<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, 1998
Commission File No. 1-10697
NON-QUALIFIED STOCK PURCHASE PLAN OF
COMMERCIAL INTERTECH CORP.
COMMERCIAL INTERTECH CORP.
1775 Logan Avenue
Youngstown, Ohio 44505
<PAGE> 2
Audited Financial Statements
NON-QUALIFIED STOCK PURCHASE PLAN OF
COMMERCIAL INTERTECH CORP.
Years Ended December 31, 1998, 1997, and
1996
<PAGE> 3
Non-Qualified Stock Purchase Plan of Commercial Intertech Corp.
Audited Financial Statements
Years Ended December 31, 1998, 1997, and 1996
CONTENTS
REQUIRED INFORMATION
Report of Independent Auditors .......................................... 1
Statements of Net Assets-December 31, 1998 and 1997...................... 2
Statements of Changes in Net Assets-Years Ended December 31, 1998,
1997, and 1996 ...................................................... 3
Notes to Financial Statements ........................................... 4
EXHIBITS
Consent of Independent Auditors ......................................... 9
<PAGE> 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, 1998 and
1997, and the related statements of changes in net assets for each of the three
years in the period ended December 31, 1998. 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, 1998 and 1997, and the changes in
its net assets for each of the three years in the period ended December 31,
1998, 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 15, 1999
1
<PAGE> 5
Non-Qualified Stock Purchase Plan of Commercial Intertech Corp.
Statements of Net Assets
<TABLE>
<CAPTION>
DECEMBER 31, 1998 DECEMBER 31, 1997
------------------------------------------ -------------------------------------------------
COMMERCIAL COMMERCIAL
INTERTECH INTERTECH
CORP. CORP.
MONEY COMMON MONEY COMMON
MARKET STOCK MARKET STOCK
FUND FUND TOTAL FUND FUND TOTAL
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Cash $ 4,579 $ 4,579
Accrued interest receivable $ 222 $ 5 $ 227 $ 314 314
Company contributions receivable 1,640 2,125 3,765
Employee contributions receivable 3,296 4,297 7,593
--------------------------------------------------------------------------------------
5,158 6,427 11,585 314 4,579 4,893
Investments:
Money Market Fund 55,609 46 55,655 50,316 50,316
Investment in CIC stock 44,869 44,869 71,006 71,006
--------------------------------------------------------------------------------------
55,609 44,915 100,524 50,316 71,006 121,322
--------------------------------------------------------------------------------------
Total assets 60,767 51,342 112,109 50,630 75,585 126,215
LIABILITIES
Distributions payable to participants 60,767 50,523 111,290 50,630 75,405 126,035
Payable to the Company 819 819 180 180
--------------------------------------------------------------------------------------
Total liabilities 60,767 51,342 112,109 50,630 75,585 126,215
--------------------------------------------------------------------------------------
NET ASSETS $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
======================================================================================
</TABLE>
See notes to financial statements.
2
<PAGE> 6
Non-Qualified Stock Purchase Plan of Commercial Intertech Corp.
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
For the Year Ended
December 31, 1998 December 31, 1997
---------------------------------------------------------------------------------------
Commercial Commercial
Intertech Intertech
Corp. Corp.
Money Common Money Common
Market Stock Market Stock
Fund Fund Total Fund Fund Total
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Contributions:
Company $ 19,708 $ 24,128 $ 43,836 $ 16,360 $ 17,446 $ 33,806
Employee 39,662 48,795 88,457 32,720 35,421 68,141
---------------------------------------------------------------------------------------
59,370 72,923 132,293 49,080 52,867 101,947
Net investment income:
Interest and dividends 1,397 1,019 2,416 1,550 1,014 2,564
Other expenses (168) (168)
---------------------------------------------------------------------------------------
1,397 851 2,248 1,550 1,014 2,564
Realized gain (loss) on distribution 15,233 15,233 17,229 17,229
Realized gain on sales of assets 40 40 21 21
Unrealized appreciation (depreciation) in
aggregate current value of investments (44,068) (44,068) 3,955 3,955
Decrease (increase) in Company payable (639) (639) 50 50
Transfers to (from) plan (177) (177)
---------------------------------------------------------------------------------------
Net assets available for distribution 60,767 44,163 104,930 50,630 75,136 125,766
Distributions payable to participants 60,767 44,163 104,930 50,630 75,136 125,766
---------------------------------------------------------------------------------------
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
=======================================================================================
<CAPTION>
December 31, 1996
--------------------------------------------------
Commercial
Intertech
Corp.
Money Common
Market Stock
Fund Fund Total
--------------------------------------------------
<S> <C> <C> <C>
Contributions:
Company $ 19,160 $ 20,437 $ 39,597
Employee 38,320 41,458 79,778
---------------------------------------
57,480 61,895 119,375
Net investment income:
Interest and dividends 1,587 823 2,410
Other expenses (124) (124)
---------------------------------------
1,587 699 2,286
Realized gain (loss) on distribution (272) (272)
Realized gain on sales of assets
Unrealized appreciation (depreciation) in
aggregate current value of investments 20,330 20,330
Decrease (increase) in Company payable (36) (36)
Transfers to (from) plan
----------------------------------------
Net assets available for distribution 59,067 82,616 141,683
Distributions payable to participants 59,067 82,616 141,683
----------------------------------------
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
========================================
</TABLE>
See notes to financial statements.
3
<PAGE> 7
Non-Qualified Stock Purchase Plan of Commercial Intertech Corp.
Notes to Financial Statements
Years Ended December 31, 1998, 1997, and 1996
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
Plan's year. Investments consist of common shares of Commercial Intertech Corp.
(the "Company" or "CIC") 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
Commercial Intertech Corp. Common Stock Fund ("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.
4
<PAGE> 8
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 $160,000, as adjusted in accordance with Section
401(a)(17) of the Internal Revenue Code. 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 $160,000, 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 that are employees of the Company and its domestic subsidiaries may
elect to contribute to either the Stock Fund or the Money Market Fund.
Participants that are employees of foreign subsidiaries of the Company may
contribute to the Stock Fund only. Employee and Company contributions are
allocated directly to each participant's account and vest immediately. For the
Stock Fund, the monthly allocation of shares to a participant's account is 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. 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.
5
<PAGE> 9
Non-Qualified Stock Purchase Plan of Commercial Intertech Corp.
Notes to Financial Statements - Continued
B. DESCRIPTION OF THE PLAN-CONTINUED
In 1998, 7 employees participated in the Money Market Fund and 10 employees
participated in the Stock Fund. In 1997, 6 employees participated in the Money
Market Fund and 8 employees participated in the Stock Fund. In 1996, 6 employees
participated in the Money Market Fund and 9 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 or intends to distribute all earnings for 1998,
1997, and 1996, 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, 1998, 1997, and 1996. The Plan received dividends
of $959, $1,014 and $823 on this stock during 1998, 1997, and 1996,
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.
6
<PAGE> 10
Non-Qualified Stock Purchase Plan of Commercial Intertech Corp.
Notes to Financial Statements - Continued
E. 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
June 1999. The Plan Sponsor does not expect this project to have a significant
effect on Plan operations.
7
<PAGE> 11
F. INVESTMENTS
<TABLE>
<CAPTION>
Identity of Issue Borrower, Description of Current
Lessor or Similar Party Investment Cost Value
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
DECEMBER 31, 1998
Commercial Intertech Corp. Common Stock Fund:
*Commercial Intertech Corp. ** 3,468 common shares
$12.938 per share $ 67,302 $ 44,869
Federated Investors Inc. Trust for
U.S. Treasury Obligations **46 shares 46 46
Money Market Fund:
Federated Investors Inc.:
Trust for U. S. Treasury Obligations
Treasury Obligations Fund ** 55,609 shares 55,609 55,609
-------------------------
$ 122,957 $ 100,524
=========================
DECEMBER 31, 1997
Commercial Intertech Corp. Common Stock Fund:
*Commercial Intertech Corp. ** 3,422 common shares
$20.750 per share $ 49,371 $ 71,006
CUNO Incorporated
Money Market Fund:
Federated Investors Inc. Trust for U.S. Treasury
Obligations ** 50,316 shares 50,316 50,316
-------------------------
$ 99,687 $ 121,322
=========================
<CAPTION>
Sales and Distributions of Investments
During the Year Ended
---------------------------------------------------
Identity of Issue Borrower, Aggregate Market Realized
Lessor or Similar Party Cost Value Gain (Loss)
- -------------------------------------------------------- ----------------- ---------------------------------
<S> <C> <C> <C>
DECEMBER 31, 1998
Commercial Intertech Corp. Common Stock Fund:
*Commercial Intertech Corp. $ 53,946 $ 69,219 $ 15,273
Federated Investors Inc. Trust for
U.S. Treasury Obligations 67,290 67,290 0
Money Market Fund:
Federated Investors Inc.:
Trust for U. S. Treasury Obligations 50,521 50,521 0
Treasury Obligations Fund 1 1 0
DECEMBER 31, 1997
Commercial Intertech Corp. Common Stock Fund:
*Commercial Intertech Corp. $ 38,835 $ 47,534 $ 8,699
CUNO Incorporated 23,816 32,367 8,551
Money Market Fund:
Federated Investors Inc. Trust for U.S. Treasury
Obligations 59,067 59,067 0
</TABLE>
* 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), depreciated $44,068 in 1998, and appreciated
$10,020 and $14,277 in 1997 and 1996 respectively. The fair value of
the Plan's investment in CUNO Incorporated common stock decreased
$6,065 as a result of distribution in 1997 and appreciated $6,053 in
1996.
8
<PAGE> 12
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 15, 1999, 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, 1998.
Ernst & Young LLP
Cleveland, Ohio
March 19, 1999
9
<PAGE> 13
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 26, 1999 Non-Qualified Stock Purchase Plan
of Commercial Intertech Corp.
By: James M. Donchess
------------------------------
James M. Donchess
Corporate Attorney, Benefits
