<PAGE> 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, 1997
Commission File No. 1-10697
COMMERCIAL INTERTECH 401(k) PLAN
COMMERCIAL INTERTECH CORP.
1775 Logan Avenue
Youngstown, Ohio 44505
<PAGE> 2
AUDITED FINANCIAL STATEMENTS AND
SCHEDULES
COMMERCIAL INTERTECH 401(k) PLAN
December 31, 1997 and 1996
<PAGE> 3
Report of Independent Auditors
Administrative Committee
Commercial Intertech 401(k) Plan
We have audited the accompanying statements of net assets available for plan
benefits of the Commercial Intertech 401(k) Plan (the "Plan") as of December 31,
1997 and 1996, and the related statement of changes in net assets available for
plan benefits for the year ended December 31, 1997. 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 available for plan benefits of the Plan at
December 31, 1997 and 1996, and the changes in its net assets available for plan
benefits for the year ended December 31, 1997 in conformity with generally
accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental Schedule of Assets
Held for Investment Purposes as of December 31, 1997, and Schedule of Reportable
Transactions for the year ended December 31, 1997, are presented for purposes of
complying with the Department of Labor's Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of 1974, and are
not a required part of the financial statements. The supplemental schedules have
been subjected to the auditing procedures applied in our audit of the 1997
financial statements and, in our opinion, are fairly stated in all material
respects in relation to the 1997 financial statements taken as a whole.
/s/ Ernst & Young LLP
Cleveland, Ohio
June 24, 1998
1
<PAGE> 4
<TABLE>
Commercial Intertech 401(k) Plan
Statements of Net Assets Available for Plan Benefits
<CAPTION>
DECEMBER 31, 1997
--------------------------------------------------
ALLOCATED UNALLOCATED TOTAL
---------------------------------------------------
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 38,204 $ 38,204
Interest receivable 4,904 4,904
Employer contributions receivable
Employee contributions receivable 282,288 282,288
---------------------------------------------------
325,396 325,396
Investments:
Interest in a registered investment company 19,415,490 19,415,490
Investments in common/collective trusts 11,875,351 11,875,351
Unallocated insurance contracts
Commercial Intertech Corp. Series B
Preferred Stock
Commercial Intertech Corp. Common Stock 5,504,788 5,504,788
CUNO Incorporated Common Stock
Participant loans receivable 858,604 858,604
---------------------------------------------------
37,654,233 37,654,233
LIABILITIES
Notes payable
Other liabilities
---------------------------------------------------
---------------------------------------------------
NET ASSETS AVAILABLE FOR PLAN BENEFITS $37,979,629 $0 $37,979,629
===================================================
</TABLE>
<TABLE>
Commercial Intertech 401(k) Plan
Statements of Net Assets Available for Plan Benefits
<CAPTION>
DECEMBER 31, 1996
-------------------------------------------------------
ALLOCATED UNALLOCATED TOTAL
-------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents $ 4,806,533 $ 669 $ 4,807,202
Interest receivable 90,907 2,328 93,235
Employer contributions receivable 352,588 352,588
Employee contributions receivable 187,875 187,875
-------------------------------------------------------
5,437,903 2,997 5,440,900
Investments:
Interest in a registered investment company 12,083,261 12,083,261
Investments in common/collective trusts
Unallocated insurance contracts 10,085,083 10,085,083
Commercial Intertech Corp. Series B
Preferred Stock 8,102,658 16,511,115 24,613,773
Commercial Intertech Corp. Common Stock 8,150,870 8,150,870
CUNO Incorporated Common Stock 1,642,988 1,642,988
Participant loans receivable 563,803 563,803
-------------------------------------------------------
40,628,663 16,511,115 57,139,778
LIABILITIES
Notes payable 11,346,122 11,346,122
Other liabilities 154,075 154,075
-------------------------------------------------------
154,075 11,346,122 11,500,197
-------------------------------------------------------
NET ASSETS AVAILABLE FOR PLAN BENEFITS $45,912,491 $ 5,167,990 $51,080,481
=======================================================
</TABLE>
See notes to financial statements.
2
<PAGE> 5
<TABLE>
Commercial Intertech 401(k) Plan
Statement of Changes in Net Assets
Available for Plan Benefits
For the Year Ended December 31, 1997
<CAPTION>
Allocated Unallocated Total
-------------------------------------------------------------
<S> <C> <C> <C>
ADDITIONS
Employee contributions $ 3,136,397 $ 3,136,397
Interest income 631,422 $ 6,680 638,102
Dividend income 432,526 396,147 828,673
Other income 93,494 93,494
-------------------------------------------------------------
4,293,839 402,827 4,696,666
DEDUCTIONS
Interest expense 7,056 401,653 408,709
Distributions 7,436,127 7,436,127
-------------------------------------------------------------
7,443,183 401,653 7,844,836
Net realized and unrealized appreciation in aggregate
current value of investments 6,173,566 6,173,566
Net transfers to (from) plan (10,957,084) (5,169,164) (16,126,248)
-------------------------------------------------------------
Net deductions (7,932,862) (5,167,990) (13,100,852)
Net assets available for plan benefits at beginning
of year 45,912,491 5,167,990 51,080,481
-------------------------------------------------------------
NET ASSETS AVAILABLE FOR PLAN BENEFITS
AT END OF YEAR $ 37,979,629 $ 0 $ 37,979,629
=============================================================
</TABLE>
See notes to financial statements.
3
<PAGE> 6
Commercial Intertech 401(k) Plan
Notes to Financial Statements
Year Ended December 31, 1997
A. PLAN AMENDMENTS AND RESTATEMENT
The Commercial Intertech 401(k) Plan (the "Plan") constitutes an amendment and
restatement of the Commercial Intertech Retirement Stock Ownership and Savings
Plan and the merger of the Cylinder City Savings and Retirement Plan, both
effective September 1, 1997. Prior to the Plan merger, the Company matching
portion of the Plan was transferred, effective September 1, 1997, to the
Commercial Intertech Employee Stock Ownership Plan (the "ESOP").
The transfer of assets allocated to the accounts of participants included
approximately 143,824 shares of Convertible Series B Preferred Stock ("Preferred
Shares") with a value of $5,923,274, 207,707 common shares of Commercial
Intertech Corp. (the "Company") with a value of $3,621,891, and cash totaling
$3,086,270. The $12,631,435 transfer of allocated assets represented 27.5% and
24.7% of allocated and total net assets respectively available for benefits as
of December 31, 1996.
The transfer of unallocated assets and liabilities included 400,908 Preferred
Shares with a value of $16,511,115, cash totaling $146,287, and notes payable
with a value of $11,346,122. The $5,311,280 net transfer of unallocated assets
represented 102.8% and 10.4% of unallocated and total net assets respectively
available for benefits as of December 31, 1996.
The merger of the Cylinder City Savings and Retirement plan resulted in the
transfer of approximately $1,844,132 into the Plan. This amount is equal to 3.6%
of total net assets available for benefits as of December 31, 1996.
On June 16, 1997, the Plan was amended to allow participation by eligible
employees on and after the first day of the first month following the date the
employee completes the earlier of (1) six months and 500 hours of eligible
service or (2) one year of eligible service. This amendment was effective
January 1, 1997 and did not have a significant impact on the net assets
available for benefits.
On September 10, 1996 the Plan was amended to incorporate provisions relating to
the spin off of CUNO Incorporated, a wholly-owned subsidiary at that time.
Principally, all Company employees of CUNO Incorporated became fully vested in
their accrued benefits, and were terminated from the Company.
4
<PAGE> 7
Commercial Intertech 401(k) Plan
Notes to Financial Statements--Continued
A. PLAN AMENDMENTS AND RESTATEMENT--CONTINUED
As a result of the amendment, the Plan made distributions of $7,649,035 to CUNO
Incorporated employees in 1996, and $3,884,811 in 1997 ( for the 1996 Plan
year). Respectively, the amounts represent 15.0% and 7.6% of net assets
available for benefits at December 31, 1996.
The Plan was also amended on September 10, 1996 to allow participation by
non-highly compensated employees of the Component Engineering Division, as
defined by the Company. This amendment was effective July 1, 1996 and did not
have a significant impact on the net assets available for benefits.
B. DESCRIPTION OF THE PLAN
The Plan consists of a pre-tax savings program, under which participants may
elect to contribute up to 18% of their compensation, on a tax-deferred basis,
into the Plan. Prior to September 1, 1997, the Plan consisted of a pre-tax
savings program allowing contributions up to 15% of a participant's
compensation, a post-tax program under which participants could contribute up to
an additional 10% of their compensation, and a leveraged matching employee stock
ownership plan. Participant contributions are subject to IRS limitations.
Employee contributions are accrued as income by the Plan on a monthly basis. The
Company contributes, into the ESOP, 50% (made in Preferred and Common shares as
needed) of the first 6% of eligible compensation that a participant contributes
into the Plan on a tax-deferred basis. Prior to September 1, 1997, Company
matching contributions were made directly into the leveraged matching portion of
the Plan. Post-tax contributions were made with after-tax dollars and did not
receive Company matching contributions.
All employees of the Company and its designated subsidiaries are eligible to
participate in the Plan upon reaching the earlier of (1) six months and 500
hours of eligible service or (2) one year of eligible service. The Plan is
subject to the applicable provisions of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"). The leveraged matching employee stock
ownership features of the Plan were designed to comply with Section 4975 (e) (7)
and the regulations thereunder of the Internal Revenue Code of 1986, as amended,
(the "Code").
5
<PAGE> 8
Commercial Intertech 401(k) Plan
Notes to Financial Statements--Continued
B. DESCRIPTION OF THE PLAN--CONTINUED
The Plan provides for separate investment options in one or more funds as
directed by the participants. Participants may change investment options at any
time. With the exception of the Commercial Intertech Common Stock Fund, all-new
investment options were offered effective September 1, 1997.
At December 31, 1997, 480 individuals participated in the Commercial Intertech
Common Stock fund, 630 individuals participated in the Benham Stable Asset Fund,
166 individuals participated in the Benham GNMA Fund, 117 individuals
participated in the American Century Strategic Allocation: Conservative Fund,
285 individuals participated in the American Century Strategic Allocation:
Moderate Fund, 278 individuals participated in the American Century Strategic
Allocation: Aggressive Fund, 451 individuals participated in the Barclays Equity
Index Fund, 350 individuals participated in the American Century Value Fund, 591
individuals participated in the American Century Equity Growth Fund, 755
individuals participated in the Twentieth Century Ultra Fund, 236 individuals
participated in the Twentieth Century Vista Fund, and 489 individuals
participated in the Twentieth Century International Growth Fund.
At December 31, 1996, 829 individuals participated in the CIGNA Guaranteed Long
Term Account, 691 individuals participated in the Commercial Intertech Common
Stock Account Fund, 291 individuals participated in the Fidelity Intermediate
Bond Fund, 450 individuals participated in the Fidelity Balanced Fund, 478
individuals participated in the Fidelity U.S. Equity Index Fund, and 741
individuals participated in the Fidelity Growth Company Fund.
All investment account dollars that result from employee contributions and
related investment results are immediately vested.
Company matching contributions and related investment results vest according to
the following schedule:
<TABLE>
<CAPTION>
Years of Vesting Service % Vested
- -------------------------------- --------------
<S> <C>
Less than 1 year 0%
1 year 20
2 years 40
3 years 60
4 years 80
5 years 100
</TABLE>
6
<PAGE> 9
Commercial Intertech 401(k) Plan
Notes to Financial Statements--Continued
B. DESCRIPTION OF THE PLAN--CONTINUED
Participants become fully vested in Company matching contributions upon
attainment of their normal retirement date, or upon their death or disability.
There were no non-vested assets in the Plan attributable to terminated employees
at December 31, 1997.
The Plan also provides for withdrawal in cases of financial hardship, upon
attainment of age 59-1/2, and of the post-tax savings program contributions.
Participating employees may borrow up to the lesser of 50% of their account
balance attributable to employee contributions or $50,000. The amount borrowed
is repaid to the participant's account via payroll deductions and carries an
interest charge at the market rate of interest at the date of the loan.
The Plan purchased the Preferred Shares, which are held in a trust established
under the Plan, in 1990 using the proceeds of a $14.3 million borrowing
guaranteed by the Company. In June 1993, the loan was refinanced through the
placement of 7.08% Senior Notes (the "Notes"), totaling $13,240,994, with two
insurance company lenders. In July 1996, the Notes, then totaling $11,869,497,
were purchased by the Company. Finally in September 1997 the Plan transferred
the Notes, then totaling $11,346,122, to the ESOP. The Notes were guaranteed by
the Company and were collateralized by the unallocated Preferred Shares. Each
year dividends on the Preferred Shares (allocated and unallocated) and Company
contributions to the Plan have been used to repay the Notes.
The financial statements of the Plan present separately the assets and
liabilities and changes therein pertaining to:
a. The accounts of employees with vested rights in allocated stock
(Allocated) and
b. Stock not yet allocated to employees (Unallocated).
The Plan is administered by the Administrative Committee (the "Committee")
appointed by the Company's Board of Directors. The trust department of UMB Bank,
an independent third-party bank, is the Plan's trustee. The Company has the sole
right to appoint the trustee, and to terminate the Plan, subject to the
provisions of ERISA. The Company pays all significant administrative expenses.
7
<PAGE> 10
Commercial Intertech 401(k) Plan
Notes to Financial Statements--Continued
B. DESCRIPTION OF THE PLAN--CONTINUED
Upon termination of the Plan, amounts credited to each participant's account
shall be 100% vested and nonforfeitable. Additionally, the interest of each
participant in the trust fund will be distributed to such participant or his or
her beneficiary at the time prescribed by the Plan terms and the Code.
The foregoing description of the Plan provides only general information.
Additional information about the Plan agreement, allocation of Preferred Shares,
forfeitures and distributions from the Plan may be obtained from the Committee.
C. SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The accounting records of the Commercial Intertech 401(k) Plan are maintained on
the accrual basis.
VALUATION OF INVESTMENTS
Investments consisting of common shares of Commercial Intertech Corp. and common
shares of CUNO Incorporated (both in the Commercial Intertech Common Stock Fund)
are carried at the closing market price on the last business day of the Plan's
year. Investments consisting of Convertible Series B Preferred Stock were valued
by an independent appraiser using the greater of 3.0227 of the price of Company
common stock as of the last business day of the Plan's year or $23.25, the price
guaranteed to the Plan participants by the Company.
Investments in unallocated insurance contracts (CIGNA Guaranteed Long Term
Account) are valued at contract value as determined by Connecticut General Life
Insurance Company ("CIGNA"). Investments in registered investment company funds
(Fidelity Intermediate Bond, Balanced, U.S. Equity Index and Growth Company
Funds, Benham GNMA Fund, Twentieth Century Strategic Allocation: Conservative,
Moderate, and Aggressive Funds, American Century Value and Equity Growth Funds,
and Twentieth Century Ultra, Vista, and International Growth Funds), and in
common/collective trusts (Benham Stable Asset Fund, Barclays Equity Index Fund)
are carried at the value of their underlying assets as of the last business day
of the Plan's year as determined by their respective Investment Managers.
Participant loans receivable are valued at cost which approximates fair value.
8
<PAGE> 11
Commercial Intertech 401(k) Plan
Notes to Financial Statements--Continued
C. SIGNIFICANT ACCOUNTING POLICIES--CONTINUED
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.
9
<PAGE> 12
Commercial Intertech 401(k) Plan
Notes to Financial Statements--Continued
D. STATEMENTS OF CHANGES IN NET ASSETS OF PARTICIPANT DIRECTED FUNDS
The amount of assets invested in each participant directed fund at the
beginning and end of the Plans' year and changes in assets in each fund during
the year were as follows:
<TABLE>
<CAPTION>
Commercial
Intertech
CIGNA Fidelity Fidelity Fidelity Fidelity Common
Guaranteed Intermediate Balanced U.S. Equity Growth Co. Stock
Account Bond Fund Fund Index Fund Fund Fund
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Additions:
Employee contributions $ 470,422 $ 71,818 $ 169,166 $ 273,971 $ 673,522 $ 268,091
Earnings from investments 382,521 41,351 44,722 40,245 20,139 252,605
------------------------------------------------------------------------------------
Total additions 852,943 113,169 213,888 314,216 693,661 520,696
Deductions:
Distributions 1,005,983 149,310 243,113 180,091 530,618 296,461
Administrative expenses
------------------------------------------------------------------------------------
Total deductions 1,005,983 149,310 243,113 180,091 530,618 296,461
Net realized and unrealized
appreciation (depreciation) (134,150) 26,798 370,866 570,825 1,192,085 2,329,176
Transfers to (from) fund (9,797,893) (987,585) (2,322,284) (3,131,123) (8,034,645) (3,927,495)
------------------------------------------------------------------------------------
Net additions (deductions) (10,085,083) (996,928) (1,980,643) (2,426,173) (6,679,517) (1,374,084)
Net fund assets at beginning
of year 10,085,083 996,928 1,980,643 2,426,173 6,679,517 6,917,076
------------------------------------------------------------------------------------
NET FUND ASSETS AT END OF YEAR $ 0 $ 0 $ 0 $ 0 $ 0 $ 5,542,992
====================================================================================
</TABLE>
<TABLE>
<CAPTION>
Twentieth Twentieth Twentieth
Century Century Century
Benham Strategic Strategic Strategic
Participant Stable Benham Allocation Allocation Allocation
Loans Asset GNMA Conservative Moderate Aggressive
Receivable Fund Fund Fund Fund Fund
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Additions:
Employee contributions $ 153,453 $ 29,595 $ 26,948 $ 69,055 $ 57,708
Earnings from investments $ 56,191 286,106 41,920 28,010 75,692 63,195
---------------------------------------------------------------------------
Total additions 56,191 439,559 71,515 54,958 144,747 120,903
Deductions:
Distributions 3,729 459,290 4,284 3,442 500 3,416
Administrative expenses 701 17 106 27 64
---------------------------------------------------------------------------
Total deductions 3,729 459,991 4,301 3,548 527 3,480
Net realized and unrealized
appreciation (depreciation) 14,858 (11,325) (23,447) (38,473)
Transfers to (from) fund 242,339 8,807,431 1,453,315 454,089 1,398,455 1,228,849
---------------------------------------------------------------------------
Net additions (deductions) 294,801 8,786,999 1,535,387 494,174 1,519,228 1,307,799
Net fund assets at beginning
of year 563,803
---------------------------------------------------------------------------
NET FUND ASSETS AT END OF YEAR $ 858,604 $8,786,999 $1,535,387 $ 494,174 $1,519,228 $1,307,799
===========================================================================
</TABLE>
<TABLE>
<CAPTION>
American Twentieth
Barclays American Century Twentieth Twentieth Century
Equity Century Equity Century Century International
Index Value Growth Ultra Vista Growth
Fund Fund Fund Fund Fund Fund
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Additions:
Employee contributions $ 112,398 $ 86,002 $ 187,515 $ 248,811 $ 46,557 $ 96,952
Earnings from investments 2,104 334,053 530,488 1,105,064 50,331 241,417
---------------------------------------------------------------------------
Total additions 114,502 420,055 718,003 1,353,875 96,888 338,369
Deductions:
Distributions 4,828 4,236 8,394 6,897 495 8,908
Administrative expenses 120 277 272 372 76 258
---------------------------------------------------------------------------
Total deductions 4,948 4,513 8,666 7,269 571 9,166
Net realized and unrealized
appreciation (depreciation) 141,220 (255,311) (250,689) (1,173,109) (165,545) (214,361)
Transfers to (from) fund 2,837,578 1,946,444 4,153,496 5,187,064 835,164 1,598,744
---------------------------------------------------------------------------
Net additions (deductions) 3,088,352 2,106,675 4,612,144 5,360,561 765,936 1,713,586
Net fund assets at beginning
of year
---------------------------------------------------------------------------
NET FUND ASSETS AT END OF YEAR $3,088,352 $2,106,675 $4,612,144 $5,360,561 $ 765,936 $1,713,586
===========================================================================
</TABLE>
<PAGE> 13
Commercial Intertech 401(k) Plan
Notes to Financial Statements--Continued
E. 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 laws. The Plan is amended periodically to conform with
current income tax laws. The Committee is not aware of any action or event that
has occurred that might affect the Plan's qualified status.
F. TRANSACTIONS WITH PARTIES-IN-INTEREST
The Plan purchased shares of common stock of the Company for $1,274,270 and sold
shares of common stock of the Company for $2,447,169 during the year ended
December 31, 1997. The Plan also sold shares of CUNO Incorporated, a former
wholly-owned subsidiary for $1,624,107.
The Plan received dividends on common stock of the Company of $290,410 and
dividends on Preferred Shares of the Company of $538,263 during the year ended
December 31, 1997.
At December 31, 1996, the Plan had a noncash contribution receivable from the
Company of 25,878 shares, of Company common stock with a market value of
$352,588. At December 31, 1997, the Plan had no Company contributions receivable
due to the transfer of the Company matching portion of the Plan to the ESOP.
11
<PAGE> 14
Commercial Intertech 401(k) Plan
Notes to Financial Statements--Continued
G. INVESTMENTS
As of December 31, 1997, the Plan's investments consist of common stock of the
Company, interests in common/collective trusts (Benham Stable Asset Fund,
Barclays Equity Index Fund), interests in a registered investment company
(American Century Investments), amounts in a temporary investment fund, and
loans to participants as follows:
<TABLE>
<CAPTION>
Identity of Issuer Description of Current
or Similar Party Investment Cost Value
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
*Commercial Intertech Corp. 265,291 Common Shares,
$1.00 Par Value $ 2,426,238 ** $ 5,504,788
*American Century Investments Benham Stable Assets Fund 8,786,999 ** 8,786,999
*American Century Investments Benham GNMA Fund 1,521,067 1,535,387
*American Century Investments Twentieth Century Strategic
Allocation: Conservative Fund 506,433 494,174
*American Century Investments Twentieth Century Strategic
Allocation: Moderate Fund 1,542,454 1,519,228
*American Century Investments Twentieth Century Strategic
Allocation: Aggressive Fund 1,346,196 1,307,799
Barclays PLC Bank Barclays Equity Index Fund 2,948,825 ** 3,088,352
*American Century Investments American Century Value Fund 2,359,679 ** 2,106,675
*American Century Investments American Century Equity
Growth Fund 4,863,398 ** 4,612,144
*American Century Investments Twentieth Century Ultra Fund 6,523,964 ** 5,360,561
*American Century Investments Twentieth Century Vista Fund 922,695 765,936
*American Century Investments Twentieth Century International
Growth Fund 1,921,493 1,713,586
*UMB Bank Scout Prime 1 Mutual Fund 38,204 38,204
Participants Loans Receivable 858,604 858,604
====================================
$36,566,249 $37,692,437
====================================
</TABLE>
12
<PAGE> 15
Commercial Intertech 401(k) Plan
Notes to Financial Statements--Continued
G. INVESTMENTS--CONTINUED
As of December 31, 1996, the Plan's investments consisted of common and
Preferred Shares of the Company, common shares of CUNO Incorporated, interests
in a registered investment company (Fidelity Management Trust Company),
unallocated insurance contracts (CIGNA Guaranteed Long Term Account), amounts in
a short-term investment fund, and loans to participants as follows:
<TABLE>
<CAPTION>
Identity of Issuer Description of Current
or Similar Party Investment Cost Value
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
*Commercial Intertech Corp. 598,229 Common Shares,
$1.00 Par Value $ 4,207,538 ** $ 8,150,870
*Commercial Intertech Corp. 196,741 Convertible Series B
Preferred Shares-Allocated 4,574,238 ** 8,102,658
*Commercial Intertech Corp. 400,908 Convertible Series B
Preferred Shares-Unallocated 9,321,111 ** 16,511,115
CUNO Incorporated 110,453 Common Shares,
$.001 Par Value 858,436 1,642,988
Connecticut General Life Guaranteed Long Term Account
Insurance Company (effective yield 5.65%) 10,085,083 ** 10,085,083
Fidelity Mgt. Trust Co. Intermediate Bond Fund 1,017,506 996,928
Fidelity Mgt. Trust Co. Balanced Fund 1,818,112 1,980,643
Fidelity Mgt. Trust Co. U.S. Equity Index Fund 1,780,731 2,426,173
Fidelity Mgt. Trust Co. Growth Company Fund 5,322,628 ** 6,679,517
*LaSalle Nat'l Bank, N.A. Short-Term Investment Fund 4,807,197 ** 4,807,197
Participants Loans Receivable 563,803 563,803
------------------------------------
$44,356,383 $61,946,975
====================================
</TABLE>
* Party-in-interest.
** Investment representing five percent or more of the Plan's net assets
available for benefits.
13
<PAGE> 16
Commercial Intertech 401(k) Plan
Notes to Financial Statements--Continued
G. INVESTMENTS--CONTINUED
The net appreciation (depreciation) (including investments bought, sold and held
during the year) for each significant class of investment for the year ended
December 31, 1997 is as follows:
<TABLE>
<CAPTION>
<S> <C>
Fair value determined by closing market price:
Commercial Intertech Corp. Common Stock:
Participant-Directed Accounts $2,308,870
Company Matching Accounts 799,078
CUNO Incorporated Common Stock:
Participant-Directed Accounts 20,306
Company Matching Accounts 36,284
Fair value determined by other means (see Footnote C):
Fidelity Intermediate Bond Fund 36,253
Fidelity Balanced Fund 336,786
Fidelity U.S. Equity Index Fund 665,248
Fidelity Growth Company Fund 1,272,898
Benham Stable Asset Fund 185,815
Benham GNMA Fund 48,544
American Century Strategic Allocation:
Conservative Fund 17,437
Moderate Fund 47,313
Aggressive Fund 25,755
Barclays Equity Index Fund 169,498
American Century Value Fund 73,616
American Century Equity Growth Fund 277,340
Twentieth Century Ultra Fund (62,070)
Twentieth Century Vista Fund (114,814)
Twentieth Century International Growth Fund 29,409
----------
$6,173,566
==========
</TABLE>
The Company's common stock is publicly traded on the New York Stock Exchange
(ending per share price at December 31, 1997 was $20.750). The Company's
Preferred Shares are not registered or publicly traded. Each Preferred Share was
convertible into 3.0227 shares of common stock at any time subject to
anti-dilution adjustments. Annual dividends on the Preferred Shares were
$1.97625 per share. The Preferred Shares are callable by the Company under
certain conditions specified in the Plan, at the following prices:
14
<PAGE> 17
Commercial Intertech 401(k) Plan
Notes to Financial Statements--Continued
G. INVESTMENTS--CONTINUED
<TABLE>
<CAPTION>
Call Date Call Price
- ----------------------------------------------------------------
<S> <C>
January 1, 1998 $23.63
January 1, 1999 23.44
January 1, 2000 and thereafter 23.25
</TABLE>
H. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
The following is a reconciliation of net assets available for benefits per the
financial statements to the Form 5500:
<TABLE>
<CAPTION>
DECEMBER 31
1997 1996
-------------------------------
<S> <C> <C>
Net assets available for benefits per the
financial statements $37,979,629 $51,080,481
Amounts allocated to withdrawing
participants (777,668) (6,136,752)
==================================
NET ASSETS AVAILABLE FOR BENEFITS PER THE
FORM 5500 $37,201,961 $44,943,729
==================================
</TABLE>
The following is a reconciliation of distributions paid to participants per the
financial statements to the Form 5500:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1997
--------------
<S> <C>
Distributions paid to participants per the financial
statements $ 7,436,127
Add: Amounts allocated to withdrawing participants at
December 31, 1997 777,668
Less: Amounts allocated to withdrawing participants at
December 31, 1996 (6,136,752)
-----------
BENEFITS PAID TO PARTICIPANTS PER THE FORM 5500 $ 2,077,043
===========
</TABLE>
15
<PAGE> 18
Commercial Intertech 401(k) Plan
Notes to Financial Statements--Continued
I. EMPLOYER CONTRIBUTIONS
Effective September 1, 1997, the Company is obligated to make matching
contributions in cash to the ESOP which, when aggregated with the ESOP's
dividends on Preferred Shares and interest earnings, equal the amount necessary
to enable the ESOP to make its regularly scheduled payments of principal and
interest due on its Notes. This contribution enables the ESOP to allocate an
appropriate number of Preferred Shares to participants (see Note B). Should the
value of Preferred Shares allocated be less than the required matching
contribution, the Company will make additional contributions to the ESOP in the
form of common stock or cash. Should the value of Preferred Shares allocated be
more than the required matching contributions, any excess value of Preferred
Shares released over the required amount will be allocated proportionately to
each participant's account in the ESOP based upon the ratio of the participant's
current Company matching contribution to the ESOP for the Plan year to the
aggregate Company matching contributions to the ESOP for all participants for
the Plan year. Prior to September 1, 1997, employer contributions were made to
the Plan on the same basis as described above.
J. YEAR 2000 ISSUE (UNAUDITED)
The Plan Sponsor has developed a plan to modify its internal information
technology to be ready for the year 2000 and has begun converting critical data
processing systems. The project also includes determining whether third party
service providers have reasonable plans in place to become year 2000 compliant.
The Plan Sponsor currently expects the project to be substantially complete by
early 1999. The Plan Sponsor does not expect this project to have a significant
effect on the Plan's operations.
16
<PAGE> 19
<TABLE>
1
Commercial Intertech 401(k) Plan
Item 27(a)--Schedule of Assets Held for Investment Purposes
December 31, 1997
<CAPTION>
Identity of Issue Description of Current
or Similar Party Investment Cost Value
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
* Commercial Intertech Corp. 265,291 Common Shares,
$1.00 Par Value $ 2,426,238 $ 5,504,788
* American Century Investments Benham Stable Asset Fund 8,786,999 8,786,999
* American Century Investments Benham GNMA Fund 1,521,067 1,535,387
* American Century Investments Twentieth Century Strategic
Allocation: Conservative Fund 506,433 494,174
* American Century Investments Twentieth Century Strategic
Allocation: Moderate Fund 1,542,454 1,519,228
* American Century Investments Twentieth Century Strategic
Allocation: Aggressive Fund 1,346,196 1,307,799
Barclays PLC Bank Barclays Equity Index Fund 2,948,825 3,088,352
* American Century Investments American Century Value Fund 2,359,679 2,106,675
* American Century Investments American Century Equity
Growth Fund 4,863,398 4,612,144
* American Century Investments Twentieth Century Ultra Fund 6,523,964 5,360,561
* American Century Investments Twentieth Century Vista Fund 922,695 765,936
* American Century Investments Twentieth Century International
Growth Fund 1,921,493 1,713,586
* UMB Bank Scout Prime 1 Mutual Fund 38,204 38,204
Participants Loans Receivable 0 858,604
==============================
$35,707,645 $37,692,437
==============================
</TABLE>
* Party-in-interest
17
<PAGE> 20
Commercial Intertech 401(k) Plan
Item 27(d)--Schedule of Reportable Transactions
Year Ended December 31, 1997
<TABLE>
<CAPTION>
Current Value
of Asset on Net
Identity of Description Purchase Sales Cost of Transaction Gain
Party Involved of Assets Price Price Asset Date (Loss)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SINGLE TRANSACTIONS + 5%
Fidelity Management Trust Co. Fidelity U.S. Equity Index $ 3,804,919 $ 2,535,984 $ 3,804,919 $ 1,268,935
Fund
Fidelity Management Trust Co. Fidelity Growth Company Fund 8,129,727 5,538,448 8,129,727 2,591,279
American Century Investments Benham Stable Asset Fund $10,521,551 10,521,551 10,521,551
American Century Investments American Century Equity
Growth Fund 3,433,096 3,433,096 3,433,096
American Century Investments Twentieth Century Ultra Fund 4,165,694 4,165,694 4,165,694
LaSalle National Bank, N.A. Short Term Investment Fund 8,129,727 8,129,727 8,129,727
LaSalle National Bank, N.A. Short Term Investment Fund 3,804,919 3,804,919 3,804,919
LaSalle National Bank, N.A. Short Term Investment Fund 8,132,619 8,132,619 8,132,619
LaSalle National Bank, N.A. Short Term Investment Fund 3,810,053 3,810,053 3,810,053
SERIES OF TRANSACTIONS + 5%
American Century Investments Benham Stable Asset Fund 10,955,668 12,312,202 12,312,202 23,267,870
American Century Investments Benham GNMA Fund 1,604,048 1,555,447 1,555,007 3,159,495 440
Barclays PLC Bank Barclays Equity Index Fund 3,034,089 2,838,599 2,836,906 5,872,688 1,693
American Century Investments American Century Value Fund 2,123,226 2,025,233 2,027,540 4,148,459 (2,307)
American Century Investments American Century Equity
Growth Fund 4,469,077 4,180,399 4,179,834 8,649,476 565
American Century Investments Twentieth Century Ultra Fund 5,605,685 5,061,716 5,071,421 10,667,401 (9,705)
American Century Investments Twentieth Century
International Growth Fund 1,894,311 1,911,503 1,917,956 3,805,813 (6,453)
Commercial Intertech Corp. Common Stock 6,599,641 4,547,107 4,209,454 13,146,748 (337,653)
</TABLE>
18
<PAGE> 21
<TABLE>
Commercial Intertech 401(k) Plan
Audited Financial Statements and Schedules
December 31, 1997 and 1996
CONTENTS
<CAPTION>
<S> <C>
REQUIRED INFORMATION
Report of Independent Auditors .................................................................. 1
FINANCIAL STATEMENTS PROVIDED
Statements of Net Assets Available for Plan Benefits ............................................ 2
Statement of Changes in Net Assets Available for Plan Benefits .................................. 3
Notes to Financial Statements ................................................................... 4
SCHEDULES
Item 27(a)--Schedule of Assets Held for Investment Purposes ...................................... 17
Item 27(d)--Schedule of Reportable Transactions................................................... 18
</TABLE>
<PAGE> 22
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: June 29, 1998 Commercial Intertech
401(k) Plan
By: James M. Donchess
-----------------------------
James M. Donchess
Corporate Attorney, Benefits
<PAGE> 1
EXHIBIT 23
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statement (Form
S-8 No. 33-43907) pertaining to the Commercial Intertech 401(k) Plan of our
report dated June 24, 1998, with respect to the financial statements and
schedules of the Commercial Intertech 401(k) Plan included in this Annual Report
(Form 11-K) for the year ended December 31, 1997.
Ernst & Young LLP
Cleveland, Ohio
June 24, 1998
