Registration No.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 11-K
(Mark One)
[X]Annual Report pursuant to Section 15(3) of the Securities Exchange Act
of 1934
For the fiscal year ended December 31, 1998
OR
[__] Transition report pursuant to Section 15(d) of the Securities Exchange Act
of 1934
For the transition period from ____________ to ________________
A. Full title of the plan and the address of the plan, if different from that
of the issuer named below:
Mestek, Inc.
Savings & Retirement
Plan
B. Name of issuer of the securities held pursuant to the plan and the address
of its principal executed office:
Mestek, Inc.
260 North Elm Street
Westfield, Massachusetts 01085
[NYC] 308136.3
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REQUIRED INFORMATION
A. Financial Statements and Schedules: Page
Independent Auditors' Report 3
Statements of Net Assets Available for Plan
Benefits as of December 31, 1998 and 1997 4
Statements of Changes in Net Assets Available for
Plan Benefits for the Years Ended December 31, 1998 and 1997 5
Notes to Financial Statements 6
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934,
the trustees (or other persons who administer the employee benefit plan) have
duly caused this annual report to be signed on its behalf by the undersigned
hereunto duly authorized.
MESTEK, INC.
SAVINGS & RETIREMENT PLAN
Date: December 8, 1999 By:/S/ Jack E. Nelson
Name: Jack E. Nelson
Title: Vice President-Human Resources
[NYC] 308136.3
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Audited Financial Statements
and Supplemental Schedules
Mestek, Inc.
Savings & Retirement Plan
Year Ended December 31, 1998 and 1997
with Report of Independent Auditors
Report of Independent Certified Public Accountants
The Plan Administrator
Mestek, Inc. Savings and Retirement Plan
We were engaged to audit the financial statements and supplemental schedules of
the Mestek, Inc. Savings and Retirement Plan (the APlan@) as of
December 31, 1998 and 1997, and for the year ended December 31, 1998 as listed
in the accompanying index. These financial statements and supplemental
schedules are the responsibility of the Plan=s management.
As permitted by 29 CFR 2520.103-8 of the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974, the Plan administrator instructed us not to perform, and
we did not perform, any auditing procedures with respect to the information
described in Note D, which was certified by MassMutual Life Insurance Company
and Bank of Boston, trustees of the Plan, except for comparing such information
with the related information included in the financial statements and
supplemental schedules. We have been informed by the Plan administrator that the
trustees hold the Plan's investment assets and execute investment transactions.
The Plan administrator has obtained a certification from the trustees as of and
for the years ended December 31, 1998 and 1997, that the information provided to
the Plan administrator by the trustees is complete and accurate.
Because of the significance of the information that we did not audit, we are
unable to, and do not, express an opinion on the accompanying financial
statements and schedules taken as a whole. The form and content of the
information included in the financial statements and schedules, other than that
derived from the information certified by the trustee, have been audited by us
in accordance with generally accepted auditing standards and, in our opinion,
are presented in compliance with the Department of Labor's Rules and Regulations
for Reporting and Disclosure under the Employee Retirement Income Security Act
of 1974.
/s/ Grant Thornton LLP
Boston, Massachusetts
July 16, 1999
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Mestek, Inc. Savings and Retirement Plan
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
December 31,
1998 1997
----------------------------------- ------------
Non-
Participant Participant Participant
Directed Directed Total Directed
ASSETS
Investments, at fair value
(note B):
MassMutual Pooled
Separate Accounts
Core equity fund $8,507,377 $5,131,346 $13,638,723 $6,955,133
Small company fund 1,106,278 3,456,416 4,562,694 1,131,983
Balanced fund 1,972,076 - 1,972,076 1,532,612
Intermediate bond fund 395,405 - 395,405 287,280
Notes receivable from
participants 1,052,378 411,288 1,463,666 794,555
---------- ---------- ---------- -----------
13,033,514 8,999,050 22,032,564 10,701,563
Investments, at contract
value (notes B and G):
MassMutual Life
Insurance Company
Investment Contract 11,038,749 5,978,670 17,017,419 9,218,973
---------- ---------- ---------- ----------
Total investments 24,072,263 14,977,720 39,049,983 19,920,536
---------- ---------- ---------- ----------
Receivables:
Participants= contributions 179,857 - 179,857 146,063
Employer=s contributions 33,293 1,133,323 1,166,616 27,419
---------- ---------- ---------- ----------
Total receivables 213,150 1,133,323 1,346,473 173,482
---------- ---------- ---------- ----------
NET ASSETS AVAILABLE
FOR BENEFITS $24,285,413 $16,111,043 $40,396,456 $20,094,018
========== ========== ========== ==========
The accompanying notes are an integral part of the financial statements.
4
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Mestek, Inc. Savings and Retirement Plan
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
For the year ended December 31, 1998
Non-
Participant Participant
Directed Directed Total
Additions
Additions to net assets attributed to:
Contributions:
Participants $2,592,438 $ - $2,592,438
Employer 434,359 1,179,413 1,613,772
Rollover 120,156 - 120,156
Investment income 2,024,992 1,060,952 3,085,944
---------- ---------- -----------
Total additions 5,171,945 2,240,365 7,412,310
---------- ---------- -----------
Deductions
Deductions from net assets
attributed to:
Benefits paid to participants 946,106 626,379 1,572,485
Miscellaneous expenses 34,444 31,928 66,372
---------- ---------- -----------
Total deductions 980,550 658,307 1,638,857
---------- ---------- -----------
NET INCREASE 4,191,395 1,582,058 5,773,453
Net assets available for benefits:
Beginning of year 20,094,018 - 20,094,018
Net assets transferred - 14,528,985 14,528,985
---------- ---------- ----------
End of year $24,285,413 $16,111,043 $40,396,456
========== ========== ==========
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
Mestek, Inc. Savings and Retirement Plan
NOTES TO FINANCIAL STATEMENTS
December 31, 1998 and 1997
NOTE A - DESCRIPTION OF PLAN
The following description of Mestek, Inc. Savings and Retirement Plan (the
APlan@) provides only general information. Participants should refer to the Plan
Agreement for a more complete description of the Plan's provisions.
General
The Plan is a defined contribution profit sharing plan established for the
benefit of the employees of Mestek, Inc. (Athe Company@). The Plan has two
components, a profit sharing account and a 401(k) account. The Plan covers
salaried or hourly employees not covered by a collective bargaining agreement,
who choose to participate, and who have completed at least one year of service.
The Plan is subject to the provisions of the Employee Retirement Income Security
Act of 1974 (AERISA@).
Contributions
A. 401(k) Account
Participants may elect to have up to fifteen percent of their compensation
withheld, up to the maximum allowed by the Internal Revenue Code. The amounts
withheld from compensation reduce the amount of income reportable for income tax
purposes.
Participants may elect to make nondeductible voluntary contributions up to an
additional ten percent of their gross earnings each year within legal limits.
The Company contributes $.25 for each $1.00 deferred by participants and
deposited to the Plan. This contribution is limited to the first 6% deferred by
participants, and, in total, the Company contribution will not exceed 1.5% of
an employee's annual compensation. The Company does not match any amounts
relating to nondeductible voluntary contributions. Contributions are funded on
a current basis.
B. Profit Sharing Account
On an annual basis, the Company determines whether to make a Profit Sharing
contribution and how much to contribute. Currently, the Company contributes 3%
of employee gross salary for all eligible, active employees employed on the last
day of the year.
6
<PAGE>
Mestek, Inc. Savings and Retirement Plan
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1998 and 1997
NOTE A - DESCRIPTION OF PLAN - Continued
Participant Accounts
Each participant=s account is credited with the participant=s contribution, the
Company=s contribution and allocations of plan earnings. Plan earnings are
allocated based on account balances by fund.
Vesting
Participants are immediately vested in their deferred salary contributions and
voluntary contributions plus actual earnings thereon. Vesting in the Company
contribution portion of an individual participant's account is based on the
following schedule:
Years of Service Percentage
3 20%
4 40%
5 60%
6 80%
7 or more 100%
Forfeitures
A. 401(k) Account
Forfeitures are applied first to reduce expenses related to the administration
of the Plan and then to reduce Company contributions.
B. Profit Sharing Account
Forfeitures are reallocated among Participants in the ratio that the
compensation of each Participant bears to the total compensation of all
Participants.
Notes Receivable from Participants
Participants are eligible to borrow up to 50% of their vested balance to a
maximum of $50,000. Loans bear interest at market rates and are repayable over
a period not to exceed five years.
7
<PAGE>
Mestek, Inc. Savings and Retirement Plan
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1998 and 1997
NOTE A - DESCRIPTION OF PLAN - Continued
Investments
A. 401(k) Account
Upon enrollment in the Plan, participants may direct contributions to any
combination of fund options maintained by MassMutual Life Insurance Company
("MassMutual"). All funds (except for the Investment Contract), are invested in
Pooled Separate Accounts and do not guarantee principal or rate of return. Plan
participants may change their investment election at any time through
MassMutual=s automatic record-keeping system.
B. Profit Sharing Account
Assets are invested at the discretion of the Plan Trustees.
The following is a description of each investment option:
The Investment Contract is invested in a group annuity contract issued by
MassMutual. This fund will receive a rate of interest set by MassMutual
annually (7.0% for fiscal year 1998). Both the principal and interest are
guaranteed by MassMutual for the duration of the contract.
The Core Equity Fund invests primarily in common stocks of large, well
established companies.
The Small Company Fund invests mainly in common stocks of small, publicly traded
companies that have some unique product, market position, or operating method
which sets them apart.
The Balanced Fund invests in a blend of three types of assets: stocks, bonds
and short-term securities (or cash).
The Intermediate Bond Fund invests mainly in investment-grade, publicly traded
bonds (debt issued by the U.S. government, agencies and companies). The bonds
mature over periods from 1 to 10 years.
Included in investment income is interest and dividends of $1,195,674 and
realized and unrealized gains on investments of $1,890,270.
8
<PAGE>
Mestek, Inc. Savings and Retirement Plan
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1998 and 1997
NOTE A - DESCRIPTION OF PLAN - Continued
Withdrawals
Participants are allowed to withdraw certain portions of their account, as
defined by the Plan, upon retirement, termination of employment, or
determination of financial hardship.
Payment of Benefits
Upon death, disability, or termination of service, a participant (or
participant=s beneficiary in the event of death) with $5,000 or more in vested
benefits may elect to receive a lump-sum distribution equal to the participant=s
vested account balance, deferred annuity or for assets to remain in the Plan.
Additional options are available under the Plan upon retirement.
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following are the significant accounting policies followed by the Plan:
Basis of Accounting
The accompanying financial statements of the Plan have been prepared using the
accrual basis of accounting.
Investment Valuation
The Plan's investments are stated at fair value, except for its investment
contract which is valued at contract value (see note G).
Payment of Benefits
Benefit payments to participants are recorded upon distribution.
Expenses
Administrative costs paid for by the Company are not included in the
accompanying financial statements.
9
<PAGE>
Mestek, Inc. Savings and Retirement Plan
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1998 and 1997
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
Insurance
In prior years, participants had the ability to purchase individual life
insurance policies through the Plan and pay for the premiums with vested benefit
amounts. The Plan no longer allows for the purchase of new policies, but
existing policyholders may continue to hold and fund such a policy. The
remaining policies are allocated insurance contracts and, accordingly, the cash
surrender value of such policies has been excluded from Plan assets. As of
December 31, 1998, the cash surrender value of these policies were
approximately $294,000.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the disclosures of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
NOTE C - TAX STATUS
Although the Plan has received a favorable determination letter dated
June 16,1995 from the Internal Revenue Service, it has not been updated for the
latest plan amendments. However, the plan administrator believes that the Plan
is designed and is being operated in compliance with the applicable requirements
of the IRC. Therefore, the plan administrator believes that the Plan was
qualified and the related trust was tax-exempt for the year ended
December 31, 1998.
NOTE D - TRUSTEE CERTIFICATION
Information included in the financial statements and supplemental schedules
regarding investments, interest and dividends income, net appreciation
(depreciation) in fair value of investments were derived from information
supplied by MassMutual and Bank of Boston, (the ATrustees@). The Plan
administrator has received certification from the Trustees that the information
supplied is complete and accurate.
10
<PAGE>
Mestek, Inc. Savings and Retirement Plan
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1998 and 1997
NOTE E - PLAN MERGER
Effective January 1, 1998, the Mestek, Inc. Profit Sharing Plan was merged into
the Mestek, Inc. 401(k) Plan to form the Mestek, Inc. Savings and Retirement
Plan. The transferred net assets have been recognized in the accounts of the
Mestek, Inc. 401(k) Plan, at their balances as previously carried in the
accounts of the Mestek, Inc. Profit Sharing Plan. A summary of the transferred
net assets follows:
ASSETS
Investments, at fair value $13,456,329
Receivables
Employer contributions 1,000,240
Accrued investment income 76,843
----------
1,077,083
----------
Total assets 14,533,412
LIABILITIES
Accrued expenses 4,427
----------
$14,528,985
----------
NOTE F - PLAN TERMINATION
Although it has not expressed any intent to do so, the Company has the right
under the Plan to discontinue its contributions 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.
NOTE G - INVESTMENT CONTRACT WITH INSURANCE COMPANY
The Plan has an investment contract with MassMutual. MassMutual maintains the
contributions in a pooled account. The account is credited with a guaranteed
rate of return and is charged for Plan withdrawals and administrative expenses
charged by MassMutual. The contract is included in the financial statements at
contract value, which approximates fair value, as reported to the Plan by
MassMutual. Contract value represents contributions made under the contract,
plus earnings less Plan withdrawals and administrative expenses.
SUPPLEMENTAL SCHEDULES
<PAGE>
<TABLE>
Mestek, Inc. Savings and Retirement Plan
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
EIN 25-0661650 PLAN #002
December 31, 1998
<CAPTION>
(b)Description of Investment
Including Maturity Date, Rate
(a)Identity of Issue, Borrower, of Interest, Collateral, (d)Current
Lessor, or Similar Party Par or Maturity Value (c)Cost Value
<S> <C> <C> <C>
MassMutual Life Insurance Company Core Equity Fund $9,812,827 $13,638,723
MassMutual Life Insurance Company Small Company Fund 4,882,398 4,562,694
MassMutual Life Insurance Company Balanced Fund 1,499,444 1,972,076
MassMutual Life Insurance Company Intermediate Bond Fund 366,976 395,405
MassMutual Life Insurance Company Investment Contract* 17,017,419 7,017,419
Notes receivable from Participants Participant Loans Receivable
(7.0% - 10.0%) 1,463,666 1,463,666
* Contract value
</TABLE>
<PAGE>
<TABLE>
Mestek, Inc. Savings and Retirement Plan
ITEM 27d - SCHEDULE OF REPORTABLE (5%) TRANSACTIONS
EIN 25-0661650 PLAN #002
For the year ended December 31, 1998
<CAPTION>
(h)Current
(f)Expense Value of
(b)Description of Asset Incurred Asset on
(a)Identity of (Include Interest Rate and (e)Lease with (g)Cost of Transaction (i)Net Gain
Party Involved Maturity in Case of a Loan) (c)Purchases (d)Sales Rental Transaction Asset Date or (Loss)
- ------------------- --------------------------- ----------- ------- ------- ----------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
MassMutual Life Investment Contract Fund $8,985,939 $8,985,939 $8,985,939
Insurance Company Investment Contract Fund $2,189,770 $7,197 2,189,770
MassMutual Life Core Equity Fund 7,182,757 7,182,757 7,182,757
Insurance Company Core Equity Fund 1,989,697 3,891 1,462,551 1,989,697 $523,255
MassMutual Life Small Company Fund 4,993,050 4,993,050 4,993,050
Insurance Company Small Company Fund 997,111 1,421 1,017,450 997,111 (21,760)
</TABLE>
