SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
FOR ANNUAL REPORTS OF EMPLOYEE STOCK PURCHASE, SAVINGS
AND SIMILAR PLANS PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
PRIMESOURCE CORPORATION
-------------------------------------------------
(Exact name of registrant as specified in charter)
[x] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the year ended December 31, 1996
Commission File Number 0-21750
----------------------------------
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.
MOMENTUM MONEY-MAKER 401(K) RETIREMENT PLAN
---------------------------------------------
(Name of Plan)
PRIMESOURCE CORPORATION
------------------------------------------------------------
(Name of issuer of the securities held pursuant to the plan)
4350 Haddonfield Road, Suite 222
Pennsauken, N.J.
--------------------------------------
(Address of principal executive office)
<PAGE>
FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES
MOMENTUM MONEY-MAKER 401(K) RETIREMENT PLAN
Financial Statements
Report of Independent Accountants ......................................... 1
Statements of Net Assets Available for Benefits
with Fund Information as of December 31, 1996 and 1995 .................... 2-3
Statements of Changes in Net Assets Available
for Benefits with Fund Information for the years ended
December 31, 1996 and 1995 ................................................ 4-5
Notes to Financial Statements ............................................. 6-10
Supplemental Schedules
Schedule of Assets Held for Investment Purposes
as of December 31, 1996 (Line 27(a)) ...................................... 11
Schedule of Reportable Transactions for
the year ended December 31, 1996 (Line 27(d)) ............................. 12
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
The Audit and Pension Committee of
PrimeSource Corporation
We have audited the accompanying statements of net assets available for benefits
of the Momentum Money-Maker 401(k) Retirement Plan (the"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 Momentum
Money-Maker 401(k)Retirement 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 accompanying supplemental schedules,
Line 27a-Schedule of Assets Held for Investment Purposes and Line 27d-Schedule
of Reportable Transactions, are presented for purposes 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 fund information in the statement of net assets
available for benefits and the statement of changes in net assets available for
benefits, is presented for purposes of additional analysis rather than to
present the net assets available for benefits and changes in net assets
available for benefits of each fund. The supplemental schedules 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 respcts in relation to the basic financial statements taken as a whole.
/s/ COOPERS & LYBRAND L.L.P.
Seattle, Washington
June 16, 1997
<PAGE>
<TABLE>
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
MOMENTUM MONEY-MAKER 401(K) RETIREMENT PLAN
As of December 31, 1996
<CAPTION>
FUND INFORMATION
-----------------------------------------------------------------------
PrimeSource Asset Income
Common Allocation Accumulation S&P 500 Loan Total
Stock Fund Fund Fund Stock Fund Fund Plan
--------------------------------------------------------------------------------------
ASSETS
Investments at fair value:
<S> <C> <C> <C> <C> <C> <C>
Cash and cash equivalents ............ $ 60,674 $ 60,674
Common stocks ........................ 822,735 822,735
Collective investment funds .......... $ 3,937,749 $ 2,417,759 $ 2,927,195 9,282,703
Participant loans .................... $ 177,015 177,015
--------------------------------------------------------------------------------------
Total Investments ........................ 883,409 3,937,749 2,417,759 2,927,195 177,015 10,343,127
--------------------------------------------------------------------------------------
Contributions receivable:
Employer ............................. 1,926 1,024 1,564 4,514
Participants ......................... 3,381 1,542 2,441 7,364
--------------------------------------------------------------------------------------
Total Contributions Receivable ........... 5,307 2,566 4,005 11,878
--------------------------------------------------------------------------------------
TOTAL ASSETS AND NET ASSETS
AVAILABLE FOR BENEFITS .............. $ 883,409 $ 3,943,056 $ 2,420,325 $ 2,931,200 $ 177,015 $10,355,005
======================================================================================
<FN>
See notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
MOMENTUM MONEY-MAKER 401(K) RETIREMENT PLAN
As of December 31, 1995
<CAPTION>
FUND INFORMATION
----------------------------------------------------------------------
PrimeSource Asset Income
Common Allocation Accumulation S&P 500 Loan Total
Stock Fund Fund Fund Stock Fund Fund Plan
--------------------------------------------------------------------------------------
ASSETS
Investments at fair value:
<S> <C> <C> <C> <C> <C> <C>
Cash and cash equivalents ............ $ 51,694 $ 51,694
Common stocks ........................ 690,336 690,336
Collective investment funds .......... $3,983,295 $2,200,994 $2,375,509 8,559,798
Participant loans .................... $ 190,604 190,604
-------------------------------------------------------------------------------------
Total Investments ........................ 742,030 3,983,295 2,200,994 2,375,509 190,604 9,492,432
-------------------------------------------------------------------------------------
Contributions receivable:
Employer ............................. 3,130 1,101 2,629 6,860
Participants ......................... 4,416 2,074 2,302 8,792
-------------------------------------------------------------------------------------
Total Contributions Receivable ........... 7,546 3,175 4,931 15,652
-------------------------------------------------------------------------------------
TOTAL ASSETS AND NET ASSETS
AVAILABLE FOR BENEFITS .............. $ 742,030 $3,990,841 $2,204,169 $2,380,440 $ 190,604 $9,508,084
=====================================================================================
<FN>
See notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
MOMENTUM MONEY-MAKER 401(K) RETIREMENT PLAN
For the Year Ended December 31, 1996
FUND INFORMATION
<CAPTION>
----------------------------------------------------------------------
PrimeSource Asset Income
Common Allocation Accumulation S&P 500 Loan Total
Stock Fund Fund Fund Stock Fund Fund Plan
--------------------------------------------------------------------------------------
ADDITIONS:
<S> <C> <C> <C> <C> <C> <C>
Investment income ........................ $ 22,883 $ 127,601 $ 17,373 $ 167,857
Net appreciation in
fair value of investments .......... 202,243 $ 439,000 $ 553,343 1,194,586
Contributions to the Plan:
Employer ........................... 15,313 6,872 $ 14,409 36,594
Participants ....................... 201,041 103,752 189,746 494,539
Participant rollovers .............. 23,974 15,573 32,936 72,483
-------------------------------------------------------------------------------------
Total Additions .......................... 225,126 679,328 253,798 790,434 17,373 1,966,059
-------------------------------------------------------------------------------------
DEDUCTIONS:
Distributions to participants ............ (51,342) (425,241) (376,387) (257,461) (8,707) (1,119,138)
Net transfers among funds at
the request of participants ........ (32,405) (301,872) 338,745 17,787 (22,255)
-------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS ........ 141,379 (47,785) 216,156 550,760 (13,589) 846,921
Net assets available for
benefits at beginning of year ...... 742,030 3,990,841 2,204,169 2,380,440 190,604 9,508,084
-------------------------------------------------------------------------------------
NET ASSETS AVAILABLE FOR
BENEFITS AT END OF YEAR ............... $ 883,409 $ 3,943,056 $ 2,420,325 $ 2,931,200 $ 177,015 $ 10,355,005
=====================================================================================
<FN>
See notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
MOMENTUM MONEY-MAKER 401(K) RETIREMENT PLAN
For the Year Ended December 31, 1995
<CAPTION>
FUND INFORMATION
-----------------------------------------------------------------------
PrimeSource Asset Income
Common Allocation Accumulation S&P 500 Loan Total
Stock Fund Fund Fund Stock Fund Fund Plan
--------------------------------------------------------------------------------------
ADDITIONS:
<S> <C> <C> <C> <C> <C> <C>
Investment income .............................. $ 55,247 $ 155,321 $ 17,453 $ 228,021
Net appreciation (depreciation) in
fair value of investments ................ (499,511) $ 939,873 $ 691,791 1,132,153
Contributions to the Plan:
Employer ................................. 23,131 9,971 13,756 46,858
Participants ............................. 295,090 131,849 166,265 593,204
Participant rollovers .................... 730 124,614 1,460 126,804
------------------------------------------------------------------------------------
Total Additions ................................ (444,264) 1,258,824 421,755 873,272 17,453 2,127,040
-------------------------------------------------------------------------------------
DEDUCTIONS:
Distributions to participants .................. (197,070) (632,148) (687,887) (156,315) (57,000) (1,730,420)
Net transfers among funds at
the request of participants .............. (182,279) 195,110 239,203 (230,861) (21,173)
-------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS .............. (823,613) 821,786 (26,929) 486,096 (60,720) 396,620
Net assets available for
benefits at beginning of year ............ 1,565,643 3,169,055 2,231,098 1,894,344 251,324 9,111,464
------------------------------------------------------------------------------------
NET ASSETS AVAILABLE FOR
BENEFITS AT END OF YEAR ..................... $ 742,030 $ 3,990,841 $ 2,204,169 $ 2,380,440 $ 190,604 $ 9,508,084
====================================================================================
<FN>
See notes to financial statements.
</FN>
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
MOMENTUM MONEY-MAKER 401(K) RETIREMENT PLAN
NOTE A - DESCRIPTION OF THE PLAN
The Momentum Money-Maker 401(k) Retirement Plan (the "Plan") is a defined
contribution investment plan. The Plan sponsor is PrimeSource Corporation (the
"Company"). The Plan is subject to the provisions of the Employment Retirement
Income Security Act of 1974 (ERISA).
The Plan is for all eligible salaried personnel of the Momentum and TK Gray
divisions of the Company. An eligible employee is an employee who has completed
one year of service and who works a minimum of 20 hours per week. The Plan is an
employee contributory plan with a Company matching provision. Participants
should refer to the Summary Plan Document for a more complete description of the
Plan's provisions. Copies are available from the Plan Administrative Committee.
Contributions
Employees may contribute up to 12% of their pretax annual compensation to the
Plan. Employees may also contribute amounts representing distributions from
other qualified defined benefit or contribution plans. Company matching
contributions, if any, are determined by the Board of Directors based on the
historical performance of the Company. Company matching contributions were 10%
of the first 6% of yearly compensation that the participants contributed to the
Plan for the years 1996 and 1995. Employee contributions vest immediately, while
the Company's matching contributions vest at the rate of 20% per year of
service. Participants are fully vested in Company contributions at the
completion of five years of service.
Individual accounts are maintained for participants that reflect their
respective contributions and related employer contributions and any earnings or
losses on the Plan's investments.
Employee contributions are invested at the discretion of the participants in any
or all of the following three funds:
Asset Allocation Fund: Units in collective investment funds invested
primarily in a mix of common stocks, long-term U.S. Treasury bonds,
and money market securities.
Income Accumulation Fund: Units in collective investment funds
invested primarily in insurance companies (GICs) and banks (BICs),
synthetic GICs, adjustable rate mortgage-backed securities (ARMS),
publicly traded U.S. government notes and bonds, and money market
securities.
S&P 500 Stock Fund: Units in collective investment funds invested
primarily in the same stocks in the same proportions as the Standard &
Poors (S&P) 500 Index.
Effective September 1, 1994, the Plan was amended to disallow any future
participant or Company contributions to the PrimeSource Common Stock Fund. This
fund invests primarily in PrimeSource Corporation common stock whose stock price
is quoted on NASDAQ.
Participants may change their investment options applicable to employee
contributed funds and earnings on such funds at their discretion. The Company's
matching contributions are allocated ratably to the funds based on the
employees' investment options in force at the time the matching contribution is
made.
<PAGE>
NOTE A - DESCRIPTION OF THE PLAN (continued)
Effective Janaury 1, 1996, all fund investments are managed by Barclays Bank PLC
(the "Trustee") at the direction of the Plan administrator and the
Administrative Committee of the Plan. Prior to January 1, 1996, all investments
were managed by Wells Fargo Bank. Effective January 1, 1996, Barclays Bank PLC
acquired the 401(k) division of Wells Fargo Bank and the assets and liabilities
of the Plan were transferred to Barclays Bank PLC.
Participant Loans
The Plan includes a provision that enables participants who are employees to
borrow from their account as limited by Section 72(P)(2) of the Internal Revenue
Code and certain other conditions as described in the Plan document. Loans to
participants from the Plan are collateralized by the borrowing participant's
account in the Plan. Loans must be greater than $1,000 and may not exceed
$50,000. Repayment terms generally do not exceed 5 years. In no event can the
loan amount exceed 50% of the participant's vested account balance. Interest is
accrued at the prime lending rate plus 1% on the date of loan disbursement.
Withdrawals and Distributions
Participants are entitled to their vested benefits upon termination from the
Plan. If the account balance is in excess of $3,500, the participant may elect
to receive periodic installment payments over a period of up to ten years.
Nonvested Company matching contributions are forfeited upon termination and
offset against future Company contributions. However, if participants reenter
the Plan within a five-year period, the nonvested amount is added back to their
respective accounts upon repayment of amounts previously distributed to the
participants. At December 31, 1996, forfeited nonvested accounts totaled
$34,941. In 1996, no amounts from forfeited nonvested accounts were used to
reduce employer contributions.
Termination
The Company 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 Plan termination, all assets of the Plan will be available to
participants and the rights of all participants will become 100% vested at that
time.
NOTE B - SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting: The accompanying financial statements have been prepared in
conformity with generally accepted accounting principles.
Valuation of Investments: Investments are stated at fair value.
Cash and cash equivalents include interest bearing cash and money-market
investments are valued at amortized cost, which approximates fair value.
Securities traded in the over-the-counter market are valued at the average
reported sales or bid prices on the last business day of the Plan year.
<PAGE>
NOTE B - SIGNIFICANT ACCOUNTING POLICIES (continued)
Investments in collective trust funds are valued based on information provided
by the Plan's investment trustee. The financial statements of the collective
trust funds are audited annually by independent accountants. Values for such
funds are determined based upon the values of their respective underlying
investments as follows:
Publicly-traded securities traded on a national securities exchange are
valued at the last reported sales price on the last business day of the
Plan year; securities traded in the over-the-counter market and listed
securities for which no sale was reported on that date are valued at
the last reported sale or bid price as available.
Investment contracts are valued at contract value. Investment contracts
held by the collective trust fund are written to be fully benefit
responsive.
Cash and cash equivalents include interest bearing cash and
money-market investments are valued at amortized cost, which
approximates fair value.
Loans to participants are valued at the unpaid principal amount of the loan,
which approximates fair value.
Purchases and sales of securities are reflected on a trade date basis. The basis
of all securities sold is determined by average cost.
Dividend and interest income from investments is recorded as earned on an
accrual basis and allocated to participants based upon the participant's
proportionate share of assets in each investment fund.
Net Appreciation (Depreciation): The Plan presents in the statement of changes
in net assets, with fund information, the net appreciation (depreciation) in the
fair value of its investments which consists of the realized gains or losses and
the unrealized appreciation (depreciation) on those investments.
Administrative Expenses: Administrative expenses and trustee fees are paid by
the Company.
Uses 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 at the date of the financial
statements and the reported amounts in the statement of changes in net assets
available for benefits during the reporting period. Actual results could differ
from those estimates.
Risks and Uncertainties: The Plan provides for various investment options as
described in Note A. Investment securities are exposed to various risks, such as
interest rate, market and credit. Due to the level of risk associated with
certain investment securities and the level of uncertainty related to changes in
the value of investment securities, it is at least reasonably possible that
changes in risks in the near term would materially affect participants' account
balances and the amounts reported in the statement of net assets available for
benefits and the statement of changes in net assets available for benefits.
<PAGE>
NOTE C - INVESTMENTS
Investments held for trading purposes consist of the following at December 31:
<TABLE>
<CAPTION>
1996 1995
---------------------- -----------------------
Units Fair Value Units Fair Value
-------- ------------ --------- -----------
Investments at Fair Value:
<S> <C> <C> <C> <C>
Cash and cash equivalents ........ 60,674 $ 60,674 51,694 $ 51,694
PrimeSource Common stock ......... 105,733 822,735 117,504 690,336
Collective Investment Funds:
Wells Fargo Institutional Trust
Asset Allocation Fund ....... 207,032 3,983,295
Income Accumulation Fund .... 117,204 2,200,994
S&P 500 Stock Fund .......... 105,251 2,375,509
Barclays Global Investors
Asset Allocation Fund ....... 183,066 3,937,749
Income Accumulation Fund .... 183,992 2,417,759
S&P 500 Stock Fund .......... 105,789 2,927,195
Participant loans ................ 177,015 190,604
------------ -----------
$10,343,127 $ 9,492,432
=========== ===========
</TABLE>
The following summarizes the net appreciation (depreciation) in fair value for
each class of investment for the year ended December 31:
<TABLE>
<CAPTION>
Description 1996 1995
- ---------------- ------------ -------------
<S> <C> <C>
Common stock .............. $ 202,243 $ (499,511)
Collective investment funds 992,343 1,631,664
------------ --------------
$ 1,194,586 $ 1,132,153
=========== =============
</TABLE>
Concentration of Credit Risk
Financial instruments which subject the Plan to a concentration of credit risk
at December 31, 1996, consist of investments of Plan assets in three separate
funds with Barclays Bank PLC.
NOTE D - INCOME TAX STATUS
The Company has received a ruling from the Internal Revenue Service stating that
the Plan and trusts are qualified under Section 401(a) of the Internal Revenue
Code (IRC) and are exempt from taxation. The Plan is required to operate in
conformity with the applicable IRC provisions to maintain its qualification. The
Pension Administration Committee is not aware of any course of action or series
of events that might adversely affect the Plan's qualified status.
<PAGE>
NOTE E - SUBSEQUENT EVENT
In 1997, the Plan was merged into the PrimeSource 401(K) Retirement Plan
("PrimeSource Plan"). Similar to the Plan, the PrimeSource Plan is an employee
contributory defined contribution investment plan with a Company matching
provision. The plan sponsor for both plans and the plan sponsor after the merger
is PrimeSource Corporation.
<PAGE>
<TABLE>
LINE 27(a) - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
MOMENTUM MONEY-MAKER 401(K) RETIREMENT PLAN
As of December 31, 1996
<CAPTION>
Current
Identity of Issue Shares Cost Value
- -------------------------------------------------------------------
Barclays Global Investors
<S> <C> <C> <C>
Money Market Fund ....... 60,674 $ 60,674 $ 60,674
PrimeSource Corporation
Common Stock ............ 105,733 954,338 822,735
Barclays Global Investors
Asset Allocation Fund ... 183,066 2,717,055 3,937,749
Barclays Global Investors
Income Accumulation Fund 183,992 2,417,759 2,417,759
Barclays Global Investors
S&P 500 Stock Fund ...... 105,789 1,831,907 2,927,195
Participant loans at
rates from 7% to 10% .... 0 177,015
- -------------------------------------------------------------------
Total ................... $10,343,127
===================================================================
</TABLE>
<PAGE>
<TABLE>
LINE 27(d) - SCHEDULE OF REPORTABLE TRANSACTIONS MOMENTUM MONEY-MAKER 401(K)
RETIREMENT PLAN For the Year Ended December 31, 1996
<CAPTION>
Total Total Dollar Total Total Dollar
Number of Value of Number of Value of
Purchases Purchases Sales Sales Net Gain /(Loss)
----------------------------------- ------------------------------------------------------
Category (iii) -- Series of Transactions in Excess of 5% of Plan Assets
Barclays Global Investors
<S> <C> <C> <C> <C> <C>
Asset Allocation Fund .. 79 $313,626 43 $798,172 $219,542
Barclays Global Investors
Income Accumulation Fund 69 542,118 48 452,954 0
Barclays Global Investors
S&P 500 Stock Fund ..... 84 347,067 29 348,724 118,482
</TABLE>
There were no Category (i), (ii) or (iv) reportable transactions during the year
ended December 31, 1996.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Administrative Committee has duly caused this annual report to be signed on its
behalf by the undersigned, hereunto duly authorized.
MOMENTUM MONEY-MAKER 401(K) RETIREMENT PLAN
------------------------------------------
Date June 27, 1997 BY /s/ ROBERT J. MILLER
ROBERT J. MILLER
PLAN COMMITTEE MEMBER
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statement on
Form S-8 (File No. 33-34391) of our report dated June 16, 1997, on our audit of
the financial statements and supplemental schedules of the Momentum Money-Maker
401(k) Retirement Plan as of December 31, 1996 and the year then ended, which
report is incorporated by reference in ths Annual Report on Form 11-K.
/s/ COOPERS & LYBRAND L.L.P.
2400 Eleven Penn Center
Philadelphia, Pennsylvania 19103
June 23, 1997
