<PAGE> 1
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, 1996
or
[ ] Transition Report Pursuant to Section 15(d) of the Securities Exchange
Act of 1934 for the transition period from ________ to ________
Commission file number 0-21800
A. Full title of the plans and the address of the plans, if
different from that of the issuer named below:
Norwood Promotional Products, Inc.
Employees 401(k) Plan
B. Name of issuer of the securities held pursuant to the plans
and the address of its principal executive office:
Norwood Promotional Products, Inc.
NE Loop 410, Suite 295
San Antonio, Texas 78216
Financial Statements and Exhibits
(A) Financial Statements:
Norwood Promotional Products, Inc.
Employees 401(k) Plan
Audited Financial Statements
Report of Independent Auditors
Statements of Net Assets Available for Benefits
Statements of Changes in Net Assets Available
for Benefits
Notes to Financial Statements
Supplemental Schedules
Schedule of Assets Held for Investment Purposes
Schedule of Reportable Transactions
(B) Exhibits:
23.1 Consent of Akin, Doherty, Klein & Feuge, P.C.
<PAGE> 2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Trustees of the Norwood Promotional Products, Inc. Employees 401(k) Plan
have duly caused this annual report to be signed by the undersigned thereunto
duly authorized.
NORWOOD PROMOTIONAL PRODUCTS, INC.
EMPLOYEES 401(K) PLAN
By: NORWOOD PROMOTIONAL
PRODUCTS, INC., Plan Administrator
By:/s/ J. MAX WAITS
-------------------------------------------
J. Max Waits,
Secretary, Treasurer and
Chief Financial Officer
Dated: June 27, 1997
<PAGE> 3
NORWOOD PROMOTIONAL PRODUCTS, INC. EMPLOYEES 401(k) PLAN
AUDITED FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
Page
AUDITED FINANCIAL STATEMENTS ----
<S> <C>
Report of Independent Auditors 1
Statements of Net Assets Available for Benefits 2
Statements of Changes in Net Assets Available for Benefits 3
Notes to Financial Statements 4
SUPPLEMENTAL SCHEDULES
Schedule of Assets Held for Investment Purposes 11
Schedule of Reportable Transactions 12
</TABLE>
<PAGE> 4
REPORT OF INDEPENDENT AUDITORS
To The Retirement Plan Committee
Norwood Promotional Products, Inc. Employees 401(k) Plan
We have audited the accompanying statements of net assets available for
benefits of the Norwood Promotional Products, Inc. Employees 401(k) Plan as of
December 31, 1996 and 1995, and the related statements of changes in net assets
available for benefits for the years then ended. 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 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 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 benefits of the Norwood
Promotional Products, Inc. Employees 401(k) Plan as of December 31, 1996 and
1995, and the changes in net assets available for benefits for the years then
ended in conformity with generally accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of (1)
assets held for investment purposes, and (2) reportable transactions are
presented for the purpose of additional analysis and are not a required part of
the basic financial statements but are 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 supplemental
schedules 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.
AKIN, DOHERTY, KLEIN & FEUGE, P.C.
San Antonio, Texas
June 26, 1997
1
<PAGE> 5
NORWOOD PROMOTIONAL PRODUCTS, INC. EMPLOYEES 401(k) PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Investments, at fair value:
AIM Limited Maturity Treasury Fund $ 284,581 $ 49,887
PIMCO Low Duration Bond Fund 402,094 51,550
Fidelity Balanced Fund - 247,893
Dodge & Cox Balanced Fund 910,650 -
AIM Aggressive Growth Fund 944,395 440,046
Norwood Promotional Products, Inc. common stock 86,140 -
Participant loans 46,046 7,477
Cash equivalents 8,377 32,096
---------- ----------
2,682,283 828,949
Contributions receivable:
Employee 55,893 34,309
Employer 5,767 2,524
---------- ----------
61,660 36,833
Interest and dividends receivable - 694
---------- ----------
Total assets 2,743,943 866,476
Liabilities - -
---------- ----------
Net assets available for benefits $2,743,943 $ 866,476
========== ==========
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
2
<PAGE> 6
NORWOOD PROMOTIONAL PRODUCTS, INC. EMPLOYEES 401(k) PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEARS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
ADDITIONS
Employee contributions $ 751,868 $ 359,758
Employer contributions 95,959 40,814
Employee contribution rollovers 114,720 -
ArtMold Products Corporation plan assets transfer 903,939 -
Investment income 104,718 36,293
Net gain on sale of investments 215,155 18,396
----------- -----------
Total additions 2,186,359 455,261
DEDUCTIONS
Administrative expenses - -
Benefit payments 179,646 66,657
----------- -----------
Total deductions 179,646 66,657
Net unrealized appreciation (depreciation) in aggregate
fair value of investments (129,246) 89,016
----------- -----------
NET INCREASES 1,877,467 477,620
Net assets available for benefits at beginning of year 866,476 388,856
----------- -----------
NET ASSETS AVAILABLE FOR BENEFITS AT END OF YEAR $ 2,743,943 $ 866,476
=========== ===========
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
3
<PAGE> 7
NORWOOD PROMOTIONAL PRODUCTS, INC. EMPLOYEES 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
NOTE A - SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation: The accounting records of the Norwood Promotional
Products, Inc. Employees 401(k) Plan (the "Plan") are maintained on the accrual
basis.
Investments: Investments are stated at aggregate fair value with the net
unrealized appreciation (depreciation) in fair value reflected in the statement
of changes in net assets available for plan benefits. Mutual fund investments
are valued at quoted market prices which represent the net asset value of
shares held by the Plan at year end. Participant loans and cash equivalents
are valued at cost which approximates fair value.
Plan Amendments: The last significant amendment to the Plan was effective
January 1, 1996, and allowed certain companies acquired by Norwood Promotional
Products, Inc. to join the Plan.
NOTE B - DESCRIPTION OF THE PLAN
The following description of the Norwood Promotional Products, Inc. Employees
401(k) Plan provides only general information. Participants should refer to
the Plan agreement for a more complete description of the Plan's provisions.
General: The Plan was established and became effective on January 1, 1994.
The Plan Sponsor is Norwood Promotional Products, Inc. (Norwood or Plan
Sponsor). Wholly-owned subsidiaries adopting the Plan in 1994 included Radio
Cap Company, Inc. and Barlow Promotional Products, Inc. Effective January 1,
1996, ArtMold Products Corporation, Air-Tex Manufacturing Corporation and BTS
Group joined the Plan. Effective January 23, 1996, Tee Off Enterprises, Inc.
joined the Plan, and effective April 1, 1996, Alpha Products, Inc. joined the
Plan.
The Plan is a defined contribution 401(k) plan and covers substantially all
employees of covered companies who have one year of service and are age
twenty-one or older. It is subject to the provisions of the Employee
Retirement Income Security Act of 1974 (ERISA).
Although it has not expressed any intent to do so, the Plan Sponsor has the
right under the Plan to discontinue its contributions at any time and to
terminate the Plan subject to the provisions of ERISA. In the event of
termination of the Plan, the net assets of the Plan are to be distributed to
participants in accordance with priorities established in the Plan.
Contributions: Each year, participants may contribute up to 15% of their pretax
annual compensation, subject to certain limitations and as defined in the Plan.
Participants may also contribute amounts representing distributions
("rollovers") from other qualified defined benefit or contribution plans. The
Plan Sponsor also may contribute a matching contribution determined by the
Board of Directors and allocated based on each of the participant's
contributions.
Participant Accounts: Each participant's account is credited with their
contribution and allocations of a) the Plan Sponsor contributions and b) Plan
earnings. Allocations are based on the participant's earnings or account
balances, as defined. The benefit to which a participant is entitled is the
benefit that can be provided from the participant's vested account.
Vesting: Participants are one hundred percent (100%) vested at all times in
their voluntary contributions. A participant's interest in the contributions
the employer makes to the Plan becomes 100% vested upon attaining the Plan's
normal retirement age or if employment is terminated due to death or
disability. If employment is terminated prior to normal retirement age for any
reason other than death or disability, then the employee's interest in employer
contributions becomes vested in accordance with specific vesting schedules
based on years of service, with 100% vesting being reached after five years of
service.
4
<PAGE> 8
NORWOOD PROMOTIONAL PRODUCTS, INC. EMPLOYEES 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
NOTE B - DESCRIPTION OF THE PLAN (CONTINUED)
Investment Options: Upon enrollment in the Plan, a participant may direct
employee and matching employer contributions in any of the five following
investment options:
AIM Limited Maturity Treasury Fund
PIMCO Low Duration Bond Fund
Dodge & Cox Balanced Fund
AIM Aggressive Growth Fund
Norwood Promotional Products, Inc. Common Stock
Participants may change their investment options daily.
Participants may borrow from their fund accounts a maximum equal to the lessor
of $50,000 or 50% of their vested account balance. Interest rates charged are
established by the Retirement Plan Committee. Principal and interest is repaid
through payroll deductions.
Payment of Benefits: On termination of service, a participant's vested account
balance is distributed in a lump sum payment or in installment payments subject
to certain limitations which are defined in the Plan agreement. The unvested
amount is forfeited and used to reduce the Sponsor's future contributions.
Hardship withdrawals are available to the participants upon approval by the
Retirement Plan Committee.
NOTE C - TRANSACTIONS WITH PARTIES-IN-INTEREST
Certain administrative fees for 1996 and 1995 have been provided for or paid
for by the Plan Sponsor. These fees were based upon customary and reasonable
rates for such services.
NOTE D - INCOME TAX STATUS
The Plan has received a favorable determination letter from the Internal
Revenue Service recognizing it as an exempt organization for federal tax
purposes under Section 401(k) of the Code.
NOTE E - EXCESS DEFERRALS
The Plan annually must meet certain requirements of ERISA which deal with
nondiscrimination rules and regulations. The two primary tests are the Average
Deferral Percentage (ADP) and Average Contribution Percentage (ACP) tests. As
a result of these tests, the Plan was required to distribute excess deferrals
made by certain highly compensated employees of $7,497 and $26,649 for the
years ended December 31, 1996 and 1995, respectively. The excess deferrals
were refunded to the respective participants, as required by ERISA and the
Internal Revenue Service, by March 15 of the succeeding year. The excess
deferrals are netted against employee contributions in the year of refund.
5
<PAGE> 9
NORWOOD PROMOTIONAL PRODUCTS, INC. EMPLOYEES 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
NOTE F - INVESTMENTS
The Plan's investments are held by a bank-administered trust fund in certain
investment funds selected by the Plan Sponsor. Individual investments in
excess of 5% of the fair value of net assets available for benefits are as
follows at December 31:
<TABLE>
<CAPTION>
Description of Investments 1996 1995
- -------------------------- -------- --------
<S> <C> <C>
AIM Limited Maturity Treasury Fund $284,581 $ 49,887
PIMCO Low Duration Bond Fund 402,094 51,550
Fidelity Balanced Fund - 247,893
Dodge & Cox Balanced Fund 910,650 -
AIM Aggressive Growth Fund 944,395 440,046
</TABLE>
The Plan's investments, including investments bought, sold, as well as held
during the year, appreciated (depreciated) in fair value as follows:
<TABLE>
<CAPTION>
Net
Appreciation Fair Value at
(Depreciation) End of Year
-------------- -------------
<S> <C> <C>
Year Ended December 31, 1996
Fair value as determined by quoted
market price -
AIM Limited Maturity Treasury Fund $ 1,547 $ 284,581
PIMCO Low Duration Bond Fund 6,573 402,094
Dodge & Cox Balanced Fund 32,827 910,650
AIM Aggressive Growth Fund (170,312) 944,395
Norwood Promotional Products, Inc. common stock 119 86,140
Estimated fair value -
Participant loans - 46,046
Cash equivalents - 8,377
---------- ----------
Total investments $ (129,246) $2,682,283
========== ==========
Year Ended December 31, 1995
Fair value as determined by quoted
market price -
AIM Limited Maturity Treasury Fund $ 777 $ 49,887
PIMCO Low Duration Bond Fund 1,653 51,550
Fidelity Balanced Fund 17,499 247,893
AIM Aggressive Growth Fund 67,679 440,046
AIM Constellation Fund 1,408 -
Estimated fair value -
Participant loans - 7,477
Cash equivalents - 32,096
---------- ----------
Total investments $ 89,016 $ 828,949
========== ==========
</TABLE>
6
<PAGE> 10
NORWOOD PROMOTIONAL PRODUCTS, INC. EMPLOYEES 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
NOTE F - INVESTMENTS (CONTINUED)
The following schedule details the net assets available for benefits for the
year ended December 31, 1996:
<TABLE>
<CAPTION>
AIM
Limited PIMCO Dodge AIM
Maturity Low Duration Fidelity & Cox Aggressive
Treasury Bond Balanced Balanced Growth
Fund Fund Fund Fund Fund
---------- ------------ --------- --------- -----------
<S> <C> <C> <C> <C> <C>
Net assets available for benefits
at January 1, 1996 $ 49,887 $ 51,550 $ 247,893 $ $ 440,046
Employer contributions 12,403 12,074 1,826 26,906 33,993
Employee contributions 75,785 71,340 22,717 203,132 312,804
Employee contribution rollovers 32,779 13,947 29,585 32,791
ArtMold plan assets transfer 207,855 238,766 323,353 102,361
Investment income 10,109 14,472 183 61,140 240,711
Benefit payments (80,132) (5,631) (30,849) (57,171)
Unrealized appreciation
(depreciation) 1,547 6,573 32,827 (170,312)
Other transfers, net (25,652) (997) (272,619) 264,556 9,172
---------- ---------- ---------- ---------- ----------
Net assets available for benefits
December 31, 1996 $ 284,581 $ 402,094 $ -0- $ 910,650 $ 944,395
========== ========== ========== ========== ==========
<CAPTION>
Norwood
Common Participant Cash Contributions
Stock Loans Equivalents Receivable Total
--------- ------------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net assets available for benefits
at January 1, 1996 $ $ 7,477 $ 32,096 $ 37,527 $ 866,476
Employer contributions 2,462 3,052 3,243 95,959
Employee contributions 16,314 28,192 21,584 751,868
Employee contribution rollovers 5,618 114,720
ArtMold plan assets transfer 31,604 903,939
Investment income (7,170) 1,122 (694) 319,873
Benefit payments (6,592) 729 (179,646)
Unrealized appreciation
(depreciation) 119 (129,246)
Other transfers, net 49,403 38,569 (62,432)
---------- ---------- ---------- ---------- ----------
Net assets available for benefits
December 31, 1996 $ 86,140 $ 46,046 $ 8,377 $ 61,660 $2,743,943
========== ========== ========== ========== ==========
</TABLE>
7
<PAGE> 11
NORWOOD PROMOTIONAL PRODUCTS, INC. EMPLOYEES 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
NOTE F - INVESTMENTS (CONTINUED)
The following schedule details the net assets available for benefits for the
year ended December 31, 1995:
<TABLE>
<CAPTION>
AIM
Limited PIMCO AIM
Maturity Low Duration Fidelity AIM Aggressive
Treasury Bond Balanced Constellation Growth
Fund Fund Fund Fund Fund
---------- ----------- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C>
Net assets available for
benefits at January 1, 1995 $ 15,709 $ 23,805 $ 124,312 $ 156,086
Employer contributions 6,568 5,697 21,063 1,094 $ 30,141
Employee contributions 25,874 24,038 111,048 3,594 149,181
Investment income 2,275 2,705 9,421 2,497 35,502
Benefit payments
Unrealized appreciation 777 1,653 17,499 1,408 67,679
Other transfers, net (1,316) (6,348) (35,450) (164,679) 157,543
--------- --------- --------- --------- ---------
Net assets available for
benefits at December 31, 1995 $ 49,887 $ 51,550 $ 247,893 $ -0- $ 440,046
========= ========= ========= ========= =========
<CAPTION>
Contributions
Participant Cash and Interest
Loans Equivalents Receivable Total
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net assets available for
benefits at January 1, 1995 $ 37,754 $ 31,190 $ 388,856
Employer contributions (23,749) 40,814
Employee contributions 2,026 43,997 359,758
Investment income 467 1,822 54,689
Benefit payments (47,268) (19,389) (66,657)
Unrealized appreciation 89,016
Other transfers, net $ 7,477 39,117 3,656
--------- -------- --------- ---------
Net assets available for
benefits at December 31, 1995 $ 7,477 $ 32,096 $ 37,527 $ 866,476
========= ======== ========= =========
</TABLE>
8
<PAGE> 12
NORWOOD PROMOTIONAL PRODUCTS, INC. EMPLOYEES 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
NOTE G - RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
The following is a reconciliation of net assets available for benefits from the
financial statements to the Form 5500 at December 31, 1996:
<TABLE>
<S> <C>
Net assets available for benefits per the financial statements $ 2,743,943
Accrual of contributions not received by Plan until 1997 (61,660)
-----------
Net assets available for benefits per the Form 5500 $ 2,682,283
===========
</TABLE>
NOTE H - PLAN ASSET TRANSFER
Effective January 1, 1996, $903,939 of net plan assets of the ArtMold Products
Corporation 401(k) Plan were transferred to the Plan.
9
<PAGE> 13
SUPPLEMENTAL SCHEDULES
10
<PAGE> 14
NORWOOD PROMOTIONAL PRODUCTS, INC. EMPLOYEES 401(k) PLAN
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
FORM 5500 - ITEM 27(a) EIN 74-2553074
DECEMBER 31, 1996
<TABLE>
<S> <C> <C> <C> <C>
(a) (b) (c) (d) (e)
Description of Investment Including
Identity of Issue, Borrower Maturity Date, Rate of Interest, Current
Lessor or Similar Party Collateral, Par or Maturity Value Cost Cost Value
- --------- ---------------------------- ---------------------------------- ------------ -----------
AIM Limited Maturity Mutual fund investing in $ 283,536 $ 284,581
Treasury Fund U.S. Treasury and similar
Securities with maturities
ranging from 12 to 24 months.
PIMCO Low Duration Bond Mutual fund investing in 396,922 402,094
Fund fixed income securities with
a portfolio duration of
1 to 3 years
Dodge & Cox Mutual fund investing in
Balanced Fund common stocks, preferred
stocks and bonds 863,982 910,650
AIM Aggressive Growth Fund Mutual fund with an emphasis on 1,017,313 944,395
higher risk stocks
Norwood Promotional Products, 4,720 shares of no par value common
Inc. common stock stock 88,801 86,140
Participant loans Loans to participants, collateralized
by vested interest of account, interest
from 8.25% to 9.00% 0 46,046
* Frost National Bank Cash equivalent account 8,377 8,377
----------- ----------
$ 2,658,931 $2,682,283
=========== ==========
</TABLE>
* Person known to be party-in-interest to the plan
11
<PAGE> 15
NORWOOD PROMOTIONAL PRODUCTS, INC. EMPLOYEES 401(k) PLAN
SCHEDULE OF REPORTABLE TRANSACTIONS
FORM 5500 - ITEM 27(d) EIN 74-2553074
YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
Identity of Description of Purchase Selling
Party Involved Asset Price Price Lease
-------------- -------------- ---------- ---------- ---------
<S> <C> <C>
N/A Short-Term Prime $ 1,511,914
N/A Short-Term Prime $ 1,399,494
N/A AIM Limited Maturity
Treasury Fund 436,494
N/A AIM Limited Maturity
Treasury Fund 197,453
N/A PIMCO Low
Duration Bond Fund 462,485
N/A PIMCO Low
Duration Bond Fund 113,687
N/A Fidelity Balanced Fund 261,117
N/A Dodge & Cox
Balanced Fund 1,621,457
N/A Dodge & Cox
Balanced Fund 760,292
N/A AIM Aggressive
Growth Fund 1,300,327
N/A AIM Aggressive
Growth Fund 800,514
N/A Norwood Promotional
Products Common Stock 117,403
N/A Norwood Promotional
Products Common Stock 21,457
<CAPTION>
(a) (f) (g) (h) (i)
Current
Value on Net
Identity of Expense Cost of Transaction Gain
Party Involved Incurred Asset Date (Loss)
-------------- -------- --------- ----------- --------
<S> <C> <C> <C> <C>
N/A $ 1,511,914
N/A $ 1,399,494 1,399,494
N/A
436,494
N/A
197,264 197,453 $ 189
N/A
462,485
N/A
113,992 113,687 (305)
N/A 248,027 261,117 13,090
N/A
1,621,457
N/A
743,499 760,292 16,793
N/A
1,300,327
N/A
598,690 800,514 201,824
N/A
117,403
N/A
28,602 21,457 (7,145)
</TABLE>
NOTE: ALL TRANSACTIONS REPORTED REPRESENT A SERIES OF TRANSACTIONS.
12
<PAGE> 16
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
23.1 Consent of Akin, Doherty, Klein & Feuge, P.C.
</TABLE>
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of
our report on Norwood Promotional Products, Inc. Employees 401(k) Plan
financial statements for the fiscal years 1995 and 1996 included in this Form
11-K into Norwood Promotional Products, Inc.'s Registration Statement on Form
S-8 filed December 29, 1995 (Commission File No. 33-81017).
AKIN, DOHERTY, KLEIN & FEUGE, P.C.
San Antonio, Texas
June 27, 1997
