<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, 1997
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 0-12448
Flow International Corporation Voluntary Pension and Salary Deferral Plan
Flow International Corporation
23500 64th Ave. S.
Kent, WA 98032
(253) 850-3500
<PAGE>
FLOW INTERNATIONAL
CORPORATION VOLUNTARY
PENSION AND SALARY DEFERRAL
PLAN
FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES
DECEMBER 31, 1997
<PAGE>
FLOW INTERNATIONAL CORPORATION
VOLUNTARY PENSION AND SALARY DEFERRAL PLAN
FINANCIAL STATEMENTS
AND SUPPLEMENTAL SCHEDULES
DECEMBER 31, 1997
INDEX
<TABLE>
<CAPTION>
PAGE
<S> <C>
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
</TABLE>
(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 12, 1998
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, 1997 and 1996, and the changes in its net assets
available for plan benefits for the year ended December 31, 1997, 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.
PRICE WATERHOUSE LLP
1
<PAGE>
FLOW INTERNATIONAL CORPORATION
VOLUNTARY PENSION AND SALARY DEFERRAL PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER 31,
1997 1996
ASSETS
<S> <C> <C>
Investments, at market
Large Company Fund $ 4,164,210 $ 4,114,970
Small Company Fund 4,226,110 4,155,005
International Fund 3,201,141 3,292,159
Money Market Fund 1,105,798 1,397,208
Bond Fund 979,337 1,285,085
Vanguard 500 Fund 1,363,320 1,147,954
Vanguard Small Cap Fund 824,259 581,036
Portico Bond Fund 133,297 142,032
FLOW Fund 588,938 741,883
Participant loans 88,518 43,377
Contributions receivable 134,748 160,936
Loan payments receivable 1,971 3,377
Interest and dividends receivable 114,926 11,073
------------ ------------
16,926,573 17,076,095
LIABILITIES
Accrued liabilities 11,616 6,824
------------ ------------
Net assets available for plan
benefits $ 16,914,957 $ 17,069,271
------------ ------------
------------ ------------
</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
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1997
<S> <C>
Additions to net assets attributed to:
Investment income
Net appreciation in fair value of investments $ 2,208,799
Interest 235,476
Dividends 429,375
-----------
2,873,650
Employer contributions 760,216
Employee contributions 1,652,878
Participant rollovers from other qualified
retirement plans 414,046
-----------
Total additions 5,700,790
-----------
Deductions from net assets attributed to:
Benefits paid to participants 1,394,498
Distributions resulting from divestiture (Note 2) 4,240,503
Administrative expenses 220,103
-----------
Total deductions 5,855,104
-----------
Net decrease (154,314)
Net assets available for plan benefits:
Beginning of year 17,069,271
-----------
End of year $16,914,957
-----------
-----------
</TABLE>
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, 1997
- --------------------------------------------------------------------------------
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. For employees meeting
certain employment criteria, 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 $220,103 for the year ended December 31, 1997.
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>
FLOW INTERNATIONAL CORPORATION
VOLUNTARY PENSION AND SALARY DEFERRAL PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
ROLLOVERS
The Plan allows transfers in from other qualified retirement plans.
Rollovers or plan-to-plan transfers are included as a separate line item in
the accompanying statement of changes in net assets available for plan
benefits.
PARTICIPANT LOANS
The Plan provides loans to participants, which are 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. Net borrowings totaled $45,141 for the
year ended December 31, 1997.
TRANSFER OF PLAN ASSETS
During 1997 the Company sold certain operating divisions. The Plan assets
and obligations related to employees of these divisions were transferred
out of the Plan to a successor plan.
3. INVESTMENTS
All plan investments are held in trust by Northwestern Trust and Investors
Advisory Company (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 Morgan Stanley. 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
Fidelity Institutional Cash Domestic Money Market Class 1 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
5
<PAGE>
FLOW INTERNATIONAL CORPORATION
VOLUNTARY PENSION AND SALARY DEFERRAL PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
- -------------------------------------------------------------------------------
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 for the
year ended December 31, 1997:
<TABLE>
<CAPTION>
LARGE SMALL
COMPANY COMPANY INTERNATIONAL
FUND FUND FUND
<S> <C> <C> <C>
Additions to net assets attributed to:
Investment income
Net appreciation
(depreciation) in fair
value of investments $ 896,405 $ 795,958 $ 49,208
Interest 18,490 34,129 54
Dividends 56,016 17,827 291,922
---------- ----------- -----------
970,911 847,914 341,184
Employer contributions 179,130 185,467 154,283
Employee contributions 376,986 396,503 328,026
Participant rollovers from
other qualified retirement
plans 88,130 115,956 69,023
---------- ----------- -----------
Total additions 1,615,157 1,545,840 892,516
---------- ----------- -----------
Participant transfers, net 25,814 (56,016) (93,365)
---------- ----------- -----------
Loan transactions, net 152 (19,494) (13,912)
---------- ----------- -----------
Deductions from net assets
attributed to:
Benefits paid to participants 403,432 282,117 217,068
Distributions resulting
from divestiture 1,121,918 1,011,636 646,463
Administrative expenses 54,601 118,133 16,356
---------- ----------- -----------
Total deductions 1,579,951 1,411,886 879,887
---------- ----------- -----------
Net increase (decrease) 61,172 58,444 (94,648)
Net assets available for
plan benefits:
Beginning of year 4,150,571 4,197,093 3,324,010
---------- ----------- -----------
End of year $4,211,743 $ 4,255,537 $ 3,229,362
---------- ----------- -----------
---------- ----------- -----------
<CAPTION>
MONEY VANGUARD
MARKET BOND 500
FUND FUND FUND SUBTOTAL
<S> <C> <C> <C> <C>
Investment income
Net appreciation
(depreciation) in fair
value of investments $ 9,502 $ 353,155 $ 2,104,228
Interest $ 81,620 48,783 10,060 193,136
Dividends 20,934 22,590 409,289
----------- ----------- ----------- -----------
81,620 79,219 385,805 2,706,653
Employer contributions 46,140 41,978 58,707 665,705
Employee contributions 98,260 85,577 144,312 1,429,664
Participant rollovers from
other qualified retirement
plans 45,322 44,028 36,863 399,322
----------- ----------- ----------- -----------
Total additions 271,342 250,802 625,687 5,201,344
----------- ----------- ----------- -----------
Participant transfers, net 68,454 (155,085) (18,968) (229,166)
----------- ----------- ----------- -----------
Loan transactions, net (4,292) (4,808) (1,144) (43,498)
----------- ----------- ----------- -----------
Deductions from net assets
attributed to:
Benefits paid to participants 246,734 18,234 48,257 1,215,842
Distributions resulting
from divestiture 379,030 356,940 281,597 3,797,584
Administrative expenses 5,280 6,041 8,897 209,308
----------- ----------- ----------- -----------
Total deductions 631,044 381,215 338,751 5,222,734
----------- ----------- ----------- -----------
Net increase (decrease) (295,540) (290,306) 266,824 (294,054)
Net assets available for
plan benefits:
Beginning of year 1,413,929 1,294,693 1,159,086 15,539,382
----------- ----------- ----------- -----------
End of year $ 1,118,389 $ 1,004,387 $ 1,425,910 $ 15,245,328
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
6
<PAGE>
FLOW INTERNATIONAL CORPORATION
VOLUNTARY PENSION AND SALARY DEFERRAL PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
Changes in net assets available for plan benefits by investment account for the
year ended December 31, 1997 (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 $ 2,104,228 $ 87,967 $ (20,103) $ 36,707 $ 2,208,799
Interest 193,136 36,553 779 224 $ 4,784 235,476
Dividends 409,289 12,534 7,552 429,375
------------ --------- --------- --------- ---------- ----------
2,706,653 137,054 (11,772) 36,931 4,784 2,873,650
Employer contributions 665,705 38,317 7,962 48,232 760,216
Employee contributions 1,429,664 96,469 18,375 108,370 1,652,878
Participant rollovers from other
qualified retirement plans 399,322 5,812 8,912 414,046
------------ --------- --------- --------- ---------- ----------
Total additions 5,201,344 277,652 14,565 202,445 4,784 5,700,790
------------ --------- --------- --------- ---------- ----------
Participant transfers, net (229,166) 228,123 14,791 (13,748) -- --
------------ --------- --------- --------- ---------- ----------
Loan transactions, net (43,498) (3,595) -- (1,849) 48,942 --
------------ --------- --------- --------- ---------- ----------
Deductions from net assets
attributed to:
Benefits paid to participants 1,215,842 55,588 31,277 89,894 1,897 1,394,498
Distributions resulting
from divestiture 3,797,584 156,795 29,393 250,043 6,688 4,240,503
Administrative expenses 209,308 5,309 1,341 4,145 220,103
------------ --------- --------- --------- ---------- ----------
Total deductions 5,222,734 217,692 62,011 344,082 8,585 5,855,104
------------ --------- --------- --------- ---------- ----------
Net (decrease) increase (294,054) 284,488 (32,655) (157,234) 45,141 (154,314)
Net assets available for
plan benefits:
Beginning of year 15,539,382 589,636 143,969 752,907 43,377 17,069,271
------------ --------- --------- --------- ---------- ----------
End of year $ 15,245,328 $ 874,124 $ 111,314 $ 595,673 $ 88,518 $16,914,957
------------ --------- --------- --------- ---------- ----------
------------ --------- --------- --------- ---------- ----------
</TABLE>
7
<PAGE>
FLOW INTERNATIONAL CORPORATION
VOLUNTARY PENSION AND SALARY DEFERRAL PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
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, 1997
and 1996, the values of the contracts with the Insurance Companies were as
follows:
<TABLE>
<CAPTION>
DECEMBER 31,
1997 1996
<S> <C> <C>
Aetna Life Insurance and Annuity Company $ 424,941 $ 594,769
Ameritas Financial Services 122,672 170,532
------------ ------------
$ 547,613 $ 765,301
------------ ------------
------------ ------------
</TABLE>
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.
6. BENEFIT OBLIGATIONS
The Plan has properly excluded obligations totaling $195,186 and $0 for
benefits payable to participants who have withdrawn from the Plan but were
not paid at December 31, 1997 and 1996, respectively. This exclusion
results in a difference between the Plan's financial statements and the
Plan's December 31, 1997 Form 5500.
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, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION COST FAIR VALUE
<S> <C> <C>
Large Company Fund
Kunath, Karren, Rinne & Atkin $ 1,841,018 $ 2,058,123
Morgan Stanley 2,168,741 2,081,905
Cash equivalents 24,182 24,182
----------- -----------
$ 4,033,941 $ 4,164,210
----------- -----------
----------- -----------
Small Company Fund
Crestone Capital Management $ 1,161,491 $ 1,257,967
ICM Asset Management 1,227,603 1,476,775
McKinley Capital Management 969,477 1,112,105
Cash equivalents 379,263 379,263
----------- -----------
$ 3,737,834 $ 4,226,110
----------- -----------
----------- -----------
International Fund
Euro-Pacific Growth Mutual Fund $ 2,020,348 $ 2,398,403
American Small Cap World Mutual Fund 792,738 802,738
----------- -----------
$ 2,813,086 $ 3,201,141
----------- -----------
----------- -----------
Money Market Fund
Fidelity Institutional Cash Domestic Money
Market Class I Fund $ 1,105,798 $ 1,105,798
----------- -----------
----------- -----------
Bond Fund
Aetna Life Insurance Group Annuity $ 419,313 $ 424,941
Ameritas Life Insurance Group Annuity 120,722 122,672
Strong Government Securities Fund 234,614 236,897
Cash equivalents 194,827 194,827
----------- -----------
$ 969,476 $ 979,337
----------- -----------
----------- -----------
Vanguard 500 Fund
Vanguard Index Trust 500 Portfolio $ 1,032,661 $ 1,363,320
----------- -----------
----------- -----------
Vanguard Small Cap Fund
Vanguard Index Trust Small Capitalization
Portfolio $ 737,009 $ 824,259
----------- -----------
----------- -----------
</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, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION COST FAIR VALUE
<S> <C> <C>
Portico Bond Fund
Portico Funds $131,859 $133,297
-------- --------
-------- --------
FLOW Fund
FLOW International Common Stock $532,493 $588,926
Cash equivalents 12 12
-------- --------
$532,505 $588,938
-------- --------
-------- --------
Participant loans
Due through 10/15/2016
Interest rates 6%-9% $88,518 $88,518
-------- --------
-------- --------
</TABLE>
10
<PAGE>
FLOW INTERNATIONAL CORPORATION
VOLUNTARY PENSION AND SALARY DEFERRAL PLAN
ADDITIONAL INFORMATION - SCHEDULE II
SCHEDULE OF REPORTABLE TRANSACTIONS
YEAR ENDED DECEMBER 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COST OF
ASSETS
SALES/ SOLD/ GAIN/
PURCHASES MATURITIES MATURED (LOSS)
<S> <C> <C> <C> <C>
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 $ 7,537,797 $ 6,987,921 $ 6,514,725 $ 473,196
Small Company Fund 14,351,868 14,746,949 13,864,047 882,902
International Fund 1,123,404 1,005,847 934,968 70,879
</TABLE>
11
<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 12, 1998 appearing on
page 4 of this Form 11-K.
/s/ PRICE WATERHOUSE LLP
Price Waterhouse LLP
Seattle, Washington
June 26, 1998
