-----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, B4xDGsoSAPnROP1J4BE8LCWHoCKqoMR0MlESbNKfqcbKK7PEv2anzyceFwwwVzyo MoOH94d1Mqo4uTzXVbC60Q== 0001088127-99-000042.txt : 19990701 0001088127-99-000042.hdr.sgml : 19990701 ACCESSION NUMBER: 0001088127-99-000042 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19990630 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: 99656784 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 [ ] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 OR [X] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from October 1, 1997 to December 31, 1997. 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 OCTOBER 1, 1997 TO DECEMBER 31, 1997 AND YEAR ENDED SEPTEMBER 30, 1997 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, October 1, 1997 to December 31, 1997 3 Statement of changes in net assets available for benefits with fund information, year ended September 30, 1997 4 Notes to financial statements 5 - 10 Supplemental schedules: Assets held for investment 12 Transactions in excess of 5% of the current value of plan assets 13 Signatures 14 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 December 31 and September 30, 1997, and the related statements of changes in net assets available for benefits for the period from October 1 to December 31, 1997 and the year ended September 30, 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 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 December 31 and September 30, 1997, and the changes in net assets available for benefits for the period from October 1 to December 31, 1997 and the year ended September 30, 1997 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. April 30, 1998 Drucker, Math & Whitman, P.C. PENTECH INTERNATIONAL INC. 401(k) PLAN STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS DECEMBER 31 AND SEPTEMBER 30, 1997 1997 December 31 September 30 Cash $ 6,382 $ 6,594 Investments, at fair market value: Dean Witter Liquid Asset Fund 28,263 19,203 Dean Witter Dividend Growth Securities 379,157 356,010 Dean Witter U.S. Government Securities Trust 30,299 28,063 Dean Witter Global Dividend Growth 108,560 109,967 Pentech International Inc. Stock 329,052 302,056 Participant loans 10,624 13,024 892,337 834,917 Contributions receivable: Participants 10,475 9,033 Employer 2,940 2,218 13,415 11,251 Net assets available for plan benefits $ 905,752 $ 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 OCTOBER 1, 1997 TO DECEMBER 31, 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 $ 98 $ 309 $ 4,467 $455 $ 8,300 $ - $ - $ - $ - $ 13,629 Realized gain (loss) - - 8,049 128 959 (186) - - - 8,950 Unrealized gain (loss) - - (2,474) 70 (14,300) 20,266 - - - 3,562 Exchange (4,290) 8,751 (4,466) - - (683) - - - (688) (4,192) 9,060 5,576 653 (5,041) 19,397 - - - 25,453 Less: investment expenses - - - - - - - - - - (4,192) 9,060 5,576 653 (5,041) 19,397 - - - 25,453 Contributions: Participants' (20,568) - 22,544 5,931 16,317 2,027 1,442 - - 27,693 Employer's - - - - - - - 6,412 722 7,134 Participant loan repayments- - 1,097 206 - 1,097 (2,400) - - - Participant rollover contributions - - 21,297 - - - - - - 21,297 (20,568) - 44,938 6,137 16,317 3,124 (958) 6,412 722 56,124 Total additions (24,760) 9,060 50,514 6,790 11,276 22,521 (958) 6,412 722 81,577 Deductions from net assets attributed to: Benefits paid (24,548) - 27,367 4,554 12,683 1,937 - - - 21,993 Loans to participants - - - - - - - - - - Miscellaneous - - - - - - - - - - Total deductions (24,548) - 27,367 4,554 12,683 1,937 - - - 21,993 Net increase (decrease) (212) 9,060 23,147 2,236 (1,407) 20,584 (958) 6,412 722 59,584 Net assets available for benefits: Beginning of year 6,594 19,203 356,010 28,063 109,967 247,955 22,057 54,101 2,218 846,168 End of year $6,382 $28,263 $379,157 $30,299 $108,560 $268,539 $21,099 $60,513 $2,940 $905,752 See notes to financial statements.
PENTECH INTERNATIONAL INC. 401(k) PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION 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 (loss) - - 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 partic- ipants (1,971) - 9,284 1,592 4,954 2,641 (16,500) - - - Total deductions(1,736) 3,968 14,586 2,233 6,818 3,337 (16,500) - - 12,706 Net increase (decrease) 4,843 (11,578) 150,331 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 NOTES TO FINANCIAL STATEMENTS PERIOD OCTOBER 1, 1997 TO DECEMBER 31, 1997 AND YEAR ENDED SEPTEMBER 30, 1997 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 match 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 period from October 1 to December 31, 1997 and the year ended September 30, 1997, the employer matching was 33% participants contributions up to a maximum of 2% of compensation. The Plan was amended effective October 1, 1997 to change the Plan year end from September 30 to December 31. Accordingly, financial statements have been prepared for the period from October 1 to December 31, 1997. 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. No investment expenses were incurred during the periods presented. 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 PERIOD OCTOBER 1, 1997 TO DECEMBER 31, 1997 AND YEAR ENDED SEPTEMBER 30, 1997 1. Description of the Plan: (continued) Contributions: (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%. Ivestment options: Upon enrollment in the Plan, a participant may direct employee contributions in 5% increments in any of six 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. 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. PENTECH INTERNATIONAL INC. 401(k) PLAN NOTES TO FINANCIAL STATEMENTS PERIOD OCTOBER 1, 1997 TO DECEMBER 31, 1997 AND YEAR ENDED SEPTEMBER 30, 1997 1. Description of the Plan: (continued) Investment options: (continued) 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 and one half. 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 and one half 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 December 31 and September 30, 1997 loans receivable totaled $10,624 and $13,024, respectively. 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 PERIOD OCTOBER 1, 1997 TO DECEMBER 31, 1997 AND YEAR ENDED SEPTEMBER 30, 1997 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. For the period October 1 to December 31, 1997, there were no excess contributions to the Plan. Excess contributions for the Plan year ended September 30, 1997 were $58,792. These contributions were refunded in April, 1998 and will be included as a reduction of contributions received for the plan year ending December 31, 1998. 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. Accordingly, actual results could differ from those estimates. PENTECH INTERNATIONAL INC. 401(k) PLAN NOTES TO FINANCIAL STATEMENTS PERIOD OCTOBER 1, 1997 TO DECEMBER 31, 1997 AND YEAR ENDED SEPTEMBER 30, 1997 3. 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 December 31, 1997: Dean Witter Dividend Growth Securities 6,977 $379,157 Dean Witter Global Dividend Growth 8,325 108,560 Pentech International Inc. Stock 114,453 329,052 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 As of April 30, 1998, the December 31, 1997 value of the Plan s investment in Company stock declined by $142,493 due to a decline in the share price of the stock. 4. Tax status: The Company has received a determination letter dated April 1998 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. 5. Party-in-interest transactions: All expenses incurred in the operation and administration of the Plan are borne by the Company. 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. For the period October 1 to December 31, 1997, the Plan purchased 2,814 and sold 733 shares of Company stock in the public markets; 114,453 shares were held as investments at December 31, 1997. 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 December 31, 1997. SUPPLEMENTAL SCHEDULES PENTECH INTERNATIONAL INC. 401(k) PLAN ASSETS HELD FOR INVESTMENT DECEMBER 31, 1997 AND SEPTEMBER 30, 1997 Market Shares Cost value December 31, 1997: Dean Witter Liquid Asset Fund 28,263 $ 28,263 $ 28,263 Dean Witter Dividend Growth Securities 6,977 273,986 379,157 Dean Witter U.S. Government Securities Trust 3,329 30,077 30,299 Dean Witter Global Dividend Growth 8,325 109,644 108,560 Pentech International Inc. Stock 114,453 331,643 329,052 Participant loans, bearing interest of 9 1/4 - 9 1/2% - - 10,624 Total investments $773,613 $ 885,955 September 30, 1997: 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 3,164 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 $ 717,559 $828,323 PENTECH INTERNATIONAL INC. 401(k) PLAN TRANSACTIONS IN EXCESS OF 5% OF THE CURRENT VALUE OF PLAN ASSETS PERIOD FROM OCTOBER 1 TO DECEMBER 31, 1997 AND YEAR ENDED SEPTEMBER 30, 1997 Period October 1 to December 31, 1997: Nature Amount Purchased Dean Witter Dividend Growth Securities Fund $44,939 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 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: April 30, 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 N:\RSKLAW\WP51\PTK\401K.97 -----END PRIVACY-ENHANCED MESSAGE-----