-----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, ITxCRDCT/gBn3NG3/742tEcFsI12NG49RedbvS4+sadx1Imma+O1MQF8G67u5M8R B2t91qvpTruOxsOuhJab1w== 0000760461-98-000010.txt : 19980331 0000760461-98-000010.hdr.sgml : 19980331 ACCESSION NUMBER: 0000760461-98-000010 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19980330 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: PENTECH INTERNATIONAL INC CENTRAL INDEX KEY: 0000760461 STANDARD INDUSTRIAL CLASSIFICATION: PENS, PENCILS & OTHER ARTISTS' MATERIALS [3950] IRS NUMBER: 232259391 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 11-K SEC ACT: SEC FILE NUMBER: 000-15374 FILM NUMBER: 98578669 BUSINESS ADDRESS: STREET 1: 195 CARTER DRIVE CITY: EDISON STATE: NJ ZIP: 08817 BUSINESS PHONE: 9082876640 MAIL ADDRESS: STREET 2: 195 CARTER DR CITY: EDISON STATE: NJ ZIP: 08817 11-K 1 FORM 11-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 [X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended September 30, 1997 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to . Commission file number 0-15374 Pentech International, Inc. 401(k) Plan (Full title of the plan and address of the plan, if different from that of the issuer named below) PENTECH INTERNATIONAL, INC. 195 Carter Drive Edison, New Jersey 08817 (Name of issuer of the securities held pursuant to the plan and the address of its principal executive office) PENTECH INTERNATIONAL, INC. 401(k) PLAN YEARS ENDED SEPTEMBER 30, 1997 AND 1996 CONTENTS Page Independent auditors' report 1 Statements of net assets available for plan benefits 2 Statement of changes in net assets available for benefits with fund information, 1997 3 Statement of changes in net assets available for benefits with fund information, 1996 4 Notes to financial statements 5 - 10 Supplemental schedules: Assets held for investment 11 Transactions in excess of 5% of the current value of plan assets 12 Independent Auditors' Report Board of Directors Pentech International, Inc. 401(k) Plan Edison, New Jersey We have audited the accompanying statements of net assets available for plan benefits of Pentech International, Inc. 401(k) Plan ("Plan") as of September 30, 1997 and 1996, 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 audits 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 Plan as of September 30, 1997 and 1996, and the changes in net assets available for benefits for the years then ended in conformity with generally accepted accounting principles. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying supplemental schedules are presented for the purpose of additional analysis and are not a required part of the basic financial statements but are supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The fund information in 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 the 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 respects in relation to the basic financial statements taken as a whole. March 11, 1998 Drucker, Math & Whitman, P.C. PENTECH INTERNATIONAL, INC. 401(k) PLAN STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS SEPTEMBER 30, 1997 AND 1996 ASSETS: 1997 1996 Cash $ 6,594 $ 1,751 Investments, at fair market value: Dean Witter Liquid Asset Fund 19,203 30,781 Dean Witter Dividend Growth Securities 356,010 205,619 Dean Witter U.S. Government Securities Trust 28,063 20,229 Dean Witter Global Dividend Growth 109,967 46,207 Pentech International, Inc. Stock 302,056 58,371 Participant loans 13,024 - 834,917 362,958 Contributions receivable: Participants 9,033 36,451 Employer 2,218 9,247 11,251 45,698 Net assets available for plan benefits $ 846,168 $408,656 See notes to financial statements. PENTECH INTERNATIONAL, INC. 401(k) PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION YEAR ENDED SEPTEMBER 30, 1997
Participant directed Employer directed Dean Dean Dean Pentech Pentech Dean Witter Witter Witter Inter- Inter- Witter Dividend U.S. Global national, national, Liquid Growth Government Dividend Inc. Inc. Cash Assets Securities Securities Growth Stock Other Stock Other Total Additions to net assets attributed to: Investment income: Dividends and interest $514 $ 1,332 $10,663 $1,474 $ 7,229 $ - $ - $ - $ - $21,212 Realized gain (loss) - - 3,557 (20) 1,559 (9,294) - - - (4,198) Unrealized gain - - 61,238 654 9,779 145,733 - 20,661 - 238,065 Exchange 4,160 (23,972) 5,974 1,098 9,219 13,671 - (7,028) - 3,122 4,674 (22,640) 81,432 3,206 27,786 150,110 - 13,633 - 258,201 Less: investment expenses(13) - - - - - - - - (13) 4,661 (22,640) 81,432 3,206 27,786 150,110 - 13,633 - 258,188 Contributions: Participants' (5) 15,030 77,609 5,084 37,156 46,783 (27,418) - - 154,239 Employer's - - - - - - - 36,496 (7,029) 29,467 Participant loan repayments - - 2,378 1,098 - - (3,476) - - - Other receipts (1,549) - 3,558 679 5,636 - - - - 8,324 (1,554) 15,030 83,545 6,861 42,792 46,783 (30,894) 36,496 (7,029) 192,030 Total additions 3,107 (7,610) 164,977 10,067 70,578 196,893 (30,894) 50,129 (7,029) 450,218 Deductions from net assets attributed to: Benefits paid 235 3,968 5,302 641 1,864 696 - - - 12,706 Loans to participants (1,971) - 9,284 1,592 4,954 2,641 (16,500) - - - Total deductions (1,736) 968 14,586 2,233 6,818 3,337 (16,500) - - 12,706 Net increase (decrease) 4,843 (11,578) 150,391 7,834 63,760 193,556 (14,394) 50,129 (7,029) 437,512 Net assets available for benefits: Beginning of year 1,751 30,781 205,619 20,229 46,207 54,399 36,451 3,972 9,247 408,656 End of year $ 6,594 $19,203 $ 356,010 $28,063 $109,967 $247,955 $22,057 $ 54,101 $ 2,218 $846,168 See notes to financial statements.
PENTECH INTERNATIONAL, INC. 401(k) PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION YEAR ENDED SEPTEMBER 30, 1996
Participant directed Employer directed Dean Dean Dean Pentech Pentech Dean Witter Witter Witter Inter- Inter- Witter Dividend U.S. Global national, national, Liquid Growth Government Dividend Inc. Inc. Cash Assets Securities Securities Growth Stock Other Stock Other Total Additions to net assets attributed to: Investment income: Dividends and interest $ - $ 1,308 $ 3,249 $ 1,142 $ 2,409 $ - $ - $ - $ - $8,108 Realized gain (loss) - - 4,271 (35) 462 (26,376) - - - (21,678) Unrealized gain (loss) - 447 23,393 (446) 2,243 (105,655) - (3,659) - (83,677) Exchange 712 - (99) - - 218 291 - - 1,122 712 1,755 30,814 661 5,114 (131,813) 291 (3,659) - (96,125) Less: investment expenses - - - - - (918) - - - (918) 712 1,755 30,814 661 5,114 (132,731) 291 (3,659) - (97,043) Contributions: Participants' - 11,592 44,882 6,588 23,592 22,390 14,499 - - 123,543 Employer's - - - - - - - 7,631 9,247 16,878 Other receipts - - 306 102 102 - - - - 510 - 11,592 45,188 6,690 23,694 22,390 14,499 7,631 9,247 140,931 Total additions 712 13,347 76,002 7,351 28,808 (110,341) 14,790 3,972 9,247 43,888 Deductions from net assets attributed to: Benefits paid 701 597 2,164 1,374 4,560 2,344 - - - 11,740 Contributions refundable - 3,620 19,509 790 2,599 10,660 (37,178) - - - Total deductions 701 4,217 21,673 2,164 7,159 13,004 (37,178) - - 11,740 Net increase (decrease) 11 9,130 54,329 5,187 21,649 (123,345) 51,968 3,972 9,247 32,148 Net assets available for benefits: Beginning of year 1,740 21,651 151,290 15,042 24,558 177,744 (15,517) - - 376,508 End of year $ 1,751 $30,781 $205,619 $20,229 $46,207 $54,399 $36,451 $3,972 $ 9,247 $408,656 See notes to financial statements.
PENTECH INTERNATIONAL, INC. 401(k) PLAN NOTES TO FINANCIAL STATEMENTS YEARS ENDED SEPTEMBER 30, 1997 AND 1996 1. Description of the Plan: The following brief description of the Pentech International, Inc. 401(k) Plan ("Plan") is provided for general information purposes only. More complete information concerning the Plan and its provisions can be found in the Plan documents. General: The Plan, as amended and restated, began on April 1, 1993 and is a defined contribution plan covering all eligible employees of Pentech International, Inc. ("Company"). Employees are eligible to participate when they have completed six months of service and have reached age twenty and one-half. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). The Plan was amended and restated on April 1, 1995 to exclude collective bargaining employees. The Plan was amended and restated on April 1, 1996 to include an employer matching provision. The amount of the employer matching is a percentage of the participants contributions up to a maximum of 6% of compensation, and is such percentage as is determined by the employer. For the year ended September 30, 1997 and the period April 1, 1996 to September 30, 1996, the employer matching was 33% of the participants contributions up to a maximum of 2% of compensation. Administration of Plan assets: The assets of the Plan are administered under a trust agreement between the Plan and a trustee designated by the Company. Administrative expenses of the Plan are paid by the Company. Investment expenses, i.e. commissions, are charged to participants' accounts at the time of withdrawal. For the years ended September 30, 1997 and 1996, investment expenses were $13 and $918, respectively. Contributions: Employee contributions are made in the form of a salary reduction by withholding an elected percentage from the employee's salary each pay period. Participants may elect to contribute up to 20% of their gross annual compensation subject to deferral and non-discrimination limitations under the Internal Revenue Code. PENTECH INTERNATIONAL, INC. 401(k) PLAN NOTES TO FINANCIAL STATEMENTS YEARS ENDED SEPTEMBER 30, 1997 AND 1996 1. Description of the Plan: (continued) The Company makes a matching contribution, as described above, or may make a profit sharing contribution, or both, as determined by the Company. Such Company contributions are subject to the provisions and limitations prescribed by the Plan. Company matching contributions are invested in Company stock, while Company profit sharing contributions, if any, are invested in the same funds in which the participants chose to invest their contributions. Participants' accounts: Each participant's account is credited with the participant's and the Company's contributions, if any, and forfeitures of terminated participants' nonvested amounts are used to reduce Company contributions. Income and profits attributable to the assets of the Plan are allocated among the participants' accounts in relation to their account balances. The benefit to which a participant is entitled is the benefit that can be provided from the participant s vested account. Vesting: Participants are immediately vested in their salary reduction contributions plus actual earnings thereon. Vesting in the Company matching and profit sharing contributions, if any, plus earnings thereon is based on years of service as follows: Less than 2 years, none; 2 years but less than 3, 20%; 3 years but less than 4, 40%; 4 years but less than 5, 60%; 5 years but less than 6, 80%; 6 years or greater, 100%. Investment options: Upon enrollment in the Plan, a participant may direct employee contributions in 5% increments in any of five investment options: Dean Witter Liquid Asset Fund - Funds are invested in a money market account which earns a market interest rate. Dean Witter Dividend Growth Securities Fund - Funds are invested in shares of a registered investment company that invests mainly in common stocks. PENTECH INTERNATIONAL, INC. 401(k) PLAN NOTES TO FINANCIAL STATEMENTS YEARS ENDED SEPTEMBER 30, 1997 AND 1996 1. Description of the Plan: (continued) Investment options: (continued) Dean Witter Global Dividend Growth Fund - Funds are invested in shares of a registered investment company that invests mainly in U.S. and foreign common stocks. Dean Witter U.S. Government Securities Fund - Funds are invested in a registered investment company that invests mainly in U.S. Government Securities. Pentech International, Inc. Stock - Funds are invested in common stock of Pentech International, Inc. Participants may change their investment options at any time by contacting Dean Witter directly. Payment of benefits: The distribution of Plan benefits, as defined, is permitted upon the earlier of retirement, death, disability, separation of service with the Company or attainment of age 59 1/2. Withdrawal will also be available in certain hardship situations, as defined in the Plan document. Distribution of account balances may be made in either a lump-sum amount, or in installments over a fixed reasonable period not to exceed the life expectancy of the participant. Distributions must commence at age 70 1/2 even if the participant does not retire. Loans receivable from Plan participants: A participant of the Plan who needs temporary financial assistance may request a loan from the Plan. A minimum of $1,000 may be borrowed in $250 increments, subject to statutory restrictions (may not exceed the lesser of $50,000 or 50% of the vested account balance). The participant may have only one loan outstanding at any time. Loans bear interest at market rates. Loan repayments are made by payroll deduction; the participant may prepay principal and interest at any time. At September 30, 1997 loans receivable totalled $13,024. At September 30, 1996, there were no loans receivable from Plan participants. Plan termination: Although it has not expressed any intent to do so, the Company has the right to terminate the Plan at any time. In the event of Plan termination, the time and manner of distribution of vested benefits shall be subject to the discretion of the Plan administrator. If the Plan is terminated by the Company, all employer contributions plus earnings become fully vested. PENTECH INTERNATIONAL, INC. 401(k) PLAN NOTES TO FINANCIAL STATEMENTS YEARS ENDED SEPTEMBER 30, 1997 AND 1996 2. Summary of significant accounting policies: Basis of accounting: The accompanying financial statements have been prepared on the accrual basis of accounting. Purchases and sales of securities are recorded on trade dates. Dividend income is accrued on the ex-dividend date. Unrealized gains and losses from security transactions are reported on the specific cost method. Investment valuation: Investments are valued at fair market value based upon market quotations. Benefit payments: Benefits are recorded when paid. Contributions refundable: Contributions to the Plan made by certain participants are deemed to be excess contributions as a result of the Plan s failure to satisfy the Actual Deferral Percentage test. Such refundable contributions are recorded as a reduction of contributions received and a Plan liability if the refunds are issued within two and one-half months of the Plan s year end. Excess contributions not refunded within this time limit are recorded when the refunds are issued. Excess contributions for the 1997 Plan year have not been computed as of the date of these financial statements. Excess contributions relating to the 1996 Plan year in the amount of $7,500 were refunded in March, 1996 and have therefore been recorded as a benefit distribution for the year ended September 30, 1997 in the Plan s financial statements. Reclassifications: Certain items in the 1996 financial statements have been reclassified to conform to the presentation used in 1997. 3. Use of estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires the Plan administrator to make estimates and assumptions that affect certain reported amounts and disclosures. Actual results could differ from those estimates. PENTECH INTERNATIONAL, INC. 401(k) PLAN NOTES TO FINANCIAL STATEMENTS YEARS ENDED SEPTEMBER 30, 1997 AND 1996 4. Investments: The fair value of individual investments which represent 5% or more of the Plan s net assets available for benefits are as follows: Shares Fair value September 30, 1997: Dean Witter Dividend Growth Securities 6,646 $ 356,010 Dean Witter Global Dividend Growth 7,405 109,967 Pentech International, Inc. Stock 112,372 302,056 September 30, 1996: Dean Witter Liquid Asset Fund 30,781 $ 30,781 Dean Witter Dividend Growth Securities 4,854 205,619 Dean Witter Global Dividend Growth 3,546 46,207 Pentech International, Inc. Stock 60,238 58,371 As of March 11, 1998, the value of the Plan s investment in Company stock declined by $42,140 due to a decline in the share price of the stock. 5. Tax status: The Company has received a determination letter dated July 1994 from the Internal Revenue Service that the Plan is qualified under Sections 401(a) and 401(k) and that the related trust is exempt from federal income taxes under Section 501(a) of the Internal Revenue Code. The Plan has been amended since receiving the determination letter. However, the Plan administrator believes the Plan is designed and is currently being operated in compliance with the applicable requirements of the IRC. 6. Party-in-interest transactions: All expenses incurred in the operation and administration of the Plan are borne by the Company. For the year ended September 30, 1997, the Plan purchased 55,860 and sold 3,726 shares of Company stock in the public market; 112,372 shares were held as investments at September 30, 1997. For the year ended September 30, 1996 the Plan purchased 18,317 and sold 10,744 shares of Company stock in the public market; 60,238 shares were held as investments at September 30, 1996. PENTECH INTERNATIONAL, INC. 401(k) PLAN NOTES TO FINANCIAL STATEMENTS YEARS ENDED SEPTEMBER 30, 1997 AND 1996 6. Party-in-interest transactions: (continued) Certain Plan investments are shares of mutual funds managed by Dean Witter. Dean Witter is the trustee as defined by the Plan, and therefore these transactions qualify as party-in-interest transactions. 7. Subsequent events: Effective October 1, 1997, the Plan elected to change its year end from September 30 to December 31. SUPPLEMENTAL SCHEDULES PENTECH INTERNATIONAL, INC. 401(k) PLAN ASSETS HELD FOR INVESTMENT SEPTEMBER 30, 1997 AND 1996
1997 Market Shares Cost value Dean Witter Liquid Asset Fund 19,203 $ 19,203 $ 19,203 Dean Witter Dividend Growth Securities 6,646 248,365 356,010 Dean Witter U.S. Government Securities Trust 3,104 27,912 28,063 Dean Witter Global Dividend Growth 7,405 96,751 109,967 Pentech International, Inc. Stock 112,372 325,328 302,056 Participant loans, bearing interest of 9 1/4 - 9 1/2% - - 13,024 Total investments $717,559 $ 28,323 1996 Market Shares Cost value Dean Witter Liquid Asset Fund 30,781 $ 30,781 $ 30,781 Dean Witter Dividend Growth Securities 4,854 159,212 205,619 Dean Witter U.S. Government Securities Trust 1,303 20,732 20,229 Dean Witter Global Dividend Growth 3,546 42,770 46,207 Pentech International, Inc. Stock 60,238 248,036 58,371 Total investments $501,531 $361,207 PENTECH INTERNATIONAL, INC. 401(k) PLAN TRANSACTIONS IN EXCESS OF 5% OF THE CURRENT VALUE OF PLAN ASSETS YEARS ENDED SEPTEMBER 30, 1997 AND 1996 Year ended September 30, 1997: Nature Amount Purchased Dean Witter Dividend Growth Securities Fund $ 100,181 Purchased Dean Witter Global Dividend Growth Fund 64,405 Purchased Pentech International, Inc. Stock 89,921 Year ended September 30, 1996: Nature Amount Purchased Dean Witter Dividend Growth Securities Fund $ 48,438 Purchased Dean Witter Global Dividend Growth Fund 26,103 Purchased Pentech International Inc. Stock 40,328 Sold Pentech International, Inc. Stock 24,363 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the trustee (or other persons who administer the employee benefit plan) has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized. Dated: March 27, 1998 PENTECH INTERNATIONAL, INC. 401(k) PLAN s/David Melnick David Melnick, Plan Administrator s/Libby Melnick Libby Melnick, Plan Administrator s/William Visone William Visone, Plan Administrator WPDOCS\PTK\FS97-96.401
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