<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 11-K
(X) ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1996
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ________ to _________
Commission file number 2-81315
Flow International Corporation Voluntary Pension and Salary Deferral Plan
Flow International Corporation
23500 64th Ave. S.
Kent, WA 98032
(206) 850-3500
<PAGE>
FLOW INTERNATIONAL
CORPORATION VOLUNTARY
PENSION AND SALARY DEFERRAL
PLAN
FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES
DECEMBER 31, 1996
<PAGE>
FLOW INTERNATIONAL CORPORATION
VOLUNTARY PENSION AND SALARY DEFERRAL PLAN
FINANCIAL STATEMENTS
AND SUPPLEMENTAL SCHEDULES
DECEMBER 31, 1996
INDEX
PAGE
Report of Independent Accountants 1
Statement of Net Assets Available for Plan Benefits 2
Statement of Changes in Net Assets Available for Plan Benefits 3
Notes to Financial Statements 4-8
SUPPLEMENTAL SCHEDULES (1)
Schedule of Assets Held for Investment Purposes 9-10
Schedule of Reportable Transactions 11
(1) Other schedules required by Section 2520.103-10 of the Department of
Labor's Rules and Regulations for Reporting and Disclosure under ERISA have
been omitted because such schedules are not applicable.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
June 27, 1997
To the Participants and Administrative Committee of the
Flow International Corporation Voluntary Pension and
Salary Deferral Plan
In our opinion, the accompanying statement of net assets available for plan
benefits and the related statement of changes in net assets available for plan
benefits present fairly, in all material respects, the net assets available for
plan benefits of the Flow International Corporation Voluntary Pension and Salary
Deferral Plan at December 31, 1996 and 1995, and the changes in its net assets
available for plan benefits for the year ended December 31, 1996, 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 made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The additional information listed in the
accompanying supplemental schedules is presented for purposes of additional
analysis and is not a required part of the basic financial statements but is
additional information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. Such information has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
1
<PAGE>
FLOW INTERNATIONAL CORPORATION
VOLUNTARY PENSION AND SALARY DEFERRAL PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER 31,
1996 1995
ASSETS
<S> <C> <C>
Investments, at market
Large Company Fund $ 4,114,970 $ 3,813,819
Small Company Fund 4,155,005 3,439,411
International Fund 3,292,159 2,703,048
Money Market Fund 1,397,208 1,699,764
Bond Fund 1,285,085 1,240,808
Vanguard 500 Fund 1,147,954
Vanguard Small Cap Fund 581,036
Portico Bond Fund 142,032
FLOW Fund 741,883 799,131
Participant loans 43,377 122,024
Contributions receivable 160,936 162,956
Loan payments receivable 3,377 5,340
Interest and dividends receivable 11,073 35,690
--------------- ---------------
17,076,095 14,021,991
Liabilities
Due to broker for securities purchased, net 20,028
Accrued liabilities 6,824 13,918
--------------- ---------------
Net assets available for plan benefits $ 17,069,271 $ 13,988,045
--------------- ---------------
--------------- ---------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF
THESE FINANCIAL STATEMENTS.
2
<PAGE>
FLOW INTERNATIONAL CORPORATION
VOLUNTARY PENSION AND SALARY DEFERRAL PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
- --------------------------------------------------------------------------------
YEAR ENDED
DECEMBER 31, 1996
Additions to net assets attributed to
Investment income
Net appreciation in fair value of investments $ 2,122,757
Interest 199,164
Dividends 161,603
-------------
2,483,524
Employer contributions 705,678
Employee contributions 1,421,273
-------------
Total additions 4,610,475
-------------
Deductions from net assets attributed to
Benefits paid to participants 1,338,224
Administrative expenses 191,025
-------------
Total deductions 1,529,249
-------------
Net increase 3,081,226
Net assets available for plan benefits
Beginning of year 13,988,045
-------------
End of year $ 17,069,271
-------------
-------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF
THESE FINANCIAL STATEMENTS.
3
<PAGE>
FLOW INTERNATIONAL CORPORATION
VOLUNTARY PENSION AND SALARY DEFERRAL PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
- --------------------------------------------------------------------------------
1. DESCRIPTION OF THE PLAN
The Flow International Corporation Voluntary Pension and Salary Deferral
Plan (the Plan) is a defined contribution plan for the benefit of
nonbargaining employees of Flow International Corporation (the Company),
effective October 1, 1986.
The Plan is administered by the Advisory Committee appointed by the Board
of Directors of the Company. Qualified employees may elect to contribute
any amount between 1% and 15% of their salary. The Company shall
contribute an amount equal to 50% of the first 6% of employee compensation
contributed for employees with less than five years of service with the
Company or 75% of the first 6% of employee compensation contributed for
employees with five years or more of service. Contributions to the Plan
are paid to a trust administered by the plan trustees under the terms of a
trust agreement. The funds must be used for the exclusive benefit of plan
participants and their beneficiaries.
Employees are eligible for participation in the Plan upon the first
quarterly open enrollment period after commencement of employment and are
eligible for the employer match one year following that date. Employer
contributions and earnings thereon vest with individual participants based
upon years of service with the Company; participants achieve 100% vesting
after five years of service or at a normal retirement age. Unvested
employer contributions relating to terminated participants are forfeited
and used to reduce the Company's future contributions to the Plan.
Participants are immediately vested in their voluntary contributions plus
actual earnings thereon. Vested benefits are payable upon the retirement,
death, disability or request at termination of a participant's employment
with the Company.
2. SIGNIFICANT ACCOUNTING POLICIES
VALUATION OF INVESTMENTS
The accompanying financial statements have been prepared using the accrual
basis of accounting.
Deposit administration contracts (Note 4) are stated at contract value
which approximates market value. Contract values represent contributions
made under the contracts, plus interest on the contracts, less funds used
to purchase annuities and pay related administrative expenses. Other
investments are stated at the quoted market value.
RECOGNITION OF INCOME AND EXPENSES
Administrative expenses, including trustee and investment manager fees, are
charged to the Plan and are reflected in these financial statements. These
expenses totaled $191,025 for the year ended December 31, 1996.
Investment transactions are recorded on the date of the purchase or sale.
Gains or losses are determined based on the fair market value of
investments on the date of a transaction.
4
<PAGE>
ROLLOVERS
The Plan allows transfers in from other qualified retirement plans.
Rollovers or plan-to-plan transfers are included in contributions.
PARTICIPANT LOANS
Effective September 30, 1992, the Company acquired all the stock in Spider
Staging Corporation (Spider) which maintained the Spider Staging
Corporation 401(k) Savings Plan (the Spider Plan) for its employees. An
amendment allowed the Company and Spider to merge the Spider Plan into the
Plan effective January 1, 1993. The Spider Plan provided loans to
participants, which were considered a participant directed investment of
their account. The loans represent a trust investment, but only the
borrowing participants' accounts shall share in the interest paid on the
loans or bear any expense or risk of loss because of the loans.
Participant loans are secured by the vested portion of each borrower's
account. The rate charged on the loan is the prime rate as of the date of
the loan's approval. The Plan does not provide for any new loans to
participants. Repayments totaled $50,386 for the year ended December 31,
1996.
3. INVESTMENTS
All plan investments are held in trust by Bank of New York (the Trustee).
Plan participants may direct their salary deferral and employer matching
contributions to one or a combination of nine investment selections, known
as the Large Company Fund, the Small Company Fund, the International Fund,
the Money Market Fund, the Bond Fund, the Vanguard 500 Fund, the Vanguard
Small Cap Fund, the Portico Bond Fund and the FLOW Fund.
The Large Company Fund consists of two investment groups, Kunath, Karren,
Rinne & Atkin and Sirach Capital Management. Each of these investment
groups invest in large companies that exhibit the potential for a high rate
of earnings growth. The Small Company Fund consists of three investment
groups, Crestone Capital Management, ICM Asset Management, and McKinley
Capital Management. Each of these investment groups invest in stock of
small to medium size companies that exhibit the potential for a high rate
of earnings growth. The International Fund consists of the Euro-Pacific
Growth Mutual Fund and the American Small Cap World Mutual Fund. Each of
these funds invest in securities of companies located outside the United
States. These funds are managed by American Funds. The Money Market Fund
consists of investments in high-quality corporate and U.S. Government
securities that have maturities of less than one year which are held in the
Bank of New York Collective Short Term Investment Fund. The Bond Fund
invests in U.S. Government and Agency securities, corporate bonds issued by
high-quality companies and deposit administration contracts with insurance
companies. The Vanguard 500 Fund invests in securities included in the S&P
500 Index. The Vanguard Small Cap Fund consists of stock of small to
medium size companies included in the Russell 2000 Index. The Portico Bond
Fund consists primarily of fixed income securities with an average
portfolio maturity of greater than five years. The FLOW Fund consists of
FLOW International Corporation common stock which is publicly traded in the
NASDAQ National Market. The investment in FLOW stock is managed directly
by the Trustee. Participants may transfer balances between funds as well
as change the investment allocation up to four times per year, but not more
frequently than every 90 days.
Changes in net assets available for plan benefits by investment account
from December 31, 1995 to December 31, 1996 are shown on the following
pages.
5
<PAGE>
Changes in net assets available for plan benefits by investment account for the
year ended December 31, 1996:
<TABLE>
<CAPTION>
LARGE SMALL MONEY VANGUARD
COMPANY COMPANY INTERNATIONAL MARKET BOND 500
FUND FUND FUND FUND FUND FUND SUBTOTAL
<S> <C> <C> <C> <C> <C> <C> <C>
Additions to net assets attributed to
Investment income
Net appreciation
(depreciation) in fair
value of investments $ 788,498 $ 798,958 $ 452,975 $ (6,971) $ 115,780 $ 2,149,240
Interest 6,045 16,016 11,205 $ 77,364 47,427 728 158,785
Dividends 46,663 18,516 36,444 26,929 19,689 148,241
----------- ----------- ----------- ----------- ----------- ----------- ------------
841,206 833,490 500,624 77,364 67,385 136,197 2,456,266
Employer contributions 171,580 174,457 139,281 41,486 46,398 42,118 615,320
Employee contributions 329,850 349,701 278,144 85,653 88,105 94,471 1,225,924
----------- ----------- ----------- ----------- ----------- ----------- ------------
Total additions 1,342,636 1,357,648 918,049 204,503 201,888 272,786 4,297,510
----------- ----------- ----------- ----------- ----------- ----------- ------------
Participant transfers, net (685,956) (179,291) (182,763) (181,280) (110,170) 892,552 (446,908)
----------- ----------- ----------- ----------- ----------- ----------- ------------
Loan transactions, net 13,660 10,039 11,222 7,113 4,264 686 46,984
----------- ----------- ----------- ----------- ----------- ----------- ------------
Deductions from net assets
attributed to
Benefits paid to participants 332,124 374,595 144,876 331,008 49,859 1,464 1,233,926
Administrative expenses 48,687 95,440 13,212 7,947 6,765 5,474 177,525
----------- ----------- ----------- ----------- ----------- ----------- ------------
Total deductions 380,811 470,035 158,088 338,955 56,624 6,938 1,411,451
----------- ----------- ----------- ----------- ----------- ----------- ------------
Net increase (decrease) 289,529 718,361 588,420 (308,619) 39,358 1,159,086 2,486,135
Net assets available for
plan benefits
Beginning of year 3,861,042 3,478,732 2,735,590 1,722,548 1,255,335 13,053,247
----------- ----------- ----------- ----------- ----------- ----------- ------------
End of year $ 4,150,571 $ 4,197,093 $ 3,324,010 $ 1,413,929 $ 1,294,693 $ 1,159,086 $ 15,539,382
----------- ----------- ----------- ----------- ----------- ----------- ------------
----------- ----------- ----------- ----------- ----------- ----------- ------------
</TABLE>
6
<PAGE>
Changes in net assets available for plan benefits by investment account for the
year ended December 31, 1996 (continued):
<TABLE>
<CAPTION>
VANGUARD PORTICO
CARRY-FORWARD SMALL CAP BOND FLOW PARTICIPANT
SUBTOTAL FUND FUND FUND LOANS TOTAL
<S> <C> <C> <C> <C> <C> <C>
Additions to net assets attributed to
Investment income
Net appreciation (depreciation)
in fair value of investments $ 2,149,240 $ 21,873 $ (2,076) $ (46,280) $ 2,122,757
Interest 158,785 34,998 200 689 $ 4,492 199,164
Dividends 148,241 7,189 6,173 161,603
------------ --------- --------- ---------- -------- -------------
2,456,266 64,060 4,297 (45,591) 4,492 2,483,524
Employer contributions 615,320 28,769 7,020 54,569 705,678
Employee contributions 1,225,924 66,266 15,215 113,868 1,421,273
------------ --------- --------- ---------- -------- -------------
Total additions 4,297,510 159,095 26,532 122,846 4,492 4,610,475
------------ --------- --------- ---------- -------- -------------
Participant transfers, net (446,908) 439,578 118,501 (111,171) - -
------------ --------- --------- ---------- -------- -------------
Loan transactions, net 46,984 107 - 3,295 (50,386) -
------------ --------- --------- ---------- -------- -------------
Deductions from net assets
attributed to
Benefits paid to participants 1,233,926 994 70,551 32,753 1,338,224
Administrative expenses 177,525 8,150 1,064 4,286 191,025
------------ --------- --------- ---------- -------- -------------
Total deductions 1,411,451 9,144 1,064 74,837 32,753 1,529,249
------------ --------- --------- ---------- -------- -------------
Net increase (decrease) 2,486,135 589,636 143,969 (59,867) (78,647) 3,081,226
Net assets available for plan
benefits
Beginning of year 13,053,247 812,774 122,024 13,988,045
------------ --------- --------- ---------- -------- -------------
End of year $ 15,539,382 $ 589,636 $ 143,969 $ 752,907 $ 43,377 $ 17,069,271
------------ --------- --------- ---------- -------- -------------
------------ --------- --------- ---------- -------- -------------
</TABLE>
7
<PAGE>
4. DEPOSIT ADMINISTRATION CONTRACTS WITH INSURANCE COMPANIES
The Plan has deposit administration contracts with Ameritas Financial
Services and Aetna Life Insurance and Annuity Company (the Insurance
Companies), which are included in the Bond Fund. As of December 31, 1996
and 1995, the value of the contracts with the Insurance Companies was as
follows:
DECEMBER 31,
1996 1995
Aetna Life Insurance and Annuity Company $ 594,769 $ 562,776
Ameritas Financial Services 170,532 159,608
------------ ------------
$ 765,301 $ 722,384
------------ ------------
------------ ------------
5. FEDERAL INCOME TAXES
The Plan received an updated favorable determination letter from the
Internal Revenue Service dated February 10, 1995 as to the qualified status
of the Plan. The Company is of the opinion that the Plan continues to
fulfill the requirements of a qualified plan under Section 401(a) of the
Internal Revenue Code and that the trust which forms a part of the Plan is
not subject to tax. Accordingly, no provision for federal or state income
taxes has been provided.
8
<PAGE>
SUPPLEMENTAL SCHEDULES
<PAGE>
FLOW INTERNATIONAL CORPORATION
VOLUNTARY PENSION AND SALARY DEFERRAL PLAN
ADDITIONAL INFORMATION - SCHEDULE I
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION COST FAIR VALUE
<S> <C> <C>
Large Company Fund
Kunath, Karren, Rinne & Atkin $ 1,845,465 $ 2,174,150
Sirach Capital Management 1,532,332 1,940,612
Cash equivalents 208 208
-------------- --------------
$ 3,378,005 $ 4,114,970
-------------- --------------
-------------- --------------
Small Company Fund
Crestone Capital Management $ 1,183,377 $ 1,414,771
ICM Asset Management 1,068,493 1,274,509
McKinley Capital Management 1,005,209 1,143,611
Cash equivalents 322,114 322,114
-------------- --------------
$ 3,579,193 $ 4,155,005
-------------- --------------
-------------- --------------
International Fund
Euro-Pacific Growth Mutual Fund $ 2,134,339 $ 2,459,688
American Small Cap World Mutual Fund 747,817 832,400
Cash equivalents 71 71
-------------- --------------
$ 2,882,227 $ 3,292,159
-------------- --------------
-------------- --------------
Money Market Fund
Bank of New York Collective Short Term Investment Fund $ 1,397,208 $ 1,397,208
-------------- --------------
-------------- --------------
Bond Fund
Aetna Life Insurance Group Annuity $ 594,769 $ 594,769
Ameritas Life Insurance Group Annuity 170,532 170,532
Strong Government Securities Fund 523,019 519,659
Cash equivalents 125 125
-------------- --------------
$ 1,288,445 $ 1,285,085
-------------- --------------
-------------- --------------
Vanguard 500 Fund
Vanguard Index Trust 500 Portfolio $ 1,036,113 $ 1,147,860
Cash equivalents 94 94
-------------- --------------
$ 1,036,207 $ 1,147,954
-------------- --------------
-------------- --------------
Vanguard Small Cap Fund
Vanguard Index Trust Small Capitalization Portfolio $ 561,889 $ 581,036
-------------- --------------
-------------- --------------
</TABLE>
9
<PAGE>
FLOW INTERNATIONAL CORPORATION
VOLUNTARY PENSION AND SALARY DEFERRAL PLAN
ADDITIONAL INFORMATION - SCHEDULE I (CONTINUED)
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1996
- --------------------------------------------------------------------------------
DESCRIPTION COST FAIR VALUE
Portico Bond Fund
Portico Funds $ 144,076 $ 142,032
------------ ------------
------------ ------------
FLOW Fund
FLOW International Common Stock $ 635,767 $ 731,159
Cash equivalents 10,724 10,724
------------ ------------
$ 646,491 $ 741,883
------------ ------------
------------ ------------
Participant loans
Due through 10/15/2016
Interest rates 6%-9% $ 43,377 $ 43,377
----------- ------------
----------- ------------
10
<PAGE>
FLOW INTERNATIONAL CORPORATION
VOLUNTARY PENSION AND SALARY DEFERRAL PLAN
ADDITIONAL INFORMATION - SCHEDULE II
SCHEDULE OF REPORTABLE TRANSACTIONS
YEAR ENDED DECEMBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COST OF
ASSETS
SALES/ SOLD/ GAIN/
PURCHASES MATURITIES MATURED (LOSS)
<S> <C> <C> <C> <C>
Single transaction in excess of 5% of the
current value of plan assets at the
beginning of the plan year
Money Market Fund $ 2,463,270 $ 2,463,270 $ 2,463,270
Vanguard 500 Fund 763,506
Series of transactions with respect to
securities when aggregated, involving
in excess of 5% of the current value
of plan assets at the beginning of the
plan year
Large Company Fund 498,876 737,152 426,223 $ 310,929
International Fund 408,383 289,766 210,801 78,965
Money Market Fund 13,822,731 14,750,925 14,750,925
Bond Fund 708,736 182,106 185,724 (3,618)
Vanguard 500 Fund 1,042,409 10,214 6,304 3,910
</TABLE>
11
<PAGE>
Signatures
The Flow International Corporation Voluntary Pension and Salary Deferral 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 by the undersigned thereunto duly
authorized.
The Flow International Corporation
Voluntary Pension and Salary Deferral Plan
Date: June 27, 1997
By /s/ Steve Reichenbach
--------------------------------
Steve Reichenbach
Plan Advisor Committee Member
<PAGE>
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the Prospectus
constituting part of the Registration Statement on Form S-3 (No. 33-57100) and
in the Registration Statements on Form S-8 (No. 33-40397 and No. 33-44776) of
Flow International Corporation of our report dated June 27, 1997 appearing on
page 3 of this Form 11-K.
By /s/ Price Waterhouse LLP
-------------------------
Price Waterhouse LLP
Seattle, Washington
June 27, 1997
