SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the plan 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 0-22230
-------
Royal Grip, Inc.
401(k) Savings Plan
(Full title of the plan and the address of the plan, if different from that of
the issuer named below)
- --------------------------------------------------------------------------------
Royal Grip, Inc.
444 West Geneva Drive
Tempe, Arizona 85282
(Name of issuer of the securities held pursuant to the plan and the address of
its principal executive office)
- --------------------------------------------------------------------------------
<PAGE>
ROYAL GRIP, INC.
ROYAL GRIP, INC. 401(k) SAVINGS PLAN
FINANCIAL STATEMENTS AS OF DECEMBER 31, 1996
(prepared in accordance with the financial reporting requirements of the
Employee Retirement Income Security Act of 1974, as amended),
TOGETHER WITH REPORT OF INDEPENDENT AUDITORS
<PAGE>
ROYAL GRIP, INC. 401(k) SAVINGS PLAN
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
DECEMBER 31, 1996
REPORT OF INDEPENDENT AUDITORS
FINANCIAL STATEMENTS
Statements of Net Assets Available for Benefits as of December 31, 1996
and 1995
Statements of Changes in Net Assets Available for Benefits for the year
ended December 31, 1996 and the period from October 1, 1995 (inception)
through December 31, 1995
Notes to Financial Statements
SCHEDULES
I Item 27a - Schedule of Assets Held for Investment Purposes as of
December 31, 1996
II Item 27d - Schedule of Reportable Transactions for the year ended
December 31, 1996
SIGNATURES
The Plan. Pursuant to the requirements of the Securities
Exchange Act of 1934, Emjay Corporation, Administrator of the Royal Grip, Inc.
401(k) Savings Plan, has duly caused this annual report to be signed on its
behalf by the undersigned hereunto duly authorized.
Date: July 14, 1997 By /s/ Thomas A. Schneider
-- --------------------------------------------
Thomas A. Schneider, Vice President-Finance
On behalf of Emjay Corporation, Adminstrator of
the Royal Grip, Inc. 401(k) Savings Plan
<PAGE>
EXHIBIT INDEX
Exhibit Page or
Number Description Method of Filing
- ------ ----------- ----------------
23 Consent of Ernst & Young LLP, Independent Auditors Filed herewith
<PAGE>
Report of Independent Auditors
Royal Grip, Inc., as Plan Sponsor of the
Royal Grip, Inc. 401(k) Savings Plan
We have audited the accompanying statements of net assets available for benefits
of Royal Grip, Inc. 401(k) Savings Plan (the Plan) as of December 31, 1996 and
1995, and the related statements of changes in net assets available for benefits
for the year ended December 31, 1996 and the period from October 1, 1995
(inception) through December 31, 1995. 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.
As explained in Note 7, the Plan was terminated effective June 20, 1997.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan at
December 31, 1996 and 1995, and the changes in its net assets available for
benefits for the year ended December 31, 1996 and the period from October 1,
1995 (inception) through December 31, 1995, 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
of assets held for investment purposes as of December 31, 1996, and reportable
transactions 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 basic financial statements. 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 our 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/ Ernst & Young LLP
July 11, 1997
<PAGE>
Royal Grip, Inc. 401(k) Savings Plan
Statement of Net Assets Available for Benefits, with Fund Information
December 31, 1996
<TABLE>
<CAPTION>
Fund Information
-----------------------------------------------------------------------------------------
Fixed Growth and Aggressive International
Liquidity Income Growth Income Growth Growth Royal Grip
Fund Fund Fund Fund Fund Fund Stock Total
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Assets
Investments, at fair value $ 4,822 $ 6,729 $ 22,127 $ 26,029 $ 37,403 $ 31,603 $ 8,398 $137,111
Participant contributions receivable 79 130 407 497 759 598 347 2,817
-----------------------------------------------------------------------------------------
Net assets available for benefits $ 4,901 $ 6,859 $ 22,534 $ 26,526 $ 38,162 $ 32,201 $ 8,745 $139,928
=========================================================================================
</TABLE>
See accompanying notes.
<PAGE>
Royal Grip, Inc. 401(k) Savings Plan
Statement of Net Assets Available for Benefits, with Fund Information
December 31, 1995
<TABLE>
<CAPTION>
Fund Information
-----------------------------------------------------------------------------------------
Fixed Growth and Aggressive International
Liquidity Income Growth Income Growth Growth Royal Grip
Fund Fund Fund Fund Fund Fund Stock Total
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Assets
Participant contributions receivable $ 765 $ 2,126 $ 5,721 $ 7,714 $11,274 $ 8,292 $ 4,516 $ 40,408
-----------------------------------------------------------------------------------------
Net assets available for benefits $ 765 $ 2,126 $ 5,721 $ 7,714 $11,274 $ 8,292 $ 4,516 $ 40,408
=========================================================================================
</TABLE>
See accompanying notes.
<PAGE>
Royal Grip, Inc. 401(k) Savings Plan
Statement of Changes in Net Assets Available for Benefits, with Fund Information
Year Ended December 31, 1996
<TABLE>
<CAPTION>
Fund Information
-----------------------------------------------------------------------------------------
Fixed Growth and Aggressive International
Liquidity Income Growth Income Growth Growth Royal Grip
Fund Fund Fund Fund Fund Fund Stock Total
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Additions to net assets attributed to:
Investment income (loss)
Net appreciation (depreciation) in
fair value of investments $ - $ 211 $ 3,804 $ 1,487 $ 3,334 $ 2,075 $(9,514) $ 1,397
Interest 84 - - - - - - 84
Dividends - 297 116 668 - 1,669 - 2,750
-----------------------------------------------------------------------------------------
Total investment income (loss) 84 508 3,920 2,155 3,334 3,744 (9,514) 4,231
Participants' contributions 3,888 6,373 19,934 24,314 37,147 29,265 17,004 137,925
-----------------------------------------------------------------------------------------
Total additions 3,972 6,881 23,854 26,469 40,481 33,009 7,490 142,156
Deductions from net assets attributed to:
Benefits paid to participants 270 1,757 6,882 7,657 13,810 9,109 3,151 42,636
-----------------------------------------------------------------------------------------
Net increase prior to interfund transfers 3,702 5,124 16,972 18,812 26,671 23,900 4,339 99,520
Interfund transfers, net 434 (391) (159) - 217 9 (110) -
-----------------------------------------------------------------------------------------
Net increase 4,136 4,733 16,813 18,812 26,888 23,909 4,229 99,520
Net assets available for benefits
Beginning of year 765 2,126 5,721 7,714 11,274 8,292 4,516 40,408
-----------------------------------------------------------------------------------------
End of year $ 4,901 $ 6,859 $22,534 $26,526 $38,162 $32,201 $ 8,745 $139,928
=========================================================================================
</TABLE>
See accompanying notes.
<PAGE>
Royal Grip, Inc. 401(k) Savings Plan
Statement of Changes in Net Assets Available for Benefits, with Fund Information
For the period from October 1, 1995 (inception) through December 31, 1995
<TABLE>
<CAPTION>
Fund Information
-----------------------------------------------------------------------------------------
Fixed Growth and Aggressive International
Liquidity Income Growth Income Growth Growth Royal Grip
Fund Fund Fund Fund Fund Fund Stock Total
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Additions to net assets attributed to:
Participants' contributions $ 765 $ 2,126 $ 5,721 $ 7,714 $11,274 $ 8,292 $ 4,516 $ 40,408
Net assets available for benefits
At inception - - - - - - - -
-----------------------------------------------------------------------------------------
End of year $ 765 $ 2,126 $ 5,721 $ 7,714 $11,274 $ 8,292 $ 4,516 $ 40,408
=========================================================================================
</TABLE>
See accompanying notes.
<PAGE>
Royal Grip, Inc. 401(k) Savings Plan
Notes to Financial Statements
December 31, 1996
1. Description of the Plan
The Royal Grip, Inc. 401(k) Savings Plan (the Plan) is a defined contribution
plan covering all eligible employees of Royal Grip, Inc. (the Company) and its
affiliates who have at least one year of service and are age twenty-one or
older. The Plan was established on October 1, 1995 and is subject to the
provisions of the Employee Retirement Income Security Act of 1974 (ERISA).
Each year, participants may contribute up to 15 percent of pretax annual
compensation, as defined in the Plan. Participants may also contribute amounts
representing distributions from other qualified defined benefit or defined
contribution plans. The Company does not match any portion that a participant
contributes to the Plan. Participants are immediately vested in their
contributions plus actual earnings therein.
Each participant's account is credited with the participant's contributions and
allocations of Plan earnings based on participant account balances, as defined.
Participants may direct their contributions in any of seven investment options:
Liquidity Fund--Funds are invested in money market accounts. (Dean Witter
Liquid Asset Fund and Stock Liquidity Fund)
Fixed Income Fund--Funds are invested in shares of a registered investment
company that invest in higher-yielding, lower rated corporate bonds. (AIM
Income A Fund)
Growth Fund--Funds are invested in shares of a registered investment
company that invest in a non diversified portfolio of securities of
companies headquartered in or conducting a majority of operations in
California. (Franklin California Growth Fund)
Growth and Income Fund--Funds are invested in shares of a registered
investment company that invest in common and preferred stocks with above
average dividend yields. (Franklin Equity Income Fund)
Aggressive Growth Fund--Funds are invested in shares of a registered
investment company that invest in a mix of small-cap, mid-cap and large-cap
stocks. (AIM Constellation Fund)
International Growth Fund--Funds are invested in shares of a registered
investment company that invest in stocks and debt obligations of companies
and governments of any nation. (Templeton Growth Fund)
<PAGE>
Royal Grip, Inc. 401(k) Savings Plan
Notes to Financial Statements (continued)
1. Description of the Plan (continued)
Royal Grip Stock--Funds are invested in common stock of the Company. The
Company has reserved 50,000 shares to be issued under the Plan.
Participants may borrow from their fund accounts a minimum of $1,000 up to a
maximum of $50,000 or 50 percent of their account balance. Loan transactions are
treated as a transfer from (to) the investment fund to (from) the loan fund with
the participant's vested account balance serving as collateral for the loan.
Loan terms range from 1-5 years or may exceed 5 years for the purchase of a
primary residence. Loans bear interest at a rate commensurate with local
prevailing rates as determined by the Plan administrator. During 1996 and 1995,
no loans were outstanding.
Upon termination, death, disability or retirement, a participant or beneficiary
may receive a lump-sum amount equal to the vested value of his or her account.
Information about the Plan agreement and vesting and benefit provisions is
contained in the booklet, Summary Plan Description of the Royal Grip, Inc.
401(k) Savings Plan, which is available from the Plan's administrator.
2. Significant Accounting Policies
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates that affect the
amounts reported in the financial statements and accompanying notes. Actual
results could differ from those estimates.
Investment Valuation and Income Recognition
The Plan's investments are stated at fair value. The shares of registered
investment companies are valued at quoted market prices which represent the net
asset values of shares held by the Plan at year-end. The shares of the Company's
common stock are valued at quoted market prices. Interest income is recorded on
the accrual basis. Dividends are recorded on the ex-dividend date.
<PAGE>
Royal Grip, Inc. 401(k) Savings Plan
Notes to Financial Statements (continued)
3. Investments
The Plan's investments are held by the Plan custodian and are presented in the
following table. Investments that represent five percent or more of the Plan's
net assets are separately identified.
December 31,
1996
--------
Investments at fair value as determined by quoted market price:
Dean Witter Liquid Asset Fund (4,239 shares) $ 4,239
Dean Witter Stock Liquidity Fund (583 shares) 583
AIM Income A Fund (817 shares) 6,729
Franklin California Growth Fund (1,083 shares) 22,127
Franklin Equity Income Fund (1,552 shares) 26,029
AIM Constellation Fund (1,481 shares) 37,403
Templeton Growth Fund (1,617 shares) 31,603
Royal Grip Common Stock (3,054 shares) 8,398
--------
$137,111
========
During 1996, the Plan's investments (including investments bought, sold, and
held during the year) appreciated (depreciated) in fair value as follows:
Year Ended
December 31,
1996
-------
Investments at fair value as determined by quoted market price:
AIM Income A Fund $ 211
Franklin California Growth Fund 3,804
Franklin Equity Income Fund 1,487
AIM Constellation Fund 3,334
Templeton Growth Fund 2,075
Royal Grip Common Stock (9,514)
-------
$ 1,397
=======
<PAGE>
Royal Grip, Inc. 401(k) Savings Plan
Notes to Financial Statements (continued)
4. Differences Between Financial Statements and Form 5500
The following is a reconciliation of net assets available for benefits per the
financial statements to the Form 5500:
December 31,
1996 1995
----------------------
Net assets available for benefits per the financial
statements $ 139,928 $ 40,408
Participants' contributions not received (2,817) --
----------------------
Net assets available for benefits per the Form 5500 $ 137,111 $ 40,408
======================
The following is a reconciliation of participants' contributions per the
financial statements to the Form 5500:
Year Ended
December 31,
1996
---------
Participants' contributions per the financial statements $ 137,925
Participants' contributions not received (2,817)
---------
Participants' contributions per the Form 5500 $ 135,108
=========
Participants' contributions not received represent contributions withheld from
participant wages relating to the year ended December 31, 1996 and were not
recorded as contributions on the Form 5500.
5. Income Tax Status
The Internal Revenue Service issued a determination letter dated February 18,
1997, that the Plan qualifies, in form, under Section 401(a) of the Internal
Revenue Code (IRC) and, therefore, the related trust is not subject to tax under
present income tax law. Once qualified, the Plan is required to operate in
accordance with the IRC to maintain its qualification. The Plan sponsor is not
aware of any course of actions or series of events that have occurred which
might adversely affect the Plan's qualified status.
6. Transactions with Related Parties
The Company pays all administrative expenses on behalf of the Plan which
amounted to approximately $18,000 for the year ended December 31, 1996 and
$6,000 for the three months ended December 31, 1995.
<PAGE>
Royal Grip, Inc. 401(k) Savings Plan
Notes to Financial Statements (continued)
7. Subsequent Event
Effective June 20, 1997, the Company terminated the Plan. The Plan will
distribute the funds within the provisions of ERISA and the plan agreement.
<PAGE>
Royal Grip, Inc. 401(k) Savings Plan
Line 27a - Schedule of Assets Held for Investment Purposes
December 31, 1996
<TABLE>
<CAPTION>
Description of Investment, Including
Identity of Issue, Borrower, Lessor or Similar Maturity Date, Rate of Interest, Current
Parties Collateral, Par or Maturity Value Cost Value
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Money Market Accounts:
Dean Witter Liquid Asset Fund* 4,239 shares $ 4,239 $ 4,239
Dean Witter Stock Liquidity Fund* 583 shares 583 583
-----------------------------------
4,822 4,822
Mutual Funds:
AIM Income A Fund 817 shares 6,518 6,729
Franklin California Growth Fund 1,083 shares 19,401 22,127
Franklin Equity Income Fund 1,552 shares 25,084 26,029
AIM Constellation Fund 1,481 shares 36,226 37,403
Templeton Growth Fund 1,617 shares 30,042 31,603
-----------------------------------
117,271 123,891
Common Stock:
Royal Grip Common Stock* 3,054 shares 16,079 8,398
-----------------------------------
$138,172 $137,111
===================================
</TABLE>
* Indicates party-in-interest to the Plan.
<PAGE>
Royal Grip, Inc. 401(k) Savings Plan
Line 27d - Schedule of Reportable Transactions
Year Ended December 31, 1996
<TABLE>
<CAPTION>
Expenses Current Value
Identity of Party Selling Lease Incurred with Cost of of Asset on Net Gain or
Involved Description of Assets Purchase Price Price Rental Transaction Asset Transaction Date (Loss)
- ------------------------------------------------------------------------------------------------------------------------------------
Category (i) - Individual transactions in excess of five percent of plan assets
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
* Dean Witter Stock Liquidity Fund $ 4,861 $ - $ - $ - $ 4,861 $ 4,861 $ -
* Dean Witter Stock Liquidity Fund 2,654 - - - 2,654 2,654 -
* Dean Witter Stock Liquidity Fund - 4,850 - - 4,850 4,850 -
* Dean Witter Stock Liquidity Fund - 2,651 - - 2,651 2,651 -
* AIM Income A Fund 2,119 - - - 2,119 2,119 -
* Franklin California Growth Fund 5,742 - - - 5,742 5,742 -
* Franklin California Growth Fund 3,072 - - - 3,072 3,072 -
* Franklin California Growth Fund - 2,900 - - 2,553 2,900 347
* Franklin Equity Income Fund 7,700 - - - 7,700 7,700 -
* Franklin Equity Income Fund 3,938 - - - 3,938 3,938 -
* AIM Constellation Fund 11,239 - - - 1,239 11,239 -
* AIM Constellation Fund 2,250 - - - 2,250 2,250 -
* AIM Constellation Fund 5,440 - - - 5,440 5,440 -
* AIM Constellation Fund - 5,147 - - 4,636 5,147 511
* Templeton Growth Fund 8,294 - - - 8,294 8,294 -
* Templeton Growth Fund 4,249 - - - 4,249 4,249 -
* Templeton Growth Fund - 3,461 - - 3,268 3,461 (193)
* Royal Grip Common Stock 4,850 - - - 4,850 4,850 -
* Royal Grip Common Stock 2,651 - - - 2,651 2,651 -
</TABLE>
<PAGE>
Royal Grip, Inc. 401(k) Savings Plan
Line 27d - Schedule of Reportable Transactions (continued)
Year Ended December 31, 1996
<TABLE>
<CAPTION>
Expenses Current Value
Identity of Party Selling Lease Incurred with Cost of of Asset on Net Gain or
Involved Description of Assets Purchase Price Price Rental Transaction Asset Transaction Date (Loss)
- ------------------------------------------------------------------------------------------------------------------------------------
Category (iii) -- Series of transactions in excess of five percent of plan assets
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
* Dean Witter Liquid Asset Fund $ 4,501 $ - $ - $ - $ 4,501 $ 4,501 $ -
* Dean Witter Liquid Asset Fund - 262 - - 262 262 -
* Dean Witter Stock Liquidity Fund 21,771 - - - 21,771 21,771 -
* Dean Witter Stock Liquidity Fund - 21,188 - - 21,188 21,188 -
* AIM Income A Fund 8,666 - - - 8,666 8,666 -
* AIM Income A Fund - 2,148 - - 2,148 2,148 -
* Franklin California Growth Fund 25,824 - - - 25,824 25,824 -
* Franklin California Growth Fund - 7,064 - - 6,423 7,064 641
* Franklin Equity Income Fund 32,691 - - - 32,691 32,691 -
* Franklin Equity Income Fund - 7,683 - - 7,608 7,683 75
* AIM Constellation Fund 49,138 - - - 49,138 49,138 -
* AIM Constellation Fund - 13,853 - - 12,912 13,853 941
* Templeton Growth Fund 38,851 - - - 38,851 38,851 -
* Templeton Growth Fund - 9,132 - - 8,810 9,132 322
* Royal Grip Common Stock 21,207 - - - 21,207 21,207 -
* Royal Grip Common Stock - 3,295 - - 5,127 3,295 (1,832)
</TABLE>
* Transactions were made on the market.
There were no category (ii) or (iv) reportable transactions during 1996.
Consent of Ernst & Young LLP, Independent Auditors
We consent to the incorporation by reference in the Registration Statement (Form
S-8 No. 33-99944) pertaining to the Royal Grip, Inc. 401(k) Savings Plan of our
report dated July 11, 1997 with respect to the financial statements and
schedules of the Royal Grip, Inc. 401(k) Savings Plan included in this Annual
Report (Form 11-K) for the year ended December 31, 1996 and the period from
October 1, 1995 to December 31, 1995.
/s/ ERNST & YOUNG LLP
Phoenix, Arizona
July 14, 1997
