<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, 1998
-----------------
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 25, 1999 INSTRON CORPORATION
By: /s/ John R. Barrett
-------------------------------
John R. Barrett
Treasurer
2
<PAGE> 3
INSTRON CORPORATION
SAVINGS AND SECURITY PLAN
FINANCIAL STATEMENTS
DECEMBER 31, 1998
3
<PAGE> 4
FINANCIAL STATEMENTS AND EXHIBITS
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
a. Financial Statements
Report of Independent Accountants 5
Statements of Net Assets Available for
Plan Benefits with Fund Information
as of December 31, 1998 and 1997 6-7
Statement of Changes in Net Assets Available
for Plan Benefits with Fund Information for the
year-ended December 31, 1998 8
Notes to Financial Statements 9-15
b. Supplemental Schedules:
Line 27(a) - Schedule of Assets Held for Investment Purposes
as of December 31, 1998 16
Line 27(d) - Schedule of Reportable Transactions - Single
Transactions in Excess of 5% of the Current Value of Plan
Assets for the year-ended December 31, 1998 17
Line 27(d) - Schedule of Reportable Transactions - Series of
Transactions in Excess of 5% of the Current Value of Plan
Assets for the year-ended December 31, 1998 18
c. Exhibits
Exhibit 23 - Consent of Independent Accountants
</TABLE>
4
<PAGE> 5
REPORT OF INDEPENDENT ACCOUNTANTS
To the Participants and Administrator of the
Instron Corporation Savings and Security Plan:
In our opinion, the accompanying statements of net assets available for plan
benefits with fund information and the related statement of changes in net
assets available for plan benefits with fund information present fairly, in all
material respects, the net assets available for plan benefits of the Instron
Corporation Savings and Security Plan ( the "Plan") at December 31, 1998 and
1997,and the changes in net assets available for plan benefits for the year
ended December 31, 1998, in conformity with generally accepted accounting
principles. 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 of these statements in
accordance with generally accepted auditing standards, which 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, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for the opinion expressed above.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules listed in the
index on page 4 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. The fund information in the statements of net assets available for plan
benefits with fund information and the statement 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.
These supplemental schedules and fund information are the responsibility of the
Plan's management. 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.
Boston Massachusetts /s/PricewaterhouseCoopers LLP
June 25, 1999 ----------------------------------------
PRICEWATERHOUSECOOPERS LLP
5
<PAGE> 6
<TABLE>
<CAPTION>
INSTRON CORPORATION SAVINGS
AND SECURITY PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
WITH FUND INFORMATION
December 31, 1998
-----------------------------------------------------------------------------
Vanguard Vanguard
Long-Term Prime Money Vanguard Vanguard Vanguard
Corporate Market Star US Growth Windsor
Fund Fund Fund Fund Fund
------------- ------------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments, at fair value:
Shares of registered
investment companies $2,492,539 $2,510,496 $2,624,167 $4,734,224 $15,173,633
Common stock
Cash equivalents
Participant loans
----------- ---------- ----------- ----------- ------------
Total investments 2,492,539 2,510,496 2,624,167 4,734,224 15,173,633
----------- ---------- ----------- ----------- ------------
Receivables:
Employee contribution 3,811 3,869 5,735 9,766 21,401
Employer contribution
Other receivables
----------- ---------- ----------- ---------- ------------
Total receivables 3,811 3,869 5,735 9,766 21,401
----------- ---------- ----------- ---------- ------------
Total assets 2,496,350 2,514,365 2,629,902 4,743,990 15,195,034
----------- ---------- ----------- ---------- ------------
LIABILITIES
Accounts payable
----------- ---------- ----------- ---------- ------------
Net assets available for
plan benefits $2,496,350 $2,514,365 $2,629,902 $4,743,990 $15,195,034
========== ========== ========== ========== ============
<CAPTION>
December 31, 1998
------------------------------------------------------------
Vanguard Instron
Retirement Common
Savings Stock Participant
Trust Fund Loans Total
----------- ---------- -------------- -----------
<S> <C> <C> <C> <C>
ASSETS
Investments, at fair value:
Shares of registered
investment companies $5,502,622 $33,037,681
Common stock $8,402,372 8,402,372
Cash equivalents 30,733 30,733
Participant loans $857,608 857,608
----------- ---------- -------- -----------
Total investments 5,502,622 8,433,105 857,608 42,328,394
----------- ---------- -------- -----------
Receivables:
Employee contribution 6,911 2,437 53,930
Employer contribution 22,019 22,019
Other receivables 19,559 19,559
----------- ---------- --------- -----------
Total receivables 6,911 44,015 95,508
----------- ---------- --------- -----------
Total assets 5,509,533 8,477,120 857,608 42,423,902
----------- ---------- --------- -----------
LIABILITIES
Accounts payable 71,983 71,983
----------- ---------- --------- -----------
Net assets available for
plan benefits $5,509,533 $8,405,137 $857,608 $42,351,919
========== ========== ======== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements
6
<PAGE> 7
<TABLE>
<CAPTION>
INSTRON CORPORATION SAVINGS AND SECURITY PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
WITH FUND INFORMATION
December 31, 1997
--------------------------------------------------------------------------
Vanguard Vanguard
Long-Term Prime Money Vanguard Vanguard Vanguard
Corporate Market Star US Growth Windsor
Fund Fund Fund Fund Fund
------------ ----------- ------------ ------------- --------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments, at fair value:
Shares of registered
investment companies $2,250,553 $2,297,962 $1,967,631 $2,229,729 $16,263,492
Common stock
Cash equivalents
Participant loans
---------- ---------- ---------- ---------- -----------
Total investments 2,250,553 2,297,962 1,967,631 2,229,729 16,263,492
---------- ---------- ---------- ---------- -----------
Receivables:
Employee contribution 5,546 5,663 7,548 10,299 37,764
Employer contribution
Other receivables
---------- ---------- ---------- ---------- -----------
Total receivables 5,546 5,663 7,548 10,299 37,764
---------- ---------- ---------- ---------- -----------
Total assets 2,256,099 2,303,625 1,975,179 2,240,028 16,301,256
---------- ---------- ---------- ---------- -----------
LIABILITIES
Accounts payable
---------- ---------- ---------- ---------- -----------
Net assets available for
plan benefits $2,256,099 $2,303,625 $1,975,179 $2,240,028 $16,301,256
========== ========= ========== ========== ===========
<CAPTION>
December 31, 1997
----------------------------------------------------------------
Vanguard Instron
Retirement Common
Savings Stock Participant
Trust Fund Loans Total
------------ ------------ -------------- ------------
<S> <C> <C> <C> <C>
ASSETS
Investments, at fair value:
Shares of registered
investment companies $5,162,231 $30,171,598
Common stock $8,813,644 8,813,644
Cash equivalents 39,483 39,483
Participant loans $814,090 814,090
---------- ---------- -------- -----------
Total investments 5,162,231 8,853,127 814,090 39,838,815
---------- ---------- -------- -----------
RECEIVABLES:
Employee contribution 17,314 3,522 (15,177) 72,479
Employer contribution 21,080 21,080
Other receivables 38,838 38,838
---------- ---------- -------- -----------
Total receivables 17,314 63,440 (15,177) 132,397
---------- ---------- -------- -----------
Total assets 5,179,545 8,916,567 798,913 39,971,212
---------- ---------- -------- -----------
LIABILITIES
Accounts payable 18,373 18,373
---------- ---------- -------- -----------
Net assets available for
plan benefits $5,179,545 $8,898,194 $798,913 $39,952,839
========== ========== ======== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements
7
<PAGE> 8
<TABLE>
<CAPTION>
INSTRON CORPORATION SAVINGS AND SECURITY PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1998
Vanguard Vanguard Vanguard Vanguard Vanguard
Long-Term Prime Money Star U.S. Windsor
Corporate Market Fund Fund Growth Fund Fund
Fund
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Additions to net assets
attributed to:
Investment income:
Interest and dividends $ 197,820 $ 121,403 $ 208,541 $ 297,886 $ 1,335,971
Net appreciation (depreciation)
in fair value 5,049 -- 62,887 823,593 (1,269,157)
--------------------------------------------------------------------------
202,869 121,403 271,428 1,121,479 66,814
Contributions:
Employer -- -- -- -- --
Employee 144,313 141,779 211,059 383,455 893,354
--------------------------------------------------------------------------
Total additions 347,182 263,182 482,487 1,504,934 960,168
--------------------------------------------------------------------------
Deductions from net assets
attributed to:
Benefits paid to participants 71,543 93,840 136,842 188,454 895,162
Loans issued to Participants 12,965 23,719 11,506 46,927 222,793
Administrative expenses -- 815 605 40 880
--------------------------------------------------------------------------
Total deductions 84,508 118,374 148,953 235,421 1,118,835
--------------------------------------------------------------------------
Other:
Participant loan repayments 17,422 23,193 30,514 37,213 186,088
Interfund transfers (39,845) 42,739 290,675 1,197,236 (1,133,643)
--------------------------------------------------------------------------
Net increase (decrease) 240,251 210,740 654,723 2,503,962 (1,106,222)
Net assets available for plan
benefits, beginning of year 2,256,099 2,303,625 1,975,179 2,240,028 16,301,256
--------------------------------------------------------------------------
Net assets available for plan
benefits, end of year $ 2,496,350 $2,514,365 $2,629,902 $4,743,990 $ 15,195,034
==========================================================================
<CAPTION>
Vanguard Instron
Retirement Common Participant
Savings Stock Fund Loans Total
Trust
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Additions to net assets
attributed to:
Investment income:
Interest and dividends $ 318,876 $ 78,481 $ 71,559 $ 2,630,537
Net appreciation (depreciation)
in fair value -- (697,623) -- (1,075,251)
---------------------------------------------------------------
318,876 (619,142) 71,559 1,555,286
Contributions:
Employer -- 656,258 -- 656,258
Employee 319,663 83,031 -- 2,176,654
---------------------------------------------------------------
Total additions 638,539 120,147 71,559 4,388,198
---------------------------------------------------------------
Deductions from net assets
attributed to:
Benefits paid to participants 277,796 319,004 2,852 1,985,493
Loans issued to Participants 63,267 17,223 (398,400) --
Administrative expenses 1,240 45 -- 3,625
---------------------------------------------------------------
Total deductions 342,303 336,272 (395,548) 1,989,118
---------------------------------------------------------------
Other:
Participant loan repayments 97,957 16,025 (408,412) --
Interfund transfers (64,205) (292,957) -- --
---------------------------------------------------------------
Net increase (decrease) 329,988 (493,057) 58,695 2,399,080
Net assets available for plan
benefits, beginning of year 5,179,545 8,898,194 798,913 39,952,839
---------------------------------------------------------------
Net assets available for plan
benefits, end of year $ 5,509,533 $ 8,405,137 $ 857,608 $ 42,351,919
===============================================================
</TABLE>
The accompanying notes are an integral part of the financial statements
8
<PAGE> 9
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, second, third and fourth amendments thereto.
The Plan consists of a cash or deferred compensation plan under Section 401(k)
of the Code of 1986, as amended. The Plan is also an employee stock ownership
plan. The purpose of the 401(k) plan is to enable eligible employees of Instron
Corporation ("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 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 Instron Corporation (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 Plan:
ELIGIBILITY. Employees of the Company are eligible to participate in the 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, summer interns, co-op
students, temporary employees and independent contractors are not eligible to
participate in the Plan.
ADMINISTRATION. The Plan is administered on behalf of the Company by a Committee
which is appointed by the Company. Vanguard Fiduciary Trust Company, the Trustee
under the Plan, acts as trustee, recordkeeper and custodian of the securities
and investments held by the Plan.
CONTRIBUTIONS. The 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.
9
<PAGE> 10
FUND A - VANGUARD RETIREMENT SAVINGS TRUST. The Vanguard Retirement Savings
Trust seeks to provide a high level of income and a stable share value of $1.00.
The Trust invests 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 or 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 PRIME MONEY MARKET FUND. The Vanguard Prime Money Market Fund
is a money market fund that seeks maximum current income, preservation of
capital and liquidity by investing in a Fund 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 Fund seeks to maintain a net asset
value of $1.00 per share. An investment in the Prime Fund is neither insured nor
guaranteed by the U.S. Government, the Trustee of the Company, and there can be
no assurance that the Prime Fund 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 LONG-TERM CORPORATE FUND. The Vanguard Long-Term Corporate
Fund ("Corporate Fund") 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 investing in a diversified Fund of long-term, investment grade
bonds. At least 65% of the Corporate Fund is invested in corporate bonds rated a
minimum of Baa3 by Moody's Investor Services or BBB by Standard & Poor's at the
time of purchase. At least 80% of the Fund's assets will normally be invested in
a combination of investment grade corporate bonds and securities of the U.S.
government and its agencies. The Corporate Fund is designed for investors who
are seeking a high-quality, long-term corporate bond Fund and who are willing to
accept the potential of significant share price volatility due to the relatively
long average maturity of Corporate Fund'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 Fund 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 FUND. The Vanguard Star Fund is a diversified equity and
fixed income fund whose primary objective is to maximize long-term total return
of capital and income. The Star Fund invests 60%-70% of its assets in seven
Vanguard equity funds, including Vanguard/Windsor Fund, Vanguard Windsor II,
Vanguard Index Trust-500 Fund, Vanguard PRIMECAP Fund, Vanguard Morgan Growth
Fund, and Vanguard Explorer Fund. Approximately 30%-40% of Star Fund's assets
are invested in three Vanguard fixed-income Funds including Long-Term Corporate
Fund, GNMA Fund of Vanguard Fixed Income Securities Fund, and Prime Money Market
Fund.
FUND F - VANGUARD U.S. GROWTH FUND. The Vanguard U.S. Growth Fund seeks
long-term capital appreciation by investing in a diversified Fund of common
stocks with above-average growth potential. Dividend income is considered
incidental. The U.S. Growth Fund 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, reasonable
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.
10
<PAGE> 11
INSTRON COMMON STOCK FUND. Contributions allocated to the Instron Common Stock
Fund are invested in common shares of Instron Corporation, 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.
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 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 and elects 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 1998 Plan year, the interest rate on these loans was 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.
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 Plan or permitted
under applicable law, 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.
11
<PAGE> 12
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 quoted
market prices, which represent the net asset value of shares of registered
investment companies held by the Plan at year-end.
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 Retirement Savings Trust are stated at
contract value, which approximates fair value. Participant loans receivable are
valued at cost which approximates fair value.
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.
PAYMENT OF BENEFITS. Benefits are recorded when paid (see footnote 7).
EXPENSES OF THE PLAN. All expenses incurred in the administration of the Plan
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 changes
in net assets available for plan benefits 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 plan benefits at the date of the
financial statements and the changes in net assets available for plan 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.
RECLASSIFICATIONS. Certain amounts in prior year financial statements have been
reclassified to conform to the current year presentation.
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.
12
<PAGE> 13
NOTE 3 - INVESTMENTS
<TABLE>
<CAPTION>
DECEMBER 31, 1998
----------------------------------------------
Units/ Market/Fair
Shares Cost Value
---------- ----------- -----------
<S> <C> <C> <C>
Vanguard Long-Term Corporate Fund* 268,303 $ 2,358,441 $ 2,492,539
Vanguard Prime Money Market Fund* 2,510,496 2,510,496 2,510,496
Vanguard Star Fund* 146,112 2,445,937 2,624,167
Vanguard U.S. Growth Fund* 126,280 3,571,028 4,734,224
Vanguard Windsor Fund* 974,543 14,826,295 15,173,633
Vanguard Retirement Savings Trust* 5,502,622 5,502,622 5,502,622
Instron Common Stock* 488,876 6,008,322 8,433,105
Participant Loans 857,608 857,608
----------- -----------
Total $38,080,749 $42,328,394
=========== ===========
Investment Income $ 2,630,537
===========
Net appreciation (depreciation) $(1,075,251)
===========
<CAPTION>
DECEMBER 31, 1997
----------------------------------------------
Units/ Market/Fair
Shares Cost Value
---------- ----------- -----------
<S> <C> <C> <C>
Vanguard Long-Term Corporate Fund* 243,040 $ 2,103,325 $ 2,250,553
Vanguard Prime Money Market Fund* 2,297,962 2,297,962 2,297,962
Vanguard Star Fund* 113,212 1,809,565 1,967,631
Vanguard U.S. Growth Fund* 77,691 1,755,357 2,229,729
Vanguard Windsor Fund* 957,803 14,315,695 16,263,492
Vanguard Retirement Savings Trust* 5,162,231 5,162,231 5,162,231
Instron Common Stock* 466,948 5,612,028 8,853,127
Participant Loans 814,090 814,090
----------- -----------
Total $33,870,253 $39,838,815
=========== ===========
Investment Income $ 3,610,290
===========
Net appreciation (depreciation) $ 3,722,611
===========
</TABLE>
*Exceed 5% of net assets available for plan benefits
13
<PAGE> 14
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 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 $10,000 in 1998, 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 sum 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.
NOTE 6 - 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 Plan,
and is, therefore, a party in interest. Participants with outstanding loan
balances and the investments in the Instron Common Stock Fund are also
considered to be parties in interest.
NOTE 7 - BENEFITS PAYABLE
Amounts allocated to participants who have withdrawn from the Plan, but for
which disbursement of those funds has not been made as of year-end, may not be
recognized as a liability in the statement of net assets available for plan
benefits in accordance with the American Institute of Certified Public
Accountants' audit guide entitled "Audits of Employee Benefits Plan." There were
$26,477 and $0 distributions payable at December 31, 1998 and 1997,
respectively. Additionally, benefits paid to participants in the statement of
changes in net assets available for plan benefits do not include such amounts.
14
<PAGE> 15
NOTE 8 SUBSEQUENT EVENT
On May 7, 1999, the Company announced the signing of a definitive merger
agreement with Kirtland Capital Partners (KCP), which would give effect to a
recapitalization of the Company. This recapitalization would be accomplished
through the merger of ISN Acquisition Corporation, a wholly owned subsidiary
organized by Kirtland Capital Partners III LP, with and into the Company, with
the Company continuing as the surviving corporation. Each share of the Company's
common stock outstanding at the effective time of the merger will be converted
into the right to receive $22 per share payable in cash. In addition, certain
members of management of the Company, as well as the Company's two founding
shareholders, will maintain an equity interest in the Company following the
closing.
Under the terms of the Merger Agreement, the Company has agreed not to pay
dividends on its common stock prior to the closing of the transaction. The
closing of the transaction is subject to the satisfaction of various conditions,
including approval of the Company's shareholders and the receipt of certain
regulatory approvals. The transaction is expected to close during the third
quarter of 1999. The closing per share price of Instron Common Stock on December
31, 1998 was $17.25.
Subsequent to the closing of the transaction, the Company's matching
contributions are anticipated to be invested according to each individual
participant's investment allocation. The cash proceeds received from the
conversion of Instron stock at $22 per share are anticipated to be invested
according to each individual participant's investment allocation.
15
<PAGE> 16
INSTRON CORPORATION SAVINGS AND SECURITY PLAN
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AS OF
DECEMBER 31, 1998
Instron Corporation Savings and Security Plan, EIN 04-2057203
Attachment to Form 5500, Line 27(a)
<TABLE>
<CAPTION>
Identity of Issue Investment Type Cost Current Value
----------------- --------------- ---- -------------
<S> <C> <C> <C>
*Vanguard LT Corporate Fd Registered Investment Company $ 2,358,441 $ 2,492,539
*Vanguard Prime Money Mkt Registered Investment Company 2,510,496 2,510,496
*Vanguard STAR Fund Registered Investment Company 2,445,937 2,624,167
*Vanguard U.S. Growth Registered Investment Company 3,571,028 4,734,224
*Vanguard Windsor Fund Registered Investment Company 14,826,295 15,173,633
*Vanguard Retire Savings Trst Common/Collective Trust 5,502,622 5,502,622
*Instron Stock Fund Company Stock Fund 6,008,322 8,433,105
*Particpant Loans 7% - 10% 857,608 857,608
----------- -----------
Total assets held for
investment purposes $38,080,749 $42,328,394
=========== ===========
</TABLE>
*Party in interest
16
<PAGE> 17
INSTRON CORPORATION SAVINGS AND SECURITY PLAN
SCHEDULE OF REPORTABLE TRANSACTIONS - SINGLE TRANSACTIONS
YEAR-ENDED DECEMBER 31, 1998
Instron Corporation Savings and Security Plan, EIN 04-2057203
Attachment to Form 5500, Line 27(d)
<TABLE>
<CAPTION>
Current Value
of Asset on
Description Purchase Selling Historical Cost Transaction Historical
Party Involved of Asset Price Price of Asset Date Gain (Loss)
- -------------- ---------- ------- ------- --------------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C>
None
</TABLE>
17
<PAGE> 18
INSTRON CORPORATION SAVINGS AND SECURITY PLAN
SCHEDULE OF REPORTABLE TRANSACTIONS - SERIES OF TRANSACTIONS
YEAR-ENDED DECEMBER 31, 1998
Instron Corporation Savings and Security Plan, EIN 04-2057203
Attachment to Form 5500, Line 27(d)
<TABLE>
<CAPTION>
Current Value
of Asset on
Historical Cost Transaction Historical
Party Involved Description of Asset Purchase Price Selling Price of Asset Date Gain
- -------------- ---------------------- ---------------- --------------- --------------- --------------- -----------
<S> <C> <C> <C> <C> <C> <C>
The Vanguard Group Vanguard Prime Money Mkt $1,154,978 $1,154,978
The Vanguard Group Vanguard Prime Money Mkt $ 942,443 $ 942,443 942,443 $ --
The Vanguard Group Vanguard U.S. Growth 2,405,860 2,405,860
The Vanguard Group Vanguard U.S. Growth 724,959 590,490 724,959 134,468
The Vanguard Group Vanguard Windsor Fund 3,146,441 3,146,441
The Vanguard Group Vanguard Windsor Fund 2,967,144 2,655,870 2,967,144 311,274
N/A Instron Stock Fund 1,180,917 1,180,917
N/A Instron Stock Fund 976,204 758,002 976,204 218,202
</TABLE>
18
<PAGE> 1
EXHIBIT 23
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 25, 1999, on our audits of
the financial statements of the Instron Corporation Savings and Security Plan as
of December 31, 1998 and 1997, and for the year ended December 31, 1998, which
report is included in this Annual Report on Form 11-K.
Boston, Massachusetts /s/ PricewaterhouseCoopers LLP
June 25, 1999 ------------------------------------
PRICEWATERHOUSECOOPERS LLP
