 2,037 2,354 3,483 851
------ ------ ------ ------ ------
End of year $9,779 $5,551 $7,557 $9,264 $2,602
====== ====== ====== ====== ======
</TABLE>
See notes to financial statements.
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<PAGE>
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS - Continued
ELJER TAX REDUCTION INVESTMENT PLAN
Year Ended December 31, 1997
(Thousands)
<TABLE>
<CAPTION>
Eljer Zurn
Household Industries Industries
International Common Common
Stock Fund Stock Fund Stock Fund Other Total
------------- ---------- ---------- ------- -------
<S> <C> <C> <C> <C> <C>
ADDITIONS
Investment income:
Dividends and interest $ 40 $ 58 $ 8 $ 121 $ 2,111
Net appreciation (depreciation)
in value of investments 880 179 (45) 3,523
------ -------- ------ ------ -------
920 237 (37) 121 5,634
Participants' contributions 48 2 (14) 2,368
Employers' contributions 78 1,397 (5) 2,819
------ -------- ------ ------ -------
TOTAL ADDITIONS 920 363 1,362 102 10,821
BENEFITS PAID TO PARTICIPANTS 270 121 22 3,842
------ -------- ------ ------ -------
NET ADDITIONS 650 242 1,340 102 6,979
NET ASSETS AVAILABLE FOR BENEFITS
Beginning of year 2,581 11,317 1,928 34,788
Transfers (98) (11,559) 66 445
------ -------- ------ ------ -------
End of year $3,133 $ -0- $1,406 $2,475 $41,767
====== ======== ====== ====== =======
</TABLE>
See notes to financial statements.
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<PAGE>
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
ELJER TAX REDUCTION INVESTMENT PLAN
Year Ended December 31, 1996
(Thousands)
<TABLE>
<CAPTION>
Fixed Managed Managed United
Income Balanced Growth States International
Fund Fund Fund Stock Fund Stock Fund
------------- ------------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C>
ADDITIONS
Investment income:
Dividends and interest $ 445 $ 148 $ 270 $ 326 $ 21
Net appreciation (depreciation)
in value of investments 238 (19) 353 82
------- ------- ------ ------- ------
445 386 251 679 103
Participants' contributions 644 372 312 574 136
Employers' contributions 659 307 388 391 153
------- ------- ------ ------- ------
TOTAL ADDITIONS 1,748 1,065 951 1,644 392
BENEFITS PAID TO PARTICIPANTS 514 140 46 384 22
------- ------- ------ ------- ------
NET ADDITIONS (DEDUCTIONS) 1,234 925 905 1,260 370
NET ASSETS AVAILABLE FOR BENEFITS
Beginning of year 7,249 3,003 3,900
Transfers (1,063) (1,310) 2,842 (1,299) 946
------- ------- ------ ------- ------
End of year $ 7,420 $ 2,618 $3,747 $ 3,861 $1,316
======= ======= ====== ======= ======
</TABLE>
See notes to financial statements.
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<PAGE>
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS - Continued
ELJER TAX REDUCTION INVESTMENT PLAN
Year Ended December 31, 1996
(Thousands)
<TABLE>
<CAPTION>
Eljer
Household Industries
International Common
Stock Fund Stock Fund Other Total
------------- ---------- ------- -------
<S> <C> <C> <C> <C>
ADDITIONS
Investment income:
Dividends and interest $ 42 $ 7 $1,259
Net appreciation in
value of investments 940 6,132 7,726
------ ------- ------ -------
982 6,139 8,985
Participants' contributions 265 $ (3) 2,300
Employers' contributions 407 498 2,803
------ ------- ------ -------
TOTAL ADDITIONS 982 6,811 495 14,088
BENEFITS PAID TO PARTICIPANTS 179 442 30 1,757
------ ------- ------ -------
NET ADDITIONS 803 6,369 465 12,331
NET ASSETS AVAILABLE FOR BENEFITS
Beginning of year 1,885 5,009 1,411 22,457
------ ------- ------ -------
Transfers (107) (61) 52
------ ------- ------ -------
End of year $2,581 $11,317 $1,928 $34,788
====== ======= ====== =======
</TABLE>
See notes to financial statements.
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<PAGE>
ELJER TAX REDUCTION INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 1997
PLAN DESCRIPTION
The Eljer Tax Reduction Investment Plan, which became effective April 1, 1989,
is a defined contribution retirement plan for eligible employees of Eljer
Industries, Inc. and its participating subsidiaries which is subject to the
provisions of the Employee Retirement Income Security Act of 1974 (ERISA).
Subject to certain eligibility requirements, participants may contribute on a
pretax or after-tax basis up to 15% of their compensation to the Plan and they
may borrow from their accounts subject to specified limitations.
At the Company's discretion, participants' contributions may be matched in whole
or in part by Company contributions ("Employer Matching Contributions") at a
rate determined by the Company. The amount of a participant's contributions
eligible for matching may not exceed 6% of the participant's annual
compensation. In addition, beginning January 1, 1996, the Company contributes
amounts equal to 2% of each eligible participant's compensation ("Level One
TRIP+") and 0% to 7% of compensation based on the participant's years of
credited service ("Level Two TRIP+"). Employer Matching Contributions and Level
Two TRIP+ contributions vest over four years of plan participation. Level One
TRIP+ contributions become vested after five years of service. All company
contributions become 100% vested upon eligibility for normal retirement, death,
or full and permanent disability.
Prior to April 14, 1989, the Company's subsidiaries were wholly-owned
subsidiaries of Household International, Inc. On that date, Household
distributed to its shareholders all of the outstanding shares of common stock of
the Company. On April 1, 1989 in preparation for the distribution, the equity
of the Plan for the participating employees of the Company, including
investments in Household common stock, was transferred from the Household
Manufacturing, Inc. Tax Reduction Investment Plan to the Plan adopted by the
Company. The Plan's Household International Stock Fund is frozen and no
contributions are permitted to be made to the fund.
On January 22, 1997, all the Company's common stock, including shares held by
the Plan, was purchased by a subsidiary of Zurn Industries, Inc. in connection
with transactions in which the Company became a wholly-owned subsidiary of Zurn
with provisions for the continuation of the Plan. Subsequently, the Pension
Committee of Zurn succeeded the Eljer TRIP Administrative and Investment
Committee as Plan administrator.
Information about the Plan agreement and the benefit provisions is contained in
the "Summary Plan Description" which may be obtained from Zurn Industries, Inc.,
the Plan Administrator.
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SIGNIFICANT ACCOUNTING POLICIES
Investments Investments in mutual funds of registered investment companies are
stated at market value as determined by the funds.
Employer Stock Funds Investments in the common stocks of Household
International, Eljer Industries, and Zurn Industries (1997 - 42,822 shares) are
stated at their quoted market values.
Investment Transactions Investment transactions are recorded as of the date the
order to buy or sell is executed with realized gains and losses determined by
the average cost method being included in investment income as a component of
the net appreciation (depreciation) in the value of investments.
Participants' Loans Participants' loans are stated at the principal amount due
from the participants.
Dividends Dividend income is recognized on the ex-dividend date.
Expenses Administrative expenses are paid by the Plan Administrator.
Statement Reclassification The 1996 financial statements have been changed to
conform to the current presentation with no effect on the amount of total net
assets available for benefits.
INCOME TAX STATUS
The Internal Revenue Service has ruled that the Plan qualifies under Section
401(a) of the Internal Revenue Code and is, therefore, not subject to tax under
present income tax law. Once qualified, the Plan is required to operate in
conformity with the Code to maintain its qualification. The Plan Administrator
is not aware of any course of action or series of events that might adversely
affect the Plan's qualified status.
WITHDRAWALS AND FORFEITURES
Benefits payable to withdrawing participants not included in the financial
statements at December 31, 1997 and 1996 amounted to approximately $634,000 and
$439,000, respectively. Forfeited contributions reduced the amount of employer
contributions by approximately $39,000 and $26,000 in 1997 and 1996,
respectively.
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SIGNIFICANT INVESTMENTS
The following investments represent 5% or more of the net assets available for
benefits at December 31, 1997 and 1996:
<TABLE>
<CAPTION>
1997 1996
------ -------
(Thousands)
<S> <C> <C>
Common stocks:
Eljer Industries, Inc. $11,315
Household International, Inc. $3,092 2,581
Mutual funds of registered investment companies:
Davis New York Venture Fund 3,719 2,037
GAM International Fund 2,777
Parkstone Small Capitalization Fund 3,452
Pimco Advisors Institutional-
Cadence Capital Appreciation Fund 3,620
Putnam Voyager Fund 4,627 1,931
Pooled separate account:
LaSalle Income Plus Fund 9,770 7,420
</TABLE>
SUBSEQUENT EVENT
On February 16, 1998, Zurn Industries entered into an Agreement and Plan of
Merger with U.S. Industries, Inc. and certain of its affiliates which, if
approved by the shareholders of both companies at meetings scheduled for June
11, 1998, will result through mergers in the companies becoming wholly-owned
subsidiaries of a new company that will change its name to U.S. Industries, Inc.
(USI). At the effective time of the mergers, each share of Zurn common stock
will be converted into the right to receive 1.6 shares of USI common stock upon
surrender of the certificates for the Zurn stock.
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SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES - Item 27a
ELJER TAX REDUCTION INVESTMENT PLAN
(Thousands of Dollars)
<TABLE>
<CAPTION>
Identity of Description of Current
Party Involved Investment Cost Value
- --- --------------------- -------------------------- ------- -------
<S> <C> <C> <C> <C>
* Zurn Industries, Inc. Common Stock, par $1,391 $1,346
value $.50
42,822 shares
Household Common Stock, par 298 3,092
International, Inc. value $1
24,229 shares
LaSalle National LaSalle Income 9,770 9,770
Trust, N.A. Plus Fund
9,769,695 shares
Miller, Anderson & MAS Funds Fixed Income 1,407 1,425
Sherrerd Portfolio Mutual Fund
119,546 shares
The Vanguard Group Vanguard Fixed Income Fund 2,678 2,699
of Investment 249,654 shares
Companies
Vanguard Windsor II Fund 813 965
33,706 shares
Davis Selected Davis New York 2,927 3,719
Advisors, L.P. Venture Fund Class A
166,559 shares
GAM Funds, Inc. GAM International Fund 2,231 2,777
97,487 shares
T. Rowe Price T. Rowe Price 1,639 1,636
International International
Funds, Inc. Stock Fund
121,909 shares
</TABLE>
* - A party known to be a party-in-interest.
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SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES - Item 27a - Continued
ELJER TAX REDUCTION INVESTMENT PLAN
(Thousands of Dollars)
<TABLE>
<CAPTION>
Identity of Description of Current
Party Involved Investment Cost Value
- --- ----------------- -------------------- ------------ -----------
<S> <C> <C> <C>
First of America Parkstone Small 3,536 3,452
Investment Capitalization Fund
Corporation 132,466 shares
Pimco Advisors Cadence Capital 3,141 3,620
Institutional Appreciation Fund
Funds 158,503 shares
Putnam Funds Putnam Voyager Fund 3,807 4,627
242,896 shares
Nations Bank, N.A. Nations Prime Fund 129 129
Primary A
129,442 shares
Accrued income Included in fund balances 35 35
* Participants' loans Interest rates 9.5% to 10% 1,689
------- -------
$33,802 $40,981
======= =======
</TABLE>
* - A party known to be a party-in-interest.
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<PAGE>
SCHEDULE OF REPORTABLE TRANSACTIONS - Item 27d
ELJER TAX REDUCTION INVESTMENT PLAN
Year Ended December 31, 1997
(Thousands of Dollars)
<TABLE>
<CAPTION>
Identity of Description of Purchase Sale Cost of Gain
Party Involved Asset Price Price Asset (Loss)
- ---------------------------- ------------------------ ------------ --------- --------- -----------
<S> <C> <C> <C> <C> <C>
INDIVIDUAL TRANSACTIONS
LaSalle National Trust, N.A. LaSalle Income Plus Fund $ 3,080
PIC Investment Trust Pinnacle Growth Fund $ 1,808 $ 1,751 $ 57
Eljer Industries, Inc. Common Stock 11,403 4,320 7,083
SERIES OF TRANSACTIONS
LaSalle National Trust, N.A. LaSalle Income Plus Fund 4,630 2,251 2,251
Davis Selected Davis New York Venture 2,148 1,305 1,133 172
Advisors, LP Fund Class A
Eljer Industries, Inc. Common Stock 11,494 4,355 7,139
Vanguard Group Vanguard Fixed Income 1,836 467 390 77
of Investment Fund
Companies
</TABLE>
This schedule lists individual and series of transactions in excess of 5% of the
fair value of Plan assets at the beginning of the year.
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<PAGE>
SCHEDULE OF REPORTABLE TRANSACTIONS - Item 27d - Continued
ELJER TAX REDUCTION INVESTMENT PLAN
Year Ended December 31, 1997
(Thousands of Dollars)
<TABLE>
<CAPTION>
Identity of Description of Purchase Sale Cost of Gain
Party Involved Asset Price Price Asset (Loss)
- ---------------------------- -------------------- ------------ --------- --------- -----------
<S> <C> <C> <C> <C> <C>
SERIES OF TRANSACTIONS
Pimco Advisors Cadence Capital 3,161
Institutional Funds Appreciation Fund
PIC Investment Trust Pinnacle Growth Fund 1,749 3,342 3,262 80
Putnam Funds Putnam Voyager Fund 2,319 126 122 4
First Of America Parkstone Small 2,239 151 133 18
Investment Corporation Capitalization Fund
</TABLE>
This schedule lists individual and series of transactions in excess of 5% of the
fair value of Plan assets at the beginning of the year.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the Pension Committee of Zurn Industries, Inc. has duly caused this annual
report to be signed on its behalf by the undersigned thereunto duly authorized
ELJER TAX REDUCTION INVESTMENT PLAN
June 11, 1998 /s/ James A. Zurn
----------------------------
James A. Zurn, Chairman
Pension Committee of
Zurn Industries, Inc.
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<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement on
Form S-8 No. 333-36621 pertaining to the Eljer Tax Reduction Investment Plan of
our report dated May 21, 1998 with respect to the financial statements and
supplemental schedules included in the Annual Report on Form 11-K of the Eljer
Tax Reduction Investment Plan.
/s/ The Pashke Group
Erie, Pennsylvania
June 11, 1998
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