<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, 1999
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, 1999, 1998, and 1997
<PAGE> 3
Non-Qualified Stock Purchase Plan of Commercial Intertech Corp.
Audited Financial Statements
Years Ended December 31, 1999, 1998, and 1997
CONTENTS
<TABLE>
<CAPTION>
<S> <C>
REQUIRED INFORMATION
Report of Independent Auditors .............................................. 1
Statements of Net Assets--December 31, 1999 and 1998 ........................ 2
Statements of Changes in Net Assets--Years Ended December 31, 1999,
1998, and 1997 .......................................................... 3
Notes to Financial Statements ............................................... 4
EXHIBITS
Consent of Independent Auditors ............................................. 9
</TABLE>
<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, 1999 and
1998, and the related statements of changes in net assets for each of the three
years in the period ended December 31, 1999. 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 auditing standards generally accepted
in the United States. 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, 1999 and 1998, and the changes in
its net assets for each of the three years in the period ended December 31,
1999, in conformity with accounting principles generally accepted in the United
States.
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.
/s/ Ernst & Young LLP
Cleveland, Ohio
March 23, 2000
1
<PAGE> 5
Non-Qualified Stock Purchase Plan of Commercial Intertech Corp.
Statements of Net Assets
<TABLE>
<CAPTION>
DECEMBER 31, 1999 DECEMBER 31, 1998
---------------------------------- --------------------------------------
COMMERCIAL COMMERCIAL
INTERTECH INTERTECH
CORP. CORP.
MONEY COMMON MONEY COMMON
MARKET STOCK MARKET STOCK
FUND FUND TOTAL FUND FUND TOTAL
--------------------------------------------------------------------------------
ASSETS
<S> <C> <C> <C> <C> <C> <C>
Accrued interest receivable $ 221 $ 16 $ 237 $ 222 $ 5 $ 227
Company contributions receivable 1,640 2,125 3,765
Employee contributions receivable 3,296 4,297 7,593
--------------------------------------------------------------------------------
221 16 237 5,158 6,427 11,585
Investments:
Money Market Fund 55,540 6,417 61,957 55,609 46 55,655
Investment in CIC stock 72,382 72,382 44,869 44,869
--------------------------------------------------------------------------------
55,540 78,799 134,339 55,609 44,915 100,524
--------------------------------------------------------------------------------
Total assets 55,761 78,815 134,576 60,767 51,342 112,109
LIABILITIES
Distributions payable to participants 55,761 78,616 134,377 60,767 50,523 111,290
Payable to the Company 199 199 819 819
--------------------------------------------------------------------------------
Total liabilities 55,761 78,815 134,576 60,767 51,342 112,109
--------------------------------------------------------------------------------
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, 1999 DECEMBER 31, 1998
---------------------------------------- ------------------------------------------
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 $ 18,125 $ 26,991 $ 45,116 $ 19,708 $ 24,128 $ 43,836
Employee 36,250 54,171 90,421 39,662 48,795 88,457
--------------------------------------------------------------------------------
54,375 81,162 135,537 59,370 72,923 132,293
Net investment income:
Interest and dividends 1,386 1,756 3,142 1,397 1,019 2,416
Other expenses (292) (292) (168) (168)
--------------------------------------------------------------------------------
1,386 1,464 2,850 1,397 851 2,248
Realized gain (loss) on distribution (19,290) (19,290) 15,233 15,233
Realized gain (loss) on sales of assets (20) (20) 40 40
Unrealized appreciation (depreciation) in
aggregate current value of investments 18,366 18,366 (44,068) (44,068)
Decrease (increase) in Company payable 620 620 (639) (639)
Transfers to (from) plan (177) (177)
--------------------------------------------------------------------------------
Net assets available for distribution 55,761 82,302 138,063 60,767 44,163 104,930
Distributions payable to participants 55,761 82,302 138,063 60,767 44,163 104,930
--------------------------------------------------------------------------------
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
================================================================================
DECEMBER 31, 1997
------------------------------------
COMMERCIAL
INTERTECH
CORP.
MONEY COMMON
MARKET STOCK
FUND FUND TOTAL
------------------------------------
<S> <C> <C> <C>
Contributions:
Company $ 16,360 $ 17,446 $ 33,806
Employee 32,720 35,421 68,141
-------------------------------------
49,080 52,867 101,947
Net investment income:
Interest and dividends 1,550 1,014 2,564
Other expenses
-------------------------------------
1,550 1,014 2,564
Realized gain (loss) on distribution 17,229 17,229
Realized gain (loss) on sales of assets 21 21
Unrealized appreciation (depreciation) in
aggregate current value of investments 3,955 3,955
Decrease (increase) in Company payable 50 50
Transfers to (from) plan
-------------------------------------
Net assets available for distribution 50,630 75,136 125,766
Distributions payable to participants 50,630 75,136 125,766
-------------------------------------
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, 1999, 1998, and 1997
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 (Match Participants). Eligible employees
also include employees, as designated by the senior administrative officer of
the company, of foreign subsidiaries of the Company (Overseas Participants), and
effective January 1, 1999, highly compensated participants in the Commercial
Intertech Retirement Plan (Retirement Plan Participants).
Match Participants and Overseas Participants may elect to contribute up to 15%
of their 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. The Company will make a
contribution to each such participant's account equal to 50% of the
participant's contributions, up to a maximum of 3% of the participant's eligible
compensation.
For eligible Retirement Plan Participants, the Company will contribute an amount
equal to 150% of the difference between (1) the actual amount of the employer
pay based contribution allocation to the account of the employee in the
retirement plan for the year just ended, and (2) the amount of the employer pay
based contribution allocation that such employee would have received for the
year just ended had such contribution allocation not been limited by Treasury
regulations under Code Section 401(a)(4) concerning non-discrimination in the
amount of contributions.
Match Participants and Retirement Plan Participants may elect to contribute to
either the Stock Fund or the Money Market Fund. Overseas participants 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.
5
<PAGE> 9
Non-Qualified Stock Purchase Plan of Commercial Intertech Corp.
Notes to Financial Statements--Continued
B. DESCRIPTION OF THE PLAN--CONTINUED
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.
In 1999, 5 employees participated in the Money Market Fund and 11 employees
participated in the Stock Fund. 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.
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 1999,
1998, and 1997, it has no federal income tax liability for such years.
6
<PAGE> 10
Non-Qualified Stock Purchase Plan of Commercial Intertech Corp.
Notes to Financial Statements--Continued
D. TRANSACTIONS WITH PARTIES-IN-INTEREST
The Plan purchased shares of common stock of Commercial Intertech Corp. during
the years ended December 31, 1999, 1998, and 1997. The Plan received dividends
of $1,693, $959 and $1,014 on this stock during 1999, 1998, and 1997,
respectively.
E. SUBSEQUENT EVENT
On January 17, 2000, Commercial Intertech and Parker-Hannifin Corporation
("Parker") announced that their Boards of Directors had approved a definitive
agreement to merge in a cash and stock transaction whereby Parker would acquire
all outstanding stock of Commercial Intertech Corp. for $20.00 per share.
Commercial Intertech shareholders will receive Parker common stock based on an
exchange ratio that will be determined by the twenty-day average of Parker's
closing price as determined five days immediately preceding the closing date of
the merger. Alternatively, shareholders may elect to receive $20.00 per share in
cash, subject to a maximum of 49 percent of the value of the total shares
acquired by Parker. The transaction will be accounted for by the purchase method
of accounting for business combinations and is expected to be tax-deferred for
that portion of the purchase price received in Parker common stock. The merger,
which is anticipated to close in April 2000, is subject to approval of the
shareholders of Commercial Intertech Corp.; regulatory approvals in the United
States, Europe and other countries; and other closing conditions.
On March 22, 2000, the Board of Directors of Commercial Intertech Corp. approved
the termination of the Plan contingent upon the closing of the above referenced
transaction. All amounts will be distributed to participants upon termination.
<PAGE> 11
Non-Qualified Stock Purchase Plan of Commercial Intertech Corp.
Notes to Financial Statements--Continued
F. INVESTMENTS
<TABLE>
<CAPTION>
Identity of Issue Borrower, Description of Current
Lessor or Similar Party Investment Cost Value
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
DECEMBER 31, 1999
Commercial Intertech Corp. Common Stock Fund:
*Commercial Intertech Corp. ** 5,677 common shares
$12.750 per share $ 76,449 $ 72,382
Federated Investors Inc:
Treasury Obligations Fund ** 6,417 shares 6,417 6,417
Money Market Fund:
Federated Investors Inc.:
Treasury Obligations Fund ** 55,540 shares 55,540 55,540
-------------------------
$ 138,406 $ 134,339
=========================
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:
Treasury Obligations Fund ** 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
=========================
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, 1999
Commercial Intertech Corp. Common Stock Fund:
*Commercial Intertech Corp.
$ 73,822 $ 54,512 $ (19,310)
Federated Investors Inc:
Treasury Obligations Fund 83,057 83,057 0
Money Market Fund:
Federated Investors Inc.:
Treasury Obligations Fund 60,767 60,767 0
DECEMBER 31, 1998
Commercial Intertech Corp. Common Stock Fund:
*Commercial Intertech Corp.
$ 53,946 $ 69,219 $ 15,273
Federated Investors Inc:
Treasury Obligations Fund 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
</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), appreciated $18,366 in 1999, depreciated $44,068
in 1998 and appreciated $10,020 in 1997. The fair value of the Plan's
investment in CUNO Incorporated common stock decreased $6,065 as a
result of distribution in 1997.
8
<PAGE> 12
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 18, 2000 Non-Qualified Stock Purchase Plan
of Commercial Intertech Corp.
By: /s/ 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. 33-25795) pertaining to the Non-Qualified Stock Purchase Plan of
Commercial Intertech Corp. and in the related Prospectus of our report dated
March 23, 2000, 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, 1999.
/s/ Ernst & Young LLP
Cleveland, Ohio
March 23, 2000
