<PAGE> 1
- --------------------------------------------------------------------------------
FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
-----------------
COMMISSION FILE NUMBER 2-91694
-------
INSTRON CORPORATION SAVINGS AND SECURITY PLAN
(Full title of the plan)
INSTRON CORPORATION
100 ROYALL STREET
CANTON, MASSACHUSETTS 02021
(Name and address of principal executive office of issuer of the securities
held pursuant to the plan)
- --------------------------------------------------------------------------------
<PAGE> 2
SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant, has duly caused this amendment to be signed on its behalf by the
undersigned, thereunto duly authorized.
June 26, 1997
INSTRON CORPORATION
By: /s/John R. Barrett
--------------------
John R. Barrett
Treasurer
2
<PAGE> 3
INSTRON CORPORATION
SAVINGS AND SECURITY PLAN
FINANCIAL STATEMENTS
DECEMBER 31, 1996
3
<PAGE> 4
Financial Statements and Exhibits
---------------------------------
Page No.
--------
a. Financial Statements
Report of Independent Accountants 5
Statements of Financial Condition as
of December 31, 1996 and 1995 6
Statements of Income and Changes in Plan
Equity for the years ended December 31, 1996,
December 31, 1995 and December 31, 1994 7
Notes to Financial Statements 8-22
b. Exhibits
Exhibit I - Consent of Independent Accountants 23
4
<PAGE> 5
REPORT OF INDEPENDENT ACCOUNTANTS
---------------------------------
To the Participants and Administrator
of the Instron Corporation Savings and
Security Plan
We have audited the accompanying statements of financial condition of Instron
Corporation Savings and Security Plan as of December 31, 1996 and 1995, and the
related statements of income and changes in plan equity for each of the three
years in the period ended December 31, 1996. 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 financial position of Instron Corporation Savings and
Security Plan as of December 31, 1996 and 1995, and the changes in plan equity
for each of the three years in the period ended December 31, 1996, in conformity
with generally accepted accounting principles.
Boston Massachusetts /s/Coopers & Lybrand L.L.P.
June 24, 1997 ----------------------------
COOPERS & LYBRAND L.L.P.
5
<PAGE> 6
INSTRON CORPORATION SAVINGS
---------------------------
AND SECURITY PLAN
-----------------
STATEMENTS OF FINANCIAL CONDITION
---------------------------------
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------
1996 1995
---- ----
<S> <C> <C>
ASSETS
Cash $ 37,955 $ 26,252
Investment in Instron Corporation
Common Stock, at fair value
(cost $5,551,846 at December 31,
1996, and $5,259,402 at December 31,
1995) 6,042,187 6,417,563
Shares of Registered Investment Companies,
at fair value (cost $17,902,409
at December 31, 1996 and $14,860,373
at December 31, 1995) 20,152,389 15,754,431
Common/Collective Investment Trust, at
contract value 5,089,978 5,074,088
Corporate Stocks, at fair value
(Cost $72,978 at December 31, 1995) 0 71,915
Loans receivable from Plan
Participants 945,426 978,877
Contributions receivable:
Employee 91,718 61,577
Employer 27,593 41,257
Dividends receivable 18,982 19,265
Other receivable 14,953 45,430
----------- -----------
Total Plan Assets $32,421,181 $28,490,655
=========== ===========
LIABILITIES AND PLAN EQUITY
Accounts payable $ 42,209 $ 38,080
Plan equity 32,378,972 28,452,575
----------- -----------
Total Liabilities and Plan Equity $32,421,181 $28,490,655
=========== ===========
</TABLE>
See accompanying notes to the financial statements.
6
<PAGE> 7
INSTRON CORPORATION SAVINGS
---------------------------
AND SECURITY PLAN
-----------------
STATEMENTS OF INCOME
--------------------
AND CHANGES IN PLAN EQUITY
--------------------------
<TABLE>
<CAPTION>
For the year For the year For the year
ended ended ended
December 31, 1996 December 31, 1995 December 31, 1994
----------------- ----------------- -----------------
<S> <C> <C> <C>
Investment income:
Interest $ 382,457 $ 362,748 $ 318,891
Dividends on Instron
Corporation Common Stock 74,589 68,718 49,307
Other dividends 1,753,076 1,390,210 829,769
----------- ----------- -----------
Net investment income 2,210,122 1,821,676 1,197,967
----------- ----------- -----------
Net appreciation (depreciation) in
the fair value of investments 1,082,270 1,974,077 (267,947)
----------- ----------- -----------
Net additions
from investment activity 3,292,392 3,795,753 930,020
----------- ----------- -----------
Contributions:
Participants 1,910,693 3,779,555 1,702,228
Employer 560,888 572,670 496,690
----------- ----------- -----------
2,471,581 4,352,225 2,198,918
----------- ----------- -----------
Total additions 5,763,973 8,147,978 3,128,938
----------- ----------- -----------
Less, benefit and termination
payments to participants:
Distributions paid to
participants 1,837,576 1,041,938 466,266
----------- ----------- -----------
Net increase in plan equity 3,296,397 7,106,040 2,662,672
Plan equity at beginning
of year 28,452,575 21,346,535 18,683,863
----------- ----------- -----------
Plan equity at end of year $32,378,972 $28,452,575 $21,346,535
=========== =========== ===========
</TABLE>
See accompanying notes to the financial statements.
7
<PAGE> 8
INSTRON CORPORATION SAVINGS
---------------------------
AND SECURITY PLAN
-----------------
NOTES TO THE FINANCIAL STATEMENTS
---------------------------------
NOTE 1 - GENERAL DESCRIPTION OF THE PLAN
- ----------------------------------------
The following description of the Instron Corporation Savings and Security Plan
(the "Plan") is intended to give a general summary of its principal provisions.
For a more complete description of the Plan, refer to the Plan document.
The Plan was originally effective July 1, 1984 and was last amended and restated
in its entirety effective August 5, 1996 and has been subsequently amended by
the first amendment thereto. Prior to the effective date of the amended and
restated plan, the Plan consisted of two parts, as follows:
1. The Instron Corporation Savings and Security Plan and Trust dated September
19, 1984, as amended and restated as of January 1, 1989, as further amended,
and as may be further amended from time to time "Division I or the "Instron
Plan"); and
2. The Laboratory MicroSystems, Inc. Retirement and Savings Plan and Trust
established as of November 1, 1987, as amended, and as may be further
amended from time to time ("Division II" or the "LMS Plan").
Division I and Division II together constituted a single plan within the
meaning of Section 414(l) of the Code. All of the assets of Division I of the
Plan and of Division II of the Plan were available to pay benefits to Members
and Beneficiaries of the Plan, as required under Section 414(l)g of the Code.
The rules set forth in each Division shall continue to apply separately to
those employees eligible to participate in such Division.
Effective as of August 5, 1996, the assets of the Trust maintained under
Division II of the Plan were transferred to the Trust maintained under
Division I of the Plan. All accounts held under Division II of the Plan were
transferred to Division I as of such date.
The Plan consists of a cash or deferred compensation plan under Section 401(k)
of the Code of 1986, as amended and the Instron Plan is an employee stock
ownership plan. The purpose of the 401(k) plan is to enable participating
employees of the Company ("Participants") to save for retirement on a
tax-deferred and/or an after-tax basis, and the purpose of the Employee Stock
Ownership Plan is to invest primarily in employer securities. The Instron Plan
is an individual account plan in which each Participant's benefits are based
solely on the amounts contributed to the Plan by the Participant and by the
Company on the Participant's behalf, as adjusted by income and gains and losses
which are allocated to each Participant. The Plan is subject to the rules and
regulations of the Employee Retirement Income Security Act of 1974, as amended,
including rules relating to the duties and conduct of the Plan's fiduciaries.
The following is a description of the provisions of the Instron Plan Division I
through August 4, 1996 and of the entire Plan from August 5, 1996 on:
ELIGIBILITY. Employees of the Company are eligible to participate in the Instron
Plan as of their first pay period. Eligibility to receive matching Company
contributions commences on the first day of the pay period coincident with the
completion of one year of eligibility service. Non-resident aliens are not
eligible to participate in the Instron Plan. LMS employees became eligible as of
July 8, 1996, to participate in the Instron Plan - Division I.
8
<PAGE> 9
ADMINISTRATION. The Plan is administered on behalf of the Company by the
Committee which is appointed by the Company. Vanguard Fiduciary Trust Company,
the Trustee under the Instron Plan, acts as trustee, recordkeeper and custodian
of the securities and investments held by the Instron Plan.
CONTRIBUTIONS. The Instron Plan permits four types of contributions--employee
pre-tax contributions, employee after-tax contributions, employee rollover
contributions and Company matching contributions. Each eligible employee may
voluntarily enter into a salary adjustment agreement with the Company pursuant
to which the employee agrees to a reduction in direct remuneration (pre-tax
contribution). Participants may also enter into a payroll deduction agreement
with the Company for after-tax contributions. The total of these deductions
(pre-tax and after-tax) may not exceed 17% of annual compensation (the
"Participant's Contributions").
The Company, in the discretion of the Board of Directors, may make matching
contributions, based on a Participant's contributions. Currently, the matching
contribution is equal to one-half of the Participant's Contributions (pre-tax
and after-tax)up to 6% of compensation, with a maximum matching contribution of
3% of annual compensation (the "Company Contribution").
INVESTMENTS. Matching contributions made on a Participant's behalf by the
Company will be invested in shares of the common stock of the Company.
Participants who have attained age 55 and have 10 years of Plan membership may
transfer a portion of their matching contribution account out of the Instron
Common Stock Fund in accordance with Section 401(a)28 of the Code. A Participant
may direct that his pre-tax, after-tax and rollover contributions be invested in
10% increments in one or more of the following investment options designated by
the Committee. Funds A-F are sponsored by The Vanguard Group. The description of
each of the Vanguard funds is qualified in its entirety by the prospectus for
the fund which can be obtained from the Trustee.
THERE CAN BE NO ASSURANCE THAT ANY OF THE FUNDS WILL ACHIEVE THEIR STATED
OBJECTIVES.
FUND A - VANGUARD INVESTMENT CONTRACT TRUST. The Vanguard Variable Rate
Investment Contract Trust provides for interest and safety of principal for a
three year period by investing in fixed rate investment contracts and variable
rate investment contracts issued by insurance companies or banks that are highly
rated by the major credit rating agencies and viewed by Vanguard as being
financially sound. The interest rate and principal of each contract are
obligations of the issuing insurance company or bank, NOT of the Trustee of the
Company. Certain restrictions, limitations and penalties apply to transfers or
withdrawals of a participant's account balances out of this Fund. These
restrictions are described in the materials provided by the Trustee.
FUND B - VANGUARD MONEY MARKET RESERVES - PRIME PORTFOLIO. The Vanguard Money
Market Reserves - Prime Portfolio ("Prime Portfolio") is a money market fund
that seeks maximum current income, preservation of capital and liquidity by
investing in a portfolio of high-quality money market instruments that mature in
one year or less. These include negotiable certificates of deposit, bankers'
acceptances, commercial paper, and other short-term corporate obligations. The
Prime Portfolio seeks to maintain a net asset value of $1.00 per share. An
investment in the Prime Portfolio is neither insured nor guaranteed by the U.S.
Government, the Trustee or the Company, and there can be no assurance that the
Prime Portfolio will be able to maintain a stable net asset value of $1.00 per
share or that it will achieve any particular level of current income.
FUND C - VANGUARD FIXED INCOME SECURITIES FUND - INVESTMENT GRADE CORPORATE
PORTFOLIO. The Vanguard Fixed Income Securities Fund - Investment Grade
Corporate Portfolio ("Corporate Portfolio") is a fixed income fund whose primary
objective is to provide a high level of current income consistent with
maintenance of principal and liquidity by
9
<PAGE> 10
FUND C - Vanguard Fixed Income Securities Fund - Investment Grade Corporate
- ---------------------------------------------------------------------------
Portfolio (continued).
- ----------------------
investing in a diversified portfolio of long-term, investment grade bonds. The
Corporate Portfolio emphasizes high-quality corporate bonds. At least 70% of the
Corporate Portfolio is invested in a diversified portfolio of bonds that, at the
time of purchase, were selected from the four highest grades assigned by Moody's
Investors Service or Standard & Poor's Corporation. The Corporate Portfolio is
designed for investors who are seeking a high-quality, long-term corporate bond
portfolio and who are willing to accept the potential of significant share price
volatility due to the relatively long average maturity of Corporate Portfolio's
investments.
FUND D - VANGUARD WINDSOR FUND. The Vanguard Windsor Fund is an equity fund
whose primary objective is to seek long-term growth of capital and income by
investing in a portfolio of common stocks. As a secondary objective, this Fund
also seeks to provide a reasonable level of current income. Although the Fund
invests primarily in common stocks, it may invest in money market instruments,
fixed income securities and other equity securities, such as preferred stock.
The Fund may also invest in stock futures contracts and options.
FUND E - VANGUARD STAR PORTFOLIO. The Vanguard Star Portfolio is a diversified
equity and fixed income fund whose primary objective is to maximize long-term
total return of capital and income. The Star Portfolio invests 60%-70% of its
assets in seven Vanguard equity funds, including Vanguard/Windsor Fund,
Vanguard/Windsor II, Vanguard Index Trust-500 Portfolio, Vanguard/PRIMECAP Fund,
Vanguard Morgan Growth Fund, and Vanguard Explorer Fund. Approximately 30%-40%
of Star Portfolio's assets are invested in three Vanguard fixed-income
portfolios including Long-Term Corporate Portfolio and GNMA Portfolio of
Vanguard Fixed Income Securities Fund, and Prime Portfolio of Vanguard Money
Market Reserves.
FUND F - VANGUARD U.S. GROWTH FUND. The Vanguard U.S. Growth Portfolio seeks
long-term capital appreciation by investing in a diversified portfolio of common
stocks with above-average growth potential. Dividend income is considered
incidental. The U.S. Growth Portfolio invests primarily in the common stocks of
companies whose prospects for growth are believed to be favorable. Such
companies tend to have exceptional records, strong market positions, good
financial strength, and low sensitivity to changing economic conditions.
Securities will be selected solely on the basis of their appreciation potential
as determined from an assessment of their fundamental value and consideration of
prevailing market conditions.
INSTRON COMMON STOCK FUND. Contributions allocated to the Instron Common Stock
Fund are invested in common shares of Instron Corporation ("Instron Common
Stock") which is purchased by the Trustee on the open market or directly from
the Company, depending on market conditions. The value of the Instron Common
Stock Fund is subject to fluctuation in the market price of Instron Common Stock
and there is no guarantee of investment performance.
VESTING AND VOTING RIGHTS. Each Participant is, at all times, 100% vested in all
of the investments in his account, including both those arising from
Participant's Contributions and those arising from the Company's Contributions.
Each Participant has the right to direct the Trustee's vote as to the number of
Instron Corporation common shares standing to his credit in his account on the
record date for any Company stockholder meeting. The Committee will direct the
Trustee to vote proxies and take similar action with respect to the Plan's
securities ownership other than Instron Corporation common shares.
10
<PAGE> 11
PARTICIPANT'S ACCOUNTING. Each participant's account is independently maintained
by the Trustee and reflects all Participant's contributions and Company's
contributions by both contribution and investment category. Accounts are
periodically adjusted to reflect the effect of investment income, realized and
unrealized investment gains and losses and withdrawals and other distributions.
BENEFITS. Participants are entitled to receive their entire interest in the
Instron Plan in a lump sum whenever their employment with the Company terminates
for any reason. Benefits are paid in cash, unless a Participant elects to
receive an in-kind distribution of shares of Instron Common Stock credited to
his account. During the period of employment with the Company, participants may
(if they are over 59-1/2 years of age, or under certain hardship conditions) be
entitled to withdraw part or all of their interest (exclusive of a portion of
earnings) in investments arising from Participant's contributions, but not their
interests in investments arising from the Company's matching contribution. If
such withdrawals are non-hardship condition withdrawals, matching Company
Contributions will be suspended during the twelve months following the
withdrawal. All such withdrawals (except an amount equal to a Participant's
after-tax contribution) are subject to federal income tax. In addition, a 10%
excise tax is imposed on withdrawals made before the age of 59-1/2 years.
Withdrawals of Company matching funds on the employee pre-tax and after-tax
contributions are allowed upon termination of employment or retirement.
Benefit payments are generally distributed within 60 days after the Participant
becomes entitled to receive them, in a manner prescribed by the Committee.
Special rules apply in the case of a Participant's death.
PARTICIPANT LOANS. Active participants are permitted to borrow funds from their
pre-tax, after-tax and rollover accounts in the Plan subject to certain
limitations. Loans are not permitted from a Participant's Company Contribution
account. During the 1996 Plan year, the interest rate on these loans is equal to
Bank of Boston's prime rate plus 1%, at the time the loan is granted. These
loans generally must be repaid over a period of no longer than 5 years. Interest
paid by a Participant is credited to the account(s) from which the loan is made.
Investment income includes interest income of $78,825, $76,074, and $59,823 from
employee loans for the years ended December 31, 1996, 1995, and 1994,
respectively.
MERGED PROFIT SHARING ACCOUNTS. In September 1995, the Instron Corporation
Employees' Profit Sharing Plan was merged into the Plan. All participants are
100% vested in their transferred profit sharing accounts. Upon termination of
employment, profit sharing accounts are distributed at the election of the
participant in a lump sum, by purchase of an annuity or by installment payments
over a period of up to 15 years. Participants may take loans from their profit
sharing accounts in accordance with the rules discussed above.
OTHER. The Company's contributions may be made only to the extent the Company
has available allowable deductions under the Internal Revenue Code. The
contribution percentages of certain participants may be reduced under certain
circumstances and other steps may be taken, as outlined in the Instron Plan, in
order to maintain the Plan's tax exempt status. There are special rules to allow
"Rollover Contributions" of amounts received by employees from certain other
retirement plans, as defined in the Plan.
The following is a description of the provisions of the LMS Plan - Division II,
in effect until August 5, 1996:
INVESTMENTS. A participant may direct that his pre-tax, after-tax contributions,
rollover contributions, LMS matching contributions and discretionary
contributions made on a participant's behalf be invested in various investment
options. The majority of participant investments are in mutual funds sponsored
by The American Funds Groups
11
<PAGE> 12
and in individual corporate stocks, which are principally included under the
"Other" caption of Note 7.
ELIGIBILITY. Employees of Laboratory MicroSystems, Inc. ("LMS") are eligible
to participate in the LMS Plan on the earlier of the first day of the Plan
Year or the fourth, seventh or tenth month of the Plan Year coinciding with
or next following the completion of six (6) months of service and attainment
of age 21.
ADMINISTRATION. The LMS Plan is administered by an LMS-appointed Trustee.
The First Albany Corporation acts as recordkeeper and custodian of the
securities and investments held by the LMS Plan.
CONTRIBUTIONS. The LMS Plan permits five types of contributions: employee
pre-tax contributions, employee after-tax contributions, employee rollover
contributions, Company matching contributions and discretionary contributions.
Each eligible employee may voluntarily enter into a salary adjustment agreement
pursuant to which the employee agrees to a reduction in direct remuneration
(pre-tax contribution). The total of these contributions may not exceed the
limitation prescribed by law. Participants may also enter into a payroll
deduction agreement with LMS for after-tax contributions (up to 6% of
compensation).
The matching contribution for the 1996 year was equal to 33-1/3% of a
Participant's salary reduction contributions (only salary reductions up to 6% of
a Participant's compensation are considered for this purpose) for the period
January 1, 1996 through July 7, 1996. LMS may also make a contribution, in its
sole discretion, to be allocated on the basis of total compensation. For 1996,
LMS made contributions totalling $16,242.
VESTING. Each participant is 100% vested in all amounts credited to their
accounts. As of December 31, 1996 and 1995, there were no forfeited
non-vested accounts.
BENEFITS. Whenever employment with LMS terminates for any reason, participants
are entitled to receive their interest in the LMS Plan in a single lump sum
payment or in equal installments over a period of not more than the
participant's assumed life expectancy at the time of distribution.
During the period of employment with LMS, Participants may be entitled to
withdraw part or all of their interests in the LMS Plan (exclusive of a portion
of earnings if they are over 59-1/2 years of age or under certain hardship
conditions.) All such withdrawals (except an amount equal to a Participant's
after-tax contributions) are subject to federal income tax. In addition, a 10%
excise tax is imposed on withdrawals made before the age of 59 1/2 years.
PARTICIPANT LOANS. Active participants are permitted to borrow funds from their
accounts in the Plan subject to certain limitations. During the 1996 Plan year,
the interest rate on these loans is equal to the prime rate plus 1% as reported
in the Wall Street Journal, at the time the loan is granted. These loans
generally must be repaid over a period of no longer than 5 years. Interest paid
by a Participant is credited to the account(s) from which the loan is made.
OTHER. The LMS contributions may be made only to the extent that the Company has
available allowable deductions under the Internal Revenue Code. The contribution
percentages of certain Participants may be reduced under certain circumstances
and other steps may be taken, as outlined in the Plan in order to maintain the
Plan's tax exempt status. There are special rules to allow "rollover
contributions" of amounts received by employees from certain other retirement
plans, as defined in the Plan.
PARTICIPANTS ACCOUNTING. Each participant's account is independently
maintained by the Trustee and reflects all participant's contributions and
LMS's contributions. Accounts are periodically adjusted to reflect the
effect of investment income,
12
<PAGE> 13
realized and unrealized investment gains and losses, withdrawals and other
distributions. The LMS accounts were transferred to Vanguard Fiduciary Trust
Company as of August 5, 1996.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- ---------------------------------------------------
BASIS OF ACCOUNTING. The accompanying financial statements have been prepared on
the accrual basis of accounting, in conformity with generally accepted
accounting principles.
INVESTMENT VALUATION. Investments in mutual fund shares are valued at the
net asset value announced by the fund as of the close of business on the last
business day of the year.
Investments in Instron Corporation's common stock are valued at the last
reported sales price on the last business day of the year. In the event that no
sale was reported on that date, such investments are valued at the mean of the
last reported bid and asked price or the price of the last sale reported,
whichever is more recent.
Investments in shares of Vanguard's Variable Rate Investment Contract Trust are
stated at contract value, which approximates fair value. Participants' loans
receivable are valued at cost which approximates fair value.
All investments of the Plan are valued at fair value as estimated in good faith
by the recordkeeper.
SECURITY TRANSACTIONS AND INVESTMENT INCOME. Sales of shares of the collective
investment trust are recorded on the Trustee's valuation dates (the last day of
each calendar month). All other security transactions are recorded on the trade
date. Realized gains or losses on security transactions are recorded as the
difference between proceeds received and cost as determined on the average cost
basis.
Transfers between investment options are treated as the purchase of one
investment option out of the proceeds of the sale of another.
Dividend income is recorded on the ex-dividend date. Interest income is recorded
on the accrual basis.
In accordance with the policy of stating investments at current value, net
unrealized appreciation or depreciation for the period is reflected in the
Statement of Income and Changes in Plan Equity.
EXPENSES OF THE PLAN. All expenses incurred in the administration of the Plan
and the Trust are charged to and paid by the Company. To the extent not paid by
the Company, the expenses may be charged against the Trust assets.
NET APPRECIATION (DEPRECIATION). The Plan presents in the Statement of Income
and Changes in Plan Equity the net appreciation (depreciation) in the fair value
of its investments which consists of the realized gains or losses and the
unrealized appreciation (depreciation) on those investments.
USE OF ESTIMATES. The preparation of the Plan's financial statements in
conformity with generally accepted accounting principles requires the plan
administrator to make significant estimates and assumptions that affect the
reported amounts of net assets available for benefits at the date of the
financial statements and the changes in net assets available for benefits during
the reporting period and, when applicable, disclosures of contingent assets and
liabilities at the date of the financial statements. Actual results could differ
from those estimates.
13
<PAGE> 14
RISK AND UNCERTAINTIES. The Plan provides for various investment options in any
combination of stocks, bonds, fixed income securities, mutual funds, and other
investment securities. Investment securities are exposed to various risks, such
as interest rate, market, and credit risks. Due to the level of risk associated
with certain investment securities, it is at least reasonably possible that
changes in the values of investment securities will occur in the near term and
that such changes could materially affect participants' account balances and the
amounts reported in the statement of net assets available for plan benefits.
NOTE 3 - INVESTMENTS
- --------------------
At December 31, 1996 and 1995 the number of participants in each investment
program, the number of units/shares, cost and the current value of investments
held were as follows:
<TABLE>
<CAPTION>
December 31, 1996
---------------------------------------------------------------------
Units/ Market/Fair
Participants Shares Cost Value
------------ ------ ---- -----
<S> <C> <C> <C> <C>
Instron Common Stock 532 473,897 $ 5,551,846 $ 6,042,187*
Vanguard Windsor Fund 443 798,576 11,279,315 13,248,381*
Vanguard Fixed Income
Securities Fund,
Investment Grade
Bond Portfolio 180 213,467 1,840,560 1,876,377*
Vanguard Money Market
Trust, Prime Portfolio 187 2,506,872 2,506,872 2,506,872*
Vanguard Variable Rate
Investment Contract
Trust 267 5,089,978 5,089,978 5,089,978*
Vanguard Star Portfolio 139 73,323 1,111,468 1,162,902
Vanguard U.S. Growth Fund 167 57,197 1,164,194 1,357,857
Loan Fund 142 0 945,426 945,426
----------- -----------
Total $29,489,659 $32,229,980
=========== ===========
</TABLE>
*Exceed 5% of Plan Assets
14
<PAGE> 15
<TABLE>
<CAPTION>
DECEMBER 31, 1995
-------------------------------------------------------------
Units/ Market/Fair
Participants Shares Cost Value
------------ ------ ---- -----
<S> <C> <C> <C> <C>
Instron Common Stock 488 475,375 $ 5,259,402 $ 6,417,563*
Vanguard Windsor Fund 391 673,484 9,223,346 9,785,727*
Vanguard Fixed Income
Securities Fund,
Investment Grade
Bond Portfolio 178 197,591 1,700,111 1,872,973*
Vanguard Money Market
Trust, Prime Portfolio 181 2,453,458 2,453,458 2,453,458*
Vanguard Variable Rate
Investment Contract
Trust 281 5,074,088 5,074,088 5,074,088*
Vanguard Star Portfolio 73 41,173 583,429 618,417
Vanguard U.S. Growth Fund 76 29,088 508,748 591,950
Loan Fund 148 0 978,877 978,877
Other 46 0 464,259 503,821
----------- -----------
Total $26,245,718 $28,296,874
=========== ===========
</TABLE>
*Exceed 5% of Plan Assets.
15
<PAGE> 16
NOTE 4 - PLAN TERMINATION
- -------------------------
The Company believes the Plan will continue without interruption, but reserves
the right to terminate or amend the Plan or discontinue contributions thereto.
In the event that both the Plan and the related trust funds terminate, all
participants' accounts continue to be fully vested and nonforfeitable. All
accounts will be valued as of the termination date and all account balances will
be distributed in full to participants, in the form of cash and/or Company
common stock.
NOTE 5 - FEDERAL INCOME TAXES
- -----------------------------
The Plan and its related trust are intended to satisfy the provisions of
Sections 401 and 501 of the Code as amended from time to time and under any
corresponding provisions of the Code which may be enacted. The Instron Plan is
also designed to qualify as an "employee stock ownership plan" under Section
4975(e) of the Code. Accordingly, the Plan is intended to be exempt from Federal
Income taxes.
The Plan last received a favorable determination letter dated January 3, 1997,
from the IRS in connection with the Plan as amended and restated effective
August 5, 1996, as amended. Management believes the Plan is operating in
compliance with the requirements of the IRS to maintain its tax exempt status.
Management is committed to amend the Plan as necessary to maintain its tax
exempt status.
Annual Participant's contributions up to $9,500 in 1996, adjusted annually for
cost of living, the Company's contributions, and earnings on all contributions
may be tax deferred. In addition, when any shares of Common Stock of the Company
are distributed as part of a lump distribution to an employee, a portion of the
tax thereon (on net unrealized appreciation) may be postponed until the time of
disposition of such shares. Tax on Plan distributions may be deferred to the
extent a distribution is rolled over into another qualified plan or an IRA in
accordance with IRS rules.
16
<PAGE> 17
NOTE 6 - ALLOCATION OF PLAN ASSETS AND LIABILITIES TO INVESTMENT PROGRAMS
-------------------------------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER 31, 1996
---------------------------------------------------------------------------------------------------------------------
Vanguard
Instron Fixed Vanguard Vanguard Common/
Common Vanguard Income Money Vanguard U.S. Collective
Stock Windsor Securities Market Star Growth Investment Loan
Fund Fund Fund Reserves Growth Fund Trust Fund Total
--------- ----------- ---------- ---------- ---------- --------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Cash $ 37,955 $ 37,955
Investments at
fair value 6,042,187 $13,248,381 $1,876,377 $2,506,872 $1,162,902 $1,357,85 $5,089,978 $945,426 32,229,980
Contributions
receivable:
Employee 2,486 37,192 6,337 4,363 9,904 15,872 15,564 91,718
Employer 27,593 27,593
Dividends 18,982 18,982
receivable
Other receivable 14,614 339 14,953
---------- ----------- ---------- ---------- ---------- ---------- ---------- -------- -----------
Total Plan Assets $6,143,817 $13,285,912 $1,882,714 $2,511,235 $1,172,806 $1,373,72 $5,105,542 $945,426 $32,421,181
========== =========== ========== ========== ========== ========== ========== ======== ===========
LIABILITIES AND
PLAN EQUITY:
Accounts payable $ 42,209 $ 42,209
Plan Equity 6,101,608 13,285,912 1,882,714 2,511,235 1,172,806 1,373,729 5,105,542 945,426 32,378,972
---------- ----------- ---------- ---------- ---------- ---------- ---------- -------- -----------
Total Liabilities
and Plan Equity $6,143,817 $13,285,912 $1,882,714 $2,511,235 $1,172,806 $1,373,72 $5,105,542 $945,426 $32,421,181
========== =========== ========== ========== ========== ========== ========== ======== ===========
</TABLE>
17
<PAGE> 18
NOTE 6 - ALLOCATION OF PLAN ASSETS AND LIABILITIES TO INVESTMENT PROGRAMS
<TABLE>
<CAPTION>
DECEMBER 31, 1995
-------------------------------------------------------------------------------------------------------------------
Vanguard
Instron Fixed Vanguard Vanguard Common/
Common Vanguard Income Money Vanguard U.S. Collective
Stock Windsor Securities Market Star Growth Investment Loan
Fund Fund Fund Reserves Growth Fund Trust Fund Other Total
---------- ---------- ---------- ---------- -------- -------- ---------- -------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Cash $ 26,252 $ 26,252
Investments at
Fair value 6,417,563 $9,785,72 $1,872,973 $2,453,458 $618,417 $591,950 $5,074,088 $978,877 $503,821 28,296,874
Contributions
receivable:
Employee 2,613 27,695 4,942 4,773 2,830 3,113 15,611 61,577
Employer 18,717 22,540 41,257
Dividends
receivable 19,265 19,265
Other receivable 28,627 7,800 1,109 1,782 1,258 306 4,548 45,430
---------- ---------- ---------- ---------- -------- -------- ---------- -------- -------- -----------
Total Plan Assets $6,513,037 $9,821,222 $1,879,024 $2,460,013 $622,505 $595,369 $5,094,247 $978,877 $526,361 $28,490,655
========== ========== ========== ========== ======== ======== ========== ======== ======== ===========
LIABILITIES AND
PLAN EQUITY:
Accounts payable $ 38,080 $ 38,080
Plan Equity 6,474,957 9,821,222 1,879,024 2,460,013 622,505 595,369 5,094,247 978,877 526,361 28,452,575
---------- ---------- ---------- ---------- -------- -------- ---------- -------- -------- -----------
Total Liabilities
and Plan Equity $6,513,037 $9,821,222 $1,879,024 $2,460,013 $622,505 $595,369 $5,094,247 $978,877 $526,361 $28,490,655
========== ========== ========== ========== ======== ======== ========== ======== ======== ===========
</TABLE>
18
<PAGE> 19
NOTE 7 - ALLOCATION OF PLAN INCOME AND CHANGES IN PLAN EQUITY TO INVESTMENT
------------------------------------------------------------------
PROGRAMS
--------
<TABLE>
FOR THE YEAR ENDED DECEMBER 31, 1996
----------------------------------------------------------------------------------------------------------
<CAPTION>
Vanguard
Instron Fixed Vanguard Vanguard Common/
Common Vanguard Income Money Vanguard U.S. Collective
Stock Windsor Securities Market Star Growth Investment Loan
Fund Fund Fund Reserves Growth Fund Trust Fund
----------- ------------ ----------- ----------- ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment Income:
Interest $ 1,651 $ -- $ -- $ -- $ -- $ -- $ 301,203 $ 78,825
Dividends 74,589 1,263,916 156,653 123,864 101,508 99,427 -- 0
----------- ------------ ----------- ----------- ---------- ---------- ----------- -----------
Net investment
income 76,240 1,263,916 156,653 123,864 101,508 99,427 301,203 78,825
----------- ------------ ----------- ----------- ---------- ---------- ----------- -----------
Net appreciation
(depreciation)in
the fair value of
investments
(338,715) 1,425,384 (138,983) 0 30,369 114,916 0 0
----------- ------------ ----------- ----------- ---------- ---------- ----------- -----------
Net additions
from
investment
activity (262,475) 2,689,300 17,670 123,864 131,877 214,343 301,203 78,825
----------- ------------ ----------- ----------- ---------- ---------- ----------- -----------
Contributions:
Participants 75,464 782,730 141,381 137,558 142,171 176,873 390,379 0
Employer 544,646 0 0 0 0 0 0 0
----------- ------------ ----------- ----------- ---------- ---------- ----------- -----------
620,110 782,730 141,381 137,558 142,171 176,873 390,379 0
----------- ------------ ----------- ----------- ---------- ---------- ----------- -----------
Total additions 357,635 3,472,030 159,051 261,422 274,048 391,216 691,582 78,825
----------- ------------ ----------- ----------- ---------- ---------- ----------- -----------
Less, benefit and
termination payments
to participants:
Distributions
paid to 305,546 352,873 82,840 143,348 167,732 40,692 543,539 56,217
participants ----------- ------------ ----------- ----------- ---------- ---------- ----------- -----------
52,089 3,119,157 76,211 118,074 106,316 350,524 148,043 22,608
----------- ------------ ----------- ----------- ---------- ---------- ----------- -----------
Interfund
transfers (425,438) 345,533 (72,521) (66,851) 443,984 427,836 (136,748) (56,059)
----------- ------------ ----------- ----------- ---------- ---------- ----------- -----------
Net increase
(decrease) in
plan equity
(373,349) 3,464,690 3,690 51,223 550,300 778,360 11,295 (33,451)
----------- ------------ ----------- ----------- ---------- ---------- ----------- -----------
Plan equity at
beginning of year 6,474,957 9,821,222 1,879,024 2,460,013 622,505 595,369 5,094,247 978,877
----------- ------------ ----------- ----------- ---------- ---------- ----------- -----------
Plan equity at
end of year $ 6,101,608 $ 13,285,912 $ 1,882,714 $ 2,511,236 $1,172,805 $1,373,729 $ 5,105,542 $ 945,426
=========== ============ =========== =========== ========== ========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
Other Total
----------- ----------
<S> <C> <C>
Investment Income:
Interest $ 778 $ 382,457
Dividends 7,708 1,827,665
----------- -----------
Net investment
income 8,486 2,210,122
----------- -----------
Net appreciation
(depreciation)in
the fair value of
investments
(10,701) 1,082,270
----------- -----------
Net additions
from
investment
activity (2,215) 3,292,392
----------- -----------
Contributions:
Participants 64,137 1,910,693
Employer 16,242 560,888
----------- -----------
80,379 2,471,581
----------- -----------
Total additions 78,164 5,763,973
----------- -----------
Less, benefit and
termination payments
to participants:
Distributions
paid to
participants 144,789 1,837,576
----------- -----------
(66,625) 3,926,397
----------- -----------
Interfund transfers (459,736) 0
----------- -----------
Net increase
(decrease) in
plan equity (526,361) 3,926,397
----------- -----------
Plan equity at
beginning of year 526,361 28,452,575
----------- -----------
Plan equity at
end of year $ 0 $32,378,972
=========== ===========
</TABLE>
19
<PAGE> 20
<TABLE>
NOTE 7 - ALLOCATION OF PLAN INCOME AND CHANGES IN PLAN EQUITY TO INVESTMENT PROGRAMS
------------------------------------------------------------------------------------
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1995
---------------------------------------------------------------------------------------------------
Vanguard
Instron Fixed Vanguard Vanguard Common/
Common Vanguard Income Money Vanguard U.S. Collective
Stock Windsor Securities Market Star Growth Investment Loan
Fund Fund Fund Reserves Portfolio Fund Trust Fund
---- ---- ---- -------- --------- ---- ----- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment
Income:
Interest $ 2,085 $ -- $ -- $ -- $ -- $ -- $ 283,457 $ 76,815
Dividends 68,718 1,095,273 113,615 101,953 40,753 23,577 0 0
---------- ---------- ---------- ---------- -------- -------- ---------- --------
Net investment
income 70,803 1,095,273 113,615 101,953 40,753 23,577 283,457 76,815
---------- ---------- ---------- ---------- -------- -------- ---------- --------
Net appreciation
in the fair
value of
investments 489,962 1,024,773 259,380 0 52,122 88,617 0 0
---------- ---------- ---------- ---------- -------- -------- ---------- --------
Net additions
from investment
activity 560,765 2,120,046 372,995 101,953 92,875 112,194 283,457 76,815
---------- ---------- ---------- ---------- -------- -------- ---------- --------
Contributions:
Participants 184,727 1,073,855 170,092 999,767 241,577 202,067 801,663 0
Employer 529,218 0 0 0 0 0 0 0
---------- ---------- ---------- ---------- -------- -------- ---------- --------
713,945 1,073,855 170,092 999,767 241,577 202,067 801,663 0
---------- ---------- ---------- ---------- -------- -------- ---------- --------
Total additions 1,274,710 3,193,901 543,087 1,101,720 334,452 314,261 1,085,120 76,815
---------- ---------- ---------- ---------- -------- -------- ---------- --------
Less, benefit and
termination payments
to participants:
Distributions
paid to
participants 163,539 430,461 62,793 118,010 21,538 14,488 173,411 30,710
---------- ---------- ---------- ---------- -------- -------- ---------- --------
1,111,171 2,763,440 480,294 983,710 312,914 299,773 911,709 46,105
---------- ---------- ---------- ---------- -------- -------- ---------- --------
Interfund transfers (79,601) 230,559 25,354 (114,831) 63,642 66,183 (248,069) 66,887
---------- ---------- ---------- ---------- -------- -------- ---------- --------
Net increase
in plan equity 1,031,570 2,993,999 505,648 868,879 376,556 365,956 663,640 112,992
---------- ---------- ---------- ---------- -------- -------- ---------- --------
Plan equity at
beginning of year 5,443,387 6,827,223 1,373,376 1,591,134 245,949 229,413 4,430,607 865,885
---------- ---------- ---------- ---------- -------- -------- ---------- --------
Plan equity at
end of year $6,474,957 $9,821,222 $1,879,024 $2,460,013 $622,505 $595,369 $5,094,247 $978,877
========== ========== ========== ========== ======== ======== ========== ========
</TABLE>
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1995
----------------------
Other Total
----- -----
<S> <C> <C>
Investment
Income:
Interest $ 391 $ 362,748
Dividends 15,039 1,458,928
-------- -----------
Net investment
income 15,430 1,821,676
-------- -----------
Net appreciation
in the fair
value of
investments 59,223 1,974,077
-------- -----------
Net additions
from investment
activity 74,653 3,795,753
-------- -----------
Contributions:
Participants 105,807 3,779,555
Employer 43,452 572,670
-------- -----------
149,259 4,352,225
-------- -----------
Total additions 223,912 8,147,978
-------- -----------
Less, benefit and
termination payments
to participants:
Distributions
paid to
participants 26,988 1,041,938
-------- -----------
196,924 7,106,040
-------- -----------
Interfund transfers (10,124) 0
-------- -----------
Net increase
in plan equity 186,800 7,106,040
-------- -----------
Plan equity at
beginning of year 339,561 21,346,535
-------- -----------
Plan equity at
end of year $526,361 $28,452,575
======== ===========
</TABLE>
20
<PAGE> 21
<TABLE>
NOTE 7 - ALLOCATION OF PLAN INCOME AND CHANGES IN PLAN EQUITY TO INVESTMENT PROGRAMS
------------------------------------------------------------------------------------
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1994
---------------------------------------------------------------------------------------------------
Vanguard
Instron Fixed Vanguard Vanguard Common/
Common Vanguard Income Money Vanguard U.S. Collective
Stock Windsor Securities Market Star Growth Investment
Fund Fund Fund Reserves Portfolio Fund Trust
---- ---- ---- -------- --------- ---- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Investment Income:
Interest $ 1,457 $ $ $ $ $ $ 247,348
Dividends 49,307 635,845 112,864 62,080 12,410 2,039 0
---------- ---------- ---------- ---------- -------- -------- ----------
Net investment
income 50,764 635,845 112,864 62,080 12,410 2,039 247,348
---------- ---------- ---------- ---------- -------- -------- ----------
Net appreciation
(depreciation) in
the fair value of
investments 607,392 (668,245) (190,989) 0 (12,866) 2,860 0
---------- ---------- ---------- ---------- -------- -------- ----------
Net additions from
investment activity 658,156 (32,400) (78,125) 62,080 (456) 4,899 247,348
---------- ---------- ---------- ---------- -------- -------- ----------
Contributions:
Participants 104,386 693,917 155,784 159,868 54,474 77,169 390,139
Employer 475,194 0 0 0 0 0 0
---------- ---------- ---------- ---------- -------- -------- ----------
579,580 693,917 155,784 159,868 54,474 77,169 390,139
---------- ---------- ---------- ---------- -------- -------- ----------
Total additions 1,237,736 661,517 77,659 221,948 54,018 82,068 637,487
---------- ---------- ---------- ---------- -------- -------- ----------
Less, benefit and
termination payments
to participants:
Distributions paid to
participants 104,668 158,663 82,484 22,751 11,347 0 77,825
---------- ---------- ---------- ---------- -------- -------- ----------
1,133,068 502,854 (4,825) 199,197 42,671 82,068 559,662
---------- ---------- ---------- ---------- -------- -------- ----------
Interfund transfers 43,687 86,033 (44,596) (310,372) 203,278 147,345 (164,826)
---------- ---------- ---------- ---------- -------- -------- ----------
Net increase
(decrease) in
plan equity 1,176,755 588,887 (49,421) (111,175) 245,949 229,413 394,836
---------- ---------- ---------- ---------- -------- -------- ----------
Plan equity at
beginning of year 4,266,632 6,238,336 1,422,797 1,702,309 0 0 4,035,771
---------- ---------- ---------- ---------- -------- -------- ----------
Plan equity at
end of year $5,443,387 $6,827,223 $1,373,376 $1,591,134 $245,949 $229,413 $4,430,607
========== ========== ========== ========== ======== ======== ==========
</TABLE>
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1994
------------------------------------
Loan
Fund Other Total
---- ----- -----
<S> <C> <C> <C>
Investment Income:
Interest $ 59,823 $ 10,263 $ 318,891
Dividends 0 4,531 879,076
-------- -------- ------------
Net investment
income 59,823 14,794 1,197,967
-------- -------- ------------
Net appreciation
(depreciation) in
the fair value of
investments 0 (6,099) (267,947)
-------- -------- ------------
Net additions from
investment activity 59,823 8,695 930,020
-------- -------- ------------
Contributions:
Participants 0 67,076 1,702,813
Employer 0 20,912 496,105
-------- -------- ------------
0 87,988 2,198,918
-------- -------- ------------
Total additions 59,823 96,683 3,128,938
-------- -------- ------------
Less, benefit and
termination payments
to participants:
Distributions paid to
participants 8,528 0 466,266
-------- -------- ------------
51,295 96,683 2,662,672
-------- -------- ------------
Interfund transfers 39,451 0 0
-------- -------- ------------
Net increase
(decrease) in
plan equity 90,746 96,683 2,662,672
-------- -------- ------------
Plan equity at
beginning of year 775,139 242,879 18,683,863
-------- -------- ------------
Plan equity at
end of year $865,885 $339,561 $ 21,346,535
======== ======== ============
</TABLE>
21
<PAGE> 22
NOTE 8 - PARTIES IN INTEREST
- ----------------------------
A portion of the Plan's investments are shares of mutual funds managed by
Vanguard Fiduciary Trust Company (Vanguard). Vanguard acts as trustee,
recordkeeper and custodian of the securities and investments held by the Instron
Plan. Participants with outstanding loan balances are also considered to be
parties in interest.
22
<PAGE> 1
EXHIBIT I
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
We consent to the incorporation by reference in the registration statement on
Form S-8 (File No. 2-91694) of our report dated June 24, 1997, on our audits of
the financial statements of Instron Corporation Savings and Security Plan as of
December 31, 1996 and 1995, and for each of the three years in the period ended
December 31, 1996, which report is included in this Annual Report on Form 11-K.
Boston, Massachusetts /s/Coopers & Lybrand L.L.P.
June 24, 1997 ---------------------------
COOPERS & LYBRAND L.L.P.
23
