<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
For the Fiscal year ended December 31, 1999
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from
Commission File No: 1-10955
THE ENVIRONMENTAL ELEMENTS CORPORATION
401(K) RETIREMENT SAVINGS PLAN
ENVIRONMENTAL ELEMENTS CORPORATION
3700 Koppers Street
Baltimore, Maryland 21227
<PAGE>
Environmental Elements Corporation
401(k) Retirement Savings Plan
Financial Statements
As Of December 31, 1999 and 1998
Together With Report of
Independent Public Accountants
<PAGE>
Report of Independent Public Accountants
To the Administrative Committee of
the Environmental Elements Corporation
401(k) Retirement Savings Plan:
We have audited the accompanying statements of net assets available for plan
benefits of the Environmental Elements Corporation 401(k) Retirement Savings
Plan (the Plan) as of December 31, 1999 and 1998, and the related statement of
changes in net assets available for plan benefits for the year ended December
31, 1999. These financial statements and the schedule referred to below are the
responsibility of the Plan's Administrative Committee. Our responsibility is to
express an opinion on these financial statements and schedule based on our
audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. 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 audits provide 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, 1999 and 1998, and the changes in its net assets available for
plan benefits for the year ended December 31, 1999, in conformity with
accounting principles generally accepted in the United States.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of investments
held is presented for the purpose of additional analysis and is not a required
part of the basic financial statements but is 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 statement of changes in net assets available for plan benefits for the
year ended December 31, 1999, is presented for purposes of additional analysis
rather than to present the net assets available for plan benefits and changes in
assets available for plan benefits of each fund. The supplemental schedule 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.
/s/ Arthur Andersen LLP
Baltimore, Maryland
June 7, 2000
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Environmental Elements Corporation
401(k) Retirement Savings Plan
Table of Contents
<TABLE>
<CAPTION>
Page
<S> <C>
Statements of Net Assets Available for Plan Benefits
As of December 31, 1999 and 1998 1
Statement of Changes in Net Assets Available for
Plan Benefits with Fund Information
For the Year Ended December 31, 1999 2
Notes to Financial Statements and Supplemental Schedule
December 31, 1999 and 1998 3
Schedule of Investments Held
As of December 31, 1999 5
</TABLE>
<PAGE>
Environmental Elements Corporation
401(k) Retirement Savings Plan
Statements of Net Assets Available for Plan Benefits
As of December 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
---------- ----------
<S> <C> <C>
Assets:
Investments in mutual funds at market,
participant directed:
Putnam Stable Value Fund $1,466,701 $1,565,178
The George Putnam Fund of Boston 197,845 127,835
Putnam OTC Emerging Growth Fund 535,330 144,952
Putnam Income Fund 87,288 81,919
The Putnam Fund for Growth and Income 1,757,015 2,449,162
Putnam International Growth Fund 603,183 173,836
Putnam Vista Fund 814,768 376,827
Putnam Investors Fund 140,675 --
---------- ----------
5,602,805 4,919,709
Environmental Elements Corporation Common
Stock at market, participant directed 799,187 1,035,186
---------- ----------
Total investments 6,401,992 5,954,895
Loan Fund 58,346 26,407
---------- ----------
Net assets available for plan benefits $6,460,338 $5,981,302
========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
1
<PAGE>
Environmental Elements Corporation
401(k) Retirement Savings Plan
Statement of Changes in Net Assets Available for Plan Benefits with Fund
Information
For the Years Ended December 31, 1999 and 1998
(Notes 1, 2 and 3)
<TABLE>
<CAPTION>
Participant Directed/Fund Information
----------------------------------------------------------------
George
Putnam Putnam Putnam OTC Putnam Putnam Fund
Stable Fund of Emerging Income for Growth
Value Fund Boston Growth Fund Fund and Income
---------- -------- ----------- -------- ----------
<S> <C> <C> <C> <C> <C>
Transfer among funds $ (170,744) $ 22,219 $ 68,181 $(21,383) $ (324,591)
---------- -------- -------- -------- ----------
Additions:
Contributions-
Employer -- -- -- -- --
Participant 60,551 58,152 54,057 28,140 193,692
---------- -------- -------- -------- ----------
Total contributions 60,551 58,152 54,057 28,140 193,692
Interest and dividends 82,902 19,574 25,904 5,142 188,962
Realized and unrealized gains (losses) -- (22,966) 241,833 (6,608) (130,900)
Net loan activity (5,879) 1,049 1,134 621 (28,267)
---------- -------- -------- -------- ----------
Total additions 137,574 55,809 322,928 27,295 223,487
---------- -------- -------- -------- ----------
Deductions:
Benefit distributions (65,307) (8,018) (731) (543) (591,043)
---------- -------- -------- -------- ----------
Total deductions (65,307) (8,018) (731) (543) (591,043)
---------- -------- -------- -------- ----------
Net increase (decrease) for the year (98,477) 70,010 390,378 5,369 (692,147)
Net assets available for plan benefits, beginning of year 1,565,178 127,835 144,952 81,919 2,449,162
---------- -------- -------- -------- ----------
Net assets available for plan benefits, end of year $1,466,701 $197,845 $535,330 $ 87,288 $1,757,015
========== ======== ======== ======== ==========
<CAPTION>
Putnam
Putnam Putnam Global Environmental
International Putnam Investors Growth Elements Corp.
Growth Fund Vista Fund Fund Fund Common Stock
----------- ---------- --------- ------- --------------
<S> <C> <C> <C> <C> <C>
Transfer among funds $144,685 $ 47,669 $108,465 $ 989 $ 124,510
-------- -------- -------- ------- ----------
Additions:
Contributions-
Employer -- -- -- -- 108,412
Participant 86,900 121,897 7,945 250 23,735
-------- -------- -------- ------- ----------
Total contributions 86,900 121,897 7,945 250 132,147
Interest and dividends 21,972 92,456 926 -- --
Realized and unrealized gains (losses) 175,865 173,801 22,961 (1,239) (452,383)
Net loan activity -- 2,376 378 -- 252
-------- -------- -------- ------- ----------
Total additions 284,737 390,530 32,210 (989) (319,984)
-------- -------- -------- ------- ----------
Deductions:
Benefit distributions (75) (258) -- -- (40,525)
-------- -------- -------- ------- ----------
Total deductions (75) (258) -- -- (40,525)
-------- -------- -------- ------- ----------
Net increase (decrease) for the year 429,347 437,941 140,675 -- (235,999)
Net assets available for plan benefits, beginning of year 173,836 376,827 -- -- 1,035,186
-------- -------- -------- ------- ----------
Net assets available for plan benefits, end of year $603,183 $814,768 $140,675 $ -- $ 799,187
======== ======== ======== ======= ==========
<CAPTION>
Loan Fund Total
---------- ----------
<S> <C> <C>
Transfer among funds $ -- $ --
------- ----------
Additions:
Contributions-
Employer -- 108,412
Participant -- 635,319
------- ----------
Total contributions -- 743,731
Interest and dividends 3,603 441,441
Realized and unrealized gains (losses) -- 364
Net loan activity 28,336 --
------- ----------
Total additions 31,939 1,185,536
------- ----------
Deductions:
Benefit distributions -- (706,500)
------- ----------
Total deductions -- (706,500)
------- ----------
Net increase (decrease) for the year 31,939 479,036
Net assets available for plan benefits, beginning of year 26,047 5,981,302
------- ----------
Net assets available for plan benefits, end of year $58,346 $6,460,338
======= ==========
</TABLE>
The accompanying notes are an integral part of these statements.
2
<PAGE>
Environmental Elements Corporation
401(k) Retirement Savings Plan
Notes to Financial Statements and Supplemental Schedules
December 31, 1999 and 1998
1. Plan Description:
The Environmental Elements Corporation 401(k) Retirement Savings Plan (the EEC
Plan), a defined contribution 401(k) plan, was established effective October 1,
1989. Effective December 31, 1994, the Environmental Elements Service
Corporation Thrift Incentive Plan (the EESC Plan) was merged with the EEC Plan
(collectively referred to as the Plan). Environmental Elements Service
Corporation discontinued operations during the tax year ended March 1997.
Employees of Environmental Elements Corporation are eligible to join the Plan on
January 1, April 1, July 1 or October 1 following the completion of six months
of service. The Plan is subject to the provisions of the Employee Retirement
Income Security Act of 1974 (ERISA). The Plan is administered by employees of
the Environmental Elements Corporation.
Under the terms of the Plan, an employee must make a salary reduction
contribution to the Plan in order to participate. Participants may contribute
from 1% to 15% of their annual compensation on a pre-tax basis. These amounts
are invested in one or more investment alternatives based upon the decisions of
the Plan participants. Allocations of income are based on the proportion of each
participant's account balance to the total of all account balances within each
fund. On termination of service, a participant may elect to receive a lump-sum
amount equal to the vested value of his or her account. The Plan also provides
for partial or complete distributions of their account balance upon attainment
of age 59-1/2 or in the case of financial hardship, as determined by the
Administrative Committee.
Effective August 1, 1990, the Plan was amended to provide for Employer matching
contributions. The Environmental Elements Corporation (the Employer) will match
50% of the participant's contribution to the Plan, not to exceed 3% of their
salary. Through March 31, 1999, the Employer match was made in the form of
Employer common stock from authorized but unissued shares of Environmental
Elements Corporation stock. Beginning April 1, 1999, the Employer made matching
cash contributions by purchasing Employer common stock on the open market.
Participants become fully vested in Employer matching contributions upon
completion of five years of service. A year of service is defined as a
consecutive twelve-month period in which an employee completes one thousand
hours of service. Voluntary contributions by participants are fully vested when
made. Nonvested employer contributions that are forfeited are used to reduce
future employer contributions.
Effective January 1, 1998, participants are permitted to borrow against their
vested 401(k) balance. A participant may take out a loan of $50,000 or up to 50%
of his/her vested balance, whichever is less. Loans must be repaid to the
participant's account through payroll deductions on an after-tax basis. All
loans must be repaid within 5 years unless for the purchase of a primary
residence (extended to 10 years). A participant may have only one loan
outstanding at a time. A loan shall bear interest at a rate that is consistent
with the provisions of the Internal Revenue Code; and the interest rate so
determined shall remain fixed throughout the duration of the loan. The range of
interest rates for all 1999 participant loans is 7.75% - 8.5%.
3
<PAGE>
2. Significant Accounting Policies:
Basis of Financial Statements
The accompanying financial statements are presented on the accrual basis of
accounting.
Valuation of Investments
Investments included in the accompanying financial statements are stated at
market value.
Income Taxes
The Plan has obtained a determination letter, in which the Internal Revenue
Service stated that the Plan, as amended, was in compliance with the applicable
requirements of the Internal Revenue Code. The Administrative Committee believes
that the Plan is currently designed and being operated in compliance with the
applicable requirements of the Internal Revenue Code and that the related trust
was qualified and tax exempt as of the financial statement dates.
Administrative Expenses
All administrative expenses are borne by the Employer and, as such, have not
been included in the accompanying financial statements.
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 disclosure of
contingent assets and liabilities as of the date of the financial statements and
the reported amounts of revenues and expenses during the reporting periods.
Actual results could differ from those estimates.
3. Schedule of Investments Held:
Investments are stated at market value and are held by Putnam Fiduciary Trust
Company (Trustee). The accompanying supplemental Schedule of Investments Held
represents a detailed listing of all investments held by the Plan as of December
31, 1999.
4
<PAGE>
Environmental Elements Corporation
401(k) Retirement Savings Plan
Schedule of Investments Held
As of December 31, 1999
<TABLE>
<CAPTION>
Number
of
Description of Investments Shares Market Value
----------------------------------------------- ------ ------------
<S> <C> <C>
Putnam Stable Value Fund 1,466,701 $1,466,701
The George Putnam Fund Of Boston 12,153 197,845
Putnam OTC Emerging Growth Fund 14,464 535,330
Putnam Income Fund 13,725 87,288
The Putnam Fund For Growth And Income 93,707 1,757,015
Putnam International Growth Fund 20,323 603,183
Putnam Vista Fund 46,665 814,768
Putnam Investors Fund 7,346 140,675
Environmental Elements Corporation Common Stock 345,595 799,187
------------
$6,401,992
============
</TABLE>
The accompanying notes are an integral part of this schedule.
5
<PAGE>
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees have duly caused this annual report to be signed on its behalf by the
undersigned hereunto duly authorized.
ENVIRONMENTAL ELEMENTS CORPORATION 401(K)
RETIREMENT SAVINGS PLAN
/s/ John C. Nichols June 26, 2000
------------------------- -------------
John C. Nichols Date
Plan Administrator
