FORM 11-K
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
------------------
(X) ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO 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)
Commission File No. 1-9294
IMO INDUSTRIES INC.
EMPLOYEES STOCK SAVINGS PLAN
(Full Title of the Plan)
Imo Industries Inc.
1009 Lenox Drive
Lawrenceville, NJ 08648
(Name of Issuer of the Securities Held
Pursuant to the Plan and the Address
of its Principal Executive Office)
IMO INDUSTRIES INC. EMPLOYEES STOCK SAVING PLAN
ANNUAL REPORT ON FORM 11-K
December 31, 1997
INDEX
SIGNATURE PAGE
AUDITED FINANCIAL STATEMENTS
Report of Independent Public Accountants
Report of Independent Auditors
Statements of Net Assets Available for Plan Benefits
Statements of Changes in Net Assets Available for Plan Benefits
Notes to Financial Statements
SUPPLEMENTARY INFORMATION
Schedule I - Schedule of Assets Held for Investment Purposes
Schedule II - Schedule of Reportable Transactions
Schedule II - Item 27b - Schedule of Loans or Fixed Income Obligations
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Administrative Committee of the Plan has duly caused this annual report to be
signed on its behalf by the undersigned thereunto duly authorized.
IMO INDUSTRIES INC.
EMPLOYEES STOCK SAVINGS PLAN
(Name of Plan)
/s/ John A. Young
John A. Young
Vice President and Chief Financial Officer
Imo Industries Inc.
For Administrative Committee
Date: August 6, 1998
Report of Independent Public Accountants
To the Administrative Committee of the
Imo Industries Inc.
Employees Stock Savings Plan:
We have audited the accompanying statement of net assets available for plan
benefits of the Imo Industries Inc. Employees Stock Savings Plan as of December
31, 1997, and the related statement of changes in net assets available for plan
benefits for the year then ended. These financial statements and the schedules
referred to below are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of the Plan as
of December 31, 1997, and the changes in its net assets available for plan
benefits for the year then ended, in conformity with generally accepted
accounting principles.
Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The accompanying supplemental schedules of assets
held for investment purposes as of December 31, 1997, reportable transactions
and loan and fixed income obligations for the year then ended are presented for
purposes of complying with the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974, and are not a required part of the financial statements. The fund
information in the statement of net assets available for plan benefits and the
statement of changes in net assets available for plan benefits 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. The supplemental schedules and fund information have been subjected to the
auditing procedures applied in our audit of the financial statements, and, in
our opinion, are fairly stated in all material respects in relation to the
financial statements taken as a whole.
Richmond, Virginia
July 10, 1998
REPORT OF INDEPENDENT AUDITORS
Administrative Committee of the Imo Industries Inc. Employees
Stock Savings Plan
We have audited the accompanying statements of net assets available for plan
benefits of the Imo Industries Inc. Employees Stock Savings Plan as of December
31, 1996. This financial statement is the responsibility of the Plan's
management. Our responsibility is to express an opinion on this financial
statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statement referred to above present fairly, in all
material respects, the net assets available for plan benefits of the Plan at
December 31, 1996, in conformity with generally accepted accounting principles.
Ernst & Young LLP
Princeton, New Jersey
June 23, 1997
<TABLE>
Imo Industries Inc.
Employees Stock Savings Plan
Statement of Net Assets Available for Plan Benefits
As of December 31, 1997
<CAPTION>
Imo SEI
Industries Merrill SEI SEI Small SEI
Inc. Lynch Equity S&P500 Cap Scudder Stable Loans
Common Capital Income Index Growth Internat. Asset to
Stock Fund Fund Fund Fund Fund Fund Participants Other Total
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investments, at
fair value
(Note 2):
Imo Industries
Inc. Common
Stock $ - $ - $ - $ - $ - $ - $ - $ - $ - $ -
Mutual fund - 13,320,665 2,057,683 10,033,921 2,208,494 738,809 - - - 28,359,572
Collective Trust
Fund (at cost
which approximates
market) - - - - - - 29,572,791 - - 29,572,791
-------- -------- --------- --------- -------- -------- ----------- ------- ------ ----------
Total investments - 13,320,665 2,057,683 10,033,921 2,208,494 738,809 29,572,791 - - 57,932,363
Loans to
participants - - - - - - - 913,985 - 913,985
Other - - - - - - - - (27,729) (27,729)
-------- -------- --------- --------- -------- -------- ----------- ------- ------- ----------
Net assets
available for
plan benefits $ - $13,320,665 $2,057,683 $10,033,921 $2,208,494 $738,809 $29,572,791 $913,985 $(27,729) $58,818,619
======== ======== ========== ========= ========= ======= =========== ======== ======= ==========
The accompanying notes are an integral part of this statement.
</TABLE>
<TABLE>
Imo Industries Inc.
Employees Stock Savings Plan
Statement of Net Assets Available for Plan Benefits
As of December 31, 1996
<CAPTION>
Imo SEI
Industries Merrill SEI SEI Small SEI
Inc. Lynch Equity S&P500 Cap Scudder Stable Loans
Common Capital Income Index Growth Internat. Asset to
Stock Fund Fund Fund Fund Fund Fund Participants Other Total
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investments, at
fair value
(Note 2):
Imo Industries
Inc. Common
Stock $4,030,980 $ - $ - $ - $ - $ - $ - $ - $ - $4,030,980
Mutual fund - 12,535,161 1,142,091 6,992,553 1,461,675 495,554 - - - 22,627,034
Collective Trust
Fund (at cost
which approximates
market) - - - - - - 25,090,826 - - 25,090,826
-------- -------- --------- --------- -------- -------- ----------- ------- ------ ----------
Total
investments 4,030,980 12,535,161 1,142,091 6,992,553 1,461,675 495,554 25,090,826 - - 51,748,840
Cash and cash
equivalents 122,125 - - - - - - - - 122,125
Accrued
dividends - 575,207 - - - - - - - 575,207
Loans to
participants - - - - - - - 1,000,336 - 1,000,336
-------- -------- --------- --------- -------- -------- ----------- ------- ------- ----------
Net assets
available for
plan benefits $4,153,105 $13,110,368 $1,142,091 $6,992,553 $1,461,675 $495,554 $25,090,826 $1,000,336 $ - $53,446,508
======== ======== ========== ========== ========= ======== =========== ======== ======= ==========
The accompanying notes are an integral part of this statement.
</TABLE>
<TABLE>
Imo Industries Inc.
Employees Stock Savings Plan
Statement of Changes in Net Assets Available for Plan Benefits
For the Year Ended December 31, 1997
<CAPTION>
Imo SEI
Industries Merrill SEI SEI Small SEI
Inc. Lynch Equity S&P500 Cap Scudder Stable Loans
Common Capital Income Index Growth Internat. Asset to
Stock Fund Fund Fund Fund Fund Fund Other Participants Total
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Interest $ - $ - $ - $ - $ - $ - $1,626,391 $ - $ - $1,626,391
Dividends - 1,173,220 411,534 202,300 84,422 80,139 - - - 1,951,615
Net realized
and unrealized
gains(losses) 5,984,881 1,531,565 (18,465) 2,109,927 1,650 (42,717) 78,301 - - 9,645,142
--------- --------- ------- --------- ------ ------- -------- ------ -------- ----------
Total investment
income 5,984,881 2,704,785 393,069 2,312,227 86,072 37,422 1,704,692 - - 13,223,148
Contributions:
Employee 216,714 612,397 178,297 634,241 232,094 124,670 1,030,589 - - 3,029,002
Employer 385,909 40,056 12,303 42,864 15,348 8,451 82,432 - - 587,363
Rollover 3,750 2,356 9,191 22,758 15,901 6,187 1,150 - - 61,293
---------- --------- ------- --------- -------- ------- -------- ------ -------- ----------
Total
contributions 606,373 654,809 199,791 699,863 263,343 139,308 1,114,171 - - 3,677,658
Distribution to
participants (363,449)(1,923,225)(553,358)(1,434,831)(341,400) (123,219) (6,574,168) - - (11,313,650)
Net loan activity (1,116) (16,607) 9,433 30,010 5,696 2,823 (131,204) - (86,351) (187,316)
Other - - - - - - - (27,729) - (27,729)
Net interfund
transfers (10,379,794)(1,209,465) 866,657 1,434,099 733,108 186,921 8,368,474 - - -
---------- ---------- ------- --------- -------- -------- ---------- ------ -------- ---------
Net increase
(decrease) (4,153,105) 210,297 915,592 3,041,368 746,819 243,255 4,481,965 (27,729) (86,351) 5,372,111
Net assets
available for
plan benefits,
at beginning of
year 4,153,105 13,110,368 1,142,091 6,992,553 1,461,675 495,554 25,090,826 - 1,000,336 53,446,508
Net assets
available for
plan benefits,
at end of year $ - $13,320,665 $2,057,683 $10,033,921 $2,208,494 $738,809 $29,572,791 $(27,729) 913,985 $58,818,619
========= ========== ========== ========== ========== ======== =========== ======== ======= =========
The accompanying notes are an integral part of this statement.
</TABLE>
Imo Industries Inc.
Employees Stock Savings Plan
Notes to Financial Statements
As of December 31, 1997
1. Plan Description:
General
The following description of the Imo Industries Inc. Employees Stock Savings
Plan (the "Plan") is provided for general information purposes only. More
complete information regarding the Plan's provisions may be found in the Plan
document.
The Plan is a defined contribution employee benefit plan in which substantially
all employees of Imo Industries Inc. and its subsidiaries (the "Company") may
participate on the first day of the month following the date of hire. The
following employees are not eligible to participate in the Plan: (i) employees
whose employment contracts exclude them from participation; (ii) members of a
collective bargaining unit covered by a collective bargaining agreement that
does not specifically provide for their coverage; (iii) temporary hourly-paid
employees who work less than 1,020 hours per year; (iv) employees who are
employed at a division or facility specifically excluded from participation; and
(v) employees paid on a non-United States payroll.
Contributions
Under the Plan, eligible employees may contribute from 1 percent to 12 percent
of their compensation on a pre-tax basis, up to a maximum of $9,500 for the 1997
calendar year. The Company may provide a matching contribution. Effective July
1, 1995, the Company restored its matching contribution, previously suspended in
July 1992, at 25 percent of the first 6 percent of each participant's pre-tax
contribution. A participant's interest in pre-tax contributions and the
Company's matching contributions is at all times 100 percent vested and
nonforfeitable. Distributions are made upon a participant's death, disability or
other termination of employment; however, limited withdrawal rights in the event
of financial hardship apply with respect to a participant's pre-tax
contributions. A participant's right or interest under the Plan is not
transferable or assignable.
Loans to Participants
Effective January 1, 1995, the Plan was amended to allow for participant loans.
Under the new provisions, participants who are active employees of the Company
may borrow from their fund accounts a minimum of $500 up to a maximum of the
lesser of $50,000 or 50 percent of their account balance. Principal repayments
and interest are deposited into the participant's account through payroll
deductions. Loans must be repaid in full within five years. Upon termination of
employment from the Company any outstanding loan balance must be repaid within
90 days.
Investment Options
Participants may elect to have their pre-tax contributions invested in any of
the following investments in 1 percent increments: (i) Merrill Lynch Capital
Fund, Inc., a mutual fund investing in equity, debt and convertible securities;
(ii) SEI Stable Asset Fund, a collective trust fund consisting primarily of
guaranteed insurance contracts; (iii) SEI Equity Income Fund, a mutual fund
investing in stocks of large companies; (iv) SEI S&P 500 Index fund, a mutual
fund investing in stocks of companies included in the S&P 500 index; (v) SEI
Small Cap Growth Fund, a mutual fund investing in stocks of small, growing
companies; and (vi) Scudder International Fund, a mutual fund investing in
stocks of companies in Europe, Asia, and South America. Participants may change
their contribution rate once every thirty days. Changes in investment options
for future contributions and redirection of investments may be done at any time.
Plan Administration
Overall responsibility for administering the Plan rests with the Board of
Directors of the Company. The Plan administrator is responsible for the daily
operation of the Plan. SEI Trust Company ("SEI") is trustee for the Plan (see
Note 7).
Plan Amendment and Termination
The Company has the right to amend the Plan in such manner as it may determine,
provided that no such amendment may divert any portion of the vested account,
cause the diversion of plan assets or, without stockholder approval, increase
the maximum permitted rate of employer matching contributions. Although it has
not expressed any intent to do so, the Company has the right under the Plan to
terminate the Plan subject to the provisions of the Employee Retirement Income
Security Act of 1974.
2. Significant Accounting Policies:
Cash and Cash Equivalents
Cash and cash equivalents consist of amounts temporarily invested by the trustee
in a short-term income producing fund, pending the investment of the amounts in
one of the Plan's investment alternatives.
Accounting for Investments
The Plan's investment in the Company's Common Stock is valued at the closing
price on the last business day of the fiscal year on the New York Stock Exchange
(see Note 6). The SEI Stable Asset Fund is valued at cost plus accrued interest
which approximates market value. Shares of mutual funds are valued at the net
asset value per share reported by such funds. Investment transactions are
accounted for on the date the securities are purchased or sold (trade date).
Dividend income is recorded on the ex-dividend date and interest income is
accrued as earned.
Expenses
All Plan administrative expenses are paid by the Company. The Plan is not
charged for these services.
Management Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires the management of the Plan to make estimates and
assumptions that affect the amount reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Income Taxes
The Internal Revenue Service issued a letter of determination dated December 9,
1996, stating the Plan continues to be qualified under section 401(a) of the
Internal Revenue Code (the "Code") and is, therefore, exempt from federal income
taxation under section 501(a) of the Code. The Plan administrator is of the
opinion that the Plan continues to operate as designed. Participants are not
subject to federal income tax until amounts are distributed to them.
Reclassification
Certain prior year amounts have been reclassified to conform with the current
year presentation.
3. Investments:
The cost of investments and number of shares or units held at December 31, 1997
and 1996, are as follows:
1997 1996
Shares Cost Shares Cost
Imo Industries Inc.Common Stock - $ - 1,289,913 $13,534,808
Merrill Lynch Capital Fund 385,994 11,746,609 403,709 11,809,842
SEI Equity Income Fund 136,814 2,307,521 77,280 1,214,280
SEI S&P 500 Index Fund 327,371 8,574,467 303,120 5,865,841
SEI Small Cap Growth Fund 132,882 2,410,654 91,653 1,720,265
Scudder International Fund 16,148 853,961 9,974 459,249
SEI Stable Asset Fund 29,572,791 29,572,791 25,090,826 25,090,826
----------- -----------
$55,466,003 $59,695,111
=========== ===========
4. Withdrawals Payable:
At December 31, 1997 and 1996, there were no withdrawals requested but not yet
paid.
5. Related-Party Transactions:
During 1997 and 1996, the Plan invested in a number of SEI mutual funds and
Company common stock. These are related-party transactions and are identified as
parties-in-interest in the accompanying schedules.
6. Plan Amendments:
Effective July 31, 1997, the Company's Common Stock Fund was frozen and
liquidated. The proceeds were invested in other funds of the Plan in accordance
with the stated contribution percentages of the participants. The Company's
Common Stock Fund is no longer an investment option.
7. Subsequent Event:
Effective March 31, 1998, the Plan's trustee was changed from SEI to CIGNA.
Schedule I
Imo Industries Inc.
Employees Stock Savings Plan
Schedule of Assets Held for Investment Purposes
As of December 31, 1997
Identity of Issuer,
Borrower, Lessor or Description of Current
Similar Party Investment Cost Value
- --------------------- ------------- ---------- ----------
Merrill Lynch Capital Fund Mutual fund - $11,746,609 $13,320,665
385,994 shares
*SEI Equity Income Fund Mutual fund - 2,307,521 2,057,683
136,814 shares
*SEI S&P 500 Index Fund Mutual fund - 8,574,467 10,033,921
327,371 shares
*SEI Small Cap Growth Fund Mutual fund - 2,410,654 2,208,494
132,882 shares
Scudder International Fund Mutual fund - 853,961 738,809
16,148 shares
*SEI Stable Asset Fund Collective trust - 29,572,791 29,572,791
29,572,791 shares
----------- ----------
$55,466,003 $57,932,363
=========== ==========
*Loans to Payment terms vary
Participants with interest rates
ranging from 9.25%
to 10% $ 913,985 $ 913,985
=========== ==========
The accompanying notes are an integral part of this schedule.
*Represents a party-in-interest.
Schedule II
<TABLE>
Imo Industries, Inc.
Employees Stock Savings Plan
Schedule of Reportable Transactions
For the Year Ended December 31, 1997
<CAPTION>
Number Number Cost Net
Identity of Party Description of Purchase of Sales of Gain
Involved of Asset Transactions Price Transactions Price Asset (Loss)
- ---------------------- ---------- --------- -------- -------- ------- ------- --------
Individual Transactions
<S> <C> <C> <C> <C> <C> <C> <C>
* Imo Industries Inc Common Stock - - 1 10,312,863 4,585,099 5,727,764
Aggregate Transactions
* Imo Industries Inc. Common Stock - - 3 10,346,578 4,600,395 5,746,183
* SEI Stable Asset Fund Stable Asset 212 22,562,205 - - - -
Fund
* SEI Stable Asset Fund Stable Asset - - 226 18,128,710 18,128,710 -
Fund
Merrill Lynch Capital Mutual Fund 156 3,228,790 - - - -
Fund
Merrill Lynch Capital Mutual Fund - - 179 4,815,442 4,417,271 398,171
Fund
* SEI S&P 500 Index Fund Mutual Fund 192 6,179,463 - - - -
* SEI S&P 500 Index Fund Mutual Fund - - 192 5,397,485 4,604,931 792,554
* SEI Small Capital Mutual Fund - - 166 3,205,980 3,004,843 201,137
Growth Fund
* Represents a party-in-interest.
The accompanying notes are an integral part of this schedule.
</TABLE>
<TABLE>
Imo Industries Inc.
Employees Stock Savings Plan
Item 27b - Schedule of Loans or Fixed Income Obligations
For the Year Ended December 31, 1997
<CAPTION>
Amount Received Unpaid
Original During the Year Balance at Amount Overdue
Identity Amount Principal Interest Year-End Description Principal Interest
<S> <C> <C> <C> <C> <C> <C> <C>
*James P. Lewis $7,030.00 $1,365.38 $301.$30 $3,395.85 Note dated $3,395.85 $ -
Route 1, Box 549 June 22, 1995,
Louisburg, due March 22,
NC 27549 1999, 10%
interest
*David G. Haynes 1,080.00 318.74 42.61 326.96 Note dated 326.96 -
323 White Pine July 24, 1995
Circle due August 30,
Florence, 1998, 10%
KY 41042 interest
*Represents a party-in-interest
</TABLE>
