SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________________
FORM 11-K
(Mark One)
[X] Annual Report pursuant to Section 15 (d) of the
Securities Exchange Act of 1934
For the fiscal year ended December 31, 1997
OR
[ ] Transition report pursuant to Section 15 (d) of the
Securities Exchange Act of 1934
For the transition period from ________ to _________
Commission file number 1-4663
A. Full title of the Plan and the address of the Plan, if
different from that of the issuer named below:
CROMPTON & KNOWLES CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
B. Name of issuer of the securities held pursuant to the
Plan and the address of its principal executive
office:
Crompton & Knowles Corporation
One Station Place - Metro Center
Stamford, Connecticut 06902
CROMPTON & KNOWLES CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
Index to Financial Statements and Exhibit
Independent Auditors' Report
Statement of Net Assets Available for Plan Benefits as of
December 31, 1997 and 1996
Statement of Changes in Net Assets Available for Plan Benefits
as of December 31, 1997 and 1996
Notes to Financial Statements
Item 27(a) Schedule of Assets Held for Investment Purposes
as of December 31, 1997
Item 27(d) Schedule of 5% Reportable Transactions for the
Year Ended December 31, 1997
Signature
Exhibit 23 - Consent of KPMG Peat Marwick LLP, Independent
Auditors
CROMPTON & KNOWLES CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
Financial Statements and Schedules
December 31, 1997 and 1996
(With Independent Auditors' Report Thereon)
CROMPTON & KNOWLES CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
Index
Independent Auditors' Report
Statement of Net Assets Available for Plan Benefits as of
December 31, 1997 and 1996
Statement of Changes in Net Assets Available for Plan Benefits
as of December 31, 1997 and 1996
Notes to Financial Statements
Schedule
Item 27(a) Schedule of Assets Held for Investment Purposes
as of December 31, 1997.................................. 1
Item 27(d) Schedule of 5% Reportable Transactions for the
Year Ended December 31, 1997............................. 2
Independent Auditors' Report
The Board of Directors
Crompton & Knowles Corporation:
We have audited the accompanying statements of net assets
available for plan benefits of Crompton & Knowles Corporation
Employee Stock Ownership Plan (the "Plan") as of December 31,
1997 and 1996, and the related statements of changes in net
assets available for plan benefits for the years 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 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 as of December 31, 1997 and 1996, and
the changes in net assets available for plan benefits for the
years then ended, in conformity with generally accepted
accounting principles.
Our audits were performed for the purpose of forming an opinion
on the basic financial statements taken as a whole. The
supplemental schedules of Assets Held for Investment Purposes and
Reportable (5%) Transactions are presented for the purpose 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. These supplemental schedules are the responsibility of
the Plan's management. The fund information in the statements of
net assets available for plan benefits and the statements of
changes in net assets available for plan benefits is presented
for purposes of additional analysis rather than to present the
net assets available for plan benefits and changes in net assets
available for plan benefits of each fund. The supplemental
schedules and fund information have been subjected to the
auditing procedures applied in the audits 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/KPMG Peat Marwick LLP
Stamford, Connecticut
June 23, 1998
CROMPTON & KNOWLES CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
Statements of Net Assets Available for Plan Benefits
December 31, 1997 and 1996
1997 C&K Fixed Stable Galaxy
Stock Income Asset Asset Alloc
Fund Fund Fund Fund
Investments:
Common stock of
Crompton & Knowles
Corporation -
1,979,063 shares
at market value
(cost $17,239,682)
in 1997 and
2,034,175 shares
at market value
(cost $16,360,444)
in 1996 $ 52,445,170 $ - $ - $ -
Hartford Life
Insurance Co.
group annuity
contract - 11,165,578 - -
Fleet Stable
Asset Fund - - 5,745,651 -
Galaxy Asset
Allocation Fund - - - 2,013,379
Galaxy Growth &
Income Fund - - - -
Fidelity Advisor
Government
Investment Fund - - - -
U S Treasury Note
- 5.75% due
9/30/97 (cost
$1,949,115) - - - -
Cash and short-term
investments at cost,
which approximates
market 284,031 - 23,733 11,472
Contributions
receivable
from participants 142,413 - 30,856 15,444
Contribution
receivable
from Crompton
& Knowles
Corporation 233,579 - - -
Accrued income - 53,967 30,117 -
Plan assets
available for plan
benefits $ 53,105,193 $ 11,219,545 $ 5,830,357 $ 2,040,295
Galaxy Fidelity Putnam Putnam
Growth & Advisors of Boston Voyager
Income Fund Fund Fund Fund
Investments:
Common stock of
Crompton & Knowles
Corporation -
1,979,063 shares
at market value
(cost $17,239,682)
in 1997 and
2,034,175 shares
at market value
(cost $16,360,444)
in 1996 $ - $ - $ - $ -
Hartford Life
Insurance Co.
group annuity
contract - - - -
Fleet Stable
Asset Fund - - - -
Galaxy Asset
Allocation Fund - - - -
Galaxy Growth &
Income Fund 9,863,013 - - -
Fidelity Advisor
Government
Investment Fund - 392,421 - -
U S Treasury Note
- 5.75% due
9/30/97 (cost
$1,949,115) - - - -
Cash and short-term
investments at cost,
which approximates
market 31,883 4,707 9,846 21,219
Contributions
receivable
from participants 42,262 5,725 13,005 28,881
Contribution
receivable
from Crompton
& Knowles
Corporation - - - -
Accrued income - - - -
Plan assets
available for plan
benefits $ 9,937,158 $ 402,853 $ 22,851 $ 50,100
Putnam Invesco Galaxy Galaxy
International Industrial Large Co. Small Cap
Fund Income Fund Index Fund Value Fund
Investments:
Common stock of
Crompton & Knowles
Corporation -
1,979,063 shares
at market value
(cost $17,239,682)
in 1997 and
2,034,175 shares
at market value
(cost $16,360,444)
in 1996 $ - $ - $ - $ -
Hartford Life
Insurance Co.
group annuity
contract - - - -
Fleet Stable
Asset Fund - - - -
Galaxy Asset
Allocation Fund - - - -
Galaxy Growth &
Income Fund - - - -
Fidelity Advisor
Government
Investment Fund - - - -
U S Treasury Note
- 5.75% due
9/30/97 (cost
$1,949,115) - - - -
Cash and short-term
investments at cost,
which approximates
market 13,704 11,558 27,677 31,354
Contributions
receivable
from participants 18,340 15,077 36,866 42,166
Contribution
receivable
from Crompton
& Knowles
Corporation - - - -
Accrued income - - - -
Plan assets
available for plan
benefits $ 32,044 $ 26,635 $ 64,543 $ 73,520
Total
Investments:
Common stock of
Crompton & Knowles
Corporation -
1,979,063 shares
at market value
(cost $17,239,682)
in 1997 and
2,034,175 shares
at market value
(cost $16,360,444)
in 1996 $ 52,445,170
Hartford Life
Insurance Co.
group annuity
contract 11,165,578
Fleet Stable
Asset Fund 5,745,651
Galaxy Asset
Allocation Fund 2,013,379
Galaxy Growth &
Income Fund 9,863,013
Fidelity Advisor
Government
Investment Fund 392,421
U S Treasury Note
- 5.75% due
9/30/97 (cost
$1,949,115) -
Cash and short-term
investments at cost,
which approximates
market 471,184
Contributions
receivable
from participants 391,035
Contribution
receivable
from Crompton
& Knowles
Corporation 233,579
Accrued income 84,084
Plan assets
available for plan
benefits $ 82,805,094
See accompanying notes to financial statements
1996
C&K Fixed Equity Advisers
Stock Fund Income Fund Fund Fund
Investments:
Common stock of
Crompton & Knowles
Corporation -
1,979,063 shares
at market value
(cost $17,239,682)
in 1997 and
2,034,175 shares
at market value
(cost $16,360,444)
in 1996 $ 39,157,869 $ - $ - $ -
Hartford Life
Insurance Co.
group annuity
contract - 14,481,933 7,595,484 1,304,476
Fleet Stable
Asset Fund - - - -
Galaxy Asset
Allocation Fund - - - -
Galaxy Growth &
Income Fund - - - -
Fidelity Advisor
Government
Investment Fund - - - -
U S Treasury Note
- 5.75% due
9/30/97 (cost
$1,949,115) - 1,957,361 - -
Cash and short-term
investments at cost,
which approximates
market 25,266 688 510 210
Contributions
receivable
from participants 266,818 62,986 47,978 17,223
Contribution
receivable
from Crompton
& Knowles
Corporation
Accrued income - 28,706 - -
Plan assets
available for plan
benefits $ 39,449,953 $ 16,531,674 $ 7,643,972 $ 1,321,909
Mortgage
Fund Total
Investments:
Common stock of
Crompton & Knowles
Corporation -
1,979,063 shares
at market value
(cost $17,239,682)
in 1997 and
2,034,175 shares
at market value
(cost $16,360,444)
in 1996 $ - $ 39,157,869
Hartford Life
Insurance Co.
group annuity
contract 353,485 23,735,378
Fleet Stable
Asset Fund - -
Galaxy Asset
Allocation Fund - -
Galaxy Growth &
Income Fund - -
Fidelity Advisor
Government
Investment Fund - -
U S Treasury Note
- 5.75% due
9/30/97 (cost
$1,949,115) - 1,957,361
Cash and short-term
investments at cost,
which approximates
market 26 26,700
Contributions
receivable
from participants 5,413 400,418
Contribution
receivable
from Crompton
& Knowles
Corporation
Accrued income - 28,706
Plan assets
available for plan
benefits $ 358,924 $ 65,306,432
See accompanying notes to financial statements
CROMPTON & KNOWLES CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
Statements of Changes in Net Assets Available for Plan Benefits
For the Years Ended December 31, 1997 and 1996
1997
C&K Fixed
Stock Income Equity Advisers
Fund Fund Fund Fund
Investment income:
Cash dividends on
investment in common
stock of Crompton &
Knowles Corporation and
interest on short-term
investments $ 106,846 $ 16,710 $ 9,715 $ 1,265
Realized gain on sale
of investments and
withdrawals 2,169,766 4,885 - -
Interest earned - 83,649 - -
Interest earned
- Hartford Life
Insurance Company
group annuity
contract - 668,839 - -
Net investment income 2,276,612 774,083 9,715 1,265
Increase (decrease)
in unrealized
appreciation
of investments 12,408,062 (8,246) 1,954,918 275,655
Contributions:
Employee Rollovers - - - -
Employee 1,437,834 536,628 503,814 190,343
Employer - Net of
forfeitures 2,114,899 - - -
Withdrawals and
Distributions (3,294,729) (1,748,233) (911,604) (140,701)
Employee interfund
transfers (1,287,438) (4,866,361) (9,200,815) (1,648,471)
Net increase/(decrease)13,655,240 (5,312,129) (7,643,972) (1,321,909)
Net assets available
for plan benefits at the
beginning of the year 39,449,953 16,531,674 7,643,972 1,321,909
Net assets available
for plan benefits at the
end of the year $53,105,193 $11,219,545 $ - $ -
Stable Galaxy Galaxy
Mortgage Asset Asset Alloc Growth &
Fund Fund Fund Income Fun
Investment income:
Cash dividends on
investment in common
stock of Crompton &
Knowles Corporation and
interest on short-term
investments $ 250 $ 676 $ - $ -
Realized gain on sale
of investments and
withdrawals - - - -
Interest earned - 55,344 159,953 1,561,371
Interest earned
- Hartford Life
Insurance Company
group annuity
contract - - - -
Net investment income 250 56,020 159,953 1,561,371
Increase (decrease)
in unrealized
appreciation
of investments 25,782 - (126,453) (1,218,262)
Contributions:
Employee Rollovers - - - -
Employee 53,577 177,596 49,126 131,889
Employer - Net of
forfeitures - - - -
Withdrawals and
Distributions (42,258) (825) - -
Employee interfund
transfers (396,275) 5,597,566 1,957,669 9,462,160
Net increase/(decrease) (358,924) 5,830,357 2,040,295 9,937,158
Net assets available
for plan benefits at the
beginning of the year 358,924 - - -
Net assets available
for plan benefits at the
end of the year $ - $ 5,830,357 $ 2,040,295 $ 9,937,158
Fidelity Putnam Putnam Putnam
Advisors of Boston Voyager International
Fund Fund Fund Fund
Investment income:
Cash dividends on
investment in common
stock of Crompton &
Knowles Corporation and
interest on short-term
investments $ - $ - $ - $ -
Realized gain on sale
of investments and
withdrawals - - - -
Interest earned 1,586 - - -
Interest earned
- Hartford Life
Insurance Company
group annuity
contract - - - -
Net investment income 1,586 - - -
Increase (decrease)
in unrealized
appreciation
of investments 2,000 - - -
Contributions:
Employee Rollovers - - - -
Employee 17,302 22,851 50,100 32,044
Employer - Net of
forfeitures - - - -
Withdrawals and
Distributions - - - -
Employee interfund
transfers 381,965 - - -
Net increase/(decrease) 402,853 22,851 50,100 32,044
Net assets available
for plan benefits at the
beginning of the year -
Net assets available
for plan benefits at the
end of the year $ 402,853 $ 22,851 $ 50,100 $ 32,044
Invesco Galaxy Galaxy
Industrial Large Co. Small Cap
Income Fund Index Fund Value Fund Total
Investment income:
Cash dividends on
investment in common
stock of Crompton &
Knowles Corporation and
interest on short-term
investments $ - $ - $ - $ 135,462
Realized gain on sale
of investments and
withdrawals - - - 2,174,651
Interest earned - - - 1,861,903
Interest earned
- Hartford Life
Insurance Company
group annuity
contract - - - 668,839
Net investment income - - - 4,840,855
Increase (decrease)
in unrealized
appreciation
of investments - - - 13,313,456
Contributions:
Employee Rollovers - - - -
Employee 26,635 64,543 73,520 3,367,802
Employer - Net of
forfeitures - - - 2,114,899
Withdrawals and
Distributions - - - (6,138,350)
Employee interfund
transfers - - - -
Net increase/(decrease) 26,635 64,543 73,520 17,498,662
Net assets available
for plan benefits at the
beginning of the year - 65,306,432
Net assets available
for plan benefits at the
end of the year $ 26,635 $ 64,543 $ 73,520 $82,805,094
See accompanying notes to financial statements
1996
C&K Fixed Equity Advisers
Stock Fund Income Fund Fund Fund
Investment income:
Cash dividends on
investment in common
stock of Crompton &
Knowles Corporation and
interest on short-term
investments $ 578,701 $ 1,800 $ 1,882 $ 572
Realized gain on sale
of investments and
withdrawals 1,978,007 - - -
Interest earned - 34,539 - -
Interest earned
- Hartford Life
Insurance Company
group annuity
contract - 1,026,153 - -
Net investment income 2,556,708 1,062,492 1,882 572
Increase (decrease)
in unrealized
appreciation
of investments 10,478,402 8,246 1,263,104 150,395
Contributions:
Employee Rollovers - - - -
Employee 1,522,889 842,652 529,652 202,809
Employer - Net of
forfeitures 2,018,734 - - -
Withdrawals and
Distributions (2,829,299) (2,469,946) (409,757) (124,901)
Employee interfund
transfers (2,587,306) (861,431) 3,028,007 430,257
Net increase/(decrease)11,160,128 (1,417,987) 4,412,888 659,132
Net assets available
for plan benefits at the
beginning of the year 28,289,825 17,949,661 3,231,084 662,777
Net assets available
for plan benefits at the
end of the year $39,449,953 $16,531,674 $ 7,643,972 $ 1,321,909
Mortgage
Fund Total
Investment income:
Cash dividends on
investment in common
stock of Crompton &
Knowles Corporation and
interest on short-term
investments $ 74 $ 583,029
Realized gain on sale
of investments and
withdrawals - 1,978,007
Interest earned - 34,539
Interest earned
- Hartford Life
Insurance Company
group annuity
contract - 1,026,153
Net investment income 74 3,621,728
Increase (decrease)
in unrealized
appreciation
of investments 15,469 11,915,616
Contributions:
Employee Rollovers - -
Employee 73,913 3,171,915
Employer - Net of
forfeitures - 2,018,734
Withdrawals and
Distributions (38,154) (5,872,057)
Employee interfund
transfers (9,527) -
Net increase/(decrease) 41,775 14,855,936
Net assets available
for plan benefits at the
beginning of the year 317,149 50,450,496
Net assets available
for plan benefits at the
end of the year $ 358,924 $65,306,432
See accompanying notes to financial statements
CROMPTON & KNOWLES CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997 and 1996
1. Basis of Presentation
The accompanying financial statements have been prepared on an
accrual basis. Securities transactions are recorded on the trade
date, and dividend income is recorded on the ex-dividend date.
2. Plan Description
The Employee Stock Purchase and Savings Plan was adopted by the
Board of Directors of Crompton & Knowles Corporation (the
"Corporation") on January 27, 1976. Effective July 1, 1989 the
Board of Directors amended the Plan to convert it into an
Employee Stock Ownership Plan (the "Plan"). The following
description of the Plan provides only general information. The
Plan is a defined contribution plan and is subject to the
provisions of the Employee Retirement Income Security Act of 1974
(ERISA).
Fleet Bank (the "Trustee") has been selected by the Company as
custodial trustee. The Trustee has custodial responsibility for a
trust fund on behalf of the Plan and maintains accounting records
for all Plan assets. These assets and changes therein have been
reported to the Plan administrator and certified as complete and
accurate by the trustee.
Eligibility
Employees of participating affiliates of the Company are eligible
to participate upon attaining the age of 18 and having worked for
at least six months.
Contributions and Vesting
The Plan permits an eligible employee to elect to participate by
authorizing a withholding of an amount equal to 1%, 2%, 3%, 4%,
5% or 6% of compensation as the basic contribution to the Plan.
Contributions by the Company to the Plan are made at an amount
equal to 66 2/3% of each participating employee's basic employee
contribution to the Plan. If participants are not eligible for
any other defined contribution plan, additional employee
contributions in 1% increments up to 10% of compensation can be
made as supplemental employee contributions. Supplemental
employee contributions are not eligible for matching Company
contributions.
A participant in the Plan is fully vested in his basic and
supplemental contributions. Employer contributions vest 100% over
a five year period at a rate of 40% after two years of service
and an additional 20% per year thereafter. There were no
forfeitures for 1997 and 1996.
Withdrawals/Benefit Payments
Upon termination, death, or retiring, a participant's account
shall be distributed. However, funds can remain in the Plan after
retirement indefinitely with quarterly withdrawals permitted and
as long as funds begin to be distributed after the participant
reaches the age of 70 1/2.
A participant may elect to make one withdrawal of his basic or
supplemental contributions in a 12 month period. Withdrawal of
basic contributions will cause a suspension of contributions for
a three month period. A participant who is fully vested and has
withdrawn all of his basic and supplemental contributions may
also elect to withdraw all or part of his employer contributions.
Withdrawal of employer contributions will result in a suspension
of contributions for a six month period.
At December 31, 1997 and 1996 benefit payments due employees who
terminated prior to year end and requested distribution of their
accounts totaled $276,000 and $430,000, respectively. These
amounts have not been recorded in the financial statements but
are included as benefit payments and liabilities in the Plan's
Form 5500.
Investments Options
The Company's contribution to the plan is invested in the
Crompton & Knowles Stock Fund (C&K Stock Fund). Prior to November
1, 1997 the Plan provided for investment of employee
contributions in the C&K Stock Fund and among four investment
funds maintained by The Hartford Life Insurance Company: the
Fixed Income Fund, the Equity Fund, the Advisers Fund, and the
Mortgage Fund.
The C&K Stock Fund is a fund invested entirely in common stock of
Crompton & Knowles Corporation. The market value of the common
stock is based on quotations from the New York Stock Exchange.
The Fixed Income Fund is a fund invested under an agreement with
Hartford Life Insurance Company (the "Hartford") pursuant to
which the Hartford guarantees the repayment of principal and the
payment of interest on all amounts on deposit at an effective
annual rate of interest of 5.80% on, and after January 1, 1997,
(6.46% for 1996). Effective November 1, 1997 the agreement with
Hartford was terminated. Payout of the funds will commence in six
equal annual installments with the initial payment on November
1, 1997 and with the rate of interest credited on the declining
balance of 5.80%
The Equity Fund was a pooled separate account maintained by
Hartford with respect to a portion of its assets, in connection
with the contract and other similar contracts issued by the
Hartford. This fund invested primarily in equity securities such
as common stocks and securities convertible into common stock.
The Equity Fund was valued based on a unit value as determined by
the fund manager.
The Advisers Fund was a pooled separate account maintained by
Hartford with respect to a portion of its assets, in connection
with the contract and other similar contracts issued by
Hartford. This fund invested in common stocks, debt securities,
and money market instruments. The Advisers Fund was valued based
on a unit of value as determined by the fund manager.
The Mortgage Fund was a pooled separate account maintained by
Hartford with respect to a portion of its assets, in connection
with the contract and other similar contracts issued by
Hartford. This fund invested in mortgage related securities,
including securities issued by the Government National Mortgage
Association. The Mortgage Fund was valued based on a unit value
as determined by the fund manager.
Effective November 1, 1997 the Hartford Life Insurance Company
funds were terminated and replaced with the following separate
investment options under a program administered by Fleet
Investment Management:
Fleet Stable Asset Fund This fund invests primarily in
guaranteed investment contracts issued by highly rated life
insurance companies.
Fidelity Advisor Government Fund This fund invests
primarily in obligations issued or guaranteed by the U.S.
Government or any of its agencies or instrumentalities.
George Putnam Fund of Boston (Class M shares) This fund's
primary objective is to provide a diversified portfolio of stocks
and bonds that will provide both capital growth and income.
Putnam Voyager Fund (Class M shares) This fund's objective
is to provide capital appreciation by investing in stocks of
companies with above average growth potential.
Putnam International Growth Fund Class M shares This fund
objective is to invest in equity securities of companies located
outside the United States.
Invesco Industrial Income Fund This fund's objective is to
provide income with secondary consideration to capital
appreciation by investing in stocks, bonds and mortgages.
Galaxy Growth and Income Fund This fund's objective is to
provide high total returns through long-term capital appreciation
and income by investing primarily in common stock.
Galaxy Asset Allocation Fund This fund's objective is to
provide a high total return with a combination of income and long
term growth in assets held by investing in equity securities,
fixed income securities and cash equivalents.
Galaxy Large Company Index Fund This fund's objective is to
provide investment results that mirror investment results of U.S.
common stocks with large stock market capitalizations as
represented by the Standard & Poor's 500 Index.
Galaxy Small Cap Value Fund This fund's objective is to
provide long-term capital appreciation by investing in companies
that have market capitalization of up to $1 billion.
At November 1, 1997 amounts invested with Hartford were
automatically invested in similar funds provided by Fleet
Investment Management. The Fleet system was responsive to
employee fund selection in February 1998.
Assets in any of the funds may be invested in short term
government or other securities pending permanent investment.
Earnings on each fund will be reinvested in that fund.
Each participant is permitted to elect to have his basic
contribution invested in any of the funds in 1% increments (10%
prior to November 1, 1997).
Prior to November 1, 1997 fund transfers as of the first day of
any month, were permitted but not more frequently than once in
any six-month period. A participant could elect to transfer any
part of the value of his basic employee account or his
supplemental employee account to any of the other funds except
the Fixed Income Fund to the Mortgage Fund in minimum increments
of 5%. Fund transfer after November 1, 1997 (implemented February
1998) can be made on a daily basis in a minimum of 1%
increments.
3. Income Taxes
The Plan obtained its latest determination letter in November
1994, in which the Internal Revenue Service stated that the Plan,
as designed, is in compliance with the applicable requirements of
the Internal Revenue Code. Therefore, no provision for income
taxes has been included in the Plan's financial statements.
4. Investments
The following presents the fair value of investments at December
31, 1997 and 1996. Investments that represent more than 5% of
net assets for either year are separately stated.
1997 1996
Crompton & Knowles Corp.
common stock $52,445,170 $39,157,869
Hartford Life Ins. Co.
Group Annuity Contract 11,165,578 14,481,933
Fleet Stable Asset Fund 5,745,651 -
Galaxy Growth and Income
Fund 9,863,013 -
Hartford Life Ins. Co.
Equity Fund - 7,595,484
Other 2,405,800 3,615,322
Total Investments $81,625,212 $64,850,608
At December 31, 1996 the total units and net value per unit for
each of the respective unit-valued based funds were as follows:
Hartford Equity Fund 48,045.12 $158.09
Hartford Advisors Fund 658,050.65 1.98
Hartford Mortgage Fund 10,993.21 32.16
5. Plan Expenses
Significant costs of Plan administration, which are payable from
the Trust or by the Corporation, are generally paid by the
Corporation.
6. Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported changes in net assets available for plan benefits during
the reporting period. Actual results could differ from those
estimates.
7. Party-in-Interest Transactions
The Fleet Bank, Bankers Trust, Hartford, and Sedgewick Noble
are parties-in-interest as defined in Section 3 (14) of the
Employee Retirement Income Security Act of 1974. During the years
1997 and 1996 there were no prohibited party-in-interest
transactions.
8. Priorities Upon Termination of the Plan
The Board of Directors of the Company shall have the right from
time to time to add to, modify or amend the Plan, and the Board
of Directors shall have the right to terminate the Plan. The
Board of Directors may also authorize the inclusion in any
contract entered into by the Company with the union or unions
representing employees, or with any group or groups of employees,
of a provision or provisions having the effect of limiting or
foregoing any such rights. Further, no addition to,
modification, amendment or termination of the Plan shall have the
effect of reducing the entitlement of any participant's benefit
accrued under the Plan or of diverting any part of the assets of
the Trust Fund for purposes other than provided in the Plan.
Upon any terminations of the Plan, or complete and permanent
discontinuance of contributions of all participants, the value of
each of the participant's account, if not already vested, shall
vest fully and all amounts in all accounts of each participant
shall be delivered and paid as soon as practicable in accordance
with the Plan Document.
Schedule 1 (Form 5500)
CROMPTON & KNOWLES CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1997
DESCRIPTION OF
INVESTMENT INCLUDING
IDENTIY OF ISSUE, MATURITY DATE,
BORROWER, RATE OF INTEREST,
LESSOR OR COLLATERAL, PAR CURRENT
SIMILAR PARTY* OR MATURITY VALUE COST VALUE
GALAXY MONEY MARKET TRUST
- 473,183.99 UNITS $ 471,184 $ 471,184
CROMPTON & KNOWLES COMMON STOCK
CORPORATION - 1,979,063 SHARES 17,239,682 52,445,170
GALAXY GROWTH & INCOME FUND
- 684,931.45 UNITS 11,081,275 9,863,013
GALAXY ASSET ALLOCATION FUND
- 129,477.75 UNITS 2,139,832 2,013,379
FIDELITY ADVISOR GOVERNMENT
INVESTMENT FUND CLASS 390,421 392,421
FLEET STABLE ASSET FUND
- 574,565.13 UNITS 5,745,651 5,745,651
HARTFORD LIFE GROUP ANNUITY
INSURANCE COMPANY CONTRACT 5.80% 11,165,578 11,165,578
TOTAL INVESTMENTS $ 48,233,623 $ 82,096,396
*Party - in - interest
Schedule 2 (Form 5500)
CROMPTON & KNOWLES CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
Item 27d Schedule of (5%) Reportable Transactions
Year Ended December 31, 1997
Cash
(paid) Realized
Description received Cost gain
Single Transactions:
Galaxy Growth
& Income Fund $ (9,462,398) $ (9,462,398) $ -
Equity Fund 9,462,398 (6,415,265) 3,047,133
Series of transactions :
Galaxy Money Market Trust 66,732,970 (66,732,970) -
Purchased 95,609 shares (1,954,247) 1,954,247 -
and sold 150,641 shares
(incl. withdrawals) 3,429,443 (1,259,677) 2,169,766
of Crompton & Knowles
Corporation
common stock
Galaxy Growth
& Income Fund (11,090,349) 11,090,341 8
Fleet Stable Asset Fund (5,745,653) 5,745,653 -
Fixed Income Fund (9,429,695) 9,429,695 -
Equity Fund 15,157,693 (11,055,558) 4,102,134
SIGNATURE
The Plan. Pursuant to the requirements of the Securities and
Exchange Act of 1934, the Plan administrator has duly caused this
annual report to be signed on its behalf by the undersigned
hereunto duly authorized.
CROMPTON & KNOWLES CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
Date: June 23, 1998 By:/s/Charles J. Marsden
Charles J. Marsden
Senior Vice President &
Chief Financial Officer
EXHIBIT 23
Independent Auditors' Consent
The Board of Directors
Crompton & Knowles Corporation
We consent to incorporation by reference in the registration
statement (No. 33-21246) on Form S-8 of Crompton & Knowles
Corporation of our report dated June 23, 1998, relating to the
statements of net assets available for plan benefits of the
Crompton & Knowles Corporation Employee Stock Ownership Plan as
of December 31, 1997, and 1996, and the related statements of
changes in net assets available for plan benefits for the years
then ended, and all related schedules, included in this annual
report on Form 11-K.
/s/KPMG Peat Marwick LLP
Stamford, Connecticut
June 23, 1998
