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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
For the year ended December 31, 1999
Commission File Number 1-5828
SAVINGS PLAN OF CARPENTER TECHNOLOGY CORPORATION (Full title of the plan)
CARPENTER TECHNOLOGY CORPORATION (Name of issuer of the securities held pursuant to the plan)
1047 N. Park Rd. Wyomissing, Pennsylvania 19610-1339 (Address of principal executive office of the issuer)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, Carpenter Technology Corporation has duly caused this annual report to be signed on its behalf by the undersigned thereunto duly authorized.
SAVINGS PLAN OF CARPENTER TECHNOLOGY CORPORATION (Name of Plan)
Date June 27, 2000 By /s/ G. Walton Cottrell G. Walton Cottrell Senior Vice President - Finance and Chief Financial Officer
Financial Statements and Exhibits
(a) Financial Statements
The financial statements filed as part of this report are listed in the Index to Financial Statements included herein.
(b) Exhibits
(1) Consent of Independent Accountants
CARPENTER TECHNOLOGY CORPORATION SAVINGS PLAN INDEX TO FINANCIAL STATEMENTS FORM 11-K ANNUAL REPORT
Report of Independent AccountantsFinancial Statements:Statement of Net Assets Available for Benefits as of December 31, 1999 and 1998 Statement of Changes in Net Assets Available for Benefits for the years ended December 31, 1999 and 1998 Notes to Financial Statements Supplemental Schedule: Assets Held for Investment as of December 31, 1999 Consent of Independent Accountants
REPORT OF INDEPENDENT ACCOUNTANTS
To the Participants and Administrator of the Savings Plan of Carpenter Technology Corporation:In our opinion, the accompanying statements of net assets available for benefits and the related statements of changes in net assets available for benefits present fairly, in all material respects, the net assets available for benefits of the Savings Plan of Carpenter Technology Corporation (the "Plan") at December 31, 1999 and 1998, and the changes in net assets available for benefits for the years then ended in conformity with accounting principles generally accepted in the United States. 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 of these statements in accordance with auditing standards generally accepted in the United States, 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 schedule of Assets Held for Investment as of December 31, 1999 is presented for the purpose of additional analysis and is not a required part of the basic financial statements but is 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. This supplemental schedule is the responsibility of the Plan's management. The supplemental schedule has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.PricewaterhouseCoopers LLP Philadelphia, PA June 23, 2000
CARPENTER TECHNOLOGY CORPORATION |
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STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS |
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as of December 31, 1999 and 1998 |
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(dollars in thousands) |
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ASSETS |
1999 |
1998 |
Investments, at fair value |
$ 308,225 |
$ 286,350 |
Receivables: |
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Investment income receivable |
366 |
381 |
Miscellaneous receivables |
35 |
64 |
Total receivables |
401 |
445 |
Total assets |
308,626 |
286,795 |
LIABILITIES |
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Accrued administration expenses |
249 |
48 |
Loans payable |
31 |
- |
Total liabilities |
280 |
48 |
Net assets available for benefits |
$ 308,346 |
$ 286,747 |
The accompanying notes are an integral part of these financial statements.
SAVINGS PLAN OF |
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CARPENTER TECHNOLOGY CORPORATION |
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STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS |
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for the years ended December 31, 1999 and 1998 |
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(dollars in thousands) |
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1999 |
1998 |
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Additions to net assets attributed to: |
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Investment income: |
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Net appreciation in fair value of investments |
$ 18,540 |
$ 11,127 |
Interest |
5,538 |
5,580 |
Dividends |
4,543 |
2,908 |
28,621 |
19,615 |
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Contributions: |
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Salary deferral |
10,239 |
11,774 |
Participant |
2,336 |
2,663 |
Rollover |
194 |
522 |
Company basic |
4,912 |
5,107 |
17,681 |
20,066 |
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Total additions |
46,302 |
39,681 |
Deductions from net assets attributed to: |
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Benefits paid to participants |
23,400 |
17,461 |
Administrative expenses |
1,303 |
811 |
Total deductions |
24,703 |
18,272 |
Net increase |
21,599 |
21,409 |
Net assets available for benefits: |
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Beginning of year |
286,747 |
265,338 |
End of year |
$ 308,346 |
$ 286,747 |
The accompanying notes are an integral part of these financial statements.
SAVINGS PLAN OF CARPENTER TECHNOLOGY CORPORATION NOTES TO FINANCIAL STATEMENTS
1. Description of Plan: The following description of the Savings Plan of Carpenter Technology Corporation (the Plan) provides only general information. A more comprehensive description of the Plan's provisions can be found in the Plan document, which is available to participants upon request from Carpenter Technology Corporation or any participating affiliate (collectively referred to as the "Company".)
General: The Plan is a profit-sharing and stock bonus plan which covers substantially all domestic employees of the Company in core Specialty Alloys Operations and Carpenter Specialty Wire Products, all domestic employees of Carpenter Special Products Corporation, and certain other employees of Engineered Products Group, and corporate office employees. It is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA), as amended.
Contributions: Each year, participants may contribute up to 17 percent of pretax annual compensation (known as salary deferral contributions), and up to 17 percent of after-tax annual compensation (known as participant contributions), as defined in the Plan. The combined contributions cannot exceed 17 percent of total compensation. Participants may also contribute amounts representing distributions from other qualified defined benefit or defined contribution plans (known as rollovers). The Company contributes an amount equal to three percent of each employee's base pay (known as company basic contributions). Contributions are subject to certain limitations. All contributions are funded with an independent trustee.
Participant's Accounts: Four accounts are maintained for each participant which are credited with contributions and Plan net earnings on funds invested within the respective accounts, as follows:
- Long-term savings account - credited with company basic and salary deferral contributions, both of which are participant directed; - Thrift account - credited with participant contributions, which are participant directed; - Profit Sharing Account - credited with Company contributions prior to 1988, which were non-participant directed. No further contributions may be made to this account, and participants cannot transfer amounts to other investment funds.
- Rollover Account - credited with rollover contributions, which are participant directed.
Vesting: All contributions and Plan earnings thereon are 100 percent vested and nonforfeitable. Investment Funds: The Plan maintains nine investment funds. Each participant may designate separately the investment fund or funds in which the Long-Term Savings Account, Thrift Account or Rollover Account are to be invested. The Profit Sharing Account may be invested only in the Carpenter Technology Stock Fund. A brief description of each investment fund is as follows: - Fixed Income Fund (Selection Fund for Employee Trusts of State Street Bank and Trust Company) - a fund invested primarily in guaranteed investment contracts, or similar insurance company or bank investments. - U.S. Government Money Market Fund (Short-term Fund for Government Securities of State Street Bank and Trust Company) - a fund invested in U.S. Government short-term money market obligations or securities. - Balanced Fund (American Balanced Fund) - a fund invested in a portfolio of securities including common and preferred stocks, corporate bonds, U.S. government securities, cash or cash equivalents. - Equity Index Fund (BZW Barclays' Equity Index Fund) - a fund invested primarily in common stocks of virtually all issues in the Standard and Poor's 500 Index. - Broad-based Equity Fund (Matrix Synthesis Fund for Employee Trusts of State Street Bank and Trust Company) - a fund invested in common stocks and other equity securities. - Carpenter Technology Stock Fund - a fund invested primarily in Company common stock. - International Equity Fund (Euro-Pacific Growth Fund) - a fund invested in securities outside the U.S. - Mid-Cap Equity Fund (Putnam Vista Fund) - a fund invested primarily in the stocks of medium-sized companies. - Intermediate Bond Fund (Putnam Income Fund) - a fund invested primarily in fixed income securities, such as government debentures and corporate bonds.
Participant Loans: Loans are available from the long-term savings account to participants who are active employees of the Company. Participants are subject to certain restrictions on their number of loans, amount and term of repayment. Interest is charged at the prime rate for commercial lenders at the time the loan is initiated, plus one percent. Loan repayments are required monthly, and payment in full is required at the time of the participant's separation.
Benefits Paid to Participants: Benefits paid to participants include participant distributions, withdrawals and loan settlements. Participants are entitled to a lump sum distribution upon separation from service, occurrence of a permanent disability or after attainment of age 59-1/2. Upon separation, a participant may elect to defer such distribution, provided the account balance is at least $5,000. The distribution of benefits to all separated participants must begin no later than the latter of December 31 of the year in which the participant retires or attains age 70-1/2. Upon attainment of age 59-1/2, participants may make withdrawals from any account without limitation. Prior to age 59-1/2, the following order applies: 1) Thrift, profit sharing and rollover accounts, balance available at any time. 2) Long-term savings account, subject to certain hardship restrictions. Benefits paid to participants are in cash, except that distribution of accounts which consist of investments in the Carpenter Technology Stock Fund shall be made in shares of the Company's common stock or cash, at the participant's option. Administrative Expenses: All fees directly related to the Plan are paid by the Plan.Plan Termination: Although it has not expressed an 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 and any contractual obligations. In the event of termination or partial termination of the Plan, or discontinuance of contributions by the Company, the rights of all participants to amounts credited to their accounts shall be nonforfeitable.
Summary of Significant Accounting Policies:
A. The financial statements of the Plan are prepared under the accrual method of accounting. B. The Plan adopted Statement of Position (SOP) No. 99-3, "Accounting for and Reporting of Certain Defined Contribution Benefit Plan Investments and Other Disclosure Matters." SOP 99-3 simplifies the presentation and disclosure of by-fund information for participant directed investments.
C. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and changes therein, and disclosure of contingent assets and liabilities. Actual results could differ from those estimates. D. The investment in common stock of Carpenter Technology Corporation is stated at fair value based on the last reported sales price as quoted on the New York Stock Exchange. The investment in the other trust funds are stated at their fair value, based on the current market values of the underlying assets of the funds, or as determined by the trustee. Purchases and sales of investments are reflected on a trade-date basis. Gain or loss on sales of investments is based on average cost. Dividend income is recorded on the ex-dividend date. Income from other investments is recorded as earned on an accrual basis. E. The net appreciation (depreciation) in the fair value of investments in the statement of changes in net assets available for benefits consists of realized gains or losses and unrealized appreciation (depreciation) on investments. F. Benefits are recorded when paid. G. Investments are exposed to various risks, such as interest rate, market and credit risks. Due to the level of risk associated with certain investments and the level of uncertainty related to changes in the value of investments, it is reasonably possible that changes in these risks in the near term could materially affect the amounts reported in the statement of net assets available for benefits and the statement of changes in net assets available for benefits.
Investments: The following presents investments that represent 5 percent or more of the Plan's net assets. (Shares and dollars in thousands)
at December 31 |
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1999 |
1998 |
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Selection
Fund for Employee Trusts of State Street Bank and |
$ 54,651 |
$ 55,751 |
Carpenter
Technology Stock Fund, 1,814 and 1,310 shares, |
$ 49,776 |
$ 44,454 |
BZW
Barclay's Equity Index Fund, 975 and 943 shares, |
$ 39,647 |
$ 31,698 |
Matrix
Synthesis Fund for Employee Trusts of State Street |
$108,955 |
$108,777 |
* Includes non
participant-directed total of $2,232 and $2,961, |
During 1999 and 1998, the Plan's investments (including gains and losses on investments bought and sold, as well as held during the year) appreciated in value by $18,540,000 and $11,127,000 as follows:
(in thousands) |
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1999 |
1998 |
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Registered investment companies |
$ 18,484 |
$ 20,325 |
Common stock |
(6,587) |
(15,907) |
Collective trusts |
6,643 |
6,709 |
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$ 18,540 |
$ 11,127 |
Nonparticipant-Directed Investments: Information about the net assets and the significant components of the changes in net assets relating to the nonparticipant-directed investments is as follows:
at December 31 |
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1999 |
1998 |
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(dollars in thousands) |
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Net Assets: | ||
Carpenter Technology Corporation common stock |
$ 2,232 |
$ 2,961 |
Year ended December 31 |
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1999 |
1998 |
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(dollars in thousands) |
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Changes in net assets: |
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Dividends |
$ 80 |
$ 121 |
Net appreciation |
(550) |
(1,227) |
Benefits paid to participants |
(259) |
(380) |
$ (729) |
$ (1,486) |
Tax Status:
The Internal Revenue Service has determined and informed
the Company by letter dated
June 7, 1995, that the Plan and related trust are
designed in accordance with applicable
sections of the Internal Revenue Code (IRC).
Although the Plan has been amended since
receiving the determination letter, the Plan
administrator and the Plan's tax counsel believe
that the Plan is designed and is currently being operated
in compliance with the applicable
requirements of the IRC. A request for an updated
determination letter is pending with the
Internal Revenue Service.
Reconciliation
of Financial Statements to Form 5500
The following is a reconciliation of net assets available
for benefits per the financial
statements to the Form 5500:
Yr Ended |
Yr Ended |
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12/31/99 |
12/31/98 |
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(dollars in thousands) |
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Net assets available for benefits per the financial statements |
$ 308,346 |
$ 286,747 |
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Amounts allocated to withdrawing participants |
(102) |
(342) |
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Net assets available for benefits per the Form 5500 |
$ 308,244 |
$ 286,405 |
The following is a reconciliation of benefits paid to participants per the financial statements to the Form 5500:
Yr Ended |
Yr Ended |
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12/31/99 |
12/31/98 |
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(dollars in thousands) |
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Benefits paid to participants per the financial statements |
$ 23,400 |
$ 17,461 |
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Add: Amounts allocated to withdrawing participants |
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at current year end |
102 |
342 |
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Less: Amounts allocated to withdrawing participants |
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at previous year end |
(342) |
(114) |
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Benefits paid to participants per the Form 5500 |
$ 23,160 |
$ 17,689 |
Amounts allocated to withdrawing participants are recorded on the Form 5500 for benefit claims that have been processed and approved for payment prior to December 31 but not yet paid as of that date.
Savings Plan of Carpenter Technology Corporation Schedule H, Part IV, Item 4i - Schedule of Assets Held for Investment Purposes December 31, 1999
(A) |
(B) |
(C) Description of investment, including |
(D) |
(E) |
Identity of issue, borrower, lessor or similar party |
maturity date, rate of interest, collateral, |
Cost |
Current |
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par or maturity value |
Value |
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Selection Fund for
Employee Trusts |
Common / Collective Trust |
$54,651,111 |
$54,651,111 |
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* |
Carpenter
Technology Corporation |
Corporate Stocks - Common |
$55,022,263 |
$49,775,521 |
BZW Barclays Equity Index Fund |
Collective Trust |
$25,181,197 |
$39,646,811 |
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Putnam Income Fund |
Registered Investment Company |
$954,563 |
$890,995 |
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Putnum Vista Fund |
Registered Investment Company |
$8,158,031 |
$10,389,096 |
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Euro Pacific Growth Fund |
Registered Investment Company |
$5,988,066 |
$7,483,779 |
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Participant Loans |
Loans to Participants - interest rate range 6.74% to 11.5%; no loans due past 1/1/2010 |
$0 |
$11,874,533 |
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American Balanced Fund |
Registered Investment Company |
$8,129,424 |
$7,729,550 |
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Matrix Synthesis
Fund for Employee |
Registered Investment Company |
$50,675,305 |
$108,955,216 |
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* |
Short-Term Fund for
Government |
Interest Bearing Cash |
$6,498,676 |
$6,498,676 |
* |
State Street Bank
and Trust |
Interest Bearing Cash |
$10,330,045 |
$10,330,045 |
* Party-in-Interest |
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (No. 2-83780) of Carpenter Technology Corporation of our report dated June 23, 2000 relating to the financial statements of the Savings Plan of Carpenter Technology Corporation, which appears in this Form 11-K.
PricewaterhouseCoopers LLP Philadelphia, PA June 27, 2000
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