-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, S7+tTdFw+RcSWAHOt9PG7kiGA94MU/uPubvkFiJrdEUGOArgrJpk9hCeOIGYcN3e oFv31HCiVk8Es53zDME6kA== 0000059198-98-000016.txt : 19980630 0000059198-98-000016.hdr.sgml : 19980630 ACCESSION NUMBER: 0000059198-98-000016 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980629 SROS: CSE SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: AEROQUIP-VICKERS INC CENTRAL INDEX KEY: 0000059198 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS FABRICATED METAL PRODUCTS [3490] IRS NUMBER: 344288310 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 11-K SEC ACT: SEC FILE NUMBER: 001-00924 FILM NUMBER: 98656975 BUSINESS ADDRESS: STREET 1: 3000 STRAYER CITY: MAUMEE STATE: OH ZIP: 43537 BUSINESS PHONE: 4198672200 MAIL ADDRESS: STREET 1: 3000 STRAYER CITY: MAUMEE STATE: OH ZIP: 43537 FORMER COMPANY: FORMER CONFORMED NAME: TRINOVA CORP DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: LIBBEY OWENS FORD CO DATE OF NAME CHANGE: 19860814 FORMER COMPANY: FORMER CONFORMED NAME: LIBBEY OWENS FORD GLASS CO DATE OF NAME CHANGE: 19681004 11-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 11-K ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1997 Commission File No. 1-924 A. Full title of the plan: AEROQUIP INOAC COMPANY RETIREMENT SAVINGS AND PROFIT-SHARING PLAN B. Name of issuer of securities held pursuant to the plan and the address of its principal executive office: AEROQUIP-VICKERS, INC. 3000 STRAYER ROAD P.O. BOX 50 MAUMEE, OH 43537-0050 REQUIRED INFORMATION The following financial statements are furnished for the Aeroquip Inoac Company Retirement Savings and Profit-Sharing Plan: Page Report of Independent Auditors 4 Statements of Assets Available for Plan Benefits 5 Statement of Changes in Assets Available for Plan 6 Benefits Notes to Financial Statement 7 Item 27a - Schedule of Assets Held for Investment 17 Purposes Item 27d - Schedule of Reportable Transactions 18 Exhibit The following exhibit is filed herewith: Exhibit No. (23) Consent of Independent Auditors 20 SIGNATURE The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized. AEROQUIP INOAC COMPANY RETIREMENT SAVINGS AND PROFIT- SHARING PLAN By: Benefit Committee Date: June 29, 1998 /S/ MICHAEL J. BEEBE Michael J. Beebe Committee Member Date: June 29, 1998 /S/ EDWARD G. BROWNLEE Edward G. Brownlee Committee Member Date: June 29, 1998 /S/ JAN HUGHETT Jan Hughett Committee Member -2- Aeroquip Inoac Company Retirement Savings and Profit Sharing Plan Financial Statements and Supplemental Schedules Years ended December 31, 1997 and 1996 Contents Report of Independent Auditors 4 Audited Financial Statements Statements of Assets Available for Plan Benefits 5 Statement of Changes in Assets Available for Plan Benefits 6 Notes to Financial Statements 7 Supplemental Schedules Item 27a--Schedule of Assets Held for Investment Purposes 17 Item 27d--Schedule of Reportable Transactions 18 -3- Report of Independent Auditors Administrative Committee Aeroquip Inoac Company Retirement Savings and Profit Sharing Plan We have audited the accompanying statements of assets available for plan benefits of the Aeroquip Inoac Company Retirement Savings and Profit Sharing Plan as of December 31, 1997 and 1996, and the related statement of changes in assets available for plan benefits for the year ended December 31, 1997. 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 assets available for benefits of the Plan at December 31, 1997 and 1996, and the changes in assets available for plan benefits for the year ended December 31, 1997, in conformity with generally accepted accounting principles. Our audits were performed for the purpose of forming an opinion on the financial statements taken as a whole. The accompanying supplemental schedules of assets held for investment purposes as of December 31, 1997, 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 financial statements. The supplemental schedules have been subjected to the auditing procedures applied in our audits of the financial statements and, in our opinion, are fairly stated in all material respects in relation to the financial statements taken as a whole. April 24, 1998 -4- Aeroquip Inoac Company Retirement Savings and Profit Sharing Plan Statements of Assets Available for Plan Benefits December 31 1997 1996 Assets (Note 1): Investments (Notes 3 and 4): Vanguard Funds $17,669,813 $10,059,188 Aeroquip-Vickers Stock Fund 889,619 10,415 Loans receivable from plan participants 1,200,854 399,875 19,760,286 10,469,478 Contributions receivable from employees 42,096 25,984 Contributions receivable from employer 2,286,256 1,517,566 Total assets available for plan benefits $22,088,638 $12,013,028 See accompanying notes. -5- Aeroquip Inoac Company Retirement Savings and Profit Sharing Plan Statement of Changes in Assets Available for Plan Benefits Year ended December 31, 1997 Additions: Assets transferred in from other plans (Note 1) $ 4,535,717 Contributions: Employees 915,536 Employer 2,712,355 3,627,891 Net investment income: Interest 71,681 Dividends 854,856 926,537 Realized and unrealized gains on investments 1,906,162 2,832,699 Total additions 10,996,307 Deductions - Benefits paid to participants 920,697 Net additions 10,075,610 Assets available for plan benefits at beginning of year 12,013,028 Assets available for plan benefits at end of year $22,088,638 See accompanying notes. -6- Aeroquip Inoac Company Retirement Savings and Profit Sharing Plan Notes to Financial Statements December 31, 1997 1. Description of Plan The following description of the Aeroquip Inoac Company Retirement Savings and Profit Sharing Plan (the Plan) provides only general information. Participants should refer to the Summary Plan Description for a more complete description of the Plan's provisions. General The Plan is a defined contribution plan covering all full-time employees and part-time employees with 1,000 hours of service with the Aeroquip Inoac Company (the Company), the Plan sponsor. It is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). Assets Transferred On July 25, 1997, the Company's partners, Aeroquip Corporation (Aeroquip) and Inoac USA (Inoac), contributed their ownership interests (51% and 49%, respectively) in two manufacturing facilities to the Company. The two manufacturing facilities employees' retirement funds were transferred into the Plan in September 1997 and such participants became eligible for participation in the Plan as of the date of transfer. Contributions Participants may contribute up to 15 percent of their compensation to the Plan in increments of 1 percent. The Company matches the first 2 percent of employees' voluntary salary deferral contributions and 50 percent of any contributions in excess of 2 percent with a maximum matching percentage of 3 percent. The Company also contributes a yearly profit-sharing amount to the Plan to be not less than 1 percent of social security taxable wages and 1.5 percent of compensation in excess of the social security taxable wage base. -7- Notes to Financial Statements (Continued) 1. Description of Plan (continued) Participant Accounts Each participant's account is credited with the participant's contribution, Company match, profit-sharing allocation and plan earnings. The profit-sharing and plan earnings allocations are based on employees' compensation and account balances, respectively. Administrative Expenses All expenses of the Plan are paid by the Plan sponsor, except for loan fees which are borne by the participant requesting the loan. Vesting Participants are immediately vested in their voluntary contributions, Company match, and roll-in amounts plus actual earnings thereon. Vesting in the profit- sharing contribution is based on years of continuous service, with full vesting occurring after four years of credited service. Forfeitures are used to reduce future employer profit-sharing contributions. The Company has the right, at any time, to terminate the Plan. Upon such termination the entire interest of each participant's account becomes fully vested. Investment Funds Each participant individually directs his or her contributions and Aeroquip Inoac Company's contributions into one or more of the following investment funds (in multiples of 1 percent). 1. Aeroquip-Vickers Stock Fund is invested in Aeroquip-Vickers, Inc. common stock with a small amount in cash. Cash dividends paid on shares are used to purchase additional shares for participant accounts. Aeroquip-Vickers, Inc. common stock is acquired in open market purchases at fair market value. 2. Vanguard Funds are managed by The Vanguard Group of Investment Companies. There are eight individual funds in which participants may invest: -8- Notes to Financial Statements (Continued) 1. Description of Plan (continued) a. Vanguard Retirement Savings Trust (Retirement Savings Trust): Retirement Savings Trust invests in investment contracts issued by financial institutions and in contracts backed by high-quality bonds and bond mutual funds. This diversification helps to protect the Trust against potential credit losses. b. Vanguard/Morgan Growth Fund (Morgan Growth Fund): Money in the Morgan Growth Fund is invested primarily in stocks of "established growth" companies. The companies normally are medium and larger size companies with above-average growth in sales and earnings over extended periods. c. Vanguard Fixed Income Fund - Long-term Corporate Portfolio (Fixed Income Fund): Money in the Fixed Income Fund is invested in a diversified portfolio of long-term investment grade bonds and seeks to provide a high and sustainable level of current income consistent with the maintenance of principal and liquidity. d. Vanguard Index Trust - 500 Portfolio (Index Portfolio): Money in the Index Fund is invested in stocks of the companies which make up the Standard & Poor's 500 Composite Stock Price Index. The objective of the Index Trust - 500 Portfolio Fund is to match the performance of the Standard & Poor's 500 index. e. Vanguard Treasury Money Market Portfolio (Money Market Portfolio): Money in the Money Market Portfolio is 100 percent invested in securities backed by the full faith and credit of the U.S. Government. It seeks the maximum current income that is consistent with the preservation of capital and liquidity. Average maturities for the securities held by the Money Market Portfolio are normally maintained in the range of 30 - 60 days and no longer than one year. f. Vanguard STAR Portfolio (Star Portfolio): Money in the STAR Portfolio is invested in a portfolio of Vanguard mutual funds that emphasizes either equity, fixed income or money market securities. It is designed as a balanced "fund of funds" for long-term investors. -9- Notes to Financial Statements (Continued) 1. Description of Plan (continued) g. Vanguard/Windsor II (Windsor II): Money in the Windsor II is invested in stocks which, in the opinion of the Fund's investment advisor, are undervalued in the marketplace. The stocks held in the Windsor II tend to offer above average price-to-earnings ratios and below- average price-to-book value ratios relative to the stock market in general. h. Vanguard International Growth Portfolio (International Growth Portfolio): Money in the International Growth Portfolio is invested in non-U.S. stocks that have been selected for their growth potential. The International Growth Portfolio tends to be widely diversified both geographically and in terms of size of companies. i. Vanguard LifeStrategy Portfolios - Conservative Growth (LifeStrategy Conservative Growth Portfolio): Money in the LifeStrategy Conservative Growth Portfolio is invested in five Vanguard funds: a domestic stock fund, an international stock fund, two bond funds, and an asset allocation fund. The objective of the LifeStrategy Conservative Growth Portfolio is to provide a high level of income and moderate long-term growth of capital and income. j. Vanguard LifeStrategy Portfolios - Growth Portfolio (LifeStrategy Growth Portfolio): Money in the LifeStrategy Growth Portfolio is invested in four Vanguard funds: a domestic stock fund, an international stock fund, a bond fund, and an asset allocation fund. The objective of the LifeStrategy Growth Portfolio is to provide long- term growth of capital. Payment of Benefits A participant is entitled to the benefit provided by the contributions and income thereon allocated to the participant's account. Upon termination of employment due to retirement, total and permanent disability or death, a participant or their beneficiary will be entitled to receive a distribution of his or her entire account without regard to the Plan's vesting rules: (i) in one lump sum amount; or (ii) in monthly installments of a fixed amount or over a specified period of time in an amount of at least $100 per month. If the value of a participant's account is less than $3,500, the Plan Administrator will distribute the participant's entire interest in one lump sum payment. -10- Notes to Financial Statements (Continued) 1. Description of Plan (continued) Withdrawals of tax deferred contributions during a participant's employment are not permitted prior to age 59-1/2, unless he or she can show financial hardship for medical expenses, expenses connected with a death in the participant's immediate family, educational expenses, purchase or renovation of a principal residence, payments necessary to avoid eviction, or a foreclosure on the mortgage of a principal residence. 2. Significant Accounting Policies Basis of Accounting The accounting records of the Plan are maintained on the accrual basis. Investment Valuation and Income Recognition Mutual funds are stated at the net asset value on the last business day of the plan year. The difference between fair value and the cost of investments is reflected in the statement of changes in assets available for plan benefits as unrealized gains (losses) on investments. Use of Estimates The preparation of the 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 of additions and deductions during the reporting period. Actual results could differ from those estimates. -11- Aeroquip Inoac Company Retirement Savings and Profit Sharing Plan Notes to Financial Statements (continued) 3. Changes in Assets by Investment Option
Aeroquip- Vanguard Vickers Contributions Loan Funds Stock Receivable Fund Total Assets available for plan benefits at December 31, 1996 $10,059,188$ 10,415 $1,543,550 $ 399,875 $12,013,028 Additions: Assets transferred in from other plans 3,745,702 496,090 293,925 4,535,717 Contributions: Employees 879,032 20,392 16,112 915,536 Employer 1,932,224 11,441 768,690 2,712,355 2,811,256 31,833 784,802 3,627,891 Net investment income: Interest 71,681 71,681 Dividends 850,656 4,200 854,856 850,656 4,200 71,681 926,537 Realized and unrealized gains 1,655,034 251,128 1,906,162 Total additions 9,062,648 783,251 784,802 365,606 10,996,307 Deductions - benefits paid to participants 827,518 49,264 43,915 920,697 Net additions prior to transfers 8,235,130 733,987 784,802 321,691 10,075,610 Net transfers among investment funds (624,505) 145,217 479,288 7,610,625 879,204 784,802 800,979 10,075,610 Assets available for plan benefits at December 31, 1997 $17,669,813 $889,619 $2,328,352 $1,200,854 $22,088,638 -12-
Aeroquip Inoac Company Retirement Savings and Profit Sharing Plan Notes to Financial Statements (continued) 4. Vanguard Funds A summary of the activity within the separate Vanguard Fund options for the year ended December 31, 1997 is as follows:
Retirement Morgan Fixed Money Savings Growth Income Index Market STAR Trust Fund Fund Portfolio Portfolio Portfolio Assets available for plan benefits at December 31, 1996 $1,992,975 $ 195,488 $2,224,080 $4,260,273 $861,608 134,869 Additions: Assets transferred in from other plans 1,559,603 104,793 11,147 545,388 48,049 1,137,424 Contributions: Employees 159,268 38,532 139,336 316,037 66,620 51,938 Employer 394,632 47,862 445,847 654,644 215,165 54,935 553,900 86,394 585,183 970,681 281,785 106,873 Dividends 166,475 67,825 179,218 136,886 45,774 134,982 Realized and unrealized gains (losses) 24,233 120,079 1,409,863 (20,589) Total additions 2,279,978 283,245 895,627 3,062,818 375,608 1,358,690 Deductions - benefits paid to participants 193,088 3,590 170,893 253,657 91,562 40,554 Net additions prior to transfers 2,086,890 279,655 724,734 2,809,161 284,046 1,318,136 Net transfers among investment funds (313,902) 52,376 (549,718) (292,048) (188,010) 155,986 1,772,988 332,031 175,016 2,517,113 96,036 1,474,122 Assets available for plan benefits at December 31, 1997 $3,765,963 $ 527,519 $2,399,096 $6,777,386 $ 957,644 1,608,991
-13- Aeroquip Inoac Company Retirement Savings and Profit Sharing Plan Notes to Financial Statements (continued) 4. Vanguard Funds (continued)
LifeStrategy International Conservative LifeStrategy Total Growth Growth Growth Vanguard Windsor II Portfolio Portfolio Portfolio Funds Assets available for plan benefits at December 31, 1996 $ 312,854 $ 77,041 $ - $ - $10,059,188 Additions: Assets transferred in from other plans 292,799 43,517 745 2,237 3,745,702 Contributions: Employees 65,751 25,745 6,493 9,312 879,032 Employer 71,737 28,368 7,240 11,794 1,932,224 137,488 54,113 13,733 21,106 2,811,256 Dividends 101,191 7,976 4,088 6,241 850,656 Realized and unrealized gains (losses) 109,126 (2,216) 4,001 10,537 1,655,034 Total additions 640,604 103,390 22,567 40,121 9,062,648 Deductions - benefits paid to participants 48,214 24,556 842 562 827,518 Net additions prior to transfers 592,390 78,834 21,725 39,559 8,235,130 Net transfers among investment funds 279,515 31,335 70,134 129,827 (624,505) 871,905 110,169 91,859 169,386 7,610,625 Assets available for plan benefits at December 31, 1997 $1,184,759 $ 187,210 $91,859 $169,386 $17,669,813
-14- Notes to Financial Statements (Continued) 5. Income Tax Status The Plan has received a favorable determination letter from the Internal Revenue Service (IRS), in its form prior to amendment, stating that the Plan is qualified under Section 401(a) of the Internal Revenue Code of 1986 (the "Code"). The IRS has not ruled on the Plan as amended, however, the pension advisory committee represents that the Plan is qualified and, therefore, the related trust is exempt from taxation. Once qualified, the Plan is required to operate in conformity with the Code and ERISA to maintain its tax exempt status. The plan administrator is not aware of any course of action or series of events that have occurred that might adversely affect the Plan's qualified status. 6. Year 2000 Issue (Unaudited) The Plan Sponsor has developed a plan to modify its internal information technology to be ready for the year 2000 and has begun converting critical data processing systems. The project also includes determining whether third party service providers have reasonable plans in place to become year 2000 compliant. The Plan Sponsor currently expects the project to be substantially complete by early 1999. The Plan Sponsor does not expect this project to have a significant effect on plan operations. -15- Supplemental Schedules -16- Aeroquip Inoac Company Retirement Savings and Profit Savings Plan Employer Identification No. 38-2788802 Plan No. 001 Item 27a--Schedule of Assets Held for Investment Purposes December 31, 1997
Identity of Issue, Borrower, Lessor or Description of Fair Cost of Proceeds of Similar Party Investment Shares Cost Value Acquisition Dispositions Mutual funds: *The Vanguard Group of Investment Companies: Vanguard Index Trust Portfolio 75,246 $ 5,106,307 $6,777,386 Vanguard Retirement Savings Trust 3,765,963 3,765,963 3,765,963 Vanguard Fixed Income Fund - Long-Term Corporate Portfolio 259,082 2,253,765 2,399,096 Vanguard STAR Portfolio 92,577 1,634,876 1,608,991 Vanguard/Windsor II 41,396 1,097,410 1,184,759 Vanguard Treasury Money Market Portfolio 957,644 957,644 957,644 Vanguard/Morgan Growth Fund 30,075 511,196 527,519 Vanguard International Growth Portfolio 11,422 197,041 187,210 Vanguard LifeStrategy Growth Portfolio 10,560 161,985 169,386 Vanguard LifeStrategy Portfolio - Conservative Growth 6,855 89,496 91,859 Total $15,775,683 $17,669,813 *Aeroquip-Vickers, Inc. Aeroquip-Vickers Common Stock 54,645 $ 664,275 $ 889,619 *Participant Loans 7% to 10.5% $ 1,200,854 $ 1,200,854 $ $ * - Party-in-interest
-17- Aeroquip Inoac Company Retirement Savings and Profit Sharing Plan Employer Identification No. 38-2788802 Plan No. 001 Item 27d--Schedule of Reportable Transactions Year ended December 31, 1997
Fair Identity of Purchase Selling Cost of Value of Party Involved Description of Assets Price Price Asset Asset Gain Aeroquip-Vickers, Inc. Aeroquip-Vickers Common Stock: Purchase transactions $ 752,504 $ 752,504 $ 752,504 Sales transactions $ 124,429 98,196 124,429 $26,233 The Vanguard Group Vanguard/Morgan Growth Fund: Purchase transactions 613,892 613,892 613,892 Sales transactions 306,092 299,111 306,092 6,981 Vanguard Fixed Income Fund Long- term Corporate Portfolio: Purchase transactions 947,555 947,555 947,555 Sales transactions 892,581 880,256 892,581 12,325 Vanguard Index Trust-500 Portfolio: Purchase transactions 2,252,844 2,252,844 2,252,844 Sales transactions 1,145,596 951,330 1,145,596 194,266 Vanguard Treasury Money Market Portfolio: Purchase transactions 547,597 547,597 547,597 Sales transactions 458,416 458,416 458,416 Vanguard STAR Portfolio: Purchase transactions 1,602,540 1,602,540 1,602,540 Sales transactions 107,830 102,337 107,830 5,493 Vanguard/Windsor II: Purchase transactions 1,080,069 1,080,079 1,080,079 Sales transactions 317,300 290,341 317,300 26,959 Vanguard Retirement Savings Trust: Purchase transactions 2,827,970 2,827,970 2,827,970 Sales transactions 1,054,983 1,054,983 1,054,983
-18- EX-99 2 EXHIBIT INDEX EXHIBIT INDEX Exhibit Page Exhibit 23 Consent of Independent Auditors 20 -19- EX-23 3 Exhibit 23 Consent of Independent Auditors We consent to the incorporation by reference in the Registration Statement (Forms S-8) pertaining to the Aeroquip Inoac Company Retirement Savings and Profit Sharing plan of our report dated April 24, 1997, with respect to the financial statements and schedules of the Aeroquip Inoac Company Retirement Savings and Profit Sharing Plan included in this Annual Report (Form 11-K) for the year ended December 31, 1997. Toledo, Ohio June 29, 1998 -20- -----END PRIVACY-ENHANCED MESSAGE-----