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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES AND EXCHANGE ACT OF 1934 [FEE REQUIRED]
FOR THE FISCAL YEAR ENDED: MARCH 31, 1995
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
FOR THE TRANSITION PERIOD FROM _______________ TO _______________
COMMISSION FILE NUMBER: 0-14161
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ANALYSIS & TECHNOLOGY, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
CONNECTICUT 95-2579365
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
ROUTE 2
P.O. BOX 220
NORTH STONINGTON, CONNECTICUT 06359
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (203) 599-3910
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: COMMON STOCK,
NO PAR VALUE
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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes /x/ No / /
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K ((xi) 229.405 of this chapter) is not contained herein,
and will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. / / [Added in Release No. 34-28869
(Paragraph 84,709), effective May 1, 1991, 56 F.R. 7242.]
The aggregate market value of the common stock held by shareholders
considered by the registrant for this purpose to be non-affiliates of the
registrant on June 20, 1995 was approximately $29,292,794, based upon the last
reported sales price of the common stock on the NASDAQ National Market System on
that date.
Number of shares of common stock, no par value, outstanding at June 20,
1995: 2,377,390
DOCUMENTS INCORPORATED BY REFERENCE
The following documents are hereby incorporated herein by reference:
Certain information in Parts I and II of the Form 10-K is incorporated by
reference from the registrant's 1995 Annual Report to shareholders.
Certain information in Part III of the Form 10-K is incorporated by
reference from the registrant's Proxy Statement for the 1995 Annual Meeting of
Shareholders to be held on August 8, 1995.
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PART I
ITEM 1. BUSINESS.
General
Analysis & Technology, Inc. ("A&T") was incorporated in
Connecticut in 1969. A&T initially provided tactical analysis to the Office of
Naval Research and sonar analysis to the Naval Underwater Systems Center, now
known as the Naval Undersea Warfare Center. During the past twenty-six years,
A&T and its subsidiaries ("the Company") have expanded the Company's business
to provide engineering services, interactive multimedia systems, and
information technology services for the military, civil government agencies,
and private industry.
The Company is implementing a strategic plan to continue
building its business with the Department of Defense while transferring its
technologies in interactive multimedia and information processing to additional
government and commercial markets. In recent years, the Company has created
several new business units through internal development and acquisition in
connection with the implementation of this strategic plan, and may create
additional business units in the future.
A&T has the following wholly owned subsidiaries:
- Applied Science Associates, Inc. ("ASA"), which designs
and implements training programs and provides system
analysis and human factors engineering services to private
industry and government;
- General Systems Solutions, Inc. ("GSS"), which provides
computer-driven systems for civil and military
applications and is developing and implementing
transaction processing systems;
- Analysis & Technology Australia Pty. Ltd. and Analysis &
Technology International Corporation, each of which
provide training systems to international markets;
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- Integrated Performance Decisions, Inc. ("IPD"), which
develops and implements performance decision software
products for U.S. Navy (the "Navy") customers and provides
software and information technology products and services
for commercial customers. In fiscal 1995, IPD formed a
Canadian subsidiary, Numerical Decisions Group Inc., to
perform similar work, primarily for the Canadian
Government; and
- Prism-Dae, Inc. and Continental Dynamics, Inc. ("CDI")
which are companies with limited resources holding
contracts with the Federal Office of Personnel Management
for services in government training and information
resource management. Most work contracted through these
companies is subcontracted to other business units in A&T.
CDI actively provided manpower development training,
information resource management, engineering management,
program management and engineering consulting until April
1995, when its staff was transferred to other A&T business
units.
The principal office and corporate offices of the Company are
in North Stonington, Connecticut. The Company presently employs 1,535
full-time employees at 39 offices in 12 states, Australia and Canada.
In February 1986, the Company conducted an underwritten public
offering of its common shares. Since that time, the Company's stock has traded
on the NASDAQ National Market under the symbol AATI.
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3
Products and Services
The Company provides professional and technical services to
commercial and government clients. The three main categories of the Company's
business are: engineering services, interactive multimedia systems, and
information technology. Although separately described below, these categories
overlap and should not be considered separate and distinct areas of business.
ENGINEERING SERVICES
The Company provides engineering services primarily for the
Navy and, to a lesser extent, for other military and government agency
customers. The Company's revenue from engineering services for fiscal 1995 was
approximately $94 million.
Company engineers and analysts assist the Navy in the
definition, design, and specification of new shipboard systems and upgrades to
existing systems. For example, they may assess the performance of current and
proposed systems under geographically diverse combat conditions and alternative
ship design configurations. They also evaluate new technologies for potential
use in future Navy combat systems. With respect to testing and evaluation,
they design at-sea tests and evaluate system performance for Navy combat
systems. They also participate in at-sea tests and support and evaluate the
computer analysis of performance test data.
The development and revision of tactical doctrine for the
Navy's submarines and surface ships is supported by the Company. Much of this
work involves planning and evaluating exercises at sea; deriving information on
system, platform, and battle group performance; and incorporating this
information into applicable tactical doctrine.
Company engineers provide systems engineering, development,
acquisition, and life-cycle logistics support to the Navy. A prototype system
that has been shown to meet its performance objectives requires additional
systems engineering, development, acquisition, and full life-cycle support if
it is to be introduced to the fleet and kept operational and up-to-date.
Company engineers are also closely involved in incorporating commercial
off-the-shelf (COTS) technology into naval systems. The Navy has strongly
endorsed COTS technology as a means for significantly reducing the costs of
system development, update, and maintenance.
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Company engineers and technicians also provide hardware design
and engineering, human factors engineering, system- level integration, and
software performance analysis for new submarine, surface ship, and airborne
systems. They are involved in the fleet integration and certification of new
systems that have entered full-scale production, and perform on-board checks,
alter electronic equipment configurations, and install and test systems. They
groom and repair naval systems dockside, at sea, and at the Company's
facilities.
New special-applications hardware is fabricated by Company
personnel using computer-aided design systems where appropriate. They also
rebuild and refurbish used equipment. A&T's GSS subsidiary supports the Navy
in the design, development, fabrication, and pre-delivery testing of mechanical
minesweeping systems.
In addition to engineering and hands-on system support,
Company engineers provide related planning and management support, including
logistics planning, equipment acquisition management, parts inventory control,
facilities design, and technical design drawings and illustrations. They write
and verify test procedures for many of the electronic systems on submarines and
surface ships, and prepare operator and maintenance manuals for shipboard
systems.
INTERACTIVE MULTIMEDIA SYSTEMS
The Company provides interactive multimedia system design,
development, and evaluation services. These services frequently are provided
for training applications. The Company also develops paper-based and
instructor-led training programs. This multimedia/training work is done for
defense, civil government, and commercial customers and generated approximately
$18 million of the Company's revenue in fiscal 1995.
Interactive multimedia systems combine multimedia content,
including computer-generated graphics and animation, full motion video and high
fidelity audio, with applications software, computer-based networks, and
enterprise-wide data bases. These systems are developed using the combined
talents of the Company's computer, communication, training, and subject matter
experts. Interactive multimedia-based training allows students to proceed at
their own pace, at their own work site and, in general, achieve training
objectives more quickly than with non-interactive forms of training.
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When working with defense customers, Company training
specialists provide training materials and systems for submarine, surface ship,
and aircraft systems. This includes combat systems training in classrooms,
dockside, and on-board ship. They coordinate the development of operationally
accurate instruction materials, compile system modeling data, and develop
training scenarios. When working with civil government and commercial
customers, they provide a variety of custom training and performance support
systems, with strengths in medical training, sales training, equipment repair
technician training, and equipment maintenance procedures training.
The Company's interactive multimedia group currently includes
personnel providing interactive multimedia products and services within the
Company's defense-related operations and in the Company's subsidiaries, ASA and
IPD.
INFORMATION TECHNOLOGY
The Company provides system integration and computer-based
information technology products and services, including advanced software, data
base management, local and wide area networks, and telecommunication services
for government and commercial customers. The Company's revenue from
information technology products and services for fiscal 1995 was approximately
$20 million.
Company software engineers perform real-time object oriented
applications programming in an open architecture environment. They support the
design and development of systems for the automatic, event-triggered,
computation and analysis of tactical data. They develop, integrate, document,
and test software and develop computerized tactical performance aids for
submarines, surface ships, aircraft, and land-based facilities.
Information technology services are provided to support
complex systems, programs, and organizations for the Navy and other customers.
These systems track and assess numerous activities and events, support risk
analysis and decision making, and fulfill extensive reporting requirements.
Company software engineers and programmers develop and maintain computerized
data bases for acquisition strategy development and engineering assessment of
decision options. They also support program planning and scheduling,
engineering change assessment and control, inventory control, equipment
maintenance, financial control and budget justification, and documentation
libraries.
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A&T's GSS subsidiary provides transaction processing software
and systems, including computer network, data base, and telecommunications
system design and implementation. The GSS On-Line Registration System (OLRS)
enables users to register vehicles from their office over a personal computer
network operated by GSS and linked to the mainframe at a state's Department of
Motor Vehicles. OLRS is operational in Connecticut, New York and New Jersey
for lease and rental companies and is also available to new car dealers in New
York. In addition to OLRS, GSS has agreements for processing New York custom
license plate requests and for identifying Connecticut uninsured motorists.
Written contracts and final system approval were required in
each state before OLRS commenced commercial operation. The agreements between
GSS and each state motor vehicle department were individually negotiated. In
each case, the contract terms include non-exclusivity provisions and provisions
permitting termination by the agencies on short notice.
A&T's IPD subsidiary provides software services and products
to various Navy and commercial customers.
Automation Software Incorporated ("ASI"), the Company's joint
venture with Brown & Sharpe Manufacturing Company, provides software to the
precision measurement (metrology) industry for data collection and analysis and
to the factory automation market for inspection and manufacturing operations.
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Contracts
The Company generates a substantial amount of its revenue from
contracts with agencies of the U.S. Government (the "Government"). Government
contracts obtained by the Company are generally competitive in nature and are
usually awarded on the basis of price and technical capability. Contracts
typically provide for either a general range of tasks to be performed over a
number of years or for specific services to be provided over a shorter period.
While task-type contracts have an absolute dollar ceiling, the customer has
complete discretion to allocate the funds among the range of contracted tasks.
Additionally, many of the Company's contracts require the issuance of delivery
orders, the periodic addition of funds, or the exercise of annual options by
the customer.
The Company's contracts with the Government typically are
structured as one of the following: (i) cost- reimbursement; (ii)
time-and-materials; or (iii) fixed-price.
Under cost-reimbursement contracts, the customer reimburses
the Company for contracted costs within cost categories permitted by Government
regulations. The Company is paid a fee in addition to its costs. Reimbursable
costs include direct labor and other direct costs, allocated overhead, and
general and administrative costs, but exclude interest expense, donations, and
certain other costs. Indirect costs are reimbursed at the lower of actual or
estimated costs, and if the Company revises its estimated costs, the revised
cost estimates will be applied prospectively to previously executed
cost-reimbursement contracts. The fee is either fixed at the time of award
(fixed fee), at a fixed hourly rate paid as hours of service are provided
(hourly fee), or is awarded based on performance, at the sole discretion of
the Government (award fee). The majority of the Company's cost- reimbursement
contracts are either cost plus a fixed fee or hourly fee contracts. The
contracts may either require completion of defined tasks or delivery of a
specific number of hours of service. The current trend continues to be to
contracts of the latter type. The total of the cost and the fee cannot exceed
the ceiling set forth in the contract. If a contracted task has not been
completed or the specific number of hours of service have not been delivered at
the time the authorized cost is expended, the Company may be required to
complete the work and will be reimbursed for the additional costs but will not
receive an additional fee. Alternatively, if the specific number of hours of
service have not been delivered at the time the authorized cost is expended,
the fee may be prorated proportionately to the number of hours actually
provided. To date, the impact of such revisions has been small.
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Under time-and-materials contracts, the customer pays a fixed
rate per hour for a specified number of hours. These fixed rates are intended
to cover salary costs attributable to work performed on the contract and
related indirect expenses, as well as a fee. To the extent the Company's costs
differ from those assumed in the fixed rate, the Company may experience higher
or lower profit margins than anticipated, or may realize a loss. The Company
is reimbursed separately for other direct costs without any profit or fee.
Under fixed-price contracts, the customer pays a specific
price for services or products. The Company bears the risk that increased or
unexpected costs may reduce its profit or cause it to sustain a loss.
Conversely, when costs are lower than expected, the Company may realize
additional profit.
The revenue and earnings of the Company could be substantially
affected by changes in Government procurement or fiscal policies, by reductions
in Government expenditures for services or products provided by the Company, or
by organizational changes within the Government or Navy which impact the
Company's customer base. Additionally, procedural changes may impact the
timing of the receipt of contracts and cash by the Company.
Government contracts are subject to termination at the
convenience of the Government or for default. If a Government contract were to
be terminated for convenience, the Company would be reimbursed for its
allowable costs to the date of termination and be paid a proportionate amount
of the stipulated profits or fees attributable to the work actually performed.
During the entire history of the Company, the Government has never terminated
any of the Company's contracts for default.
The books and records of the Company are subject to audit by
the Defense Contract Audit Agency ("DCAA"), which can result in adjustments to
contract costs and fees as well as penalties and interest costs. The
Government retains a portion of the fee earned by the Company until contract
completion and audit by the DCAA. See Note 3 of "Notes to Consolidated
Financial Statements" on page 22 of the Company's 1995 Annual Report to
shareholders. Audits of A&T by DCAA have been completed for all fiscal years
through 1993 without material adjustments. In the opinion of management, the
audits for fiscal years 1994 and 1995 will not result in adjustments having a
material adverse effect on the Company's financial position or results of
operations. However, no assurances can be given that future material
adjustments will not be required.
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Products developed by the Company under Government contracts
are the property of the Government.
The Company's commercial contracts are generally in its
interactive multimedia systems and information technologies areas. These
contracts typically are structured as one of the following: (i) time-and-
materials; (ii) fixed-price; or (iii) transaction-based. Time-and-materials
and fixed-price contracts in the commercial environment are similar to those
types of contracts with the Government as described above. Under transaction-
based contracts, the Company is paid a fee for each transaction processed.
The Company's transaction-based contracts are primarily in the
OLRS business area. When OLRS is functional within a state, each vehicle lease
or rental company or automobile dealer using the system is a GSS customer and
contracts with GSS directly. GSS is paid based on the number and types of
transactions performed by that company. The volume and frequency of OLRS
customer transactions and, therefore, revenue varies based on the particular
state's vehicle registration and renewal procedures and the nature and size of
the customer's business. Some types of lease or rental companies register
significant numbers of new vehicles in accord with seasonal customer demand.
In addition to the contracts with individual lease or rental
companies, agreements are needed with each state. The agreements may be
between the particular state and GSS; a three-way agreement between the state,
GSS and a vehicle lease or rental company association; or an agreement between
the state and a vehicle lease or rental company association which in turn has
an agreement with GSS. The agreements provide GSS access to the state's
computer and vehicle registration records and allow GSS to sell vehicle
registration transaction processing. Obtaining these agreements can be complex
and time consuming.
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The following table gives the approximate percentages of the
Company's revenues realized from the four basic contract types during the
periods indicated:
<TABLE>
<CAPTION>
Fiscal Years Ended March 31,
----------------------------
Contract Type 1993 1994 1995
- ------------- ---- ---- ----
<S> <C> <C> <C>
Cost-Reimbursement 69% 69% 70%
Time-and-Materials 9% 11% 6%
Fixed-Price 22% 19% 23%
Transaction-Based ---- 1% 1%
------------------------------------------------
Total Company 100% 100% 100%
</TABLE>
The Company often commits to provide non-labor items such as
purchased materials, computer services, travel, and work subcontracted as part
of its contract services. Non-labor items as a percentage of revenue in fiscal
1993, 1994 and 1995 were approximately 19.7%, 24.6% and 23.3%, respectively.
The Company typically earns a fee on non-labor items, but at a lower fee
percentage than it does on labor services. The Company sometimes commits to
subcontract a portion of its work to other companies to obtain special services
or materials when the Company believes that such action will give it a
competitive advantage. Subcontract costs are included in the non-labor
percentages provided above. Subcontracting expenses as a percentage of revenue
were approximately 5.5%, 10.6%, and 9.8% in fiscal 1993, 1994, and 1995
respectively. In addition, the Company receives subcontracts from other
companies on which it earns a fee comparable to a fee earned on work performed
directly for the Government. In fiscal 1993, 1994, and 1995 the Company
received subcontracted work from other companies for amounts representing
approximately 18.5%, 12.4%, and 9.7% of its revenue, respectively.
Revenue under cost-reimbursement, time-and-materials, and
fixed-price contracts, including applicable fee or profit, are recognized
concurrently with costs incurred thereunder. Certain amounts not yet billed to
customers are included in recognized revenues and in contract receivables on
the balance sheet. See Note 3 of "Notes to Consolidated Financial Statements"
on page 22 of the Company's 1995 Annual Report to shareholders.
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Backlog
The Company's total backlog represents the aggregate contract
revenue remaining to be earned by the Company at a given time over the life of
its contracts. Funded backlog consists of the aggregate revenue remaining to
be earned at a given time under (a) contracts for which funding has been
contractually committed to the Company in writing by a procuring Government
agency; (b) requests to the Company from a procuring Government agency to
commence work before execution of the written authorization under which the
work is to be done; and (c) contracts with non-Government customers. Unfunded
backlog is the difference between total backlog and funded backlog.
Funding under the Company's contracts with the Government is
dependent upon congressional approval of program level funding and contracting
agency approval of the funding for the Company's work. There can be no
assurance that any program or contract will be funded in its entirety. During
fiscal 1995, total backlog varied between $357.0 million and $418.9 million.
During the year, $10.7 million of backlog expired that was not funded. Backlog
at March 31, 1995 was $401.6 million, a 7.7% increase from $372.8 million a
year ago. The funded and unfunded backlog of the Company varies from time to
time because delivery orders, new contract awards, and extensions of existing
contracts are executed at various dates throughout the year with varying
periods of performance. The Company believes that year-to-year comparisons of
backlog are not necessarily indicative of any revenue trends but may be
indicative of the Company's ability to be competitive in its marketplaces.
For commercial contracts, total backlog and funded backlog are
generally the same, i.e., the contracts are usually fully funded. The Company,
however, attributes no backlog to GSS's transaction-based work because there
are no contractually specified levels of future revenue under those contracts.
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The Company's total backlog at March 31, 1993, 1994 and 1995
was as follows:
<TABLE>
<CAPTION>
March 31,
(in thousands)
------------
1993 1994 1995
---- ---- ----
<S> <C> <C> <C>
Funded Backlog $ 40,003 $ 33,817 $ 33,583
Unfunded Backlog 320,872 338,992 367,996
-------------------------------------------------
Total $360,875 $372,809 $401,580
</TABLE>
Substantially all of the funded backlog at March 31, 1995 is expected to be
expended by the end of the Government's current fiscal year on September 30,
1995.
Customers
The Navy is the Company's principal customer, accounting for
approximately 78% of the Company's revenue. Within the Navy, the Company does
business with over 20 different contracting agencies and in fiscal 1995, the
Company had 70 contracts with ceilings in excess of $500,000. The Company
provides its services and products to numerous Navy customers including: (i)
several Navy laboratories, such as the Naval Undersea Warfare Center; Coastal
Systems Station, Dahlgren Division, Naval Surface Warfare Center; Carderock
Division, Naval Surface Warfare Center; and the Naval Research Laboratory, each
of which performs research, development, and test and evaluation functions for
the Navy; (ii) acquisition commands which are responsible for procurement of
ships, aircraft, weapons, major systems, and equipment, such as Naval Sea
Systems Command; and (iii) operational commands which operate and maintain the
ships, aircraft, weapons, and systems, such as Commander-in-Chief, U.S.
Atlantic Fleet and Commander Submarine Force, Atlantic. The degree of effect,
if any, on the Company's future revenues created by any changes in customer
operations due to facility closings or relocations cannot be determined at this
time.
The Company also has contracts with civil government
customers. The principal civil government customer is the Office of Personnel
Management which contracts with the Company for training services. Working
through the Office of
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Personnel Management, the Company also provides training services to other
governmental entities. GSS's OLRS customers are vehicle lease and rental
companies and automobile dealers. The states of Connecticut and New York are
also customers of GSS for its custom plates and uninsured motorists services.
Sales and Marketing
The Company's marketing activities relating to government
contracts are conducted by its professional and technical staff located in its
various offices. This decentralized approach enables the Company's customers
to communicate directly with the employees of the Company responsible for both
sales and work performance and aids the Company in maintaining an awareness of
customer needs, developing new business opportunities, and preparing project
proposals. These marketing activities are identified and coordinated through
the Company's strategic planning process, which includes the annual development
and monthly update of operating plans for each existing and prospective
customer organization. The corporate marketing office provides proposal
development guidance, information systems, and training; data on markets,
competition, and internal capabilities; marketing literature; and trade show
coordination.
Commercial interactive multimedia systems applications are
sold to a wide range of clients in the telecommunications, pharmaceutical,
financial, and aerospace industries. Sales and marketing are conducted
primarily from offices in Pennsylvania, the Washington, D.C. area, Florida and
Connecticut. Sales and marketing for GSS are conducted primarily from its main
office in Groton, Connecticut.
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Competition
The Company's business is very competitive. There are a
substantial number of large, diversified companies with greater financial
resources and larger technical staffs than those of the Company that are
capable of rendering services similar to those offered by the Company. The
in-house capabilities of the Company's governmental customers are also, in
effect, in competition with the Company since they may perform many of the
types of services that might otherwise be performed by the Company. In
addition, there are many smaller companies which have developed specialized
capabilities in areas similar to those of the Company. As the markets in which
the Company operates continue to mature, other companies continue to be
attracted to them.
Currently, the major competitor for OLRS is CVR, Inc., an
affiliated company of Automated Data Processing. CVR, Inc. primarily sells
software services, including registration services to car and truck dealers.
Competitors whose capital resources greatly exceed those of the Company are
capable of developing OLRS products similar to those produced and marketed by
the Company, and the Company is aware of vehicle registration products in
development by several competitors, including IBM. OLRS customer companies
may, in some instances, develop their own on-line vehicle registration
products.
It is not possible to predict the future intensity of
competition which the Company will encounter as a result of changing economic
or competitive conditions, customer requirements, or technological
developments. However, to the extent that defense budgets are reduced,
competition for remaining defense business can be expected to increase. The
principal competitive factors for the Company's businesses are technical
capability, price, quality of services and products, responsiveness, record of
delivering on time and within budget, and reputation and familiarity of the
Company and its personnel with customers. While the Company's ability to
compete in defense markets is not dependent on intangible property rights such
as proprietary processes, patents, or licenses, these factors do affect its
ability to compete in commercial areas.
Human Resources
The principal resource of the Company is its 1,535 full-time
employees, approximately 1,170 of whom are professional and technical
personnel. Because the Company is diversifying by transferring its core
competencies to new markets, the make-
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up of the professional and technical staff of the Company is similar for
Government and commercial work and includes engineers, scientists,
mathematicians, educators, analysts, and programmers.
The Company has no collective bargaining units and considers
its employee relations to be excellent.
Government Requirements
The Company's ability to maintain its current base of defense
and other Government business is dependent on providing employees and
facilities which meet rigorous Government requirements. Each facility has a
continuing program to meet applicable Government requirements and to maintain
employee awareness of the paramount need for compliance with Government
requirements.
ITEM 2. PROPERTIES.
The Company owns its corporate office building complex on
approximately 19 acres of land in North Stonington, Connecticut. The complex
includes 60,330 square feet of office space. The Company also owns buildings
in New London, Connecticut which provide 50,220 square feet of office and shop
space, and in Butler, Pennsylvania which provides 37,000 square feet of office
space and 16,000 square feet of garage space. The Company is seeking buyers
for its Butler property. The Company intends to lease new space in
Pennsylvania in a geographical location which will be more convenient to its
customers and which will enhance its ability to recruit new employees when
needed.
The Company leases office, shop, or warehouse space in 36
locations in 11 states, Australia and Canada totaling approximately 250,000
square feet. Approximately 14,000 square feet of office space is subleased to
third parties. A summary of the Company's principal leases is as follows:
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<TABLE>
<CAPTION>
Square
Location Footage Lease Expiration
- -------- ------- ----------------
<S> <C> <C> <C>
A&T
- ---
Middletown, R.I. One Corporate Place 38,793 06/30/99
Arlington, VA Jefferson Davis Highway 33,958 09/05/98
Chesapeake, VA Greenbrier Circle 22,912 02/28/98
San Diego, CA Camino Del Rio North 16,468 08/31/99
GSS
- ---
Groton, CT 1353 Goldstar Highway 16,000 Month-to-Month
ASA
- ---
Landover, MD Corporate Drive 14,500 03/31/96
</TABLE>
The Company believes its facilities and equipment are in good
condition and adequate for its current business needs. The Company leases the
GSS facility on a month-to-month basis, and is confident that, if necessary, it
could replace such facility either with other existing Company space or by
leasing other suitable facilities. The Company has not experienced, and does
not anticipate experiencing, any difficulty in obtaining satisfactory
facilities.
For additional information on the Company's leases and rental
expenses thereunder, see Note 11 of "Notes to Consolidated Financial
Statements" on page 27 of A&T's 1995 Annual Report to shareholders.
ITEM 3. LEGAL PROCEEDINGS.
The Company is not engaged in any legal proceeding which is
material to the business or financial condition of the Company nor is the
property of the Company subject to any such proceedings.
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of security holders during
the fourth quarter of fiscal 1995.
ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT
The names and ages of the executive officers of the Company as
of June 15, 1995 are set forth below, together with the primary positions held
by each such person in A&T or its subsidiaries:
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
Gary P. Bennett 53 President, Chief Executive Officer, and Director of
A&T
David M. Nolf 52 Executive Vice President, Chief Financial and
Administrative Officer, Secretary and Director of
A&T
Thomas J. Will, Sr. 55 Executive Vice President and Corporate Development
Manager of A&T
Jay W. Ryerson 60 Executive Vice President and Chief Operating
Officer of A&T
Gerald Snyder 50 Senior Vice President, Planning, and Corporate
Manager of Finance and Management Information
Systems of A&T
</TABLE>
Officers of A&T serve until the Annual Board of Directors
Meeting following the Annual Meeting of shareholders or until their successors
are chosen and qualify or until earlier resignation or removal.
<PAGE> 19
18
Gary P. Bennett has been employed by A&T since 1972. He was
elected President in May 1991 and served as Chief Operating Officer from 1984
until he was named Chief Executive Officer in November 1992. He was an
Executive Vice President from 1978 to 1991. Mr. Bennett has been a Director of
A&T since 1979.
David M. Nolf has been employed by A&T since 1971 and served
as Senior Vice President, Finance and Administration from 1979 until May 1985
when he was elected to serve as Executive Vice President, Chief Financial and
Administrative Officer and Secretary of A&T. Mr. Nolf has been a Director of
A&T since 1976 and served as Chairman of the Board of Directors from 1978 to
May 1985.
Jay W. Ryerson has been employed by A&T since 1972. Mr.
Ryerson served as department manager from 1982 until he became division manager
in 1985. He became a sector manager and was elected a Vice President in 1987,
a Senior Vice President in 1989, and was elected Executive Vice President in
1992. In November 1992 he became A&T's Chief Operating Officer.
Thomas J. Will, Sr. has been employed by A&T since 1978. Mr.
Will served as department manager from 1980 until he became a division manager
in 1982. In 1984, Mr. Will became a sector manager. He was elected a Vice
President in 1982, a Senior Vice President in 1984, and was elected Executive
Vice President in 1987. He is A&T's Corporate Development Manager.
Gerald Snyder has been employed by A&T since 1984. Mr. Snyder
served as Corporate Manager of Finance and Budgets from 1984 until he was
elected Vice President, Planning in 1987. In 1991 he was elected Senior Vice
President, Planning.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
Pursuant to General Instruction G to Form 10-K, the
information required by this Item is incorporated by reference to information
set forth under Corporate Information in the Company's 1995 Annual Report to
shareholders.
<PAGE> 20
19
ITEM 6. SELECTED FINANCIAL DATA.
Pursuant to General Instruction G to Form 10-K, the
information required by this Item is incorporated by reference to information
set forth under Selected Financial Data: A Five-Year Summary in the Company's
1995 Annual Report to shareholders.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Pursuant to General Instruction G to Form 10-K, the
information required by this Item is incorporated by reference to information
set forth under Management's Discussion and Analysis of Financial Condition and
Results of Operations in the Company's 1995 Annual Report to shareholders.
ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Pursuant to General Instruction G to Form 10-K, the
information required by this Item is incorporated by reference to information
set forth in the Consolidated Financial Statements and notes on pages 17
through 28 of the Company's 1995 Annual Report to shareholders.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None
<PAGE> 21
20
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Pursuant to General Instruction G to Form 10-K, the
information required by this Item with respect to directors is incorporated by
reference to the information set forth under Item 1. ELECTION OF DIRECTORS in
the Company's Proxy Statement for the Annual Meeting of shareholders to be held
on August 8, 1995. Information concerning executive officers is set forth
under Item 4A of this Form 10-K pursuant to Instruction 3 to Item 401(b) of
Regulation S-K.
ITEM 11. EXECUTIVE COMPENSATION.
Pursuant to General Instruction G to Form 10-K, the
information required by this Item is incorporated by reference to information
set forth under the following headings: Compensation of Executive Officers;
Option/SAR Grants in Last Fiscal Year; Aggregated Option Exercises in Last
Fiscal Year and Fiscal Year-End Option Values; and "Report of the Compensation
Committee and the Stock Option Committee on Executive Compensation" in the
Company's Proxy Statement for the Annual Meeting of shareholders to be held on
August 8, 1995.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
Pursuant to General Instruction G to Form 10-K, the
information required by this Item is incorporated by reference to information
set forth under Security Ownership of Management and 5% Shareholders in the
Company's Proxy Statement for the Annual Meeting of shareholders to be held on
August 8, 1995.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
None.
<PAGE> 22
21
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM
8-K.
<TABLE>
<CAPTION>
Page Number in
Page Number in 1995 Annual
Form 10-K Report
--------- ---------------
<S> <C> <C>
(a) 1. Financial Statements
Independent Auditors' Report 29
Consolidated Balance Sheets as of March 31, 1995 and 1994 17
Consolidated Statements of Earnings for Each of the Years in the 18
Three-Year Period Ended March 31, 1995
Consolidated Statements of Shareholders' Equity for Each of the 19
Years in the Three-Year Period Ended March 31, 1995
Consolidated Statements of Cash Flows for Each of the Years in 20
the Three-Year Period Ended March 31, 1995
Notes to Consolidated Financial Statements 21
(a) 2. Financial Statement Schedules
</TABLE>
<PAGE> 23
22
Schedules have been omitted because either: (i) such schedules
are not required; or (ii) the information has been presented in the Consolidated
Financial Statements or notes thereto.
(a) 3. Exhibits (* denotes filed herewith):
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
- ------
<S> <C>
3(i) Restated Certificate of Incorporation (incorporated by
reference to Exhibit 3A to the Registrant's Report on Form
10-Q, File No. 0-14161, for the quarter ended September 30,
1990).
3(ii) By-laws, Amended and Restated to February 6, 1993
(incorporated by reference to Exhibit 3(ii) to the
Registrant's Report on Form 10-K, file No. 0-14161, for the
year ended March 31, 1993).
4A Specimen Certificate of Common Stock (incorporated by
reference to Exhibit 4A to Amendment No. 1 to the Registrant's
Registration Statement on Form S-1, No. 33-2314), Articles 6
and 7 of the Certificate of Incorporation and Article II,
Article III, Sections 3 to 6, Article VI and Article VIII of
the By-laws (included in Exhibits 3(i) and 3(ii),
respectively).
4B Amended and Restated Revolving Credit and Term Loan Agreement
between Analysis & Technology, Inc. and Shawmut Bank
Connecticut, National Association formerly known as The
Connecticut National Bank, dated December 9, 1994
(incorporated by reference to Exhibit 4A to the Registrant's
Report on Form 10-Q, File No. 0-14161 for the quarter ended
December 31, 1994).
4C(1) Open-End Mortgage Deed and Security Agreement, dated November
25, 1987, and related documents between Analysis & Technology,
Inc. and The Connecticut National Bank.
</TABLE>
<PAGE> 24
23
4D(1) Open-End Mortgage Deed and Security Agreement, dated May 30,
1986, and related documents between Analysis & Technology,
Inc. and The Connecticut National Bank.
4F(1) Open-End Mortgage, dated March 8, 1978, and related documents
of Analysis & Technology, Inc. to Groton Savings Bank.
4G(1) Notes payable, due in monthly installments, with various
interest rates and maturity dates, secured by equipment.
10A Analysis & Technology, Inc. 1983 - 1986 Stock Option Plans, as
amended (incorporated by reference to Exhibits 28(b) through
28(g) of the Registrant's Registration Statement on Form S-8,
No. 33-17313).
10B Analysis & Technology, Inc. 1987 Stock Option Plan
(incorporated by reference to Exhibit A to Proxy Statement,
dated July 6, 1987 of Analysis & Technology, Inc.).
10C Analysis & Technology, Inc. 1988 Stock Option Plan
(incorporated by reference to Exhibit A to Proxy Statement
dated July 1, 1988 of Analysis & Technology, Inc.).
10D Analysis & Technology, Inc. 1989 Stock Option Plan
(incorporated by reference to Exhibit A to the Proxy Statement
dated July 3, 1989 of Analysis & Technology, Inc.).
10E Analysis & Technology, Inc. 1990 Stock Option Plan
(incorporated by reference to Exhibit B to the Proxy Statement
dated July 3, 1990 of Analysis & Technology, Inc.).
10F Analysis & Technology, Inc. 1992 Stock Option Plan
(incorporated by reference to Exhibit A to Proxy Statement
dated July 7, 1992 of Analysis & Technology, Inc.).
10G Analysis & Technology, Inc. 1994 Stock Option Plan
(incorporated by reference to Exhibit A to Proxy Statement
dated July 8, 1994 of Analysis & Technology, Inc.).
<PAGE> 25
24
10H Analysis & Technology, Inc. 1995 Stock Option Plan.
(incorporated by reference to Exhibit A to Proxy Statement
dated July 7, 1995 of Analysis & Technology, Inc.)
10I Amendments, dated June 30, 1989, to the Analysis & Technology,
Inc. 1981 - 1986 Stock Option Plans (incorporated by reference
to Exhibits 19B through 19G to the Registrant's Report on Form
10-Q, File No. 0-14161, for the quarter ended June 30, 1989).
10J Amendment, dated June 30, 1989, to the Analysis & Technology,
Inc. 1987 Stock Option Plan (incorporated by reference to
Exhibit 19H to the Registrant's Report on Form 10-Q, File No.
0-14161, for the quarter ended June 30, 1989).
10K Amendment, dated June 30, 1989, to the Analysis & Technology,
Inc. 1988 Stock Option Plan (incorporated by reference to
Exhibit 19I to the Registrant's Report on Form 10-Q, File No.
0-14161, for the quarter ended June 30, 1989).
10L* Amendment, dated December 1, 1994, to the Analysis &
Technology, Inc. Savings & Investment Plan effective January
1, 1995.
10M Amended and Restated Analysis & Technology, Inc. Savings &
Investment Plan effective August 10, 1993 (incorporated by
reference to Exhibit 3(ii) of the Registrant's Report on Form
10-K, File No. 0-14161, for the year ended March 31, 1994).
10N* Amended and Restated Analysis & Technology, Inc. Employee
Stock Ownership Plan dated November 21, 1994, effective
January 1, 1994.
10O Analysis & Technology, Inc. Performance Incentive Compensation
Plan dated September 19, 1991 (incorporated by reference to
Exhibit 19B of the Registrant's Report on Form 10-Q, File No.
0-14161, for the quarter ended September 30, 1991).
10P* Amended and Restated Analysis & Technology Deferred
Compensation Plan dated April 1, 1994, effective April 1, 1994.
<PAGE> 26
25
10Q* Analysis & Technology, Inc. 401(k) Restitution Plan, dated
August 8, 1994, effective April 1, 1994.
10R Joint Venture Agreement by and among Brown & Sharpe
Manufacturing Company, Analysis & Technology, Inc. and
Automation Software Incorporated (incorporated by reference to
Exhibit 10H of the Registrant's Registration Statement on Form
S-1, No. 33-2314).
10S Group Medical Reimbursement Insurance for Officers
(incorporated by reference to Exhibit 10J of Amendment No. 1
to the Registrant's Registration Statement on Form S-1, No.
33-2314).
10T Analysis & Technology, Inc. Managers' Benefit Options Plan
(incorporated by reference to Exhibit 10J of the Registrant's
Report on Form 10-Q, File No. 0-14161, for the quarter ended
December 31, 1986).
10U Analysis & Technology, Inc. Officers' Benefit Options Plan
(incorporated by reference to Exhibit 10L of the Registrant's
Report on Form 10-K, File No. 0-14161, for the year ended
March 31, 1989).
10V Stock Purchase Agreement, dated June 1, 1989, among Analysis &
Technology, Inc., Applied Science Associates, Inc. and the
Sellers (as defined therein) (incorporated by reference to
Exhibit 2.1 on the Registrant's Report on Form 8-K, File No.
0-14161, dated June 1, 1989).
13* Analysis & Technology, Inc. 1995 Annual Report to shareholders
(required textual portions).
22* List of Subsidiaries of Analysis & Technology, Inc.
24* Consent of KPMG Peat Marwick, LLP with respect to the
incorporation by reference of its reports dated May 5, 1995.
27* Financial Data Schedule
(1) Copies of these documents are not being filed as exhibits, since the
indebtedness represented thereby does not exceed 10% of the total assets of the
Company. The
<PAGE> 27
26
Company agrees to provide copies of these documents to the Securities and
Exchange Commission upon request.
(b) A report on Form 8-K, dated February 17, 1995 reporting
Item 5 - Other Events, was filed by the Registrant on February 17, 1995.
<PAGE> 28
27
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
Analysis & Technology, Inc.
Date: June 21, 1995 By: /S/ Gary P. Bennett
-------------------------
Gary P. Bennett
President and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Name Title Date
---- ----- ----
<S> <C> <C>
/S/ GARY P. BENNETT President and Chief Executive June 21, 1995
- ---------------------- Officer and Director (Principal
Gary P. Bennett Executive Officer)
/S/ DAVID M. NOLF Executive Vice President, June 21, 1995
- ---------------------- Chief Financial and Administrative
David M. Nolf Officer and Director (Principal
Financial Officer and Principal
Accounting Officer)
/S/ JAMES B. FOX Chairman of the Board June 21, 1995
- ----------------------
James B. Fox
/S/ LARRY M. FOX Director June 21, 1995
- ----------------------
Larry M. Fox
/S/ NELDA S. NARDONE Director June 21, 1995
- ----------------------
Nelda S. Nardone
/S/ THURMAN F. NAYLOR Director June 21, 1995
- ----------------------
Thurman F. Naylor
/S/ DENNIS G. PUNCHES Director June 21, 1995
- ----------------------
Dennis G. Punches
</TABLE>
<PAGE> 29
28
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description of Documents Page No.
- ------- ------------------------ --------
<S> <C>
3(i) Restated Certificate of Incorporation (incorporated by reference
to Exhibit 3A to the Registrant's Report on Form 10-Q, File No.
0-14161, for the quarter ended September 30, 1990).
3(ii) By-laws, Amended and Restated to February 6, 1993 (incorporated
by reference to Exhibit 3(ii) to the Registrant's Report on Form
10-K, file No. 0-14161, for the year ended March 31, 1993).
4A Specimen Certificate of Common Stock (incorporated by reference
to Exhibit 4A to Amendment No. 1 to the Registrant's Registration
Statement on Form S-1, No. 33-2314), Articles 6 and 7 of the
Certificate of Incorporation and Article II, Article III,
Sections 3 to 6, Article VI and Article VIII of the By-laws
(included in Exhibits 3(i) and 3(ii), respectively).
4B Amended and Restated Revolving Credit and Term Loan Agreement
between Analysis & Technology, Inc. and Shawmut Bank Connecticut,
National Association formerly known as The Connecticut National
Bank, dated December 9, 1994. (incorporated by reference to
Exhibit 4A of the Registrant's Report on Form 10-Q, File No.
0-14161 for the quarter ended December 31, 1994).
4C(l) Open-End Mortgage Deed and Security Agreement, dated November 25,
1987, and related documents between Analysis & Technology, Inc.
and The Connecticut National Bank.
</TABLE>
<PAGE> 30
29
<TABLE>
<CAPTION>
<S> <C>
4D(1) Open-End Mortgage Deed and Security Agreement, dated May 30,
1986, and related documents between Analysis & Technology, Inc.
and The Connecticut National Bank.
4F(1) Open-End Mortgage, dated March 8, 1978, and related documents of
Analysis & Technology, Inc. to Groton Savings Bank.
4G(1) Notes payable, due in monthly installments, with various interest
rates and maturity dates, secured by equipment.
10A Analysis & Technology, Inc. 1983 - 1986 Stock Option Plans, as
amended (incorporated by reference to Exhibits 28(b) through
28(g) of the Registrant's Registration Statement on Form S-8, No.
33-17313).
10B Analysis & Technology, Inc. 1987 Stock Option Plan (incorporated
by reference to Exhibit A to the Proxy Statement, dated July 6,
1987 of Analysis & Technology, Inc.).
10C Analysis & Technology, Inc. 1988 Stock Option Plan (incorporated
by reference to Exhibit A to the Proxy Statement dated July 1,
1988 of Analysis & Technology, Inc.).
10D Analysis & Technology, Inc. 1989 Stock Option Plan (incorporated
by reference to Exhibit A to the Proxy Statement dated July 3,
1989 of Analysis & Technology, Inc.).
10E Analysis & Technology, Inc. 1990 Stock Option Plan (incorporated
by reference to Exhibit B to the Proxy Statement dated July 3,
1990 of Analysis & Technology, Inc.).
</TABLE>
<PAGE> 31
30
<TABLE>
<CAPTION>
<S> <C>
10F Analysis & Technology, Inc. 1992 Stock Option Plan (incorporated
by reference to Exhibit A to the Proxy Statement dated July 7,
1992 of Analysis & Technology, Inc.).
10G Analysis & Technology, Inc. 1994 Stock Option Plan (incorporated
by reference to Exhibit A to the Proxy Statement dated July 8,
1994 of Analysis & Technology, Inc.).
10H Analysis & Technology, Inc. 1995 Stock Option Plan (incorporated
by reference to Exhibit A to the Proxy Statement dated July 7,
1995 of Analysis & Technology, Inc.).
10I Amendments, dated June 30, 1989, to the Analysis & Technology,
Inc. 1981 - 1986 Stock Option Plans (incorporated by reference to
Exhibits 19B through 19G to the Registrant's Report on Form 10-Q,
File No. 0-14161, for the quarter ended June 30, 1989).
10J Amendment, dated June 30, 1989, to the Analysis & Technology,
Inc. 1987 Stock Option Plan (incorporated by reference to Exhibit
19H to the Registrant's Report on Form 10-Q, File No. 0-14161,
for the quarter ended June 30, 1989).
10K Amendment, dated June 30, 1989, to the Analysis & Technology,
Inc. 1988 Stock Option Plan (incorporated by reference to Exhibit
19I to the Registrant's Report on Form 10-Q, File No. 0-14161,
for the quarter ended June 30, 1989).
10L* Amendment, dated December 1, 1994, to the Analysis & Technology,
Inc. Savings & Investment Plan effective January 1, 1995.
</TABLE>
<PAGE> 32
31
<TABLE>
<CAPTION>
<S> <C>
10M Amended and Restated Analysis & Technology, Inc. Savings &
Investment Plan effective August 10, 1993 (incorporated by
reference to Exhibit 3(ii) of the Registrant's Report on Form
10-K, File No. 0-14161, for the year ended March 31, 1994).
10N* Amended and Restated Analysis & Technology, Inc. Employee Stock
Ownership Plan dated November 21, 1994, effective January 1,
1994.
10O Analysis & Technology, Inc. Performance Incentive Compensation
Plan dated September 19, 1991 (incorporated by reference to
Exhibit 19B of the Registrant's Report on Form 10-Q, File No.
0-14161, for the quarter ended September 30, 1991).
10P* Amended and Restated Analysis & Technology Deferred Compensation
Plan dated April 1, 1994, effective April 1, 1994.
10Q* Analysis & Technology, Inc. 401(k) Restitution, Plan, dated
August 8, 1994, effective April 1, 1994.
10R Joint Venture Agreement by and among Brown & Sharpe Manufacturing
Company, Analysis & Technology, Inc. and Automation Software
Incorporated (incorporated by reference to Exhibit 10H of the
Registrant's Registration Statement on Form S-1, No. 33-2314).
10S Group Medical Reimbursement Insurance for Officers (incorporated
by reference to Exhibit 10J of Amendment No. 1 to the
Registrant's Registration Statement on Form S-1, No. 33-2314).
10T Analysis & Technology, Inc. Managers' Benefit Options Plan
(incorporated by reference to Exhibit 10J
</TABLE>
<PAGE> 33
32
of the Registrant's Report on Form 10-Q, File No. 0-14161, for the
quarter ended December 31, 1986).
10U Analysis & Technology, Inc. Officers' Benefit Options Plan
(incorporated by reference to Exhibit 10L of the Registrant's
Report on Form 10-K, File No. 0-14161, for the year ended March
31, 1989).
10V Stock Purchase Agreement, dated June 1, 1989, among Analysis &
Technology, Inc., Applied Science Associates, Inc. and the
Sellers (as defined therein) (incorporated by reference to
Exhibit 2.1 to the Registrant's Report on Form 8-K, File No.
0-14161, dated June 1, 1989).
13* Analysis & Technology, Inc. 1995 Annual Report to shareholders
(required textual portions).
22* List of Subsidiaries of Analysis & Technology, Inc.
24* Consent of KPMG Peat Marwick, LLP with respect to the
incorporation by reference of its reports dated May 5, 1995.
27* Financial Data Schedule
<PAGE> 1
EXHIBIT 10L
AMENDMENT TO
ANALYSIS & TECHNOLOGY, INC.
SAVINGS AND INVESTMENT PLAN
WHEREAS, Analysis & Technology, Inc. (the "Employer") heretofore adopted the
Analysis & Technology, Inc. Savings and Investment Plan (the "Plan"); and
WHEREAS, the Employer reserved the right to amend the Plan; and
WHEREAS, the Employer desires to amend the Plan;
NOW, THEREFORE, the Plan is hereby amended, effective as of January 1, 1995, as
follows:
1. Section 1.15 of the Plan shall be amended to read in its entirety as
follows:
1.15 "NORMAL RETIREMENT DATE" shall mean a Participant's sixty-fifth
(65th) birthday; provided, however, that any Participant who was a
participant in the Applied Science Associates, Inc. 401(k) Retirement
Savings Plan (the "ASA Plan") and whose account balance under the ASA
Plan was transferred to this Plan in connection with the merger of the
ASA Plan with this Plan, the Normal Retirement Date for any such
Participant shall be the date such Participant attains age fifty-nine
and one-half (59-1/2).
2. Section 7.1 of the Plan shall be amended to read in its entirety as
follows:
7.1 MANNER OF PAYMENT. The Participant's vested Account shall be
distributed to the Participant (or to the Participant's Beneficiary in
the event of the Participant's death) by any of the following methods,
as elected by the Participant or, when applicable, the Participant's
Beneficiary:
(a) in a single lump-sum payment; or
(b) provided the Participant's vested Account exceeds $3,500, in
periodic installments (at least annual), subject to the minimum
distribution rules set forth below.
If a distribution is made in installments the following rules shall
apply:
(a) Payments to Participant or to Participant and Surviving Spouse.
Payment shall commence no later than a date provided for in
Section 7.2 below. The amount to be distributed each year shall be
at least equal to the vested balance in the Participant's Account
as of the preceding Valuation Date multiplied by the following
fraction: the numerator shall be one (1) and the denominator shall
be the life expectancy of the Participant (or the joint life
expectancy of the Participant and the Participant's spouse)
determined as of the Valuation Date preceding the first payment
and reduced by one for each succeeding year.
1
<PAGE> 2
(b) Payments to Participant and Non-Spouse Beneficiary. Payment shall
commence no later than a date provided for in Section 7.2 below.
The amount to be distributed each year shall be at least equal to
the vested balance in the Participant's Account as of the
preceding Valuation Date multiplied by the following fraction: the
numerator shall be one (1) and the denominator shall be the joint
life expectancy of the Participant and the Participant's
Beneficiary computed as of the Valuation Date preceding the first
payment and reduced by one (1) for each succeeding year. Payments
shall be restricted under this option to insure compliance with
the minimum distribution incidental death benefit requirement of
Section 401(a)(9) of the Code and the regulations promulgated
thereunder.
(c) Payments to Beneficiary. Payment shall commence no later than a
date provided for in Section 7.6 below. The amount to be
distributed each year shall be at least equal to the vested
balance in the Participant's Account as of the preceding Valuation
Date multiplied by the following fraction: the numerator shall be
one (1) and the denominator shall be the life expectancy of the
Participant's Beneficiary computed as of the Valuation Date
preceding the first payment and reduced by one (1) for each
succeeding year.
(d) Recalculation of Life Expectancy. If distribution is to be made
over the life expectancy of the Participant or, where the
Participant's spouse is his Beneficiary, the life expectancy of
the Participant's surviving spouse, or the joint life expectancy
of the Participant and his spouse, such life expectancy or joint
life expectancy, at the election of the Participant or his
surviving spouse, as the case may be, may be recalculated
annually. Any such election shall be irrevocable as to the
Participant (and spouse, if applicable) and shall apply to all
subsequent years. In no event, however, shall the life expectancy
of a non-spouse Beneficiary be recalculated.
Distribution of the portion of a Participant's Account invested in
Employer stock, if any, shall be made, at the election of the
Participant or his Beneficiary, as the case may be, either in the form
of Employer stock or in the form of cash, or partly in Employer stock
and partly in cash; provided, however, that in all events, cash may be
paid in lieu of fractional shares.
3. Except as hereinabove amended, the provisions of the Plan shall continue
in full force and effect.
IN WITNESS WHEREOF, the Employer, by its duly authorized officer, has caused
this Amendment to be executed on the 1st day of December, 1994.
--- --------
ANALYSIS & TECHNOLOGY, INC.
By:/S/ DAVID M. NOLF
------------------------------------
Executive Vice President
2
<PAGE> 1
EXHIBIT 10N
ANALYSIS & TECHNOLOGY, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE 1 PURPOSE; EXCLUSIVE BENEFIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Exclusive Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 2 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.1 Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.2 Administrator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.3 Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.4 Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.5 Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.6 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.7 Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.8 Employer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.9 Employer Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.10 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.11 Fiduciary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.12 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.13 Highly-Compensated Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.14 Investment Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.15 Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.16 Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.17 Plan Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.18 Retirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.19 Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.20 Stock Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.21 Trust and Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.22 Trust Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.23 Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.24 Valuation Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE 3 ELIGIBILITY TO PARTICIPATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.1 Initial Eligibility Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.2 Eligibility Following a Termination of Employment . . . . . . . . . . . . . . . . . . . . 8
3.3 Determination of Eligibility by Administrator . . . . . . . . . . . . . . . . . . . . . . 8
</TABLE>
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ARTICLE 4 CONTRIBUTIONS BY THE EMPLOYER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.1 Employer's Annual Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.2 Payment of Employer's Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.3 Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.4 Participant Contributions Prohibited . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.5 Obligation of Fiduciaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE 5 GENERAL RULES CONCERNING ALLOCATIONS OF CONTRIBUTIONS
AND TRUST ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.1 Accounts of Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.2 Eligibility for Allocation of Employer Contributions and Forfeitures . . . . . . . . . . . 10
5.3 Allocation of Employer Contributions and Forfeitures . . . . . . . . . . . . . . . . . . . 10
5.4 Limitation on Participant Allocations . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.5 Net Value of the Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.6 Allocation of Trust Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.7 Limitation of Participants' Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.8 Participants Omitted in Error . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE 6 SPECIAL RULES CONCERNING ALLOCATIONS OF EMPLOYER SECURITIES
AND OTHER ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.1 Investment in Employer Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.2 Valuation of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.3 Allocation of Securities Purchased with Proceeds of Loan . . . . . . . . . . . . . . . . . 15
6.4 Acquisition of Securities for Distribution to Participant or Beneficiary . . . . . . . . . 15
6.5 Privileges or Restrictions on Employer Securities; In General . . . . . . . . . . . . . . 15
6.6 Privileges or Restrictions Applicable to Securities Acquired
with Stock Purchase Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE 7 BENEFITS BECAUSE OF RETIREMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
7.1 Normal Retirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
7.2 Late Retirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
7.3 Early Retirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
7.4 Disability Retirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
7.5 Retirement Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE 8 BENEFITS BECAUSE OF DEATH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
8.1 Death of a Participant or Former Participant . . . . . . . . . . . . . . . . . . . . . . . 19
8.2 Designation of Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
8.3 Distribution in Case no Beneficiary Designated or Surviving . . . . . . . . . . . . . . . 19
8.4 Death of a Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
</TABLE>
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ARTICLE 9 BENEFITS BECAUSE OF SEVERANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
9.1 Severance Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
9.2 Vested Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
9.3 Years of Service in Certain Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
9.4 Forfeiture of Nonvested Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
9.5 Return to Employment Before Distribution of Vested Account Balance . . . . . . . . . . . . 21
ARTICLE 10 DISTRIBUTION OF BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
10.1 Time for Distribution of Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
10.2 Manner of Distribution of Retirement and Severance Benefits . . . . . . . . . . . . . . . 22
10.3 Manner of Distribution of Death Benefits . . . . . . . . . . . . . . . . . . . . . . . . . 23
10.4 Notice of Death, Retirement or Separation from Service . . . . . . . . . . . . . . . . . . 23
10.5 Eligible Rollover Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
10.6 Cessation of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
10.7 Missing Persons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
10.8 Delivery of Benefits by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
10.9 Minors and Incompetents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE 11 ADMINISTRATION OF THE PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
11.1 Appointment of Administrator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
11.2 Powers and Duties of Administrator; Administrator not to Act in
Discriminatory Manner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
11.3 Committee Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
11.4 Notification of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
11.5 Administrator to Keep Accurate Records . . . . . . . . . . . . . . . . . . . . . . . . . . 27
11.6 Claims Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
11.7 Reliance on Specialists . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
11.8 Compensation; Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE 12 TRUSTEE RESPONSIBILITIES; INVESTMENT OF THE TRUST FUND . . . . . . . . . . . . . . . . . . . 29
12.1 Trust Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
12.2 Investment of Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
12.3 Diversification of Investments or Distribution for Certain Participants . . . . . . . . . 29
12.4 Voting Employer Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
12.5 Tendering Employer Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
12.6 Trustee's Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
12.7 Trustee's Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
12.8 Trustee's Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
12.9 Trustee's Compensation and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
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ARTICLE 13 AMENDMENT AND TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
13.1 Right to Amend or Terminate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
13.2 Permanence of Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
13.3 Termination of Plan or Plan and Trust . . . . . . . . . . . . . . . . . . . . . . . . . . 32
13.4 Vesting on Termination or Partial Termination of Plan or
Discontinuance of Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
13.5 Successor to Business of Employer . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
13.6 Liquidation of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
13.7 Merger or Consolidation of Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE 14 TOP-HEAVY PLAN REQUIREMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE 15 SPENDTHRIFT PROVISION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE 16 AFFILIATED EMPLOYER PROVISION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE 17 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
17.1 Rights of Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
17.2 Obligation of the Employer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
17.3 Action by the Employer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
17.4 Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
17.5 Liability of Employer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
17.6 Titles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
17.7 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
17.8 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
</TABLE>
<PAGE> 6
ANALYSIS & TECHNOLOGY, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
WHEREAS, Analysis & Technology, Inc. (hereinafter referred to as the "Employer")
heretofore adopted the Analysis & Technology, Inc. Employee Stock Ownership
Plan (hereinafter referred to as the "Plan") for the benefit of its Employees;
and
WHEREAS, the Employer reserved the right to amend the Plan; and
WHEREAS, the Employer wishes to amend the Plan; and
WHEREAS, it is intended that the Plan is to continue to be a qualified plan
under Section 401(a) of the Internal Revenue Code for the exclusive benefit of
the Participants and their Beneficiaries;
NOW, THEREFORE, the Plan is hereby amended and restated, effective, except as
otherwise provided, as of January 1, 1989, to read in its entirety as follows:
ARTICLE 1--PURPOSE: EXCLUSIVE BENEFIT
1.1 PURPOSE. The primary purpose of the Plan is to enable Employees of the
Employer who qualify as Participants to obtain an ownership interest in the
Employer in accordance with the terms of the Plan. The Plan is designated as,
and is intended to constitute, an employee stock ownership plan within the
meaning of Sections 409 and 4975(e)(7) of the Internal Revenue Code of 1986 (the
"Code") and Section 407(d)(6) of the Employee Retirement Income Security Act of
1974 ("ERISA"). The Plan is not intended to provide pensions or any other form
of benefit as such, but instead to allocate to Participants and their
Beneficiaries an ownership interest in the Employer through distribution of
Employer Securities (or cash value) following a Participant's termination of
service. Neither the Employer, its officers, directors, Employees or
shareholders, nor any Fiduciary shall have any responsibility for the value of
any stock or other securities of the Employer allocated to the Account of, or
distributed to, any Participant or Beneficiary hereunder, it being understand
that such stock or securities may decline in value or become wholly worthless
due to risks and circumstances which cannot be foreseen and which may not be
within the control of any such persons or entities.
1.2 EXCLUSIVE BENEFIT. In no event shall the principal or income of the Plan
be paid or revert to the Employer, or be used for any purpose whatsoever other
than the exclusive purpose of providing benefits to Participants or their
Beneficiaries, and defraying the reasonable expenses of administering the Plan,
except that (a) contributions made by mistake of fact shall be returned to the
Employer within one (1) year of the date of payment, (b) amounts held in
suspense in accordance with Section 5.4 shall be returned to the Employer upon
termination of the Plan, and (c) contributions that are conditioned on the
deductibility thereof under the Code shall be returned to the Employer within
one (1) year of the disallowance of the deduction. All contributions of the
Employer to the Plan are hereby expressly conditioned on their deductibility
under the Code.
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<PAGE> 7
ARTICLE 2--DEFINITIONS
2,1 "ACCOUNT" shall mean either or both of the Stock Account and Investment
Account maintained on the books of the Plan for each Participant.
2.2 "ADMINISTRATOR" shall mean the Employer, or such other individual,
committee or firm as the Board of Directors shall designate from time to time in
accordance with Section 11.1.
2.3 "BENEFICIARY" shall mean the person or persons designated by a Participant
pursuant to Section 8.2, or if no such designation is made or no designated
person survives the Participant, the person or persons specified in Section 8.3.
2.4 "BOARD OF DIRECTORS" shall mean the Board of Directors of the Employer.
2.5 "CODE" shall mean the Internal Revenue Code of 1986, as amended from time
to time.
2.6 "COMPENSATION" shall mean a Participant's total annual compensation paid to
him in cash by the Employer for the Plan Year (as reflected on IRS Form W-2),
including salary, overtime, commissions and bonuses, but excluding non-cash
compensation, and contributions paid under this Plan or any other program of
deferred or additional compensation, provided that a Participant's compensation
shall also include compensation which is not currently includable in the
Participant's gross income by reason of his election pursuant to Section 125,
Section 402(a)(8) or 401(k) of the Code.
Notwithstanding any provision contained herein to the contrary, only the first
$200,000 (or such amount as may be prescribed by the Secretary of the Treasury
or his delegate) of each Participant's Compensation shall be considered for all
purposes under the Plan; provided, however, that the dollar increase in effect
on January 1 of any calendar year shall be effective for the Plan Year beginning
in such calendar year. Except as otherwise provided under Section 401(a)(17) of
the Code and the regulations thereunder, if the Plan determines Compensation
over a period of time which contains less than twelve (12) calendar months, then
the annual Compensation limit shall be the amount equal to the annual
Compensation limit for the calendar year in which the Compensation period
begins, multiplied by the ratio obtained by dividing the number of full months
in the period by twelve (12). In determining the Compensation of a Participant
for the purposes of this limitation, the provisions of Code Section 414(q)(6)
shall apply, except to the extent that such rules shall only include the spouse
of the Participant and any lineal descendants of the Participant who have not
attained age nineteen (19) before the end of the Plan Year. If, as a result of
the application of such rules, the adjusted $200,000 limitation is exceeded, the
limitation shall be prorated among the affected individuals' Compensation
determined under this Section prior to the application of this limitation.
In addition to other applicable limitations set forth in the Plan, and
notwithstanding any other provision of the Plan to the contrary, for Plan Years
beginning on or after January 1, 1994, the annual Compensation of each
Participant taken into account under the Plan shall not exceed the OBRA '93
annual compensation limit. The OBRA '93 annual compensation limit is $150,000,
as adjusted by the Secretary of the Treasury
2
<PAGE> 8
or his delegate for increases in the cost of living in accordance with Section
401(a)(17)(B) of the Code. The cost-of-living adjustment in effect for a
calendar year applies to any period, not exceeding 12 months, over which
Compensation is determined (determination period) beginning in such calendar
year. If a determination period consists of fewer than 12 months, the OBRA '93
annual compensation limit shall be multiplied by a fraction, the numerator of
which is the number of months in the determination period, and the denominator
of which is 12.
For Plan Years beginning on or January 1, 1994, any reference in the Plan to the
limitation under Section 401(a)(17) of the Code shall mean the OBRA '93 annual
compensation limit set forth in this provision.
If Compensation for any prior determination period is taken into account in
determining a Participant's benefits accruing in the current Plan Year, the
Compensation for that prior determination period is subject to the OBRA '93
annual compensation limit in effect for that prior determination period. For
this purpose, for determination periods beginning before the first day of the
first Plan Year beginning on or after January 1, 1994, the OBRA '93 annual
compensation limit is $150,000.
For purposes of determining who is a Highly-Compensated Employee, Compensation
shall mean compensation as defined in Code Section 414(q)(7).
2.7 "EMPLOYEE" shall mean any individual who is employed as a common-law
employee of the Employer.
2.8 "EMPLOYER" shall mean Analysis & Technology, Inc.
2.9 " EMPLOYER SECURITY" shall mean stock of the Employer (or any member of the
Employer's Affiliated Group (as defined in Article 16)) which meets the
requirements of Section 409(1) of the Code.
2.10 "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
2.11 "FIDUCIARY" shall mean the Administrator, the Trustee and all other
persons who are fiduciaries (within the meaning of Section 3(21)(A) of ERISA)
with respect to the Plan.
2.12 "FISCAL YEAR" shall mean the regular annual accounting period of the
Employer for federal income tax purposes.
2.13 "HIGHLY-COMPENSATED EMPLOYEE" shall mean any Employee of the Employer who:
(a) was a five percent (5%) owners of the Employer (as defined in Section
416(i)(1) of the Code) during the "determination year" or "look-back year"; or
(b) earned more than $75,000 (as increased by cost-of-living adjustments)
of Compensation from the Employer during the "look- back year"; or
3
<PAGE> 9
(c) earned more than $50,000 (as increased by cost-of-living adjustments)
of Compensation from the Employer during the "look- back year" and was in the
"Top-Paid Group" of Employees for such year (as defined under Section 414(q)(4)
of the Code and the regulations promulgated thereunder); or
(d) was an officer of the Employer during the "look-back year" and
received Compensation during the "look-back year" from the Employer in excess of
fifty percent (50%) of the dollar limitation under Section 415(b)(1)(A) of the
Code. The number of officers shall be limited to the lesser of (i) fifty (50)
Employees; or (ii) the greater of three (3) Employees or ten percent (10%) of
all Employees. If the Employer does not have at least one officer whose annual
Compensation exceeds fifty percent (50%) of the dollar limitation under Section
415(b)(1)(A) of the Code, then the highest paid of the Employer shall be treated
as a Highly-Compensated Employee.
An Employee who is in the group consisting of the one hundred (100) Employees
paid the greatest Compensation during the "determination year" and also
described in subsections (b), (c) or (d) above when these subsections are
modified to substitute "determination year" for "look-back year", shall be
deemed a Highly-Compensated Employee for the determination year.
An Employee who separated from Service prior to the determination year shall be
treated as a Highly-Compensated Employee for the determination year if such
Employee was a Highly-Compensated Employee when such Employee separated from
Service, or was a Highly- Compensated Employee at any time after attaining age
fifty-five (55).
For purposes of this Section, the "determination year" shall be the Plan Year
for which a determination is being made as to whether an Employee is a
Highly-Compensated Employee. The "look-back year" shall be the twelve
(12)-month period immediately preceding the determination year. However, if the
Employer shall elect, the "look-back year" shall be the calendar year ending
with or within the Plan Year for which testing for the determination of which
Employees are Highly-Compensated Employees is being performed, and the
"determination year" (if applicable) shall be the period of time, if any, which
extends beyond the "look-back year" and ends on the last day of the Plan Year
for which such testing is being performed (the "lag period"). If the "lag
period" is less than twelve (12) months, the dollar threshold amounts specified
in (b), (c) and (d) above shall be pro rated based upon the number of months in
the "lag period".
If an individual is a member of the "family" (within the meaning of Section
414(q)(6)(B) of the Code) of a five percent (5%) owner or a Highly-Compensated
Employee in the group consisting of the ten (10) Highly-Compensated Employees
paid the greatest Compensation during the determination and/or look-back year,
then such individual shall not be considered a separate Employee, and any
Compensation paid to such individual (and any contribution or benefit on behalf
of such individual) shall be treated as if paid to (or on behalf of) the five
percent (5%) owner or such Highly-Compensated Employee.
2.14 "INVESTMENT ACCOUNT" shall mean an account maintained on the book of the
Plan by the Administrator or the Trustee for the purpose of recording each
Participant's beneficial interest in assets of the Trust other than Employer
Securities, and any income, expenses, gains or losses attributable thereto and
any distributions therefrom.
4
<PAGE> 10
2.15 "PARTICIPANT" shall mean any Employee who has satisfied the requirements
for eligibility to participant in the Plan in accordance with Article 3. "FORMER
PARTICIPANT" shall mean a Participant whose employment by the Employer has
terminated and for whom an amount remains in the Trust Fund which is allocable
to his Account.
2.16 "PLAN" shall mean the Analysis & Technology, Inc. Employee Stock Ownership
Plan as set forth herein, with any and all supplements and amendments which may
be in effect.
2.17 "PLAN YEAR" shall mean the regular annual accounting period of the Plan
and Trust, which shall be the twelve (12) consecutive- month period beginning
January 1 and ending December 31.
2.18 "RETIREMENT" shall mean a termination of employment which meets the
requirements of Article 7.
2.19 "SERVICE" is the period of an Employee's employment credited under the
Plan. Definitions related to Service are as follows:
"EMPLOYMENT COMMENCEMENT DATE" shall mean the date on which an Employee
first rendered an Hour of Service to the Employer;
"HOUR OF SERVICE" shall mean the following:
(a) Each hour for which an Employee is paid, or entitled to
payment, for the performance of duties for the Employer. These hours shall
be credited to the Employee for the Plan Year or Years in which the duties
are performed.
(b) Each hour for which an Employee is paid, or entitled to
payment, by the Employer on account of a period of time during which no
duties are performed (irrespective of whether the employment relationship
has terminated) due to vacation, holiday, illness, incapacity (including
disability), jury duty, military duty, or leave of absence; provided,
however, that
(1) no more than 501 Hours of Service shall be credited
under this paragraph (b) to an Employee on account of
any single continuous period during which the
Employee performs no services (whether or not such
period occurs in a single Plan Year or other
computation period);
(2) an hour for which an Employee is paid, or entitled
to payment, by the Employer on account of a period
during which no duties are performed shall not be
credited to the Employee if such payment is made or
due under a plan maintained solely for the purpose of
complying with applicable worker's compensation or
unemployment compensation or disability insurance
laws; and
(3) Hours of Service shall not be credited for a payment
which solely reimburses an Employee for medical or
medically related expenses incurred by the Employee.
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<PAGE> 11
(c) Each hour for which back pay, irrespective of mitigation of
damages, is either awarded or agreed to by the Employer; provided, however,
that the same Hours of Service shall not be credited under both paragraph
(a) above and this paragraph (c), and provided, further, that no more than
501 Hours of Service shall be credited under this paragraph (c) with
respect to payments of back pay, to the extent that such back pay is agreed
to or awarded for a period of time described in paragraph (b) above, during
which the Employee did not or would not have performed any duties. These
hours shall be credited to the Employee for the Plan Year or Years to which
the award, agreement or payment pertains, rather than the Plan Year in
which the award, agreement or payment is made.
Hours of Service for non-performance of duties shall be credited in
accordance with DOL Regulations Section 2530.200b-2(b). Hours of Service
shall be credited to the applicable computation period in accordance with
DOL Regulations Section 2530.200b- 2(c).
"BREAK IN SERVICE" shall mean a Plan Year during which an Employee was not
credited with more than 500 Hours of Service.
An Employee who is absent from work on account of pregnancy or of the birth
or adoption of a child, or for purposes of caring for a newborn or newly
adopted child, shall be credited during such absence with the number of
Hours of Service which would normally have been credited to him but for
such absence (or, if the number just described cannot be determined, with
eight (8) Hours of Service per day of such absence); provided, however,
that no more than 501 Hours of Service shall be credited with respect to
any such pregnancy, birth or adoption; and further provided that the
Employee must furnish such information as shall be reasonably required to
establish the reason for such absence and its duration. Hours of Service
shall be credited in accordance with this paragraph for the computation
period in which the absence begins, if necessary to prevent the Employee
from incurring a Break in Service in that period, or if not, in the
computation period next following that in which the absence begins.
"YEARS OF SERVICE" shall mean a Plan Year during which an Employee or
Participant is credited with at least one thousand (1,000) Hours of
Service.
2.20 "STOCK ACCOUNT" shall mean an account maintained on the books of the Plan
by the Administrator or the Trustee for the purpose of recording the number of
full and fractional shares of Employer Securities allocable to a Participant,
Former Participant or Beneficiary, and any additions, deletions or distributions
of shares of securities from such account.
2.21 "TRUST" and "TRUST FUND" shall mean the fund established pursuant to the
Trust Agreement, into which contributions are to be made and from which benefits
are to be paid in accordance with the terms of the Plan.
2.22 "TRUST AGREEMENT" shall mean the trust agreement adopted by the Employer
and relating to the Plan, with any and all supplements and amendments which may
be in effect.
2.23 "TRUSTEE" shall mean the trustee or trustees who may, from time to time,
be acting as trustee under the Trust Agreement.
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2.24 "VALUATION DATE" shall mean the date or dates established by the
Administrator for the valuation of the assets of the Trust. Valuation Dates
shall occur no less frequently than once every Plan Year. In the absence of any
action by the Administrator establishing a later date, the Valuation Date shall
be the last day of the Plan Year preceding the event requiring reference to a
Valuation Date.
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ARTICLE 3--ELIGIBILITY TO PARTICIPATE
3.1 INITIAL ELIGIBILITY PERIOD. All Employees participating in the Plan prior
to this restatement shall continue to participate, subject to the terms hereof.
Each other Employee shall become a Participant as of the last day of the first
Plan Year in which he is credited with at least one thousand (1,000) Hours of
Service, provided he is a member of an eligible class of Employees. To be a
member of an eligible class of Employees, an Employee must be employed by a Cost
Center, Segment or Subsidiary identified on Schedule I attached hereto for the
specified Plan Year.
3.2 ELIGIBILITY FOLLOWING A TERMINATION OF EMPLOYMENT. A Participant who
returns to employment with the Employer after a termination of employment shall
become eligible to participate as of the date on which he first completes an
Hour of Service following his return; provided, however, that if such
Participant was not vested in any portion of his Account balance derived from
Employer contributions and such Participant incurred five (5) consecutive Breaks
in Service prior to his reemployment, such Participant shall again become a
Participant in accordance with the provisions of Section 3.1.
3.3 DETERMINATION OF ELIGIBILITY BY ADMINISTRATOR. The determination of an
Employee's eligibility to participate in the Plan shall be made by the
Administrator from the records of the Employer, and the Administrator's
determination shall be conclusive upon all persons.
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<PAGE> 14
ARTICLE 4--CONTRIBUTIONS BY THE EMPLOYER
4.1 EMPLOYER'S ANNUAL CONTRIBUTION. For each Plan Year, the Employer shall
contribute to the Trust such amount of cash or Employer Securities as the Board
of Directors shall determine; provided that for any Plan Year in which there is
outstanding any "Stock Purchase Loan" (as defined in Section 6.3), the Employer
shall contribute to the Trust at least that amount of cash necessary to amortize
the loan in accordance with its terms; and provided, further, that the Employer
contribution may vary the amount allocated among the participating Cost Centers,
Segments and Subsidiaries identified on Schedule I attached hereto.
4.2 PAYMENT OF EMPLOYER'S CONTRIBUTION. The Employer's contribution for each
Plan Year shall be paid directly to the Trustee within the time required by law
in order to obtain a deduction of the amount of the contribution for federal
income tax purposes. Any such payments shall constitute a part of the Trust
upon their receipt by the Trustee, and the Trustee may either (a) use or apply
such payments to the repayment of principal or interest of any Stock Purchase
Loan (as defined in Section 6.3), or (b) allocate such amount among the Accounts
of Participants eligible to participate in the contribution as provided in
Section 5.2.
4.3 SCHEDULE. As soon as is practicable after the end of each Plan Year, the
Administrator shall prepare a schedule showing:
(a) the name of each Employee eligible to participate in the Employer's
contribution and any forfeitures for the Plan Year;
(b) the number of Years of Service each such Employee has completed
through the end of the Plan Year; and
(c) the amount of each such Employee's Compensation for the Plan Year.
4.4 PARTICIPANT CONTRIBUTIONS PROHIBITED. Participants are neither required
nor permitted to make contributions under the Plan.
4.5 OBLIGATION OF FIDUCIARIES. No Fiduciary shall be under a duty to inquire
into the correctness of the amount or, nor to enforce payment of, any
contribution to be made hereunder by the Employer, and no one shall have any
right to question any determination of the Board of Directors concerning the
amount of the Employer's contribution or the failure to make a contribution in
any given year.
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<PAGE> 15
ARTICLE 5--GENERAL RULES CONCERNING ALLOCATIONS
OF CONTRIBUTIONS AND TRUST ASSETS
5.1 ACCOUNTS OF PARTICIPANTS. The Administrator or the Trustee shall maintain
two separate accounts on the books of the Plan for each Participant. One such
account shall be called the "Stock Account" and shall reflect the number of full
and fractional shares of Employer Securities allocated to the Participant in
accordance with Sections 5.2 and 5.6. The other such account shall be called
the "Investment Account" and shall reflect the Participant's interest in assets
of the Trust Fund allocated to him in accordance with Sections 5.2 and 5.6 other
than Employer Securities. These accounts shall be maintained primarily for
bookkeeping purposes, and the Trustee shall not be required to segregate the
assets in the Accounts of Participants for purposes of investment or otherwise.
5.2 ELIGIBILITY FOR ALLOCATION OF EMPLOYER CONTRIBUTIONS AND FORFEITURES. To
be eligible for an allocation of Employer contributions and any forfeitures for
a Plan Year, a Participant must:
(a) be credited with at least one thousand (1,000) Hours of Service
during the Plan Year; and
(b) be employed by the Employer in an eligible class of Employees
(within the meaning of Section 3.1) on the last day of the Plan
Year.
5.3 ALLOCATION OF EMPLOYER CONTRIBUTIONS AND FORFEITURES. Subject to Section
5.4 and Article 6, for Plan Years beginning after December 31, 1993, the value
of the Employer's contributions for each Plan Year, and any forfeitures then
available for allocation as described in Article 9, shall be allocated among the
eligible Participants in the proportion that the Compensation of each
Participant employed by the participating Cost Center, Segment or Subsidiary, as
the case may be, bears to the total Compensation of all such eligible
Participants employed by such Cost Center, Segment or Subsidiary.
For Plan Years beginning prior to January 1, 1994, Employer contributions for
each Plan Year shall be allocated among the Accounts of eligible Participants as
follows:
(i) for each one hundred dollars ($100) of Compensation or major
fraction thereof earned during such Plan Year, a Participant shall be credited
with one (1) allocation unit; and
(ii) for each Year of Service, a Participant shall be credited with two
(2) allocation units; and
(iii) the Employer contribution for such Plan Year shall be allocated to
the Account of each Participant in proportion to the ratio that the number of
allocation units credited under (i) and (ii) above to each eligible Participant
bears to the total number of such allocation units credited to all such eligible
Participants.
Forfeitures for each Plan Year prior to January 1, 1994 shall be allocated among
the Accounts of eligible Participants in proportion to the ratio that the
balance of each eligible Participant's Account bears to the total balance of all
eligible Participants' Accounts for the Plan Year.
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<PAGE> 16
Subject to Section 6.1, Employer contributions in the form of Employer
Securities shall be allocated among the Stock Accounts of the Participants, and
Employer contributions in any other form shall be allocated among the Investment
Accounts of the Participants.
5.4 LIMITATION ON PARTICIPANT ALLOCATIONS. Any other provision of the Plan
notwithstanding, the Annual Addition (as hereinafter defined) with respect to a
Participant for any Plan Year shall not exceed an amount equal to the lesser of
(i) $30,000 (as adjusted from time to time in accordance with Treasury
Regulations issued pursuant to Section 415 of the Code), or (ii) twenty-five
percent (25%) of the Participant's compensation (as reported on Form W-2) for
the Plan Year; provided, however, that the amount just described shall be
reduced by the annual addition credited to the Participant for that Plan Year
under any other defined contribution plan (within the meaning of Section 414(j)
of the Code) maintained by the Employer, further reduced by that amount by which
his Annual Addition hereunder must be reduced in order that the sum of the
Defined Benefit Plan Fraction (as hereinafter defined) and the Defined
Contribution Fraction (as hereinafter defined), computed as of the end of the
Plan Year, shall not exceed 1.0.
For purposes of this Section 5.4, the following definitions shall apply:
(a) The "Annual Addition" with respect to a Participant for any Plan
Year shall mean the sum of the Employer contributions and forfeitures allocated
to his Account for the Plan Year in accordance with Section 5.3; provided,
however, that for any Plan Year in which not more than one-third of the
contributions of the Employer are allocated to the Accounts of Participants who
are Highly- Compensated Employees, the Annual Addition shall not include (1)
forfeitures of Employer Securities which were acquired with the proceeds of a
loan described in Section 404(a)(9)(A) of the Code, or (2) contributions of the
Employer to the Plan which are applied to the payment of interest on a loan
incurred for the purpose of acquiring Employer Securities as described in
Section 404(a)(9)(B) of the Code and are charged against the Participant's
Account.
(b) The "Defined Benefit Plan Fraction" for any Plan Year means a
fraction, the numerator of which is the projected annual benefit of the
Participant, determined as of the close of the Plan Year, under all defined
benefit plans maintained by the Employer, and the denominator of which is the
lesser of (1) the product of 1.25 multiplied by the dollar limitation in effect
under Section 415(b)(1)(A) of the Code for the Plan Year or (2) the product of
1.4 multiplied by the amount which may be taken into account under Section
415(b)(1)(B) of the Code with respect to the Participant for the Plan Year.
(c) The "Defined Contribution Plan Fraction" for any Plan Year means a
fraction, the numerator of which is the sum of the Annual Additions credited to
the Participant under the Plan and any other defined contribution plan
maintained by the Employer as of the close of the Plan Year, and the denominator
of which is the sum of the lesser of the following amounts determined for the
Plan Year and for each of the Participant's prior Years of Service with the
Employer: (1) the product of 1.25 multiplied by the dollar limitation under
Section 415(c)(1)(A) of the Code for the Plan Year, or (2) the product of 1.4
multiplied by twenty-five percent (25%) of the Participant's compensation (as
reported on Form W-2) for the Plan Year.
Any amount that would otherwise be allocated to the Account of a Participant but
for the limitations set forth in this Section 5.4 (hereinafter referred to as
the "Excess Amount") shall be held in an unallocated suspense account to which
investment gains and losses shall not be allocated, and amounts shall be
withdrawn from the suspense account and allocated as hereinafter set forth:
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(i) If the Participant is entitled, in accordance with Section
5.2, to participate in contributions by the Employer at the end of the
succeeding Plan Year, then the Excess Amount shall be reapplied to reduce
contributions of the Employer under the Plan for that Plan Year (and for
succeeding Plan Years) for the Participant, so that in each such year the
sum of actual Employer contributions (including any allocation of
forfeitures) plus the reapplied amount of Employer contributions shall
equal the amount which would otherwise be allocated to the Participant's
Account. If the Participant is not entitled, in accordance with Section
5.2, to participate in contributions by the Employer at the end of the
succeeding Plan Year, then the Excess Amount shall be reapplied to reduce
contributions of the Employer (including allocation of any forfeitures) for
all remaining Participants. If the Plan is terminated while there remains
an Excess Amount which cannot under the limitations of this Section 5.4 be
allocated to the Accounts of any Participants, the Excess Amount shall be
returned to the Employer, notwithstanding any other provision hereof.
(ii) In lieu of or in addition to the procedures described in
this paragraph, the Employer may, if it so elects, reduce the contribution
to the Plan for allocation to the Account of the Participant in question by
the amount necessary to eliminate the Excess Amount.
5.5 NET VALUE OF THE TRUST. The Trustee shall ascertain the net value of the
Trust on the basis of the fair market values of the assets and liabilities as of
each Valuation Date. Such net value shall reflect any estimated and unpaid
liabilities. Solely for purposes of allocating Trust assets in accordance with
Section 5.6, such net value shall exclude (a) the amount of the Employer's
contribution paid or accrued with respect to the Plan Year to which the
valuation relates and (b) assets in the Stock Accounts of Participants.
5.6 ALLOCATION OF TRUST ASSETS. The balance of the Investment Account of each
Participant shall be adjusted as of each Valuation Date in the following manner:
the net value of the Trust (ascertained in accordance with Section 5.5) as
determined on each Valuation Date shall be compared with the total of the credit
balances of the Investment Accounts of all Participants as of the previous
Valuation Date. To the extent that the net value of the Trust as of the current
Valuation Date exceeds (or is less than) the total of said credit balances as of
the previous Valuation Date, the excess (or deficit) shall be credited to (or
charged against) the Investment Accounts of all Participants in the proportion
that the credit balance of the Investment Account of each Participant bears to
the total credit balances of the Investment Accounts of all Participants.
Pursuant to the rules set forth in Article 6, the credit balance of the Stock
Accounts of Participants shall be adjusted by adding thereto or deleting
therefrom the appropriate number of full and fractional shares of Employer
Securities arising from acquisitions of securities and from distributions or
other transactions occurring since the preceding Valuation Date.
Except as provided in the following sentence, for purposes of the above
computations, any distribution or transfer made to or for the benefit of a
Participant, Former Participant or Beneficiary since the previous Valuation Date
shall be charged against the credit balance of the Account from which the
distribution was made as of the Valuation Date which precedes or coincides with
the date of the distribution. Under such nondiscriminatory procedures as the
Administrator may establish in lieu of or in addition to the allocation
procedures specified above, income, gains, losses and expenses of the Trust may
be allocated among Accounts in such equitable manner as the Administrator shall
deem appropriate to reflect the interest in the Trust of Accounts arising from
contributions or transfers to Accounts on behalf of a Participant, or
distributions or transfers from Accounts, occurring between Valuation Dates.
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5.7 LIMITATION OF PARTICIPANTS' RIGHTS. Nothing contained in this Article 5 or
elsewhere in the Plan shall be deemed to give any Participant any interest in
any specific part of the Trust Fund or any interest other than his right to
receive benefits in accordance with the applicable provisions of the Plan.
5.8 PARTICIPANTS OMITTED IN ERROR. In the event a Participant is not allocated
a share of the Employer contribution or forfeitures as a result of an
administrative error in any Plan Year, the Employer may elect to (1) make an
additional contribution on behalf of such omitted Participant in an appropriate
amount, and/or (2) deduct the appropriate amount from the next succeeding
Employer contribution and/or forfeitures and allocate such amount to the
Participant's Account prior to making the allocations set forth under Section
5.3.
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ARTICLE 6--SPECIAL RULES CONCERNING ALLOCATIONS
OF EMPLOYER SECURITIES AND OTHER ASSETS
6.1 INVESTMENT IN EMPLOYER SECURITIES. The Trust Agreement shall authorize and
direct the Trustee to invest assets of the Trust Fund primarily in Employer
Securities. Accordingly, the Plan provides for the establishment of two
separate Accounts for each Participant, one to be designated as the Stock
Account and the other to be designated as the Investment Account. Contributions
by the Employer, forfeitures by Participants, earnings of the Trust Fund and
distributions from the Trust Fund shall be allocated to and among the Stock
Accounts and Investment Accounts of Participants in accordance with the general
rules in Article 5 and the special rules in this Article 6.
As of the last day of each Plan Year, the Administrator shall first allocate to
each Participant entitled in accordance with Section 5.2 to share in the
Employer's contributions and forfeitures for the Plan Year, an amount (computed
in dollars) equal to his proportionate share of the Employer's contributions and
forfeitures for the Plan Year, as set forth in Section 5.3. To the extent that
the aggregate dollar amount allocable among all Participants is held by the
Trustee in the form of Employer Securities at the time the allocation is made
(which allocation may be made after the close of the Plan Year), there shall be
allocated to the Stock Account of each Participant his ratable portion of the
total number of such shares of Employer Securities. The remaining portion of
the aggregate amount of the Employer's contributions and forfeitures allocable
among all Participants shall be allocated ratably among the Investment Accounts
of the Participants entitled in accordance with Section 5.2 to share in the
Employer's contributions and forfeiture for such Plan Year.
If the Trustee purchases Employer Securities in exchange for assets of the Trust
Fund allocable to Investment Accounts of Participants, then the Administrator or
the Trustee shall debit the Investment Accounts of all Participants ratably in
proportion to their respective values by the aggregate amount used for such
purchase, and credit the shares of Employer Securities so purchased to the Stock
Accounts of the Participants ratably in the same proportion. If the Trustee
shall sell or exchange Employer Securities allocable to the Stock Accounts of
Participants, the Administrator or the Trustee shall debit the Stock Accounts of
the Participants by the aggregate number of shares sold or exchanged ratably in
proportion to the number of shares previously held in each such Account, and
credit to and allocate among the Investment Accounts of the Participants the
amount of cash or value of other assets received in such sale or exchange
ratably in the same proportion, provided that if the Trustee shall sell or
exchange Employer Securities allocable to the Stock Account of a Participant
pursuant to the Participant's instructions in accordance with Section 12.5, such
Account shall be debited by the number of shares so sold or exchanged and shall
be credited with the amount of cash or the other assets received for such shares
in such sale or exchange.
Unless otherwise instructed by the Employer, the Trustee shall, to the extent
feasible, reinvest in Employer Securities all dividends or other earnings and
distributions received with respect to such securities. Additional shares so
acquired shall be allocated among the Stock Accounts of Participants ratably in
proportion to the number of shares previously held in each Account. If and for
so long as such reinvestment is not feasible, the amount of dividends or other
earnings or distributions shall be allocated among the Investment Accounts of
Participants in proportion to the number of shares allocated to the Stock
Accounts of the Participants. Alternatively, the Employer may direct the
Trustee to distribute dividends currently to Participants or to apply dividends
to the payments due on any Stock Purchase Loan (as defined in Section 6.3), all
as determined from time to time by the Employer in its discretion.
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<PAGE> 20
6.2 VALUATION OF SECURITIES. The Administrator or Trustee shall ascertain the
value of Employer Securities as of each Valuation Date, in accordance with
applicable Treasury Regulations under Section 4975 of the Code. All valuations
relied upon for purposes of any purchase, exchange or distribution by the Plan
of Employer Securities which are not readily tradable on an established
securities market shall be made by an independent appraiser meeting requirements
similar to those contained in Treasury Regulations pursuant to Section 170(a)(1)
of the Code. The Administrator's records shall reflect the tax cost or adjusted
basis of all shares of Employer Securities acquired pursuant to the Plan.
6.3 ALLOCATION OF SECURITIES PURCHASED WITH PROCEEDS OF LOAN. Pursuant to the
Trust Agreement, the Trustee may be directed by the Employer to borrow money for
the purpose of acquiring Employer Securities. While any such loan (hereinafter
referred to as a "Stock Purchase Loan") or portion thereof remains outstanding,
such Employer Securities shall be held in a suspense account and shall be
allocated among the Stock Accounts of Participants, in accordance with Section
5.3, at such time and in such amounts as the Stock Purchase Loan has been
reduced by principal payments, or if appropriate, principal and interest
payments. For purposes of Section 5.4, the Annual Addition of each Participant
for any Plan Year in which allocations are made pursuant to the foregoing
provisions of this Section 6.3 shall be calculated by reference to the amount of
Employer contributions applied to payments under the Stock Purchase Loan, rather
than to the current value of Employer Securities released from the suspense
account.
6.4 ACQUISITION OF SECURITIES FOR DISTRIBUTION TO PARTICIPANT OR BENEFICIARY.
Under Section 10.1, distributions to a Participant, Former Participant or
Beneficiary may be made either in cash or in the form of Employer Securities, or
in any combination thereof. If, at the time any such distribution becomes
payable partly or wholly in the form of Employer Securities, the distributee's
Account does not contain a sufficient amount of Employer Securities to make the
required distribution, then the Administrator shall direct the Trustee to use
other assets allocable to the Account of the distributee to acquire additional
securities for distribution to him. If the purchase of additional securities is
not feasible at the time in question, then the Trustee shall transfer from the
Stock Accounts of all remaining Participants the appropriate number of shares of
securities, and shall allocate the assets of the Investment Account of the
distributee among the Investment Accounts of the remaining Participants an
amount equal in value to such securities, and shall distribute such shares to
the distributee, or hold such shares in a segregated account for distribution in
accordance with the Administrator's notice.
6.5 PRIVILEGES OR RESTRICTIONS ON EMPLOYER SECURITIES; IN GENERAL. Subject to
Section 6.6, any shares of Employer Securities contributed to or otherwise
acquired by the Trust or distributed to a Participant, Former Participant or
Beneficiary pursuant to the Plan may be made subject to such lawful rights,
privileges or restrictions as the Employer may from time to time confer or
impose, including, without limitation, a right on the part of the distributee to
cause the Employer to purchase the securities or any portion thereof, a right of
first refusal in the Employer or the Trust to purchase all or any portion the
securities thereof from the distributee, and restrictions on transfer whether
arising under applicable securities laws or otherwise; provided, however, that
the Employer shall not confer any such rights as privileges or impose any such
restrictions in a manner that discriminates in favor of Participants who are
Highly-Compensated Employees. The Employer shall from time to time notify the
Administrator and the Trustee of any rights, privileges or restrictions that
will be applicable to shares of securities contributed to, acquired by or
distributed from the Trust.
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6.6 PRIVILEGES OR RESTRICTIONS APPLICABLE TO SECURITIES ACQUIRED WITH STOCK
PURCHASE LOAN. Notwithstanding any other provision of the Plan or the Trust
Agreement, the following terms or conditions shall at all times apply to any
Employer Securities acquired with proceeds of a Stock Purchase Loan:
(a) Right of First Refusal. Employer Securities acquired with the
proceeds of a Stock Purchase Loan may, but need not be, subject to a right of
first refusal which meets the requirements of this paragraph (a). Securities
subject to a right must be stock or an equity security, or a debt security
convertible into stock or an equity security, and must not be publicly traded at
the time the right may be exercised. The right of first refusal may be in favor
of the Employer, the Trust or both in any order of priority. The selling price
and other terms under the right must not be less favorable to the seller than
the greater of the value of the security determined under Treasury Regulations
Section 54.4975-11(d)(5), or the purchase price and other terms offered by a
buyer, other than the Employer or the Trust, making a good faith offer to
purchase the security. The right of first refusal must lapse no later than 14
days after the security holder gives to the holder of the right written notice
that an offer by a third party to purchase the security has been received.
(b) Put Option. Employer Securities acquired with the proceeds of a
Stock Purchase Loan must be subject to a put option, if at the time of its
distribution it is either subject to a trading limitation, or is not publicly
traded. For purposes of this paragraph (b), a "trading limitation" on a
security is a restriction under any federal or state securities law, any
regulation thereunder, or an agreement, not prohibited by Treasury Regulations
Section 54.4975-7(b) affecting the security so as to make the security not as
freely tradable as one not subject to such a restriction. The put option must
be exercisable only by a Participant, Former Participant or Beneficiary (any and
all such persons being hereinafter in this Section 6.6 referred to generally as
the "Participant") or by any donee of the Participant or by a person to whom the
security passes by reason of a Participant's death. The put option must permit
a Participant to put the security to the Employer, and it may grant the Trust an
option to assume the rights and obligations of the Employer at the time that the
put option is exercised, but under no circumstances may the put option bind the
Trust. If federal or state law will be violated by the Employer's honoring such
a put option, the put option must permit the security to be put, in a manner
consistent with such law, to a third party (for example, but without limitation,
to a related employer or a shareholder other than the Trust) that has
substantial net worth at the time the Stock Purchase Loan is made and whose net
worth is reasonably expected to remain substantial.
(c) Duration of Put Option.
(1) General Rule. A put option may be exercisable at any
time during a period or periods which include at least (A) sixty (60) days
beginning on the date the security subject to the put option is
distributed by the Trustee and (B) sixty (60) days in the next following
Plan Year, in accordance with regulations issued pursuant to Section 409
of the Code.
(2) Special Rule. In the case of a security that is
publicly traded without restriction when distributed, but ceases to be so
traded within the put option period(s) set forth in subparagraph (1), the
Employer must notify each security holder in writing on or before the
tenth (10th) day after the date the security ceases to be so traded that
during the remainder of such period(s) the security is subject to a put
option. The number of days between such tenth (10th) day and the date on
which notice is actually given, if later than the tenth (10th) day, must
be added to the duration of the put option. The notice must inform
distributees of the terms of the put options that they are to hold.
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(d) Other Put Option Provisions.
(1) Manner of Exercise. A put option is exercised by
the holder's notifying the Employer in writing that the put option is
being exercised.
(2) Time Excluded from Duration of Put Option. The
period during which a put option is exercisable does not include any time
when a distributee is unable to exercise it because the party bound by the
put option is prohibited from honoring it by applicable federal or state
law.
(3) Price. The price at which a put option must be
exercisable is the value of the security, as determined under Treasury
Regulations Section 54.4975-11(d)(5).
(4) Payment Terms. The provisions for payment under a
put option must provide that the Employer, or the Trust if the Plan so
elects, shall repurchase the Employer Securities as follows:
(A) If the distribution constitutes a total
distribution within the meaning of Section 409(h)(5) of the
Code, payment of the fair market value of the repurchased
Employer Securities may be made in five (5) substantially
equal annual payments, of which the first shall be paid not
later than thirty (30) days after the Participant exercises
the put option. The purchaser shall pay a reasonable rate
of interest and provide adequate security on amounts not
paid after thirty (30) days.
(B) If the distribution does not constitute a
total distribution, the purchaser shall pay the Participant
an amount equal to the fair market value of the Employer
Securities repurchased no later than thirty (30) days after
the Participant exercises the put option.
(5) Payment Restrictions. Payment under a put option
must not be restricted by the provisions of a Stock Purchase Loan or any
other arrangement, including the terms of the Employer's Articles of
Incorporation, unless so required by applicable law.
(e) Nonterminable Provisions. The foregoing provisions of this Section
6.6 shall not terminate, notwithstanding the repayment of a Stock Purchase Loan
or the cessation of treatment of this Plan as an employee stock ownership plan
within the meaning of Section 4975(e)(7) of the Code.
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<PAGE> 23
ARTICLE 7--BENEFITS BECAUSE OF RETIREMENT
7.1 NORMAL RETIREMENT. Subject to Section 7.2, a Participant may retire from
the Service of the Employer on the first day of the month next following his
sixty-fifth (65th) birthday (his "Normal Retirement Date"). Upon his attaining
age sixty-five (65), the Participant's Account shall become 100% vested
notwithstanding the provisions of Section 9.2.
7.2 LATE RETIREMENT. Notwithstanding Section 7.1, a Participant who has
reached his Normal Retirement Date may remain as an Employee of the Employer
until the date he establishes with the Employer for his retirement. While such
a Participant continues to be an Employee, he shall have all the rights under
the Plan that he would have had if he had not yet reached his Normal Retirement
Date.
7.3 EARLY RETIREMENT. A Participant may retire under the Plan after attaining
age sixty (60) provided his Account is 100% vested under Section 9.2.
7.4 DISABILITY RETIREMENT. If a Participant becomes totally and permanently
disabled while in the employ of the Employer prior to his Normal Retirement
Date, his vested Account, if any, as determined under Section 9.2 shall be
distributed in accordance with Article 10. For this purpose, total and
permanent disability shall be established by a doctor's certificate that is
satisfactory to the Administrator.
7.5 RETIREMENT BENEFITS. Upon his Retirement, a Participant shall be entitled
to benefits under the Plan to the extent of the balance (or vested balance, as
the case may be) of his Account as of the most recent Valuation Date that
precedes or coincides with any distribution of such benefits. Benefits
determined hereunder shall be payable at the time and in the manner determined
in accordance with Article 10.
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<PAGE> 24
ARTICLE 8--BENEFITS BECAUSE OF DEATH
8.1 DEATH OF A PARTICIPANT OR FORMER PARTICIPANT. If a Participant dies while
an Employee, his Account shall become 100% vested upon his death notwithstanding
the provisions of Section 9.2, and his Beneficiary shall be entitled to benefits
under the Plan to the extent of the credit balance of his Account as of the most
recent Valuation Date that precedes or coincides with any distribution of such
benefits. If a Former Participant dies before distribution to him of all of the
benefits to which he is entitled under the Plan has been completed, his
Beneficiary shall be entitled to benefits under the Plan to the extent of his
remaining vested Account. Benefits determined hereunder shall be payable at the
time and in the manner determined in accordance with Article 10.
8.2 DESIGNATION OF BENEFICIARY. A Participant or Former Participant may
designate a Beneficiary and may revoke or change any prior designation of
Beneficiary by filing with the Administrator a written designation of
Beneficiary signed by him on a form acceptable to the Administrator; provided,
however, that a Participant's designation of a Beneficiary other than his spouse
shall not take effect unless either (a) his spouse consents in writing to such
designation and the spouse's consent acknowledges the effect of such designation
and is witnessed by a notary public or a representative of the Plan, or (b) it
is established to the satisfaction of the Administrator that the Participant has
no spouse, or that spouse's consent cannot be obtained because the spouse cannot
be located, or because of such other circumstances as may be prescribed in
regulations pursuant to Section 417 of the Code. No such designation shall be
effective unless so filed prior to the death of the Participant or Former
Participant. The marriage of a Participant shall revoke any designation of
Beneficiary made by him before the marriage.
8.3 DISTRIBUTION IN CASE NO BENEFICIARY DESIGNATED OR SURVIVING. If no
Beneficiary has been properly designated or if no designated Beneficiary
survives a deceased Participant or Former Participant, the Account of the
deceased shall be paid to Beneficiaries in the following order of priority:
(a) the Participant's spouse;
(b) the Participant's estate.
Provided that as a condition to payment, the Administrator may require such
receipts, releases, indemnity agreements, waivers, proofs and other documents as
it may deem necessary or desirable.
8.4 DEATH OF A BENEFICIARY. Unless otherwise specified in the form of
designation of Beneficiary, in the event of the death of a Beneficiary who has
become entitled to receive benefits under the Plan, any benefits remaining to be
paid to the deceased Beneficiary shall be paid to his estate.
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<PAGE> 25
ARTICLE 9--BENEFITS BECAUSE OF SEVERANCE
9.1 SEVERANCE BENEFIT. A Participant whose employment with the Employer
terminates for any reason other than his death or Retirement shall be entitled
to a severance benefit under the Plan to the extent of the vested portion of the
amount credited to his Account, and the remainder shall be forfeited and
re-allocated in accordance with Section 5.3. Any severance benefit determined
under this Article 9 shall be payable at the time and in the manner determined
in accordance with Article 10.
9.2 VESTED AMOUNT. The vested portion of the Account of a Participant shall be
an amount equal to the product obtained by multiplying:
(a) the credit balance of his Account as of the Valuation Date that
precedes or coincides with a distribution of benefits on account of his
termination of employment; and
(b) the percentage set forth below opposite the number of his Years of
Service:
<TABLE>
<CAPTION>
NUMBER OF
YEARS OF SERVICE VESTED PERCENTAGE
---------------- -----------------
<S> <C>
Less than 3 years 0%
3 years but less than 4 20%
4 years but less than 5 40%
5 years but less than 6 60%
6 years but less than 7 80%
7 years and thereafter 100%
</TABLE>
9.3 YEARS OF SERVICE IN CERTAIN CASES. The following rules shall apply for
purposes of determining the number of Years of Service to be credited to a
Participant who returns to employment following one or more consecutive Breaks
in Service:
(a) In determining the vested portion of his Account attributable to
contributions and forfeitures allocated before such Breaks in Service, Years of
Service after his Breaks in Service shall be included unless he has incurred at
least five (5) consecutive Breaks in Service.
(b) In determining the vested portion of his Account attributable to
contributions and forfeitures allocated after such Breaks in Service, Years of
Service prior to his Breaks in Service shall be included unless he was credited
with fewer than three (3) Years of Service prior to his Breaks in Service, and
the number of his consecutive Breaks in Service is five (5) or more.
(c) In the case of a Participant who returns to employment with the
Employer following five (5) or more consecutive Breaks in Service, separate
accounts shall be maintained with respect to the portions of his Account accrued
before and after his Breaks in Service.
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<PAGE> 26
9.4 FORFEITURE OF NONVESTED BALANCE. The nonvested portion of a Participant's
Account, as determined in accordance with Section 9.2, shall be forfeited as of
the earlier of (i) the last day of the Plan Year in which the Participant
receives distribution of his vested Account or (ii) the last day of the Plan
Year in which the Participant incurs five (5) consecutive Breaks in Service. The
amount forfeited shall be reallocated to the remaining eligible Participants
pursuant to Section 5.3.
If the Participant returns to the employment of the Employer prior to incurring
five (5) consecutive Breaks in Service and prior to receiving distribution of
his vested Account, the nonvested portion shall be restored. However, if the
nonvested portion of the Participant's Account was allocated as a forfeiture as
the result of the Participant receiving distribution of his vested Account
balance, the nonvested portion shall be restored if:
(a) the Participant resumes employment prior to incurring five (5)
consecutive Breaks in Service; and
(b) the Participant repays to the Plan, as of the earlier of (i) the
date which is five (5) years after his reemployment date or (ii)
the date which is the last day of the period in which the
Participant incurs five (5) consecutive Breaks in Service, an
amount equal to the total distribution derived from Employer
contributions under Section 5.3.
The nonvested amount shall be restored to the Participant's Account, without
interest or adjustment for interim Trust valuation experience, by a special
Employer contribution or from the next succeeding Employer contribution and
forfeitures, as appropriate.
For purposes of this Section 9.4, a Participant who is not vested in any portion
of his Account attributable to Employer contributions shall be deemed to have
received distribution of his Account as of the end of the Plan Year in which he
incurs a Break in Service.
9.5 RETURN TO EMPLOYMENT BEFORE DISTRIBUTION OF VESTED ACCOUNT BALANCE. If
distribution is made to an Employee of less than the Employee's entire vested
Account, and if the Employee returns to Service, a separate record shall be
maintained of said Account balance. The Employee's vested interest at any time
in this separate account shall be an amount equal to the formula P(AB+D)-D,
where P is the vested percentage at the relevant time, AB is the Account balance
at the relevant time, and D is the amount of the distribution made to the
Employee.
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<PAGE> 27
ARTICLE 10--DISTRIBUTION OF BENEFITS
10.1 TIME FOR DISTRIBUTION OF BENEFITS. In the event of a Participant's
Retirement, disability, or death, distribution of such Participant's Account (or
vested portion thereof as the case may be) shall be made or commence no later
than one (1) year after the close of the Plan Year in which such event occurs.
In the event a Participant terminates employment with the Employer for any other
reason, distribution of such Participant's vested Account shall be made or
commence no later than one (1) year after the close of the Plan Year which is
the fifth (5th) Plan Year following the Plan Year in which the Participant
terminated employment, except that this paragraph shall not apply if the
Participant is reemployed by the Employer before distribution is required to
begin under this paragraph.
For purposes of this Section 10.1, the Account balance of a Participant shall
not include any Employer Securities acquired with the proceeds of a Stock
Purchase Loan (within the meaning of Section 6.3) until the close of the Plan
Year in which such loan is repaid in full.
Notwithstanding the foregoing provision of this Section, in no event shall
distribution of Retirement or severance benefits be made or commence later than
the April 1 of the year following the calendar year in which the Participant
attains age 70-1/2 (regardless of whether the Participant continues to be an
Employee). Provided, however, that for any Participant who attained age seventy
and one-half (70-1/2) on or before January 1, 1988 and was not a five percent
(5%) owner of the Employer, in no event shall distribution be made or commence
later than the later of (i) the April 1 following the calendar year in which he
terminates employment or (ii) the April 1 following the calendar year in which
he attains age 70-1/2.
Notwithstanding the preceding provisions of this Section 10.1, whenever the
vested Account of a Participant exceeds $3,500, distribution of such vested
Account to the Participant shall not be made or commence prior to the
Participant's Normal Retirement Date unless the Participant shall consent in
writing to an earlier distribution.
10.2 MANNER OF DISTRIBUTION OF RETIREMENT AND SEVERANCE BENEFITS. Distribution
of a Participant's vested Account may be made in the form of a lump-sum payment
or, provided the Participant's vested Account exceeds $3,500, in substantially
equal, annual installments over a period not exceeding five (5) years (provided
that the period over which installments may be distributed may be extended an
additional year (up to an additional five years) for each $100,000 or fraction
thereof by which his vested Account exceeds $500,000, as the Participant my
elect. Such distribution may be made in whole shares of Employer Securities,
cash or a combination of both, as determined by the Administrator; provided,
however, that a Participant shall have the right to demand distribution of his
vested Account entirely in whole shares of Employer Securities (with the value
of any fractional shares being paid in cash).
If distribution is made wholly or partially in the form of Employer Securities,
and if, at the time of distribution, the Employer Securities are not readily
tradable on an established market, the Participant shall have the right to
require the Employer to purchase such securities under a fair valuation formula
and method which complies with applicable requirements of Section 409(h) or
successor provision of the Code and the provisions of Section 6.6 of the Plan.
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<PAGE> 28
Notwithstanding the foregoing provisions of this Section 10.2, if the Employer's
charter or bylaws restrict ownership of substantially all shares of Employer
Securities to Employees and the Trust, distribution of a Participant's vested
Account may be entirely in cash without granting the Participant the right to
demand distribution in the form of Employer Securities.
10.3 MANNER OF DISTRIBUTION OF DEATH BENEFITS. Distribution of any death
benefit shall be made in the form of a lump-sum payment and may be made in whole
shares of Employer Securities, cash or a combination of both, as determined by
the Administrator; provided, however, that a Participant's Beneficiary shall
have the right to demand distribution entirely in whole shares of Employer
Securities (with the value of any fractional shares being paid in cash).
If distribution is made wholly or partially in the form of Employer Securities,
and if at the time of distribution, the Employer Securities are not readily
tradable on an established market, the Beneficiary shall have the right to
require the Employer to purchase such securities under a fair valuation formula
and method which complies with applicable requirements of Section 409(h) or
successor provision of the Code and the provisions of Section 6.6 of the Plan.
Notwithstanding the foregoing provisions of this Section 10.3, if the Employer's
charter or bylaws restrict ownership of substantially all shares of Employer
Securities to Employees and the Trust, distribution may be entirely in cash
without granting the Beneficiary to demand distribution in the form of Employer
Securities.
10.4 NOTICE OF DEATH, RETIREMENT OR SEPARATION FROM SERVICE. As soon as
possible after the Retirement, death or other separation from service of a
Participant or Former Participant, the Administrator shall cause to be delivered
to the Trustee a notice specifying the name and address of the Participant or
Former Participant (of, if applicable, the Beneficiary) who is entitled to
receive benefits under the Plan, and the time and manner in which such benefits
are to be paid. If benefits are to be deferred and paid solely in the form of
Employer Securities, the notice shall direct the Trustee to liquidate the
Participant's or Former Participant's Investment Account as expeditiously as
possible and to reinvest the proceeds thereof in additional Employer Securities,
whereupon such securities together with the Participant's Securities Account
shall be distributed to or held for distribution to the Participant, Former
Participant or Beneficiary in accordance with the notice.
10.5 ELIGIBLE ROLLOVER DISTRIBUTIONS.
Notwithstanding the foregoing provisions of this Article 10, the provisions of
this Section 10.5 shall apply to distributions made on or after January 1, 1993.
(a) A distributee may elect, at the time and in the manner prescribed
by the Administrator, to have any portion of an eligible rollover distribution
paid directly to an eligible retirement plan specified by the distributee in a
direct rollover.
(b) Definitions:
(i) Eligible Rollover Distribution. An eligible rollover
distribution is any distribution of all or any portion of the balance to the
credit of the distributee, except that an eligible rollover distribution does
not include: any distribution that is one of a series of substantially equal
periodic payments (not less
23
<PAGE> 29
frequently than annually) made for the life (or life expectancy) of the
distributee or the joint lives (or joint life expectancies) of the distributee
and the distributee's designated beneficiary, or for a specified period of ten
(10) years or more; any distribution to the extent such distribution is required
under Section 401(a)(9) of the Code; and the portion of any distribution that is
not includable in gross income (determined without regard to the exclusion for
net unrealized appreciation with respect to Employer Securities).
(ii) Eligible Retirement Plan. An eligible retirement plan is an
individual retirement account described in Section 408(a) of the Code, an
individual retirement annuity described in Section 408(b) of the Code, an
annuity plan described in Section 403(a) of the Code or a qualified trust
described in Section 401(a) of the Code, that accepts the distributee's eligible
rollover distribution. However, in the case of an eligible rollover
distribution to the surviving spouse, an eligible retirement plan is an
individual retirement account or individual retirement annuity.
(iii) Distributee. A distributee includes an Employee or former
Employee. In addition, the Employee's or former Employee's surviving spouse and
the Employee's or former Employee's spouse or former spouse who is the alternate
payee under a qualified domestic relations order, as defined in Section 414(p)
of the Code, are distributees with regard to the interest of the spouse or
former spouse.
(iv) Direct Rollover. A direct rollover is a payment by the Plan
to the eligible retirement plan specified by the distributee.
(c) If a distribution is one to which Sections 401(a)(11) and 417 of
the Code do not apply, such distribution may commence less than 30 days after
the notice required under Section 1.411(a)-11(c) of the Income Tax Regulations
is given, provided that:
(1) the Administrator clearly informs the Participant that the
Participant has a right to a period of at least 30 days after receiving the
notice to consider the decision of whether or not to elect a distribution (and,
if applicable, a particular distribution option), and
(2) the Participant, after receiving the notice, affirmatively
elects a distribution.
10.6 CESSATION OF INTEREST. Upon the delivery to a Participant, Former
Participant or Beneficiary of a lump sum distribution or the transfer of the
assets in his Account to the trustee of a successor tax-qualified retirement
plan, the interest of the Participant, Former Participant or Beneficiary in the
Plan and Trust shall thereupon cease.
10.7 MISSING PERSONS. In the event that a person entitled to benefits under
the Plan cannot be located after diligent search by the Administrator or the
Trustee and the whereabouts of such person continues to be unknown for a period
of three (3) years, the Administrator may determine that the person has died,
whereupon his benefits shall be distributed to his Beneficiary, or if no
Beneficiary can be determined or located after reasonable efforts, the
Administrator may determine that such benefits are forfeited, and the amount
thereof shall be re-allocated in accordance with Section 5.3; provided, however,
that such benefits shall be restored to the Beneficiary or Former Participant
entitled thereto upon his filing a claim therefor within the time prescribed by
applicable law or regulations.
24
<PAGE> 30
10.8 DELIVERY OF BENEFITS BY TRUSTEE. Whenever the Trustee is directed to
deliver benefits in the form of Employer Securities, it shall deliver to the
Employer's transfer agent certificates for the number of shares of Employer
Securities specified by the Administrator, together with such stock transfer
powers or other documents and instructions as the transfer agent may require. If
and to the extent that benefits are to be distributed in cash, the Trustee shall
mail a check to the person or persons entitled thereto. The delivery of
securities to the transfer agent and the mailing of a check shall be adequate
delivery by the Trustee for all purposes.
10.9 MINORS AND INCOMPETENTS. In the event that any benefit hereunder becomes
payable to a minor or to a person under legal disability or to a person not
judicially declared incompetent but who, by reason of illness or mental or
physical disability, is in the opinion of the Administrator unable properly to
administer such benefit, then the same shall be paid out in such of the
following ways as the Administrator deems best and neither the Administrator,
the Trustee nor the Employer shall incur any liability therefor: (a) directly
to such person; (b) to the legally appointed guardian or conservator of such
person; (c) to some relative or friend for the care and support of such person;
or (d) by the Administrator's using such benefit directly for such person's care
and support.
25
<PAGE> 31
ARTICLE 11--ADMINISTRATION OF THE PLAN
11.1 APPOINTMENT OF ADMINISTRATOR. In the absence of any action by the
Employer to appoint an Administrator as hereinafter set forth, the Employer
shall be the Administrator. The Board of Directors may from time to time
appoint one or more individuals, firms, corporations or other entities to be
the Administrator, and the Board of Directors may at any time and from time to
time remove such parties as Administrator, with or without cause.
If the Board of Directors determines that the Administrator shall be a
committee of individuals, it shall appoint a committee (the "Committee") to
consist of two (2) or more persons. The Administrator or any one or all of the
members of the Committee acting as the Administrator may also be an officer or
employee of the Employer, or a Trustee or a member of the Board of Directors.
A member of the Committee may be removed by the Board of Directors at any time
with or without cause. Vacancies in the Committee may be filled by the Board
of Directors. The Committee or a member of the Committee may resign at any
time by filing written notice thereof with the Board of Directors. The
Administrator and each member of any Committee acting as Administrator shall
serve until such time as he dies, resigns, or is removed by the Board of
Directors.
11.2 POWERS AND DUTIES OF ADMINISTRATOR; ADMINISTRATOR NOT TO ACT IN
DISCRIMINATORY MANNER. The Administrator shall constitute the "named
fiduciary" and the "administrator" with respect to the Plan as such terms are
defined in ERISA, and in such capacities it shall have authority to control and
manage the operation and administration of the Plan. The Administrator shall
have the powers and duties specified in the Plan and, not in limitation but in
amplification of the foregoing, shall have power to construe the Plan and Trust
Agreement and to determine all questions that shall arise thereunder including
particular questions submitted by the Trustee on all matters necessary for it
properly to discharge its duties, powers and obligations.
The Administrator may employ such actuaries, accountants, counsel, specialists
and other persons as it deems necessary or desirable in connection with the
administration of the Plan. To the extent permitted by ERISA, the
Administrator may delegate any of its fiduciary responsibilities or other
duties or responsibilities to such persons as it deems appropriate.
The Administrator may correct any defect, supply any omission, reconcile any
inconsistency, and adopt such rules and procedures with respect to the
administration of the Plan in such manner and to such extent as it may deem
necessary and expedient to carry out the Plan. The rules and decisions of the
Administrator made in good faith upon any matter within the scope of its powers
and authority shall be final and binding upon all parties, but the
Administrator at all times shall make similar decisions on similar questions
involving similar circumstances and shall not act so as to discriminate in
favor of Highly-Compensated Employees.
26
<PAGE> 32
11.3 COMMITTEE PROCEDURES. If a Committee shall be appointed as
Administrator, such Committee may adopt such by-laws and regulations as it
deems desirable for the conduct of its affairs. Any act which the Plan
authorizes or requires the Administrator to do may be done by a majority of the
members of the Committee serving at the time. The action of a majority of the
members of the Committee expressed either by a vote at a meeting or in writing
without a meeting shall constitute the action of the Administrator and shall
have the same effect for all purposes as if assented to by all of the members
of the Committee at the time in office.
11.4 NOTIFICATION OF TRUSTEE. The Company shall notify the Trustee of the
identity of the Administrator and of changes therein, and the Trustee may act
in full reliance upon the last such notice received by it.
11.5 ADMINISTRATOR TO KEEP ACCURATE RECORDS. The Administrator shall keep
accurate records and minutes of its proceedings and actions. It shall also
maintain, or cause to be maintained, accounts showing the operation and
condition of the Trust Fund and shall keep, or cause to be kept, in convenient
form such data as may be necessary for the valuation of the assets and
liabilities of the Plan. The Administrator shall prepare annually a report
showing in reasonable detail the assets and liabilities and a brief account of
the operations for the preceding year and shall make such report available to
the Board of Directors; any such report may be based substantially on
information or data furnished by the Trustee and it may consist of a copy of
any annual report relating to the Plan which the Administrator is required to
file with the Internal Revenue Service or Department of Labor.
11.6 CLAIMS PROCEDURE.
(a) A Participant, Former Participant or Beneficiary who asserts a
right to any benefit under the Plan which he has not received must file a
written claim with the Administrator. If the Administrator wholly or partially
denies the claim, it shall within 90 days of the receipt of the claim provide a
written notice of denial to the claimant, setting forth:
(1) specific reasons for the denial of the claim,
(2) specific reference to pertinent provisions of the Plan on
which the denial is based,
(3) a description of any additional material or information
necessary to perfect the claim and an explanation of why
such material or information is necessary, and
(4) an explanation of the Plan's review procedure.
(b) A claimant whose application for benefits is denied or who has
received neither an affirmative replay nor notice of denial within 90 days
after filing his claim may request a full and fair review of the decision
denying the claim. The request must be made in writing to the Administrator
within 60 days after receipt of the notice of denial (or, if no notice of
denial is issued, within 60 days after the expiration of 90 days from the
filing of the claim). In connection with the review, the claimant or his
authorized representative may:
(1) request a hearing by the Administrator upon written
application to the Administrator,
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<PAGE> 33
(2) review pertinent documents in possession of the
Administrator, or
(3) submit issues and comments in writing to the Administrator
for review.
(c) A decision on review by the Administrator shall be made promptly,
and not later than 60 days after the receipt by the Administrator of a request
for a review, unless special circumstances (such as the need to hold a hearing)
require an extension of time for processing, in which case the claimant will be
so notified of the extension, and a decision shall be rendered as soon as
possible, and not later than 120 days after the receipt of the request for
review. The decision shall be in writing and shall include specific reasons
for the decision written in a manner calculated to be understood by the
claimant, and specific reference to the pertinent provisions of the Plan on
which the decision is based. The decision of the Administrator shall be final
and binding upon all parties.
11.7 RELIANCE ON SPECIALISTS. Neither the Administrator, the Employer, the
officers or directors of the Employer, nor the Trustee shall be responsible for
any reports furnished by a specialists retained or employed by the Employer or
the Administrator, but they shall be entitled to rely thereon as well as on
certificates furnished by an accountant, and on all opinions of counsel. The
Administrator, the Employer, the officers and directors of the Employer, and
the Trustee shall be fully protected with respect to any action taken or
suffered by them in good faith in reliance upon such specialist, accountant or
counsel, and all actions taken or suffered in such reliance shall be conclusive
upon each of them and upon all Employees, Participants, Former Participants,
Beneficiaries and any other persons interested hereunder and under the Trust
Agreement.
11.8 COMPENSATION; LIABILITY. The Administrator shall be entitled to
reimbursement for its reasonable expenses incurred hereunder. Individuals
serving as Administrator (or members of a Committee designated as
Administrator) who are also full time employees of the Employer shall not be
compensated for their services as Administrator, except as their compensation
as employees may be such compensation. Other individuals, firms or
corporations serving as Administrator shall be entitled to reasonable
compensation for their services as such. The Employer will indemnify the
Administrator (or any member of a Committee designated as Administrator) who is
also a full time employee of the Employer against all liability occasioned by
any act or omission to act, provided that the Administrator (or the Committee
and such members) act in good faith. The Employer shall be entitled to defend
or maintain either in its own name or in the name of the Administrator, any
suit or litigation arising hereunder with respect to the Administrator, and may
employ its own counsel for such purpose. Except as may be required by federal
law, no bond or other security shall be required of the Administrator for the
faithful performance of its duties hereunder.
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<PAGE> 34
ARTICLE 12--INVESTMENT RESPONSIBILITIES;
INVESTMENT OF THE TRUST FUND
12.1 TRUST AGREEMENT. The Trust Agreement, as in effect from time to time, is
hereby incorporated into and made a part of the Plan.
12.2 INVESTMENT OF TRUST FUND. The Trustee shall invest the assets of the
Trust Fund in accordance with the Trust Agreement. The Plan is designed to
invest primarily in Employer Securities. The Trust Agreement shall direct the
Trustee to invest primarily in Employer Securities and shall authorize the
Trustee to invest and hold up to one hundred percent (100%) of the Trust Fund
in Employer Securities.
12.3 DIVERSIFICATION OF INVESTMENTS OR DISTRIBUTION FOR CERTAIN PARTICIPANTS.
For purposes of this Section 12.3, "Qualified Participant" shall mean a
Participant who has attained age fifty-five (55) and who has completed at least
ten years of participation in the Plan. "Qualified Election Period" shall mean
the period of six (6) Plan Years beginning with the Plan Year in which the
Participant first becomes a Qualified Participant; provided that the Qualified
Election Period shall apply only with respect to Employer Securities acquired
by or contributed to the Plan after 1986 and shall not begin unless and until
the fair market value of Employer Securities acquired by or contributed to the
Plan after 1986 and allocated to the Participant's Account is at least $500 as
of any Valuation Date.
Each Qualified Participant shall be permitted to direct the Plan as to the
investment of twenty-five percent (25%) of the value of his Account balance
attributable to Employer Securities, plus amounts previously transferred or
distributed pursuant to an election under this Section 12.3, to the extent such
percentage exceeds the amounts transferred or distributed pursuant to a prior
election under this Section 12.3, within 90 days after the last day of each
Plan Year during the Participant's Qualified Election Period. Within 90 days
after the close of the last Plan Year in the Participant's Qualified Election
Period, a Qualified Participant may direct the Plan as to the investment of
fifty percent (50%) of the value of such Account balance pursuant to an
election under this Section 12.3. The Participant's direction shall be
provided to the Administrator in writing and shall be effective no later than
180 days after the close of the Plan Year to which the direction applies.
The Plan may satisfy the Participant's direction by transferring the portion of
the Account that is covered by the election to another qualified plan of the
Employer which accepts such transfers, provided that such plan permits
employee-directed investments, and offers the Participant at least three
investment options (not inconsistent with regulations prescribed by the
Secretary of the Treasury) other than Employer Securities. Such transfer shall
be made and the amount transferred shall be invested in accordance with the
Participant's election, no later than 90 days after the last day of the period
during which the election can be made. However, if the Employer does not
maintain a qualified plan that is eligible to receive the portion of the
Participant's Account that is covered by the election, the Plan may distribute
such portion to the Participant within 90 days after the last day of the period
during which the election can be made. Such distribution shall be subject to
the requirements of Section 6.6 concerning put options. This Section shall
apply notwithstanding any other provision of the Plan, other than such
provisions as require the consent of the Participant to a distribution with a
present value in excess of $3,500. If the Participant does not consent
29
<PAGE> 35
to such a distribution, such amount shall be retained in the Plan and the
diversification requirement of this Section 12.3 shall be deemed to have been
satisfied.
12.4 VOTING EMPLOYER SECURITIES. Each Participant shall have the right to
direct the Trustee as to the manner in which the Trustee is to vote that number
of shares of Employer Securities credited to the Participant's Account (both
vested and unvested). Directions from a Participant to the Trustee concerning
the voting of Employer Securities shall be communicated in writing; these
directions shall be held in confidence by the Trustee and shall not be divulged
to the Employer, or any officer or employee thereof, or any other person. Upon
its receipt of the directions, the Trustee shall vote the shares of Employer
Securities as directed by the Participant. The Trustee shall not vote shares
of Employer Securities credited to a Participant's Account for which it has
received no directions from the Participant. Shares of Employer Securities not
allocated to Participants' Accounts (including unallocated shares acquired
during the Plan Year and nonvested shares held in suspense) shall be voted by
the Trustee in its discretion.
12.5 TENDERING EMPLOYER SECURITIES. In the event that any party shall make a
tender offer for Employer Securities, the Trustee shall, upon receipt of
appropriate information regarding such tender offer, promptly furnish each
Participant a copy of such offering information together with a form for
furnishing to the Trustee each Participant's instructions as to whether such
Employer Securities credited to the Participant's Account should be tendered,
or as to whether any other actions solicited by such offering information
should be taken with request to such Employer Securities. Each Participant
shall have the right to instruct the Trustee, within the time prescribed by the
Trustee, that the Employer Securities credited to his Account (including
fractional shares) be tendered by the Trustee, or that other solicited action
be taken by the Trustee on his behalf with respect to the Employer Securities
credited to his Account. The Trustee shall respond to the tender offer on
behalf of all unallocated shares of Employer Securities held by the Trust. The
Trustee shall then tender or not tender, on a "block" basis, all shares of
Employer Securities held by the Trust, as has been elected by the majority of
all shares of Employer Securities held by the Trust.
12.6 TRUSTEE'S ACCOUNTS. The assets of the Trust Fund shall be valued at
their fair market value by the Trustee as of the last day of each Plan Year, or
such other Valuation Date as may be designated by the Administrator, and the
values reported to the Employer and the Administrator together with a statement
of receipts and disbursements for the preceding Plan Year and such other
information regarding the Trust Fund as the Administrator may request.
12.7 TRUSTEE'S RECORDS. The Trustee shall keep and maintain records under the
direction of the Administrator which shall accurately disclose at all times the
state of the Trust Fund.
12.8 TRUSTEE'S LIABILITY. The Trustee shall not be responsible for the
validity of the Plan or Trust Agreement, nor for the adequacy of the Trust Fund
to meet the obligations hereunder, but shall be accountable only for funds paid
to it under the Trust Agreement.
30
<PAGE> 36
12.9 TRUSTEE'S COMPENSATION AND EXPENSES. The Trustee shall be entitled to
reimbursement for its reasonable expenses incurred hereunder. Individuals
serving as Trustee who are also full time employees of the Employer shall not
be compensated for their services as Trustee, except as their compensation as
employees of the Employer may be such compensation. Other individuals and any
corporation or trust company serving as a Trustee shall be entitled to
compensation for their services in such amount as the Employer and such Trustee
may agree upon from time to time. Such reimbursement or compensation due a
Trustee, if not paid by the Employer, shall constitute a charge upon the Trust
Fund.
31
<PAGE> 37
ARTICLE 13--AMENDMENT AND TERMINATION
13.1 RIGHT TO AMEND OR TERMINATE. The Employer, by resolution of its Board of
Directors, may amend or terminate the Plan and/or the Trust. The foregoing
notwithstanding, the Employer shall have no power to amend or terminate the
Plan or the Trust in such manner as would:
(a) cause or permit any of the Trust assets to be diverted to purposes
other than for the exclusive benefit of the Participants, Former Participants
or their Beneficiaries;
(b) cause any reduction in the amount theretofore credited to the
Account of any Participant, Former Participant or Beneficiary;
(c) cause or permit any portion of the Trust assets to revert to or
become the property of the Employer, except as permitted under Section 1.2 or
5.4; or
(d) cause any termination of the provisions of Section 6.6
13.2 PERMANENCE OF PLAN. The Employer has established the Plan with the bona
fide intention and expectation that the Employer will be able to make
contributions indefinitely, but the Employer is not and shall not be under any
obligation or liability whatsoever to maintain the Plan or the Trust for any
given length of time and may, by resolution of its Board of Directors,
terminate the Plan, or the Plan and Trust, or discontinue its contributions
hereunder at any time, without any liability whatsoever for such termination or
discontinuance.
13.3 TERMINATION OF PLAN OR PLAN AND TRUST. The Plan and, if so directed by
the Employer, the Trust, shall terminate upon delivery to the Administrator and
the Trustee of a notice of termination executed on behalf of the Employer by
authority of the Board of Directors, specifying the date as of which the Plan
(or the Plan and Trust) shall so terminate.
13.4 VESTING ON TERMINATION OR PARTIAL TERMINATION OF PLAN OR DISCONTINUANCE
OF CONTRIBUTIONS. The Employer shall notify the Administrator and the Trustee
in writing if it shall permanently discontinue contributions hereunder.
Notwithstanding any other provisions of this Plan, if the Plan is terminated or
if the Employer shall permanently discontinue contributions hereunder
(irrespective of whether the Trust shall be terminated), the interests of all
Participants in the Plan and Trust shall become fully vested and
non-forfeitable as of the date of such termination or such discontinuance.
This Section shall not apply in the case of a temporary suspension of
contributions by the Employer. Upon the partial termination of the Plan with
respect to a group of Participants, the interests of all such affected
Participants in the Plan and Trust shall become fully vested and
non-forfeitable as of the date of such partial termination.
32
<PAGE> 38
13.5 SUCCESSOR TO BUSINESS OF EMPLOYER. Unless the Plan and Trust be sooner
terminated, a successor to the business of the Employer, by whatever form or
manner resulting, may continue the Plan and Trust by executing appropriate
supplementary instruments, and such successor shall thereupon succeed to all
the rights, powers and duties of the Employer hereunder. The employment of any
Employee who has continued in the employ of such successor shall not be deemed
to have been terminated or severed for any purpose hereunder if any such
supplemental instrument so provides.
13.6 LIQUIDATION OF TRUST. In the event of the termination of the Plan or the
complete discontinuance of contributions by the Employer, or in the event of
the partial termination of the Plan with respect to a group of Participants,
the Administrator shall direct the Trustee:
(a) to reduce to cash such part or all of the Trust Fund as the
Administrator may deem appropriate;
(b) to pay the liabilities, if any, of the Trust;
(c) to value the remaining assets of the Trust as of the date of
termination, partial termination or discontinuance; and
(d) to adjust and allocate any unallocated amounts and to adjust the
Account balances as provided in Article 5 and 6.
In the event that the Trust is also terminated, the Administrator shall also
direct the Trustee to distribute the assets of the Trust in liquidation to and
among the persons having an interest in the Trust, in proportion to the amounts
standing to the credit of their respective Accounts. If the Trust is not
terminated, the Administrator shall so notify the Trustee, and the Trustee
shall continue to administer the Trust Fund as provided in the Plan and in the
Trust Agreement.
13.7 MERGER OR CONSOLIDATION OF PLAN. In the case of any merger or
consolidation of the Plan with, or transfer of assets or liabilities of the
Plan to, any other plan, the value of the benefits to which case Participant,
Former Participant or Beneficiary would become entitled if the resulting or
transferee plan were terminated immediately after such merger, consolidation or
transfer must equal or exceed the value of the benefits to which such
Participant, Former Participant or Beneficiary would have been entitled had the
Plan been terminated immediately prior to such merger, consolidation or
transfer of assets.
33
<PAGE> 39
ARTICLE 14--TOP-HEAVY PLAN REQUIREMENTS
Notwithstanding any other provision of the Plan, the following provisions shall
apply to any Plan Year for which the Plan is determined to be a "top-heavy
plan" within the meaning of Section 416 of the Code.
(a) The Plan shall be considered a top-heavy plan for the initial Plan
Year if as of the last day of such Plan Year, and for any subsequent Plan Year
if as of the last day of the preceding Plan Year (the "Determination Date"),
(1) the total credit balance of the Accounts of Participants who are "key
employees" (as hereinafter defined) exceeds 60% of the total credit balance of
the Accounts of all Participants (the "60% test") or (2) the Plan is part of a
"required aggregation group" (as hereinafter defined) which is top-heavy.
However, notwithstanding the results of the 60% test, the Plan shall not be
considered a top-heavy plan for any Plan Year in which the Plan is part of any
"aggregation group" which is not top-heavy.
(b) A key employee is an Employee who at any time during the Plan Year
containing the Determination Date, or any of the four preceding Plan Years, is
(1) an officer of the Employer who has annual compensation for any such Plan
Year which is greater than 50% of the amount in effect under Section
415(b)(1)(A) of the Code, or (2) one of the ten employees of the Employer
having annual compensation from the Employer of more than the amount in effect
under Section 415(c)(1)(A) of the Code and owning (or considered as owning
within the meaning of Section 318 of the Code) both more than a one-half
percent (1/2%) interest and the largest interests in the Employer, or (3) a
"five-percent owner" of an Employer, or (4) a "one-percent owner" of the
Employer who has annual compensation from the Employer of more than $150,000.
A person shall be considered a five percent owner or a one percent owner if he
owns (or is considered to own within the meaning of Section 318 of the Code)
more than the applicable percentage of (A) the outstanding Employer Securities,
or (B) the total combined voting power of all Employer Securities. A
beneficiary of a deceased key employee shall be treated as a key employee, a
beneficiary of a deceased former key employee shall be treated as a former key
employee, and a beneficiary of a non-key employee (as defined in Section
416(i)(2) of the Code) or former non-key employee shall be treated as a non-key
employee.
(c) An aggregation group is a group of tax qualified retirement plans
maintained by the Employer. A required aggregation group includes each such
plan in which any key employee participates, and any other such plan which
enables a plan in which a key employee participates to meet the requirements of
Section 401(a)(4) or 410 of the Code. A "permissive aggregation group"
includes the required aggregation group plus any other plan or plans of the
Employer which, when considered with the required aggregation group, continue
to satisfy the requirements of Sections 401(a)(4) and 410 of the Code, and
which the Administrator has designated as part of the permissive aggregation
group. An aggregation group shall be considered top-heavy if, treating the
plans in the aggregation group as a single plan, the single plan would be
top-heavy under the 60% test.
(d) For purposes of determining whether the Plan or any aggregation
group is top-heavy under the 60% test, the following rules shall apply: (1)
the credit balance of the Accounts of Participants shall be increased by the
aggregate distributions made with respect to any Participant during the five
year period ending on the Determination Date, (2) there shall not be taken into
account the Account balance of any Participant who on the Determination Date is
not a key employee but who was a key employee in a prior Plan Year, and (3)
there shall not be taken into account the Account balance of any individual who
has not received any compensation (other than benefits under the Plan) from the
Employer within five years preceding the Determination Date.
34
<PAGE> 40
(e) Notwithstanding Section 5.3, the Employer's contribution, if any,
together with any forfeitures available for allocation as of the end of the
Plan Year, shall be allocated among the Accounts of Participants so that the
Account of each Participant who is a "non-key employee" (as defined in Section
416(i)(2) of the Code) is credited with an amount equal to at least three
percent (3%) of his Compensation for the Plan Year (or, if less, the largest
percentage of Compensation allocated to any Participant who is a key employee
for that Plan Year), regardless of the number of Hours of Service credited to
him for the Plan Year; provided, however, that no such allocation shall be made
to the Account of a Participant who is not an Employee on the last day of the
Plan Year.
(f) The vested portion of the Account of each Participant who has been
credited with at least one Hour of Service after the first day of the first
Plan Year in which the Plan is a top-heavy plan shall be determined in
accordance with the following schedule:
<TABLE>
<CAPTION>
NUMBER OF
YEARS OF SERVICE VESTED PERCENTAGE
---------------- -----------------
<S> <C>
Less than 2 years 0%
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 and thereafter 100%
</TABLE>
(g) In the event that the Plan becomes top-heavy and thereafter ceases
to be top-heavy, the rule in Section 9.2 shall supersede the rule stated in
paragraph (f), effective as of the first Plan Year in which the Plan is no
longer top-heavy; provided, however, that no Participant's vested percentage
may be thereby reduced, and provided further that any Participant who had at
least three Years of Service when the Plan ceases to be top-heavy shall be
entitled to the vested percentage which would have been applicable to him had
the Plan remained top-heavy. For Participants who have fewer than three Years
of Service when the Plan ceases to be top-heavy, the rule stated in paragraph
(h) shall apply only in determining the vested portion of their Accounts as of
the date on which the Plan ceases to be top-heavy.
(h) If (1) the Plan would be considered a top-heavy plan if a "90%
test" were utilized under subsection (a) above or (2) if Employer contributions
(together with any available forfeiture amounts) do not produce an allocation
to the Account of each Participant who is a non-key employee equal in value to
at least four percent (4%) of the Participant's Compensation (or, if less, the
minimum contribution required under subsection (d) plus one percent (1%) of the
Participant's Compensation), then, in calculating the denominators of the
Defined Benefit Plan Fraction and the Defined Contribution Plan Fraction in
accordance with Section 5.4, the factor "1.0" shall be substituted for "1.25".
35
<PAGE> 41
ARTICLE 15--SPENDTHRIFT PROVISION
The beneficial interest in the Trust of a Participant, Former Participant or
Beneficiary shall not be assignable or subject to attachment or receivership,
nor shall it pass to any trustee in bankruptcy or be reached or applied by any
legal process for the payment of any obligations of the Participant, Former
Participant or Beneficiary; provided, however, that the rule just stated shall
not apply in the case of a "qualified domestic relations order" within the
meaning of Section 414(p) of the Code.
36
<PAGE> 42
ARTICLE 16--AFFILIATED EMPLOYER PROVISION
For each Plan Year in which the Employer is a member of an "Affiliated Group"
as hereinafter defined, all service of an Employee with any one or more
employers within such Affiliated Group shall be treated as employment by the
Employer for purposes of determining the Employee's Hours of Service and Years
of Service pursuant to Section 2.19, the Employee's eligibility to participate
in the Plan in accordance with Section 3.1, and the limitation on allocations
under Section 5.4. The transfer of employment by an Employee to another
employer within the Affiliated Group shall not be deemed to constitute a
Retirement or other termination of employment by the Employee for purposes of
this Plan, but the Employee shall be deemed to have continued in employment
with the Employer for purposes hereof; provided, however, that contributions by
the Employer under this Plan relating to any such Employee shall be allocated
to the Participant's Account only with respect to his Compensation within a
Plan Year from the Employer. For purposes of this Article 16, "Affiliated
Group" shall mean the Employer and all corporations, trades or businesses
(whether or not incorporated) which constitute a controlled group of
corporations with the Employer, a group of trades or businesses under common
control with the Employer, or an affiliated service group, within the meaning
of Section 414(b), Section 414(c) or Section 414(m), respectively of the Code.
For purposes of the limitations on allocations under Section 5.4, "Affiliated
Group" shall mean the Employer and all corporations, trades or business
(whether or not incorporated) which constitute a controlled group of
corporations with the Employer or a group of trades or business under control
with the Employer, within the meaning of Section 414(b) or Section 414(c) of
the Code, as modified by Section 415(h) of the Code, or which constitute an
affiliated service group within the meaning of Section 414(m) of the Code.
37
<PAGE> 43
ARTICLE 17--MISCELLANEOUS
17.1 RIGHTS OF EMPLOYEES. The adoption and maintenance of the Plan and Trust
shall not be deemed to be a contract between the Employer and any Employee.
Nothing herein contained shall be deemed to give any Employee the right to be
retained in the employ of the Employer or to diminish the right of the Employer
to discharge any Employee at any time, nor shall it be deemed to give the
Employer the right to require any Employee to remain in its employ or interfere
with the Employee's right to terminate his employment at any time.
17.2 OBLIGATION OF THE EMPLOYER. All benefits payable under the Plan shall be
paid or provided for solely from the Trust and neither the Administrator nor
any fiduciary assumes any personal liability or responsibility therefor.
17.3 ACTION BY THE EMPLOYER. Whenever, under the terms of the Plan, the
Employer is permitted or required to do or perform any act or thing it shall be
done or performed by an officer thereunto duly authorized by the Board of
Directors.
17.4 CONSTRUCTION. The provisions of the Plan shall be construed,
administered and enforced according to the laws of the United States of America
insofar as they may be applicable and otherwise according to the laws of the
State of Connecticut. In any questions of interpretation or other matter of
doubt, the Administrator, the Trustee and the Employer may rely upon the
opinion of counsel for the Employer or any other attorney at law designated by
the Employer. The masculine gender shall include both sexes, the singular
shall include the plural and the plural the singular, unless the context
otherwise requires.
17.5 LIABILITY OF EMPLOYER. The only duty of the Employer hereunder shall be
to use reasonable care in the selection of the Trustee and the Administrator.
Subject to its agreement to indemnify the Administrator as provided in Section
11.8, and to indemnify the Trustee if and to the extent provided in the Trust
Agreement, neither the Employer nor any person acting on its behalf shall be
liable for any act or omission on the part of the Administrator, or on the part
of the Trustee, or for any act performed or failed to be performed by any
person with respect to the Plan or the Trust.
17.6 TITLES. The titles of the Articles and Sections hereof are included for
convenience only and shall not be construed as part of the Plan or in any
respect affecting or modifying its provisions. Such words as "herein",
"hereinafter", "hereof" and "hereunder" refer to this instrument as a whole and
not merely to the subdivision in which said words appear.
17.7 COUNTERPARTS. The Plan may be executed in any number of counterparts and
each fully executed counterpart shall be deemed an original.
38
<PAGE> 44
17.8 EXPENSES. All expenses incurred in establishing and operating the Plan,
including, without limiting the generality of the foregoing, legal fees,
brokerage commissions, administrative expenses, Trustee's expenses,
Administrator's expenses, and the like, may be paid by the Employer, but if not
so paid, shall be paid by the Trustee from the Trust Fund.
39
<PAGE> 45
IN WITNESS WHEREOF, the Employer, by its duly authorized officer, has caused
this Plan to be executed on the 21st day of November, 1994.
____ ________
ANALYSIS & TECHNOLOGY, INC.
By: /S/ GARY P. BENNETT
__________________________________
40
<PAGE> 1
EXHIBIT 10P
ANALYSIS & TECHNOLOGY, INC.
DEFERRED COMPENSATION PLAN
REV F - 1 APRIL 1994
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I - Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II - Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.1 Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.2 Aggregate Deferral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.3 Annual Deferral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.4 Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.5 Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.6 Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.7 Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.8 Deferral Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.9 Deferral Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.10 Deferred Income Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.11 Determination Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.12 Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.13 Employer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.14 Gross Salary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.15 Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.16 Participation Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.17 Performance Incentive Awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.18 Plan Administrator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.19 Plan Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.20 Retirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.21 Spouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.22 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.23 Total Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE III - Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.1 Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.2 Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.3 Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
</TABLE>
<PAGE> 3
TABLE OF CONTENTS (CONT'D)
<TABLE>
<S> <C>
ARTICLE IV - Participation and Deferral Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.1 Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.2 Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.3 Deferral Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.4 Waiver of Deferral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.5 Employer Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE V - Deferred Income Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5.1 Crediting of Deferred Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5.2 Vesting of Deferred Income Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5.3 Determination of Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5.4 Investment Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5.5 Statement of Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE VI - Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
6.1 Benefit Payments and Form of Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
6.2 Benefit Commencement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
6.3 Retirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
6.4 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
6.5 Death . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
6.6 Hardship Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
6.7 Withholding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
6.8 Leave of Absence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
6.9 Change of Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE VII - Beneficiary Designation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
7.1 Beneficiary Designation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
7.2 Amendment, Marital Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
7.3 No Participant Designation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
7.4 Effect of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE VIII - Amendment and Termination of Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
8.1 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
8.2 Company's Right to Terminate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
</TABLE>
<PAGE> 4
TABLE OF CONTENTS (CONT'D)
<TABLE>
<S> <C>
ARTICLE IX - General Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
9.1 Unsecured General Creditor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
9.2 Nonassignability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
9.3 Not a Contract of Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
9.4 Protective Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
9.5 Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
9.6 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
9.7 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
9.8 Validity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
9.9 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
9.10 Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
9.11 Incompetent Participant or Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE X - Claims Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
10.1 Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
10.2 Denial of Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
10.3 Review of Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
10.4 Final Decision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
APPENDIX A - Participation and Deferral Election Agreement
APPENDIX B - Beneficiary Designation and Form of Benefit Election
</TABLE>
<PAGE> 5
ARTICLE I
Purpose
The purpose of the Deferred Compensation Plan (hereinafter referred to
as the "Plan") is to provide funds upon the retirement, death, or disability of
designated employees of Analysis & Technology, Inc. and those of its Affiliates
which participate in the Plan (hereinafter collectively referred to as the
"A&T" or "Company"). It is intended that the Plan will aid in retaining and
attracting employees by providing a means to supplement their standard of
living in retirement. In addition, the Plan is to provide funds upon the
completion of service or death of a member of the Board of Directors of A&T.
ARTICLE II
Definitions
For purposes of this Plan, the following words and phrases shall have
the meanings indicated, unless the context clearly indicates otherwise.
2.1 Affiliate. "Affiliate" means a corporation which is a member of a
controlled group of corporations of which the Company is also a member. A
"controlled group of corporations" shall be defined in accordance with Section
414(b) of the Internal Revenue Code (the "Code") and shall include other
corporations to the extent fixed by the Committee. "Affiliate" also means any
unincorporated business under common control with the Company. "Common
Control" shall be defined in accordance with regulations prescribed by the
Secretary of the Treasury under Section 414(c) of the Code and, to the extent
not inconsistent therewith, in accordance with such rules as may be adopted by
the Committee.
2.2 Aggregate Deferral. "Aggregate Deferral" means the aggregate of
the Salary, Incentive Compensation, Retainer and Meeting Fee Deferrals of a
Participant.
2.3 Annual Deferral. "Annual Deferral" means the amount a Participant
elects to defer annually pursuant to his filed Participation Agreement.
2.4 Beneficiary. "Beneficiary" means the person, persons or entity
designated by the Participant, or as otherwise provided in accordance with
Article VII, to receive any benefits
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payable under the Plan. Any Beneficiary designation shall be made in a written
instrument filed with the Committee.
2.5 Board. "Board" means the Board of Directors of A&T.
2.6 Committee. "Committee" means the Committee appointed by the Board
to administer the Plan pursuant to Article III.
2.7 Contributions. "Contributions" means for any Plan Year the amount
of total compensation deferred under this Plan for such Plan Year.
2.8 Deferral Benefit. "Deferral Benefit" means the benefit payable to a
Participant pursuant to Article VI.
2.9 Deferral Period. "Deferral Period" means the calendar year for
which Compensation is being deferred as set forth in the Participant's filed
Participation Agreement and Article IV.
2.10 Deferred Income Account. "Deferred Income Account" means the
accounts maintained on the books of the Employer for each Participant pursuant
to Article V. A separate Deferred Income Account shall be maintained for each
Participant. A Participant's Deferred Income Account shall be utilized solely
as a device for the determination of the amounts to be paid to the Participant
pursuant to this Plan. A Participant's Deferred Income Account shall not
constitute, or be treated as, a trust of any kind, and it shall be funded at
all times but shall remain an asset of the Employer.
2.11 Determination Date. "Determination Date" means the date on which
the value of a Participant's Deferred Income Account is determined as provided
in Article V hereof. The last day of each calendar month shall be a
Determination Date.
2.12 Effective Date. "Effective Date" shall be January 1, 1987.
2.13 Employer. "Employer" means Analysis & Technology, Inc. and those
of its Affiliates which, with the approval of the Board, adopt the Plan, and
any successor to the business thereof.
2.14 Gross Salary. "Gross Salary" means the salary paid to an Employee
Participant in respect of a Plan Year and considered to be "wages" for purposes
of federal income tax withholding, but before reduction for compensation
pursuant to this Plan. Gross salary shall include any amounts deferred in
accordance with IRC Section 401(k) and any amounts which qualify under IRC
Section 125.
2.15 Participant. "Participant" means any designated individual who
participates in this Plan by filing a Participation Agreement as provided in
Article IV.
2.16 Participation Agreement. "Participation Agreement" means the
agreement filed with the Committee by a Participant pursuant to Section 4.2.
2.17 Performance Incentive Awards. "Performance Incentive Award" means
the compensation, if any, that is not part of the Employee Participant's gross
salary.
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2.18 Plan Administrator. The Committee shall be the administrator of
the Plan.
2.19 Plan Year. "Plan Year" means the period from the effective date
of the Plan to December 31, 1987 and any calendar year thereafter.
2.20 Retirement. "Retirement" means an Employee Participant's
retirement from service after age 55 or a Director Participant's completion of
service with A&T.
2.21 Spouse. "Spouse" means a Participant's wife or husband who was
lawfully married to the Participant immediately prior to receipt of payments
from this Plan.
2.22 Termination. "Termination" means severance from service with the
Company other than Retirement.
2.23 Total Compensation. "Total Compensation" means the sum of the
gross salary and the Performance Incentive Award, if any, or the retainer and
meeting fee paid to a Participant during the Plan Year.
ARTICLE III
Administration
3.1 Committee; Duties. This Plan shall be administered by a committee
(the "Committee") consisting of not less than three individuals who shall be
appointed, from time to time, by the Board of A&T. The Committee shall have
the authority to make, amend, interpret and enforce all appropriate rules and
regulations for the administration of this Plan and decide, or resolve, any and
all questions including interpretations of this Plan, as may arise in
connection with the Plan. No member of the Committee may act, vote or
otherwise influence a decision of the Committee specifically relating to his
own participation in the Plan.
3.2 Agents. In the administration of this Plan, the Committee may,
from time to time, employ agents and delegate to them such administrative
duties as it sees fit and may, from time to time, consult with counsel who may
be counsel to the Employer.
3.3 Procedure. All determinations of the Committee shall be made by
not less than a majority of its members present at the meeting at which a
quorum is present. A majority of the entire Committee shall constitute a
quorum for the transaction of business. Any action required or permitted to be
taken at a meeting of the Committee may be taken without a meeting, if a
unanimous written consent which sets forth the action is signed by each member
of the Committee and filed with the minutes of proceedings of the Committee.
Services on the
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Committee shall constitute services as an employee of A&T so that members
of the Committee shall be entitled to indemnification for their services as
members of the Committee to the same extent as for services as employees of
A&T.
ARTICLE IV
Participation and Deferral Amounts
4.1 Eligibility. All employees who are officers of Analysis &
Technology, Inc., all employees who have a gross salary of $100,000 per annum
or greater, all members of the Board of Directors who are not employees of A&T
or of an affiliate, and all active participants of the Plan as of December 31,
1993.
4.2 Participation. Participation in the Plan shall be limited to that
class of Employees and Directors eligible to participate pursuant to Section
4.1 and who elect to participate in the Plan by filing a properly completed and
executed Participation Agreement with the Committee not later than December 15,
1987 and each December 15 thereafter (or such later date as the Committee shall
in its sole discretion decide) substantially in the forms annexed hereto as
Appendix A. The Participation Agreement shall provide for an Aggregate
Deferral during the Deferral Period. The election to participate shall be made
pursuant to this Section 4.2 for the following calendar year. Such election
shall be irrevocable for that Plan Year. Employees and Directors entering an
eligible class shall be able to participate in the Plan as of next January 1.
For eligible Employees hired after December 15, 1987 and each December 15
thereafter, participation in the Plan for the following year shall be at the
Committee's discretion and a properly completed and executed Participation
Agreement must be filed no later than December 31.
4.3 Deferral Amounts. The Participant shall elect annually, in the
Participation Agreement or on such other form as the Committee shall provide
therefore, the following:
(a) Eligible employees can defer up to twenty-five percent (25%) of
their total compensation.
(b) Eligible Directors can defer from 10% to 100% of their annual
Director's retainer and meeting fees compensation in increments of 10%.
(c) Eligible Director who is Chairman of the Board of Directors can
defer from 10% to 100% of the annual Chairman's retainer compensation in
increments of 10%.
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<PAGE> 9
4.4 Waiver of Deferral. The Committee may, in its sole discretion,
grant a waiver or suspension of a Participant's deferral commitment, for the
balance of the Deferral Period, upon a finding that the Participant has
suffered a financial hardship. For purposes of this Plan, financial hardship
shall be determined by the Committee under uniform rules to be adopted by the
Committee and shall include without limitation, a need for cash arising from an
illness, casualty loss, sudden financial reversal, transfer of place of
employment or other such occurrence.
4.5 Employer Contribution. Eligible employees who are officers at the
vice president and above level of Analysis & Technology, Inc. or its
subsidiaries and are eligible for an employer matching contribution in the
employer's or a subsidiary's 401(k) plan, shall receive an employer
contribution of 3% of compensation less the actual employer contribution to the
401(k) plan provided the employee elects to defer under Section 4.3(a) at least
6% of compensation less the actual employee deferral to the 401(k) plan. This
contribution shall be designated the 401(k) Restitution Plan contribution.
For calendar year 1994 only, the employer contribution will be 75% of
the annual employer contribution and the requirement of the employee deferral
under Section 4.3(a) will be waived.
ARTICLE V
Deferred Income Accounts
5.1 Crediting of Deferred Compensation. The amount of Compensation
that a Participant elects to defer in respect of each Plan Year shall be
credited by the Company to the Participant's Deferred Income Account for such
Plan Year on the first day of each calendar quarter in the case of retainer and
meeting fees, as defined in Section 4.3(b) and (c), on the biweekly paydate in
the case of gross salary as defined in Section 4.3(a), and, in the case of
Incentive Award, on the date such Incentive Award is awarded in such Plan Year.
The amount credited to a Participant's Deferred Income Account shall equal the
amount deferred except that the amount may be reduced, at the discretion of the
Committee, to the extent that the Company is required to withhold any taxes or
other amounts from the Participant's deferred compensation pursuant to any
federal, state, or local law that may be enacted in the future.
5.2 Vesting of Deferred Income Account. A Participant shall always be
100% vested in the value of his Deferred Income Account.
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<PAGE> 10
5.3 Determination of Account. A Participant's Deferred Income Account,
as of each Determination Date, shall consist of the sum of (i) the balance of
the Participant's Deferred Income Account as of the immediately preceding
Determination Date, (ii) amounts deferred since the immediately preceding
Determination Date pursuant to Article IV and (iii) any investment
earnings/losses credited since the preceding Determination Date. The Deferred
Income Account of each Participant shall be reduced by the amount of all
distributions, if any, made from such Deferred Income Account since the
preceding Determination Date. The investment earnings/losses credited to the
Deferred Income Account in respect of any Plan Year shall be based upon
investment performance for such Plan Year determined pursuant to Section 5.4.
5.4 Investment Performance. All Deferred Income Accounts shall be
invested as elected by the Committee.
5.5 Statement of Accounts. The Committee shall submit to each
Participant, after the close of each calendar quarter, a statement in such form
as the Committee deems desirable setting forth the balance to the credit of
such Participant in his Deferred Income Account as of the last day of the
calendar quarter.
ARTICLE VI
Benefits
6.1 Benefit Payments and Form of Benefit. Each Participant entitled to
a Deferral Benefit will receive a payment pursuant to Section 5.3 and this
Section 6.1. Participants with Deferred Income Accounts exceeding $10,000
shall have the following Form of Benefit payment options:
(a) Lump-Sum Payment. Under this form of payment, the value of a
Participant's Deferred Income Account shall be paid in a single payment.
(b) Five-Year Payment. Under this form of payment, the value of a
Participant's Deferred Income Account shall be paid in five annual payments.
The amount of the payments will be: one-fifth of the account balance in year
one, one-quarter of the existing account balance in year two, one-third of the
existing account balance in year three, one-half of the existing account
balance in year four, and 100% of the remaining account balance in year five.
The form of benefit payment shall be elected by the Participant in his filed
Beneficiary Designation and Form of Benefit Election, in the form annexed
hereto as Appendix B, or in other
6
<PAGE> 11
such agreement in the form provided therefore by the Committee. Participants
with Deferred Income Accounts of $10,000 or less shall receive benefits in the
form of a lump-sum payment.
6.2 Benefit Commencement. Payment of Deferral Benefits shall commence
within 120 days following the Retirement, Termination or Death of a
Participant.
6.3 Retirement. Upon a Participant's retirement, in accordance with
Section 2.21, the value of the Deferred Income Account will be determined as of
the Determination Date immediately following his date of retirement pursuant to
Section 5.3 and in accordance with Sections 6.1, 6.2, and 6.7.
6.4 Termination. In the event a Participant terminates his employment
for reasons other than Death or Retirement, the value of the Deferred Income
Account will be determined pursuant to Section 5.3 and in accordance with
Sections 6.1, 6.2, and 6.7. If a Participant ceases to be an employee of the
Company because of the sale or other disposition of A&T or of the assets of an
Affiliate, his employment shall be deemed to have been terminated pursuant to
this Section 6.4.
6.5 Death. Upon the death of a Participant, while employed by the
Company or an Affiliate, the Deferral Benefit shall be paid to the
Participant's Beneficiary in accordance with Sections 6.1, 6.2, and 6.7 as if
the Participant had retired as of the date of his death.
6.6 Hardship Distribution. The Committee may, in its sole discretion,
upon the finding that the Participant or Beneficiary has suffered a financial
hardship, allow such Participant or Beneficiary to withdraw a portion of his
Deferred Income Account sufficient to eliminate the hardship. Financial
hardship shall be determined by the Committee under uniform rules to be adopted
by the Committee.
6.7 Withholding; Payroll Taxes. To the extent required by the law in
effect at the time payments are made, the Employer shall withhold from payments
made hereunder any taxes required to be withheld for federal, state, or local
government purposes.
6.8 Leave of Absence. If a Participant is on approved leave of
absence, including, without limitation, disability leave while in receipt of
long-term disability payments, he shall be considered as actively employed
(except that no deferrals of income shall be permitted or required from
disability pay) and shall not be entitled to Deferral Benefits until his actual
Retirement or Termination and the cessation of his receipt of benefits as a
current employee, including, without limitation, his receipt of long-term
disability payments. If a Participant becomes employed by an Affiliate that is
not a Participating Employer, such employment shall not be considered to be
Retirement or Termination. If a Participant terminates his employment,
commences receiving Deferral Benefits and returns to employment with A&T or an
Affiliate, payments to him of his Deferral Benefit shall cease until his
subsequent Retirement or Termination, but no repayment to the Plan will be
required or permitted.
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6.9 Change of Control. In the event of a Change of Control of A&T (as
hereinafter defined), all Deferred Income Accounts of Participants shall be
determined pursuant to Section 5.3 as of the effective date of the Change in
Control. At the election of the Committee, in the exercise of its sole
discretion, Deferral benefits shall become payable immediately following a
Change in Control utilizing the method of payment previously elected by each
Participant, subject to the limitation set forth in the following sentence.
Any payment of Deferral Benefits pursuant to the preceding sentence shall be
reduced to the extent required so that the amount paid pursuant to this
Section, when taken together with all other payments to a Participant under all
other A&T or Affiliate plans, contracts, and agreements, may be paid to a
Participant without any of such payments being non-deductible to the Company
under Section 280G, or subject to tax upon receipt by the Participant under
Section 4999, of the Code as then in effect. In the event it is determined
that the amount payable to a Participant in accordance with the preceding
sentence is less than the amount originally calculated and paid to the
Participant, the Participant shall repay the Company the amount that is
necessary so that, after such adjustment, the Participant will have received or
be entitled to receive hereunder the total amount defined above, with any such
repayment to bear interest at the rate specified pursuant to Section 1272 of
the Code. For purposes of this Section 6.9, a Change of Control shall be
deemed to have taken place if: (a) any consolidation or merger of A&T shall be
consummated in which A&T is not the continuing or surviving corporation or
pursuant to which shares of A&T's voting securities would be converted to cash,
securities or other property other than a consolidation or merger of A&T in
which the holders of A&T's voting securities immediately prior to the merger
have the same proportionate ownership of voting securities of the surviving
corporation immediately after the merger; (b) any sale, lease, exchange or
other transfer (in one transaction or a series of related transactions) of all,
or substantially all, of the assets of A&T shall be consummated; (c) the
shareholders of A&T shall have approved any plan or proposal for A&T's
liquidation or dissolution; (d) any person [as such term is used in Section
13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")], other than an A&T Employee Benefit Plan, shall become the
beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act) of
20% or more of A&T's outstanding voting securities; or (e) during any period of
two consecutive years, individuals who at the beginning of such period
constitute the entire Board of Directors shall cease for any reason to
constitute a majority thereof unless election, or the nomination for election
by A&T's shareholders, of each new director was approved by a vote of at least
two-thirds of the directors then still in office who were directors at the
beginning of the period.
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ARTICLE VII
Beneficiary Designation
7.1 Beneficiary Designation. Each Participant shall have the right, at
any time, to designate any person, persons, or entity as his Beneficiary or
Beneficiaries to whom payment under the Plan shall be paid in the event of his
death by filing with the Committee a Beneficiary Designation substantially in
the form annexed hereto as Appendix B. Such payment shall be in accordance
with and pursuant to Section 6.1, Section 6.2, and Section 6.7.
7.2 Amendment, Marital Status. If a Participant's compensation is
community property, any designation other than the Spouse made by a Participant
then married shall not be valid or effective to the extent any Beneficiary (or
combination thereof) is to receive more than fifty percent (50%) of such
Participant's aggregate benefits payable hereunder unless the Spouse shall, in
writing, approve such designation. Any Beneficiary designation may be changed
by a Participant by filing such change on a form prescribed by the Committee.
The filing of a new Beneficiary designation will cancel all Beneficiary
designations previously filed for such Plan Year, subject to the first sentence
of this Section 7.2.
7.3 No Participant Designation. If a Participant fails to designate a
Beneficiary as provided above, or if his Beneficiary designation is revoked by
operation of law or otherwise, without execution of a new designation, or if
all designated Beneficiaries predecease the Participant or die prior to
complete distribution of the Participant's benefits, then the Participant's
Beneficiary shall be deemed to be his estate.
7.4 Effect of Payment. The completed payment of the balance of all
Deferred Income Accounts shall completely discharge the Company's obligations
under this Plan.
ARTICLE VIII
Amendment and Termination of Plan
8.1 Amendment. Analysis & Technology, Inc. may at any time amend the
Plan in whole or in part, provided, however, that no amendment shall decrease
the balance to the credit of any Deferred Income Account as of the date of such
amendment.
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8.2 Company's Right to Terminate. The Company has the right to amend,
suspend, or terminate the Plan at any time and for any reason. The consent of
any Participant, Beneficiary, other Company, or other person shall not be
requisite to such amendment, suspension, or termination of the plan. Upon the
termination of the Plan, with respect to existing deferrals, each Participant
shall receive, in a lump sum, the balance of his Deferred Income Account.
ARTICLE IX
General Provisions
9.1 Unsecured General Creditor. Participants and their Beneficiaries,
heirs, successors, and assigns shall have no legal or equitable rights,
interest or claims in any property or assets of the Company. No assets of the
Company shall be held under any trust for the benefit of Participants, their
Beneficiaries, heirs, successors, or assigns, or held in any way as collateral
security from the fulfilling of the obligations of the Company under this Plan.
For purposes of this Plan, any and all of the Company's assets shall be, and
remain, the general, unpledged, unrestricted assets of the Company. The
Company's obligation under the Plan shall be merely that of an unfunded and
unsecured promise of the Company to pay money in the future.
9.2 Nonassignability. Neither a Participant nor any other person shall
have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage
or otherwise encumber, transfer, hypothecate or convey in advance of actual
receipt the amounts, if any, payable hereunder. All payments and the rights to
all payments are expressly declared to be unassignable and nontransferable. No
part of the amounts payable shall, prior to actual payment, be subject to
seizure or sequestration for the payment of any debts, judgments, or decrees
(except Qualified Domestic Relations Orders from a court of competent
jurisdiction pursuant to the Retirement Equity Act of 1984), or transferred by
operation of law in the event of a Participant's or any Beneficiary's
bankruptcy or insolvency.
9.3 Not a Contract of Employment. The terms and conditions of this
Plan shall not be deemed to constitute a contract of employment between the
Company and the Participant, and the Participant (or his Beneficiary) shall
have no rights against the Company except as may otherwise be specifically
provided herein. Moreover, nothing in this Plan shall be deemed to give a
Participant the right to be retained in the service of the Company or to
eliminate the Company's right to discipline or discharge him at any time for
any reason whatsoever.
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<PAGE> 15
9.4 Protective Provisions. A Participant or beneficiary will cooperate
with the Company by furnishing any and all information requested by the
Company, in order to facilitate the payment of benefits hereunder, and taking
such other action as may be requested by the Company or the Committee.
9.5 Terms. Whenever any words are used herein in the masculine, they
shall be construed as though they were used in the feminine in all cases where
they would so apply; and wherever any words are used herein in the singular or
in the plural, they shall be construed as though they were used in the plural
or in the singular, as the case may be, in all cases where they would so apply.
9.6 Captions. The captions of the articles, sections and paragraphs of
this Plan are for convenience only and shall not control or affect the meaning
or construction of any of its provisions.
9.7 Governing Law. The provisions of this Plan shall be construed and
interpreted according to the laws of the State of Connecticut.
9.8 Validity. In case any provisions of this Plan shall be illegal or
invalid for any reason, said illegality or invalidity shall not affect the
remaining parts hereof, but this Plan shall be construed and enforced as if
such illegal and invalid provisions had never been inserted herein.
9.9 Notice. Any notice or filing required or permitted to be given to
the Committee under this Plan shall be sufficient if in writing and hand
delivered, or sent by registered or certified mail, to the Committee at the
principal office of A&T. Such notice shall be deemed given as of the date of
delivery, or if delivery is made by mail, as of the date shown on the postmark
on the receipt for registration or certification.
9.10 Successors. The provisions of this Plan shall bind and inure to
the benefit of the Company and its successors and assigns. The term successors
as used herein shall include any corporate or other business entity which
shall, whether by merger, consolidation, purchase or otherwise acquire all or
substantially all of the business and assets of the Company, and successors of
any such corporation or other business entity.
9.11 Incompetent Participant or Beneficiary. In the event that it
shall be found upon evidence satisfactory to the Committee that any Participant
or Beneficiary to whom a benefit is payable under this Plan is unable to care
for his affairs because of illness or accident, any payment due (unless prior
claim therefore shall have been made by a duly authorized guardian, or other
legal representative) may be paid, upon appropriate indemnification of the
Committee, to the Spouse or other person deemed by the Committee to have
incurred expense for such Participant. Any such payment shall be a payment for
the account of the Participant and shall be a complete discharge of any
liability of the Plan therefore.
11
<PAGE> 16
ARTICLE X
Claims Procedure
10.1 Claim. Any person claiming a benefit, requesting an
interpretation or ruling under the Plan, or requesting information under the
Plan shall present the request in writing to the Committee which shall respond
in writing within 45 days of the request.
10.2 Denial of Claim. If the claim or request is denied, the written
notice of denial shall state:
(a) The reason for denial, with specific reference to the Plan
provisions on which the denial is based.
(b) A description of any additional material or information required
and an explanation of why it is necessary.
(c) An explanation of the Plan's claim review procedure.
10.3 Review of Claim. Any person whose claim or request is denied or
who has not received a response within 45 days may request review by notice
given in writing to the Committee. The claim or request shall be reviewed by
the Committee who may grant the claimant a hearing, or request a hearing, to
clarify any related matters which it deems appropriate. On review, the
claimant may be entitled to representation, may examine pertinent documents,
and may submit issues and comments in writing.
10.4 Final Decision. The decision on review shall normally be made by
the Committee within 60 days of the date of the appeal. If an extension of
time is required for a hearing or other special circumstances, the claimant
shall be notified and the time limit shall be 120 days. The decisions shall be
in writing and shall state the reason and the relevant Plan provisions and
shall be conclusive and binding on all parties.
/s/ D. M. Nolf
____________________________________
D. M. Nolf
Executive Vice President/Secretary
Rev F - 1 April 1994
12
<PAGE> 1
EXHIBIT 10Q
401(K) RESTITUTION PLAN
EFFECTIVE DATE: April 1, 1994
PLAN YEAR: Calendar year
PURPOSE: Legal limits on contributions to the 401(k) Plan
prevent some officers from receiving 3% of pay as
Company matching contributions. The Restitution Plan
will provide that 3% opportunity.
BENEFIT FOR 1994: All eligible officers who satisfy the 401(k) plan
participation requirement (stated below as #1) will
receive a Company contribution for 1994 whether or not
they participate in the Deferred Compensation Plan.
The company contribution will equal 75% (9 months) of
the company matching contribution available had the
plan been in effect for the entire year.
ELIGIBILITY: Officers at the Vice President and above level of A&T
and named subsidiaries, provided they are eligible
for Company matching contributions in a Company's or
subsidiary's 401(k) plan.
NAMED SUBSIDIARIES: ASA, CDI, GSS, IPD
PLAN COMPENSATION: W-2 Earnings plus deferred compensation, not
including Restitution contributions.
REQUIREMENTS FOR RECEIVING A RESTITUTION CONTRIBUTION:
1) The officer must participate in the 401(k) Plan at any percent and
contribute as a matchable contribution the maximum amount allowable
that is in effect at the beginning of the Plan Year (e.g., $7200 for
1994).
2) The officer must participate in the Deferred Compensation Plan. The
dollar amount of officer's contributions to the Deferred Compensation
Plan plus the 401(k) Plan must equal 6% of Plan Compensation.
3) All rules and conditions of the Deferred Compensation Plan will apply
to Restitution Contributions.
BENEFIT CALCULATION:
1) Officer's contribution: 6% times Plan Compensation minus actual
contribution to 401(k).
2) Company matching contributions: 3% of Plan Compensation minus actual
matching contributions to the 401(k) Plan.
Note: The above calculations will apply to all eligible officers regardless of
the percent Company match available to them in any of the Company's or
subsidiary's 401(k) plans.
August 8, 1994
<PAGE> 2
401(k) Restitution Plan, Page 2
BENEFIT COMPUTATION DATE:
Estimates of the minimum officer deferral necessary to satisfy the plan
requirements will be calculated and provided to officers prior to each Deferred
Compensation election period.
Company contributions to the Restitution plan will be determined at year-end
and invested in the Deferred Compensation Plan as soon as is practical.
INVESTMENT:
Both officer contributions and Company matching contributions will be invested
in the Deferred Compensation Plan.
RESPONSIBILITIES:
Estimating minimum officer deferrals and calculating Restitution Contributions
will be the responsibility of the Corporate Manager of Retirement Plans.
Officers eligible for Restitution Contributions will be notified and given the
opportunity to participate in the Deferred Compensation Plan.
NO GUARANTEE:
The Company reserves the right to terminate, amend, and alter the plan at any
time for any reason.
By: /s/ DAVID M. NOLF
___________________________________
Title: Exec Vice President
___________________________________
Date: August 8, 1994
___________________________________
August 8, 1994
<PAGE> 1
EXHIBIT 13
FINANCIAL INFORMATION
SELECTED FINANCIAL DATA
- 13
MANAGEMENT'S DISCUSSION AND ANALYSIS
- 14
CONSOLIDATED FINANCIAL STATEMENTS
- 17
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- 21
INDEPENDENT AUDITOR'S REPORT
- 29
12<PAGE> 2
ANALYSIS & TECHNOLOGY, INC. AND SUBSIDIARIES
SELECTED FINANCIAL DATA: A FIVE-YEAR SUMMARY
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Years Ended March 31, 1995 1994 1993 1992 1991
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Amounts in thousands except per share and employee data
Revenue $ 132,257 $ 130,362 $ 116,466 $ 108,961 $ 104,014
Costs and Expenses 126,639 125,032 111,995 105,740 97,423
- -----------------------------------------------------------------------------------------------------------------------------------
Operating Earnings 5,618 5,330 4,471 3,221 6,591
Interest Expense, Net 542 553 434 413 367
Other, Net 269 433 485 354 342
- -----------------------------------------------------------------------------------------------------------------------------------
Earnings Before Income Taxes 4,807 4,344 3,552 2,454 5,882
Income Taxes 2,034 1,845 1,573 1,014 2,149
- -----------------------------------------------------------------------------------------------------------------------------------
Net Earnings $ 2,773 $ 2,499 $ 1,979 $ 1,440 $ 3,733
===================================================================================================================================
Earnings per Common and Common
Equivalent Share $ 1.12 $ 1.06 $ 0.91 $ 0.67 $ 1.73
Weighted Average Shares and
Common Equivalent Shares Outstanding 2,469 2,367 2,173 2,163 2,157
Dividends per Share $ 0.26 $ 0.24 $ 0.22 $ 0.20 $ .185
- -----------------------------------------------------------------------------------------------------------------------------------
Working Capital $ 15,610 $ 12,676 $ 10,290 $ 12,085 $ 11,872
Contract Receivables $ 27,816 $ 24,418 $ 23,051 $ 19,806 $ 21,018
Total Assets $ 65,049 $ 56,754 $ 52,334 $ 49,291 $ 48,396
Long-Term Debt (Including Current
Installments) $ 7,242 $ 4,631 $ 4,653 $ 4,617 $ 4,887
Shareholders' Equity $ 37,174 $ 34,442 $ 30,890 $ 29,353 $ 28,320
Book Value per Common Share $ 15.68 $ 14.87 $ 14.34 $ 13.65 $ 13.19
Number of Full-Time Employees 1,535 1,556 1,558 1,477 1,474
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
13
<PAGE> 3
ANALYSIS & TECHNOLOGY, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
- -------------------------------------------------------------------------------
RESULTS OF OPERATIONS
Analysis & Technology, Inc. and Subsidiaries (the Company) set a record for
revenue in fiscal 1995 for the 22nd consecutive year. The following table
shows the relationship of selected income statement items to revenue and
presents earnings per share for the last three years.
<TABLE>
<CAPTION>
Years Ended March 31, 1995 1994 1993
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Percentage of Revenue:
Revenue 100.0% 100.0% 100.0%
Costs and Expenses 95.8% 95.9% 96.2%
Operating Earnings 4.2% 4.1% 3.8%
Earnings Before Income Taxes 3.6% 3.3% 3.0%
Income Taxes 1.5% 1.4% 1.4%
Net Earnings 2.1% 1.9% 1.7%
Earnings per Common and
Common Equivalent Share $ 1.12 $ 1.06 $ 0.91
- ------------------------------------------------------------------------------
</TABLE>
FISCAL 1995 COMPARED WITH FISCAL 1994
The major factors in the comparison of fiscal 1995 with fiscal 1994 are as
follows:
- - Revenue increased 1.5% to $132.3 million
- - Operating earnings increased 5.4%
- - Operating earnings as a percentage of revenue (operating margins) increased
to 4.2% in fiscal 1995 from 4.1% in the prior year
- - Net earnings increased 11.0%
- - Weighted average shares and common equivalent shares outstanding increased
4.3%
- - Earnings per common and common equivalent share increased 5.7% to $1.12
Revenue increased 1.5% to $132.3 million from $130.4 million in fiscal 1994.
Revenue for the Company's core defense operations was about level with that of
the prior year. Despite reduced U.S. Navy budgets, the Company maintained its
defense revenue base by working on high-priority programs and by increasing the
technology content of its work. However, the effect, if any, on the Company's
future revenue due to future market changes cannot be determined at this time.
Possible future market changes include U.S. Navy budget reductions; relocation
of the New London Laboratory of the Company's largest customer, the Naval
Undersea Warfare Center; and changes in other customer operations due to
facility closings or relocations.
Civil government and commercial revenue combined increased 9.6% to $19.5
million from $17.8 million in fiscal 1994. Commercial revenue alone increased
25.3% to $10.9 million in fiscal 1995 from $8.7 million in fiscal 1994. The
increase in commercial revenue was the result of the Company's diversification
efforts in information technologies and interactive multimedia systems. While
progress on the On-Line Registration System (OLRS) developed by the Company's
subsidiary, General Systems Solutions, Inc. (GSS), moved more slowly than
anticipated during the fiscal year, the system was operational and generated
revenue from lease and rental companies in Connecticut and New York. In
addition, GSS recorded revenue for processing New York custom license plate
requests and for identifying Connecticut uninsured motorists.
Non-labor related revenue generated by purchased components, computer usage,
travel and work subcontracted to other companies totaled $30.8 million in
fiscal 1995, a $1.2 million decrease as compared with fiscal 1994. The
decrease in non-labor revenue was primarily due to reduced purchases of
components by GSS under its contracts to provide minesweeping equipment to the
U.S. Navy. While GSS began work on a follow-on contract in the third quarter
of fiscal 1995, purchases of components were $2.5 million in fiscal 1995 as
compared with $3.6 million in fiscal 1994.
During fiscal 1995, total contractual backlog varied between $357.0 million and
$418.9 million. During the year, $10.7 million of backlog expired without
being funded while in fiscal 1994, $5.3 million of backlog expired without
being funded. The backlog used during fiscal 1995, plus the unfunded backlog
that expired, was more than offset by newly awarded contracts. Backlog as of
March 31, 1995 was $401.6 million, a 7.7% increase from $372.8 million a year
ago. Government funding continues to be dependent on congressional approval of
program-level funding and on contracting agency approval of funding for the
Company's work. The extent to which the Company's backlog will be funded in
the future cannot be determined.
14
<PAGE> 4
ANALYSIS & TECHNOLOGY, INC. AND SUBSIDIARIES
Operating earnings increased 5.4% to $5.6 million from $5.3 million in fiscal
1994. Operating margins were 4.2% in fiscal 1995 compared with 4.1% in fiscal
1994. During fiscal 1995, the Company bid and earned higher fees in its
defense operations due, in part, to higher fees bid and earned in the Company's
field services operations. Contract overruns on naval air work in the
Company's subsidiary, Continental Dynamics, Inc. (CDI), were partly offset by
higher than budgeted earnings on certain of the Company's firm fixed price
contracts.
The Company is continuing its diversification efforts in information
technologies and interactive multimedia systems. The Company's level of
expenditure for these new business initiatives was approximately the same in
fiscal 1995 and fiscal 1994. The Company plans to continue such expenditures
and anticipates that future margins will be adversely affected. The Company
also experienced start-up costs for the GSS On-Line Registration System in New
York and expects to incur additional start-up costs when the system becomes
operational in other states.
The total of interest expense, interest income and other net expenses as a
percentage of revenue decreased to 0.6% in fiscal 1995 compared with 0.8% in
fiscal 1994. Interest expense, net of interest income, as a percentage of
revenue decreased to 0.4% in fiscal 1995 from 0.5% in fiscal 1994. The
decrease was primarily the result of a negotiated interest rate reduction on
one of the Company's mortgages offset, in part, by increased borrowing under
the Company's revolving credit agreement. Other net expense decreased to 0.2%
of revenue in fiscal 1995 as compared with 0.3% in fiscal 1994. The decrease
was due to the offsetting effect of higher earnings reported by Automation
Software Incorporated (ASI), the Company's joint venture with Brown & Sharpe
Manufacturing Company. Higher earnings were due, in part, to a key person
insurance payment resulting from the death of ASI's president. The effect of
this payment, net of expenses, on the Company's earnings was $115,000.
Earnings before income taxes increased 10.7% to $4.8 million in fiscal 1995
compared with $4.3 million in fiscal 1994. The Company's effective tax rate
decreased to 42.3% in fiscal 1995 from 42.5% in fiscal 1994. The lower
effective tax rate was due in part to higher earnings by ASI which are reported
on an after-tax basis and are not included in the Company's taxable income.
Net earnings increased 11.0% to $2.8 million from $2.5 million in fiscal 1994.
Earnings per share increased 5.7% to $1.12 from $1.06 in fiscal 1994. The
weighted average number of common shares and common equivalent shares
outstanding increased 4.3% to 2.47 million from 2.37 million in fiscal 1994.
The increase in the number of common shares and common equivalent shares
outstanding was principally due to exercises of stock options.
FISCAL 1994 COMPARED WITH FISCAL 1993
Revenue increased 11.9% to $130.4 million in fiscal 1994 from $116.5 million in
fiscal 1993. Revenue for the Company's core defense operations increased 11.6%
to $112.6 million. The single largest factor in this increase was non-labor
related revenue generated by purchased components, computer usage, travel, and
work subcontracted to other companies, which increased $9.1 million over fiscal
1993. During fiscal 1994, components totaling $3.6 million were purchased by
GSS for its contract to provide minesweeping equipment to the U.S. Navy. The
balance of the non-labor increase was primarily due to an increase in work
subcontracted to other companies. Civil government and commercial revenue grew
14.1% to $17.8 million.
During fiscal 1994, total contractual backlog varied between $331.7 million and
$372.8 million. During the year, $5.3 million of backlog expired without being
funded compared with $11.8 million in fiscal 1993. Backlog at March 31, 1994
was $372.8 million, a 3.3% increase from $360.8 million for the prior year.
Operating earnings increased 19.2% to $5.3 million from $4.5 million in fiscal
1993. Operating margins were 4.1% in fiscal 1994 compared with 3.8% in fiscal
1993. Pre-tax charges totaling $331 thousand in fiscal 1994 for expenses
associated with the Company's natural gas industry software product (GASS) and
the shutdown of the Company's tourist kiosk business; pre-tax charges totaling
$1.3 million in fiscal 1993 for expenses associated with organizational changes
and realignment of business development efforts; and business development
expenditures of approximately $1.1 million in each year associated with the
Company's diversification efforts adversely affected operating margins. Other
factors adversely affecting operating margins in fiscal 1994 were startup costs
for the GSS On-Line Registration System in Connecticut, lower interest
reimbursement rates and lower fees earned on some government contracts, and
support costs for GASS. These factors were partially offset by higher fees
earned from field services operations and a one-time license fee for software
from the State of New York.
The total of interest expense, interest income, and other net expenses as a
percentage of revenue remained constant at 0.8% in fiscal 1994 and 1993.
Interest expense, net of interest income, as a percentage of revenue increased
to 0.5% in fiscal 1994 from 0.4% in fiscal 1993, while other net expenses
decreased to 0.3% in fiscal 1994 from 0.4% in fiscal 1993. The decrease in
other net expenses in fiscal 1994 was due, in part, to higher earnings reported
by the Company's joint venture (ASI).
15
<PAGE> 5
ANALYSIS & TECHNOLOGY, INC. AND SUBSIDIARIES
Earnings before income taxes increased 22.3% to $4.3 million in fiscal 1994
compared with $3.6 million in fiscal 1993. The Company's effective tax rate
decreased to 42.5% in fiscal 1994 from 44.3% in fiscal 1993. The lower
effective tax rate in fiscal 1994 was due, in part, to higher earnings by ASI.
The Company's share of these earnings is reported on an after-tax basis and is
not included in the Company's taxable income.
Net earnings increased 26.3% to $2.5 million from $2.0 million in fiscal 1993.
Earnings per share increased 16.5% to $1.06 in fiscal 1994 from $0.91 in fiscal
1993. The weighted average number of shares and equivalent shares outstanding
increased 8.9% to 2.37 million in fiscal 1994 from 2.17 million in fiscal 1993.
The increase in the number of common shares and common equivalent shares
outstanding was principally due to the exercise of stock options and an
increase in the average price of the Company's stock, which increased the
number of common equivalent shares attributable to stock options.
EFFECT OF IMPLEMENTING STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 109
The Company adopted Statement of Financial Accounting Standards No. 109,
Accounting for Income Taxes, effective April 1, 1993. Statement 109 mandates
the asset and liability approach for computing income taxes. The adoption of
Statement 109 did not have an impact on the Company's fiscal 1994 consolidated
statement of earnings.
LIQUIDITY AND CAPITAL RESOURCES
For fiscal 1995, net cash provided from operating activities totaled $4.9
million. Cash generated by operations was offset, in part, by a $3.4 million
increase in contract receivables. Contract receivables totaled $27.8 million,
$24.4 million, and $23.1 million as of March 31, 1995, 1994, and 1993,
respectively, and represented approximately 43%, 43%, and 44% of total assets
as of those dates. The increase in contract receivables in fiscal 1995 was due
to delays in processing of the Company's invoices due to Government paying
office personnel reductions and software problems. The average period for
payment to the Company was 72 days at March 31, 1995, 66 days at March 31,
1994; and 70 days at March 31, 1993.
For fiscal 1995, net cash used in investing activities totaled $7.2 million.
Additions to buildings and equipment totaled $2.4 million, much of which was
for the purchase of computer and telecommunications equipment and related
software supporting the Company's computer and networking requirements.
Payments relating to the acquisition of business units, primarily contingent
payment amounts to the former owners of CDI and the purchase of a small
software development company in the naval architecture industry, totaled $1.0
million. Capitalized software product development costs totaled $3.8 million
in fiscal 1995. Included are expenditures of $3.6 million for initial OLRS
product development in New York, New Jersey and California and for new product
applications and enhancements in Connecticut. Expenditures are expected to
continue for initial product development in California and for new product
applications and enhancements in the other three states. The Company expects
to spend approximately $2.5 million on OLRS software product development in
fiscal 1996. This is less than in fiscal 1995 because emphasis is shifting
from initial product development to expanding product applications.
Net cash provided from financing activities for fiscal 1995 totaled $2.1
million. The primary contributor to cash provided from financing activities
was borrowings under the Company's revolving credit agreement. Any capital
needs not satisfied by cash generated from operations were, and in the future
will be, met with money borrowed by the Company under its line of credit and
revolving credit agreements. The total funds available to the Company under
these agreements at March 31, 1995 was $20.0 million. Borrowings under these
agreements were $3.5 million, $1.2 million, and $1.3 million as of March 31,
1995, 1994, and 1993, respectively.
The Company's working capital (excluding deferred taxes) was $16.8 million at
March 31, 1995, compared to $13.8 million at March 31, 1994. The Company's
current ratio was 2.0:1 at March 31, 1995 and 1.9:1 at March 31, 1994.
It is anticipated that the Company's existing cash, together with funds
generated from operations and borrowing under its line of credit and revolving
credit agreements, will be sufficient to meet its normal working capital
requirements and investments in software product development for the
foreseeable future. As of March 31, 1995, the Company does not have any major
capital commitments.
The Company believes that inflation has not had a material effect on its
business.
16
<PAGE> 6
ANALYSIS & TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
As of March 31, 1995 1994
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 502,372 $ 728,693
Contract receivables (note 3) 27,815,779 24,417,813
Notes and other receivables 1,146,419 371,308
Prepaid expenses 1,009,323 839,488
- ------------------------------------------------------------------------------------------------------------
Total current assets 30,473,893 26,357,302
- ------------------------------------------------------------------------------------------------------------
Property, buildings, and equipment, net (notes 4 and 6) 15,603,863 15,679,954
- ------------------------------------------------------------------------------------------------------------
Other assets (note 4):
Goodwill, net of accumulated amortization 6,783,335 6,313,870
Deposits and other receivables 428,921 469,352
Product development costs, net of accumulated amortization 8,531,649 5,317,560
Other 3,226,956 2,616,099
- ------------------------------------------------------------------------------------------------------------
18,970,861 14,716,881
- ------------------------------------------------------------------------------------------------------------
Total assets $ 65,048,617 $ 56,754,137
============================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term borrowings (note 5) $ 4,059 $ 593,603
Current installments of long-term debt (note 6) 309,258 921,582
Accounts payable 4,012,872 3,296,567
Accrued expenses (note 10) 8,707,471 7,180,681
Dividends payable 616,153 556,056
Deferred income taxes (note 7) 1,214,123 1,132,486
- ------------------------------------------------------------------------------------------------------------
Total current liabilities 14,863,936 13,680,975
Long-term debt, excluding current installments (note 6) 6,933,174 3,709,531
Deferred income taxes (note 7) 3,675,135 2,787,310
- ------------------------------------------------------------------------------------------------------------
Other long-term liabilities (note 9) 2,402,679 2,134,450
Total liabilities 27,874,924 22,312,266
- ------------------------------------------------------------------------------------------------------------
Commitments and contingencies (notes 3, 6, 9, and 11)
Shareholders' equity (notes 8 and 9):
Common stock, $.125 stated value. Authorized 7,500,000
shares; issued 2,371,399 shares in 1995 and
2,315,620 shares in 1994 296,425 289,453
Additional paid-in capital 9,285,867 8,718,008
Retained earnings 27,591,401 25,434,410
- ------------------------------------------------------------------------------------------------------------
Total shareholders' equity 37,173,693 34,441,871
- ------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $ 65,048,617 $ 56,754,137
============================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
17
<PAGE> 7
ANALYSIS & TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Years Ended March 31, 1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenue $ 132,256,713 $ 130,362,333 $ 116,466,597
Costs and expenses 126,639,078 125,032,353 111,995,221
- ------------------------------------------------------------------------------------------------------------------------
Operating earnings 5,617,635 5,329,980 4,471,376
- ------------------------------------------------------------------------------------------------------------------------
Other deductions (income):
Interest expense (notes 5 and 6) 564,862 607,373 576,773
Interest income (22,980) (53,625) (142,833)
Other, net 268,510 433,146 485,399
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
810,392 986,894 919,339
Earnings before income taxes 4,807,243 4,343,086 3,552,037
Income taxes (note 7) 2,034,099 1,844,508 1,573,281
- ------------------------------------------------------------------------------------------------------------------------
Net earnings $ 2,773,144 $ 2,498,578 $ 1,978,756
========================================================================================================================
Earnings per common and common equivalent share $ 1.12 $ 1.06 $ 0.91
========================================================================================================================
Weighted average shares and common
equivalent shares outstanding (notes 2 and 8) 2,469,148 2,366,470 2,173,432
========================================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
18
<PAGE> 8
ANALYSIS & TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Common stock Total
--------------------- Additional shareholders'
Stated paid-in Retained equity (notes 8
Years Ended March 31, 1995, 1994, and 1993 Shares value capital earnings and 9)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balances at March 31, 1992 2,149,708 $ 268,714 $ 7,097,235 $ 21,986,719 $ 29,352,668
Proceeds from sale of common stock 4,358 545 31,530 -- 32,075
Net earnings -- -- -- 1,978,756 1,978,756
Cash dividends declared - $.22 per share -- -- -- (473,587) (473,587)
- -------------------------------------------------------------------------------------------------------------------------------
Balances at March 31, 1993 2,154,066 269,259 7,128,765 23,491,888 30,889,912
Proceeds from sale of common stock 161,554 20,194 1,589,243 -- 1,609,437
Net earnings -- -- -- 2,498,578 2,498,578
Cash dividends declared - $.24 per share -- -- -- (556,056) (556,056)
- -------------------------------------------------------------------------------------------------------------------------------
Balances at March 31, 1994 2,315,620 289,453 8,718,008 25,434,410 34,441,871
Proceeds from sale of common stock 55,779 6,972 567,859 -- 574,831
Net earnings -- -- -- 2,773,144 2,773,144
Cash dividends declared - $.26 per share -- -- -- (616,153) (616,153)
- -------------------------------------------------------------------------------------------------------------------------------
Balances at March 31, 1995 2,371,399 $ 296,425 $ 9,285,867 $ 27,591,401 $ 37,173,693
===============================================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
19
<PAGE> 9
ANALYSIS & TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Years Ended March 31, 1995 1994 1993
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net earnings $ 2,773,144 $ 2,498,578 $ 1,978,756
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization of property,
buildings, and equipment 2,406,133 3,009,962 2,737,520
Amortization of goodwill 429,727 320,184 267,006
Amortization of product development costs 641,421 419,045 100,000
Loss on sale of equipment 78,970 70,174 206,769
Advance from customer (34,544) (90,809) (521,502)
Decrease (increase) in:
Contract receivables (3,373,532) (1,366,774) (2,218,506)
Notes and other receivables (775,111) 41,111 146,750
Prepaid expenses (169,835) (51,246) (410,504)
Other assets (568,923) (370,733) (387,854)
Increase (decrease) in:
Accounts payable and accrued expenses 2,243,095 646,582 (606,804)
Deferred income taxes 969,462 499,606 435,245
Other long-term liabilities 268,229 351,984 531,712
- -----------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 4,888,236 5,977,664 2,258,588
- -----------------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Additions to property, buildings, and equipment (2,402,993) (2,862,220) (3,238,213)
Product development costs (3,805,999) (2,895,290) (2,599,569)
Proceeds from the sale of equipment 6,563 85,872 22,304
Acquisition of business units (net of cash acquired) (987,222) (405,024) (591,047)
- -----------------------------------------------------------------------------------------------------------------------
Net cash used for investing activities (7,189,651) (6,076,662) (6,406,525)
- -----------------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Net repayments of short-term borrowings (555,000) (600,811) (138,246)
Proceeds from long-term borrowings 2,895,000 345,698 345,302
Repayments of long-term borrowings (283,681) (367,042) (309,429)
Proceeds from sale of common stock 574,831 1,609,437 32,075
Dividends paid (556,056) (473,587) (429,942)
- -----------------------------------------------------------------------------------------------------------------------
Net cash provided by (used for)
financing activities 2,075,094 513,695 (500,240)
- -----------------------------------------------------------------------------------------------------------------------
Increase (decrease) in cash and cash equivalents (226,321) 414,697 (4,648,177)
Cash and cash equivalents:
Beginning of year 728,693 313,996 4,962,173
- -----------------------------------------------------------------------------------------------------------------------
End of year $ 502,372 $ 728,693 $ 313,996
=======================================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
20
<PAGE> 10
ANALYSIS & TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
1. DESCRIPTION OF BUSINESS AND ACQUISITIONS
Analysis & Technology, Inc. (A&T) initially provided tactical analysis to the
Office of Naval Research and sonar analysis to the Naval Underwater Systems
Center, now known as the Naval Undersea Warfare Center. During the past 25
years, A&T and Subsidiaries (the Company) has expanded its business to provide
engineering services, interactive multimedia systems, and information
technology services for the military, civil government agencies, and private
industry. The Company typically performs its Department of Defense services
under cost reimbursement contracts whereby the U.S. Government reimburses the
Company for contracted costs and pays a fee. In fiscal 1995, 1994, and 1993,
the amount of the Company's non-defense revenue was $19.5 million, $17.8
million, and $15.6 million, respectively.
The Company has - during fiscal 1993, 1994, and 1995 - both acquired and formed
a number of business units that operate as wholly- owned subsidiaries of the
Company as described below. The business acquisitions were accounted for as
purchases.
In fiscal 1993, the Company purchased all the shares of Continental Dynamics,
Inc. (CDI), which specializes in manpower development training, information
resource management, engineering management, program management, and
engineering consulting. During fiscal 1994 and 1995, per the terms of the
purchase agreement for CDI, the Company made contingent payments of $100,000
and $769,999, respectively, to the former owners of CDI. Also during fiscal
1993, the Company made contingent purchase payments totaling $200,400 to the
former owners of businesses acquired in earlier fiscal years.
In fiscal 1994, the Company purchased all the shares of Prism-Dae, Inc., a
company with limited resources but which holds a contract with the Federal
Office of Personnel Management for services in government training and
information resource management areas. In addition, in fiscal 1994 the Company
formed Integrated Performance Decisions, Inc. (IPD) to develop and implement
performance decision software products for Navy customers and for customers in
the natural gas industry.
In fiscal 1995, the Company acquired certain assets of Design Systems &
Services, Inc., a Delaware company, operating a technology- based engineering,
professional service and software business. In fiscal 1995, the Company also
purchased assigned contracts and related patents and trademarks of the "Raydist
Line" from Teledyne Industries. Both of these acquisitions were merged into
existing business units. In addition, in fiscal 1995, the Company formed a
Canadian subsidiary, Numerical Decisions Group, Inc., to develop and implement
software for the Canadian Navy.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies of the Company:
- - PRINCIPLES OF CONSOLIDATION - The consolidated financial statements include
the accounts of A&T and its subsidiaries. All significant intercompany
accounts and transactions have been eliminated in consolidation.
- - CASH EQUIVALENTS - For financial statement purposes, the Company considers
all cash investments with original maturities of less than three months at
the time of purchase to be cash equivalents.
- - FAIR VALUE OF FINANCIAL INSTRUMENTS - The carrying amounts of the Company's
financial instruments approximate fair value.
- - DEPRECIATION AND AMORTIZATION - Property, buildings, and equipment are
stated at cost. Depreciation of buildings and equipment is provided over
the estimated useful lives of the respective assets using the straight-line
method. Leasehold improvements are amortized over the shorter of the term
of the lease or the life of the asset.
- - GOODWILL - Goodwill relating to the Company's acquisitions represents the
excess of cost over the fair value of net assets acquired and is amortized
on a straight-line basis over periods ranging from 2 to 30 years.
Determination of the straight-line period is dependent on the type of
acquisition. The Company evaluates the recoverability of goodwill on a
periodic basis to assure that changes in facts and circumstances do not
suggest that recoverability has been impaired. This analysis relies on a
number of factors, including operating results, business plans, budgets,
economic projections, and changes in management's strategic direction or
market emphasis. The test of recoverability for goodwill is a comparison of
the unamortized balance to expected cumulative (undiscounted) operating
income of the acquired business or enterprise over the remaining portion of
the amortization period. If the book value of goodwill exceeds undiscounted
future operating income, the writedown is computed as the excess of the
unamortized balance of the asset over the present value of operating income
discounted at the Company's weighted average cost of capital over the
remaining amortization period.
- - PRODUCT DEVELOPMENT COSTS - Product development costs represent expenditures
for the development of transaction processing systems and other software
products that have been capitalized in accordance with Statement of
Financial Accounting Standards No. 86, Accounting for the Costs of Computer
Software to Be Sold, Leased, or Otherwise Marketed. Amortization is
computed on an individual product basis and is the greater of (a) the ratio
of current gross revenues for a product to the total of current and
anticipated future gross revenues for that product or (b) the amount
computed using the straight-line method over the remaining economic useful
life of the product. The Company is currently using economic lives ranging
from two to five years for all capitalized product development costs.
Amortization of product development costs begins when the software product
is available for general release to customers.
21
<PAGE> 11
ANALYSIS & TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
- - ACCOUNTING FOR INVESTMENT IN JOINT VENTURE - The Company's 50% investment in
a joint venture, Automation Software Incorporated is accounted for using the
equity method of accounting. The Company's investment in the joint venture
is included in Other assets.
- - INCOME TAXES - Effective Apri1 1, 1993, the Company adopted Statement of
Financial Accounting Standards No. 109, Accounting for Income Taxes. The
adoption of Statement 109 did not have an impact on the fiscal 1994
consolidated statement of earnings.
Pursuant to the deferred method under APB Opinion 11, which was applied in
fiscal 1993 and prior years, deferred income taxes were recognized for
income and expense items reported in different years for financial reporting
purposes and income tax purposes using the tax rate applicable for the year
of the calculation. Under the deferred method, deferred taxes were not
adjusted for subsequent changes in tax rates.
- - REVENUE RECOGNITION - The revenue from contract services is earned under
cost-reimbursement, time-and-material, and fixed-price contracts. Revenues
under such contracts, including applicable fees and estimated profits, are
recorded as costs are incurred. If estimates indicate a probable ultimate
loss on a contract, provision is made immediately for the entire amount of
the estimated future loss.
- - EARNINGS PER SHARE - Earnings per share have been computed on the basis of
the weighted average number of common and common equivalent shares
outstanding during the year. Options to purchase common stock have been
considered to be common stock equivalents.
3. CONTRACT RECEIVABLES
Contract receivables are summarized as follows:
<TABLE>
<CAPTION>
1995 1994
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
U.S. Government:
Amounts due currently - prime contractor $ 15,101,053 $ 12,338,752
Amounts due currently - subcontractor 5,154,579 4,839,229
Retainage 2,051,455 2,296,198
- ------------------------------------------------------------------------------------------------------------
22,307,087 19,474,179
- ------------------------------------------------------------------------------------------------------------
Commercial customers:
Amounts due currently 2,381,361 2,533,186
- ------------------------------------------------------------------------------------------------------------
Unbilled contracts in process:
Fixed-price contracts in progress, net of progress billings 2,154,342 1,995,162
Revenues recorded on work performed pursuant to
customer authorization but prior to execution of
contractual documents or modifications 972,989 415,286
- ------------------------------------------------------------------------------------------------------------
3,127,331 2,410,448
- ------------------------------------------------------------------------------------------------------------
$ 27,815,779 $ 24,417,813
============================================================================================================
</TABLE>
The Government retains a portion of the fee earned by the Company (retainage)
until contract completion and final audit by the Defense Contract Audit Agency
(DCAA). It is estimated that approximately $1,654,543 of retainage at March
31, 1995 will be collected within one year; the remainder will be collected in
later years as DCAA completes its audits.
All unbilled contract receivables, net of retainage, are expected to be billed
and collected within one year.
22
<PAGE> 12
ANALYSIS & TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
4. NON-CURRENT ASSETS
A summary of property, buildings, and equipment follows:
<TABLE>
<CAPTION>
1995 1994
- -------------------------------------------------------------------------------------------
<S> <C> <C>
Land $ 376,839 $ 376,839
Buildings 10,424,706 10,317,109
Equipment 20,064,436 18,412,599
Leasehold improvements 1,568,066 1,360,320
- -------------------------------------------------------------------------------------------
32,434,047 30,466,867
Less accumulated depreciation and amortization (16,830,184) (14,786,913)
- -------------------------------------------------------------------------------------------
$ 15,603,863 $ 15,679,954
===========================================================================================
</TABLE>
Goodwill as of March 31, 1995 and 1994 was $6,783,335 and $6,313,870 net of
accumulated amortization of $1,551,378 and $1,121,651, respectively. The amount
of goodwill added in fiscal 1995 and 1994 was $899,192 and $405,024,
respectively. Amortization expense was $429,727 in fiscal 1995, $320,184 in
fiscal 1994, and $267,006 in fiscal 1993.
Product development costs at March 31, 1995 and 1994 were $8,531,649 and
$5,317,560 net of accumulated amortization of $1,260,466 and $619,045,
respectively. The amount of product development costs capitalized was
$3,855,510 in fiscal 1995, $2,895,290 in fiscal 1994, and $2,599,559 in fiscal
1993. Amortization expense was $641,421 in fiscal 1995, $419,045 in fiscal 1994
and $100,000 in fiscal 1993.
5. SHORT-TERM BORROWINGS
Short-term borrowings consist of borrowings under the Company's short-term
lines of credit and advances from a customer.
General Systems Solutions, Inc. (GSS), a wholly owned subsidiary of the
Company, has a $1,500,000 line of credit agreement that expires on September
30, 1996. Interest is payable at the bank's prime interest rate (9.0% at March
31, 1995). GSS's line of credit is guaranteed by A&T.
Applied Science Associates, Inc. (ASA), a wholly owned subsidiary of the
Company, had a $1,000,000 line of credit agreement that expired on April 4,
1994. Interest was payable at the bank's prime interest rate (6.25% as of
March 31, 1994).
The following is a summary of short-term borrowings under lines of credit:
<TABLE>
<CAPTION>
1995 1994
- -------------------------------------------------------------------------------
<S> <C> <C>
Borrowings outstanding:
At end of year $ -- $ 555,000
During year:
Maximum 1,200,000 2,137,000
Minimum -- --
Average 299,315 1,158,383
Weighted average interest rate 7.8% 6.0%
</TABLE>
The weighted average interest rate is computed using the daily borrowings
outstanding and the daily borrowing interest rates in effect during the year.
Advances from a customer represent advance collections. These totaled $4,059
and $38,603 at March 31, 1995 and 1994, respectively. Interest is calculated
on the unearned portion of the advance at the end of every month at 2.5% below
prime (6.5%, net, at March 31, 1995).
23
<PAGE> 13
ANALYSIS & TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
6. LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
1995 1994
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Revolving credit and term loan agreement as described
in the paragraph below $ 3,530,000 $ 635,000
Mortgage payable to Shawmut Bank bearing interest at 10.75%,
due in monthly installments of principal and interest of $15,497
through May 1, 1996 with a balloon payment of $729,873 due on
June 1, 1996, secured by certain land and buildings with a
depreciated cost of $2,681,409 839,773 928,809
Mortgage payable to Shawmut Bank bearing interest at 6.98%,
due in monthly installments of principal and interest of $18,826
through November 1, 2002, secured by certain land and buildings
with a depreciated cost of $3,174,447 1,893,123 1,981,590
Mortgage payable bearing interest at 9.25%, due in monthly
installments of principal and interest of $4,477 through March 2004,
secured by certain land and buildings 317,452 344,120
Small Business Administration loan bearing interest at 8.5%, due in monthly
installments of principal and interest of $4,923 through May 2001 285,665 316,252
Note payable to former officer of ASA bearing interest at 10%, due in monthly
installments of principal and interest of $7,438 through September 2000 376,419 425,342
- -------------------------------------------------------------------------------------------------------------------
Total long-term debt 7,242,432 4,631,113
Less current installments of long-term debt 309,258 921,582
- -------------------------------------------------------------------------------------------------------------------
Total long-term debt, excluding current installments $ 6,933,174 $ 3,709,531
===================================================================================================================
</TABLE>
A&T has an $18,500,000 revolving credit and term loan agreement that expires on
October 31, 1996. Amounts drawn against the line of credit may be converted
into a term loan at A&T's discretion at any time prior to the expiration of the
loan agreement. If converted, the term loan would be payable in 20
substantially equal quarterly installments. The alternate rates of interest
for the term loan from which A&T can choose are the bank's base rate, the
bank's certificate of deposit rate plus 1%, or LIBOR plus 3/4%. There is a
commitment fee of 1/2% per annum on the average daily balance of the unused
portion of the first $5,000,000 of the commitment and 1/4% per annum on the
remaining unused portion of the commitment, payable quarterly.
The revolving credit and term loan agreement places certain restrictions on
encumbering A&T assets, incurring additional debt, and disposing of any
significant assets. It also requires that A&T maintain at least $10,000,000 in
working capital (excluding deferred income taxes), a net worth of at least
$18,000,000, a debt-to-net-worth ratio of less than 2.5 to 1.0, an interest
coverage ratio of not less than two times interest paid or accrued, and a debt
service ratio of not less than 1.2 to 1.0. As of March 31, 1995, A&T was in
compliance with these covenants.
Under current agreements, principal payments due on long-term debt during each
of the five fiscal years subsequent to March 31, 1995 are as follows: $309,258
in 1996, $4,499,576 in 1997, $248,687 in 1998, $270,323 in 1999, and $293,622
in 2000.
The Company paid $564,862, $607,373 and $576,773 in interest on all debts,
including short-term borrowings, in fiscal 1995, 1994, and 1993, respectively.
24
<PAGE> 14
ANALYSIS & TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
7. INCOME TAXES
Total income tax expense for the years ended March 31, 1995, 1994, and 1993
consisted of the following:
<TABLE>
Current Deferred Total
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1995:
Federal $ 689,551 $ 1,000,418 $ 1,689,969
State 375,086 (30,956) 344,130
- ----------------------------------------------------------------------------------------------------------------------------
$ 1,064,637 $ 969,462 $ 2,034,099
============================================================================================================================
1994:
Federal $ 1,112,269 $ 373,882 $ 1,486,151
State 232,633 125,724 358,357
- ----------------------------------------------------------------------------------------------------------------------------
$ 1,344,902 $ 499,606 $ 1,844,508
============================================================================================================================
1993:
Federal $ 942,811 $ 253,331 $ 1,196,142
State 195,225 181,914 377,139
- ----------------------------------------------------------------------------------------------------------------------------
$ 1,138,036 $ 435,245 $ 1,573,281
============================================================================================================================
</TABLE>
Income tax expense differed from the amount computed by applying the U.S.
federal income tax rate of 34% to earnings before income taxes as a result of
the following:
<TABLE>
<CAPTION>
1995 1994 1993
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Computed expected tax expense $ 1,634,463 $ 1,476,649 $ 1,207,693
Increase in income taxes resulting from:
Amortization of goodwill 145,451 108,863 90,782
State income taxes (net of valuation allowance and
federal income tax benefit) 227,126 236,516 248,912
Other (net) 27,059 22,480 25,894
- ----------------------------------------------------------------------------------------------------------------------------
$ 2,034,099 $ 1,844,508 $ 1,573,281
============================================================================================================================
</TABLE>
For the year ended March 31, 1993, deferred income tax expense resulted from
timing differences in the recognition of income and expense for income tax and
financial accounting purposes. The sources and tax effects of those timing
differences for this fiscal year, which preceded the adoption of Statement 109,
are presented below:
<TABLE>
<CAPTION>
1993
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C>
Excess of financial statement depreciation over tax depreciation $ (39,002)
Capitalization of software product development costs 927,348
Unbillable contract revenue 39,095
Reporting certain income and expense items on a cash basis for tax purposes (259,357)
Other, net (232,839)
- ----------------------------------------------------------------------------------------------------------------------------
$ 435,245
============================================================================================================================
</TABLE>
25
<PAGE> 15
ANALYSIS & TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
The tax effects of temporary differences that give rise to significant portions
of the deferred tax assets and deferred tax liabilities as of March 31, 1995
and 1994 are presented below:
<TABLE>
<CAPTION>
1995 1994
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Deferred tax assets:
Uncollected receivables that are not yet deductible for tax purposes $ 363,782 $ 838,401
Compensated absences, principally due to accrual for
financial reporting purposes 1,087,411 1,162,636
Deferred compensation 876,323 725,243
Net operating loss carryforwards 358,769 --
Other 20,411 62,164
- ------------------------------------------------------------------------------------------------------------
Total gross deferred tax assets 2,706,696 2,788,444
Less valuation allowance 183,300 --
- ------------------------------------------------------------------------------------------------------------
Net deferred tax assets 2,523,396 2,788,444
- ------------------------------------------------------------------------------------------------------------
Deferred tax liabilities:
Tax depreciation in excess of financial statement depreciation (1,273,420) (1,354,806)
Capitalized software product development costs (3,461,117) (2,213,436)
Unbilled contract revenue (2,654,655) (3,133,523)
Other (23,462) (6,475)
- ------------------------------------------------------------------------------------------------------------
Total gross deferred tax liabilities (7,412,654) (6,708,240)
- ------------------------------------------------------------------------------------------------------------
Net deferred tax liability $ 4,889,258 $ 3,919,796
============================================================================================================
</TABLE>
At March 31, 1995, the Company had state and foreign net operating loss
carryforwards of approximately $3,550,000 and $350,000, respectively. Such
carryforwards have various expiration dates and begin to expire in the year
ended March 31, 1999. For financial purposes, a valuation allowance of
$183,300 has been recognized to offset the deferred tax asset related to the
portion of these net operating losses which the Company believes will more
likely than not expire unutilized. There was no valuation allowance required
as of April 1, 1993 and March 31, 1994.
Management has evaluated the remaining temporary differences and concluded that
it is more likely than not that the Company will have sufficient taxable income
of an appropriate character within the carryback and carryforward period
permitted by current tax law to allow for the utilization of the deductible
amounts generating the deferred tax assets and, therefore, no valuation
allowance is required as of April 1, 1993 and March 31, 1994 and 1995.
The Company made federal and state income tax payments of $1,335,533,
$1,416,541, and $1,914,926 during fiscal 1995, 1994, and 1993, respectively.
8. EMPLOYEE STOCK OPTIONS
A&T has granted common stock options to certain key employees under its stock
option plans. All plans provide that the fair market value upon which option
exercise prices are based shall be the average of the high and low sale prices
of the Company's common stock as reported on the NASDAQ National Market System
on the day the option is granted. Options awarded are vested at a rate of 20%
annually, commencing on the date of award. Options granted under these plans
provide stock appreciation rights whereby an employee may elect to relinquish
up to 30% of the options being exercised and receive a cash payment in lieu of
purchasing shares. The amount of the cash payment would be equal to the number
of shares covered by the portion of the option relinquished multiplied by the
difference between the option exercise price per share and the fair market
value of a share of the Company's common stock at the time of surrender.
The changes in the number of common shares under option are summarized as
follows:
<TABLE>
<CAPTION>
1995 1994 1993
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Outstanding at beginning of year 564,946 720,177 530,882
Granted 134,600 67,000 257,700
Exercised (59,161) (176,482) (11,738)
Canceled or expired (66,178) (45,749) (56,667)
- --------------------------------------------------------------------------------------------------
Outstanding at end of year 574,207 564,946 720,177
==================================================================================================
Exercise price range per share $ 9.07-16.63 $ 9.07-16.63 $ 7.44 -15.13
==================================================================================================
Shares reserved for stock options 642,547 619,161 815,411
==================================================================================================
</TABLE>
26
<PAGE> 16
ANALYSIS & TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
Options for 353,327 shares were exercisable at March 31, 1995. The average
price per share of options exercised in fiscal 1995, 1994, and 1993 was $10.53,
$10.51 and $9.76, respectively.
In addition, some of the subsidiaries of the Company have stock options plans
which grant options to certain key employees to purchase subsidiaries' stock.
The price of the options as of the date of award and subsequent valuation is
based on a calculation considering book value per share and an earnings factor.
9. OTHER EMPLOYEE BENEFIT PLANS
The Company's Savings and Investment Plan is a discretionary contribution plan
as defined in the Internal Revenue Code, Section 401(a)(27). The plan covers
substantially all of the Company's full-time employees. The Company's
contributions are made at the discretion of the Board of Directors for any plan
year. For the plan years ended December 31, 1994, 1993, and 1992, the Company
matched up to 50% of a participant's contribution of up to a maximum of 8% of
the participant's compensation, depending on the business unit to which the
participant was assigned. The Company's matching contributions to this plan
were $1,409,709, $1,243,289, and $1,154,402 for the years ended March 31, 1995,
1994, and 1993, respectively. One of the investment options available under
the Company's Savings and Investment Plan is the purchase of the Company's
stock. The Plan owned 40,162, 33,000, and 13,780 shares of common stock of the
Company at March 31, 1995, 1994, and 1993, respectively.
The A&T Employee Stock Ownership Plan covers substantially all full-time
employees. Contributions to the plan are made at the discretion of the Board
of Directors for any plan year. A&T's contributions to the plan amounted to
$80,900, $108,900, and $15,000 for fiscal 1995, 1994, and 1993, respectively.
The plan owned 457,990, 484,667, and 520,926 shares of common stock of the
Company at March 31, 1995, 1994, and 1993, respectively.
A&T's liability to employees for deferred compensation of $2,139,274 and
$1,750,011 as of March 31, 1995 and 1994, respectively, is included in other
long-term liabilities on the accompanying consolidated balance sheets.
ASA maintains a defined contribution employee stock ownership and
profit-sharing plan for substantially all of ASA's full-time employees. The
annual contribution to the plan is equal to a percentage of the eligible
compensation of all participants. The percentage is determined annually by the
ASA Board of Directors. The contributions to the plan were $73,293 and
$131,855 for fiscal 1994 and 1993, respectively. There were no contributions
to the Plan in fiscal 1995. The Plan owned 27,189 shares of common stock of
the Company at March 31, 1995, 1994, and 1993.
10. ACCRUED EXPENSES
Accrued expenses consist of the following:
<TABLE>
<CAPTION>
1995 1994
- ------------------------------------------------------------------------------
<S> <C> <C>
Accrued vacation $ 3,692,240 $ 3,440,118
Payroll taxes payable 480,920 441,965
Accrued compensation 2,598,879 2,119,782
Accrued benefits 1,395,547 824,349
Other 539,885 354,467
- ------------------------------------------------------------------------------
$ 8,707,471 $ 7,180,681
==============================================================================
</TABLE>
11. COMMITMENTS AND CONTINGENCIES
The Company occupies certain office facilities and uses certain equipment under
lease agreements with terms that range from two to six years. Many of the
leases have renewal options with similar terms. All of these agreements are
accounted for as operating leases. Minimum lease payments for which the
Company is obligated are as follows (the amounts are net of certain maintenance
expenses, insurance, and taxes):
<TABLE>
<CAPTION>
Years Ending March 31:
- ------------------------------------------------------------------------------
<S> <C>
1996 $ 4,641,334
1997 3,117,560
1998 2,180,638
1999 797,673
2000 213,553
- ------------------------------------------------------------------------------
Total minimum lease payments $10,950,758
==============================================================================
</TABLE>
Net lease expenses amounted to approximately $4,450,000, $3,000,000, and
$3,100,000 in fiscal 1995, 1994, and 1993, respectively.
27
<PAGE> 17
ANALYSIS & TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
Under the terms of the Design Systems & Services, Inc. purchase agreement, the
Company is committed to make contingent payments up to $400,000. Contingent
payments are based on 15% of revenues derived from sales of a ship design
software product made between the purchase date and April 30, 1999. The first
quarterly payment for sales through April 30, 1995 is due in May 1995.
Under the terms of the CDI purchase agreement, the Company is committed to make
two additional contingent payments of $100,000 each, to the former owners of
CDI. The payments will be made in May 1995 and May 1996.
The U.S. Government has the right to audit and make retroactive adjustments
under certain contracts. Audits through March 31, 1993 have been completed.
In the opinion of management, adjustments, if any, resulting from audits for
the years ended March 31, 1994 and 1995 will not have a material effect on the
Company's consolidated financial statements.
In fiscal 1994, the Company received $600,000 under the terms of a development
agreement with a state-financed corporation, Connecticut Innovations, Inc.
(CII), to assist in funding the development of GSS's On-Line Registration
Systems (OLRS). Under the terms of the agreement, the Company is required to
remit royalty payments of up to 5% of future revenues from its OLRS products.
The duration of the royalty payments, the maximum amount of such royalties, and
the rate at which the royalties will be paid are all contingent on the timing
and volume of revenues derived from the on-line system products. There is no
minimum amount of royalties that must be paid by the Company. In addition, GSS
has negotiated agreements, each having a term of five years with various trade
organizations to promote the OLRS product within certain states. Under these
agreements, GSS must remit quarterly royalty payments to each trade
organization based upon 1.75% of revenue generated during the quarter from OLRS
transactions in each respective state. The total amount of royalty payments
made in fiscal 1995 and 1994 were $17,640 and $26,208, respectively.
During fiscal 1995, the Company entered into another agreement with CII under
which CII will assist in funding the development of commercial imaging
processing products and services. Under the agreement, CII will provide to
the Company funds equal to 60% of any development expenses incurred upon
satisfactory performance of established milestones, up to a maximum of
$300,000. The funds received in fiscal 1995 amounted to $100,000. Under the
terms of the agreement, the Company is required to remit quarterly royalty
payments of up to 5% of the gross sales of imaging products and services and
25% of the aggregate amount of one-time license fees received through September
30, 1999. After September 1999, royalty payments shall be made at the greater
of the amount stated above or 2% of the commercial sales of the Company's
Engineering Technology Center Business Unit, until cumulative royalty payments
to CII reach $300,000. Royalty payments will be deemed to be paid in full if
at any time after October 1996, CII has received a 25% annual compounded rate
of return on all funds advanced to the Company.
The Company has also entered into negotiations with the Connecticut Department
of Economic Development to receive an amount not to exceed $1.2 million to fund
interactive multimedia development. The final terms of the agreement,
including royalties to be paid by the Company, are expected to be finalized in
fiscal 1996.
12. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The following summarizes quarterly results of operations for the years ended
March 31, 1995 and 1994:
Dollars in thousands except per share amounts
<TABLE>
<CAPTION>
Quarter Ended June 30 September 30 December 31 March 31 Total
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1995:
Revenue $ 31,404 $ 32,559 $ 32,794 $ 35,500 $ 132,257
Operating earnings 1,276 1,347 1,426 1,569 5,618
Net earnings 682 632 707 752 2,773
Earnings per share 0.28 0.26 0.28 0.30 1.12
1994:
Revenue $ 31,772 $ 32,308 $ 32,622 $ 33,660 $ 130,362
Operating earnings 1,235 1,376 1,294 1,425 5,330
Net earnings 564 623 660 652 2,499
Earnings per share 0.26 0.26 0.27 0.26 1.06
</TABLE>
28
<PAGE> 18
ANALYSIS & TECHNOLOGY, INC. AND SUBSIDIARIES
INDEPENDENT AUDITOR'S REPORT
- -------------------------------------------------------------------------------
The Board of Directors and Shareholders
Analysis & Technology, Inc. and Subsidiaries:
We have audited the accompanying consolidated balance sheets of Analysis &
Technology, Inc. and Subsidiaries as of March 31, 1995 and 1994, and the
related consolidated statements of earnings, shareholders' equity, and cash
flows for each of the years in the three-year period ended March 31, 1995.
These consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
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 consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Analysis &
Technology, Inc. and Subsidiaries as of March 31, 1995 and 1994 and the results
of their operations and their cash flows for each of the years in the
three-year period ended March 31, 1995 in conformity with generally accepted
accounting principles.
As discussed in note 2 to the consolidated financial statements, in fiscal 1994
the Company adopted the provisions of the Financial Accounting Standards
Board's Statement of Financial Accounting Standards No. 109, Accounting for
Income Taxes.
KPMG Peat Marwick LLP
Hartford, Connecticut
May 5, 1995
29
<PAGE> 19
DIRECTORS AND OFFICERS
- -------------------------------------------------------------------------------
BOARD OF DIRECTORS
ANALYSIS & TECHNOLOGY, INC.
JAMES B. FOX
Chairman of the Board,
Analysis & Technology, Inc.
GARY P. BENNETT
President and
Chief Executive Officer,
Analysis & Technology, Inc.
LARRY M. FOX
Purchasing Manager,
VTEL Corporation
NELDA S. NARDONE
Retired Secretary,
Analysis & Technology, Inc.
THURMAN F. NAYLOR
Retired Chairman and
Chief Executive Officer,
Standard Thomson Corporation
DAVID M. NOLF
Executive Vice President,
Analysis & Technology, Inc.
DENNIS G. PUNCHES
Chairman,
Payco American Corporation
OFFICERS
ANALYSIS & TECHNOLOGY, INC.
GARY P. BENNETT
President and
Chief Executive Officer
DAVID M. NOLF
Executive Vice President
Chief Financial and
Administrative Officer
Secretary
JAY W. RYERSON
Executive Vice President
Chief Operating Officer
THOMAS J. WILL, SR.
Executive Vice President
ROBERT M. GORMAN
Senior Vice President
JAMES R. LAVOIE
Senior Vice President
JOSEPH M. MARINO
Senior Vice President
RICHARD P. MITCHELL
Senior Vice President
GERALD SNYDER
Senior Vice President,
Planning
V. LEHMAN WOODS
Senior Vice President,
Contracts
DOUGLAS L. CLARK
Vice President
DANIEL R. CONWAY
Vice President
RUSSELL J. DESIMONE
Vice President
DOUGLAS P. DUNBAR
Vice President
DAVID C. GHEN
Vice President
STEPHEN E. JOHNSTON
Vice President,
Human Resources
ADELAIDE K. MAYHEW
Vice President
G. MICHAEL NIKODEM
Vice President
SUSAN C. VARNADOE
Vice President
RALPH L. VOLK, III
Vice President
SUBSIDIARY OFFICERS
APPLIED SCIENCE ASSOCIATES, INC. (ASA)
JAY W. RYERSON
President and
Chief Executive Officer (Acting)
JOHN T. MCCOY
Senior Vice President
Chief Financial Officer
JOHN G. DRUGO
Senior Vice President
ADELAIDE K. MAYHEW
Senior Vice President
DAVID M. NOLF
Secretary
PAMELA J. SEMLER
Assistant Secretary
PRISM-DAE, INC.
GARY P. BENNETT
Chairman
ADELAIDE K. MAYHEW
President
CATHERINE FREDERICK-BITTNER
Vice President
DAVID M. NOLF
Secretary
CONTINENTAL DYNAMICS, INC. (CDI)
JOSEPH Q. NESMITH
Chief Executive Officer
Treasurer
JAMES W. CRAWFORD
President
DAVID M. NOLF
Secretary
GENERAL SYSTEMS SOLUTIONS, INC. (GSS)
JAY W. RYERSON
President and
Chief Executive Officer (Acting)
ALAN E. GALLO
Senior Vice President
Chief Operating Officer
WILLIAM L. BRUMLEY
Vice President
Chief Financial Officer
JOSEPH S. BROMLEY
Vice President
ALAN J. CATTERSON
Vice President
DAVID M. NOLF
Secretary and Treasurer
INTEGRATED PERFORMANCE DECISIONS, INC. (IPD)
JAMES R. LAVOIE
President
LINDA M. EDWARDS
Vice President
ELEANOR S. HOLMES
Vice President
JAMES A. MCNITT
Vice President
DAVID M. NOLF
Secretary
ANALYSIS & TECHNOLOGY AUSTRALIA PTY LIMITED
PAUL A. FOTHERGILL
Managing Director
Secretary
A&T INTERNATIONAL CORPORATION (ATIC)
GARY P. BENNETT
President and
Chief Executive Officer
V. LEHMAN WOODS
Executive Vice President
Chief Financial Officer
ADELAIDE K. MAYHEW
Vice President
WILLIAM A. REED
Vice President
DAVID M. NOLF
Secretary
JOINT VENTURE
AUTOMATION SOFTWARE INCORPORATED (ASI)
BRYN EDWARDS
President and
Chief Executive Officer
STEPHEN E. LOGEE
Vice President
THOMAS KUNEMAN
Chief Financial Officer
Secretary
30
<PAGE> 20
CORPORATE INFORMATION
TRANSFER AGENT AND REGISTRAR
Mellon Securities Trust Company
Hartford, Connecticut
1-800-288-9541
AUDITORS
KPMG Peat Marwick, Hartford, Connecticut
COUNSEL
Cummings & Lockwood, Hartford, Connecticut
FORM 10-K
Copies of the Company's fiscal 1995 Annual Report on Form 10-K, as filed with
the Securities and Exchange Commission, may be obtained at no charge by writing
to:
Elaine G. Beckwith
Corporate Communications Manager
Analysis & Technology, Inc.
P.O. Box 220
North Stonington, CT 06359-0220
ANNUAL MEETING
Analysis & Technology, Inc.'s annual meeting of shareholders will be held on
Tuesday, August 8, 1995 at 10:00 a.m. at The Mystic Hilton, Coogan Boulevard,
Mystic, Connecticut.
MARKET AND DIVIDEND INFORMATION
Analysis & Technology, Inc.'s common stock is currently traded on the NASDAQ
Stock Market under the symbol AATI. The high and low sale prices of the
Company's common stock from April 1, 1993 through March 31, 1995 by quarter
have been as follows:
<TABLE>
<CAPTION>
Quarter Ended High Low
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
1993: June 30 14.25 10.00
September 30 15.75 13.625
December 31 19.50 15.50
1994: March 31 18.75 14.50
June 30 15.75 14.50
September 30 15.75 13.75
December 31 15.75 14.50
1995: March 31 16.50 12.50
</TABLE>
The Company declared an annual dividend of $.26 per share, payable on April 21,
1995 to shareholders of record on March 31, 1995. The annual dividend for the
fiscal year ended March 31, 1994 was $.24 per share.
On May 25, 1995, there were approximately 342 shareholders of record and
2,376,865 shares of common stock outstanding.
OFFICE LOCATIONS
ANALYSIS & TECHNOLOGY, INC. CORPORATE OFFICE
Route 2
P.O. Box 220
North Stonington, CT 06359-0220
(203) 599-3910
CALIFORNIA
A&T Monterey
A&T San Diego
GSS Sacramento
CONNECTICUT
A&T North Stonington
ATIC North Stonington
IPD North Stonington
A&T New London
Fleet Support Center
(FSC) New London
GSS Groton
Engineering Technology
Center (ETC) Mystic
FLORIDA
A&T Orlando
A&T Panama City
GSS Panama City
MARYLAND
A&T Burtonsville
ETC/Proteus Engineering
ASA Landover
MICHIGAN
ASI Farmington Hills
MISSISSIPPI
A&T Bay St. Louis
NEW JERSEY
A&T Mt. Laurel
NEW YORK
A&T Bohemia
GSS Albany
OKLAHOMA
ASA Oklahoma City
PENNSYLVANIA
ASA Butler
IPD Butler
RHODE ISLAND
A&T Newport
IPD Newport
ASI North Kingstown
SOUTH CAROLINA
FSC North Charleston
VIRGINIA
A&T Arlington
IPD Arlington
ETC Arlington
A&T Chesapeake
FSC Chesapeake
A&T Dahlgren
A&T Herndon
A&T Norfolk
A&T Virginia Beach
ASA McLean
Prism-Dae, Inc. McLean
WASHINGTON
A&T Silverdale
A&T Oak Harbor
AUSTRALIA
A&T Fyshwick
CANADA
IPD Victoria
Analysis & Technology, Inc. is an Affirmative Action and Equal Opportunity
Employer.
DESIGN: Cole Design Group ILLUSTRATION: Nikolai Punin
<PAGE> 1
EXHIBIT 22
SUBSIDIARIES OF ANALYSIS & TECHNOLOGY, INC.
<TABLE>
<CAPTION>
NAMES UNDER WHICH JURISDICTION OF
NAME DOING BUSINESS INCORPORATION
- ---- ----------------- ----------------
<S> <C> <C>
Applied Science Associates, Inc. ----- Pennsylvania
General Systems Solutions, Inc. ----- Connecticut
Analysis & Technology
Australia Pty Limited ----- Australia
Continental Dynamics, Inc. ----- Virginia
Analysis & Technology
International Corporation ----- Delaware
Integrated Performance Decisions, Inc. ----- Delaware
Numerical Decisions Group, Inc. ----- Canada
Prism-Dae, Inc. ----- Delaware
</TABLE>
JOINT VENTURES WITH ANALYSIS & TECHNOLOGY, INC.
<TABLE>
<S> <C> <C>
Automation Software Incorporated ----- Delaware
</TABLE>
<PAGE> 1
EXHIBIT 24
[LETTERHEAD OF PEAT MARWICK LLP]
The Board of Directors
Analysis & Technology, Inc.:
We consent to incorporation by reference in Registration Statements (Nos.
33-34004, 33-86576 and 33-86666) on Form S-8 of Analysis & Technology, Inc. of
our report dated May 5, 1995, relating to the consolidated balance sheets of
Analysis & Technology, Inc. and Subsidiaries as of March 31, 1995 and 1994, and
the related consolidated statements of earnings, shareholders' equity and cash
flows for each of the years in the three-year period ended March 31, 1995, which
report is incorporated by reference in the March 31, 1995, annual report on Form
10-K of Analysis & Technology, Inc.
Our report refers to a change in the Company's method of accounting for income
taxes.
/s/ KPMG Peat Marwick LLP
June 28, 1995
<TABLE> <S> <C>
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<NAME> ANALYSIS & TECHNOLOGY, INC.
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<S> <C>
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<PERIOD-END> MAR-31-1995
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0
0
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</TABLE>
