<PAGE>
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
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1998 Commission File Number 333-42879
A. Full title of the plan and the address of the plan, if different from that
of the issuer named below:
Gerber Scientific, Inc. and Participating Subsidiaries
401(k) Maximum Advantage Program and Trust
As Amended and Restated Effective January 1, 1997 (the "Plan")
B. Name of the issuer of the securities held pursuant to the plan and the
address of the principal executive office:
Gerber Scientific, Inc.
83 Gerber Road West
South Windsor, Connecticut 06074
REQUIRED INFORMATION
The following financial statements and supplemental schedules for the Plan
are being filed herewith.
<PAGE>
GERBER SCIENTIFIC, INC.
AND PARTICIPATING SUBSIDIARIES
401(k) MAXIMUM ADVANTAGE PROGRAM AND TRUST
FINANCIAL STATEMENTS AND SCHEDULES
DECEMBER 31, 1998 AND 1997
(WITH INDEPENDENT AUDITORS' REPORT THEREON)
2
<PAGE>
GERBER SCIENTIFIC, INC AND PARTICIPATING SUBSIDIARIES
401 (k) MAXIMUM ADVANTAGE PROGRAM AND TRUST
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Independent Auditors' Report............................................. 4
Statements of Net Assets Available for Plan Benefits,
December 31, 1998 and 1997............................................ 5
Statements of Changes in Net Assets Available for Plan Benefits, Years
Ended December 31, 1998 and 1997...................................... 6
Notes to Financial Statements............................................ 9
Schedules
1. Schedule of Assets Held for Investment Purposes at End of
Plan Years, December 31, 1998 and 1997................................ 15
2. Schedule of Reportable Transactions
for Year Ended December 31, 1998...................................... 17
</TABLE>
Note: The schedules of non-exempt transactions, assets held for investment
purposes which were acquired and disposed of within the plan year, loans
or fixed income obligations, and leases in default or classified as
uncollectible, required by Section 103(c)(5) of the Employee Retirement
Income Security Act of 1974, are not applicable.
3
<PAGE>
Independent Auditors' Report
----------------------------
The Plan Administrator
Gerber Scientific, Inc. and Participating Subsidiaries
401(k) Maximum Advantage Program and Trust:
We have audited the accompanying statements of net assets available for plan
benefits of Gerber Scientific, Inc. and Participating Subsidiaries 401(k)
Maximum Advantage Program and Trust as of December 31, 1998 and 1997 and the
related statements of changes in net assets available for plan benefits with
fund information 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 report dated June 24, 1998, we did not express an opinion on the Plan's
1997 and 1996 financial statements because, as permitted by 29 CFR 2520.103-8 of
the Department of Labor's Rules and Regulations for Reporting and Disclosure
under the Employee Retirement Income Security Act of 1974, the Plan
Administrator instructed us not to perform, and we did not perform, any auditing
procedures with respect to the investment information which was certified by
Barclays Global Investors, National Association in 1997 and 1996, the trustee of
the Plan, except for comparing such information with the related information
included in the financial statements and supplemental schedules. Since that
date, we have, at the request of the Plan Administrator, audited the investment
information. Accordingly, our present opinion on the 1997 financial statements,
as presented herein, is different from that expressed in our previous report.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of Gerber
Scientific, Inc. and Participating Subsidiaries 401(k) Maximum Advantage Program
and Trust as of December 31, 1998 and 1997, 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 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 with fund information 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.
KPMG LLP
Hartford, Connecticut
June 30, 1999
4
<PAGE>
GERBER SCIENTIFIC, INC. AND PARTICIPATING SUBSIDIARIES
401 (k) MAXIMUM ADVANTAGE PROGRAM AND TRUST
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
DECEMBER 31, 1998 and 1997
<TABLE>
<CAPTION>
December 31,
-------------------------------------
1998 1997
--------------- ---------------
<S> <C> <C>
Mutual Funds, at fair value:
MasterWorks Standard & Poor's 500 Stock Fund $ 19,522,150 $ 11,365,349
MasterWorks Asset Allocation Fund 14,971,914 13,691,984
MasterWorks Money Market Fund 9,745,652 8,527,811
Founders Growth Fund 6,280,510 --
Strong Schafer Value Fund 2,964,259 --
Gerber Scientific, Inc. Stock Fund 2,245,551 --
MasterWorks Bond Index Fund 1,442,781 --
Templeton Foreign (A) Fund 551,562 --
MasterWorks U.S. Treasury Allocation Fund 170,770 984,139
MasterWorks Growth Stock Fund -- 3,997,516
Collective Investment Fund, at fair value:
International Equity Fund 1,008,716 1,192,020
Loans Receivable from Plan Participants, 1,374,838 1,201,467
at fair value: --------------- ---------------
Net Assets Available for Plan Benefits $ 60,278,703 $ 40,960,286
=============== ===============
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
GERBER SCIENTIFIC, INC. AND PARTICIPATING SUBSIDIARIES
401(K) MAXIMUM ADVANTAGE PROGRAM AND TRUST
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS WITH FUND
INFORMATION FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION> Participant Directed
------------------------------------------------------------------------------
MasterWorks MasterWorks
Money Asset MasterWorks
Market Allocation S & P 500
Fund Fund Stock Fund
----------------------- --------------------- --------------------
<S> <C> <C> <C>
Investment Income:
Net Appreciation (Depreciation)
in Fair Value of Investments $ - $ 1,335,987 $ 2,655,060
Interest and Dividends 374,443 1,677,618 1,090,656
Interest on Participant Loans - - -
----------------------- --------------------- --------------------
374,443 3,013,605 3,745,716
Contributions:
Plan Participants 576,344 918,887 1,928,146
Employer 120,162 144,530 335,064
----------------------- --------------------- --------------------
Total Investment Income
and Contributions 1,070,949 4,077,022 6,008,926
----------------------- --------------------- --------------------
Transfers from Acquired Plan 3,171,747 414,075 3,425,748
----------------------- --------------------- --------------------
Benefits Paid to Participants (1,403,392) (1,305,313) (1,176,857)
Administrative Fees (5,611) (4,631) (5,472)
----------------------- --------------------- --------------------
Total Benefits and Expenses (1,409,003) (1,309,944) (1,182,329)
----------------------- --------------------- --------------------
Excess of Additions Over Deductions 2,833,693 3,181,153 8,252,345
Inter-fund Transfers, Net (1,615,852) (1,901,223) (95,544)
----------------------- --------------------- --------------------
Net Increase in Net Assets 1,217,841 1,279,930 8,156,801
Net Assets Available for Benefits
at Beginning of Year 8,527,811 13,691,984 11,365,349
----------------------- --------------------- --------------------
Net Assets Available for
Benefits at End of Year $ 9,745,652 $ 14,971,914 $ 19,522,150
======================= ===================== ====================
<CAPTION>
----------------------------------------------------------------------------
Founders Masterworks Gerber
Growth Stock Growth Stock Scientific Inc.
Fund Fund Stock Fund
--------------------- -------------------- ----------------------
<S> <C> <C> <C>
Investment Income:
Net Appreciation (Depreciation)
in Fair Value of Investments $ 525,475 $ (687,726) $ 274,577
Interest and Dividends 149,014 736,354 -
Interest on Participant Loans - - -
--------------------- -------------------- ----------------------
674,489 48,628 274,577
Contributions:
Plan Participants 511,308 704,935 573,978
Employer 86,905 118,885 67,643
--------------------- -------------------- ----------------------
Total Investment Income
and Contributions 1,272,702 872,448 916,198
--------------------- -------------------- ----------------------
Transfers from Acquired Plan 487,403 - -
--------------------- -------------------- ----------------------
Benefits Paid to Participants (188,531) (365,007) (154,193)
Administrative Fees (716) (1,636) (680)
--------------------- -------------------- ----------------------
Total Benefits and Expenses (189,247) (366,643) (154,873)
--------------------- -------------------- ----------------------
Excess of Additions Over Deductions 1,570,858 505,805 761,325
Inter-fund Transfers, Net 4,709,652 (4,503,321) 1,484,226
--------------------- -------------------- ----------------------
Net Increase in Net Assets 6,280,510 (3,997,516) 2,245,551
Net Assets Available for Benefits
at Beginning of Year - 3,997,516 -
--------------------- -------------------- ----------------------
Net Assets Available for Benefits
at end of Year $ 6,280,510 $ - $ 2,245,551
===================== ==================== ======================
</TABLE>
See accompanying notes to financial statements.
6
<PAGE>
GERBER SCIENTIFIC, INC. AND PARTICIPATING SUBSIDIARIES
401(K) MAXIMUM ADVANTAGE PROGRAM AND TRUST
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS WITH FUND
INFORMATION FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
Participant Directed
------------------------------------------------------------------------
MasterWorks MasterWorks
Bond Templeton International Strong U.S. Treasury
Index Foreign (A) Equity Schafer Value Allocation
Fund Fund Fund Fund Fund
---------- ---------- ---------- ------------ ----------
<S> <C> <C> <C> <C> <C>
Investment Income:
Net Appreciation (Depreciation)
in Fair Value of Investments $ (7,293) $ (83,561) $ 178,383 $ (58,557) $ 16,032
Interest and Dividends 7,270 53,099 - 18,931 57,011
Interest on Participant Loans - - - - -
----------- ---------- ----------- ----------- ----------
(23) (30,462) 178,383 (39,626) 73,043
Contributions:
Plan Participants 8,255 172,351 157,619 479,454 135,588
Employer 500 29,536 25,895 84,707 24,544
----------- ---------- ----------- ----------- ----------
Total Investment Income
and Contributions 8,732 171,425 361,897 524,535 233,175
----------- ---------- ----------- ----------- ----------
Transfers from Acquired Plan - - - 1,349,810 194,038
----------- ---------- ----------- ----------- ----------
Benefits Paid to Participants (429) (32,010) (91,081) (243,056) (219,121)
Administrative Fees (56) (189) (500) (467) (546)
----------- ---------- ----------- ----------- ----------
Total Benefits and Expenses (485) (32,199) (91,581) (243,523) (219,667)
----------- ---------- ----------- ----------- ----------
Excess of Additions Over Deductions 8,247 139,226 270,316 1,630,822 207,546
Inter-fund Transfers, Net 1,434,534 412,336 (453,620) 1,333,437 (1,020,915)
----------- ---------- ----------- ----------- ----------
Net Increase in Net Assets 1,442,781 551,562 (183,304) 2,964,259 (813,369)
Net Assets Available for Benefits
at Beginning of Year - - 1,192,020 - 984,139
----------- ---------- ----------- ----------- ----------
Net Assets Available for
Benefits at End of Year $ 1,442,781 $ 551,562 $ 1,008,716 $ 2,964,259 $ 170,770
=========== ========== =========== =========== ==========
<CAPTION>
Participant Directed
-----------------------------
Participant
Loans Total
------------ -------------
<S> <C> <C>
Investment Income:
Net Appreciation (Depreciation)
in Fair Value of Investments $ - $ 4,148,377
Interest and Dividends - 4,164,396
Interest on Participant Loan 120,348 120,348
------------ ------------
120,348 8,433,121
Contributions:
Plan Participants - 6,166,865
Employer - 1,038,371
------------ ------------
Total Investment Income
and Contributions 120,348 15,638,357
------------ ------------
Transfers from Acquired Plan - 9,042,821
------------ ------------
Benefits Paid to Participants (163,267) (5,342,257)
Administrative Fees - (20,504)
------------ ------------
Total Benefits and Expenses (163,267) (5,362,761)
------------ ------------
Excess of Additions Over Deductions (42,919) 19,318,417
Inter-fund Transfers, Net 216,290 -
------------ ------------
Net Increase in Net Assets 173,371 19,318,417
Net Assets Available for Benefits
at Beginning of Year 1,201,467 40,960,286
------------ ------------
Net Assets Available for
Benefits at End of Year $ 1,374,838 $60,278,703
============ ============
</TABLE>
(Concluded)
See accompanying notes to financial statements.
7
<PAGE>
<TABLE>
<CAPTION>
GERBER SCIENTIFIC, INC. AND PARTICIPATING SUBSIDIARIES
401(K) MAXIMUM ADVANTAGE PROGRAM AND TRUST
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1997
Participant Directed
-------------------------------------------------------------------------------------
MasterWorks MasterWorks MasterWorks MasterWorks MasterWorks
Asset Money Growth U.S. Treasury International
Allocation S & P 500 Market Stock Allocation Equity
Fund Stock Fund Fund Fund Fund Fund
------------- ------------- ---------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Investment Income:
Net Appreciation (Depreciation)
in Fair Value of Investments $ 750,588 $ 2,066,048 $ -- $ (175,745) $ 6,423 $ 2,249
Interest and Dividends 1,703,511 383,933 459,357 313,054 60,059 --
Interest on Participant Loans -- -- -- -- -- --
------------ ------------ ----------- ------------ ----------- -----------
2,454,099 2,449,981 459,357 137,309 66,482 2,249
Contributions:
Plan Participants 1,071,075 1,063,624 846,838 686,884 106,967 226,035
Employer 113,523 116,754 105,588 75,513 15,108 21,283
------------ ------------ ----------- ------------ ----------- -----------
Total Investment Income
and Contributions 3,638,697 3,630,359 1,411,783 899,706 188,557 249,567
------------ ------------ ----------- ------------ ----------- -----------
Transfers from Acquired Plan -- 268,985 -- 124,906 21,268 125,975
------------ ------------ ----------- ------------ ----------- -----------
Benefits Paid to Participants (508,330) (415,668) (1,186,941) (281,387) (61,412) (119,020)
Administrative Fees (5,255) (3,892) (6,877) (1,662) (506) (530)
------------ ------------ ----------- ------------ ----------- -----------
Total Benefits and Expenses (513,585) (419,560) (1,193,818) (283,049) (61,918) (119,550)
------------ ------------ ----------- ------------ ----------- -----------
Excess of Additions Over Deductions 3,125,112 3,479,784 217,965 741,563 147,907 255,992
Inter-fund Transfers, Net (337,734) 1,415,675 (351,905) (403,766) (96,517) (110,588)
------------ ------------ ----------- ------------ ----------- -----------
Net Increase in Net Assets 2,787,378 4,895,459 (133,940) 337,797 51,390 145,404
Net Assets Available for Benefits
at Beginning of Year 10,904,606 6,469,890 8,661,751 3,659,719 932,749 1,046,616
------------ ------------ ----------- ------------ ----------- -----------
Net Assets Available for
Benefits at End of Year $ 13,691,984 $ 11,365,349 $ 8,527,811 $ 3,997,516 $ 984,139 $ 1,192,020
============ ============ =========== ============ =========== ===========
<CAPTION>
----------------------------------------
Participant
Loans Total
------------------ --------------
<S> <C> <C>
Investment Income:
Net Appreciation (Depreciation)
in Fair Value of Investments $ -- $ 2,649,563
Interest and Dividends -- 2,919,914
Interest on Participant Loans 118,681 118,681
------------- --------------
118,681 5,688,158
Contributions:
Plan Participants -- 4,001,423
Employer -- 447,769
------------- --------------
Total Investment Income
and Contributions 118,681 10,137,350
------------- --------------
Transfers from Acquired Plan 7,414 548,548
------------- --------------
Benefits Paid to Participants (64,071) (2,636,829)
Administrative Fees -- (18,722)
------------- --------------
Total Benefits and Expenses (64,071) (2,655,551)
------------- --------------
Excess of Additions Over Deductions 62,025 8,030,347
Inter-fund Transfers, Net (115,166) --
------------- --------------
Net Increase in Net Assets (53,141) 8,030,347
Net Assets Available for Benefits
at Beginning of Year 1,254,608 32,929,939
------------- --------------
Net Assets Available for
Benefits at End of Year $ 1,201,467 $ 40,960,286
============= ==============
</TABLE>
See accompanying notes to financial statements.
8
<PAGE>
GERBER SCIENTIFIC, INC. AND PARTICIPATING SUBSIDIARIES
401 (k) MAXIMUM ADVANTAGE PROGRAM AND TRUST
NOTES TO FINANCIAL STATEMENTS
December 31, 1998 and 1997
A. Description of the Plan
-----------------------
The following brief description of the Gerber Scientific, Inc. and
Participating Subsidiaries 401 (k) Maximum Advantage Program and Trust (the
"Plan") is provided for general information purposes only and reflects the
Plan's provisions as of the date of the financial statements. Participants
should refer to the Plan documents for more complete information on the
Plan's provisions.
1. General
-------
The Plan is a defined contribution plan sponsored by Gerber
Scientific, Inc. and Participating Subsidiaries (the "Company") and
was established effective January 1, 1985. It is intended that the
Plan be qualified and exempt under Sections 401(a) and 501(a) of the
Internal Revenue Code of 1986 (the "Code"), as amended from time to
time, and meet the requirements of Section 401 (k) of the Code. The
Plan is subject to the provisions of the Employee Retirement Income
Security Act of 1974 ("ERISA").
2. Purpose
-------
The purpose of the Plan is to encourage employee savings and to
provide a facility for accumulation of funds to be used to provide
benefits upon an employee's retirement, death, disability, termination
of employment, or certain other circumstances.
3. Administration
--------------
The Board of Directors of Gerber Scientific, Inc., which has the
authority to administer the Plan, has delegated the duties of Plan
Administrator to a Committee consisting of Company employees. The
Committee interprets and applies Plan provisions, makes final
determinations concerning eligibility, benefits, and rights under the
Plan, furnishes individual benefits statements to Participants, and
files such reports as may be required by law.
4. Eligibility
-----------
Employees of the Company become eligible to participate in the Plan on
the first day of employment.
9
<PAGE>
5. Employee Contributions
----------------------
An eligible employee becomes a Participant by authorizing the Company
to reduce the Participant's eligible pay and make a corresponding "pre-
tax" or "after-tax" contribution to the Plan. Eligible pay is defined
as base pay, overtime pay, commissions, and bonus pay. "Pre-tax"
contributions may range from 2% to 15% of base pay and "after-tax"
contributions may range from 1% to 10% of base pay. A Participant may
change or suspend contributions by providing written notice to the
Company.
"Pre-tax" contributions are deducted from taxable wages before income
taxes are withheld and are not subject to income taxation until
withdrawn from the Plan. "After-tax" contributions do not reduce
taxable wages and thus are subject to current income taxation.
Under Internal Revenue Service regulations, annual compensation limit
for Plan purposes was $160,000 in 1998 and in 1997, and the maximum
"pre-tax" contribution was limited to $10,000 per Participant in 1998
and $9,500 per Participant in 1997.
6. Employer Contributions
----------------------
The Company matches 50% of the first 6% of eligible pay which a
Participant contributes on a "pre-tax" basis, subject to a maximum
annual Company contribution of $800 per Participant for 1998 and $400
per Participant in 1997.
7. Investment of Contributions and Participants' Accounts
------------------------------------------------------
A separate accounting is maintained in the name of each Participant,
reflecting contributions by the Participant, amounts contributed by the
Company under the Plan on the Participant's behalf, investment earnings
or losses, loans, withdrawals, or other distributions, and expenses, if
any, charged against such account. The amount of benefit available to
each Participant at any point in time depends solely upon the value of
the Participant's own account.
A Participant directs the investment of his/her account. During Plan
year ending December 31, 1998, there were ten investment funds in which
Participants could invest. These investment funds are managed by a
variety of investment managers. The investment funds offered to
participants during Plan year ending December 31, 1998 were:
a. The MasterWorks Money Market Fund, which is comprised of
investments in U.S. Government and agency obligations, bank
certificates of deposit, bankers' acceptances, and corporate
commercial paper;
b. The MasterWorks Asset Allocation Fund, which uses a computer model
to allocate its investments among common stocks, U.S. Treasury
bonds, and money market instruments. The computer model allocates
and reallocates investments among these asset classes based upon
estimates of their relative risk and rates of return;
10
<PAGE>
c. The U.S. Treasury Allocation Fund, which invests in three classes of
U.S. Treasury debt securities: long-term U.S. Treasury bonds;
intermediate-term U.S. Treasury notes; and short-term U.S. Treasury
bills. The Fund allocates and reallocates investments among these
classes of debt securities based upon estimates of their relative
risk and rates of return;
d. The MasterWorks Bond Index Fund, which is comprised of fixed-income
securities issued by the U.S. Government and investment grade
corporations and attempts to achieve the same rate of return as the
Lehman Brothers Government/Corporate Bond Index by holding nearly
all of the 5,000 fixed-income securities that the Index measures;
e. The MasterWorks Standard & Poor's 500 Stock Fund, which is comprised
of investments in common stock and attempts to achieve the same rate
of return as the Standard & Poor's 500 Composite Stock Price Index.
The Fund attempts to do this by holding nearly all of the 500 common
stocks that the Index measures;
f. The Founders Growth Fund, which invests primarily in common stock
and other equity securities of U.S. companies;
g. The Strong Schafer Value Fund, which invests primarily in common
stock and other equity securities of U.S. companies;
h. The Gerber Scientific, Inc. Stock Fund is comprised primarily of the
common stock of Gerber Scientific, Inc. and a nominal component of
money market instruments;
i. The Templeton Foreign (A) Fund, which invests primarily in stocks
and debt obligations of companies and governments outside the U.S.;
and
j. The International Equity Fund, which invests in securities traded
outside the United States and excludes securities of U.S. companies.
The Fund invests in substantially the same stocks and the same
percentages as comprise the Morgan Stanley Capital International
Europe, Australia, and Far East (EAFE) Index.
In December 1998, the MasterWorks Growth Stock Fund investment manager
discontinued the fund and therefore the fund was removed from the
portfolio of funds available for investment. The Plan elected to
transfer the fund balance to the Founders Growth Fund. Also in
December 1998, the MasterWorks U.S. Treasury Allocation Fund was
removed from the portfolio of funds available for investment. The
MasterWorks Bond Index Fund was added as a fund available for
investment.
The Plan permits a participant to change the investment allocation of
future contributions and the investment allocation of the Participant's
existing account. There is no limit on the number of changes that may
be made.
11
<PAGE>
8. Vesting
-------
A Participant is at all times 100% vested in the Participant's "pre-
tax" contributions, "after-tax" contributions, "rollover"
contributions, and the Company contributions on the Participant's
behalf.
9. Withdrawals and Loans
---------------------
The Plan allows the distribution of savings at the end of the
Participant's career with the Company or the maintenance of their
account balance until distribution is requested. However, the Plan
makes provision for hardship and non-hardship withdrawals and for
loans, subject to current Internal Revenue Service regulations.
Hardship withdrawals are permitted to meet a financial hardship
resulting from qualifying medical expenses, educational expenses,
funeral expenses, the purchase of a primary residence, or the loss of a
primary residence through eviction or mortgage foreclosure. Hardship
withdrawals require approval of the Committee. Non-hardship withdrawals
may be made only against a Participant's "after-tax" contributions or
"rollover" contributions and may be made for any reason.
Loans may be drawn against a Participant's account, subject to a $500
minimum and a $50,000 maximum, and may not exceed 50% of the
Participant's account balance. Loan repayments are redeposited in the
Participant's account in accordance with the Participant's current
investment allocation for contributions. Any outstanding loan balance
not repaid at termination of employment is treated as a taxable
distribution. As of December 31, 1998 interest rates on outstanding
loans ranged from 7% to 10.98%.
10. Payment of Benefits
-------------------
Distributions from the Plan are paid either in a lump sum cash payment
or a portion paid in a lump sum and the remainder paid later. Unless a
Participant elects otherwise, distributions are payable upon the
termination of employment. If a Participant's total account balance is
greater than $3,500, the Participant (or in the event of death, the
Participant's designated beneficiary) has the right to defer the
distribution.
Upon the death of a Participant, the designated beneficiary, or the
Participant's estate if no beneficiary is designated, is entitled to
100% of the Participant's account.
11. Taxation
--------
Income taxes are deferred on "untaxed funds" in a Participant's
account. Untaxed funds consist of "pre-tax" contributions, Company
contributions, net investment earnings, and loan interest repaid. Upon
distribution, such untaxed funds become taxable. Untaxed funds received
as a loan are not subject to income taxes. "After-tax" contributions
which are distributed are not taxable, but investment earnings on
"after-tax" contributions are taxable when distributed.
12
<PAGE>
B. Summary of the Plan's Significant Accounting Policies
-----------------------------------------------------
1. Basis of Presentation
---------------------
The accompanying financial statements have been prepared on the accrual
basis of accounting and present the net assets available for plan
benefits and the changes in net assets available for plan benefits as
of and for the plan years ended December 31, 1998 and 1997.
2. Trust Funds Held and Managed
----------------------------
On August 29, 1997, Merrill Lynch, Pierce, Fenner & Smith Inc.
("Merrill Lynch") acquired the MasterWorks division of Barclays Global
Investors, National Association ("Barclays") and became the Plan's
recordkeeper. Barclays remained as trustee of the Plan through December
31, 1997. On January 1, 1998, Merrill Lynch Trust Company, FSB became
trustee of the Plan.
The Plan's investments at December 31, 1998 were held in trust by
Merrill Lynch Trust Company, FSB and were invested in mutual funds and
a collective investment fund managed by various investment managers.
Investments were recorded by Merrill Lynch on a trade date basis. For
the Plan year ended December 31, 1998, the investment in and the
changes in these investment funds were reported to the Plan by Merrill
Lynch as determined through the use of quoted market values for all
assets of the funds.
The Plan's investments at December 31, 1997 were held in trust by
Barclays and were invested in mutual funds and a collective investment
fund managed by Barclays Global Fund Advisors (BGFA), a wholly owned
subsidiary of Barclays. Investments were recorded by Barclays on a
trade date basis. For the Plan year ended December 31, 1997, the
investment in and the changes in these investment funds were reported
to the Plan by Barclays as determined through the use of current market
values for all assets of the funds.
The preparation of financial statements in conformity with generally
accepted accounting principles requires the plan administrator to make
estimates and assumptions that affect the reported amounts of assets,
liabilities and changes therein and the disclosure of contingent assets
and liabilities.
C. Administrative Expenses
-----------------------
Costs of establishing and administering the Plan, such as legal fees,
consulting fees, and salaries and fringe benefits of Company personnel, have
been paid by the Company and, accordingly, are not included as
administrative expenses of the Plan. Expenses which are included in the
financial statements represent loan maintenance fees charged against the
accounts of participants with outstanding loan balances and account
maintenance fees charged to non-active participants.
13
<PAGE>
D. Amendment and Termination
-------------------------
Although it has not expressed any intent to do so, the Company reserves the
right to modify, suspend, or terminate the Plan, in whole or in part
(including the provisions relating to contributions), subject to the
provisions of ERISA. However, the Company has no power to modify, suspend,
amend, or terminate the Plan in a manner that will cause or permit any part
of the trust fund to be used for or diverted to purposes other than the
exclusive benefit of Participants or their beneficiaries, or for the payment
of expenses pursuant to the provisions of the Plan. Upon termination or
partial termination of the Plan, the amounts credited to the accounts of
members affected by such termination or partial termination shall be non-
forfeitable.
E. Federal Income Tax Status of the Plan
-------------------------------------
The Company has received favorable determinations from the Internal Revenue
Service that the Plan constitutes an employees' trust which is exempt from
taxation, and that the Company may deduct for income tax purposes the
amounts contributed by it to the trust fund.
It is the intention of the Company that the Plan remain qualified and exempt
under Sections 401(a) and 501(a) of the Code and meet the requirements of
Section 401(k) of the Code. The Company may authorize any modification or
amendment of the Plan which is deemed necessary or appropriate to maintain
the qualification and exemption of the Plan within the requirements of
Section 401(a) and 501(a) of the Code, or any other applicable provision of
the Code as now in effect or hereafter amended or adopted.
F. Plan Mergers/Sale of Subsidiary
-------------------------------
In February 1998, Gerber Optical, Inc. a subsidiary of Gerber Scientific,
Inc., acquired Coburn Optical Industries, Inc. In conjunction with this
acquisition, in December 1998 the Coburn Employees' Retirement Savings Plan
was merged into the Gerber Scientific, Inc. and Participating Subsidiaries
401(k) Maximum Advantage Program and Trust.
In February 1997, Gerber Garment Technology, Inc. a subsidiary of Gerber
Scientific, Inc., acquired Cutting Edge, Inc. In conjunction with this
acquisition, the Cutting Edge, Inc. 401(k) Profit Sharing Plan was merged
into the Gerber Scientific, Inc. and Participating Subsidiaries 401(k)
Maximum Advantage Program and Trust.
In March 1998, Gerber Scientific, Inc. sold the Gerber Systems subsidiary.
Employees of Gerber Systems were given the option of transferring their
account balance to their new employer's 401(k) plan.
G. Subsequent Events
-----------------
Effective January 1, 1999 the Company increased the matching contribution
maximum annual amount from $800 to $1,000 per participant.
In June 1999, the MasterWorks Money Market Fund was no longer offered to
participants for investment and was replaced by the Merrill Lynch Retirement
Reserves Money Fund.
14
<PAGE>
Schedule 1
GERBER SCIENTIFIC, INC. AND PARTICIPATING SUBSIDIARIES
401 (k) MAXIMUM ADVANTAGE PROGRAM AND TRUST
Item 27a-Schedule of Assets Held for Investment Purposes as of
December 31, 1998
<TABLE>
<CAPTION>
Description of investment,
including maturity date,
rate of interest,
Identity of issue, borrower, collateral, par, or Current
lessor, or similar party maturity value Cost Value
- ------------------------------------------ -------------------------------- -------------- -------------
<S> <C> <C> <C>
*Merrill Lynch Trust Company, FSB
Masterworks Funds:
Standard & Poor's 500 Stock Fund Mutual Fund, 793,261 shares $ 17,108,946 $ 19,522,150
Asset Allocation Fund Mutual Fund, 1,058,834 shares 13,820,649 14,971,914
Money Market Fund Mutual Fund, 9,745,652 shares 9,745,652 9,745,652
Bond Index Fund Bond Index Fund, 144,134 shares 1,450,220 1,442,781
U.S. Treasury Allocation Fund Mutual Fund, 18,014 shares 170,779 170,770
Founders Growth Fund Mutual Fund, 307,717 shares 5,778,910 6,280,510
Strong Schafer Value Fund Mutual Fund, 49,996 shares 2,967,690 2,964,259
Gerber Scientific, Inc. Stock Fund Stock Fund, 191,600 shares 2,153,860 2,245,551
International Equity Fund Collective Investment Fund, 871,662 1,008,716
59,406 shares
Templeton Foreign (A) Fund Mutual Fund, 65,740 shares 626,715 551,562
Participant Loans Participant Loans, 7.0% - 10.98% 1,374,838 1,374,838
------------- -------------
$ 56,069,921 $ 60,278,703
============= =============
</TABLE>
*-Represents a party-in-interest.
15
<PAGE>
GERBER SCIENTIFIC, INC. AND PARTICIPATING SUBSIDIARIES
401 (k) MAXIMUM ADVANTAGE PROGRAM AND TRUST
Item 27a-Schedule of Assets Held for Investment Purposes as of
December 31, 1997
<TABLE>
<CAPTION>
Description of investment,
including maturity date, rate of
Identity of issue, borrower, interest, collateral, par, or
lessor, or similar party maturity value Cost
- --------------------------------- --------------------------------- ---------------
<S> <C> <C>
* Barclays Global Investors:
Masterworks Funds:
Asset Allocation Fund Mutual Fund, 1,074,724 shares $ 13,018,006
Standard & Poor's 500 Stock Fund Mutual Fund, 557,398 shares 9,458,404
Money Market Fund Mutual Fund, 8,527,811 shares 8,527,811
Growth Stock Fund Mutual Fund, 273,615 shares 4,172,194
U.S. Treasury Allocation Fund Mutual Fund, 104,919 shares 977,135
International Equity Fund Collective Investment Fund, 83,945 shares 1,194,298
Participant Loans Participant Loans, 7.0% - 11.9% 1,201,467
---------------
$ 38,549,315
===============
</TABLE>
*-Represents a party-in-interest.
16
<PAGE>
<TABLE>
<CAPTION>
Schedule 2
----------
GERBER SCIENTIFIC, INC. AND PARTICIPATING SUBSIDIARIES
401 (k) MAXIMUM ADVANTAGE PROGRAM AND TRUST
Item 27d - Schedule of Reportable Transactions for the Year Ended December 31, 1998
Value
(b) Description of asset Number ---------------------------
(a) Identity of (include interest rate and ------------------ (c) Purchase (d) Selling (e) Lease
party involved maturity in case of a loan) Purchases Sales price price rental
- ---------------------------------- ---------------------------- ------------------ --------------------------- ----------
<S> <C> <C> <C> <C> <C> <C>
* Merrill Lynch Trust Company, FSB
Standard & Poor's 500 Stock Fund Mutual Fund 140 105 $ 8,687,095 $ 3,185,354 $ -
Money Market Fund Mutual Fund 111 126 7,807,674 6,589,833 -
Founders Growth Fund Mutual Fund 142 66 6,119,447 364,412 -
Strong Schafer Value Fund Mutual Fund 137 69 4,148,816 1,126,000 -
Gerber Scientific, Inc. Stock Fund Stock Fund 160 73 4,036,731 2,065,757 -
Asset Allocation Fund Mutual Fund 135 100 4,079,880 4,135,936 -
Growth Stock Fund Mutual Fund 114 102 1,630,906 4,940,696 -
U.S. Treasury Allocation Fund Mutual Fund 130 61 1,117,477 1,946,879 -
<CAPTION>
(b) Description of asset (f) Expense (g) Cost of asset
(a) Identity of (include interest rate and incurred with ----------------------------
party involved maturity in case of a loan) transaction Purchases Sales
- ---------------------------------- --------------------------- ------------- ----------------------------
<S> <C> <C> <C> <C>
* Merrill Lynch Trust Company, FSB
Standard & Poor's 500 Stock Fund Mutual Fund $ - $ 8,687,095 $ 2,251,654
Money Market Fund Mutual Fund - 7,807,674 6,589,833
Founders Growth Fund Mutual Fund - 6,119,447 340,537
Strong Schafer Value Fund Mutual Fund - 4,148,816 1,181,127
Gerber Scientific, Inc. Stock Fund Stock Fund - 4,036,731 1,882,871
Asset Allocation Fund Mutual Fund - 4,079,880 3,466,388
Growth Stock Fund Mutual Fund - 1,630,906 5,641,587
U.S. Treasury Allocation Fund Mutual Fund - 1,117,477 1,934,960
<CAPTION>
(h) Current value of asset
(b) Description of asset on transaction date
(a) Identity of (include interest rate and ---------------------------- (i) Net
party involved maturity in case of a loan) Purchases Sales Gain (Loss)
- ----------------------------------- --------------------------- ---------------------------- --------------
<S> <C> <C> <C> <C>
* Merrill Lynch Trust Company, FSB
Standard & Poor's 500 Stock Fund Mutual Fund $ 8,687,095 $ 3,185,354 $ 933,700
Money Market Fund Mutual Fund 7,807,674 6,589,833 0
Founders Growth Fund Mutual Fund 6,119,447 364,412 23,875
Strong Schafer Value Fund Mutual Fund 4,148,816 1,126,000 (55,127)
Gerber Scientific, Inc. Stock Fund Stock Fund 4,036,731 2,065,757 182,886
Asset Allocation Fund Mutual Fund 4,079,880 4,135,936 669,548
Growth Stock Fund Mutual Fund 1,630,906 4,940,696 (700,891)
U.S. Treasury Allocation Fund Mutual Fund 1,117,477 1,946,879 11,919
</TABLE>
17
<PAGE>
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934,
the trustees (or other persons who administer the employee benefit plan) have
duly caused this annual report to be signed on its behalf by the undersigned
hereunto duly authorized.
Gerber Scientific, Inc. and Participating
Subsidiaries 401(k) Maximum Advantage Program and
Trust As Amended and Restated Effective January 1,
1997
Date July 14, 1999 /s/ GARY K. BENNETT
------------------------------------------
Gary K. Bennett
Member of the Committee duly authorized to
administer the Plan
18
<PAGE>
Exhibit 23
The Plan Administrator
Gerber Scientific, Inc. and Participating Subsidiaries
401(k) Maximum Advantage Program and Trust:
We consent to incorporation by reference in Registration Statement No.
333-42879 on Form S-8 of Gerber Scientific, Inc. and Participating Subsidiaries
401(k) Maximum Advantage Program and Trust of our report dated June 30, 1999,
relating to the statements of net assets available for plan benefits of Gerber
Scientific, Inc. and Participating Subsidiaries 401(k) Maximum Advantage Program
and Trust as of December 31, 1998 and 1997, and the related statements of
changes in net assets available for plan benefits with fund information for the
years then ended and all related schedules, which report appears in the December
31, 1998 annual report on Form 11-K of Gerber Scientific, Inc. and Participating
Subsidiaries 401(k) Maximum Advantage Program and Trust.
KPMG LLP
Hartford, Connecticut
July 14, 1999
