SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
F O R M 11 - K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
August 31, 1999
For the fiscal year ended.......................................................
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from........................to........................
Commission file number......1-11288..... [Applied Power Inc.]
A. Full title of the plan and the address of the plan, if different from that of
the issuer named below:
APW 401(k) PLAN
B. Name of issuer of the securities held pursuant to the plan and the address of
its principal executive office:
APPLIED POWER INC.
N22 W23685 RIDGEVIEW PARKWAY WEST
WAUKESHA, WI 53188
SIGNATURES
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.
APW 401(k) PLAN
Date: February 25, 2000 /s/ Richard D. Carroll
-------------------------------------
Richard D. Carroll
Plan Administrative Committee Member
APW 401(k) PLAN
Report on Audits of Financial Statements
As of and for the years ended August 31, 1999 and 1998
and Supplemental Schedules
for the year ended August 31, 1999
APW 401(k) Plan
Index
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Pages
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Report of Independent Accountants 2
Financial Statements:
Statements of Net Assets Available for Plan Benefits,
August 31, 1999 and 1998 3
Statements of Changes in Net Assets Available
for Plan Benefits for the years ended
August 31, 1999 and 1998 4
Notes to Financial Statements 5-9
Supplemental Schedules:
Item 27(a) - Schedule of Assets Held for Investment Purposes
as of August 31, 1999 10
Item 27(d) - Schedule of Reportable Transactions
for the year ended August 31, 1999 11
Report of Independent Accountants
APW 401(k) Plan
In our opinion, the accompanying statements of net assets available for plan
benefits and the related statements of changes in net assets available for plan
benefits, after the restatement described in Note 3, present fairly, in all
material respects, the net assets available for plan benefits of the APW 401(k)
Plan (the "Plan") at August 31, 1999 and 1998, and the changes in net assets
available for plan benefits for the years then ended, in conformity with
generally accepted accounting principles. 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 which 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, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for the opinion expressed above.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of (1) assets
held for investment purposes as of August 31, 1999, and (2) reportable
transactions for the year ended August 31, 1999, are presented for purposes 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 supplemental schedules 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.
The schedule of assets held for investment purposes does not disclose the
historical cost of plan assets. Disclosure of this information is required by
the Department of Labor's Rules and Regulations for Reporting and Disclosure
under the Employee Retirement Income Security Act of 1974.
PricewaterhouseCoopers LLP
Milwaukee, Wisconsin
February 11, 2000
APW 401(k) Plan
Statements of Net Assets Available for Plan Benefits
August 31, 1999 and 1998
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1999 1998*
------------ -----------
Assets
Investments $112,960,145 $77,420,248
Contributions receivable - participants 246,734 155,682
------------ -----------
Net assets available for plan benefits $113,206,879 $77,575,930
============ ===========
*Restated, see Note 3 of Notes to Financial Statements.
The accompanying notes are an integral part of these financial statements.
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APW 401(k) Plan
Statements of Changes in Net Assets Available for Plan Benefits
for the years ended August 31, 1999 and 1998
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1999 1998*
------------ -----------
Additions:
Investment income:
Interest and dividends $ 4,077,518 $ 1,212,197
Net appreciation (depreciation) in
fair value of investments 19,075,160 (9,846,059)
------------ -----------
Total investment income (loss) 23,152,678 (8,633,862)
------------ -----------
Contributions:
Employer 5,477,123 1,711,829
Rollovers 881,343 799,559
Participants 7,863,449 3,917,635
------------ -----------
Total contributions 14,221,915 6,429,023
------------ -----------
Total additions (reductions) 37,374,593 (2,204,839)
------------ -----------
Deductions:
Distributions to participants (8,556,752) (7,668,759)
Administrative expenses and other (32,924) (5,454)
------------ -----------
Total deductions (8,589,676) (7,674,213)
------------ -----------
Transfers from other plans 6,846,032 44,402,914
------------ -----------
Net increase 35,630,949 34,523,862
Net assets available for plan benefits:
Beginning of year 77,575,930 43,052,068
------------ -----------
End of year $113,206,879 $77,575,930
============ ===========
*Restated, see Note 3 of Notes to Financial Statements.
The accompanying notes are an integral part of these financial statements.
-4-
APW 401(k) Plan
Notes to Financial Statements
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1. Plan Description:
The following description of the APW 401(k) Plan provides only general
information. Participants should refer to the Summary Plan Description for a
more complete description of the Plan's provisions.
a. General: Prior to January 1, 1998, Applied Power Inc. (the "Company")
operated two retirement savings plans, the Applied Power Inc. Employee
Stock Ownership Plan (the "ESOP Plan") which had an August 31 plan year
end, and the Applied Power Inc. Employee Savings Plan (the "Savings
Plan") which had a December 31 plan year end. The ESOP Plan operated as
an employee stock ownership plan as defined in Section 4975(e)(7) of the
Internal Revenue Code. The Savings Plan operated as a 401(k) salary
reduction plan. On January 1, 1998, the Savings Plan was merged with the
ESOP Plan to become the APW 401(k) Plan (the "Plan"). The Savings Plan
and ESOP Plan were merged to consolidate trustee and administrative
functions.
Beginning January 1, 1998, the Plan operates as a 401(k) salary reduction
plan. Generally, all employees of the Company's domestic subsidiaries who
are scheduled to work at least 1,000 hours in a one-year period are
immediately eligible to participate in the Plan. Employees of acquired
companies are added to the Plan at the discretion of the Company. The
Plan allows participants to reduce their taxable income by making
voluntary contributions to the Plan on a "before-tax" basis in an amount
representing a fixed percent of their defined compensation, not to exceed
19%, subject to certain Internal Revenue Service limitations.
Participants are also allowed to make additional contributions not to
exceed 5% of their defined compensation on an "after-tax" basis, subject
to certain limitations. Plan participants have the ability to self-direct
their contributions into various funds.
For the period from September 1, 1997 to December 31, 1997, the
provisions of the ESOP Plan were in effect. Generally, all employees of
the Company and its domestic subsidiaries were eligible to participate in
the ESOP Plan. Employees of acquired companies were added to the ESOP
Plan at the discretion of the Company. An employee became eligible to
participate in the ESOP Plan on the first date on which the employee
completed an hour of service if such employee attained at least 1,000
hours of service during the plan year.
During 1999, $6,846,032 of net assets available for plan benefits were
transferred into the Plan from various other Plans. On January 1, 1998,
$44,402,914 of net assets available for plan benefits were transferred
into the Plan from the Savings Plan. Also on January 1, 1998, Fidelity
Institutional Retirement Services Company became the trustee of the Plan.
b. Company Contributions: The Company matches the first $300 of pre-tax
contributions by employees who were employed on the last day of the plan
year, even if the employee was not contributing on the last day, plus an
additional 25% of employee pre-tax contributions between $300 and 6% of
the participant's eligible compensation (after-tax contributions are not
matched).
At the end of each plan year, the Company makes a "core" contribution to
the accounts of all eligible participants. Employees must be employed at
plan year end and must have 1,000 or more hours of service in the plan
year to be eligible for the core contribution. The core contribution is
equal to 3% of defined compensation for that plan year, subject to
certain limitations. All Company contributions are invested in the APW
Stock Fund. Participants who are age 50 or older and fully vested are
eligible to invest one-half of their Company contribution into any of the
investment funds available under the Plan.
-5-
APW 401(k) Plan
Notes to Financial Statements, Continued
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1. Plan Description, Continued:
For the period from September 1, 1997 to December 31, 1997, under the ESOP
Plan provisions, eligible participants received contributions equalling 3%
of qualified compensation for each plan year, plus such additional amounts
as the Board of Directors of the Company determined from time to time.
The percentage of pay and any discretionary contributions were made in
cash or qualifying employer securities; however, all contributions were to
be made in cash if there was a stock obligation outstanding.
c. Investment Options: The Plan allows participants to direct the investment
of their contributions among several investment funds. The funds are
maintained by Fidelity Institutional Retirement Services Company. As of
August 31, 1999 and 1998, the Plan provided the following investment funds
in which participant contributions to the Plan could be invested:
Equity Growth (Magellan) Fund: Invests in common stocks seeking long-term
capital appreciation.
Growth Company Fund: Invests in stocks of companies with above-average
growth potential, aggressively seeking investment growth.
Intermediate Bond Fund: Invests in fixed income obligations with
intermediate maturities, seeking high levels of current income.
Balanced Fund: Invests in common and preferred stocks and bonds seeking
as much income as possible, consistent with preservation of capital.
International Growth and Income Fund: Invests in foreign securities
seeking capital growth and current income.
Low-Priced Stock Fund: Invests in equity securities that are considered
by the fund's management to be low-priced at the time of purchase ($25 or
less per share), seeking long-term capital appreciation.
Managed Income Portfolio Fund: Invests in short and long-term investment
contracts, seeking preservation of capital and a competitive level of
income over time.
Spartan U.S. Equity Index Portfolio Fund: Invests in stocks of companies
on the Standard & Poor's 500 Index, and seeks as much income as possible,
consistent with preservation of capital.
APW Stock Fund: Seeks to achieve long-term capital appreciation and
current income by investing in the common stock of Applied Power Inc.
d. Participant Accounts: Each participant's account is credited with the
participant's contribution, the Company's matching and core contributions,
and any additional Company contributions, an allocation of Plan earnings,
and charged with an allocation of administrative expenses. Allocations of
Plan earnings and administrative expenses are determined in accordance
with the proportion of a participant's account to all accounts. The
benefit to which a participant is entitled is the benefit that can be
provided from the participant's vested account.
e. Vesting: Participants are immediately vested in their salary deferred and
voluntary contributions. As of January 1, 1998, vesting in the Company's
contribution portion of their accounts plus actual earnings thereon is
based on years of continuous service. Benefits from employer contributions
are vested at 50% after three years of credited service and 100% after
five years of credited service.
-6-
APW 401(k) Plan
Notes to Financial Statements, Continued
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1. Plan Description, Continued:
As of January 1, 1998, participant accounts under the Savings Plan and
ESOP Plan are subject to special vesting provisions as follows:
Years of Vesting Savings Plan Company Plan Matching "Core" Contribution
Service Contribution Account Contribution Account Account
---------------- -------------------- -------------------- -------------------
Less than 3 100% vested 50% after 3 years; 50% after 3 years;
100% after 5 years 100% after 5 years
3 or more 100% vested 100% vested 50% after 3 years
100% after 5 years
f. Payment of Benefits: Withdrawals are subject to the limitations of Section
401(k) of the Internal Revenue Code. Upon retirement or death, the
participant or his beneficiary is entitled to 100% of the participant's
and vested employer contributions plus allocated earnings of the Plan.
Participants or their beneficiaries can elect to receive their benefit
payments either in a lump sum or in installments. Benefit payments
requested but unprocessed amounted to approximately $200,000 and $420,000
at August 31, 1999 and 1998, respectively.
g. Participant Loans: Participants may borrow from their vested fund
accounts, with the exception of amounts designated as core contributions,
a minimum of $1,000 up to a maximum equal to the lesser of $50,000 or 50%
of their vested account balance. Loan transactions are treated as a
transfer to (from) the investment fund from (to) participant loan
accounts. Loan terms range from 1 to 5 years or up to 20 years for the
purchase of a primary residence. The loans are collateralized by the
balance in the participant's account and bear interest at prime plus one
percent. Principal and interest are payable ratably through payroll
deductions.
h. Forfeited Accounts: Any non-vested portions of terminated accounts will be
used to reduce future employer contributions. Forfeitures amounted to
$401,000 and $689,000 for the Plan years ended August 31, 1999 and 1998,
respectively.
2. Summary of Significant Accounting Policies:
The following is a summary of the Plan's significant accounting policies.
a. Estimates: The Plan prepares its financial statements in conformity with
generally accepted accounting principles, which requires management to
make estimates and assumptions which affect the reported amounts of net
assets available for plan benefits at the date of the financial statements
and the changes in net assets available for plan benefits during the
reporting period and, when applicable, disclosures of contingent assets
and liabilities at the date of the financial statements. Actual results
could differ from those estimates.
b. Basis of Presentation: The accompanying financial statements have been
prepared on the accrual basis of accounting, including investment
valuation and income recognition. Investments of the Plan are stated at
fair market value determined by quoted prices in an active market.
Purchases and sales of investments are recorded on a trade date basis.
-7-
APW 401(k) Plan
Notes to Financial Statements, Continued
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2. Summary of Significant Accounting Policies, Continued:
c. Investment Income: In accordance with the policy of stating investments at
fair value, net appreciation or depreciation in the fair value of
investments includes realized and unrealized gains and losses for the
year. Interest income is recorded on the accrual basis and dividend income
is recorded when reported as received by the trustee.
d. Contributions: Contributions from employees are recorded in the period the
Company makes payroll deductions from the Plan participants. Employer
contributions are funded currently.
e. Payment of Benefits: Benefits are recorded when paid.
f. Administrative Expenses: Certain fees charged by the trustee are paid by
the Plan. All other administrative expenses are paid by the Company at no
cost to the Plan.
Under the provisions of the ESOP Plan for the period from September 1,
1997 to December 31, 1997, all expenses incurred by the ESOP Plan,
including periodic fees charged by the service providers to the ESOP Plan,
were reimbursed or paid directly by the Company.
3. Restatement of 1998 Financial Statements:
The 1998 financial statements have been restated to properly reflect the
employer contributions. This resulted in the decrease of employer
contributions receivable and net assets available for Plan benefits in the
Statement of Net Assets Available for Plan benefits at August 31, 1998, and
employer contributions in the Statement of Changes in Net Assets Available
for Plan Benefits for the year ended August 31, 1998, in each case, by
$3,819,311.
4. Investments:
The following investments represent five percent or more of the Plan's net
assets at August 31, 1999 and 1998:
1999 1998
----------- -----------
Fidelity Equity Growth (Magellan) Fund $23,659,752 $14,952,379
Fidelity Balanced Fund 9,421,095 6,814,290
Fidelity Managed Income Portfolio Fund 12,043,510 11,213,210
Fidelity Spartan U.S. Equity Index Portfolio Fund 10,488,307 6,084,184
APW Stock Fund 44,463,023 31,790,606
5. Tax Status:
The Plan obtained its latest determination letter as of May 8, 1998, in which
the Internal Revenue Service stated that the Plan as then designed, was in
compliance with the applicable requirements of the Internal Revenue Code.
The Plan has been amended since receiving that determination letter and
applied for a new determination. However, the plan administrator believes
that the Plan is currently designed and being operated in compliance with the
applicable requirements of the Internal Revenue Code.
-8-
APW 401(k) Plan
Notes to Financial Statements, Continued
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6. Plan Termination:
Although it has not expressed any intent to do so, the Company has the right
under the Plan to discontinue its contributions at any time and to terminate
the Plan, subject to the provisions of ERISA. In the event of Plan
termination, participants will become fully vested in their accounts.
7. Related Party Transactions:
Plan investments are held and managed by Fidelity Institutional Retirement
Services Company (Fidelity). Fidelity is the trustee of the Plan, custodian
of the assets of the Plan and processes the daily transactions of the Plan.
The APW Stock Fund invests in the stock of the Company. Therefore,
transactions with Fidelity and the Company qualify as party-in-interest
transactions. These transactions are not, however, considered prohibited
transactions under section 408(b) of the ERISA regulations. At August 31,
1999 and 1998, 39% and 41% respectively, of the Plan's total investments were
invested in the APW Stock Fund.
8. Reconciliation of Financial Statements to Form 5500:
The following is a reconciliation of net assets available for plan benefits
per the financial statements to the Form 5500 at August 31, 1999 and 1998.
1999 1998
------------ -----------
Net assets available for plan benefits per the
financial statements $113,206,879 $77,575,930
Amounts allocated to withdrawing participants (199,893) (420,655)
------------ -----------
Net assets available for plan benefits per Form 5500 $113,006,986 $77,155,275
============ ===========
The following is a reconciliation of distributions to participants per the
financial statements to benefits paid to participants per the Form 5500 for
the year ended August 31, 1999.
Distributions to participants per the financial statements $8,556,752
Add: Amounts allocated to withdrawing participants at
August 31, 1999 199,893
Less: Amounts allocated to withdrawing participants at
August 31, 1998 (420,655)
----------
Benefits paid to participants per the Form 5500 $8,335,990
==========
Amounts allocated to withdrawing participants are recorded on Form 5500 for
benefit claims that have been processed and approved for payment prior to
August 31 but not yet paid as of that date.
-9-
APW 401(k) Plan
Item 27a -- Schedule of Assets Held for Investment Purposes
August 31, 1999
- --------------------------------------------------------------------------------
Column A Column B Column C Column E
- ---------- ----------------------------------- ---------------------------------------------------- --------------
Identity of Issuer,
Borrower, Lessor Current
or Similar Party Description of Investment Value
- ---------- ----------------------------------- ---------------------------------------------------- --------------
* Fidelity Investments Institutional 191,035.544 shares, Equity Growth (Magellan) Fund,
Service Company $123.85 net asset value $ 23,659,752
* Fidelity Investments Institutional 79,206.836 shares, Growth Company Fund,
Service Company $64.05 net asset value 5,073,198
* Fidelity Investments Institutional 159,022.376 shares, Intermediate Bond Fund,
Service Company $9.84 net asset value 1,564,780
* Fidelity Investments Institutional 543,943.130 shares, Balanced Fund,
Service Company $17.32 net asset value 9,421,095
* Fidelity Investments Institutional 77,522.737 shares, International Growth and Income
Service Company Fund, $24.17 net asset value 1,873,725
* Fidelity Investments Institutional 104,126.507 shares, low-priced Stock Fund,
Service Company $23.31 net asset value 2,427,189
* Fidelity Investments Institutional 12,043,509.530 shares, Managed Income Portfolio
Service Company Fund, $1.00 net asset value 12,043,510
* Fidelity Investments Institutional 222,728.978 shares, Spartan U.S. Equity Index
Service Company Portfolio Fund, $47.09 net asset value 10,488,307
* Applied Power Inc. 1,451,617 shares, APW Stock Fund,
$30.63 net asset value 44,463,023
* Plan Participants Participants loans, interest
from 8.75 - 9.50% 1,945,566
------------
$112,960,145
============
* Party-in-interest transactions, which are exempt from prohibited transaction
rules under Section 408(b) ERISA.
(A) Column D, Cost, is omitted as the information is not available from the
trustee.
See Report of Independent Accountants.
- 10 -
APW 401(k) Plan
Item 27d--Schedule of Reportable Transactions
for the year ended August 31, 1999
- ---------------------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column G Column I
- ------------------------------- ------------------- ------------- ----------------- -------------- ---------------
Identity of Party Involved Description of Purchase Selling Cost of Net Gain
Asset Price Price Asset or (Loss)
- ------------------------------- ------------------- ------------- ----------------- -------------- ---------------
Fidelity Equity Growth
(238) purchases (Magellan) Fund $ 7,716,147 $ 4,501,205 $ 3,531,699 $ 969,506
(207) sales
Fidelity Growth Company
(209) purchases Fund 2,988,627 976,559 847,031 129,528
(155) sales
Fidelity Balanced Fund
(208) purchases 2,840,991 1,374,120 1,218,326 155,794
(167) sales
Fidelity Managed Income
(211) purchases Portfolio Fund 4,591,110 3,760,811 3,760,811 --
(190) sales
Fidelity Spartan U.S.
(221) purchases Equity Index Fund 3,659,208 1,665,493 1,262,741 402,752
(172) sales
Applied Power Inc. APW Stock Fund
(221) purchases 9,600,845 4,903,178 3,045,461 1,857,717
(192) sales
(A) The numbers disclosed in parentheses represent the number of transactions in
a series of transactions. A single transaction is reported as a part of a
series of transactions, whenever possible.
(B) Column E, Lease Rental, is omitted as it is not applicable.
(C) Column F, Expense Incurred with Transaction, is omitted, as the price
reported is net of commission or expense, if any.
(D) Column H, Current Value of Asset of Transaction Date, is omitted, as there
are no deviations of purchase price and selling price from the current value
on the transaction date.
See Report of Independent Accountants.
-11-