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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
X ANNUAL REPORT PURSUANT TO SECTION 15(d) OF
_____ THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999
OR
TRANSITION REPORT PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____ to ______
Commission File Number 0-2648
HON INDUSTRIES Inc. Profit-Sharing Retirement Plan
HON INDUSTRIES Inc.
414 East Third Street
Muscatine, Iowa 52761-0071
_________________________________________________________________
_________________________________________________________________
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HON INDUSTRIES Inc.
Profit-Sharing Retirement Plan
Financial Statements and Schedules
As of December 31, 1999 and 1998
Together With Auditors' Report
Employer Identification Number 42-0617510
Plan Number 001
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HON INDUSTRIES INC.
PROFIT-SHARING RETIREMENT PLAN
FINANCIAL STATEMENTS AND SCHEDULES
December 31, 1999 and 1998
TABLE OF CONTENTS
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
FINANCIAL STATEMENTS:
Exhibit I-- Statements of Net Assets Available for
Benefits as of December 31, 1999 and 1998
Exhibit II--Statement of Changes in Net Assets
Available for Benefits for the Year Ended
December 31, 1999
NOTES TO FINANCIAL STATEMENTS AND SCHEDULES
SCHEDULES:
Schedule I-- Schedule of Assets Held for Investment
Purposes as of December 31, 1999
Schedule II--Schedule of Reportable Transactions for
the Year Ended December 31, 1999
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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Pension and Retirement Fund
Committee and Participants of
HON INDUSTRIES Inc. Profit-Sharing Retirement Plan:
We have audited the accompanying statements of net assets
available for benefits of HON INDUSTRIES INC. PROFIT-SHARING
RETIREMENT PLAN as of December 31, 1999 and 1998, and the related
statement of changes in net assets available for benefits for the
year ended December 31, 1999. In our report dated June 11, 1999,
we expressed a disclaimer of opinion on the statement of net
assets available for benefits as of December 31, 1998 (the 1998
financial statement), because the Plan administrator, as
permitted by the Department of Labor's Rules and Regulations,
instructed us not to audit the information certified by the
trustee. We have performed sufficient audit procedures to render
an opinion on the 1998 financial statement. Accordingly, our
present opinion on the 1998 financial statement, as presented
herein, is unqualified. 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 benefits of HON INDUSTRIES Inc. Profit-Sharing
Retirement Plan as of December 31, 1999 and 1998, and the changes
in net assets available for benefits for the year ended
December 31, 1999, 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 supplemental schedules have been
subjected to the auditing procedures applied in the audit 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.
Arthur Andersen LLP
Chicago, Illinois
June 23, 2000
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Exhibit I
HON INDUSTRIES INC.
PROFIT-SHARING RETIREMENT PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
As of December 31, 1999 and 1998
(Employer Identification Number 42-0617510, Plan Number 001)
1999 1998
ASSETS:
Cash $ - $ 23,804
Investments 490,321,998 467,138,379
Receivables-
Employer contribution 21,667,774 18,698,296
Participant contributions 1,121,651 1,083,318
Investment income - 2,288
Total receivables 22,789,425 19,783,902
NET ASSETS AVAILABLE FOR BENEFITS $513,111,423 $486,946,085
The accompanying notes are an integral part of these statements.
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Exhibit II
HON INDUSTRIES INC.
PROFIT-SHARING RETIREMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
For the Year Ended December 31, 1999
(Employer Identification Number 42-0617510, Plan Number 001)
ADDITIONS:
Additions to net assets attributed to-
Investment income-
Net realized and unrealized appreciation
in fair value of investments $13,220,798
Net investment income from group annuity
contracts 817,384
Interest 8,728,867
Dividends 14,716,987
Total investment income 37,484,036
Employer contributions 21,666,762
Participant contributions 14,386,547
Total additions 73,537,345
DEDUCTIONS:
Benefits paid to participants 55,705,810
Administrative expenses 116,575
Total deductions 55,822,385
TRANSFERS:
Transfers from other plans 8,450,378
NET INCREASE 26,165,338
NET ASSETS AVAILABLE FOR BENEFITS,
beginning of year 486,946,085
NET ASSETS AVAILABLE FOR BENEFITS,
end of year $513,111,423
The accompanying notes are an integral part of this statement.
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HON INDUSTRIES INC.
PROFIT-SHARING RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS AND SCHEDULES
December 31, 1999 and 1998
1. PLAN DESCRIPTION
The following description of the HON INDUSTRIES, Inc. Profit-
Sharing Retirement Plan (the "Plan") provides only general
information. Participants should refer to the Plan document
for a more complete description of the Plan's provisions.
General
The Plan is a defined contribution plan covering
substantially all regular, full-time nonbargaining employees
who have one year of service and are age 18 or older, of HON
INDUSTRIES Inc. and its wholly owned subsidiaries/divisions,
BPI Inc., The Gunlocke Company, Allsteel Inc., Panel
Concepts, Inc., Hearth Technologies, Inc., the HON Company,
Murphy-Miller Co., Hiebert East, Inc., HON International Inc.
and Holga Inc. (the "Company"). The Plan is subject to the
provisions of the Employee Retirement Income Security Act of
1974 ("ERISA"), as amended.
During 1999, the Panel Concepts Retirement and Savings Plan
and the Allsteel Savings and Retirement Plan merged into the
Plan. Consequently, net assets totaling approximately
$8,500,000 were transferred into the Plan with respect to
participant amounts formerly maintained in these plans.
Effective December 31, 1998, the HON Members Company
Ownership Plan (the "ESOP") was merged into the Plan.
Consequently, net assets totaling approximately $39,000,000
were transferred into the Plan with respect to participant
amounts formerly maintained in the ESOP.
Contributions
The Plan generally provides for each employer to contribute
an amount equal to 2.5% of a participant's compensation
earned while an active participant during the first three
quarters of the Plan year and the last quarter of the prior
Plan year. Employers may make additional contributions to
the Plan from their accumulated profits ("profit-sharing
contributions"), at the discretion of the Board of Directors.
In addition, as a result of the ESOP merger, employers will
now contribute to this Plan a number of shares of Company
stock, with a fair market value determined on the last day of
the Plan year, equal to 2% of a participant's compensation
earned, as described above. Participants may make voluntary
pretax and after-tax contributions up to 12% of their
compensation, subject to certain limitations.
Participant Accounts
Each participant's account is credited with the participant's
contributions and the participant's respective share of
employer contributions, Plan earnings and forfeitures of
terminated participants.
Vesting
Except for a participant's interest in the portion of their
account attributable to profit-sharing contributions,
participants are generally immediately vested. The profit-
sharing contributions portion of a participant's account is
nonvested until five years of vesting service has been
completed, at which time the account is 100% vested.
Investment Options
Participants may direct their account balances in any of
eleven investment options.
A participant's investment in the Company stock is limited to
a maximum of 25% of participant contributions and certain
employer contributions.
Loans to Participants
A participant may borrow up to the lesser of $50,000 or 50%
of his or her vested account balance with a minimum loan
amount of $1,000. Loans are repayable through payroll
deductions over periods ranging up to 60 months (fifteen(not
15) years in the case of a loan used to acquire a principal
residence). The interest rate is based on prevailing market
conditions. Participants cannot borrow from their Company
contribution account balance.
Payment of Benefits
On termination of service due to death, disability or
retirement, a participant generally may elect to receive
either a lump-sum amount equal to the value of the
participant's vested interest in his or her account or in
installment payments over a period of not less than fifteen
years. For termination of service due to other reasons, a
participant may receive the value of the vested interest in
his or her account as a rollover distribution.
2. SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting
The financial statements of the Plan are prepared under the
accrual method of accounting.
Use of Estimates
The preparation of the financial statements in conformity
with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
reported amounts of assets, liabilities and changes therein,
and disclosure of contingent assets and liabilities. Actual
results could differ from those estimates.
Change in Reporting of Investments
The Accounting Standards Executive Committee issued Statement
of Position ("SOP") 99-3, "Accounting for and Reporting of
Certain Defined Contribution Plan Investments and Other
Disclosure Matters," which eliminates the requirement for a
defined contribution plan to disclose participant-directed
investment programs. As such, the 1998 statement of net
assets available for benefits has been reclassified to
eliminate the participant-directed investment program
disclosures.
Investment Valuation
Except for investment contracts (Note 5), all investments are
carried at fair value. Fair value is the last reported sales
price on the last business day of the month for securities
traded on a national securities exchange. Fair value for
shares of the mutual fund investments is the net asset value
of those shares as computed by the respective funds.
Administrative Expenses
Certain administrative expenses are borne by the Plan, while
others are borne by the Company.
Payment of Benefits
Benefits are recorded when paid.
3. INVESTMENTS
The following presents investments that represent 5% or more
of the Plan's net assets:
1999 1998
HON INDUSTRIES Inc. common stock,
1,669,761 and 1,793,314,
respectively $31,141,044 $35,866,277
HON INDUSTRIES Inc. common stock,
1,962,546 and 1,629,093,
respectively 36,601,479* 38,995,599*
Fidelity Puritan Fund, 3,507,334
and 3,496,215 shares, respectively 66,744,568 70,169,033
Fidelity Blue Chip Growth Fund,
1,817,882 and 1,681,718 shares,
respectively 109,272,897 84,741,770
Fidelity Interest Income Fund,
147,130,270 and 136,060,495 shares,
respectively 147,130,270 136,060,495
Fidelity Asset Manager: Growth,
1,475,776 and 1,616,435 shares,
respectively 29,028,511 30,195,001
*Nonparticipant directed.
During 1999, the Plan's investments (including gains and
losses on investments bought and sold, as well as held during
the year) appreciated in value by $13,220,798 as follows:
Mutual funds $18,219,247
Common stock (4,998,449)
$13,220,798
4. NONPARTICIPANT-DIRECTED INVESTMENTS
Information about the net assets and the significant
components of the changes in net assets relating to the
nonparticipant-directed investments is as follows:
1999 1998
Net assets-
Common stock $36,601,479 $38,995,599
Cash - 23,804
Receivables-
Employer contribution 5,314,201 -
Income - 2,288
$41,915,680 $39,021,691
Changes in net assets-
Contributions $6,467,877
Net depreciation (354,067)
Benefits paid to participants (3,205,815)
Expenses (14,006)
$2,893,989
5. GROUP ANNUITY CONTRACTS FOR TERMINATED PARTICIPANTS
Group annuity contracts have been purchased to fund deferred
retirement benefits of terminated employees. The contracts
are held by Principal Financial Group and Lincoln National
Life Insurance Company. The Principal Financial Group
Contract No. 53440 offers investments in a guaranteed fixed
fund which guarantees all deposits against loss and
guarantees an annual interest rate. During 1999, Principal
Financial Group Contract No. 4-18129 and Lincoln National
Life Insurance Company Contract No. 59040 were terminated and
the assets were transferred to the Fidelity Interest Income
Fund, which invests in investment contracts from insurance
companies, banks or other financial institutions. The
Principal Financial Group Contract No. 4-18129 included five
separate investment funds: guaranteed fixed, stock account,
money market, stock index and stock emphasis. The guaranteed
fixed fund guaranteed all deposits against loss and
guaranteed an annual interest rate. The stock account was a
pooled investment account investing in U.S. securities,
primarily common stocks. The money market fund consisted
principally of government securities, commercial paper and
bank certificates of deposit. The stock index fund was a
"passively managed" account whose goal was to earn a rate of
return that followed changes in the Standard & Poor's 500
Stock Index. The stock emphasis fund was a pooled investment
account with a focus toward equity accounts. The Lincoln
National Life Insurance Company Contract No. 59040 offered
several separate investment funds with investments being made
in the following funds: guaranteed fixed, money market and
select equity. The guaranteed fixed fund guaranteed all
deposits against loss of principal and guaranteed an annual
interest rate. The money market fund consisted principally
of securities which had maturities of one year or less. The
select equity fund consisted principally of common stocks,
bonds and short-term investments.
The remaining contract is valued at contract value, which
represents the principal balance of the investment contract,
plus accrued interest at the stated contract rate, less
payments received and contract charges by the insurance
company, because the contract is fully benefit responsive.
6. PLAN TERMINATION
Although it has not expressed any intent to do so, the
Company has the right under the Plan to discontinue its
contributions at any time and to terminate the Plan subject
to the provisions of ERISA. In the event of Plan
termination, participants will become 100% vested in their
accounts.
7. TAX STATUS
The Internal Revenue Services has determined and informed the
Company by a letter dated June 20, 1996, that the Plan is
designed in accordance with applicable sections of the
Internal Revenue Code ("IRC"). The Plan has been amended
since receiving the determination letter. However, the Plan
administrator believes that the Plan is designed and is
currently being operated in compliance with the applicable
requirements of the IRC.
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Schedule I
HON INDUSTRIES INC.
PROFIT-SHARING RETIREMENT PLAN
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
As of December 31, 1999
(Employer Identification Number 42-0617510, Plan Number 001)
Identity of Issuer/ Current
Description of Investment Cost Value
*HON INDUSTRIES INC. COMMON STOCK $35,653,131 $67,742,523
MUTUAL FUNDS:
*Fidelity Puritan Fund 66,744,568
*Fidelity Investment Grade Bond Fund 16,851,628
*Fidelity Blue Chip Growth Fund 109,272,897
*Fidelity Asset Manager Fund 15,229,492
*Fidelity Asset Manager: Growth 29,028,511
*Fidelity Asset Manager: Income 8,596,037
Spartan U.S. Equity Index Fund 6,524,871
Janus Worldwide Fund 11,767,899
Baron Asset Fund 3,034,428
*FIDELITY INTEREST INCOME FUND 147,130,270
GROUP ANNUITY CONTRACT:
Principal Financial Group-
Contract No. GA 53440 4,976,780
*LOANS TO PARTICIPANTS (interest rates
range from 8.5% to 10.0%) 3,422,094
Total assets held for investment
purposes $490,321,998
*Represents a party in interest.
The accompanying notes are an integral part of this schedule.
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Schedule II
HON INDUSTRIES INC.
PROFIT-SHARING RETIREMENT PLAN
SCHEDULE OF REPORTABLE TRANSACTIONS
For the Year Ended December 31, 1999
(Employer Identification Number 42-0617510, Plan Number 001)
Purchases Sales
_________________________________________________________
Current
Identity of Value
Party of Asset
Involved/ Number Number Cost on
Decription of of Purchase of Selling of Transaction Net
Assets Transactions Price Transactions Price Asset Date Gain
_____________________________________________________________________________
None
The accompanying notes are an integral part of this schedule.
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SIGNATURES
Pursuant to the requirements of the securities Exchange Act of
1934, the Committee and the Trustees have duly caused this annual
report to be signed by the undersigned thereunto duly authorized.
HON INDUSTRIES Inc. Profit-Sharing Retirement Plan
By: /s/ David C. Stuebe
David C. Stuebe
Vice President and CFO
By: /s/ Melvin L. McMains
Melvin L. McMains
Vice President and Controller
Date: June 23, 2000
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CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation of our report dated June 23, 2000, included in this
Form 11-K, into HON INDUSTRIES Inc. Profit-Sharing Retirement
Plan's previously filed Form S-8 Registration Statement
No. 333-31366.
Arthur Andersen LLP
Chicago, Illinois
June 23, 2000
