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, 1997
Commission File Number 00-21750
-------------------------------
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 of 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>
MOMENTUM MONEY-MAKER
401(k) RETIREMENT PLAN
REPORT ON AUDITS OF
FINANCIAL STATEMENTS
for the two months ended and year ended
February 28, 1997 and
December 31, 1996, respectively
<PAGE>
MOMENTUM MONEY-MAKER
401(k) RETIREMENT PLAN
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Pages
-----
<S> <C>
Report of Independent Accountants ............................ 1
Financial Statements:
Statements of Net Assets Available for Benefits
with Fund Information, as of February 28, 1997
and December 31, 1996 ............................... 2
Statements of Changes in Net Assets Available
for Benefits with Fund Information for the two
months ended February 28, 1997 ...................... 3
Statements of Changes in Net Assets Available
for Benefits with Fund Information for the
year ended December 31, 1996 ........................ 4
Notes to Financial Statements ............................ 5-9
Supplemental Schedule:
Schedule of Reportable Transactions for the two
months ended February 28, 1997, Item 27(d)* ......... 10-11
</TABLE>
*Refers to item number in Form 5500 (Annual
Return/Report of Employee Benefit Plan) for the
period ended February 27, 1997, which materials are
incorporated herein by reference.
<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 February
28, 1997 and December 31, 1996, and the related statements of changes in net
assets available for benefits for the two-months ended February 28, 1997 and
year ended December 31, 1996. 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 February 28, 1997 and December 31, 1996
and the changes in net assets available for benefits for the two-months ended
February 28, 1997 and year ended December 31, 1996 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 schedule,
Item 27(d) - Schedule of Reportable Transactions, is presented for purposes 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 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 schedule is the
responsibility of the Plan's management. 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/Coopers & Lybrand L.L.P.
2400 Eleven Penn Center
Philadelphia, Pennsylvania
June 9, 1998
<PAGE>
<TABLE>
MOMENTUM MONEY-MAKER
401(k) RETIREMENT PLAN
Statement of Net Assets Available for Benefits with Fund Information
as of February 28, 1997 and December 31, 1996
Participant Directed
------------------------------------------------------------------------
<CAPTION>
Total Plan Total Plan
as of PrimeSource Asset Income as of
February 28, Common Allocation Accumulation S&P 500 Loan December 31,
1997 Stock Fund Fund Fund Stock Fund Fund 1996
----------- ----------- ----------- ----------- ----------- ----------- -----------
Investments at fair value (Note 1)
<S> <C> <C> <C> <C> <C> <C>
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
Cash and cash equivalents .............. 60,674 60,674
----------- ----------- ----------- ----------- ----------- ----------- -----------
-- 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
----------- ----------- ----------- ----------- ----------- ----------- -----------
-- -- 5,307 2,566 4,005 -- 11,878
----------- ----------- ----------- ----------- ----------- ----------- -----------
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>
MOMENTUM MONEY-MAKER
401(k) RETIREMENT PLAN
Statement of Changes in Net Assets Available for Benefits with Fund Information
for the two months ended February 28, 1997
Participant Directed
------------------------------------------------------------
<CAPTION>
PrimeSource Asset Income
Common Allocation Accumulation S&P 500 Loan Total
Stock Fund Fund Fund Stock Fund Fund Plan
------------- ---------- ------------ ----------- ----------- -----------
Additions to net assets attributed to:
<S> <C> <C> <C> <C> <C> <C>
Investment income ..................... $ 5,379 $ 23,454 $ 1,359 $ 30,192
Net appreciation in fair
value of investments ............. 49,233 $ 94,443 $ 204,356 348,032
Contributions to the Plan:
Employer .............................. 30,840 30,840
Participants........................... --
--------- --------- ---------- --------- --------- -----------
54,612 125,283 23,454 204,356 1,359 409,064
--------- --------- ---------- --------- --------- -----------
Deductions from net assets attributed to:
Distributions to participants ......... -8,225 -126,971 -3,743 -32,457 -171,396
Net transfers among funds at
the request of participants ...... -300 2,432 -4,532 420 1,980 --
Transfer to PrimeSource 401(k)
Savings Plan (Note 1) ............ -929,496 -3,943,800 -2,435,504 -3,103,519 -180,354 -10,592,673
--------- --------- ---------- --------- --------- -----------
Decrease in net assets ........................... -883,409 -3,943,056 -2,420,325 -2,931,200 -177,015 -10,355,005
Net assets available for benefits:
Beginning of year ................... 883,409 3,943,056 2,420,325 2,931,200 177,015 10,355,005
--------- --------- ---------- --------- --------- -----------
End of period ....................... -- -- -- -- -- --
========= ========= ========== ========= ========= ===========
<FN>
See notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
MOMENTUM MONEY-MAKER
401(k) RETIREMENT PLAN
Statement of Changes in Net Assets Available for Benefits with Fund Information
for the year ended December 31, 1996
Participant Directed
----------------------------------------------------------------
<CAPTION>
PrimeSource Asset Income
Common Allocation Accumulation S&P 500 Loan Total
Stock Fund Fund Fund Stock Fund Fund Plan
------------- ------------ ------------ ----------- ----------- ------------
Additions to net assets attributed to:
<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
---------- ---------- ---------- ---------- ---------- -----------
225,126 679,328 253,798 790,434 17,373 1,966,059
---------- ---------- ---------- ---------- ---------- -----------
Deductions from net assets attributed to:
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:
Beginning of year .................... 742,030 3,990,841 2,204,169 2,380,440 190,604 9,508,084
---------- ---------- ---------- ---------- ---------- -----------
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>
MOMENTUM MONEY-MAKER
401(k) RETIREMENT PLAN
Notes to Financial Statements
1. General Description of the Plan:
Effective January 1, 1997, the Momentum Money-Maker 401(k) Retirement Plan
(the "Plan") was merged into the PrimeSource 401(k) Retirement Plan (the
"PrimeSource Plan"). Accordingly, the net assets of $10,592,673 from the
Plan were transferred to the PrimeSource Plan on February 28, 1997. The
sponsor was PrimeSource Corporation (the "Company"). The Plan was subject
to the provisions of the Employment Retirement Income Security Act of 1974
("ERISA").
The Plan was for all eligible salaried personnel of the Momentum and TK
Gray divisions of the Company. An eligible employee was an employee who had
completed one year of service and who worked a minimum of 20 hours per
week. The Plan was an employee contributory plan with a Company matching
provision. For a more complete description of the Plan's provisions, Plan
participants should refer to the Plan document or summary plan document.
Effective January 1, 1997, no participant contributions were allowed into
the Plan and participants in the Plan became participants in the
PrimeSource Plan. Prior to January 1, 1997, participants were able to
contribute up to 12% of their pretax annual compensation to the Plan.
Employees were also able to contribute amounts representing distributions
from other qualified defined benefit or contribution plans. Company
matching contributions, if any, were 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 1996 plan year.
Individual accounts were maintained for participants that reflect their
respective contributions and related employer contributions and any
earnings or losses on the Plan's investments. These individual accounts
were carried over to the PrimeSource Plan which also maintains accounts on
an individual basis.
<PAGE>
1. General Description of the Plan, continued:
Employee contributions were 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 invested primarily in Company common stock whose stock price is
quoted in NASDAQ.
Participants were allowed to change their investment options applicable to
employee contributed funds and earnings on such funds at their discretion.
The Company's matching contributions were allocated ratably to the funds
based on the employees' investment options in force at the time the
matching contribution was made.
All fund investments were managed by Barclays Bank PLC (the "Plan
administrator and recordkeepter") at the direction of the Administrative
Committee of the Plan.
Participant Loans:
Loans to participants are valued at the unpaid principal amount of the
loan, which approximates fair value.
The Plan included a provision that enabled participants who were 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 were collateralized by the
borrowing participant's account in the Plan. Loans had to be greater than
$1,000 and were not allowed to exceed $50,000. Repayment terms generally
could not exceed 5 years. In no event can the loan amount exceed 50% of the
participant's vested balance. Outstanding loans at the time of the merger
were transferred to the PrimeSource Plan. Participant loans mature from one
to ten years and bear interest at 7% to 10% at February 28, 1997 and
December 31, 1996.
<PAGE>
1. General Description of the Plan, continued:
Vesting:
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. Vesting periods carried over to the PrimeSource Plan.
Participants were entitled to their vested benefits upon termination from
the Plan. If the account balance was in excess of $3,500, the participant
could elect to receive periodic installment payments over a period of up to
ten years. Nonvested Company matching contributions were forfeited upon
termination and offset against future Company contributions. If
participants reentered the Plan within a five-year period, the nonvested
amount was added back to their respective accounts upon repayment of
amounts previously distributed to the participants.
2. Significant Accounting Policies:
General:
The accounting records of the Plan are maintained on an accrual basis.
Valuation of Investments:
Investments are stated at 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.
Investments in collective trust funds are valued based on information
provided by the Plan's administrator and recordkeeper. 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.
<PAGE>
2. Significant Accounting Policies, continued:
Valuation of Investments, continued:
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.
Cash and Cash Equivalents:
Cash and cash equivalents include interest bearing cash and money-market
investments are valued at amortized cost, which approximates fair value.
Risks and Uncertainties:
The Plan provides for various investment options as described in Note 1.
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.
Net Appreciation (Depreciation):
The Plan presents in the statement of changes in net assets, with fund
information, the net appreciation 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 fees were paid by the Company.
Payment of Benefits:
Benefits are recorded when paid.
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.
<PAGE>
3. Investments:
Investments held for trading purposes consisted of the following at
December 31, 1996:
<TABLE>
<CAPTION>
Units Fair Value
--------------- ------------
Investments at fair value:
<S> <C> <C>
PrimeSource Common Stock ........... 105,733 $ 822,735
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
Cash and cash equivalents ............. 60,674 60,674
-----------
$10,343,127
===========
</TABLE>
The following summarized the net appreciation in fair value for each class
of investment for the two months ended February 28, 1997 and the year ended
December 31, 1996:
<TABLE>
<CAPTION>
February 28, December 31,
Description 1997 1996
------------------- ----------- -----------
<S> <C> <C>
Common stock ................................ $ 49,233 $ 202,243
Collective investment funds ................. 298,799 992,343
---------- ----------
$ 348,032 $1,194,586
========== ==========
</TABLE>
4. Related Parties:
Barclays Bank PLC is the Plan administrator and recordkeeper and as such is
a party-in-interest.
The Trustee of the Plan is comprised entirely of the Company's management.
5. Income Tax Status:
The United States Treasury has determined that the Plan, including all
amendments, constitutes a qualified trust under Section 401(a) of the
Internal Revenue Code and is, therefore, exempt from Federal income taxes
under provisions of Section 501(a).
The Plan has been amended since receiving the determination letter.
However, the plan administrator and the Plan's tax counsel believe that the
Plan is currently designed and being operated in compliance with the
applicable requirements of the Internal Revenue Code. Therefore, no
provision for income taxes has been included in the Plan's financial
statements.
<PAGE>
<TABLE>
MOMENTUM MONEY-MAKER
401(k) RETIREMENT PLAN
Line 27(d) - Schedule of Reportable Transactions
for the two months ended February 28, 1997
<CAPTION>
Identify Cost of
of Party Purchase Selling Asset Net
Involved Description of Assets Price Price Sold Gain (Loss)
- ------------------------------------ ------------------------------------------ ---------- ----------- ----------- -------------
*Single Transactions in Excess of 5% of Plan Assets
------------------------------------------------------
<S> <C> <C> <C>
Barclays Global Investors** Asset Allocated Fund, 117,708.50 units $3,913,141 $2,640,518 $1,272,623
Barclays Global Investors** Income Accumulation Fund, 183,565.62 units 2,435,604 2,435,604 -
Barclays Global Investors** S&P 500 Stock Fund, 104,817.93 units 3,103,659 1,820,410 1,283,249
PrimeSource Corporation Common Stock, 104,580 shares 862,777 943,665 -80,888
<FN>
*Single Transactions included above are also reported as Series of Transactions.
** Party-in-interest
</FN>
</TABLE>
<PAGE>
<TABLE>
MOMENTUM MONEY-MAKER
401(k) RETIREMENT PLAN
Line 27(d) - Schedule of Reportable Transactions, Continued
for the two months ended February 28, 1997
<CAPTION>
Total Total Total Dollar Total Dollar
Identity of Number of Number of Value of Value of Net
Party Involved Description of Assets Purchases Sales Purchases Sales Gain/(Loss)
- ----------------------------- --------------------------- --------- ---------- ------------- ------------ -------------
*Series of Transactions in Excess of 5% of Plan Assets
- -------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Barclays Global Investors** Asset Allocated Fund 5 5 $ 9,935 $ 2,726,991 $ 1,315,136
Barclays Global Investors** Income Accumulation Fund 3 5 6,857 2,448,071 -
Barclays Global Investors** S&P 500 Stock Fund 6 3 13,489 3,145,041 1,299,644
PrimeSource Corporation Common stock 104,580 shares - 5 874,748 -82,236
<FN>
*Transactions included as Single transactions are also reported as Series of Transactions.
** Party-in-interest
</FN>
</TABLE>
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 9, 1998 on our audits of
the financial statements of the Momentum Money-Maker 401(k) Retirement Plan as
of February 28, 1997 and 1996, and for the two months and year ended February
28, 1997 and December 31, 1996, respectively, which report is included in this
Form 11-K.
/s/Coopers & Lybrand L.L.P.
2400 Eleven Penn Center
Philadelphia, Pennsylvania
June 29, 1998
