UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
(x) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (Fee Required)
For the fiscal year ended December 30, 1994
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 1-8544
AMERICAN PRESIDENT COMPANIES, LTD.
(Exact name of registrant as specified in its charter)
Delaware 94-2911022
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1111 Broadway
Oakland, CA 94607
(Address of principal executive offices)
Registrant's telephone number: (510) 272-8000
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
Common Stock, Par New York Stock Exchange
Value $.01 Pacific Stock Exchange
Rights to Purchase Series A New York Stock Exchange
Junior Participating Preferred Stock Pacific Stock Exchange
Securities registered pursuant to Section 12 (g) of the Act:
None
______________
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the 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. (x)
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, and (2) has been subject to such filing requirements
for the past 90 days. Yes (x) No ( )
______________
At March 1, 1995 the number of shares of Common Stock outstanding was
27,323,728. Based solely upon the closing price of the New York Stock Exchange
on such date, the aggregate market value of Common Stock held by non-affiliates
of the registrant was approximately $608 million.
Documents Incorporated by Reference
Portions of registrant's Proxy Statement for its 1995 Annual Meeting of
Stockholders are incorporated by reference into Part III hereof.
______________
<PAGE>
<TABLE>
TABLE OF CONTENTS
<CAPTION>
Page
PART I
<S> <S> <C>
Items 1. and 2. BUSINESS AND PROPERTIES 3-11
Item 3. LEGAL PROCEEDINGS 11-12
Item 4. SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS 12
PART II
Item 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND
RELATED STOCKHOLDER MATTERS 12
Item 6. SELECTED FINANCIAL DATA 12-13
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND
RESULTS OF OPERATIONS 14-24
Item 8. CONSOLIDATED FINANCIAL STATEMENTS AND
SUPPLEMENTARY DATA 24-47
Item 9. DISAGREEMENTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE 48
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS
OF THE REGISTRANT 48
Item 11. EXECUTIVE COMPENSATION 49
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT 49
Item 13. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS 49
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND
REPORTS ON FORM 8-K 49-56
SIGNATURES 57-58
</TABLE>
<PAGE>
PART I
ITEMS 1. AND 2. BUSINESS AND PROPERTIES
American President Companies, Ltd. and its subsidiaries (the "company")
provide container transportation and related services in North America, Asia and
the Middle East through an intermodal system combining ocean, rail and truck
transportation.
The company's international transportation operations are conducted
through American President Lines, Ltd., an ocean common carrier with operations
concentrated in the Pacific Basin. Another operating unit, American
Consolidation Services, Ltd., provides cargo distribution, warehousing and
freight consolidation services. Stevedoring and terminal operations on the U.S.
West Coast are conducted through Eagle Marine Services, Ltd. The company's
North America transportation operations are conducted through APL Land Transport
Services, Inc., which provides intermodal transportation and freight brokerage,
and through American President Trucking Company, Ltd., which provides over-the-
road truck transportation in North America. The company was engaged in real
estate operations through Natomas Real Estate Company until 1994, when its
remaining real estate holdings were sold.
TRANSPORTATION
International
The company provides ocean-going containerized cargo transportation
services in the trans-Pacific and intra-Asia markets. The company's share of
the trans-Pacific market for containerized cargo was approximately 9%, 11%, and
11% in 1994, 1993 and 1992, respectively. The company offers five scheduled
trans-Pacific services per week between key ports in Asia and four U.S. ports
and one Canadian port. The company and Orient Overseas Container Line ("OOCL"),
a Hong Kong shipping company, are parties to agreements enabling them to
exchange vessel space and coordinate vessel sailings. The term of these
agreements extend through 2005. Two of the company's trans-Pacific services are
made possible under its agreements with OOCL which permit both companies to
offer faster transit times, more frequent sailings between key markets in Asia
and the U.S. West Coast, and sharing of terminals and several feeder operations
within Asia.
In September 1994, the company, Mitsui OSK Lines, Ltd. ("MOL"), and OOCL
signed an agreement to exchange vessel space, coordinate vessel sailings and
cooperate in the use of port terminals and equipment for ocean transportation
services in the Asia-U.S. West Coast trade through 2005. The carriers currently
expect to commence service under this agreement in late 1995 or early 1996.
This agreement is subject to government approvals in the U.S. and Japan.
The three carriers and Nedlloyd Lines B.V. ("NLL") signed a separate
agreement to exchange vessel space, coordinate vessel sailings and cooperate in
the use of port terminals and equipment in the Asia-U.S. East Coast trade via
Panama for a minimum of three years. The four carriers currently expect to
initiate an all-water service under this agreement in March 1995, and weekly
service is currently expected to commence by August 1995.
Additionally, in September 1994, the four carriers and Malaysian
International Shipping Corporation BHD signed an agreement to exchange vessel
space, coordinate vessel sailings and cooperate in the use of port terminals and
<PAGE>
equipment for ocean transportation services in the Asia-Europe trade
through 2001. The carriers currently expect to commence service under the
agreement in January 1996. Prior to the commencement of this alliance, the
company will enter the Asia-Europe trade by chartering vessel space through MOL
beginning in March 1995.
The Asia-U.S. West Coast, Asia-U.S. East Coast and Asia-Europe alliance
agreements are all currently scheduled to be implemented by late 1995 or early
1996. Under the terms of the three agreements, alliance partners contribute and
are allocated vessel space, which may be adjusted from time to time.
The following tables show the company's line haul capacity provided to
and available from alliance partners under the company's alliance agreements
with OOCL since 1991 and other carriers beginning in 1995, as discussed above,
in thousands of twenty-foot equivalent units ("TEUs"):
<TABLE>
Capacity provided by the company
<CAPTION>
to the alliances: 1992 1993 1994 1995(1) 1996(1)
Trans-Pacific
<S> <C> <C> <C> <C> <C>
Eastbound 463.0 474.8 488.4 523.4 615.2
Westbound 336.8 341.3 331.0 370.5 436.7
Total 799.8 816.1 819.4 893.9 1,051.9
Asia-Europe
Eastbound
Westbound
Asia-U.S. East Coast
Eastbound
Westbound
Total Capacity Provided 799.8 816.1 819.4 893.9 1,051.9
Capacity available to the company
from the alliances: 1992 1993 1994 1995(1) 1996(1)
Trans-Pacific
Eastbound 463.0 474.8 506.3 523.4 539.9
Westbound 336.8 341.3 331.0 370.5 383.4
Total 799.8 816.1 837.3 893.9 923.3
Asia-Europe
Eastbound 22.1 41.6
Westbound 27.6 52.0
Total 49.7 93.6
Asia-U.S. East Coast
Eastbound 14.1 28.0
Westbound 10.5 22.3
Total 24.6 50.3
Total Capacity Available 799.8 816.1 837.3 968.2 1,067.2
</TABLE>
(1)Amounts for 1995 and 1996 are based upon the current schedule for delivery
and deployment of newly constructed vessels and implementation of the
alliance and assumes no adjustments to currently allocated vessel space.
The value of vessel space currently expected to be provided by the
company to the alliance is less than the value of the total capacity allocated
to it through the alliance, resulting in an annual net cash purchase commitment
from the company to its alliance partners currently estimated to be $29 million,
beginning in 1996. For 1995, the company currently expects its net purchase
commitment to its alliance partners for vessel space in the Asia-U.S. East Coast
and Asia-Europe trades to be approximately $35 million. Agreements covering
terminal and equipment sharing among the alliance partners have not been
finalized, and the company's net cash commitment, if any, to the alliance
partners for these services cannot be determined at this time.
<PAGE>
In April 1994, the company and Transportacion Maritima Mexicana ("TMM"),
a Mexican transportation company, entered into an agreement enabling them to
reciprocally charter vessel space for a period of three years. Under the
agreement, cargo is transported between major Asian ports and certain ports on
the Pacific Coast of the U.S. and Mexico.
In all, the company provides scheduled service between 58 ports in the
Pacific and Indian Oceans and in the Arabian Gulf. In the intra-Asia market,
the company provides service between approximately 425 Asian cities and
commercial centers. The company's ocean transportation business maintains a
total of 183 offices and agents located in the three countries in North America,
31 countries in Asia and the Middle East, 11 countries in Europe, and in Africa
and Australia.
International container transportation operations are seasonal and
subject to economic cycles and the growth of local economies in the markets
served, fluctuations in the relative values of the U.S. dollar and various
foreign currencies and resulting changes in demand for transportation of import
and export products. The second and third quarters generally have been the
company's strongest in terms of volume, primarily due to the export of seasonal
refrigerated goods from the U.S. in both of these quarters and increased imports
of consumer goods to the U.S. in the third quarter for the Christmas buying
season.
The following table sets forth the amount and source of the company's
ocean shipping revenues for the past five years, in millions of dollars. While
U.S. import and export amounts are stated net of revenues resulting from the
transportation of military cargo for Operation Desert Storm, the intra-Asia
amounts for 1991 and 1990 include Desert Storm revenues, which were not
segregated from normal operations in this market.
<TABLE>
<CPATION>
1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
U.S. Import $ 896 $ 880 $ 829 $ 775 $ 761
U.S. Export 494 498 500 498 463
Intra-Asia 352 329 296 280 242
Desert Storm 103 26
Total $ 1,742 $ 1,707 $ 1,625 $ 1,656 $1,492
</TABLE>
The company transports imports into North America that include higher
value goods such as clothing, electronics, automotive and manufacturing
components and other consumer items. Generally, higher value cargo is
transported at higher rates due to its value, time sensitivity or need for
specialized services.
U.S. export cargoes transported by the company include refrigerated
goods, military shipments and lower value, semi-processed and raw materials, as
well as auto parts, oil field supplies and other higher value finished products.
In the intra-Asia market, the industrialized economies import food, raw
materials and semi-processed goods from developing Asian nations and export auto
parts, electronics and other technological and capital-intensive finished
products.
The single largest customer of the company's international
transportation operations is the U.S. government, which ships military and other
cargo and accounted for approximately 3%, 3% and 2% of consolidated revenues in
1994, 1993 and 1992, respectively. Generally, the company bids competitively
for contracts to transport military and other cargo for the U.S. government. In
<PAGE>
recent years, the U.S. military has been closing bases and
reducing the number of U.S. military personnel overseas. The extent to which
future U.S. military base closures and rollback of personnel may impact
shipments of U.S. military cargo by the company cannot be estimated.
In 1990 and 1991, the company transported military cargo related to
Operation Desert Storm. Export shipments of Desert Storm cargo began in the
fourth quarter of 1990 and continued through the first quarter of 1991 during
the build-up of U.S. military equipment and supplies. The company also returned
military equipment from this region to the U.S. during the second and third
quarters of 1991. In addition to military freight revenues, the company
collected detention charges from the U.S. government for containers transported
for Operation Desert Storm and held beyond an allowed time, which contributed
$10 million, $6 million and $41 million to operating income in 1994, 1993 and
1992, respectively. All detention claims were settled during 1994.
The following table shows the company's total international
transportation volumes in forty-foot equivalent units ("FEU") for the past five
years:
Year Volumes
1994 558,000
1993 543,000
1992 501,000
1991 513,000
1990 492,000
Since 1989, the company and 12 other shipping companies, representing
approximately 85% of total trans-Pacific U.S. import capacity, have been parties
to the Trans-Pacific Stabilization Agreement. Among other things, the agreement
limits import capacity of participating companies by amounts mutually determined
from time to time in an attempt to improve the balance of supply and demand in
the U.S. import market. The agreement may be terminated upon the unanimous
written consent of the companies. The company believes that the Trans-Pacific
Stabilization Agreement has been effective in supporting rates for import
shipments. The company's ability to be party to this agreement is based upon
certain immunity from the antitrust laws provided by the Shipping Act of 1984
(the "Act"). Recently, proposals have been made to substantially repeal the Act
and eliminate the Federal Maritime Commission, which administers the Act.
Related hearings have been held before a subcommittee of the U.S. House of
Representatives Transportation and Infrastructure Committee. The company is
unable to predict whether or to what extent efforts to eliminate or amend the
Act may be successful, but the repeal of the Act could have a material adverse
impact on the competitive environment in which the company operates and on the
company's results of operations.
The following table shows the company's utilization of its containership
capacity during the past five years, which for 1991 and 1990 includes the
effects of shipments related to Operation Desert Storm:
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990
_______________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
U.S. Import 89% 89% 89% 93% 85%
U.S. Export 94% 92% 90% 95% 91%
</TABLE>
The company provides cargo distribution and warehousing services on the
East Coast of the U.S. and freight consolidation services in Mexico, Asia, the
Middle East, Europe and Africa through its subsidiary, American Consolidation
Services, Ltd. ("ACS"). ACS also provides freight deconsolidation services in
several U.S. locations and acts as a non-vessel operating common carrier in the
intra-Asia market and from Asia to Europe and Australia. Freight consolidators
combine various shipments from multiple vendors into a single
<PAGE>
container load for delivery to a single destination. The company also serves
shippers of less-than-containerload cargoes by combining their shipments with
others bound for the same or proximate geographic locations.
The company has port terminal facilities in Oakland and Los Angeles,
California, Seattle, Washington and Dutch Harbor, Alaska and major inland
terminal facilities at Chicago, Illinois, Atlanta, Georgia and South Kearny, New
Jersey. Each port terminal facility is operated under a long-term use agreement
providing for preferential, although non-exclusive use of the facility by the
company. The company also operates major port terminal facilities in Asia under
long-term lease agreements in Kobe and Yokohama, Japan and Kaohsiung, Taiwan.
On January 17, 1995, the port terminal in Kobe, Japan was damaged in the
earthquake and will require extensive repairs. In 1994, cargo moving through
the Kobe terminal accounted for approximately 6% of the company's international
revenues. On February 4, 1995, the company and OOCL announced resumption of
limited service to Kobe, and the company and OOCL have adjusted their shared
trans-Pacific schedule to and from Japan. The company cannot estimate the
extent to which its operating results will be affected by the damage caused by
the earthquake in future quarters, which will depend upon the timing of port
repairs, the recovery of the infrastructure and economy in the region and the
company's ability to make alternative arrangements to service the area.
In 1993, the company entered into a contract with the Port of Los
Angeles to lease a new 226-acre terminal facility for 30 years. Occupancy of
the new facility is scheduled for 1997 upon completion of its construction.
Additionally, in 1994, the company and the Port of Seattle signed a lease
amendment for the improvement and expansion of its existing terminal facility.
Under the amended lease, the facility will be expanded from 83 acres to
approximately 160 acres. The expansion is expected to be completed during 1997,
and the lease term will be 30 years from completion. In addition, the company
has the option to expand the terminal by an additional 30 acres.
In addition to performing stevedoring and terminal services for the
company's own operations, Eagle Marine Services, Ltd., a subsidiary of the
company, provides these services to third parties at the company's U.S. port
facilities.
On December 30, 1994, the company operated 19 U.S.-flag containerships,
five of which are chartered under operating lease agreements. The remainder are
owned by the company. In addition, the company owns four U.S.-flag vessels that
are chartered to another carrier. The following table sets forth the U.S. flag
vessels deployed in the company's trans-Pacific and intra-Asia services at
December 30, 1994:
<TABLE>
Maximum
Number of Date Placed Capacity Service Speed
Type of Vessel Vessels in Service (in TEUs) (in knots)
_______________________________________________________________________________________________
<S> <C> <C> <C> <C>
C-10 5 1988 4,300 24.0
C-9 3 1982-1983 2,900 23.5
L-9 4 1987 2,800 21.0
J-9 2 1984 2,700 22.5
C-8 4 1979 & 1986 2,000 22.0
Pacesetter 1 1973 1,400 23.5
</TABLE>
The company has the authority from the United States Maritime
Administration ("MarAd") to operate up to 28 foreign-flag-feeder vessels in its
intra-Asia service. At December 30, 1994, the company operated 23 such vessels,
which are leased for terms of up to three years.
<PAGE>
In 1993, the company began a fleet modernization program pursuant to
which it has placed orders for the construction of six new C11-class
containerships ("C11s") and three new Kl0-class containerships ("K10s") for an
aggregate cost of approximately $730 million. OOCL has placed orders to
purchase six vessels similar in size and speed to the company's C11s. The
company's C11s and OOCL's similar vessels are scheduled to be delivered during
1995 and 1996. The company and OOCL have agreed initially to operate six and
five of these vessels, respectively, under their existing trans-Pacific
coordinated sailing and slot-sharing agreements, and in late 1995 or early 1996,
under their Asia-U.S. West Coast alliance agreement with MOL. The company's
deployment under the latter agreement will require U.S. government approval, and
no assurances can be given as to whether approval will be granted. The
deployment of the 11 new C11-type vessels by the company and OOCL, replacing 14
older vessels, will increase the combined trans-Pacific capacity of the company
and OOCL by approximately 15%. The company currently expects growth in demand
in the trans-Pacific market and believes that the increase in combined capacity
should be sufficient to permit the company and OOCL to maintain their combined
relative market share in that market. However, other competing ocean carriers
have also placed orders for the construction of new vessels, and no assurances
can be given with respect to anticipated growth in demand, utilization of the
increased capacity or the potential negative impact of the increased capacity on
rates. Additionally, no assurances can be made that the company and OOCL will
be able to maintain their combined market share.
The company's K10s were ordered to replace four L9-class vessels
chartered by the company for use in its West Asia/Middle East service. Delivery
of the K10s is scheduled for 1996, which is when the charters of the L9s will
expire. The alliance agreements with MOL, NLL and OOCL may impact the
deployment and/or the ultimate ownership of the K10s. Deployment of the
company's K10s may also be subject to U.S. government approval. No assurances
can be given that such approval will be granted.
At December 30, 1994, the company operated 117,400 dry containers
consisting of 20-, 40-, 45-, 48-, and 53-foot containers, 44,300 of which were
owned and 73,100 leased under operating lease agreements. At that date, the
company also operated 8,400 refrigerated containers, 3,800 of which were owned
and 4,600 leased under operating leases. In addition, the company operated
55,000 chassis for the carriage of containers, 34,100 of which were owned and
20,900 leased under capital and operating leases.
North America
The company provides intermodal transportation and freight brokerage
services to North American and international shippers as well as time-critical
cargo transportation and just-in-time delivery (principally to the automotive
manufacturing industry). These services are provided through an integrated
system of rail and truck transportation, the primary element of which is a train
system utilizing double-stack rail cars.
The company's double-stack train system principally serves the North
American long-haul truck and piggyback rail freight markets, and the
international (export-import) intermodal market through more than 30 U.S.,
Canadian and Mexican inland terminal facilities. The company has agreements
with certain railroads under which those railroads serve as the company's rail
carriers, providing locomotive power, rail cars, trackage, terminal services and
labor to transport the company's containers on individual double-stack rail cars
and on dedicated unit trains.
<PAGE>
The following table shows the company's total North America stacktrain
volumes (in FEUs):
Year Volumes
1994 594,000
1993 538,000
1992 508,000
1991 509,000
1990 500,000
A stacktrain comprises up to 28 double-stack rail cars and has a
capacity of up to 280 FEUs. At December 30, 1994, the company controlled 930
such rail cars, 220 of which are owned and 710 of which are leased. This
compares to 1,100 double-stack rail cars controlled in 1993 and in 1992. In
addition, as part of agreements with certain railroads, the company utilizes
additional rail cars owned or leased and operated by the railroads. These
agreements reduced the number of rail cars under direct company control in 1994.
In combination with its double-stack rail service, the company also
provides local trucking services in North America though a fleet of 420 trucks,
250 of which it leases, and 170 of which are operated by owner-operators.
Information Systems
The company manages its fleet of containers and chassis using its
computer systems and specialized software, linked through a satellite network
with the company's ships and offices. The company's cargo and container
management system processes cargo bookings, generates bills of lading, expedites
U.S. customs clearance and facilitates the management of rail cars, containers
and other equipment. The company has also developed computer systems designed
to optimize the loading of containers onto ships and to facilitate the planning
of ship, rail and truck moves. The company's communications system permits its
customers to access information regarding the location and status of their cargo
via touch-tone telephone, personal computer or computer-facsimile link.
Real Estate
In 1994, the company sold its remaining 86 acres of land.
COMPETITION AND REGULATION
International Transportation
The company is a U.S.-flag carrier. It faces vigorous competition,
principally on the basis of price and service, on all of its trade routes from
approximately 19 major U.S.-flag and foreign-flag operators, some of which are
owned by foreign governments. Foreign-flag competitors generally have cost and
operating advantages over U.S.-flag carriers. The timing of increases in
capacity in the ocean transportation industry can result in imbalances in
industry-wide supply and demand, which causes volatility in rates.
The carriage of U.S. military cargo is reserved for U.S.-flag shipping
companies, and this trade is also subject to vigorous competition among such
carriers. The carriage of this cargo is awarded in accordance with competitive
bidding procedures under which the low bidder wins the right to carry a
substantial portion of such cargo for a period of up to 12 months.
A substantial portion of the company's transportation operations is
subject to regulation by agencies of the U.S. government that have
<PAGE>
jurisdiction over shipping practices, maintenance and safety standards and other
matters. The company's wholly-owned subsidiary, American President Lines, Ltd.
("APL") and MarAd are parties to a 20-year Operating-Differential Subsidy
Agreement ("ODS Agreement") expiring December 31, 1997. This agreement provides
for payments by the U.S. government to partially compensate APL for the greater
expense of operating vessels under U.S. rather than foreign registry. Under
APL's ODS Agreement, APL must be controlled by U.S. citizens and its vessels
must be registered and built in the U.S. (except as noted below) and manned by
U.S. crews. Under its ODS Agreement, APL also is required, among other things,
to operate vessels on designated trade routes in the foreign commerce of the
U.S. and to replace the capacity of its existing vessels as they reach the end
of their statutory lives (generally 25 years) if construction differential
subsidy, provided by the U.S. government, is made available. This subsidy has
not been made available since 1981. In addition, APL is required to serve such
trade routes within designated minimum and maximum numbers of annual sailings;
and, except for over age vessels, APL may not, without prior government
approval, remove any of its vessels from operation under its ODS agreement.
Since 1981, Congress has twice passed legislation permitting U.S.-flag
carriers to acquire a limited number of foreign-built vessels and thereafter to
operate such vessels under existing subsidy agreements under U.S. flag. Under
such laws, APL had five C10-class vessels constructed in Germany. APL currently
operates certain of its vessels under this legislation.
In June 1993, MarAd awarded APL contracts to manage 12 Ready Reserve
Force vessels for a period of five years. During 1994, one of the contracts
covering two vessels was canceled, leaving APL with contracts to manage 10
vessels. APL receives a per diem fee based upon the operating status of each
vessel.
In June 1992, the Bush Administration announced that no new ODS
agreements would be entered into and existing ODS agreements would be allowed to
expire. The Clinton Administration and Congress have been reviewing U.S.
maritime policy. Proposed maritime support legislation introduced in 1994 was
not enacted. The Administration's 1995 budget includes a proposal for a 10-year
subsidy program with $100 million in annual payments to be requested and
appropriated on a year-to-year basis. The company is not able to predict
whether or when maritime support legislation will be enacted or what terms such
legislation may have, if enacted.
While the company continues to encourage efforts to enact maritime
support legislation, prospects for passage of a program acceptable to the
company are unclear. Accordingly, in July 1993, the company filed applications
with MarAd to operate under foreign flag its six C11-class containerships,
presently under construction, and to transfer to foreign flag seven of the 15
U.S.-flag containerships in its trans-Pacific fleet. On November 15, 1994,
MarAd issued a waiver that will allow the company to operate its C11-class
vessels under foreign registry on the condition that the vessels be returned to
U.S.-flag in the event acceptable maritime reform legislation is enacted. The
remaining application is still pending and no assurances can be given as to
whether, or when, the authority will be granted.
Management of the company believes that, in the absence of ODS or an
equivalent government support program, it will be generally no longer
commercially viable to own or operate containerships in foreign trade under the
U.S. flag because of the higher labor costs and the more restrictive design,
maintenance and operating standards applicable to U.S.-flag liner vessels. The
company continues to evaluate its strategic alternatives in light of the pending
expiration of its ODS agreement and the uncertainties as to whether a new U.S.
government maritime support program acceptable to the company will be enacted,
whether sufficient labor efficiencies can be achieved
<PAGE>
through the collective bargaining process, and whether the company's remaining
application to flag its vessels under foreign registry will be approved. While
no assurances can be given, management of the company believes that it will be
able to structure its operations to enable it to continue to operate on a
competitive basis without direct U.S. government support.
In 1995, lawsuits were filed against the company and the U.S. Department
of Transportation by certain of its unions and union members challenging MarAd's
November 15, 1994 action granting the company the waiver allowing it to operate
its C11-class vessels under foreign flag. While no assurances can be given,
management believes these legal challenges will not be successful.
On January 5, 1995, the company and Columbia Shipmanagement Ltd., a
Cyprus company ("Columbia"), entered into an agreement under which Columbia
would provide crewing, maintenance, operations and insurance for the company's
six C11-class vessels for a per diem fee per vessel. The agreement may be
terminated at any time by either party with notice.
North America Transportation
The company's stacktrain operations compete with 11 trans-Pacific
containership companies and four West Coast railroads offering double-stack
train service. In addition, the company's stacktrain operations, together with
its trucking operations, compete with long-haul trucking companies for truckload
shipments. The company's brokerage operations compete for available business
with over 150 shippers' agents. Competition among shippers' agents is based
principally on the types and timeliness of services provided.
EMPLOYEES
At December 30, 1994, the company and its subsidiaries employed 507
seagoing and 4,927 shoreside personnel. The seagoing personnel and certain
shoreside personnel were employed under collective bargaining agreements with
several unions.
ITEM 3. LEGAL PROCEEDINGS
The company is a party to various pending legal proceedings, claims and
assessments arising in the course of its business activities, including actions
relating to trade practices, personal injury or property damage, alleged
breaches of contracts, torts, labor matters, employment practices, tax matters
and miscellaneous other matters. Some of these proceedings involve claims for
punitive damages, in addition to other specific relief.
Among these actions are approximately 1,520 cases pending against the
company, together with numerous other ship owners and equipment manufacturers,
involving injuries or illnesses allegedly caused by exposure to asbestos or
other toxic substances on ships.
The company insures its potential liability for bodily injury to seamen
through mutual insurance associations. Industry-wide resolution of asbestos-
related claims at significantly higher than expected amounts could result in
additional contributions to those associations by the company and other
association members.
In December 1989, the government of Guam filed a complaint with the
Federal Maritime Commission ("FMC") alleging that American President Lines, Ltd.
and an unrelated company charged excessive rates for carrying cargo between the
U.S. and Guam, in violation of the Shipping Act, 1916 and the Intercoastal
Shipping Act of 1933, and seeking an undetermined amount of reparations. Three
<PAGE>
private shippers are also complainants in this proceeding.
Evidentiary hearings have been concluded and a decision by the FMC is not
expected until 1996.
In March 1992, the government of Guam and four private shippers filed a
class action complaint in the United States District Court, District of
Columbia, based on the same allegations, seeking an undetermined amount of
damages on behalf of all shippers of cargo to and from Guam on the company's
vessels and the vessels of the other named defendant. In January 1993, the
class action complaint was dismissed. In July 1994, the decision of dismissal
was affirmed by the U.S. Court of Appeals for the Circuit of the District of
Columbia. That dismissal has become final.
In April 1994, a lawsuit, Hockert Pressman & Flohr Money Purchase Plan,
et. al. vs. American President Companies, Ltd., et. al., was filed against the
company and certain of its officers in United States District Court for the
Northern District of California. The suit alleges that the company and certain
officers made false and misleading statements about the company's operating and
financial performance in violation of federal securities laws, and seeks
unspecified damages on behalf of a purported class of stockholders who purchased
shares of the company's common stock during the period October 7, 1993 through
March 30, 1994. The company believes that it has meritorious defenses and
intends to defend itself vigorously against this lawsuit.
Based upon information presently available, and in light of legal and
other defenses and insurance coverage and other potential sources of payment
available to the company, management does not expect the legal proceedings
described, individually or in the aggregate, to have a material adverse impact
on the company's consolidated financial position or operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of the company's security holders
during the fourth quarter of 1994.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS
The company's Common Stock is listed on the New York and Pacific Stock
Exchanges using the symbol APS. The reported high and low closing sales prices
per share of the company's Common Stock and cash dividends declared for the
preceding eight fiscal quarters are set forth in Note 12 to the consolidated
financial statements, Part II, Item 8, on page 46.
On March 1, 1995, the company had 3,938 common stockholders of record.
ITEM 6. SELECTED FINANCIAL DATA
The following selected financial data for the ten years ending December
30, 1994 are derived from the consolidated financial statements of the company,
which have been examined and reported upon by the company's independent public
accountants as set forth in their report included elsewhere herein. This
information should be read in conjunction with the Consolidated Financial
Statements and Management's Discussion and Analysis of Financial Condition and
Results of Operations.
<PAGE>
<TABLE>
TEN-YEAR FINANCIAL REVIEW
<CAPTION>
(Dollars in millions, except per share amounts) 1994 1993 1992 1991 1990
Results of Operations (1)
Revenues
Transportation
<S> <C> <C> <C> <C> <C>
International $ 2,017 $ 1,930 $ 1,878 $ 1,791 $ 1,590
North America 761 660 632 645 669
Real Estate 16 16 6 17 15
Total Revenues 2,794 2,606 2,516 2,453 2,274
Operating Income (Loss)
Transportation 114 123 137 131 (64)
Real Estate 9 10 3 12 8
Total Operating Income (Loss) 123 133 140 143 (56)
Income (Loss) Before Taxes 110 131 122 107 (93)
Income (Loss) Before Cumulative Effect
of Accounting Changes 74 80 78 66 (62)
Net Income (Loss) 74 80 56 56 (62)
Earnings (Loss) Per Common Share, Fully Diluted Before
Cumulative Effect of Accounting Changes (2) 2.30 2.50 2.34 1.85 (1.78)
Earnings (Loss) Per Common Share, Fully Diluted (2) 2.30 2.50 1.69 1.56 (1.78)
Cash Dividends Per Common Share (2) 0.40 0.30 0.30 0.30 0.30
Financial Position
Cash, Cash Equivalents
& Short-Term Investments $ 255 $ 84 $ 132 $ 179 $ 118
Working Capital 206 51 (16) 159 112
Total Assets 1,664 1,454 1,436 1,541 1,608
Net Capital Expenditures 128 156 66 20 39
Long-Term Debt 373 250 222 251 279
Capital Lease Obligations 13 17 20 193 202
Redeemable Preferred Stock 75 75 75 75 75
Stockholders' Equity 541 475 397 426 459
Capitalization 1,007 822 829 955 1,022
Book Value Per Common Share (2) 19.82 17.72 15.25 14.48 12.44
Financial Ratios
Return on Equity (3) 12.7% 15.7% 11.6% 10.7% (10.5%)
Cash Flow to Average Total Debt (4) 53.3% 53.7% 43.4% 44.0% 21.0%
Return on Average Assets 4.8% 5.5% 3.8% 3.5% (3.7%)
Total Debt to Equity (3) 63.4% 49.4% 75.5% 90.4% 91.3%
Current Ratio 1.5 1.1 1.0 1.5 1.3
TEN-YEAR FINANCIAL REVIEW
(Dollars in millions, except per share amounts) 1989 1988 1987 1986 1985
Results of Operations (1)
Revenues
Transportation
International $ 1,579 $ 1,436 $ 1,271 $ 945 $ 859
North America 637 650 540 469 305
Real Estate 21 45 14 26 7
Total Revenues 2,237 2,131 1,825 1,440 1,171
Operating Income (Loss)
Transportation 51 129 162 50 69
Real Estate 9 33 7 13 4
Total Operating Income (Loss) 60 162 169 63 73
Income (Loss) Before Taxes 22 136 149 41 52
Income (Loss) Before Cumulative Effect
of Accounting Changes 13 81 79 18 39
Net Income (Loss) (16) 81 79 18 39
Earnings (Loss) Per Common Share, Fully Diluted Before
Cumulative Effect of Accounting Changes (2) 0.16 1.63 1.62 0.35 0.93
Earnings (Loss) Per Common Share, Fully Diluted (2) (0.57) 1.63 1.62 0.35 0.93
Cash Dividends Per Common Share (2) 0.29 0.25 0.25 0.25 0.19
Financial Position
Cash, Cash Equivalents
& Short-Term Investments $ 127 $ 186 $ 287 $ 276 $ 67
Working Capital 128 178 261 237 36
Total Assets 1,683 1,711 1,599 1,343 1,060
Net Capital Expenditures 111 379 155 75 128
Long-Term Debt 303 317 138 151 70
Capital Lease Obligations 208 224 234 244 220
Redeemable Preferred Stock 75 75
Stockholders' Equity 567 617 705 641 538
Capitalization 1,169 1,254 1,089 1,049 839
Book Value Per Common Share (2) 14.18 15.26 14.44 12.98 12.94
Financial Ratios
Return on Equity (3) (2.4%) 11.6% 11.8% 3.0% 7.4%
Cash Flow to Average Total Debt (4) 20.3% 38.6% 50.9% 36.0% 34.2%
Return on Average Assets (1.0%) 4.9% 5.4% 1.5% 3.8%
Total Debt to Equity (3) 82.2% 81.2% 54.5% 63.8% 56.1%
Current Ratio 1.4 1.6 2.0 2.0 1.2
</TABLE>
(1) The company's fiscal year ends on the last Friday in December. All years
presented above were 52 weeks, except for 1993 and 1988 which were 53-
week years.
(2) Earnings Per Common Share, Cash Dividends Per Common Share and Book
Value Per Common Share have been computed for all periods retroactively
reflecting the effect of a 3-for-2 stock split effected on May 30, 1985,
and a 2-for-1 stock split effected on December 31, 1993. Earnings Per
Common Share also reflect the repurchase of 3.7 million, 7.8 million,
2.9 million, 1.0 million and 8.8 million shares of the company's common
stock during 1992, 1991, 1990, 1989 and 1988, respectively, on a post-
split basis. In 1989, 2.0 million shares of the company's Series B
Preferred Stock were converted into common stock.
(3) Redeemable Preferred Stock is included in Equity for the purpose of
calculating these ratios. If Redeemable Preferred Stock were a component
of Debt instead of Equity, Return on Equity would be 13.3%, 16.8%,
12.1%, 11.0%, (13.3%), (5.2%) and 12.8% in 1994, 1993, 1992, 1991, 1990,
1989 and 1988, respectively, and Total Debt to Equity would be 86.1%,
72.9%, 108.6%, 123.9%, 122.5%, 106.3% and 103.3% in 1994, 1993, 1992,
1991, 1990, 1989, and 1988, respectively.
(4) Cash Flow represents Cash Flows from Operating Activities.
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
<TABLE>
RESULTS OF OPERATIONS
<CAPTION>
(In millions) 1994 Change 1993 Change 1992
Revenues
<S> <C> <C> <C> <C> <C>
International Transportation $ 2,017 4% $ 1,930 3% $ 1,878
North America Transportation 761 15% 660 4% 632
Real Estate 16 1% 16 N/A 6
Operating Income
Transportation $ 114 (7%) $ 123 (10%) $ 137
Real Estate 9 (10%) 10 N/A 3
Pretax Income $ 110 (15%) $ 131 7% $ 122
</TABLE>
Although pretax income declined in 1994 compared with 1993, and increased
in 1993 compared with 1992, included in these amounts are items that are not
part of the company's base transportation business. These items are: sales of
the company's real estate holdings, which were completed in 1994 and contributed
$9 million, $11 million, and $5 million to pretax income in 1994, 1993 and 1992,
respectively; Desert Storm per diem collections, which contributed $10 million,
$6 million and $41 million to pretax income in 1994, 1993 and 1992,
respectively; gains on sales of the company's investment in the common stock of
Amtech Corporation, which contributed $9 million and $8 million to pretax income
in 1993 and 1992, respectively; and expenses related to the company's corporate
initiatives to improve its financial and order cycle processes, which totaled
$31 million and $9 million in 1994 and 1993, respectively. Excluding these
items, the company's pretax income was $122 million, $114 million and $68
million in 1994, 1993, and 1992, respectively.
In 1994, the company benefited from improvements in North America
stacktrain volumes and stacktrain revenue per forty-foot equivalent unit ("FEU")
compared with 1993. Volumes of the company's U.S. import and intra-Asia cargo
also increased in 1994. Gains on sales of a crane and certain containers
contributed approximately $6 million to the 1994 results. Transportation
operating expenses per FEU rose in 1994 compared with 1993, primarily due to
higher stevedoring and fuel costs, and an unfavorable currency exchange rate in
Japan. Additionally, the company's 1993 income and volumes were positively
impacted by the fact that the 1993 fiscal year was 53 weeks, compared with 52
weeks in 1994 and 1992.
The improvements in the company's 1993 results compared with 1992 were
due to higher freight volumes in all the company's markets, higher operating
margins in the company's North America stacktrain market, and lower net interest
expense. Lower rates in the company's U.S. export and intra-Asia markets
partially offset these improvements. Also contributing to the increase in
earnings in 1993 were gains totaling $9 million from sales of three of the
company's older steamships and certain containers.
<TABLE>
<CAPTION>
INTERNATIONAL TRANSPORTATION (1) 1994 Change 1993 Change 1992
(Volumes in thousands of FEUs)
Import
<S> <C> <C> <C> <C> <C>
Volumes 217.8 2% 214.3 4% 206.8
Average Revenue per FEU $ 4,112 0% $ 4,107 2% $ 4,013
Export
Volumes 155.5 0% 155.5 5% 147.6
Average Revenue per FEU $ 3,174 (1%) $ 3,200 (5%) $ 3,385
Intra-Asia
Volumes 184.6 6% 173.3 19% 146.1
Average Revenue per FEU $ 1,909 1% $ 1,899 (6%) $ 2,030
</TABLE>
<PAGE>
(1)Volumes and average revenue per FEU data are based upon shipments originating
during the period, which differ from the percentage-of-completion method
used for financial reporting purposes.
The company's U.S. import volumes increased in 1994 compared with 1993
primarily due to service enhancements in the People's Republic of China that
resulted in higher volumes from that country in 1994, and higher volumes of
refrigerated and military cargo. Volumes of U.S. export cargo were unchanged in
1994 from 1993. Volumes of refrigerated cargo in the company's U.S. export
market improved, but were offset by a decline in military dry volumes resulting
from the loss of the company's position as preferred carrier of military dry
cargo in June 1994. Intra-Asia volumes for 1994 increased compared with 1993 as
a result of the company's expanded service to and from China and the growing
economies in Southeast and West Asia and the Middle East in 1994. Additionally,
volumes of refrigerated cargo in this market have grown substantially since last
year.
The increase in the company's import volumes in 1993 compared with 1992
resulted primarily from expanded service from the People's Republic of China in
1993. The company's export volumes increased due to higher military volumes
from June 1, 1993, when the company became the preferred carrier of U.S.
military cargo for a period of 12 months. The increase in export military
shipments was partially offset by a decline in the company's commercial
refrigerated shipments in this market compared with 1992. The company's intra-
Asia volumes increased in 1993 compared with 1992, due to expanded service to
the People's Republic of China and the growing trade in Southeast and West Asia.
Utilization of the company's containership capacity in 1994 was 89% and 94%
for import and export shipments, respectively, compared with 89% and 92% in
1993, and 89% and 90% in 1992. Import capacity was increased in 1994 by the
additional vessel space purchased from Orient Overseas Container Line ("OOCL"),
a Hong Kong shipping company.
Average revenue per FEU for the company's U.S. import shipments was
relatively unchanged in 1994, compared with 1993, as competitive pressures in
this market have continued to hold import rates down. In 1994, average revenue
per FEU in the company's U.S. export market was lower than 1993 due to reduced
rates in the first half of the year resulting from weak market conditions and
increased competition. Average revenue per FEU in the company's intra-Asia
market increased slightly in 1994 compared with 1993, primarily attributable to
an increase in higher-rated commercial refrigerated cargo, partially offset by
competitive rate pressures in this market.
In 1993, average revenue per FEU for the company's U.S. import shipments
increased compared with 1992 due to higher rates and a greater proportion of
higher-rated commercial cargo carried by the company. Average revenue per FEU
for the company's U.S. export shipments decreased in 1993 compared with 1992 due
to strong competition in this market and a decrease in the proportion of higher-
rated commercial refrigerated cargo carried by the company. In its intra-Asia
market, the company's average revenue per FEU declined in 1993 compared with
1992, resulting from competitive pressures in this market and a higher
proportion of lower-rated short-haul cargo in the intra-Asia trade during 1993.
Other international transportation revenues, which primarily comprises
cargo handling, freight consolidation and per diem revenues, were $281 million
in 1994 compared with $254 million in 1993. This increase was primarily due to
an increase in Asia cargo handling related to the OOCL and TMM contracts,
discussed below, and an increase in feeder services in Asia provided to other
carriers. Other international transportation revenues declined in 1993 to $254
<PAGE>
million from $261 million in 1992, primarily due to a decrease of $35
million in collections of detention charges from the U.S. government for
containers used in Operation Desert Storm and held beyond an allowed time.
Partially offsetting the 1993 decrease was an increase in cargo handling
revenues related to the OOCL contract. As of the end of 1994, all Desert Storm
detention claims have been settled with the U.S. government and all payments
have been received.
The company and OOCL are parties to agreements enabling them to exchange
vessel space and coordinate vessel sailings through 2005. The agreements permit
both companies to offer faster transit times, more frequent sailings between key
markets in Asia and the U.S. West Coast, and to share terminals and several
feeder operations within Asia. Since December 1993, the company has been
required to purchase additional vessel space from OOCL for approximately $7
million annually, accrued ratably over each year. This commitment reduces as
the company increases the capacity it can exchange with OOCL, which is expected
to begin with the scheduled delivery of the company's C11-class vessels in 1995.
In September 1994, the company, Mitsui OSK Lines, Ltd. ("MOL"), and OOCL
signed an agreement to exchange vessel space, coordinate vessel sailings and
cooperate in the use of port terminals and equipment for ocean transportation
services in the Asia-U.S. West Coast trade through 2005. The carriers currently
expect to commence service under this agreement in late 1995 or early 1996.
This agreement is subject to government approvals in the U.S. and Japan.
The three carriers and Nedlloyd Lines B.V. ("NLL") signed a separate
agreement to exchange vessel space, coordinate vessel sailings and cooperate in
the use of port terminals and equipment in an all-water service in the Asia-U.S.
East Coast trade via Panama for a minimum of three years. The four carriers
currently expect to initiate service under this agreement in March 1995, and
weekly service is currently expected to commence by August 1995.
Additionally, in September 1994, the four carriers and Malaysian
International Shipping Corporation BHD signed an agreement to exchange vessel
space, coordinate vessel sailings and cooperate in the use of port terminals and
equipment for ocean transportation services in the Asia-Europe trade through
2001. The carriers currently expect to commence service under the agreement in
January 1996. Prior to the commencement of this alliance, the company will
enter the Asia-Europe trade by chartering vessel space through MOL beginning in
March 1995.
The Asia-U.S. West Coast, Asia-U.S. East Coast and Asia-Europe alliance
agreements are all expected to be implemented by late 1995 or early 1996. Under
the terms of the three agreements, alliance partners contribute and are
allocated vessel space, which may be adjusted from time to time. The value of
vessel space provided by the company to the alliance is less than the value of
the total capacity allocated to it through the alliance, resulting in an annual
net cash purchase commitment from the company to its alliance partners currently
estimated to be $29 million, beginning in 1996. For 1995, the company currently
estimates its net purchase commitment to its alliance partners for vessel space
in the Asia-U.S. East Coast and Asia-Europe trades to be approximately $35
million. Agreements covering terminal and equipment sharing among the alliance
partners have not been finalized, and the company's net cash commitment, if any,
to the alliance partners for these services cannot be determined at this time.
In April 1994, the company and Transportacion Maritima Mexicana ("TMM"),
a Mexican transportation company, entered into an agreement enabling them to
reciprocally charter vessel space for a period of three years. Under the
agreement, cargo is transported between major Asian ports and certain ports on
the Pacific Coast of the U.S. and Mexico. Each party is committed to purchase
<PAGE>
a minimum amount of vessel space at contract rates and may buy available extra
space as needed. The company's minimum space purchase commitment exceeds that
of TMM by approximately $5 million per year.
Recently, proposals have been made to substantially repeal the Shipping
Act of 1984 (the "Act"), which provides the company with certain immunity from
antitrust laws, and eliminate the Federal Maritime Commission, which administers
the Act. Related hearings have been held before a subcommittee of the U.S.
House of Representatives Transportation and Infrastructure Committee. The
company is unable to predict whether or to what extent efforts to eliminate or
amend the Act may be successful, but the repeal of the Act could have a material
adverse impact on the competitive environment in which the company operates and
on the company's results of operations.
The company is party to an Operating-Differential Subsidy ("ODS")
agreement with the U.S. government, expiring on December 31, 1997, which
provides for payment by the U.S. government to partially compensate the company
for the relatively greater expense of vessel operation under U.S. registry. ODS
payments to the company were approximately $61 million, $65 million and $70
million in 1994, 1993 and 1992, respectively.
In June 1992, the Bush Administration announced that no new ODS
agreements would be entered into and existing ODS agreements would be allowed to
expire. The Clinton Administration and Congress have been reviewing U.S.
maritime policy. Proposed maritime support legislation introduced in 1994 was
not enacted. The Administration's 1995 budget includes a proposal for a 10-year
subsidy program with $100 million in annual payments to be requested and
appropriated on a year-to-year basis. The company is not able to predict
whether or when maritime support legislation will be enacted or what terms such
legislation may have, if enacted.
While the company continues to encourage efforts to enact maritime
support legislation, prospects for passage of a program acceptable to the
company are unclear. Accordingly, in July 1993, the company filed applications
with the United States Maritime Administration ("MarAd") to operate under
foreign flag its six C11-class containerships, presently under construction, and
to transfer to foreign flag seven of the 15 U.S.-flag containerships in its
trans-Pacific fleet. On November 15, 1994, MarAd issued a waiver that will
allow the company to operate its C11-class vessels under foreign registry on the
condition that the vessels be returned to U.S.-flag in the event acceptable
maritime reform legislation is enacted. The remaining application is still
pending and no assurances can be given as to whether, or when, the authority
will be granted.
Management of the company believes that, in the absence of ODS or an
equivalent government support program, it will be generally no longer
commercially viable to own or operate containerships in foreign trade under the
U.S. flag because of the higher labor costs and the more restrictive design,
maintenance and operating standards applicable to U.S.-flag liner vessels. The
company continues to evaluate its strategic alternatives in light of the pending
expiration of its ODS agreement and the uncertainties as to whether a new U.S.
government maritime support program acceptable to the company will be enacted,
whether sufficient labor efficiencies can be achieved through the collective
bargaining process, and whether the company's remaining application to flag its
vessels under foreign registry will be approved. While no assurances can be
given, management of the company believes that it will be able to structure its
operations to enable it to continue to operate on a competitive basis without
direct U.S. government support.
<PAGE>
In 1995, lawsuits were filed against the company and the U.S. Department
of Transportation by certain of its unions and union members challenging MarAd's
November 15, 1994 action granting the company the waiver allowing it to operate
its C11-class vessels under foreign flag. While no assurances can be given,
management believes these legal challenges will not be successful.
On January 5, 1995, the company and Columbia Shipmanagement Ltd., a
Cyprus company ("Columbia"), entered into an agreement under which Columbia
would provide crewing, maintenance, operations and insurance for the company's
six C11-class vessels for a per diem fee per vessel. The agreement may be
terminated at any time by either party with notice.
The company expects to incur incremental operating expenses and a loss of
ocean freight revenues during 1995 resulting from the earthquake in Kobe on
January 17, 1995. The ocean terminal leased by the company was damaged and will
require extensive repairs. Business interruption insurance is expected to
provide coverage for most of the related first quarter revenue shortfall and
expenses, but the company expects an impact on pretax income of approximately $2
million for the quarter. In 1994, cargo moving through the Kobe terminal
accounted for approximately 6% of the company's international revenues. On
February 4, 1995, the company and OOCL announced resumption of limited service
to Kobe, and the company and OOCL have adjusted their shared trans-Pacific
schedule to and from Japan. The company cannot estimate the extent to which its
operating results will be affected by the damage caused by the earthquake in
future quarters, which will depend upon the timing of port repairs, the recovery
of the infrastructure and economy in the region and the company's ability to
make alternative arrangements to service the area.
The new C11-class vessels are scheduled to be delivered beginning in May
1995, and the new alliances are scheduled to begin in March 1995. Start-up
expenses related to these programs are expected to be incurred in the first half
of 1995, with limited related revenues. The company currently expects soft
earnings in the first half of 1995, with improvement in the second half based on
the company's expectation of utilization of its new capacity. However,
utilization depends to a great extent upon the level of demand for
transportation services and competition among carriers in the company's markets,
and there is no assurance that such utilization will materialize.
<TABLE>
NORTH AMERICA TRANSPORTATION (1)
<CAPTION>
(Volumes in thousands of FEUs) 1994 Change 1993 Change 1992
Revenues (2) (In millions)
<S> <C> <C> <C> <C> <C>
Stacktrain $ 535 18% $ 455 8% $ 420
Non-Stacktrain 226 10% 205 (3%) 212
Stacktrain Volumes
North America 398.5 15% 345.6 9% 316.9
International 195.5 2% 192.6 1% 190.9
Stacktrain Average
Revenue per FEU (2) $ 1,343 2% $ 1,315 (1%) $ 1,327
</TABLE>
(1)Volumes and average revenue per FEU data are based upon shipments originating
during the period, which differ from the percentage-of-completion method
used for financial reporting purposes.
(2)In addition to North America third party business, the transportation of
containers for the company's international customers is a significant
component of its stacktrain operations. These shipments are represented
above as International Stacktrain Volumes and, since they are eliminated
in consolidation, are excluded in Revenues and Stacktrain Average Revenue
per FEU.
<PAGE>
Revenues from the company's North America transportation operations
increased in 1994 compared with 1993, as a result of higher North America
stacktrain volumes and revenue per FEU. The increase in stacktrain volumes in
1994 was due to the improvement in the U.S. economy, increases in Mexican and
Canadian shipments, particularly automotive shipments between the U.S. and
Mexico, and competitor equipment shortages. The company added 1,800 containers
to its fleet during 1994, which enabled it to meet increasing demand.
Stacktrain average revenue per FEU increased in 1994 compared with 1993 due to
an improvement in cargo mix and increased rates in certain stacktrain markets.
The company's North America non-stacktrain revenues also improved in 1994
compared with 1993, primarily due to increased volumes resulting from an
improved U.S. economy.
In 1993, revenues and volumes from the company's North America stacktrain
operations increased from 1992 due to an overall improvement in demand for North
America stacktrain services and an increase in stacktrain services to Mexico and
Canada. Additionally, key competitors in this market were adversely affected by
equipment shortages, which diverted some shipments to the company. Non-
stacktrain volumes declined as the company converted its automotive shipments to
its stacktrains. Stacktrain average revenue per FEU decreased in 1993 compared
with 1992 due to the company's efforts to reduce stacktrain services that were
less profitable.
For 1995, the company expects growth in demand in the North America
stacktrain markets as the U.S. economy continues to improve and more cargo
converts from long-haul trucking to stacktrain service. There can be no
assurances, however, that such demand will materialize. Additionally, growth in
demand for stacktrain services to and from Mexico is dependent upon conditions
in the Mexican economy, which have been extremely volatile recently, and the
extent to which U.S. automakers continue to operate there, among other factors.
<TABLE>
TRANSPORTATION OPERATING EXPENSES
(In millions, except
<CAPTION>
Operating Cost per FEU) 1994 Change 1993 Change 1992
<S> <C> <C> <C> <C> <C>
Land Transportation $ 1,010 8% $ 934 0% $ 933
Cargo Handling 552 7% 516 10% 470
Vessel, Net 335 9% 308 8% 286
Transportation Equipment 202 9% 184 1% 181
Information Systems 48 (2%) 49 0% 50
Other 332 10% 303 6% 287
Total $ 2,479 8% $ 2,294 4% $ 2,207
Operating Cost Per FEU (1) $ 2,592 0% $2,581 (4%) $ 2,700
Percentage of Transportation Revenues 89% 89% 88%
</TABLE>
(1) Operating expenses used in this calculation include costs associated with
certain International and North America revenues that are not volume
related.
Land transportation expenses increased in 1994 from 1993, due to higher
North America stacktrain volumes in 1994. The increase in cargo handling
expenses in 1994 compared with 1993 is attributable to increased stevedoring
costs, which were impacted by higher labor rates in Asia and the U.S. and
handling of increased cargo to and from China, West Asia and Southeast Asia.
The weakening of the U.S. dollar relative to Asian currencies, particularly the
Japanese yen, also resulted in higher cargo handling expenses. These increases
were partially offset by a favorable land rent reduction in Taiwan. Vessel
expenses increased in 1994 compared with last year due to increased charter hire
<PAGE>
activity resulting from expanded service to China, an increase in Latin American
activity and additional vessel space purchased from OOCL and TMM in 1994.
Vessel expenses were also impacted by a 6% increase in fuel cost in 1994 and the
collision of one of the company's vessels during 1994, the
uninsured cost of which was approximately $2 million. Transportation equipment
costs increased in 1994 compared with 1993 due to the addition of 1,800 leased
containers during 1994 for use in North America stacktrain operations, and
increased repair and maintenance costs. Other operating expenses increased in
1994 compared with 1993 due to an increase of $9 million in the provision for
potentially uncollectible accounts receivable, primarily in the People's
Republic of China. This provision was made because of the continuing
deterioration of currency liquidity in that country, which may, among other
factors, impact the ability of shippers to pay. Also contributing to the
increase in other operating expenses were higher employee and telecommunications
costs, particularly in Asia. Other operating expenses for 1994 are net of gains
of $6 million from sales of a crane and certain containers, and for 1993, are
net of gains of $9 million from sales of three vessels and certain containers.
Land transportation expenses were relatively unchanged in 1993 compared
with 1992 despite a 9% increase in North America stacktrain volume, reflecting
benefits realized from the renegotiation of rail contracts in 1992. Cargo
handling expenses increased in 1993 compared with 1992 due to higher cargo
volumes and contract rate increases at certain Asian and U.S. ports. In 1993,
vessel expenses increased because of increased charter hire activity resulting
from expanded service to China and the Philippines, partially offset by savings
from four fewer ships in service during the year. In 1993, transportation
equipment costs increased from the prior year primarily due to higher
maintenance, repair and lease costs, partially offset by cost savings from
changes in the company's rail cost structure. Other operating expenses
increased in 1993 from 1992, primarily due to higher salary and fringe costs in
North America and Asia operations, partially offset by gains of $9 million from
the sale of three vessels and certain containers, and certain fixed cost savings
in the North America stacktrain operations.
General and administrative expenses increased 21% in 1994 compared with
1993, primarily due to expenditures of $31 million in 1994 on corporate
initiatives to improve the company's financial and order cycle processes.
Expenditures on corporate initiatives are currently estimated to be $33 million
in 1995 and $12 million in 1996. The company currently anticipates that during
1995 and 1996, between 550 and 900 positions will be eliminated as a result of
order cycle process changes, and approximately 50 positions will be eliminated
as a result of financial process changes. The actual number of position
reductions, however, will not be finally determined until design and
implementation of the new processes in 1995 and 1996, and costs associated with
eliminating these positions cannot yet be estimated. Anticipated cost savings
resulting from these initiatives are expected to be realized in future years,
but no assurances can be given as to the timing or amount of these savings. The
company also expects to eliminate its administrative offices in Hong Kong by the
second quarter of 1995, and to combine certain functions with those performed in
Oakland. Costs associated with eliminating or relocating these positions are
estimated to be between $1 million and $2 million.
General and administrative expenses increased 9% in 1993 compared with
1992. In 1993, the company incurred approximately $9 million in costs related
to corporate initiatives to improve the company's financial and order cycle
processes. Partially offsetting these costs in 1993 were cost savings at the
corporate level.
Depreciation and amortization expense decreased 3% in 1994 from 1993 as
certain assets reached the end of their depreciable lives in 1994. Depreciation
and amortization expense increased 2% in 1993 from 1992 due to capital spending
activity during the year. Depreciation and amortization expense is expected to
increase to approximately $127 million in 1995 due to the increased level of
capital spending.
<PAGE>
Net interest expense increased 13% in 1994 compared with 1993, due to
interest expense on two public debt offerings totaling $300 million in November
1993 and January 1994, which was partially offset by increased interest income
on higher cash balances and higher interest rates in 1994. Net interest expense
declined to $11 million in 1993 from $26 million in 1992, due to the company's
restructuring of its long-term liabilities in late 1992 and early 1993, when the
company retired certain capital lease obligations and redeemed its 11% Public
Notes.
The effective tax rates applicable to the company were 33%, 39% and 35%
in 1994, 1993 and 1992, respectively. The 1994 effective tax rate includes the
effect of revisions of prior years' estimated tax liabilities. The 1993
effective tax rate includes an adjustment of $2.7 million to reflect the effect
of an increase in the maximum corporate federal income tax rate to 35%. The
effective tax rate for 1995 is expected to be approximately 38%.
In 1992, the company changed its method of recognizing revenues and
expenses to conform with new transportation industry guidelines established by
the Financial Accounting Standards Board's Emerging Issues Task Force. Under
the new method, the company recognizes revenues on a percentage-of-completion
basis and expenses as incurred. The company previously recorded revenues and
variable expenses at the time freight was loaded. In 1992, the company recorded
a one-time charge of $22 million, after taxes of $13 million, for the effect of
this change in accounting on prior years' results.
<TABLE>
LIQUIDITY AND CAPITAL RESOURCES
<CAPTION>
(In millions) 1994 1993 1992
Cash, Cash Equivalents and
<S> <C> <C> <C> <C>
Short-term Investments $ 255 $ 84 $ 132
Working Capital 206 51 (16)
Total Assets 1,664 1,454 1,436
Long-term Debt and Capital
Lease Obligations (1) 391 272 357
Cash Provided by Operations 177 169 176
Net Capital Expenditures
Ships $ 38 $ 93 $ 18
Containers, Chassis and Rail Cars 57 41 31
Leasehold Improvements and Other 33 22 17
Total $ 128 $ 156 $ 66
Financing Activities
Borrowings $ 147 $ 664
Repayment of Debt and Capital Leases (28) (748) $ (97)
Common Stock Repurchases (78)
Dividend Payments (18) (15) (15)
</TABLE>
(1) Includes current and long-term portions.
In November 1993, the company issued $150 million of 10-year Senior Notes
at an effective interest rate of 7.3%, and in January 1994, issued $150 million
of 30-year Senior Debentures at an effective interest rate of 8.2%. A portion
of the proceeds from the issuance of this debt was used to repay $72 million of
bank borrowings, and the remainder will be used to finance vessel purchases,
other capital expenditures and for general corporate purposes. The remaining
proceeds have been invested in commercial paper and other cash instruments.
<PAGE>
In 1992 and early 1993, the company restructured its long-term
liabilities to reduce its high-cost debt and eliminate restrictions on the use
of subsidiary cash. In January 1993, the company purchased the remaining two
vessels previously leased under leveraged leases and retired the related debt
guaranteed by MarAd, eliminating MarAd's restrictions on the payment of
dividends to the company by its wholly-owned subsidiary, American President
Lines, Ltd. The purchase price of these vessels was $131 million, $110 million
of which retired the related capital lease obligations. Also in January 1993,
the company retired $95 million of 11% Public Notes.
In 1993, the company began a fleet modernization program pursuant to
which it has placed orders for the construction of six new C11-class
containerships ("C11s") and three new Kl0-class containerships ("K10s") for an
aggregate cost of approximately $730 million. OOCL has placed orders to
purchase six vessels similar in size and speed to the company's C11s. The
company's C11s and OOCL's similar vessels are scheduled to be delivered during
1995 and 1996. The company and OOCL have agreed to initially operate six and
five of these vessels, respectively, under their existing trans-Pacific
coordinated sailing and slot-sharing agreements, and in late 1995 or early 1996,
under their Asia-U.S. West Coast alliance agreement with MOL. The company's
deployment under the latter agreement will require U.S. government approval, and
no assurances can be given as to whether approval will be granted. The
deployment of the 11 new C11-type vessels by the company and OOCL, replacing 14
older vessels, will increase the combined trans-Pacific capacity of the company
and OOCL by approximately 15%. The company currently expects growth in demand
in the trans-Pacific market and believes that the increase in combined capacity
should be sufficient to permit the company and OOCL to maintain their combined
relative market share in that market. However, other competing ocean carriers
have also placed orders for the construction of new vessels, and no assurances
can be given with respect to anticipated growth in demand, utilization of the
increased capacity or the potential negative impact of the increased capacity on
rates. Additionally, no assurances can be made that the company and OOCL will
be able to maintain their combined market share.
The company's K10s were ordered to replace four L9-class vessels
chartered by the company for use in its West Asia/Middle East service. Delivery
of the K10s is scheduled for 1996, which is when the charters of the L9s will
expire. The alliance agreements with MOL, NLL and OOCL may impact the
deployment and/or the ultimate ownership of the K10s. Deployment of the
company's K10s may also be subject to U.S. government approval. No assurances
can be given that such approval will be granted.
The C11-class vessels are being constructed by Howaldtswerke-Deutsche
Werft AG, of Germany ("HDW") (three ships) and Daewoo Shipbuilding and Heavy
Machinery, Ltd., of Korea ("Daewoo") (three ships). The total estimated project
cost for the construction of these vessels is $535 million. A $52 million
progress payment was made in 1993, and progress payments of $31 million were
made in 1994. A progress payment of $20 million is due in early 1995, with the
remaining 80% of each vessel's purchase price due upon delivery of each vessel
scheduled beginning in May 1995. In March 1994, the company entered into a loan
agreement with European banks to finance approximately $400 million of the
purchase price of the six C11-class vessels. Principal payments on any draw-
downs would be due in semiannual installments over a 12-year period commencing
six months after the delivery of each vessel. Interest rates would be based
upon various margins over LIBOR or the banks' cost of funds as elected by the
company. The remaining costs of these vessels are expected to be financed with
a portion of the net proceeds from the company's November 1993 and January 1994
public debt offerings and with cash from operations.
<PAGE>
The K10s are being constructed by Daewoo. The total estimated project
cost for construction of these vessels is $195 million. A progress payment of
$18 million was made to Daewoo in 1993. The remaining progress payments are due
in two $18 million installments in 1995, with the remaining 70% of each vessel's
purchase price due upon delivery of each vessel in 1996. The costs of these
vessels are expected to be financed with a portion of the net proceeds from the
company's November 1993 and January 1994 public debt offerings and with cash
from operations.
Other than vessel progress payments of $31 million, the company's
capital expenditures in 1994 totaled $97 million and were primarily for
purchases of chassis and terminal and leasehold improvements. In 1993, the
company made $70 million in progress payments on the C11s and K10s, and spent
$21 million on the purchase of previously leased vessels. In addition to the
vessel expenditures in 1993, the company's capital expenditures of $65 million
were primarily for purchases of refrigerated containers and terminal and
leasehold improvements. Capital expenditures in 1995 are expected to be
approximately $555 million, including $477 million of vessel costs. The balance
will be spent primarily on terminal equipment in North America and Asia,
terminal improvements in North America and chassis and computer systems. The
company has outstanding purchase commitments to acquire cranes, facilities,
equipment and services totaling $99 million.
The company is in the process of expanding its two major West Coast
ports' facilities and has extended their lease terms. The company has entered
into a contract with the Port of Los Angeles to lease a new 226-acre terminal
facility for 30 years. Occupancy of the new facility is scheduled for 1997 upon
completion of construction. The minimum annual rent expense under the new lease
is estimated to be between $22 million and $26 million, depending upon the final
scope of development. The annual rent for the company's current 129-acre
terminal in Los Angeles was approximately $19 million in 1994.
In June 1994, the company and the Port of Seattle signed a lease
amendment for the improvement and expansion of its existing terminal facility.
Under the amended lease, the facility would be expanded from 83 acres to
approximately 160 acres. The expansion is expected to be completed during 1997,
and the lease term would be 30 years from completion. In addition, the company
has the option to expand the terminal by an additional 30 acres. The annual
rent payment for the company's existing facility was approximately $6 million in
1994. The minimum annual rent payment, for the first full year after
completion, under the amended lease is estimated to be $13 million, depending
upon the final scope of development and consumer price index increases. The
minimum annual rent payment increases in five year increments over the term of
the lease, to approximately $40 million in the 29th and 30th years, also
depending upon the final scope of development and consumer price index
increases.
In 1993, the company sold its remaining investment in the common stock
of Amtech Corporation ("Amtech"), from which it realized a pretax gain of $9
million. In 1992, the company sold approximately one-half of its investment in
Amtech, from which it realized a pretax gain of $8 million.
In September 1994, the company made a deposit of $37 million to its
Capital Construction Fund ("CCF"). Also in September 1994, the company sold an
undivided interest in $40 million of its trade accounts receivable to its CCF
for $37 million in cash.
<PAGE>
In March 1994, the company entered into a credit agreement with a group
of banks that provides for an aggregate commitment of up to $200 million through
March 1999. The credit agreement contains, among other things, various
financial covenants that require the company to meet certain levels of interest
coverage, leverage and net worth. The borrowings bear interest at rates based
upon various indices as elected by the company. The annual commitment fee is a
maximum of one-half of one percent of the available amount. There have been no
borrowings under this agreement.
As an alternative to borrowing under its credit agreement, the company
has an option under that agreement to sell up to $150 million of certain of its
accounts receivable to the banks. This alternative is subject to less
restrictive financial covenants than the borrowing option.
The company borrowed under its previous revolving credit agreement
during 1993 to partially finance the purchase of the leased vessels and for
general corporate purposes. Also during 1993, the company borrowed under
uncommitted lines of credit with certain banks for general corporate purposes.
All outstanding bank borrowings were repaid with a portion of the proceeds from
the issuance of $150 million 10-year Senior Notes in November 1993.
ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO FINANCIAL STATEMENTS
Report of Management 25
Report of Independent Public Accountants 26
Consolidated Financial Statements
Statement of Income 27
Balance Sheet 28
Statement of Cash Flows 29
Statement of Changes in Stockholders' Equity 30
Notes to Consolidated Financial Statements 31-46
Financial Statement Schedule
Schedule II 47
<PAGE>
REPORT OF MANAGEMENT
To the Stockholders of American President Companies, Ltd.:
The financial statements have been prepared by the company, and we are
responsible for their content. They are prepared in accordance with generally
accepted accounting principles, and in this regard we have undertaken to make
informed judgments and estimates, where necessary, of the expected effect of
future events and transactions. The other financial information in the annual
report is consistent with that in the consolidated financial statements.
The company maintains and depends upon a system of internal controls
designed to provide reasonable assurance that our assets are safeguarded, that
transactions are executed in accordance with management's intent and the law,
and that the accounting records fairly and accurately reflect the transactions
of the company. The company has an internal audit program which reviews the
adequacy of the internal controls and compliance with them.
The company engaged Arthur Andersen LLP as independent public
accountants to provide an objective, independent audit of our financial
statements.
There is an Audit Committee of the Board of Directors which is composed
solely of outside directors. The committee meets whenever necessary to monitor
and review with management, the internal auditors and the independent public
accountants, the company's financial statements and accounting controls. Both
the independent public accountants and the internal auditors have access to the
Audit Committee, without management being present, to discuss internal controls,
auditing and financial reporting matters.
To help assure that its affairs are properly conducted, management has
established policies regarding standards of corporate behavior. The company
regularly reminds its key employees of significant policies and requires them to
confirm their compliance.
/s/ John M. Lillie
John M. Lillie
Chairman of the Board, President
and Chief Executive Officer
/s/ Will M. Storey
Will M. Storey
Executive Vice President and
Chief Financial Officer
/s/ William J. Stuebgen
William J. Stuebgen
Vice President, Controller and
Chief Accounting Officer
Oakland, California
February 10, 1995
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders of American President Companies, Ltd.:
We have audited the accompanying consolidated balance sheet of American
President Companies, Ltd. (a Delaware corporation) and subsidiaries as of
December 30, 1994 and December 31, 1993, and the related consolidated statements
of income, cash flows and changes in stockholders' equity for each of the three
years in the period ended December 30, 1994. These consolidated financial
statements and the schedule referred to below are the responsibility of the
company's management. Our responsibility is to express an opinion on these
consolidated financial statements and the schedule 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 financial statements referred to above present fairly, in
all material respects, the financial position of American President Companies,
Ltd. and subsidiaries as of December 30, 1994 and December 31, 1993, and the
results of their operations and their cash flows for each of the three years in
the period ended December 30, 1994, in conformity with generally accepted
accounting principles.
As explained in Note 1 to the financial statements, the company has changed its
method of recognizing revenues and expenses effective as of December 28, 1991.
Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The schedule listed in the index to financial
statements is presented for purposes of complying with the Securities and
Exchange Commission's rules and is not a required part of the basic financial
statements. This information has been subjected to the auditing procedures
applied in the audit of the basic financial statements and, in our opinion, is
fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
/s/ Arthur Andersen LLP
Arthur Andersen LLP
San Francisco, California
February 10, 1995
<PAGE>
<TABLE>
CONSOLIDATED STATEMENT OF INCOME
<CAPTION>
Year Ended December 30 December 31 December 25
(In thousands, except 1994 1993 1992
per share amounts)
<S> <C> <C> <C>
Revenues $ 2,793,468 $ 2,606,220 $ 2,515,633
Expenses
Operating, Net of Operating-
Differential Subsidy 2,486,360 2,299,872 2,209,250
General and Administrative 77,686 64,281 59,147
Depreciation and Amortization 106,274 109,127 107,180
Total Expenses 2,670,320 2,473,280 2,375,577
Operating Income 123,148 132,940 140,056
Interest Income 16,150 6,290 12,233
Interest Expense (28,994) (17,663) (38,668)
Gain on Sale of Investment 8,934 8,091
Income Before Taxes 110,304 130,501 121,712
Federal, State and Foreign
Tax Expense 36,106 50,392 43,696
Income Before Cumulative
Effect of Accounting Change 74,198 80,109 78,016
Cumulative Effect on Prior Years
of Changing the Accounting for
Revenues and Expenses (21,565)
Net Income $ 74,198 $ 80,109 $ 56,451
Less Dividends on Preferred Stock 6,750 6,750 6,750
Net Income Applicable to
Common Stock $ 67,448 $ 73,359 $ 49,701
Earnings Per Common Share
Primary
Before Cumulative Effect of
Accounting Change $ 2.38 $ 2.65 $ 2.43
Cumulative Effect of Accounting Change (0.74)
Primary Earnings Per Common Share $ 2.38 $ 2.65 $ 1.69
Fully Diluted
Before Cumulative Effect of
Accounting Change $ 2.30 $ 2.50 $ 2.34
Cumulative Effect of Accounting Change (0.65)
Fully Diluted Earnings Per
Common Share $ 2.30 $ 2.50 $ 1.69
Dividends Per Common Share $ 0.40 $ 0.30 $ 0.30
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED BALANCE SHEET
<CAPTION>
December 30 December 31
(In thousands, except share amounts) 1994 1993
ASSETS
Current Assets
<S> <C> <C>
Cash and Cash Equivalents $ 39,754 $ 84,053
Short-Term Investments 214,898
Trade and Other Receivables, Net 280,736 271,053
Fuel and Operating Supplies 36,549 35,354
Prepaid Expenses and Other 37,135 48,378
Total Current Assets 609,072 438,838
Property and Equipment
Ships 678,453 676,854
Containers, Chassis and Rail Cars 781,100 750,557
Leasehold Improvements and Other 260,699 249,636
Construction in Progress 116,845 74,138
1,837,097 1,751,185
Accumulated Depreciation and Amortization (896,802) (825,003)
Property and Equipment, Net 940,295 926,182
Investments and Other Assets 114,590 89,357
Total Assets $ 1,663,957 $ 1,454,377
LIABILITIES, REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY
Current Liabilities
Current Portion of Long-Term Debt and Capital Leases $ 4,797 $ 4,395
Accounts Payable and Accrued Liabilities 397,969 383,029
Total Current Liabilities 402,766 387,424
Deferred Income Taxes 139,955 130,228
Other Liabilities 118,603 118,966
Long-Term Debt 373,142 250,610
Capital Lease Obligations 13,108 16,696
Total Long-Term Debt and Capital Lease Obligations 386,250 267,306
Commitments and Contingencies
Redeemable Preferred Stock, $.01 Par Value,
Stated at $50.00, Authorized-2,000,000 Shares
Series C, Shares Issued and Outstanding-1,500,000
in 1994 and 1993 75,000 75,000
Stockholders' Equity
Common Stock $.01 Par Value, Stated at $1.00
Authorized-60,000,000 Shares
Shares Issued and Outstanding-27,318,000 in
1994 and 26,837,000 in 1993 27,318 26,837
Additional Paid-In Capital 70,853 61,656
Retained Earnings 443,212 386,960
Total Stockholders' Equity 541,383 475,453
Total Liabilities, Redeemable Preferred Stock
and Stockholders' Equity $ 1,663,957 $ 1,454,377
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENT OF CASH FLOWS
<CAPTION>
Year Ended December 30 December 31 December 25
(In thousands) 1994 1993 1992
Cash Flows from Operating Activities
<S> <C> <C> <C>
Net Income $ 74,198 $ 80,109 $ 56,451
Adjustments to Reconcile Net Income to Net
Cash Provided by (Used in) Operating Activities:
Depreciation and Amortization 106,274 109,127 107,180
Deferred Income Taxes 14,865 6,633 (8,054)
Change in Receivables (42,216) (37,915) 7,238
Issuance of Notes Receivable on Sales
of Real Estate (7,470) (4,170) (2,067)
Change in Fuel and Operating Supplies (1,195) (469) (1,133)
Change in Prepaid Expenses and Other
Current Assets 8,335 3,055 (9,617)
Gain on Sale of Assets (5,583) (17,577) (8,279)
Change in Accounts Payable and
Accrued Liabilities 18,844 18,543 (23,302)
Cumulative Effect on Prior Years
of Changes in Accounting 34,783
Other 10,519 11,285 22,611
Net Cash Provided by Operating Activities 176,571 168,621 175,811
Cash Flows from Investing Activities
Capital Expenditures (127,757) (156,270) (65,667)
Proceeds from Sale of Long-Term Investment 11,310 11,834
Proceeds from Sales of Property and Equipment 9,297 8,955 1,811
Purchase of Short-Term Investments (453,870) (206,849)
Proceeds from Sales of Short-Term Investments 238,972 38,846 239,577
Transfer from Capital Construction Fund 8,843 17,508
Deposits to Capital Construction Fund (6,140) (8,000)
Other 1,649 5,036 4,621
Net Cash Used in Investing Activities (331,709) (89,420) (5,165)
Cash Flows from Financing Activities
Repurchase of Common Stock (77,829)
Issuance of Debt 147,348 663,571
Repayments of Capital Lease Obligations (3,278) (113,465) (67,351)
Repayments of Debt (24,897) (634,932) (29,471)
Dividends Paid (17,651) (14,725) (15,271)
Other 9,383 12,841 7,551
Net Cash Provided by (Used in)
Financing Activities 110,905 (86,710) (182,371)
Effect of Exchange Rate Changes on Cash (66) (1,273) (2,547)
Net Decrease in Cash and Cash Equivalents (44,299) (8,782) (14,272)
Cash and Cash Equivalents at Beginning of Year 84,053 92,835 107,107
Cash and Cash Equivalents at End of Year $ 39,754 $ 84,053 $ 92,835
SUPPLEMENTAL DATA:
Cash Paid for:
Interest (Net of Capitalized Interest) $ 24,158 $ 26,232 $ 40,793
Income Taxes (Net of Refunds) $ 15,848 $ 32,370 $ 47,967
Noncash Investing Activities:
Sale of Trade Receivables to the Capital
Construction Fund, Net of Discount $ 37,773
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
<CAPTION>
Year Ended December 30 December 31 December 25
(In thousands, except share amounts) 1994 1993 1992
Common Stock
<S> <C> <C> <C>
Beginning Balance $ 26,837 $ 13,022 $ 14,719
Stock Awards and Options Exercised, Net 481 397 161
Issuance of 13,418,000 shares of common stock
to effect a 2-for-1 stock split 13,418
Repurchase and Retirement of Common Stock (1,858)
Ending Balance 27,318 26,837 13,022
Additional Paid-In Capital
Beginning Balance 61,656 62,023 130,416
Stock Awards and Options Exercised, Net 9,197 13,051 7,578
Issuance of 13,418,000 shares of common stock
to effect a 2-for-1 stock split (13,418)
Repurchase and Retirement of Common Stock (75,971)
Ending Balance 70,853 61,656 62,023
Retained Earnings
Beginning Balance 386,960 322,183 281,191
Net Income 74,198 80,109 56,451
Cash Dividends
Common (10,901) (7,975) (8,521)
Series C Redeemable Preferred (6,750) (6,750) (6,750)
Other (295) (607) (188)
Ending Balance 443,212 386,960 322,183
Total Stockholders' Equity $ 541,383 $ 475,453 $ 397,228
See notes to consolidated financial statements.
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation and Fiscal Year
The consolidated financial statements include the accounts of American President
Companies, Ltd. and its majority-owned subsidiaries (the "company"), after
eliminating intercompany accounts and transactions. The company's fiscal year
ends on the last Friday in December. The company's 1994 and 1992 fiscal years
were 52 weeks, compared with 53 weeks for 1993.
Revenues and Expenses
In 1992, the company changed its method of recognizing revenues and expenses to
conform with new transportation industry guidelines established by the Financial
Accounting Standards Board's Emerging Issues Task Force. Under the new method,
the company recognizes revenues on a percentage-of-completion basis and expenses
as incurred. The company previously recorded revenues and variable expenses at
the time freight was loaded. At the beginning of fiscal 1992, the company
recorded a one-time charge of $21.6 million, after taxes of $13.2 million, for
the effect of this change in accounting on prior years.
Detention revenue is recognized when cash is received.
Foreign Currency Transactions
Foreign currency transactions and balances were translated to U.S. dollars.
Included in Operating Income on the accompanying Consolidated Statement of
Income for 1994, 1993 and 1992 are net gains (losses) on foreign currency
transactions and translations of $0.5 million, $(1.1) million and $(2.0)
million, respectively.
In 1993, the company entered into foreign currency contracts to buy
Deutsche marks in the future to lock in the U.S. dollar cost of constructing
German-built vessels. These contracts are discussed in Note 10.
Cash, Cash Equivalents and Short-Term Investments
Cash and Cash Equivalents comprise cash balances and investments with maturities
of three months or less at the time of purchase. Short-Term Investments consist
of commercial paper and other cash instruments and are carried at cost, which
approximates fair value.
Allowance for Doubtful Accounts
The provision for doubtful accounts, included in Operating Expenses on the
accompanying Consolidated Statement of Income, for 1994, 1993 and 1992 was $13.2
million, $4.3 million and $5.9 million, respectively. At December 30, 1994 and
December 31, 1993 the allowance for doubtful accounts, included in Trade and
Other Receivables on the accompanying Consolidated Balance Sheet, amounted to
$21.9 million and $10.4 million, respectively.
<PAGE>
Property and Equipment
Property and Equipment are recorded at historical cost. For assets financed
under capital lease arrangements, an amount equal to the present value of the
future minimum lease payments is recorded at the date of acquisition as Property
and Equipment with a corresponding amount recorded as a capital lease
obligation. Depreciation and Amortization are computed using the straight-line
method based upon the following estimated useful lives:
<TABLE>
<CAPTION>
Classification Estimated Useful Life
<S> <C>
Ships 15 to 25 Years
Containers, Chassis and Accessories 5 to 15 Years
Rail Cars 5 to 10 Years
Other Property and Equipment Various
Assets Under Capital Lease Arrangements Term of Lease
</TABLE>
Maintenance and repair expenditures of $117.3 million, $110.3 million and $101.6
million have been charged to expense in 1994, 1993 and 1992, respectively, as
they were incurred. Major periodic dry dockings and rail car overhauls totaling
$12.6 million, $18.2 million and $21.2 million at December 30, 1994, December
31, 1993, and December 25, 1992, respectively, have been deferred and are being
amortized over two to five years.
Long-Term Investments
The company has certain investments, long-term deposits and receivables, which
are included in Investments and Other Assets on the accompanying Consolidated
Balance Sheet. The fair value of these assets approximates their carrying value
at December 30, 1994.
Software Costs
Costs related to purchased and internally developed software are charged to
expense as incurred.
Capitalized Interest
Interest costs of $6.3 million and $1.5 million relating to cash paid for the
construction of vessels were capitalized in 1994 and 1993, respectively. No
interest costs were capitalized in 1992.
Reclassifications
Certain 1993 and 1992 amounts have been reclassified to conform to the 1994
presentation.
NOTE 2. UNITED STATES MARITIME ADMINISTRATION AGREEMENTS
Operating-Differential Subsidy Agreement
The company and the United States Maritime Administration ("MarAd") are parties
to an Operating-Differential Subsidy ("ODS") agreement expiring December 31,
1997, which provides for payment by the U.S. government to partially compensate
the company for the relatively greater expense of vessel operation under United
States registry. The ODS amounts for 1994, 1993 and 1992 were $60.8 million,
$64.7 million and $69.7 million, respectively, and have been included as a
reduction of operating expenses.
<PAGE>
In June 1992, the Bush Administration announced that no new ODS
agreements would be entered into and existing ODS agreements would be allowed to
expire. The Clinton Administration and Congress have been reviewing U.S.
maritime policy. Proposed maritime support legislation introduced in 1994 was
not enacted. The Administration's 1995 budget includes a proposal for a 10-year
subsidy program with $100 million in annual payments to be requested and
appropriated on a year-to-year basis. The company is not able to predict
whether or when maritime support legislation will be enacted or what terms such
legislation may have, if enacted.
While the company continues to encourage efforts to enact maritime
support legislation, prospects for passage of a program acceptable to the
company are unclear. Accordingly, in July 1993, the company filed applications
with MarAd to operate under foreign flag its six C11-class containerships,
presently under construction, and to transfer to foreign flag seven of the 15
U.S.-flag containerships in its trans-Pacific fleet. On November 15, 1994,
MarAd issued a waiver that will allow the company to operate its C11-class
vessels under foreign registry on the condition that the vessels be returned to
U.S.-flag in the event acceptable maritime reform legislation is enacted. The
remaining application is still pending and no assurances can be given as to
whether, or when, the authority will be granted.
Management of the company believes that, in the absence of ODS or an
equivalent government support program, it will be generally no longer
commercially viable to own or operate containerships in foreign trade under the
U.S. flag because of the higher labor costs and the more restrictive design,
maintenance and operating standards applicable to U.S.-flag liner vessels. The
company continues to evaluate its strategic alternatives in light of the pending
expiration of its ODS agreement and the uncertainties as to whether a new U.S.
government maritime support program acceptable to the company will be enacted,
whether sufficient labor efficiencies can be achieved through the collective
bargaining process, and whether the company's remaining application to flag its
vessels under foreign registry will be approved. While no assurances can be
given, management of the company believes that it will be able to structure its
operations to enable it to continue to operate on a competitive basis without
direct U.S. government support.
In 1995, lawsuits were filed against the company and the U.S. Department
of Transportation by certain of its unions and union members challenging MarAd's
November 15, 1994 action granting the company the waiver allowing it to operate
its C11-class vessels under foreign flag. While no assurances can be given,
management believes these legal challenges will not be successful.
Capital Construction Fund
The company also has an agreement with MarAd pursuant to which the company has
established a Capital Construction Fund ("CCF") to which the company makes
contributions to provide funding for certain U.S.-built assets and for the
repayment of certain vessel acquisition debt. In 1994, the company made a
deposit of $36.9 million to its CCF and sold an undivided interest in $40
million of its trade accounts receivable to its CCF for $36.9 million in cash.
At December 30, 1994, the CCF totaled $37.8 million, and is included in
Investments and Other Assets on the accompanying Consolidated Balance Sheet.
There was no balance in the CCF at December 31, 1993.
The company receives a federal income tax deduction for deposits made to
the CCF, subject to certain restrictions. Withdrawals from the CCF for
investment in vessels or related assets do not give rise to a tax liability, but
reduce the depreciable bases of the assets for income tax purposes. At December
30, 1994, the total tax basis of assets purchased with CCF funds was
approximately $58.6 million less than net book value. Deferred income taxes
have been provided for CCF amounts on deposit or invested in vessels or related
equipment.
<PAGE>
NOTE 3. INCOME TAXES
The company adopted Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes", ("SFAS 109") in 1992, the effects of which were
applied retroactively to the beginning of fiscal 1989. SFAS 109 requires the
company to compute deferred taxes based upon the amount of taxes payable in
future years, after considering known changes in tax rates and other statutory
provisions that will be in effect in those years.
The reconciliation of the company's effective tax rate to the federal
statutory tax rate is as follows:
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
U.S. Federal Statutory Rate 35% 35% 34%
Increases (Decreases) in Rate Resulting from:
State Taxes, Net of Federal Benefit 3% 3% 3%
Effect of Federal Tax Rate Change on Prior Years 2%
Revisions of Prior Years' Tax Estimates (6%)
Permanent Book/Tax Differences and Other 1% (1%) (2%)
Net Effective Tax Rate 33% 39% 35%
</TABLE>
The following is a summary of the company's provision for income taxes,
net of $13.2 million related to the cumulative effect of the accounting change
for revenues and expenses in 1992:
<TABLE>
<CAPTION>
(In thousands) 1994 1993 1992
Current
<S> <C> <C> <C>
Federal $ 20,441 $ 30,164 $ 19,303
State 2,865 3,291 3,848
Foreign 6,746 6,684 5,980
30,052 40,139 29,131
Deferred
Federal 5,358 7,664 2,456
State 696 (160) (1,109)
Change in Federal Tax Rate 2,749
6,054 10,253 1,347
Total Provision $ 36,106 $ 50,392 $ 30,478
</TABLE>
The following table shows the tax effect of the company's cumulative
temporary differences and carryforwards included on the company's Consolidated
Balance Sheet at December 30, 1994 and December 31, 1993:
<TABLE>
<CAPTION>
(In thousands) 1994 1993
<S> <C> <C>
Excess of Tax Over Book Depreciation $ (111,613) $ (114,929)
Tax Deductions for CCF Deposits in Excess of Book
Depreciation of CCF Assets (48,756) (35,843)
Net Tax Deduction for Rent Differential on Capital Leases (26,879) (25,779)
Pension and Postretirement Accruals 20,692 18,515
Excess Insurance Reserves Over Claims Paid 20,340 23,470
Accounts Receivable Allowance 8,664 4,311
Accrued Liabilities 6,440 10,692
Other 1,871 5,187
Total Net Deferred Tax Liability $ (129,241) $ (114,376)
</TABLE>
<PAGE>
The amount of deferred tax assets and liabilities at December 30, 1994
and December 31, 1993 were as follows:
<TABLE>
<CAPTION>
(In thousands) 1994 1993
<S> <C> <C>
Deferred Tax Assets $ 67,339 $ 75,749
Deferred Tax Liabilities (196,580) (190,125)
Total Net Deferred Tax Liability (129,241) (114,376)
Less Net Current Deferred Tax Asset (10,714) (15,852)
Deferred Income Taxes $ (139,955) $ (130,228)
</TABLE>
The net current deferred tax asset is included in Prepaid Expenses and
Other on the accompanying Consolidated Balance Sheet.
NOTE 4. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts Payable and Accrued Liabilities at December 30, 1994 and December 31,
1993 were as follows:
<TABLE>
<CAPTION>
(In thousands) 1994 1993
<S> <C> <C>
Accounts Payable $ 54,009 $ 39,101
Accrued Liabilities 259,933 271,477
Current Portion of Accrued Claims 24,468 11,500
Income Taxes 2,883 1,551
Unearned Revenue 56,676 59,400
Total Accounts Payable and Accrued Liabilities $ 397,969 $ 383,029
</TABLE>
NOTE 5. LONG-TERM DEBT
Long-term debt at December 30, 1994 and December 31, 1993 consisted of the
following:
<TABLE>
<CAPTION>
(In thousands) 1994 1993
8% Senior Debentures $150 Million Face Amount,
<S> <C> <C>
Due on January 15, 2024 (1) $ 147,144
7 1/8% Senior Notes $150 Million Face Amount,
Due on November 15, 2003 (1) 148,065 $ 147,915
Series I 8% Vessel Mortgage Bonds, Due Through 1997 (2) 57,176 81,000
8% Refunding Revenue Bonds, Due on November 1, 2009 (3) 12,000 12,000
Refunding Revenue Bonds, at Various Rates Not to
Exceed 12%, Due on November 1, 2009 (4) 6,495 6,495
Note Payable at 9%, Due Through 1997 (5) 2,591 3,577
Notes Payable at Prime Plus 1% 572 616
Note Payable at 10%, Due Through 1998 184
Total Debt 374,227 251,603
Current Portion (1,085) (993)
Long-Term Debt $ 373,142 $ 250,610
</TABLE>
<PAGE>
(1) In November 1993, the company filed a shelf registration statement
covering the issuance from time to time of up to $400 million of debt
securities of varying terms and amounts. Pursuant to this registration
statement the company issued 7 1/8% Senior Notes and 8% Senior Debentures
in November 1993 and January 1994, respectively. Interest payments are
due semiannually. The Senior Notes had an effective interest rate of
7.325%, and an unamortized discount of $1.9 million and $2.1 million at
December 30, 1994 and December 31, 1993, respectively. The Senior
Debentures had an effective interest rate of 8.172%, and an unamortized
discount of $2.9 million at December 30, 1994. Fair value of the Senior
Notes and Senior Debentures was approximately $129 million and $123
million, respectively, at December 30, 1994 based on quoted dealer prices
for similar issues.
(2) Principal payments are due in equal semiannual installments. The company
has the option to issue Series II Bonds due sequentially in semiannual
payments at the end of the term of the Series I Bonds in lieu of up to
five of the remaining cash payments, which it has not yet exercised. The
bonds issued under this loan agreement are collateralized by the five C10-
class vessels, which had a net book value of $177.6 million at December
30, 1994. Fair value of this debt is approximately $59 million at
December 30, 1994 assuming a current interest rate of 8.65%.
(3) The Bonds are redeemable on or after November 1, 1999 at a redemption
price of 102% of the principal amount, reducing to 100% of the principal
amount on or after November 1, 2001.
(4) The interest rate at December 30, 1994 was 5.7%. The principal repayment
is collateralized by a $6.6 million letter of credit.
(5) The Note was used to finance the purchase of certain chassis and is
collateralized by the chassis. At December 30, 1994, the net book value
of these chassis was $3.7 million.
Carrying value of significant issues of long-term debt, other than the
Series I Bonds, Senior Notes and Senior Debentures, approximates fair value
because the interest rates on outstanding debt approximates current interest
rates that would be offered to the company for similar debt.
Principal payments scheduled on long-term debt during the next five
years, on the basis that the company issues Series II Bonds totaling $23.8
million per year in lieu of up to five of the remaining semiannual cash payments
on the Series I Bonds, are as follows:
(In thousands)
1995 $ 1,085
1996 1,365
1997 14,696
1998 23,913
1999 19,103
The company has a credit agreement with a group of banks that provides
for an aggregate commitment of up to $200 million through March 1999. The
credit agreement contains, among other things, various financial covenants that
require the company to meet certain levels of interest coverage, leverage and
net worth. The borrowings bear interest at rates based upon various indices as
elected by the company. The annual commitment fee is a maximum of one-half of
one percent of the available amount. There have been no borrowings under this
agreement.
As an alternative to borrowing under its credit agreement, the company
has an option under that agreement to sell up to $150 million of certain of its
accounts receivable to the banks. This alternative is subject to less
restrictive financial covenants than the borrowing option.
<PAGE>
NOTE 6. LEASES
The company leases equipment under capital leases expiring in two to six years.
Assets under capital lease included in Property and Equipment on the
accompanying Consolidated Balance Sheet at December 30, 1994 and December 31,
1993 are as follows:
<TABLE>
<CAPTION>
(In thousands) 1994 1993
<S> <C> <C>
Containers, Chassis and Rail Cars $ 38,003 $ 38,291
Other Property and Equipment 938 938
38,941 39,229
Accumulated Depreciation (32,955) (29,540)
Total $ 5,986 $ 9,689
</TABLE>
The following is a schedule of future minimum lease payments required
under the company's leases that have initial noncancelable terms in excess of
one year at December 30, 1994:
<TABLE>
<CAPTION>
Capital Operating
(In thousands) Leases Leases
<C> <C> <C>
1995 $ 5,172 $ 230,690
1996 12,543 150,181
1997 414 115,379
1998 414 101,912
1999 414 94,363
Later Years 45 1,495,242
Total Minimum Payments Required $ 19,002 $ 2,187,767
Amount Representing Interest (2,182)
Present Value of Minimum Lease Payments 16,820
Current Portion (3,712)
Long-Term Portion $ 13,108
</TABLE>
In 1993, the company entered into a contract with the Port of Los
Angeles to lease a new 226-acre terminal facility for 30 years. Occupancy of
the new facility is scheduled for 1997 upon completion of construction. The
minimum annual rent expense under the new lease is estimated to be between $22
million and $26 million, depending upon the final scope of development. The
annual rent for the company's current 129-acre terminal in Los Angeles was
approximately $18.5 million in 1994.
In 1994, the company and the Port of Seattle signed a lease amendment
for the improvement and expansion of its existing terminal facility. Under the
amended lease, the facility would be expanded from 83 acres to approximately 160
acres. The expansion is expected to be completed during 1997, and the lease
term would be 30 years from completion. In addition, the company has the option
to expand the terminal by an additional 30 acres. The annual rent payment for
the company's existing facility was approximately $6.3 million in 1994. The
minimum annual rent payment, for the first full year after completion, under the
amended lease is estimated to be $13 million, depending upon the final scope of
development and consumer price index increases. The minimum annual rent payment
increases in five year increments over the term of the lease, to approximately
$39.6 million in the 29th and 30th years, also depending upon the final scope of
development and consumer price index increases.
Total rental expense for operating leases and short-term rentals was
$334.3 million, $289.5 million and $260.4 million in 1994, 1993 and 1992,
respectively.
<PAGE>
NOTE 7. EMPLOYEE BENEFIT PLANS
Pension Plans
The company has defined benefit pension plans covering most of its employees,
which generally call for benefits to be paid to eligible employees at retirement
based on years of credited service and average monthly compensation during the
five years of employment with the highest rate of pay. The company's general
policy is to fund pension costs at no less than the statutory requirement.
Certain non-qualified plans are secured through a grantor trust. The investment
in this trust at December 30, 1994 was $16.1 million and is included in
Investments and Other Assets on the accompanying Consolidated Balance Sheet.
The investments in the trust consist of life insurance policies and other cash
instruments, which are carried at fair value.
The following table sets forth the pension plans' funded status and
amounts recognized in the accompanying Consolidated Balance Sheet at December
30, 1994 and December 31, 1993:
<TABLE>
<CAPTION>
1994 1993
Assets in Accumulated Assets in Accumulated
Excess of Benefits Excess of Benefits
Accumulated in Excess Accumulated in Excess
(In thousands) Benefits of Assets Benefits of Assets
Actuarial Present Value of:
<S> <C> <C> <C> <C>
Vested Benefit Obligation $ (94,408) $ (8,082) $ (89,291) $ (7,203)
Accumulated Benefit Obligation (103,079) (8,837) (100,054) (8,251)
Actuarial Present Value of
Projected Benefit Obligation $ (139,993) $ (13,252) $ (142,636) $ (11,834)
Plan Assets at Fair Value 131,590 130,587 574
Funded Status (8,403) (13,252) (12,049) (11,260)
Unrecognized Net Loss (Gain) 15,422 (1,631) 21,226 1,501
Unrecognized Prior Service
(Credit) Cost (16,049) 3,915 (12,930)
Unrecognized Transition
(Asset) Obligation (9,940) 829 (11,381) 994
Net Pension Liability $ (18,970) $ (10,139) $ (15,134) $ (8,765)
</TABLE>
The following assumptions were made in determining the company's net
pension liability:
<TABLE>
<CAPTION>
(Weighted Average of All Plans) 1994 1993 1992
<S> <C> <C> <C>
Discount Rate 7.9% 7.1% 7.9%
Rate of Increase in Compensation Levels 5.2% 5.2% 6.0%
Expected Long-Term Rate of Return
on Plan Assets 8.2% 8.2% 8.2%
</TABLE>
Net pension cost related to the company's pension plans included the
following components:
<TABLE>
<CAPTION>
(In thousands) 1994 1993 1992
<S> <C> <C> <C>
Service Cost $ 9,144 $ 7,858 $ 10,546
Interest Cost on Projected
Benefit Obligation 11,228 10,138 9,225
Actual Return on Plan Assets 414 (14,354) (8,336)
Net Amortization and Deferral (12,971) 2,453 (2,172)
Net Pension Cost $ 7,815 $ 6,095 $ 9,263
</TABLE>
<PAGE>
The company also participates in collectively bargained, multi-employer
plans that provide pension and other benefits to certain union employees. The
company contributed $5.3 million in 1994, $5.2 million in 1993 and $6.5 million
in 1992 to such plans. These contributions are determined in accordance with
the provisions of negotiated labor contracts and generally are based on the
number of hours worked and are expensed as incurred.
Postretirement Benefits Other than Pensions
The company shares the cost of its health care benefits with the majority of its
domestic shoreside retired employees and recognizes the cost of providing health
care and other benefits to retirees over the term of employee service.
Postretirement benefit costs in the accompanying Consolidated Statement
of Income for the years ended December 30, 1994 and December 31, 1993 were as
follows:
<TABLE>
<CAPTION>
(In thousands) 1994 1993
<S> <C> <C>
Interest Cost $ 1,380 $ 1,573
Service Cost 1,117 1,033
Amortization of Gains (117) (117)
Total Postretirement Benefit Cost $ 2,380 $ 2,489
</TABLE>
The following table sets forth the postretirement benefit obligation
recognized in the accompanying Consolidated Balance Sheet at December 30, 1994
and December 31, 1993:
<TABLE>
<CAPTION>
(In thousands) 1994 1993
Accumulated Postretirement Benefit Obligation
<S> <C> <C>
Retirees $ 6,975 $ 8,445
Active Employees - Fully Eligible 462 2,611
Active Employees - Not Fully Eligible 7,925 8,680
Unrecognized Net Gain 7,671 1,451
Unamortized Prior Service Cost 1,952 2,069
Total $ 24,985 $ 23,256
</TABLE>
The expected cost of the company's postretirement benefits is assumed to
increase at an annual rate of 10.4% in 1995. This rate is assumed to decline
approximately 1% per year to 5% in the year 1999 and remain level thereafter.
The health care cost trend rate assumption has a significant impact on the
amounts reported. An increase in the rate of 1% in each year would increase the
accumulated postretirement benefit obligation at December 30, 1994 by $2.4
million and the aggregate of the service and interest cost for 1994 by $0.4
million. The weighted average discount rate used to determine the accumulated
postretirement benefit obligation was 8%. The company has not funded the
liability for these benefits.
Profit-Sharing Plans
The company has defined contribution profit-sharing plans covering certain non-
union employees. Under the terms of these plans, the company has agreed to make
matching contributions equal to those made by the participating employees up to
a maximum of 6% of each employee's base salary. The company's total
contributions to the plans for 1994, 1993 and 1992 were $6.3 million, $6.0
million and $5.7 million, respectively.
<PAGE>
NOTE 8. REDEEMABLE PREFERRED STOCK
Shares of 9% Series C Cumulative Convertible Preferred Stock ("Series C
Preferred Stock") are convertible into shares of the company's common stock at
the rate of 2.641 shares of common stock for each share of Series C Preferred
Stock, or a conversion price of $18.9325 per share of common stock. Holders of
this stock have one vote for each share of common stock into which Series C
Preferred Stock is convertible and have agreed to vote in accordance with the
recommendations of the company's Board of Directors on certain matters. The
holders of the Series C Preferred Stock also have a class vote with respect to
mergers, recapitalizations, or other similar transactions which are not approved
by a majority of the independent directors of the company.
The Series C Preferred Stock is exchangeable at the option of the holder
into shares of 9% Series D Convertible Preferred Stock, which have the same
economic rights as the Series C Preferred Stock, but no voting rights except as
required by law. The holders of the Series C Preferred Stock have agreed to
certain transfer restrictions which do not apply to the Series D Preferred
Stock. On or after July 31, 1995, the company may redeem shares of the Series C
or Series D Preferred Stock outstanding, if any, and must redeem all such shares
on January 31, 2001 at their stated value.
The Series C Preferred Stock carries liquidation rights equal to the
greater of 110% of the stated value per share, plus dividends accrued to the
date of payment, or the current market value of the common stock into which the
Series C Preferred Stock outstanding is convertible.
NOTE 9. STOCKHOLDERS' EQUITY
Common Stock
On December 3, 1993, the Board of Directors of the company authorized a two-for-
one stock split effected in the form of a stock dividend payable January 28,
1994 to stockholders of record on December 31, 1993.
On a post-split basis, the company repurchased 3,715,928 of its
outstanding common stock in 1992 at an average per share cost of $20.94. The
excess of the purchase price of the common stock over its stated value has been
reflected as a decrease in Additional Paid-In Capital on the accompanying
Consolidated Balance Sheet.
Earnings Per Common Share
For the periods presented, primary earnings per common share were computed by
dividing net income, reduced by the amount of preferred stock dividends, by the
weighted average number of common shares and common equivalent shares
outstanding during the year. Common equivalent shares consist of stock options
granted. Fully diluted earnings per common share were computed based on the
assumption that the Series C Preferred Stock was converted. The number of
shares used in these computations was as follows:
<TABLE>
Weighted Average Number of Common and Common Equivalent Shares
<CAPTION>
(In millions) 1994 1993 1992
<S> <C> <C> <C>
Primary 28.3 27.7 29.4
Fully Diluted 32.3 32.1 33.3
</TABLE>
<PAGE>
Stockholder Rights Plan
The company's stockholder rights agreement provides that rights become
exercisable when a person acquires 20% or more of the company's common stock or
announces a tender offer which would result in the ownership of 20% or more of
the company's common stock, or if a person who has been declared "adverse" by
the independent directors of the company exceeds a threshold stock ownership
established by the Board, which may not be less than 10%. The rights will be
attached to all common stock, Series C Preferred Stock and Series D Preferred
Stock certificates at the rate of one right per common share and one right for
each common share into which Series C and Series D Preferred Stock is
convertible. Once exercisable, each right entitles its holder to purchase two
one-hundredths of a share ("unit") of Series A Junior Participating Preferred
Stock at a purchase price of $130 per unit, subject to adjustment.
Upon the occurrence of certain other events related to changes in the
ownership of the company's outstanding common stock, each holder of a right
would be entitled to purchase shares of the company's common stock or an
acquiring corporation's common stock having a market value of two times the
exercise value of the right. Rights that are, or were, beneficially owned by an
acquiring or adverse person will be null and void. In addition, the Board of
Directors may, in certain circumstances, require the exchange of each
outstanding right for common stock or other consideration with a value equal to
the exercise price of the rights. The company has reserved 500,000 shares of
preferred stock for issuance pursuant to the exercise of the rights in the
future. The rights expire November 29, 1998 and, subject to certain conditions,
may be redeemed by the Board of Directors at any time at a price of $0.025 per
right.
Stock Incentive Plans
The Compensation Committee of the Board of Directors approved stock option
grants under the company's 1989 Stock Incentive Plan (the "Plan") for shares of
the company's common stock beginning in July 1993 to key employees of the
company. The options have an exercise price of the greater of the fair market
value on the date of grant or $22.38 per share, a term expiring July 26, 2003
and vest between 1995 and 2002 based upon the achievement of stock price
appreciation targets. The percentage of the options that vest during specified
time periods will depend on the amount of stock price appreciation in those time
periods. After five years, the options will vest as to 60% of the covered
shares if not otherwise vested, and after nine years, the options will vest as
to the remaining 40% if not otherwise vested.
Previous stock option grants under the Plan become exercisable in three
to four equal annual installments commencing one year after grant. The Plan
also provides for awards of restricted shares of common stock and stock units to
officers and other key employees. Recipients of restricted shares must pay the
par value of $0.01 for each restricted share of common stock received.
Restricted shares are not transferable until vested, but the recipient enjoys
full voting and dividend rights. Vesting ordinarily occurs in five unequal
annual installments increasing from 10 percent in the first year to 30 percent
in the fifth year. The liability for these awards is based upon the market
value of the shares at the date of award and is included in Stockholders' Equity
on the accompanying Consolidated Balance Sheet.
The 1992 Directors Stock Option Plan provides for the granting of
options to purchase shares of common stock to non-employee members of the
company's Board of Directors. The aggregate number of options which may be
granted under this plan is 200,000. Options become exercisable in three equal
installments on the first three anniversaries of the date of grant.
<PAGE>
The following is a summary of the transactions in the plans during 1994:
<TABLE>
<CAPTION>
Stock Options Restricted Shares
Average
Shares Price
<S> <C> <C> <C>
Outstanding at December 31, 1993 4,176,030 $ 17.80 82,200
Granted 1,358,839 22.51
Exercised (516,614) 12.07
Vested (79,200)
Canceled (97,384) 21.59
Outstanding at December 30, 1994 4,920,871 $ 19.63 3,000
Exercisable at December 30, 1994 1,240,719 $ 12.86
Exercised in 1993 833,834 $ 11.54
Exercised in 1992 412,926 $ 11.07
</TABLE>
At December 30, 1994, a total of 902,936 shares were available for future grants
of stock options, restricted shares and stock units under these plans.
NOTE 10. COMMITMENTS AND CONTINGENCIES
Commitments
Ship Purchases and Related Financing
In May 1993, the company entered into contracts for the construction and
purchase of six new C11-class containerships from Howaldtswerke-Deutsche Werft
AG, of Germany ("HDW") (three ships) and Daewoo Shipbuilding and Heavy
Machinery, Ltd., of Korea ("Daewoo") (three ships). The total estimated project
cost for the construction of these vessels is $535 million. A $52 million
progress payment was made in 1993, and progress payments of $31 million were
made in 1994. A progress payment of $20 million is due in early 1995, with the
remaining 80% of each vessel's purchase price due upon delivery of each vessel
scheduled beginning in May 1995. In March 1994, the company entered into a loan
agreement with European banks to finance approximately $400 million of the
purchase price of the six C11-class vessels. Principal payments on any draw-
downs would be due in semiannual installments over a 12-year period commencing
six months after the delivery of each vessel. Interest rates would be based
upon various margins over LIBOR or the banks' cost of funds as elected by the
company. The remaining costs of these vessels are expected to be financed with
a portion of the net proceeds from the company's November 1993 and January 1994
public debt offerings and with cash from operations.
In connection with the construction and purchase of the ships from HDW,
the company entered into foreign currency contracts to buy Deutsche marks in the
future to lock in the U.S. dollar cost of the Deutsche-mark denominated price of
the vessels. Any gains or losses on these contracts will be deferred and
recognized as an adjustment to the cost basis of the ships when the related
payments are made. At December 30, 1994, the company had contracts to purchase
$218.5 million in Deutsche marks. At December 30, 1994, the carrying value of
such contracts was an asset of $6.6 million and the fair value, based on quoted
market prices of comparable instruments, was an asset of $33.7 million. The
value of the contracts upon ultimate settlement is dependent upon actual
currency exchange rates at the various maturity dates in 1995.
<PAGE>
On January 5, 1995, the company and Columbia Shipmanagement Ltd., a
Cyprus company ("Columbia"), entered into an agreement under which Columbia
would provide crewing, maintenance, operations and insurance for the company's
six C11-class vessels for a per diem fee per vessel. The agreement may be
terminated at any time by either party with notice.
In December 1993, the company entered into contracts with Daewoo for the
construction and purchase of three diesel-powered K10-class containerships
scheduled to be delivered in 1996. The total estimated project cost for
construction of these vessels is $195 million. A progress payment of $18
million was made to Daewoo in 1993. The remaining progress payments are due in
two $18 million installments in 1995, with the remaining 70% of each vessel's
purchase price due upon delivery of each vessel in 1996. The costs of these
vessels are expected to be financed with a portion of the net proceeds from the
company's November 1993 and January 1994 public debt offerings and with cash
from operations. The alliance agreements with Orient Overseas Container Line
("OOCL"), a Hong Kong shipping company, Mitsui OSK Lines, Ltd. ("MOL") and
Nedlloyd Lines B.V. ("NLL") described below may impact the deployment and/or the
ultimate ownership of the K10-class vessels.
Alliances
The company and OOCL are parties to agreements enabling them to exchange vessel
space and coordinate vessel sailings through 2005. Currently, each party is
guaranteed vessel space and buys extra space as needed. Since December 1993,
the company has been required to purchase additional vessel space from OOCL and
to compensate OOCL for this space at a rate currently calculated at $6.6 million
per year, accrued ratably over each year. This commitment reduces as the
company increases the capacity it can exchange with OOCL, which is expected to
begin with the scheduled delivery of the company's C11-class vessels in 1995.
In September 1994, the company, MOL, and OOCL signed an agreement to
exchange vessel space, coordinate vessel sailings and cooperate in the use of
port terminals and equipment for ocean transportation services in the Asia-U.S.
West Coast trade through 2005. The carriers currently expect to commence
service under this agreement in late 1995 or early 1996. This agreement is
subject to government approvals in the U.S. and Japan.
The three carriers and NLL signed a separate agreement to exchange
vessel space, coordinate vessel sailings and cooperate in the use of port
terminals and equipment in an all-water service in the Asia-U.S. East Coast
trade via Panama for a minimum of three years. The four carriers currently
expect to initiate service under this agreement in March 1995, and weekly
service is currently expected to commence by August 1995.
Additionally, in September 1994, the four carriers and Malaysian
International Shipping Corporation BHD signed an agreement to exchange vessel
space, coordinate vessel sailings and cooperate in the use of port terminals and
equipment for ocean transportation services in the Asia-Europe trade through
2001. The carriers currently expect to commence service under the agreement in
January 1996. Prior to the commencement of this alliance, the company will
enter the Asia-Europe trade by chartering vessel space through MOL beginning in
March 1995.
<PAGE>
The Asia-U.S. West Coast, Asia-U.S. East Coast and Asia-Europe alliance
agreements are all expected to be implemented by late 1995 or early 1996. Under
the terms of the three agreements, alliance partners contribute and are
allocated vessel space, which may be adjusted from time to time. The value of
vessel space provided by the company to the alliance is less than the value of
the total capacity allocated to it through the alliance, resulting in an annual
net cash purchase commitment from the company to its alliance partners currently
estimated to be $29 million, beginning in 1996. For 1995, the company currently
estimates its net purchase commitment to its alliance partners for vessel space
in the Asia-U.S. East Coast and Asia-Europe trades to be approximately $35
million. Agreements covering terminal and equipment sharing among the alliance
partners have not been finalized, and the company's net cash commitment, if any,
to the alliance partners for these services cannot be determined at this time.
In April 1994, the company and Transportacion Maritima Mexicana ("TMM"),
a Mexican transportation company, entered into an agreement enabling them to
reciprocally charter vessel space for a period of three years. Under the
agreement, cargo will be transported between major Asian ports and certain ports
on the Pacific Coast of the U.S. and Mexico. Each party is committed to
purchase a minimum amount of vessel space at contract rates and may buy
available extra space as needed. The company's minimum space purchase
commitment exceeds that of TMM by approximately $5.3 million per year.
Facilities, Equipment and Services
The company has outstanding purchase commitments to acquire cranes, facilities,
equipment and services totaling $99.4 million. In addition, the company has
commitments to purchase terminal services for its major Asian operations. These
commitments range from one to ten years, and the amounts of the commitments
under these contracts are based upon the actual services performed. At December
30, 1994, the company had outstanding letters of credit totaling $11 million,
which guarantee the company's performance under certain of its commitments.
Employment Contracts
The company has entered into employment agreements with certain of its executive
officers. The agreements provide for certain payments to each officer upon
termination of employment, other than as a result of death, disability in most
cases, or justified cause, as defined. The aggregate estimated commitment under
these agreements was $15.9 million at December 30, 1994.
Contingencies
The company is a party to various legal proceedings, claims and
assessments arising in the course of its business activities. Based upon
information presently available, and in light of legal and other defenses and
insurance coverage and other potential sources of payment available to the
company, management does not expect these legal proceedings, claims and
assessments, individually or in the aggregate, to have a material adverse impact
on the company's consolidated financial position or operations.
<PAGE>
NOTE 11. BUSINESS SEGMENT INFORMATION
The company provides container transportation services in North America, Asia
and the Middle East through an intermodal system combining ocean, rail and truck
transportation. In addition, the company was engaged in real estate operations
until 1994, when its remaining real estate holdings were sold.
<TABLE>
<CAPTION>
(In millions) 1994 1993 1992
Revenues
<S> <C> <C> <C>
Transportation $ 2,777.3 $ 2,590.2 $ 2,509.6
Real Estate 16.2 16.0 6.0
Total $ 2,793.5 $ 2,606.2 $ 2,515.6
Operating Income
Transportation $ 114.2 $ 122.9 $ 136.7
Real Estate 9.0 10.0 3.4
Total $ 123.2 $ 132.9 $ 140.1
Identifiable Assets
Transportation $ 1,658.0 $ 1,442.0 $ 1,417.4
Real Estate 6.0 12.4 18.2
Total $ 1,664.0 $ 1,454.4 $ 1,435.6
</TABLE>
Depreciation expense and capital expenditures were related only to
transportation operations in 1994, 1993 and 1992.
The following table shows the percentage of ocean transportation revenues
by country:
<TABLE>
<CAPTION>
1994 1993 1992
Origin Destination Origin Destination Origin Destination
<S> <C> <C> <C> <C> <C> <C>
United States 26% 44% 27% 44% 30% 44%
Hong Kong 14 4 12 4 12 5
People's Republic
of China 10 3 8 1 6 2
Japan 9 11 10 12 11 11
Taiwan 9 3 9 4 10 3
India 5 2 5 3 5 2
Korea 4 3 5 2 4 3
Indonesia 4 1 4 1 3 1
Other 19 29 20 29 19 29
</TABLE>
Operating income, net income and identifiable assets cannot be allocated
on a geographic basis due to the nature of the company's business.
<PAGE>
NOTE 12. QUARTERLY RESULTS (Unaudited)
<TABLE>
(In millions, except per share amounts)
<CAPTION>
1994 1993
Quarter December September July April December September June April
Ended 30 23 1 8 31 17 25 2
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues $ 764.7 $672.1 $ 653.6 $ 703.1 $ 765.9 $ 625.4 $ 583.9 $ 631.0
Operating Income
Transportation 34.3 37.2 26.1 16.6 26.6 48.3 24.3 23.7
Real Estate 6.4 2.6 5.4 1.0 3.6
Total (1) 34.3 37.2 32.5 19.2 32.0 49.3 27.9 23.7
Income Before Taxes (2) 32.2 34.0 28.8 15.3 31.1 46.4 33.7 19.3
Net Income $ 22.5 $ 22.5 $ 19.0 $ 10.2 $ 21.2 $ 25.5 $ 21.3 $ 12.1
Earnings
Per Common Share
Primary Earnings
Per Common Share $ 0.74 $ 0.74 $ 0.62 $ 0.30 $ 0.69 $ 0.85 $ 0.71 $ 0.39
Fully Diluted Earnings
Per Common Share $ 0.69 $ 0.70 $ 0.60 $ 0.30 $ 0.66 $ 0.80 $ 0.67 $ 0.38
Cash Dividends
Per Common Share $ 0.10 $ 0.10 $ 0.10 $ 0.10 $ 0.075 $ 0.075 $ 0.075 $ 0.075
Market Price
Per Common Share
High $26 7/8 $27 1/8 $23 1/8 $34 $30 $28 1/2 $27 3/4 $24 3/8
Low 21 1/4 20 7/8 19 22 1/8 23 22 3/8 23 3/8 19
</TABLE>
(1) Collections of detention charges related to the company's
containers used to transport Operation Desert Storm cargo contributed $0.7
million, $0.5 million, $0.7 million and $8.3 million to Operating Income
for the fourth, third, second and first quarters of 1994, respectively,
and $3.6 million, $0.6 million and $1.7 million to Operating Income for
the fourth, third and second quarters of 1993, respectively.
(2) The gain on the sale of the company's remaining investment in
the common stock Amtech Corporation contributed $8.9 million to Income
Before Taxes in the second quarter of 1993.
<PAGE>
<TABLE>
SCHEDULE II. VALUATION AND QUALIFYING ACCOUNTS
(In thousands)
<CAPTION>
Description Balance at Charged To Charged To Deductions- Balance at
Beginning Cost and Other Describe (1) End of Year
of Year Expense Accounts-
Describe (2)
Allowance for Doubtful Accounts
<S> <C> <C> <C> <C> <C>
December 30, 1994 $ 10,359 $ 13,217 $ 2,295 $ (3,963) $ 21,908
December 31, 1993 $ 13,237 $ 4,324 $ (764) $ (6,438) $ 10,359
December 25, 1992 $ 14,611 $ 5,859 $ (7,233) $ 13,237
</TABLE>
(1) Uncollectible receivables written off, net of recoveries.
(2) Reclassifications from/(to) other Balance Sheet accounts.
<PAGE>
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information with respect to Directors and certain executive officers
of the company appearing under the caption "Election of Directors - Information
With Respect to Nominees and Directors" in the company's definitive proxy
statement for the annual meeting of stockholders to be held on May 2, 1995 is
hereby incorporated herein by reference.
The following sets forth certain information with respect to the remaining
executive officers of the company:
John G. Burgess, age 50, elected Executive Vice President of American President
Lines, Ltd. in December 1992. Prior to that, he served as Executive Vice
President and Chief Operating Officer of American President Lines, Ltd. from May
1990 to November 1992.
Maryellen B. Cattani, age 51, elected Executive Vice President of the company in
March 1995, and has served as Senior Vice President, Secretary and General
Counsel of the company since July 1991. Prior to joining the company, she was a
partner in the law firm of Morrison & Foerster from 1989 to 1991 and Senior Vice
President, General Counsel and Secretary of Transamerica Corporation from 1983
to 1989.
L. Dale Crandall, age 53, elected Executive Vice President and Chief Financial
Officer of the company, to become effective upon his becoming a full-time
employee of the company which is expected to occur in May 1995. Mr. Crandall
has been a Partner in the accounting firm of Price Waterhouse since 1974 and has
been managing partner of the firm's Los Angeles office since 1990.
Michael Diaz, age 46, elected Executive Vice President of American President
Lines, Ltd. in December 1992. Prior to that, he served as President, Asia
Division of American President Lines, Ltd. from August 1992 to November 1992,
and Executive Vice President and Chief Operating Officer of APL Land Transport
Services, Inc. from July 1990 to July 1992.
James S. Marston, age 61, elected Senior Vice President and Chief Information
Officer of the company in September 1987, served as Vice President and then
President of AMR Corporation-Technical Training Division from June 1982 to June
1986 and from June 1986 to September 1987, respectively.
William J. Stuebgen, age 47, elected Vice President, Controller and Chief
Accounting Officer of the company in October 1990. Prior to that, he served as
Vice President, Treasurer of the company from October 1988 to September 1990 and
Vice President, Controller from April 1987 to March 1989.
The executive officers of the company are elected by the Board of Directors.
Each officer holds office until his or her successor has been duly elected and
qualified, or until the earliest of his or her death, resignation, retirement or
removal by the Board.
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
The information appearing under the caption "Compensation of Executive
Officers and Directors" and in the company's definitive proxy statement for the
annual meeting of stockholders to be held on May 2, 1995, is hereby incorporated
herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information appearing under the captions "Election of Directors-
Stock Ownership of Directors and Executive Officers" and "Certain Beneficial
Ownership of Securities" in the company's definitive proxy statement for the
annual meeting of stockholders to be held on May 2, 1995, is hereby incorporated
herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information appearing under the captions "Compensation of Executive
Officers and Directors -- Employment Agreements, Termination of Employment and
Change-in-Control Arrangements and Certain Transactions" in the company's
definitive proxy statement for the annual meeting of stockholders to be held on
May 2, 1995, is hereby incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Documents filed as part of this report:
1. Financial Statements and Schedules
The following report of independent public accountants, consolidated
financial statements and notes to the consolidated financial statements of
American President Companies, Ltd. and subsidiaries are contained in Part
II, Item 8:
a. Report of Independent Public Accountants
b. Consolidated Statement of Income
c. Consolidated Balance Sheet
d. Consolidated Statement of Cash Flows
e. Consolidated Statement of Changes in Stockholders' Equity
f. Notes to Consolidated Financial Statements
2. The following schedules are contained in Part II, Item 8:
a. Schedule II - Valuation and Qualifying Accounts
3. Exhibits required by Item 601 of Regulation S-K
The following documents are exhibits to this Form 10-K
Exhibit No. Description of Document
______________________________________________________________________________
3.1* Certificate of Incorporation, filed as Exhibit 3.1 to the company's
Form SE (File No. 1-8544), dated May 14, 1985.
<PAGE>
3.2* Certificate of Amendment of Certificate of Incorporation, filed as
Exhibit 3.1 to the company's Form SE (File No. 1-8544), dated March
11, 1988.
3.3* By-Laws, as amended, filed as Exhibit 3.1 to the company's Form SE
(File No. 1-8544), dated March 27, 1991 and electronically filed as
Exhibit 3.1 to the company's Form 10Q (File No. 1-8544), dated August
3, 1993.
3.4* Amendment to the By-laws dated June 25, 1993, filed as Exhibit 3.2 to
the company's Form 10Q (File No. 1-8544), dated August 3, 1993.
4.1* Amended and Restated Rights Agreement dated October 22, 1991, between
the company and The First National Bank of Boston, as Rights Agent,
filed as Exhibit 4.1 to the company's Form SE (File No. 1-8544), dated
October 22, 1991.
4.2* Trust Indenture between American President Lines, Ltd., Issuer, and
Security Pacific National Bank, Trustee, dated as of April 22, 1988,
President Truman Issue, filed as Exhibit 4.1 to the company's Form SE
(File No. 1-8544), dated July 26, 1988.
4.3* Forms of Series I and Series II Bonds, filed as part of Exhibit 4.1 to
the company's Form SE (File No. 1-8544), dated July 26, 1988.
4.4* Certificate of Designation, Preferences, and Rights of the 9% Series C
Cumulative Convertible Preferred Stock, filed with the Delaware
Secretary of State on September 20, 1988, filed as Exhibit 4.1 to the
company's Form SE (File No. 1-8544), dated September 21, 1988.
4.5* Specimen Certificate of the company's 9% Series C Cumulative
Convertible Preferred Stock, par value $.01 per share, filed as
Exhibit 4.1 to the company's Form SE (File No. 1-8544), dated August
1, 1989.
4.6* Preferred Stock Purchase Agreement among the company, Hellman &
Friedman Capital Partners, Hellman & Friedman Capital Partners
International (BVI), and APC Partners; dated as of August 3, 1988, and
amendments 1 through 3, dated September, 1988 (without exhibits),
filed as Exhibit 4.1 to the company's Form SE (File No. 1-8544), dated
February 17, 1989.
4.7* Amendment of Preferred Stock Purchase Agreement among the company,
Hellman & Friedman Capital Partners, Hellman & Friedman Capital
Partners International (BVI), and APC Partners; dated March 15, 1989,
filed as Exhibit 4.2 to the company's Form SE (File No. 1-8544), dated
March 14, 1990.
4.8* Registration Rights Agreement, among the company, Hellman & Friedman
Capital Partners, Hellman & Friedman Capital Partners International
(BVI), and APC Partners; dated as of August 3, 1988, as amended
(without exhibits), filed as Exhibit 4.2 to the company's Form SE
(File No. 1-8544), dated February 17, 1989.
4.9* Certificate of Elimination with Respect to the $3.50 Series B
Convertible Exchangeable Preferred Stock of American President
Companies, Ltd., dated June 22, 1992, filed as Exhibit 4.1 to the
company's Form 10Q (File No. 1-8544), dated August 3, 1993.
<PAGE>
4.10* Certificate of Designation, Preferences and Rights of the 9% Series D
Convertible Preferred Stock of American President Companies, Ltd.,
dated June 29, 1992, filed as Exhibit 4.2 to the company's Form 10Q
(File No. 1-8544), dated August 3, 1993.
4.11* Indenture, dated as of November 1, 1993, between American President
Companies, Ltd. and The First National Bank of Boston as Trustee,
filed as Exhibit 4.1 to the company's Form 8K (File No. 1-8544), dated
November 29, 1993.
4.12* Form of 7-1/8% Senior Note Due 2003 of American President Companies,
Ltd., filed as Exhibit 4.2 to the company's Form 8K (File No. 1-8544)
dated November 29, 1993.
4.13* Form of 8% Senior Debentures Due 2024 of American President Companies,
Ltd., filed as Exhibit 4.20 to the company's Form 10K (File No. 1-
8544), dated March 9, 1994.
10.1* Operating-Differential Subsidy Agreement (No. MA/MSB-417), effective
as of January 1, 1978, between the United States and American
President Lines, Ltd., and Addenda Nos. 1 through 79 thereto,
excluding Nos. 16, 52, 56, 67, 72, 73, 76 and 77, filed as Exhibit
10.1 to the company's Form SE (File No. 1-8544), dated March 17, 1992.
10.2* Addenda Nos. 87 and 89 dated August 16, 1991 and March 19, 1992,
respectively to the Operating-Differential Subsidy Agreement (No.
MA/MSB-417), effective as of January 1, 1978, between the United
States and American President Lines, Ltd., filed as Exhibit 10.72 to
the company's Form 10K (File No. 1-8544), dated March 9, 1994.
10.3* Lease Agreement, dated June 1, 1988, between Monsanto Company and
American President Intermodal Company, Ltd., filed as Exhibit 10.14 to
the company's Form SE (File No. 1-8544), dated July 26, 1988.
10.4* Lease Agreement, dated June 1, 1988, between Consolidated Rail
Corporation and American President Intermodal Company, Ltd., filed as
Exhibit 10.2 to the company's Form SE (File No. 1-8544), dated March
14, 1990.
10.5* Lease and Preferential Assignment Agreement dated January 6, 1971, and
First Supplemental Agreement dated February 24, 1971, between the City
of Oakland and Seatrain Terminals of California, Inc., filed as
Exhibit 10.32 to the company's Registration Statement on Form S-l,
Registration No. 2-93718, which became effective on November 1, 1984.
10.6* Second Supplemental Agreement to Lease and Preferential Assignment
Agreement, dated May 3, 1988, filed as Exhibit 10.3 to the company's
Form SE (File No. 1-8544), dated March 14, 1990.
10.7* Preferential Assignment dated February 23, 1972, between the City of
Oakland and Seatrain Terminals of California, Inc., filed as Exhibit
10.33 to the company's Registration Statement on Form S-l,
Registration No. 2-93718, which became effective on November 1, 1984.
10.8* Assignment, Designation of Secondary Use and Consent, dated December
11, 1974, among Seatrain Terminals of California, Inc., American
President Lines, Ltd., the City of Oakland and Seatrain Lines, Inc.,
filed as Exhibit 10.34 to the company's Registration Statement on Form
S-l, Registration No. 2-93718, which became effective on November 1,
1984.
<PAGE>
10.9* Acknowledgment of Termination of Consent to Secondary Use and Sublease
and Assumption of Entire Combined Premises and Cranes dated December
18, 1981, between the City of Oakland and American President Lines,
Ltd., filed as Exhibit 10.35 to the company's Registration Statement
on Form S-l, Registration No. 2-93718, which became effective on
November 1, 1984.
10.10* Supplemental Agreement dated July 6, 1982, between the City of Oakland
and American President Lines, Ltd., filed as Exhibit 10.36 to the
company's Registration Statement on Form S-l, Registration No. 2-
93718, which became effective on November 1, 1984.
10.11* Permit No. 441, dated November 26, 1980, Second Amendment to Permit
No. 441, dated February 7, 1983, and Third Amendment to Permit No.
441, dated May 10, 1984, between the City of Los Angeles and American
President Lines, Ltd., filed as Exhibit 10.37 to the company's
Registration Statement on Form S-l, Registration No. 2-93718, which
became effective on November 1, 1984.
10.12* Fourth Amendment to Permit No. 441, dated as of October 29, 1986
between the City of Los Angeles and American President Lines, Ltd.,
filed as Exhibit 10.4 to the company's Form SE (File No. 1-8544),
dated March 23, 1987.
10.13* Financing and Security Agreement, dated March 27, 1984, between
American President Lines, Ltd. and the City of Los Angeles,
California, filed as Exhibit 10.38 to the company's Registration
Statement on Form S-1, Registration No. 2-93718, which became
effective on November 1, 1984.
10.14* Lease, dated July 31, 1972, Lease Agreement, dated September 1, 1980,
Memorandum, dated September 1, 1980, and two letters dated July 3,
1981 and July 14, 1981, respectively, between Hanshin Port Development
Authority and American President Lines, Ltd., filed as Exhibit 10.39
to the company's Registration Statement on Form S-1, Registration No.
2-93718, which became effective on November 1, 1984.
10.15* Pre-engagement Agreement for Lease dated March 17, 1983, Supplemental
Agreement dated March 17, 1983 and form of Wharf Lease Agreement
between Yokohama Port Terminal Corporation and American President
Lines, Ltd., filed as Exhibit 10.41 to the company's Registration
Statement on Form S-l, Registration No. 2-93718, which became
effective on November 1, 1984.
10.16* Lease Contract of Wharfs Nos. 68 & 69 of Container Terminal No. 3
Kaohsiung Harbor, Taiwan, Republic of China, dated December 31, 1987
and Equipment Agreement between the Kaohsiung Harbor Bureau and APL,
dated December 31, 1987, filed as Exhibit 10.4 to the company's Form
SE (File No. 1-8544), dated March 11, 1988.
10.17* Lease dated April 28, 1978, Memorandum of Understanding, Addendum to
Lease dated May 9, 1978, Addendum No. 2 to Lease dated July 28, 1978,
and Addendum No. 3 to Lease dated March 27, 1984, between Sunset
Cahuenga Building, a Joint Venture, and American President Lines,
Ltd., filed as Exhibit 10.44 to the company's Registration Statement
on Form S-l, Registration No. 2-93718, which became effective on
November 1, 1984.
10.18* Addendum No. 4 dated April 19, 1985 to Lease dated April 28, 1978,
between Sunset Cahuenga Building, a Joint Venture, and American
President Lines, Ltd., filed as Exhibit 10.1 to the company's Form SE
(File No. 1-8544), dated December 12, 1985.
<PAGE>
10.19* Addendum No. 5 dated July 25, 1986 to Lease dated April 28, 1978,
between Sunset Cahuenga Building, a Joint Venture, and American
President Lines, Ltd., filed as Exhibit 10.5 to the company's Form SE
(File No. 1-8544), dated March 11, 1988.
10.20* Addendum No. 6, dated May 1, 1988, to Lease dated April 28, 1978,
between Sunset Cahuenga Building, a Joint Venture, and American
President Lines, Ltd., filed as Exhibit 10.13 to the company's Form SE
(File No. 1-8544), dated July 26, 1988.
10.21* Lease Agreement between Port of Seattle and American President Lines,
Ltd. at Terminal 5 dated September 26, 1985, filed as Exhibit 10.5 to
the company's Form SE (File No. 1-8544), dated December 12, 1985.
10.22* Amendment No. 6 to the Lease Agreement between Port of Seattle and
American President Lines, Ltd. at Terminal 5, and assignment of the
lease from American President Lines, Ltd. to Eagle Marine Services,
Ltd. dated June 1, 1994, excluding exhibits and other related
agreements, filed as Exhibit 10.1 to the company's Form 10Q (File No.
1-8544), dated August 12, 1994.
10.23* Lease Agreement between the company and Bramalea Pacific, Inc. dated
April 18, 1988, and Amendments 1 through 5, filed as Exhibit 10.3 to
the company's Form SE (File No. 1-8544), dated March 27, 1991.
10.24* Credit agreements dated as of February 12, 1987, between American
President Lines, Ltd. and Kreditanstalt fur Wiederaufbau, filed as
Exhibit 10.9 to the company's Form SE (File No. 1-8544), dated March
23, 1987.
10.25* Guarantees dated as of February 12, 1987, by the company in favor of
Kreditanstalt fur Wiederaufbau, filed as Exhibit 10.10 to the
company's Form SE (File No. 1-8544), dated March 23, 1987.
10.26* Grantor Trust Agreement with U.S. Trust Company of California, N.A.,
effective April 10, 1989, filed as Exhibit 10.1 to the company's Form
SE (File No. 1-8544), dated August 1, 1989.
10.27* Trans-Pacific Stabilization Agreement, a Cooperative Working Agreement
among Ocean Common Carriers, including American President Lines, Ltd.,
signed November 22, 1988, filed as Exhibit 10.2 to the company's Form
SE (File No. 1-8544), dated August 1, 1989.
10.28* Assignment Agreement from United States Lines, Inc. to American
President Lines, Ltd. with attached supplements, dated September 16,
1987, filed as Exhibit 10.8 to the company's Form SE (File No. 1-
8544), dated March 14, 1990.
10.29* Contract for the Purchase of Containership Vessels dated May 10, 1993,
between Howaldtswerke-Deutsche Werft and Aktungesellschaft and
American President Lines, Ltd., filed as Exhibit 10.66 to the
company's Form 10K (File No. 1-8544), dated March 9, 1994.
10.30* Contract for the Purchase of Containership Vessels dated May 10, 1993,
between Daewoo Shipbuilding and Heavy Machinery, Ltd. and American
President Lines, Ltd., filed as Exhibit 10.67 to the company's Form
10K (File No. 1-8544), dated March 9, 1994.
10.31* Amendment No. 1 to the Contract for the Purchase of Containership
Vessels, dated June 3, 1993, between Daewoo Shipbuilding and Heavy
Machinery, Ltd., filed as Exhibit 10.4 to the company's Form 10Q (File
No. 1-8544), dated August 3, 1993.
<PAGE>
10.32* Permit No. 733, dated September 10, 1993, between the City of Los
Angeles and Eagle Marine Services, Ltd., and the Guaranty of Agreement
made by American President Lines, Ltd., excluding exhibits, filed as
Exhibit 10.1 to the company's Form 10Q (File No. 1-8544), dated
November 18, 1993.
10.33* Loan Agreement dated March 14, 1994 by and among Kreditanstalt fur
Wiederaufbau (as Agent and Lender); Commerzbank AG, Hamburg (as
Syndicate Agent); Commerzbank AG (Kiel Branch), Dresdner Bank AG in
Hamburg, Vereins-und Westbank AG, Deutsche Schiffsbank AG,
Norddeutsche Landesbank-Girozentrale, Deutsche Verkehrs-Bank AG,
Banque Internationale a Luxembourg S.A. (as the Syndicate); and
American President Lines, Ltd. (as Borrower); including Appendices and
Schedules thereto, filed as Exhibit 10.4 to the company's Form 10Q
(File No. 1-8544), dated May 20, 1994 and as Exhibit 10.4a to the
company's Form 10-K/A (file No. 1-8544), dated December 6, 1994.
10.34* Guarantee dated as of March 14, 1994 by American President Companies,
Ltd. (as Guarantor); in favor of Kreditanstalt fur Wiederaufbau (as
Agent and Lender); and Commerzbank AG Hamburg (as Syndicate Agent);
Commerzbank AG (Kiel Branch), Dresdner Bank AG in Hamburg, Vereins-und
Westbank AG, Deutsche Schiffsbank AG, Norddeutsche Landesbank-
Girozentrale, Deutsche Verkehrs-Bank AG, Banque Internationale a
Luxembourg S.A. (as the Syndicate), including Schedule 1 thereto,
filed as Exhibit 10.5 to the company's Form 10Q (File No. 1-8544),
dated May 20, 1994.
10.35* Credit Agreement, dated March 25, 1994 among American President
Companies, Ltd., borrower, and Morgan Guaranty Trust Company of New
York, J.P. Morgan Delaware, Bank of America National Trust and Savings
Association, The First National Bank of Boston, Barclays Bank PLC, ABN
AMRO Bank N.V., The First National Bank of Chicago and Morgan Guaranty
Trust Company of New York, as agent, filed as Exhibit 10.1 to the
company's Form 10Q (File No. 1-8544), dated May 20, 1994.
10.36* Deferred Compensation Plan For Directors of the company, filed as
Exhibit 10.49 to the company's Registration Statement on Form S-l,
Registration No. 2-93718, which became effective on November 1,
1984.**
10.37* Executive Survivors' Benefits Plan, dated November 29, 1988, filed as
Exhibit 10.4 to the company's Form SE (File No. 1-8544), dated March
17, 1992.**
10.38* Amendment No. 1 to the Executive Survivors' Benefits Plan, effective
December 4, 1992, filed as Exhibit 10.10 to the company's Form SE
(File No. 1-8544), dated March 24, 1993.**
10.39* 1988 Deferred Compensation Plan dated November 29, 1988, filed as
Exhibit 10.5 to the company's Form SE (File No. 1-8544), dated
February 17, 1989.**
10.40* Amendment No. 1 to the 1988 Deferred Compensation Plan, effective
January 1, 1992, filed as Exhibit 10.3 to the company's Form SE (File
No. 1-8544), dated March 24, 1993.**
10.41* 1992 Directors' Stock Option Plan, dated March 17, 1992, filed as
Exhibit 10.06 to the company's Form SE (File No. 1-8544), dated May 5,
1992.**
<PAGE>
10.42* Amended and Restated Retirement Plan for the Directors of American
President Companies, Ltd., dated September 15, 1992, filed as Exhibit
10.01 to the company's Form SE (File No. 1-8544), dated October 20,
1992.**
10.43* American President Companies, Ltd. Retirement Plan, amended and
restated effective January 1, 1993, filed as Exhibit 10.13 to the
company's Form SE (File No. 1-8544), dated March 24, 1993.**
10.44* 1989 Stock Incentive Plan of the company, as amended and restated
effective April 28, 1994, filed with the company's Proxy Statement
(File No. 1-8544) for the Annual Meeting of Shareholders held on April
28, 1994.**
10.45 American President Companies, Ltd. SMART Plan, second amendment and
restatement effective January 1, 1995.**
10.46 Excess-Benefit Plan of the company, amended and restated effective
December 31, 1994.**
10.47 1995 Deferred Compensation Plan of the company, effective January 1,
1995.**
10.48 1995 Supplemental Executive Retirement Plan of the company, effective
January 1, 1995.**
10.49* Employment Agreement as amended, dated January 29, 1991 between the
company and John M. Lillie, filed as Exhibit 10.1 to the company's
Form SE (File No. 1-8544), dated May 8, 1991.**
10.50* Amendment No. 1 dated July 28, 1992 to the Employment Agreement as
amended, between the company and John M. Lillie, filed as Exhibit 10.1
to the company's Form SE (File No. 1-8544), dated March 24, 1993.**
10.51* Amendment No. 2 dated January 26, 1992 to the Employment Agreement as
amended, between the company and John M. Lillie, filed as Exhibit 10.2
to the company's Form SE (File No. 1-8544), dated March 24, 1993.**
10.52* Employment Agreement between the company and Maryellen B. Cattani
dated April 28, 1994, filed as Exhibit 10.10 to the company's Form 10Q
(File No. 1-8544), dated May 20, 1994.**
10.53* Employment Agreement between the company and Will M. Storey dated
March 4, 1994, filed as Exhibit 10.11 to the company's Form 10Q (File
No. 1-8544), dated May 20, 1994.**
10.54* Employment Agreement between the company and Timothy J. Rhein dated
July 28, 1992, filed as Exhibit 10.1 to the company's Form 10Q (File
No. 1-8544), dated November 4, 1994.**
10.55* Employment Agreement between the company and Joji Hayashi dated July
28, 1992, filed as Exhibit 10.2 to the company's Form 10Q (File No. 1-
8544), dated November 4, 1994.**
10.56* Employment Agreement between the company and James S. Marston dated
July 28, 1992, filed as Exhibit 10.3 to the company's Form 10Q (File
No. 1-8544), dated November 4, 1994.**
10.57* Employment Agreement between the company and John G. Burgess dated
July 28, 1992, filed as Exhibit 10.4 to the company's Form 10Q (File
No. 1-8544), dated November 4, 1994.**
<PAGE>
10.58* Employment Agreement between the company and Michael Diaz dated July
28, 1992, filed as Exhibit 10.5 to the company's Form 10Q (File No. 1-
8544), dated November 4, 1994.**
10.59* Form of Indemnity Agreements dated March 11, 1988 between the company
and W. B. Seaton, Charles S. Arledge, John H. Barr, Calvin S. Hatch,
J. Hayashi, Forrest N. Shumway and Barry L. Williams, filed as Exhibit
10.3 to the company's Form SE (File No. 1-8544), dated February 17,
1989.**
10.60* Form of Indemnity Agreements dated April 25, 1991 between the company
and F. Warren Hellman, John M. Lillie, Timothy J. Rhein, Will M.
Storey, filed as Exhibits 10.3 through 10.6 to the company's Form SE
(File No. 1-8544), dated May 8, 1991.**
10.61* Indemnity Agreement dated October 5, 1993 between the company and Toni
Rembe, filed as Exhibit 10.74 to the company's Form 10K (File No. 1-
8544), dated March 9, 1994.**
10.62 Form of Indemnity Agreement dated April 28, 1994 between the company
and G. Craig Sullivan.**
10.63 Form of Indemnity Agreement dated June 20, 1994 between the company
and Tully M. Friedman.**
11.1 Computation of Earnings Per Share.
21.1 Subsidiaries of the company.
23.1 Consent of Independent Public Accountants.
24.1 Powers of Attorney.
27 Financial Data Schedules filed under Article 5 of Regulation S-X for
the year ended December 30, 1994.
*Incorporated by Reference
**Denotes management contract or compensatory plan.
Pursuant to Instruction 2 to Item 601 of Regulation S-K, the company has
omitted the Contract for the Purchase of Containership Vessels dated December 2,
1993, between Daewoo Shipbuilding and Heavy Machinery, Ltd. and American
President Lines, Ltd. Such document is substantially identical to the Contract
for the Purchase of Containership Vessels dated May 10, 1993, between Daewoo
Shipbuilding and Heavy Machinery, Ltd. and American President Lines, Ltd.,
except with respect to prices and dates of delivery, set forth as Exhibit 10.30.
Pursuant to Item 601 (b)(4)(iii)(A) of Regulation S-K, certain
instruments defining the rights of holders of the long-term debt of the company
and its consolidated subsidiaries have not been filed because the amount of
securities authorized under each such instrument does not exceed ten percent of
the total assets of the company and its subsidiaries on a consolidated basis. A
copy of any such instrument will be furnished to the Commission upon request.
(b) Reports on Form 8-K during the fourth quarter:
No current report on Form 8-K was filed during the quarter for which
this report on Form 10-K is filed.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
AMERICAN PRESIDENT COMPANIES, LTD.
(Registrant)
By /s/ William J. Stuebgen
William J. Stuebgen
Vice President,
Controller and
Chief Accounting Officer
March 10, 1995
Pursuant to the requirements of the Securities and 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.
/s/ John M. Lillie* March 10, 1995
John M. Lillie
Chairman of the Board
of Directors, President
and Chief Executive Officer
/s/ Charles S. Arledge* March 10, 1995
Charles S. Arledge
Director
/s/ John H. Barr* March 10, 1995
John H. Barr
Director
/s/ Tully M. Friedman March 10, 1995
Tully M. Friedman
Director
/s/ Joji Hayashi* March 10, 1995
Joji Hayashi
Director
/s/ F. Warren Hellman* March 10, 1995
F. Warren Hellman
Director
/s/ Toni Rembe* March 10, 1995
Toni Rembe
Director
<PAGE>
/s/ Timothy J. Rhein* March 10, 1995
Timothy J. Rhein
Director
/s/ Forrest N. Shumway* March 10, 1995
Forrest N. Shumway
Director
/s/ G. Craig Sullivan* March 10, 1995
G. Craig Sullivan
Director
/s/ Will M. Storey* March 10, 1995
Will M. Storey
Executive Vice President,
Chief Financial Officer
and Director
/s/ Barry L. Williams* March 10, 1995
Barry L. Williams
Director
*By: /s/ Maryellen B. Cattani March 10, 1995
Maryellen B. Cattani
Attorney-in-fact
--
Execution Copy
AMERICAN PRESIDENT COMPANIES, LTD.
SMART PLAN
Second Amendment and Restatement
Effective as of
January 1, 1993
TABLE OF CONTENTS
Page
ARTICLE 1. INTRODUCTION 1
ARTICLE 2. ELIGIBILITY AND ENROLLMENT 2
2.1 Eligible Employees 2
2.2 Enrollment 2
2.3 Rehired and Transferred Employees 2
2.4 Suspension of Participation 3
2.5 Termination of Participation 3
ARTICLE 3. EMPLOYEE CONTRIBUTIONS 4
3.1 Amount of Employee Contributions 4
3.2 Designation of Employee Contributions 4
3.3 Payment of Employee Contributions 4
3.4 Elections to Contribute 5
3.5 Amendment of Prior Elections 5
3.6 Voluntary Suspension of Employee Contributions 5
3.7 Make-Up Unmatched After-Tax Contributions 5
3.8 Investment of Contributions 6
ARTICLE 4. COMPANY CONTRIBUTIONS 7
4.1 Amount of Matching Contributions 7
4.2 Allocation of Matching Contributions 7
4.3 Discretionary Contributions
ARTICLE 5. ROLLOVER CONTRIBUTIONS 9
5.1 Requirements for Rollover Contributions 9
5.2 Crediting of Rollover Contributions 9
ARTICLE 6. PLAN INVESTMENTS 10
6.1 The Trust Fund; No Reversion 10
6.2 Individual Accounts 10
6.3 Investment Elections 11
6.4 Change in Investment Elections 11
6.5 Account Transfers 11
6.6 Accounts Transferred From AP Plan 12
ARTICLE 7. WITHDRAWALS 13
7.1 Withdrawals From After-Tax Accounts
and Rollover Accounts 13
7.2 Withdrawals From Other Accounts 14
7.3 Hardship or Disability Withdrawals 15
7.4 Procedure for Hardship Withdrawals 15
7.5 Representations Necessary for a Hardship Withdrawal 16
7.6 Payment and Source of Withdrawals 17
ARTICLE 8. LOANS 18
8.1 Amount of Loans 18
8.2 Aggregate Loan Limitation 18
8.3 Terms of Loans 18
8.4 Company Consent 19
8.5 Restrictions on Loans 20
8.6 Disbursement and Source of Loans 20
8.7 Loan Payments and Defaults 20
8.8 Loan Fees 21
ARTICLE 9. VESTING AND FORFEITURES 22
9.1 100 Percent Vesting 22
9.2 Vesting Schedules 22
9.3 Vesting After Prior Distributions 23
9.4 Forfeitures 23
9.5 Criminal Acts 24
ARTICLE 10. AMOUNT AND DISTRIBUTION OF PLAN BENEFITS 25
10.1 Amount of Plan Benefits 25
10.2 Time of Distribution: General Rule 25
10.3 Earliest Time of Distribution 25
10.4 Latest Time of Distribution 26
10.5 Special Rules for Employees Over Age 65 26
10.6 Annuity Form of Distribution 26
10.7 Available Forms of Distribution 26
10.8 Small Benefits: Immediate Lump Sum 27
10.9 Waiver of Annuity Form of Distribution 27
10.10 Survivor Annuity 28
10.11 Other Forms of Death Benefit 28
10.12 Information on Distribution Options 29
10.13 Determination of Marital Status 30
10.14 Direct Rollovers 30
(a) The Direct Rollover Option 30
(b) Definition of Eligible Rollover Distribution 30
(c) Definition of Eligible Retirement Plan 30
(d) Definition of Distributee 31
(e) Definition of Direct Rollover 31
ARTICLE 11. CLAIMS PROCEDURE 32
11.1 Filing Claims for Benefits 32
11.2 Denial of Claims 32
ARTICLE 12. REVIEW PROCEDURE 33
12.1 Appointment of Review Panel 33
12.2 Right To Appeal 33
12.3 Form of Request for Review 33
12.4 Time for Review Panel Action 33
12.5 Review Panel Decisions 33
12.6 Rules and Procedures 34
12.7 Exhaustion of Remedies Required 34
ARTICLE 13. MANAGEMENT OF ASSETS 35
13.1 Control and Management of Plan Assets 35
13.2 Investment Authority 35
13.3 Independent Qualified Public Accountant 35
13.4 Expenses 35
13.5 Benefit Payments 36
13.6 Valuation of Accounts 36
13.7 Statements 36
ARTICLE 14. ADMINISTRATION OF THE PLAN 37
14.1 Plan Administration 37
14.2 Employment of Advisers 37
14.3 Service in Several Fiduciary Capacities 37
ARTICLE 15. AMENDMENT AND TERMINATION 38
15.1 Right To Amend or Terminate 38
15.2 Effect of Termination 38
15.3 Allocation of Assets Upon Termination 38
ARTICLE 16. GENERAL PROVISIONS 39
16.1 No Assignment of Property Rights; Qualified
Domestic Relations Orders 39
16.2 Incompetence 39
16.3 Unclaimed Plan Benefits 39
16.4 No Employment Rights 40
16.5 Beneficiary 40
16.6 Merger, Consolidation and Transfer of
Assets or Liabilities 41
16.7 Voting Rights 41
16.8 Other Instructions by Participants 41
16.9 Spousal Consents 41
16.10 Forms for Plan Communications 42
16.11 Choice of Law 42
ARTICLE 17. SPECIAL TOP-HEAVINESS RULES 43
17.1 Determination of Top-Heavy Status 43
17.2 Minimum Allocations 43
17.3 Impact on Contribution Limitations 43
17.4 Special Definitions 43
(a) "Aggregation Group" 43
(b) "Determination Date" 43
(c) "Key Employee" 43
(d) "Permissive Aggregation Group" 43
(e) "Required Aggregation Group" 44
(f) "Section 415 Compensation" 44
(g) "Top-Heavy Ratio" 44
ARTICLE 18. PERIOD OF SERVICE 45
18.1 Period of Employment Relationship 45
18.2 Interval Between Periods of Employment 45
18.3 Other Periods 46
18.4 Aggregation of Periods 46
18.5 Exclusions 46
ARTICLE 19. DEFINITIONS 47
19.1 "Accounts" 47
19.2 "Affiliated Group" 47
19.3 "After-Tax Accounts" 47
19.4 "After-Tax Contribution" 48
19.5 "Annuity Starting Date" 48
19.6 "APC Stock" 48
19.7 "APC Stock Fund" 48
19.8 "AP Plan" 48
19.9 "Basic Company Accounts" 48
19.10 "Beneficiary" 48
19.11 "Code" 48
19.12 "Company" 48
19.13 "Company Accounts" 48
19.14 "Company Contribution" 48
19.15 "Compensation" 48
19.16 "Disability" 49
19.17 "Discretionary Contribution" 49
19.18 "Eligible Employee" 49
19.19 "Employee" 49
19.20 "Employee Accounts" 50
19.21 "Employee Contribution" 50
19.22 "ERISA" 50
19.23 "Forfeiture" 50
19.24 "Highly Compensated Employee" 50
19.25 "Investment Funds" 50
19.26 "Investment Manager" 50
19.27 "Matched After-Tax Contribution" 50
19.28 "Matched Contribution" 50
19.29 "Matched Salary Deferral" 50
19.30 "Matching Contribution" 50
19.31 "NPSI Plan" 51
19.32 "Participant" 51
19.33 "Participating Company" 51
19.34 "Pension Accounts" 51
19.35 "Period of Service" 51
19.36 "Period of Severance" 51
19.37 "Permanent Service Break" 51
19.38 "Plan" 52
19.39 "Plan Benefit" 52
19.40 "Plan Year" 52
19.41 "Profit-Sharing Accounts" 52
19.42 "Qualified Joint and Survivor Annuity" 52
19.43 "Qualified Preretirement Survivor Annuity" 52
19.44 "Review Panel" 52
19.45 "Rollover Accounts" 52
19.46 "Rollover Contribution" 52
19.47 "Salary Deferral" 52
19.48 "Salary Deferral Accounts" 52
19.49 "Special Absence" 53
19.50 "Transferred Company Accounts" 53
19.51 "Trust Agreement" 53
19.52 "Trustee" 53
19.53 "Trust Fund" 53
19.54 "United States" 53
19.55 "Unmatched After-Tax Contribution" 53
19.56 "Unmatched Contribution" 53
19.57 "Unmatched Salary Deferral" 54
19.58 "Years of Service" 54
ARTICLE 20. EXECUTION 55
APPENDIX I LIMITATIONS ON CONTRIBUTIONS 56
ARTICLE 1. DEFINITIONS 56
1.1 "Aggregate 401(k) Contributions" 56
1.2 "Aggregate 401(m) Contributions" 56
1.3 "Annual Additions 56
1.4 "Excess Aggregate Contributions" 57
1.5 "Excess Contributions" 57
1.6 "Excess Deferrals" 57
1.7 "Family Member" 57
1.8 "Highly Compensated Employee" 57
1.9 "Highly Compensated Former Employee" 59
1.10 "Nonhighly Compensated Employee" 59
1.11 "Section 415 Compensation" 59
1.12 "Section 415 Employer Group 59
1.13 "Section 414(s) Compensation" 60
1.14 "Top-Paid Group" 61
1.15 "Total Compensation" 61
ARTICLE 2. DEFERRAL AND AVERAGE DEFERRAL PERCENTAGE
LIMITATIONS 63
2.1 Return of Excess Deferrals 63
2.2 Average Deferral Percentage Limitation 63
2.3 Allocation of Excess Contributions
to Highly Compensated Employees 64
2.4 Distribution of Excess Contributions 64
2.5 Qualified Matching Contributions 65
2.6 Corrective Qualified Nonelective Contributions 65
2.7 Special Rules 66
2.8 Prospective Limitations on Salary Deferrals 68
ARTICLE 3. AVERAGE CONTRIBUTION PERCENTAGE LIMITATIONS 69
3.1 Average Contribution Percentage Limitation 69
3.2 Allocation of Excess Aggregate Contributions
to Highly Compensated Employees 69
3.3 Distribution of Excess Aggregate Contributions 70
3.4 Use of Salary Deferrals 70
3.5 Corrective Qualified Nonelective Contributions 70
3.6 Special Rules 70
ARTICLE 4. MULTIPLE-USE LIMITATIONS 73
4.1 Applicability of the Multiple-Use Limitation 73
4.2 Multiple-Use Limitation 73
4.3 Correction of Multiple-Use Limitation 74
ARTICLE 5. ALLOCATION LIMITATIONS 75
5.1 Limitation on Contributions 75
5.2 Effect on Future Contributions 75
5.3 Return of Prior Employee Contributions 75
5.4 Other Excess Amounts 76
5.5 Combined Limitation on Benefits and
Contributions 76
AMERICAN PRESIDENT
COMPANIES, LTD.
SMART PLAN
ARTICLE 1. INTRODUCTION.
The Plan was most recently amended and restated as of January 1, 1993, to read
as set forth herein. The Plan is intended to qualify as a profit-sharing plan
under section 401(a) of the Code and contains a salary deferral arrangement
intended to qualify under section 401(k) of the Code.
The Plan may be amended or terminated at any time and for any reason pursuant to
Article 15. The rights of a Participant who ceases to be an Employee shall be
determined solely in accordance with the provisions of the Plan then in effect
and shall not be affected by plan amendments taking effect as of a subsequent
date, except as otherwise expressly provided in the Plan.
Effective as of September 1, 1990, certain participants in the AP Plan became
Participants in this Plan and the accounts maintained for them under the AP Plan
were transferred to this Plan. The Plan includes certain transition provisions
that pertain only to Participants who transferred from the AP Plan effective as
of September 1, 1990.
ARTICLE 2. ELIGIBILITY AND ENROLLMENT.
2.1 Eligible Employees
The term "Eligible Employee" shall mean any Employee who is employed by
a Participating Company, except an Employee who is:
(a) Employed outside the United States and not on the U.S.
payroll;
(b) A "leased employee" (within the meaning of section 414(n)
of the Code) with respect to the Participating Company;
(c) Classified by the Company as a driver, driver-trainer or
temporary employee;
(d) Included in a unit of employees covered by a collective-
bargaining agreement which does not provide that the
Employee is eligible to participate in the Plan; or
(e) Designated by the Company in writing as an individual who
is not eligible to participate in the Plan.
An individual's status as an Eligible Employee shall be determined by
the Company, and such determination shall be conclusive and binding on
all persons.
2.2 Enrollment
An Employee shall become entitled to participate in the Plan on the date
when he or she becomes an Eligible Employee. The foregoing
notwithstanding, July 1, 1993 is the first date on which an Employee who
is compensated by a Participating Company on a nonsalaried basis shall
become eligible to participate in the Plan. Eligible Employees who wish
to participate shall make Employee Contributions and shall make the
appropriate elections pursuant to Sections 3.4 and 6.3. Upon becoming a
Participant, each Eligible Employee shall designate a Beneficiary
pursuant to Section 16.5.
2.3 Rehired and Transferred Employees
A former Employee who is rehired as an Eligible Employee may commence or
resume participation in the Plan on the date of reemployment. An
Employee who is transferred to the status of an Eligible Employee may
commence participation in the Plan on the date of the transfer.
2.4 Suspension of Participation
A Participant's participation in the Plan shall be suspended for any
period of time during which the Participant:
(a) Is subject to Section 3.6;
(b) Neither receives nor is entitled to receive any
Compensation, including (without limitation) any leave of
absence without pay; or
(c) Does not qualify as an Eligible Employee but remains a
Participant.
A suspended Participant shall not be entitled to make Employee
Contributions and shall not receive any allocation of Company
Contributions or Forfeitures with respect to a period of suspended
participation. A suspended Participant's Accounts shall remain invested
as a part of the Trust Fund and shall continue to share in the gains,
income, losses and expenses of the Trust Fund.
2.5 Termination of Participation.
A Participant's participation in the Plan shall terminate when his or
her entire Plan Benefit has been distributed or on the date of his or
her death, whichever occurs first. In the case of a Participant who is
not entitled to a Plan Benefit, participation in the Plan shall
terminate when the Participant ceases to be an Employee.
ARTICLE 3. EMPLOYEE CONTRIBUTIONS.
3.1 Amount of Employee Contributions
A Participant who is not suspended may elect to make Matched
Contributions to the Plan. The amount of such Matched Contributions for
any period of participation may be equal to any whole percentage of the
Participant's Compensation for such period, up to six percent of the
Participant's Compensation for such period. In addition, a Participant
who is not suspended may elect to make Unmatched Contributions to the
Plan. The amount of such Unmatched Contributions for any period of
participation may be equal to any whole percentage of the Participant's
Compensation for such period, up to 10% of the Participant's
Compensation for such period. Contributions under this Section 3.1 are
also subject to the limitations set forth in Section 3.2, Section 10.5
and Appendix I.
3.2 Designation of Employee Contributions
Each Participant who elects to make Employee Contributions to the Plan
shall designate the percentage (in increments of one percent) of the
Participant's Compensation which shall be contributed as Salary
Deferrals and the percentage which shall be contributed as After-Tax
Contributions. Salary Deferrals shall not exceed 12% of the
Participant's Compensation for the applicable period. After-Tax
Contributions shall not exceed 16% of the Participant's Compensation for
the applicable period, reduced by the amount of Salary Deferrals for
such period.
3.3 Payment of Employee Contributions
For federal income tax purposes (and, wherever permitted, for other
federal and state and local tax purposes), Salary Deferrals shall be
deemed to be employer contributions to the Plan, and a Participant's
election to make Salary Deferrals shall constitute an election to have
the Participant's taxable compensation reduced by the amount of the
Salary Deferrals. After-Tax Contributions shall constitute after-tax
employee contributions to the Plan. Salary Deferrals shall be made
through periodic payroll deductions from the Participant's Compensation
or through such other method as may be determined by the Company.
Employee Contributions shall be withheld from Compensation through
periodic payroll deductions, except as provided in Section 3.7.
3.4 Elections to Contribute
In accordance with procedures prescribed by the Company, a Participant
who wishes to make Employee Contributions pursuant to Section 3.1 shall
specify the rate at which he or she wishes to contribute to the Plan and
shall designate such Employee Contributions as Salary Deferrals and/or
After-Tax Contributions, as provided in Section 3.2. An initial
election to make Employee Contributions may be made as of the enrollment
date described in Section 2.2 or 2.3 by providing the prescribed
election on or before such enrollment date (or such later date as the
Company may specify). A subsequent election to make Employee
Contributions shall be effective as of the first day of the payroll
period that commences at least 14 calendar days after receipt of such
election.
3.5 Amendment of Prior Elections
In accordance with procedures prescribed by the Company, a Participant
who is making Employee Contributions may change the rate of such
contributions to any other rate permitted under Sections 3.1 and 3.2. An
election to change the rate of Employee Contributions shall be effective
as of the first day of the payroll period that commences at least 14
days after receipt of such election.
3.6 Voluntary Suspension of Employee Contributions
In accordance with procedures prescribed by the Company, a Participant
may elect to suspend all Employee Contributions. Any such election
shall be effective as of the first day of the payroll period that
commences at least 14 calendar days after receipt of such election. A
Participant who has suspended all Employee Contributions may elect to
resume such contributions by following the procedure prescribed by
Section 3.4. However, an election to resume Employee Contributions
shall in no event take effect prior to the first day of the payroll
period that commences at least six months after the date on which such
contributions were suspended.
3.7 Make-Up Unmatched After-Tax Contributions
A Participant who is not suspended may deposit in the Plan one or more
Unmatched After-Tax Contributions on account of any prior periods of
participation for which he or she contributed any Matched Contributions
under Section 3.1 (if Matched Contributions were then permissible) but
did not contribute the maximum Unmatched After-Tax Contributions
permitted by
Sections 3.1 and 3.2. The amount of any such Unmatched After-Tax
Contribution shall not exceed (a) the maximum Unmatched After-Tax
Contributions that would have been permissible under Sections 3.1 and
3.2 while he or she participated in the Plan plus (b) the amount of any
Unmatched After-Tax Contributions (excluding investment increments)
previously withdrawn by the Participant under Section 7.1 plus (c) in
the case of a Participant who transfers to this Plan from the AP Plan as
of September 1, 1990, the maximum "Unmatched After-Tax Contribution"
that he or she could have made under the AP Plan as of August 31, 1990,
minus (d) the amount of the aggregate Unmatched After-Tax Contributions
previously made by the Participant. An Unmatched After-Tax Contribution
under this Section 3.7 shall be paid to the Company in a lump sum in
cash. A Participant making an Unmatched After-Tax Contribution under
this Section 3.7 shall make a special investment election, applicable
solely to such contribution, under Section 6.3.
3.8 Investment of Contributions
All Employee Contributions shall be transferred to the Trustee, for
investment in the Trust Fund as provided in Article 6, as soon as
reasonably practicable after they were withheld or otherwise paid to the
Company. Salary Deferrals shall be credited to the Participant's Salary
Deferral Accounts, and After-Tax Contributions shall be credited to the
Participant's After-Tax Accounts.
ARTICLE 4. COMPANY CONTRIBUTIONS.
4.1 Amount of Matching Contributions
For each Plan Year, the Participating Companies shall make one or more
Matching Contributions to the Plan. The aggregate amount of the Matching
Contributions for a Plan Year shall be equal to the sum of the amounts
allocated for such Plan Year to Participants pursuant to Section 4.2,
reduced by Forfeitures which arose during such Plan Year.
4.2 Allocation of Matching Contributions
Subject to the limitations set forth in Appendix I, each eligible
Participant's allocation of Matching Contributions and Forfeitures for a
payroll period shall be equal to 100% of the aggregate Matched
Contributions made by the Participant since the close of the preceding
payroll period. As soon as reasonably practicable after the amount of
the required allocation is determined, the Matching Contribution shall
be paid to the Trustee and shall be allocated, along with Forfeitures,
among eligible Participants who made Matched Contributions during the
payroll period. A Participant who made Matched Contributions pursuant
to Article 3 shall be eligible for an allocation of Matching
Contributions and Forfeitures for a payroll period, unless Matching
Contributions are suspended pursuant to Section 7.1 due to a withdrawal
of Matched After-Tax Contributions. The preceding sentence
notwithstanding, an individual who first became an Employee on or after
April 1, 1989 (and who did not transfer to this Plan from the AP Plan as
of September 1, 1990), shall in no event be eligible for an allocation
of Matching Contributions or Forfeitures for any period prior to the
first day of the payroll period which commences on or after the date on
which he or she completed a six-month Period of Service. A
Participant's share of Matching Contributions and Forfeitures shall be
credited to his or her Company Accounts.
4.3 Discretionary Contributions
Each Participating Company may make Discretionary Contributions to the
Plan in such amounts as it may from time to time determine.
Discretionary Contributions for a Plan Year shall be paid to the Trustee
not later than the last date prescribed by law for filing the Company's
federal income tax return for the taxable year with or within which such
Plan Year ends (including extensions of such date). Subject to the
limitations set forth in Appendix I, Discretionary
Contributions made for a Plan Year by a Participating Company shall be
allocated among the eligible Participants employed by such Participating
Company in the proportion that the Compensation of each of such eligible
Participants for the Plan Year bears to the total Compensation of all of
such eligible Participants for such Plan Year. For this purpose, an
eligible Participant is a Participant who was an Employee on the last
day of the Plan Year. The preceding sentence notwithstanding, an
individual who first became an Employee on or after April 1, 1989, shall
in no event be eligible for an allocation of Discretionary Contributions
for any Plan Year unless he or she completed a six-month Period of
Service on or before the October 1 of such Plan Year. A Participant's
share of Discretionary Contributions shall be credited to his or her
Company Accounts.
ARTICLE 5. ROLLOVER CONTRIBUTIONS.
5.1 Requirements for Rollover Contributions
With the Company's prior written consent, any Participant may make one
or more Rollover Contributions to the Plan. A Rollover Contribution
shall be permitted only if it meets both of the following conditions:
(a) The contribution must be made entirely in the form of U.S.
dollars; and
(b) The Participant must demonstrate to the Company's
satisfaction that the contribution qualifies as a
rollover contribution under section 402(c)(4), 403(a)(4)
or 408(d)(3) of the Code.
5.2 Crediting of Rollover Contributions
A Rollover Contribution shall be paid to the Company in a lump sum. A
Participant making a Rollover Contribution shall make a special
investment election, applicable solely to such contribution, under
Section 6.3, except that no portion of a Rollover Contribution shall be
invested in the APC Stock Fund. Each approved Rollover Contribution
shall be transferred to the Trustee as soon as reasonably practicable
after it is paid to the Company. The Rollover Contribution shall be
credited to the Participant's Rollover Accounts.
ARTICLE 6. PLAN INVESTMENTS.
6.1 The Trust Fund; No Reversion
The Trust Fund shall be comprised of one or more Investment Funds, as
determined from time to time by the Company, including (without
limitation) the APC Stock Fund. Except as provided in Subsections (a)
and (b) below, the assets of the Plan shall never inure to the benefit
of any Participating Company and shall be held for the exclusive purpose
of providing benefits to Participants or their Beneficiaries and of
defraying the reasonable expenses of administering the Plan.
(a) In the case of a Company Contribution or Salary Deferral that was
made by virtue of a mistake of fact, this Section 6.1 shall not
prohibit the return of such Company Contribution or Salary
Deferral to the appropriate Participating Company within 12
months after the payment thereof.
(b) All Company Contributions and Salary Deferrals are
conditioned upon the deductibility thereof under section
404 of the Code. To the extent that a deduction is
disallowed for a Company Contribution or Salary Deferral,
this Section 6.1 shall not prohibit the return of such
Company Contribution or Salary Deferral (to the extent
disallowed) to the appropriate Participating Company
within 12 months after the disallowance of the deduction.
6.2 Individual Accounts
To the extent required by a Participant's selection of one or more
Investment Funds, the following Accounts shall be maintained for such
Participant:
(a) One or more After-Tax Accounts;
(b) One or more Company Accounts;
(c) One or more Rollover Accounts;
(d) One or more Salary Deferral Accounts;
(e) In the case of a Participant who transfers to this Plan
from the AP Plan as of September 1,
1990, one or more Basic Company Accounts and one or more
Transferred Company Accounts;
(f) In the case of a Participant who transfers to this Plan
from the AP Plan as of September 1, 1990, and who
previously participated in the profit-sharing component
of the NPSI Plan, one or more Profit-Sharing Accounts;
and
(g) In the case of a Participant who transfers to this Plan
from the AP Plan as of September 1, 1990, and who
previously participated in the pension component of the
NPSI Plan, one or more Pension Accounts.
6.3 Investment Elections
Each Participant's share of new Company Contributions and reallocated
Forfeitures and his or her new Employee Contributions and Rollover
Contributions shall be invested entirely in any one Investment Fund or
in any combination of the available Investment Funds, except that no
Rollover Contributions and not more than 50% of all other contributions
shall be invested in the APC Stock Fund. The portion of a Participant's
contributions to be invested in any one Investment Fund shall be
designated in increments of one percentage point. Each Participant shall
make an investment allocation election in accordance with procedures
prescribed by the Company before participation commences, except that a
special election shall be made with respect to make-up Unmatched After-
Tax Contributions under Section 3.7 and Rollover Contributions under
Section 5.2. In the case of a Participant who transferred to this Plan
from the AP Plan as of September 1, 1990, the investment allocation that
he or she elected most recently under the AP Plan shall continue to
apply under this Plan, unless a change is made pursuant to Section 6.4.
If a Participant fails to direct the manner in which Rollover
Contributions, Employee Contributions, Company Contributions and
reallocated Forfeitures are to be invested, then he or she shall be
deemed to have elected to have all such amounts invested entirely in the
Investment Fund(s) selected by the Company for this purpose.
6.4 Change in Investment Elections
On any business day, a Participant (including a Participant whose
participation is suspended pursuant to Section 2.4) may change his or
her investment directions with respect to Employee Contributions,
Rollover Contributions, Company Contributions and Forfeitures to be
allocated thereafter. Any such change shall be made in accordance with
procedures established by the Company and communicated to Participants.
6.5 Account Transfers
Subject to such restrictions as the Company may establish, including
(without limitation) any restrictions required by a guaranteed
investment contract held by the Plan, a Participant may transfer all or
any portion of the value of his or her existing Accounts invested in one
Investment Fund to any other Investment Fund, except that no amounts
shall be transferred into the APC Stock Fund. The transfer may be made
on any business day, in accordance with procedures established by the
Company and communicated to Participants.
6.6 Accounts Transferred From AP Plan
In the case of a Participant who transferred to this Plan from the AP
Plan as of September 1, 1990, the accounts maintained for him or her
under the AP Plan were transferred to this Plan. Such accounts were
combined with, or added to, his or her Accounts under this Plan as
follows:
AP Plan Accounts Accounts Under This Plan
After-Tax Accounts . . . . . After-Tax Accounts
Basic Company Accounts . . . Basic Company Accounts
Discretionary Accounts . . . Transferred Company
Accounts
Matching Accounts . . . . . Transferred Company
Accounts
Pension Accounts . . . . . . Pension Accounts
Profit-Sharing Accounts . . Profit-Sharing Accounts
Rollover Accounts . . . . . Rollover Accounts
Salary Deferral Accounts . . Salary Deferral Accounts
The transfers did not affect a Participant's investment allocation.
Outstanding loans were transferred without change.
ARTICLE 7. WITHDRAWALS.
7.1 Withdrawals From After-Tax Accounts and Rollover Accounts
A Participant who has After-Tax Accounts or Rollover Accounts may make
withdrawals from such Accounts, as provided by this Section 7.1.
(a) A Participant may withdraw all or any portion of his or
her After-Tax Contributions (not including investment
increments) which are credited to his or her Pre-1987
After-Tax Accounts and which were not previously
withdrawn by or distributed to the Participant. Any such
withdrawal shall be treated as a withdrawal of Unmatched
After-Tax Contributions, to the extent that previously
unwithdrawn Unmatched After-Tax Contributions remain
credited to the Participant's Pre-1987 After-Tax
Accounts. Any additional withdrawal of After-Tax
Contributions shall be treated as a withdrawal of Matched
After-Tax Contributions. If Matched After-Tax
Contributions are deemed withdrawn, no Matching
Contributions or Forfeitures shall be allocated to the
Participant's Company Accounts with respect to a period
of six months, commencing as of the first day of the
second payroll period following the date on which the
withdrawal request was made; provided, however, that no
such suspension of Matching Contributions or Forfeitures
shall apply to a Participant who is at the same time
withdrawing an amount on account of hardship pursuant to
Section 7.3.
(b) A Participant who has withdrawn or is withdrawing the
entire amount of his or her After-Tax Contributions
credited to his or her Pre-1987 After-Tax Accounts
pursuant to Subsection (a) above may withdraw all or any
part of the remaining balance credited to his or her Pre-
1987 After-Tax Accounts.
(c) A Participant who has withdrawn or is withdrawing the
entire amount of his or her After-Tax Contributions
credited to his or her Pre-1987 After-Tax Accounts
pursuant to Subsection (a) above may withdraw all or any
part of the balance credited to his or her Post-1986
After-Tax Accounts. The portion of the amount withdrawn
which is taxable to the
Participant under section 72(e) of the Code, as determined by the
Company, shall be treated as a withdrawal of investment
increments. The portion of the amount withdrawn which is
not so taxable to the Participant shall be treated as a
withdrawal of his or her After-Tax Contributions. A
withdrawal of After-Tax Contributions under this
Subsection (c) shall be treated as a withdrawal of
Unmatched After-Tax Contributions, to the extent that
previously unwithdrawn Unmatched After-Tax Contributions
remain credited to the Participant's Post-1986 After-Tax
Accounts. After all Unmatched After-Tax Contributions
are withdrawn, any additional withdrawal of After-Tax
Contributions shall be treated as a withdrawal of Matched
After-Tax Contributions. If Matched After-Tax
Contributions are deemed withdrawn, no Matching
Contributions or Forfeitures shall be allocated to the
Participant's Company Accounts with respect to a period
of six months, commencing as of the first day of the
second payroll period following the date on which the
withdrawal request was made; provided, however, that no
such suspension of Matching Contributions or Forfeitures
shall apply to a Participant who is at the same time
withdrawing an amount on account of hardship pursuant to
Section 7.3.
(d) A Participant who has Rollover Accounts may make
withdrawals from such Accounts. The amount that may be
withdrawn under this Subsection (d) shall not exceed the
balance credited to his or her Rollover Accounts.
(e) A Participant who wishes to make a withdrawal under this
Section 7.1 shall file an election with the Company in
accordance with the prescribed procedures. A Participant
shall not be permitted to make more than one withdrawal
under this Section 7.1, Section 7.2 or the AP Plan in any
period of six consecutive months; provided, however, that
withdrawals made at the same time shall be considered a
single withdrawal.
7.2 Withdrawals From Other Accounts
A Participant who is withdrawing the maximum amount permissible under
Section 7.1 may at the same time
withdraw any amount which is not less than $500 and which does not
exceed the lesser of:
(a) The value of the Participant's Company Accounts,
Transferred Company Accounts and Profit-Sharing Accounts,
reduced by the Participant's share of those Company
Contributions which were actually paid to the Trustee
less than 24 months prior to the date of withdrawal; or
(b) The vested portion of the Participant's Company Accounts,
Transferred Company Accounts and Profit-Sharing Accounts.
A Participant shall not be permitted to make more than one withdrawal
under Section 7.1, this Section 7.2 or the AP Plan in any period of six
consecutive months; provided, however, that withdrawals made at the same
time shall be considered a single withdrawal.
7.3 Hardship or Disability Withdrawals
This Section 7.3 shall apply only to a Participant who is subject to a
Disability or who satisfies the requirements of Section 7.4. If such a
Participant is withdrawing the maximum amount permissible under Sections
7.1 and 7.2 (and under all other plans of the Affiliated Group), then he
or she may at the same time withdraw from his or her Salary Deferral
Accounts, Company Accounts, Transferred Company Accounts and Profit-
Sharing Accounts any additional amount which is not less than $500 and
which does not exceed the following limitations:
(a) The maximum amount that may be withdrawn from a
Participant's Salary Deferral Accounts is the sum of (i)
the amount of his or her previously unwithdrawn Salary
Deferrals which remain credited to such Accounts plus
(ii) the amount of the net unwithdrawn investment income
which was credited to such Accounts or to the
corresponding accounts under the AP Plan as of December
31, 1988.
(b) The maximum amount that may be withdrawn from a
Participant's Company Accounts is the vested portion of
such Company Accounts.
7.4 Procedure for Hardship Withdrawals
A hardship withdrawal under Section 7.3 shall be permitted only if the
distribution is necessary to satisfy an immediate and heavy financial
need of the
Participant. A Participant who wishes to make a hardship withdrawal
under Section 7.3 shall file a request with the Company in accordance
with the prescribed procedures, and such request shall specify the
reason or reasons why such withdrawal is required. The Company shall
authorize a hardship withdrawal under Section 7.3 only to the extent
that the Participant has demonstrated that the after-tax proceeds of the
requested funds are required for one or more of the following reasons:
(a) To pay expenses (i) for medical care described in section
213(d) of the Code that were incurred by the Participant,
the Participant's spouse or any dependents of the
Participant (as defined in section 152 of the Code) or
(ii) necessary for such persons to obtain medical care
described in section 213(d) of the Code;
(b) To pay tuition for the next 12 months of post-secondary
education for the Participant or his or her spouse,
children or dependents;
(c) To purchase (excluding mortgage payments) a principal
residence of the Participant;
(d) To prevent the eviction of the Participant from his or
her principal residence or the foreclosure of the
mortgage on the Participant's principal residence; or
(e) Any other reason described by the Commissioner of
Internal Revenue in a revenue ruling, notice or other
document of general application.
The Company, based on the foregoing criteria, may authorize no hardship
withdrawal or a hardship withdrawal in an amount which is smaller than
the amount requested by the Participant. This Section 7.4 shall not
apply to a Participant who is subject to a Disability.
7.5 Representations Necessary for a Hardship Withdrawal
No Participant shall be eligible to receive a hardship withdrawal under
Section 7.3 unless:
(a) The Participant represents to the Company, in the manner
specified by the Company, that the withdrawal does not
exceed the Participant's immediate and heavy financial
need;
(b) The Participant represents to the Company, in the manner
specified by the Company, that the Participant's
immediate and heavy financial need cannot be relieved:
(i) Through reimbursement or compensation by
insurance or otherwise;
(ii) By reasonable liquidation of the
Participant's assets, to the extent such
liquidation would not itself cause an
immediate and heavy financial need;
(iii) By cessation of Salary Deferrals or
After-Tax Contributions; or
(iv) By other distributions or nontaxable (at
the time of the loan) loans from this Plan
or any other plans maintained by a member
of the Affiliated Group, or by borrowing
from commercial sources on reasonable
commercial terms.
This Section 7.5 shall not apply to a Participant who is subject to a
Disability.
7.6 Payment and Source of Withdrawal.
A withdrawal shall be paid as soon as reasonably practicable after the
request for such withdrawal is received by the Company in the form
prescribed by the Company. The value of a Participant's Accounts and
the vested percentage of a Participant's Company Accounts shall be
determined on the date when the Trustee effects the withdrawal
transaction. Withdrawals shall be paid only in the form of a single
lump sum in cash. In the case of a married Participant who participated
in the NPSI Plan, a requested withdrawal shall not be paid unless the
Participant's spouse has consented in writing to the payment of such
withdrawal in the form of a lump sum (instead of a Qualified Joint and
Survivor Annuity). The spouse's consent shall comply with Section 16.9
and shall be given within the 90-day period preceding payment of the
withdrawal. If more than one Account is available to pay the withdrawal
because the Participant elected to invest in more than one Investment
Fund, the withdrawal shall be made proportionately from each available
Account, subject to such other ordering rules as the Company may adopt.
ARTICLE 8. LOANS.
8.1 Amount of Loans
With the Company's prior written consent, a Participant who is an
Employee may obtain a cash loan from the Participant's Accounts other
than Pension Accounts. The minimum amount of the loan shall be $1,000.
Subject to Section 8.2, the maximum amount of the loan shall be 50% of
the value of the vested portion of the Participant's Accounts other than
Pension Accounts.
8.2 Aggregate Loan Limitation
No loan shall be granted under the Plan if it would cause the aggregate
balance of all loans which a Participant thereafter has outstanding
under this Plan or under any other qualified plan maintained by any
member of the Affiliated Group to exceed $50,000, less the amount by
which such aggregate balance has been reduced through repayments during
the period of 12 consecutive months ending on the day before a new loan
is made.
8.3 Terms of Loans.
A loan to a Participant shall be made on such terms and conditions as
the Company may determine, provided that the loan shall:
(a) Be evidenced by a promissory note signed by the
Participant and secured by 50% of the value of the vested
portion of all of his or her Accounts (regardless of the
amount of the loan or the source of the loan funds);
(b) Bear interest at a fixed rate equal to the prime interest
rate in effect at the New York main office of The Chase
Manhattan Bank, N.A., on the last business day of the
month immediately preceding the date on which the Company
receives the prescribed loan request form;
(c) Provide for level amortization over its term with
payments at quarterly or more frequent intervals, as
determined by the Company;
(d) Provide for loan payments of not less than $50 per
payment;
(e) Provide for loan payments (i) to be withheld whenever
possible through periodic payroll deductions from the
Participant's compensa-
tion from any member of the Affiliated Group or (ii) to be paid
by check or money order whenever payroll withholding is
not possible;
(f) Provide for repayment in full on or before the earlier of
(i) the date when the Participant ceases to receive
periodic cash compensation from an Affiliated Group
member or (ii) the date five years after the loan is made
(or the date 15 years after the loan is made if the loan
is used to acquire a dwelling which, within a reasonable
period of time, is to be used as the principal residence
of the Participant); and
(g) Provide that a Participant's Accounts shall not be
applied to the satisfaction of the Participant's loan
obligations before the Accounts become distributable
under Article 10, unless the Company determines that the
loan obligations are in default and takes such actions as
the Company deems necessary or appropriate to cause the
Plan to realize on its security for the loan. Such
actions may include (without limitation) an involuntary
withdrawal from the Participant's vested Accounts,
whether or not the withdrawal would be permitted under
Article 7 on a voluntary basis; provided (i) that no
involuntary withdrawals from Basic Company Accounts and
Pension Accounts shall be made and (ii) that an
involuntary withdrawal from Company Contributions paid to
the Trustee within the most recent 24 months or from
Salary Deferrals shall be subject to the limitations of
Section 8.3. The Company may take such action as it
deems necessary to recover the balance of a loan secured
by such Company Contributions or by Basic Company
Accounts, Pension Accounts or Salary Deferral Accounts.
If any involuntary withdrawal occurs, the Participant
shall not be permitted to obtain a new loan under the
Plan for a period of 12 months, commencing as of the last
day of the payroll period in which the involuntary
withdrawal occurs. The consent of the Participant's
spouse shall not be required at the time of any action
taken by the Company under this Subsection (g).
8.4 Company Consent
The Company, based on the borrower's creditworthiness and the criteria
set forth in this Article 8, may
withhold its consent to any loan or may consent only to the borrowing of
a part of the amount requested by the Participant. The Company shall
act upon requests for loans in a uniform and nondiscriminatory manner,
consistent with the requirements of section 401(a), section 401(k) and
related provisions of the Code and section 408(b)(1) of ERISA and the
regulations thereunder.
8.5 Restrictions on Loan
No Participant shall have more than two loans outstanding under this
Article 8 or the AP Plan at the same time. A Participant shall not be
permitted to obtain more than one loan under this Article 8 or the AP
Plan in any period of 12 consecutive months. A married Participant
shall not be permitted to obtain any loan under this Article 8 unless
his or her spouse, in compliance with Section 16.9 and within the 90-day
period before the loan is made, has consented in writing to the
assignment of his or her Accounts as security and to any actions that
the Company subsequently may take under Section 8.3(g).
8.6 Disbursement and Source of Loans
A Participant may request a loan by filing the prescribed loan request
form with the Company. A loan shall be disbursed as soon as reasonably
practicable after the date on which the Company receives the prescribed
loan request form (subject to the Company's consent). For purposes of
this Article 8, the value and vested percentage of a Participant's
Accounts shall be determined on the date when the Trustee effects the
loan transaction. If a Participant requests and is granted a loan, the
amount of the loan shall be transferred from the Participant's Accounts
other than Pension Accounts. If more than one Account is available to
make a transfer, the transfer shall be made proportionately from each
Account, subject to such other ordering rules as the Company may adopt.
The promissory note executed by the Participant shall be held by the
Trustee or its agent as part of the Trust Fund.
8.7 Loan Payments and Defaults
Principal and interest payments on a Participant's loan shall be
credited as soon as reasonably practicable to the Participant's Accounts
in the ratio specified by the Participant under Section 6.3. Any loss
caused by nonpayment or other default on a Participant's loan
obligations shall be borne solely by that Participant's Accounts.
8.8 Loan Fees
A Participant who obtains a loan under this Article 8 shall be required
to pay such fees and loan transaction charges as the Trustee or its
agent may impose in order to defray the cost of administering loans from
the Plan.
ARTICLE 9. VESTING AND FORFEITURES.
9.1 100 Percent Vesting
A Participant's interest in all of his or her Accounts other than
Company Accounts shall be 100% vested at all times. A Participant's
interest in his or her Company Accounts shall become 100% vested when
the earliest of the following events occurs:
(a) The Participant ceases to be an Employee by reason of
Disability;
(b) The Participant, before ceasing to be an Employee,
attains the age of 65 years;
(c) The Participant dies while employed as an Employee;
(d) The Plan is terminated, or the Plan undergoes a partial
termination which affects the Participant, before the
Participant ceases to be an Employee; or
(e) Company Contributions and Salary Deferrals are completely
discontinued before the Participant ceases to be an
Employee.
In addition, a Participant who transfers to this Plan from the AP Plan
as of September 1, 1990, and who has completed three Years of Service on
or before November 1, 1990, shall be 100% vested in all of his or her
Company Accounts.
9.2 Vesting Schedules
Before a Participant becomes 100% vested under Section 9.1, the
Participant shall be vested in a percentage of his or her Company
Accounts determined from the following schedule:
Participant's
Years of Service Vested Percentage
Less than 1 year . . . . . . . . . . 0%
1 year . . . . . . . . . . . . . . . 33-1/3%
2 years . . . . . . . . . . . . . . . 66-2/3%
3 years or more . . . . . . . . . . . 100%
The foregoing notwithstanding, in the case of an individual who first
became an Employee on or after April 1, 1989, and who is not yet 100%
vested under Section 9.1, he or she shall be vested in a percentage
of his or her Company Accounts determined from the following schedule:
Participant's
Years of Service Vested Percentage
Less than 1 year . . . . . . . . . . 0%
1 year . . . . . . . . . . . . . . . 20%
2 years . . . . . . . . . . . . . . . 40%
3 years . . . . . . . . . . . . . . . 60%
4 years . . . . . . . . . . . . . . . 80%
5 years or more . . . . . . . . . . . 100%
9.3 Vesting After Prior Distributions
Section 9.2 shall be applied as set forth in this Section 9.3 in the
case of any Participant who received one or more prior withdrawals or
distributions from his or her Company Accounts, who thereafter has not
incurred a Permanent Service Break, and who is not yet 100% vested in
his or her Company Accounts. The vested portion of such Participant's
Company Accounts shall be determined in two steps. First, the
Participant's vested percentage under Section 9.2 shall be applied to
the sum of (a) the value of each Company Account plus (b) the aggregate
amount of the Participant's prior withdrawals or distributions from such
Account. Then, the aggregate amount of the Participant's prior
withdrawals or distributions from such Account shall be subtracted. For
purposes of this Section 9.3 only, a transfer from a Company Account to
fund a loan under Article 8 shall be treated as a withdrawal from such
Company Account, but the amount thereof shall be reduced by repayments
of principal.
9.4 Forfeitures
If a Participant ceases to be an Employee at a time when he or she is
less than 100% vested in his or her Company Accounts, then the nonvested
portion of each Company Account shall be removed from such Company
Account when employment terminates and shall constitute a Forfeiture for
the Plan Year in which employment terminated. Forfeitures shall be
applied to reduce the Matching Contributions for such Plan Year. If the
Participant is rehired as an Employee before incurring a Permanent
Service Break, then the portion of his or her Company Accounts which
constituted a Forfeiture shall be reinstated to such Company Accounts as
of the close of the Plan Year in which the rehire occurs. The
appropriate Participating Company shall make a special contribution in
the amount required to reinstate the Forfeiture. Thereafter, Section
9.3 may be applicable to the determination of the vested portion of the
Participant's Company Accounts. In no event shall a Participant's
Forfeitures be reinstated if he or she is rehired as an Employee after
incurring a Permanent Service Break.
9.5 Criminal Acts
Any other provision of the Plan notwithstanding, if a Participant who
has neither attained age 65 nor completed five Years of Service severs
from all employment as an Employee after admitting to, being convicted
of, or pleading "no contest" with respect to any criminal act against
any Affiliated Group member, then his or her vested percentage shall be
zero percent, unless the Plan is terminated or Company Contributions and
Salary Deferrals are completely discontinued prior to the date when he
or she admits to, is convicted of, or pleads "no contest" with respect
to such criminal act.
ARTICLE 10. AMOUNT AND DISTRIBUTION OF PLAN BENEFITS.
10.1 Amount of Plan Benefits
A Participant's Plan Benefit shall include such Participant's entire
interest in his or her Accounts other than Company Accounts. To the
extent that a Participant is vested under Article 9 in his or her
Company Accounts, such Participant's Plan Benefit shall also include the
vested percentage of his or her Company Accounts. The amount of a
Participant's Plan Benefit shall be reduced by the amount of any loan
balance that remains outstanding under Article 8 at the time when such
Plan Benefit is paid or at the time of such Participant's death,
whichever is earlier. The value of a Plan Benefit shall be determined
on the distribution date for such Plan Benefit. Subject to Section 9.5,
a Participant's vested interest in the Plan shall not be divested for
cause or otherwise forfeited (but the market value of such interest may
decline).
10.2 Time of Distribution: General Rule
Subject to Sections 10.3, 10.4 and 10.5, the distribution of a
Participant's Plan Benefit shall occur or commence on or about the date
that he or she has elected. Within the 60-day period commencing 90 days
before the Annuity Starting Date, the Company shall provide to each
Participant the written explanation of his or her distribution options
(including his or her right to defer receipt of the distribution)
prescribed by the applicable regulations. The distribution election
shall be made in writing on the prescribed form, which shall be signed
by the Participant and filed with the Company after he or she has
received such explanation. Where applicable, the distribution election
form shall include the written consent of the Participant to the
distribution of all or part of his or her Plan Benefit before he or she
attains age 65.
10.3 Earliest Time of Distribution
Except as required by Section 10.4, the distribution of a Participant's
Plan Benefit shall not occur or commence prior to the later of:
(a) The date when the Participant ceases to be an Employee;
or
(b) The date when the Company receives a completed
distribution election form (as described in Section
10.2).
10.4 Latest Time of Distribution
In no event shall the distribution of a Participant's Plan Benefit occur
or commence after the April 1 next following the close of the calendar
year in which the Participant attains age 70-1/2 (whether or not the
Participant ceased to be an Employee). If the Participant fails to file
a timely distribution election form, Section 16.3 (relating to unclaimed
Plan Benefits) may apply.
10.5 Special Rules for Employees Over Age 65
Section 10.3(a) notwithstanding, a Participant whose employment
continues past age 65 may elect to have the distribution of his or her
Plan Benefit occur or commence before he or she retires, as if he or she
had retired as of the date of the election. If a Participant makes such
an election, his or her employment shall be deemed to have terminated
(for purposes of the Plan) as of the date of such election. Any other
provision of the Plan to the contrary notwithstanding, the Participant
shall not thereafter be permitted to make any Employee Contributions or
to receive any allocation of Company Contributions or Forfeitures. All
distributions under the Plan shall be made in accordance with the Income
Tax Regulations under section 401(a)(9) of the Code, including Income
Tax Regulations section 1.401(a)(9)-2 or its successor. Such regulations
are incorporated in the Plan by reference and shall override any
inconsistent provisions of the Plan.
10.6 Annuity Form of Distribution
In the case of a Participant who participated in the NPSI Plan, his or
her Plan Benefit shall be distributed in the form of a nontransferable
annuity contract purchased from an insurance company selected by the
Company, unless such Participant elects one of the forms of distribution
described in Section 10.7. The sole form of annuity contract available
under the Plan shall be a Qualified Joint and Survivor Annuity.
10.7 Available Forms of Distribution
A Participant who participated in the NPSI Plan may waive the annuity
form of distribution and elect to have his or her Plan Benefit
distributed in one of the forms available under this Section 10.7 by
following the special procedures described in Section 10.9. The Plan
Benefit of each other Participant shall automatically be distributed
under this Section 10.7.
The forms of Plan Benefit available under this Section 10.7 shall be as
follows:
(a) A lump sum in cash; provided that the Participant may
elect to receive all whole shares of APC Stock
attributable to his or her share of the APC Stock Fund
(to the extent vested) in the form of one or more
certificates for APC Stock; or
(b) Monthly, quarterly, semi-annual or annual cash
installments payable over a period not exceeding the
Participant's life expectancy at the time when he or she
commences receiving such installments. During the
installment period, the remaining account balances shall
be credited with a share of gains, losses, income and
expenses of the Trust Fund in accordance with Section
13.6, and the investment election procedure described in
Section 6.3 shall remain available to Participants
receiving an installment distribution. The amount of
each installment shall be determined by dividing the
remaining account balances by the number of remaining
installments. The distribution of all or part of the
remaining account balances may be accelerated at the
Participant's request.
A Participant who did not participate in the NPSI Plan shall elect a
form of benefit on the distribution election form filed under Section
10.2. If a form of benefit has not been elected, such Participant shall
be deemed to have elected a lump sum in cash.
10.8 Small Benefits: Immediate Lump Sum
Any other provision of this Article 10 notwithstanding, if the value of
any Participant's vested Plan Benefit equals $3,500 or less, then the
Plan Benefit shall be paid immediately to such Participant (or, in the
case of his or her death, to the Beneficiary) in a single lump sum in
cash.
10.9 Waiver of Annuity Form of Distribution
A Participant who participated in the NPSI Plan may waive the Qualified
Joint and Survivor Annuity and elect a lump sum or installments by
filing the prescribed form with the Company. Such election may be made
only during an election period consisting of the 90 consecutive days
ending on the Participant's Annuity Starting Date. A Participant may
revoke an election of
a lump sum or installments at any time prior to the end of such election
period by filing the prescribed form with the Company. If the
Participant, having revoked a prior election, does not make another
election within such election period, then his or her Plan Benefit shall
be distributed in the form of a Qualified Joint and Survivor Annuity.
In the case of a married Participant, any election of a lump sum or
installments shall not take effect unless the Participant's spouse, in
compliance with Section 16.9, consents in writing to the election during
such election period.
10.10 Survivor Annuity. In the case of any Participant who
participated in the NPSI Plan and who dies before his or her Annuity
Starting Date and has a surviving spouse who is the sole primary
Beneficiary, such surviving spouse shall be entitled to receive the Plan
Benefit in the form of a Qualified Preretirement Survivor Annuity. The
Qualified Preretirement Survivor Annuity shall be paid pursuant to a
nontransferable annuity contract purchased from an insurance company
selected by the Company. Such contract shall be purchased at a cost
equal to the value of the Participant's Plan Benefit and shall provide
for equal monthly payments for the life of his or her surviving spouse.
Alternatively, the surviving spouse may elect to receive the Plan
Benefit in one of the forms available under Section 10.11 in lieu of the
Qualified Preretirement Survivor Annuity. The payment of the Plan
Benefit ordinarily shall occur or commence on or about the date when the
Participant would have attained age 65 or the date of the Participant's
death, whichever is later. However, the surviving spouse may elect any
earlier commencement or payment date after the Participant's death. Any
election of an alternate form of distribution or an earlier commencement
or payment date may be made only in writing during the 90-day period
preceding the Annuity Starting Date.
10.11 Other Forms of Death Benefit
If a Participant dies before receiving his or her entire Plan Benefit
and Section 10.10 is not applicable, then such Participant's
Beneficiary shall be entitled to receive such Plan Benefit (or the
undistributed portion thereof) after filing the prescribed claim form
with the Company. The Beneficiary's distribution shall be made as
follows:
(a) This Subsection (a) shall apply only in the event that a
Participant elected to receive his or her Plan Benefit
in installments under Section 10.7(b) and then dies
after
installment payments have commenced but before such payments
are completed. The remaining installments of such
Participant's Plan Benefit ordinarily shall be paid to
his or her Beneficiary in accordance with the
predetermined distribution schedule originally
established for him or her by the Company. However, a
Beneficiary may make a written request to accelerate the
distribution of any or all unpaid installments to which
such Beneficiary is entitled.
(b) This Subsection (b) shall apply in the event that a
Participant dies before his or her Plan Benefit is
distributed and Subsection (a) above does not apply.
Such Participant's Plan Benefit ordinarily shall be paid
to his or her Beneficiary in the form of a single lump
sum in cash, and the distribution ordinarily shall be
made as soon as reasonably practicable after the
Participant's death. A Beneficiary may make a written
request to defer the distribution of the Plan Benefit to
which such Beneficiary is entitled. However, the
distribution shall in no event be made later than five
years after the Participant's death. In addition, a
Beneficiary may make a written request to receive the
Plan Benefit to which such Beneficiary is entitled in
the form of APC Stock to the extent permitted by Section
10.7(a).
10.12 Information on Distribution Options
Within the 60-day period commencing 90 days before the Annuity Starting
Date, the Company shall provide to each Participant who participated in
the NPSI Plan (whether or not married) the written explanation of the
Qualified Joint and Survivor Annuity prescribed by the applicable
regulations. Within the three-year period commencing with the first
day of the Plan Year in which the Participant attains age 32 or within
the one-year period commencing when he or she becomes a Participant
(whichever ends later), the Company shall provide to each Participant
who participated in the NPSI Plan the written explanation of the
Qualified Preretirement Survivor
Annuity prescribed by the applicable regulations. In the case of a
Participant who participated in the NPSI Plan but who ceases to be an
Employee before attaining age 35, the written explanation of the
Qualified Preretirement Survivor Annuity shall be provided not later
than one year after the termination of employment.
10.13 Determination of Marital Status
Whether a Participant is married and the identity of his or her spouse
(if any) shall be determined by the Company as of the earlier of (i)
his or her Annuity Starting Date or (ii) the date of his or her death.
10.14 Direct Rollovers
(a) The Direct Rollover Option. Notwithstanding any provision of the
Plan to the contrary that would otherwise limit a Distributee's
election under this Section, a Distributee may elect, at the time and
in the manner prescribed by the Plan 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) Definition of 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
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 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 includible in gross income
(determined without regard to the exclusion for net unrealized
appreciation with respect to employer securities).
(c) Definition of 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.
(d) Definition of 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 defined in section 414(p) of the Code are
Distributees with regard to the interest of the spouse or former
spouse.
(e) Definition of Direct Rollover. A Direct Rollover is a payment by
the Plan to the Eligible Retirement Plan specified by the Distributee.
ARTICLE 11. CLAIMS PROCEDURE.
11.1 Filing Claims for Benefits
Claims for benefits under the Plan shall be made in writing on the
prescribed form and shall be signed by the Participant or by his or her
Beneficiary, as the case may be. All claims for or inquiries
concerning benefits under the Plan shall be submitted to the Company at
its U.S. headquarters.
11.2 Denial of Claims
In the event that any claim for benefits is denied in whole or in part,
the Company shall notify the applicant in writing of such denial and
shall advise the applicant of the right to a review thereof. Such
written notice shall set forth, in a manner calculated to be understood
by the applicant, specific reasons for the denial, specific references
to the Plan provisions on which the denial is based, a description of
any information or material necessary for the applicant to perfect the
application, an explanation of why such material is necessary and an
explanation of the Plan's review procedure. Such written notice shall
be given to the applicant within 90 days after the Company received the
claim in proper form, except that such 90-day period may be extended
for an additional 90 days if special circumstances exist. The Company
shall advise the applicant of such circumstances in writing within the
first 90-day period. If the Company does not provide the applicant
with written notice of its decision within the applicable time period,
the applicant's claim shall be deemed to have been denied as of the
last day of the applicable time period.
ARTICLE 12. REVIEW PROCEDURE.
12.1 Appointment of Review Panel
The Company from time to time shall appoint a Review Panel consisting
of three or more individuals, who may (but need not) be employees of
the Company. The Review Panel shall be the named fiduciary which has
the authority to act with respect to appeals from denials of claims
under the Plan.
12.2 Right To Appeal
Any applicant whose claim for benefits was denied in whole or in part
(or such applicant's authorized representative) may appeal from the
denial by submitting to the Review Panel a written request for a review
of the claim within three months after receiving written notice of the
denial, or within three months after the date when a claim may be
deemed to have been denied. The Company shall give the applicant (or
the applicant's authorized representative) an opportunity to review
pertinent materials, other than legally privileged documents, in
preparing such request for review.
12.3 Form of Request for Review;
The request for review shall be made in writing and shall be addressed
to the Review Panel in care of the Company at its U.S. headquarters.
The request for review shall set forth all of the grounds on which it
is based, all facts in support thereof and any other matters which the
applicant deems pertinent. The Review Panel may require the applicant
to submit such additional facts, documents or other material as the
Review Panel may deem necessary or appropriate in making its review.
12.4 Time for Review Panel Action
The Review Panel shall act upon each request for review within 60 days
after receipt thereof, unless special circumstances require further
time for processing and the applicant is advised of the extension. In
no event shall the decision on review be rendered more than 120 days
after the Review Panel received the request for review in proper form.
12.5 Review Panel Decisions
The Review Panel shall give prompt written notice of its decision to
the applicant and to the Company. In the event that the Review Panel
confirms the denial of
the claim for benefits in whole or in part, such notice shall set
forth, in a manner calculated to be understood by the applicant, the
specific reasons for such denial and specific references to the Plan
provisions on which the decision was based. In the event that the
Review Panel determines that the claim for benefits should not have
been denied in whole or in part, the Company shall take appropriate
remedial action as soon as reasonably practicable after receiving
notice of the Review Panel's decision.
12.6 Rules and Procedures
The Review Panel shall establish such rules, procedures and
interpretations, consistent with the Plan and ERISA, as it may deem
necessary or appropriate in carrying out its responsibilities under
this Article 12. The Review Panel may require an applicant who wishes
to submit additional information in connection with an appeal from a
denial of benefits to do so at his or her own expense.
12.7 Exhaustion of Remedies Required
No legal or equitable action for benefits under the Plan shall be
brought unless and until the applicant (a) has submitted a written
claim for benefits in accordance with Article 11, (b) has been notified
that the claim is denied, (c) has filed a written request for a review
of the claim in accordance with this Article 12 and (d) has been
notified in writing that the Review Panel has affirmed the denial of
the claim; provided, however, that such an action may be brought after
the Company or the Review Panel has failed to act on the claim within
the time prescribed in Sections 11.2 and 12.4, respectively.
ARTICLE 13. MANAGEMENT OF ASSETS.
13.1 Control and Management of Plan Assets
The Company is a named fiduciary with respect to control over and
management of the assets of the Plan, but only to the extent of (a)
having the duty to appoint one or more trustees to hold all assets of
the Plan in trust, (b) having the authority to remove any trustee so
appointed and to appoint one or more successor trustees, (c) having the
duty to enter into a trust agreement with each trustee or successor
trustee so appointed, (d) having the authority to appoint one or more
Investment Managers for any Plan assets, to enter into an investment
management agreement with each Investment Manager so appointed and to
remove such Investment Manager and (e) having the authority to direct
the investment of any Plan assets not assigned to an Investment
Manager. Each Investment Manager appointed by the Company shall
acknowledge in writing that such Investment Manager is a fiduciary with
respect to the Plan.
13.2 Investment Authority
The Trustee shall have the exclusive authority and discretion to
invest, manage and control the assets of the Plan, except to the extent
that the Company has allocated the authority to manage such assets to
one or more Investment Managers or has retained such authority. Any
Investment Manager appointed under Section 13.1 shall have the
exclusive authority to manage, including the power to direct the
acquisition and disposition of, the Plan assets assigned to it by the
Company.
13.3 Independent Qualified Public Accountant
The Company shall engage an independent qualified public accountant to
conduct such examinations and to express such opinions as may be
required by section 103(a)(3) of ERISA. The Company in its discretion
may remove and discharge the person so engaged, in which event it shall
appoint a successor independent qualified public accountant to perform
such examinations and express such opinions.
13.4 Expenses
All expenses of the Plan and the Trust Fund shall be paid by the
Trustee out of the Trust Fund pursuant to the terms of the Trust
Agreement, except such expenses as are paid by the Company.
13.5 Benefit Payments
All benefits, withdrawals and loans payable pursuant to the Plan shall
be paid by the Trustee out of the Trust Fund pursuant to the directions
of the Company and the terms of the Trust Agreement.
13.6 Valuation of Accounts
Each Account shall be revalued on each business day to allocate to it a
pro rata share of any increase or decrease in the fair market value of
the applicable Investment Fund. By the revaluation, the balance in
each Participant's Accounts will be increased or decreased by such
Participant's share of the realized and unrealized income, gains,
expenses and losses of the Trust Fund since the preceding valuation.
13.7 Statements
A statement shall be prepared and distributed to each Participant at
least annually. Such statement shall reflect the status of the
Participant's Accounts (including the fair market value thereof) and
shall contain such other information as the Company may prescribe.
ARTICLE 14. ADMINISTRATION OF THE PLAN.
14.1 Plan Administration
The Company is the named fiduciary with respect to the operation and
administration of the Plan, and the Company is the "administrator" and
"plan sponsor" of the Plan (as such terms are used in ERISA). The
Company shall make such rules and computations and shall take such
other actions to administer the Plan as it may deem appropriate. The
Company shall have the sole discretion to interpret the terms of the
Plan and to determine eligibility for loans, withdrawals and benefits
pursuant to the objective criteria set forth in the Plan. The
Company's rules, interpretations, computations and actions shall be
conclusive and binding on all persons. In administering the Plan, the
Company (a) shall act in a nondiscriminatory manner to the extent
required by section 401(a) and related sections of the Code and (b)
shall at all times discharge its duties in accordance with the
standards set forth in section 404(a)(1) of ERISA.
14.2 Employment of Advisers
The Company may retain such attorneys, actuaries, accountants,
consultants or other persons to render advice or to perform services
with regard to its responsibilities under the Plan as it shall
determine to be necessary or desirable. The Company may designate by
written instrument (signed by both parties) one or more persons to
carry out, where appropriate, fiduciary responsibilities under the
Plan. The Company's duties and responsibilities under the Plan which
have not been delegated to other fiduciaries pursuant to the preceding
sentence shall be carried out by its directors, officers and employees,
acting on behalf and in the name of the Company in their capacities as
directors, officers and employees, and not as individual fiduciaries.
14.3 Service in Several Fiduciary Capacities
Nothing herein shall prohibit any person or group of persons from
serving in more than one fiduciary capacity with respect to the Plan
(including service both as the administrator and as a trustee of the
Plan).
ARTICLE 15. AMENDMENT AND TERMINATION.
15.1 Right To Amend or Terminate
The Company reserves the right to amend or terminate the Plan or to
discontinue Company Contributions at any time and for any reason, by
action of its board of directors or by a committee or individual(s)
acting under a written delegation of authority. No amendment of the
Plan, however, shall (a) reduce the benefit of any Participant accrued
under the Plan prior to the date when such amendment is adopted or (b)
divert any part of the Plan's assets to purposes other than the
exclusive purpose of providing benefits to the Participants and
Beneficiaries who have an interest in the Plan and of defraying the
reasonable expenses of administering the Plan.
15.2 Effect of Termination
Upon termination of the Plan, no assets of the Plan shall revert to the
Participating Companies or be used for or diverted to purposes other
than the exclusive purpose of providing benefits to Participants and
Beneficiaries and of defraying the reasonable expenses of termination
(except as otherwise provided in Section 6.1). Upon termination of the
Plan, the Trust Fund shall continue in existence until it has been
distributed entirely, as provided in Section 15.3.
15.3 Allocation of Assets Upon Termination
Upon termination of the Plan, the Trust Fund shall continue in
existence until the Accounts of each Participant have been distributed
to such Participant (or to such Participant's Beneficiary) as provided
in Article 10; provided, however, that the assets of the Plan shall be
allocated in accordance with the requirements of section 403(d)(l) of
ERISA.
ARTICLE 16. GENERAL PROVISIONS.
16.1 No Assignment of Property Rights; Qualified Domestic Relations
Orders
Except as provided in Section 8.3 with respect to loans from the Plan,
the interest or property rights of any person in the Plan, in any
Account or in any payment to be made under the Plan shall not be
optioned, anticipated, assigned (either at law or in equity), alienated
or made subject to attachment, garnishment, execution, levy, other
legal or equitable process, or bankruptcy. Any act in violation of
this Section 16.1, whether voluntary or involuntary, shall be void.
This Section 16.1 shall not apply with respect to qualified domestic
relations orders described in section 414(p) of the Code. The Company
shall establish reasonable procedures to determine the qualified status
of domestic relations orders and to administer distributions under
qualified domestic relations orders. Pursuant to a qualified domestic
relations order, any benefit payable to an alternate payee may be
distributed in the form of a single lump sum payment prior to the
earliest date upon which the Participant could receive his or her Plan
Benefit.
16.2 Incompetence
If, in the opinion of the Company, any individual becomes unable to
handle properly any amount payable to such individual under the Plan,
then the Company may make such arrangements for payment on such
individual's behalf as it determines will be beneficial to such
individual, including (without limitation) payment to such individual's
guardian, conservator, spouse or dependent.
16.3 Unclaimed Plan Benefits
If any Plan Benefit, or a portion thereof, would be distributable under
the Plan but the Company is unable to locate the Participant or
Beneficiary to whom the distribution is payable for three consecutive
Plan Years, then the Participant's Accounts may be closed after the
third consecutive Plan Year during which such distribution is payable
but the Participant or Beneficiary cannot be found. The amount of the
unpaid Plan Benefit shall be applied as a Forfeiture, unless mandatory
provisions of applicable escheat laws require another application, in
which case such Plan Benefit shall be applied as such laws require.
If, however, the Participant or Beneficiary subsequently makes a proper
claim to the Company for any Plan Benefit which was applied as a
Forfeiture and which
was not lost by reason of escheat, then such Plan Benefit (without
income, gains or other adjustment) shall be restored to the
Participant's Accounts from a special contribution made by the
appropriate Participating Company for this purpose. The Plan Benefit
shall thereafter be distributable in accordance with the terms of the
Plan.
16.4 No Employment Rights
Nothing in the Plan shall be deemed to give any individual any right to
remain in the employ of any Participating Company or to affect the
right of such Participating Company to terminate such individual's
employment at any time, with or without cause.
16.5 Beneficiary;
Upon commencement of participation, each Participant shall, by
following the procedures prescribed by the Company, name a person or
persons as the Beneficiary who will receive any distribution payable
under the Plan in the event of the Participant's death. If the
Participant has not named a Beneficiary or if none of the named
Beneficiaries is living when any payment is to be made, then (a) the
spouse of the deceased Participant shall be the Beneficiary or (b) if
the Participant has no spouse living at the time of such payment, the
then living children of the deceased Participant shall be the
Beneficiaries in equal shares or (c) if the Participant has neither
spouse nor children living at the time of such payment, the estate of
the Participant shall be the Beneficiary. The Participant may change
the designation of a Beneficiary from time to time in accordance with
procedures established by the Company. Any designation of a
Beneficiary (or an amendment or revocation thereof) shall be effective
only if it is made in writing on the prescribed form and is received by
the Company prior to the Participant's death. Any other provision of
this Section 16.5 notwithstanding, in the case of any married
Participant, any designation of a person other than his or her spouse
as the sole primary Beneficiary shall be valid only if the spouse
consented to such designation in writing in compliance with Section
16.9. In the case of a married Participant who participated in the
NPSI Plan, any designation of a person other than his or her spouse as
the sole primary Beneficiary, if made before the first day of the Plan
Year in which the Participant attains age 35, shall become invalid on
such day. The Participant may make a new designation (with spousal con
sent) on or after such day. If the Participant dies on or after such
day without having
made a new designation, his or her spouse shall be the Beneficiary.
16.6 Merger, Consolidation and Transfer of Assets or Liabilities
The Plan shall not be merged or consolidated with any other plan, and
no assets or liabilities of the Plan shall be transferred to any other
plan, unless each Participant would receive a Plan Benefit immediately
after the merger, consolidation or transfer (if the Plan were then
terminated) which is equal to or greater than the Plan Benefit which
such Participant would have been entitled to receive immediately before
such merger, consolidation or transfer (if the Plan had then been
terminated).
16.7 Voting Rights
Participants may, to the extent provided in the Trust Agreement, issue
directions to the Trustee with respect to the voting of the shares of
APC Stock held by the Plan. Such directions shall be given and
followed only pursuant to the Trust Agreement.
16.8 Other Instructions by Participants
In the event that an offer to purchase the APC Stock held by the Plan
is made, Participants may, to the extent provided in the Trust
Agreement, issue directions to the Trustee with respect to the
acceptance or rejection of such offer. Such directions shall be given
and followed only pursuant to the Trust Agreement.
16.9 Spousal Consents
This Section 16.9 shall apply whenever the consent of a Participant's
spouse is required for an election, waiver or designation made by such
Participant under the Plan. Any spousal consent shall be in writing
and shall be witnessed by a plan representative (if permitted by the
Company) or by a notary public. The spousal consent shall acknowledge
the effect of the Participant's action and shall, if applicable,
specify the particular optional form of benefit being elected or the
particular non-spouse Beneficiary being designated (including any class
of Beneficiaries or any contingent Beneficiaries). The spousal consent
shall be irrevocable. Any other provision of the Plan notwithstanding,
no spousal consent shall be required if (a) it is established to the
satisfaction of the Company that there is no spouse or that the spouse
cannot be located or (b) the Participant is legally
separated or has been abandoned (within the meaning of local law) and
has an appropriate court order, unless a qualified domestic relations
order provides otherwise. If the spouse is legally incompetent to give
consent, the spouse's legal guardian (including the Participant) may
give consent.
16.10 Forms for Plan Communications
All communications from a Participant or Beneficiary with regard to the
Plan shall become effective only when made in accordance with the
procedures prescribed by the Company. If the Company has adopted
prescribed forms for any communications, such communications shall be
effective only if filed on such forms.
16.11 Choice of Law
The Plan and all rights thereunder shall be interpreted and construed
in accordance with ERISA and, to the extent that state law is not
preempted by ERISA, the law of the State of California.
ARTICLE 17. SPECIAL TOP-HEAVINESS RULES.
17.1 Determination of Top-Heavy Status
Any other provision of the Plan notwithstanding, this Article 17 shall
apply to any Plan Year in which the Plan is a Top-Heavy Plan. The Plan
shall be considered a "Top-Heavy Plan" for a Plan Year if, as of the
Determination Date for such Plan Year, the Top-Heavy Ratio for the
Aggregation Group exceeds 60%.
17.2 Minimum Allocations
For any Plan Year during which the Plan is a Top-Heavy Plan, the Salary
Deferrals, Company Contributions and Forfeitures allocated to each
Participant who is not a Key Employee, but who is an Employee on the
last day of such Plan Year, shall not be less than the lesser of (a)
three percent of his or her Section 415 Compensation or (b) the
greatest allocation, expressed as a percentage of Compensation, made to
any Participant who is a Key Employee.
17.3 Impact on Contribution Limitations
For any Plan Year during which the Plan is a Top-Heavy Plan, the number
"1.0" shall be substituted for the number "1.25" wherever it appears in
section 415(e)(2) and (3) of the Code.
17.4 Special Definitions17.4Special Definitions
For purposes of this Article 17 only, the following definitions shall
apply:
(a) "Aggregation Group" means either the Required Aggregation Group
or any Permissive Aggregation Group, as the Company may elect.
(b) "Determination Date" means the last day of the Plan Year prior to
the applicable Plan Year.
(c) "Key Employee" means a key employee, as defined in section 416(i)
of the Code.
(d) "Permissive Aggregation Group" means a group of qualified plans
which includes (i) the Required Aggregation Group and (ii) one or more
plans of a member of the Affiliated Group which are not part of the
Required Aggregation Group. A Permissive Aggregation Group, when
viewed as a single plan, must
satisfy the requirements of sections 401(a)(4) and 410 of the Code.
(e) "Required Aggregation Group" means a group of qualified plans
which includes (i) each plan of a member of the Affiliated Group in
which a Key Employee participates and (ii) each other plan of a member
of the Affiliated Group which enables any plan in which a Key Employee
participates to meet the requirements of section 401(a)(4) or 410 of
the Code.
(f) "Section 415 Compensation" shall have the meaning set forth in
Appendix I.
(g) "Top-Heavy Ratio" means a percentage determined pursuant to
section 416(g) of the Code.
ARTICLE 18. PERIOD OF SERVICE.
18.1 Period of Employment Relationship
An individual's Period of Service shall include any period during which
he or she maintains an employment relationship with any Affiliated
Group member, determined as follows:
(a) An individual's employment relationship shall begin as
of the date on which he or she first performs duties as
an Employee for which he or she receives (or is entitled
to receive) compensation and shall end as of the date on
which he or she retires, dies, quits, is discharged or
otherwise severs from all employment with all Affiliated
Group members.
(b) If an individual is absent (with or without pay) with
the approval of an Affiliated Group member and if the
absence does not exceed 12 months, then the absence
shall not be considered a quit. If the absence exceeds
12 months but the individual complies with all terms and
conditions imposed from time to time by the Affiliated
Group member (which may include a requirement of
reemployment), then the absence also shall not be
considered a quit. If the absence exceeds 12 months and
if the individual fails to comply with such terms and
conditions, then the absence shall be considered a quit
as of the expiration of the first 12 months.
(c) If an individual enters into military service with the
United States, then his or her entry into military
service shall not be considered a quit; provided,
however, that the entry into military service shall be
considered a quit as of the time when it occurs if the
individual fails to return to employment with an
Affiliated Group member within the period during which
his or her reemployment rights are protected by law.
18.2 Interval Between Periods of Employment
The Period of Service of an individual who is rehired by an Affiliated
Group member within 365 days after the end of his or her previous
employment relationship with an Affiliated Group member, as determined
pursuant to Section 18.1, shall include the period
between the end of the previous employment relationship and the
commencement of the new employment relationship.
18.3 Other Periods
An individual's Period of Service shall include any other period which
constitutes a Period of Service under such written, uniform and
nondiscriminatory rules as the Company may adopt from time to time.
18.4 Aggregation of Periods
All Periods of Service determined pursuant to this Article 18 shall be
aggregated, whether or not such Periods of Service are consecutive.
When partial months are aggregated, 30 days shall be deemed to equal
one full month.
18.5 Exclusions
Any other provision of this Article 18 notwithstanding, an individual's
Period of Service shall not include any period prior to February 1,
1983, during which he or she (a) declined to make Matched After-Tax
Contributions, although eligible to do so, or (b) declined to make
mandatory employee contributions required under any qualified thrift or
profit-sharing plan maintained by a predecessor of a Participating
Company, although eligible to do so.
ARTICLE 19. DEFINITIONS.
19.1 "Accounts" means, to the extent applicable to a Participant, one
or more of the Accounts listed in Section 6.2.
19.2 "Affiliated Group" means a group of one or more chains of
corporations connected through stock ownership with the Company, if:
(a) Stock possessing at least 80% of the total combined
voting power of all classes of stock entitled to vote or
at least 80% of the total value of shares of all classes
of stock of each of the corporations, except the
Company, is owned by one or more of the other
corporations; and
(b) The Company owns stock possessing at least 80% of the
total combined voting power of all classes of stock
entitled to vote or at least 80% of the total value of
shares of all classes of stock of at least one of the
other corporations excluding, in computing such voting
power or value, stock owned directly by such other
corporations.
In addition, the term "Affiliated Group" includes any other entity
which the Company has designated in writing as a member of the
Affiliated Group for purposes of the Plan. An entity shall be
considered a member of the Affiliated Group only with respect to
periods for which such designation is in effect or during which the
relationship described in Subsections (a) and (b) above exists.
19.3 "After-Tax Accounts" means, to the extent applicable to a
Participant, one or more of the accounts maintained under the Plan to
which After-Tax Contributions are credited. After-Tax Accounts shall
include transferred amounts described in Section 6.6. For purposes of
Article 8, "After-Tax Accounts" also means one or more of the Pre-1987
After-Tax Accounts and the Post-1986 After-Tax Accounts, to the extent
applicable to the Participant. The "Pre-1987 After-Tax Accounts" shall
consist of the portion of the After-Tax Accounts attributable to After-
Tax Contributions made by the Participant before January 1, 1987. The
"Post-1986 After-Tax Accounts" shall consist of the portion of the
After-Tax Accounts attributable to After-Tax Contributions made by the
Participant after December 31, 1986. "After-Tax Accounts" transferred
from the AP Plan to this Plan under Section 6.6 shall be apportioned
between the
Pre-1987 After-Tax Accounts and the Post-1986 After-Tax Accounts in a
manner consistent with the preceding two sentences.
19.4 "After-Tax Contribution" means a Matched After-Tax Contribution
or an Unmatched After-Tax Contribution.
19.5 "Annuity Starting Date" means the first day of the first period
for which an amount is paid (or is to be paid) under the Plan.
19.6 "APC Stock" means the common stock, $.01 par value, of the
Company.
19.7 "APC Stock Fund" means a part of the Trust Fund, as described in
Section 6.1. The APC Stock Fund shall be invested and reinvested
exclusively in APC Stock.
19.8 "AP Plan" means the American President Profit-Sharing Plan, a
plan maintained by the Company which is intended to qualify as a profit
-sharing plan under section 401(a) of the Code and which contains a
salary deferral arrangement intended to qualify under section 401(k) of
the Code.
19.9 "Basic Company Accounts" means, to the extent applicable to a
Participant who transfers to this Plan from the AP Plan as of September
1, 1990, one or more of the accounts maintained under the Plan to which
"Basic Company Contributions" made under the AP Plan were transferred.
19.10 "Beneficiary" means one or more persons designated by the
Participant (or by the Plan) pursuant to Section 16.5.
19.11 "Code" means the Internal Revenue Code of 1986, as amended from
time to time.
19.12 "Company" means American President Companies, Ltd., a Delaware
corporation.
19.13 "Company Accounts" means, to the extent applicable to a
Participant, one or more of the accounts maintained under the Plan to
which Company Contributions are credited.
19.14 "Company Contribution" means a Matching Contribution or a
Discretionary Contribution.
19.15 "Compensation" means the base salary or wages paid to the
Participant by a Participating Company for personal services performed
while an Eligible Employee, including commissions and amounts
contributed at the Participant's election to a plan described in
sections 125 or 401(k) of the Code, but excluding overtime pay,
bonuses, expatriate premiums, any other forms of additional
compensation, Company Contributions, and contributions by the
Participating Company under any other benefit plan, all as determined
by the Company.
Compensation taken into account under this Section 19.15 shall not
include an amount paid to a Participant for 1993 in excess of $235,840,
which is the limitation in effect for such year under Code section
401(a)(17), or any compensation paid to a Participant for any Plan Year
beginning after December 31, 1993 in excess of $150,000 (or such other
amount as may be adopted by the Commissioner of Internal Revenue to
reflect a cost-of-living adjustment under Code section 401(a)(17).
For purposes of applying the Code section 401(a)(17) dollar limitation
on Compensation, the Compensation of any of the 10 most highly
compensated Highly Compensated Employees or any five-percent owner
shall be determined by combining the Compensation of such top-10 Highly
Compensated Employee or five-percent owner with the Compensation of any
Employees who are family members of such top-10 Highly Compensated
Employee or five-percent owner. (For purposes of this Section 19.15,
"family members" means an individual's spouse and any lineal
descendants who have not attained age 19 prior to the end of the Plan
Year.) If, as a result of the application of such family-aggregation
rules, the Code section 401(a)(17) dollar limitation is exceeded, then
the limitation shall be prorated among the individuals in each family-
aggregation group in proportion to each such individual's Compensation,
determined without regard to the application of the family-aggregation
rules or the Code section 401(a)(17) dollar limitation.
19.16 "Disability" means the condition of a Participant who is
permanently unable, by reason of a physical or mental incapacity, to
perform the normal duties of his or her occupation for a Participating
Company, as certified by a physician selected by such Participating
Company.
19.17 "Discretionary Contribution" means a contribution made by a
Participating Company pursuant to Section 4.3.
19.18 "Eligible Employee" is defined in Section 2.1.
19.19 "Employee" means an individual who (a) is a common-law employee
of a member of the Affiliated Group or (b) is
a "leased employee" (within the meaning of section 414(n) of the Code)
with respect to a member of the Affiliated Group.
19.20 "Employee Accounts" means, to the extent applicable to a
Participant, one or more of the accounts maintained under the Plan to
which Employee Contributions are credited.
19.21 "Employee Contribution" means an After-Tax Contribution or a
Salary Deferral.
19.22 "ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time.
19.23 "Forfeiture" means that part of the Participant's Company
Accounts which has not become vested pursuant to Article 9 when he or
she ceases to be an Employee.
19.24 "Highly Compensated Employee" is defined in Appendix I.
19.25 "Investment Funds" means, to the extent applicable, one or more
of the APC Stock Fund and the other investment funds offered under the
Plan.
19.26 "Investment Manager" means any person who is:
(a) Registered as an investment adviser under the
Investment Advisers Act of 1940;
(b) A "bank," as defined in such Act; or
(c) An insurance company qualified to perform
investment management services under the laws of more
than one state.
19.27 "Matched After-Tax Contribution" means an after-tax
contribution that (a) was made by a Participant under Article 3
and (b) did not exceed six percent of his or her Compensation
for the period for which it was made.
19.28 "Matched Contribution" means a Matched After-Tax
Contribution or a Matched Salary Deferral.
19.29 "Matched Salary Deferral" means a pre-tax contribution
that (a) was made by a Participating Company on a Participant's
behalf under Article 3 and (b) did not exceed six percent of
his or her Compensation for the period for which it was made.
19.30 "Matching Contribution" means a contribution made by a
Participating Company pursuant to Section 4.1.
19.31 "NPSI Plan" means the National Piggyback Services, Inc.
Profit-Sharing and Pension Plan, as in effect until April 30,
1988. The NPSI Plan was a predecessor of the AP Plan. As of
April 1, 1985, the NPSI Plan was set forth in a single
document but was treated as two separate plans for purposes
of the Code; one component was a profit-sharing plan and the
other component was a pension plan. The AP Plan, as adopted
as of May 1, 1988, constituted an amendment to the profit-
sharing portion of the NPSI Plan and a merger of the pension
portion of the NPSI Plan into the AP Plan.
19.32"Participant" means an individual whose participation in
the Plan (a) has commenced pursuant to Section 2.2 or 2.3 and
(b) has not yet terminated pursuant to Section 2.5.
19.33 "Participating Company" means each member of the
Affiliated Group which has been designated in writing as a
Participating Company by the Company. The Company, in
writing, may designate a member of the Affiliated Group as a
Participating Company with respect to certain Employees, to
the exclusion of the other Employees of such Affiliated Group
member.
19.34 "Pension Accounts" means, to the extent
applicable to a Participant who transfers to this Plan from
the AP Plan as of September 1, 1990, and who previously
participated in the pension component of the NPSI Plan, one
or more of the accounts maintained under the Plan to which
"Pension Contributions" made under the NPSI Plan were
transferred.
19.35 "Period of Service" means an Employee's period of
employment with any Affiliated Group member, as determined
under Article 18.
19.36 "Period of Severance" means a period of time
which commences when the Employee retires, quits, is
discharged or otherwise severs from all employment with any
member of the Affiliated Group and ends on the date (if any)
on which he or she is rehired by a member of the Affiliated
Group. In no event, however, shall a Period of Severance
commence during any period of Special Absence (not to exceed
12 consecutive months).
19.37 "Permanent Service Break" means either (a) a
Period of Severance of at least 12 consecutive months ending
prior to January 1, 1985, or (b) a Period of Severance of at
least 60 consecutive months ending on or after January 1,
1985.
19.38 "Plan" means this American President Companies,
Ltd. SMART Plan, as amended from time to time.
19.39 "Plan Benefit" means the benefit payable to the
Participant or to his or her Beneficiary pursuant to Article
10.
19.40 "Plan Year" means a calendar year.
19.41 "Profit-Sharing Accounts" means, to the extent
applicable to a Participant who transfers to this Plan from
the AP Plan as of September 1, 1990, and who previously
participated in the profit-sharing component of the NPSI
Plan, one or more of the accounts maintained under the Plan
to which "Profit-Sharing Contributions" made under the NPSI
Plan were transferred.
19.42 "Qualified Joint and Survivor Annuity" means a
monthly annuity which is actuarially equivalent to the
Participant's Plan Benefit and which is payable (a) in the
case of a married Participant, for the joint lives of the
Participant and his or her spouse, with 100% of such annuity
continued for the life of the survivor, and (b) in the case
of a single Participant, for the life of the Participant.
19.43 "Qualified Preretirement Survivor Annuity" means
a monthly annuity in the form described in Section 10.10.
19.44 "Review Panel" means the fiduciary described in
Section 12.1.
19.45 "Rollover Accounts" means, to the extent
applicable to a Participant, one or more of the accounts
maintained under the Plan to which Rollover Contributions are
credited. Rollover Accounts shall also include transferred
amounts described in Section 6.6.
19.46 "Rollover Contribution" means a contribution made
by the Participant pursuant to Article 5.
19.47 "Salary Deferral" means a Matched Salary Deferral
or an Unmatched Salary Deferral.
19.48 "Salary Deferral Accounts" means, to the extent
applicable to the Participant, one or more of the accounts
maintained under the Plan to which Salary Deferrals are
credited. Salary Deferral Accounts shall also include
transferred amounts described in Section 6.6.
19.49 "Special Absence" means an absence from work
which commences on or after January 1, 1985, and which is due
to:
(a) The Employee's pregnancy;
(b) The birth of the Employee's child;
(c) The placement of a child with the Employee in
connection with the adoption of such child by the Employee;
or
(d) Caring for the child for a period immediately
after the birth or placement described in Subsections (b) and
(c) above, respectively.
An absence shall not be treated as a Special Absence unless the
Employee furnishes to the Company such timely information as the
Company may reasonably require in order to establish that such absence
is caused by one of the reasons set forth in this Section 19.49 and to
determine the number of days for which such absence is continuing.
19.50 "Transferred Company Accounts" means, to the extent applicable to
a Participant who transfers to this Plan from the AP Plan as of
September 1, 1990, one or more of the accounts maintained under the
Plan to which "Discretionary Contributions" and "Matching
Contributions" made under the AP Plan were transferred.
19.51 "Trust Agreement" means the trust agreement(s) between the
Company and the Trustee, as amended from time to time.
19.52 "Trustee" means the trustee(s) appointed by the Company pursuant
to Section 13.1.
19.53 "Trust Fund" means the trust fund(s) established pursuant to the
Trust Agreement.
19.54 "United States" means the 50 states of the United States, the
District of Columbia, Guam and Puerto Rico.
19.55 "Unmatched After-Tax Contribution" means an after-tax
contribution that (a) was made by a Participant under Article 3 and (b)
exceeded six percent of his or her Compensation for the period for
which it was made.
19.56 "Unmatched Contribution" means an Unmatched After-Tax
Contribution or an Unmatched Salary Deferral.
19.57 "Unmatched Salary Deferral" means a pre-tax contribution that (a)
was made by a Participating Company on a Participant's behalf under
Article 3 and (b) exceeded six percent of his or her Compensation for
the period for which it was made.
19.58 "Years of Service" means the number of months in an Employee's
Period of Service divided by 12. In no event, however, shall the Years
of Service of an Employee who transfers to this Plan from the AP Plan
as of September 1, 1990, be less than the number of his or her Years of
Service under the AP Plan as of August 31, 1990.
ARTICLE 20. EXECUTION.
To record the second amendment and restatement of the Plan to read as
set forth herein, effective as of January 1, 1993, the Company has caused its
authorized officer to execute this document on this 21st day of November, 1994.
AMERICAN PRESIDENT COMPANIES, LTD.
By Timothy J. Windle
Assistant Secretary
APPENDIX I
LIMITATIONS ON CONTRIBUTIONS;
ARTICLE 1. DEFINITIONS.
1.1 "Aggregate 401(k) Contributions" means, for any Plan Year, the sum of the
following: (a) the Participant's Salary Deferrals for the Plan Year; (b) the
Matching Contributions allocated to the Participant's Accounts as of a date
within the Plan Year, to the extent that such Matching Contributions are
aggregated with Salary Deferrals pursuant to Section 2.5 of this Appendix I;
and (c) the Qualified Nonelective Contributions allocated to the
Participant's Accounts as of a date within the Plan Year, to the extent that
such Qualified Nonelective Contributions are aggregated with Salary Deferrals
pursuant to Section 2.6 of this Appendix I.
1.2 "Aggregate 401(m) Contributions" means, for any Plan Year, the sum of
the following: (a) the Matching Contributions allocated to the Participant's
Accounts as of a date within the Plan Year; (b) the After-Tax Contributions
allocated to the Participant's Accounts as of a date within the Plan Year;
(c) the Participant's Salary Deferrals for the Plan Year, to the extent that
such Salary Deferrals are aggregated with Matching Contributions pursuant to
Section 3.4 of this Appendix I; and (d) the Qualified Nonelective
Contributions allocated to the Participant's Accounts as of a date within the
Plan Year, to the extent that such Qualified Nonelective Contributions
are aggregated with Matching Contributions pursuant to Section 3.5 of this
Appendix I.
1.3 "Annual Additions" means, for any calendar year, the sum of the
following:
(a) The aggregate after-tax employee contributions that the
Participant contributes during such year to all
qualified retirement plans maintained by the Employer
Group;
(b) The amount of employer contributions and forfeitures
allocated to the Participant under any qualified defined-
contribution plan that may be maintained by the Section
415 Employer Group, other than this Plan, as of any date
within such year;
(c) The amount of Unmatched Contributions allocated to the
Participant's Accounts
under this Plan as of any date within such year;
(d) The amount of Matched Contributions allocated to the
Participant's Accounts under this Plan as of any date
within such year and Matching Contributions and
Forfeitures attributable to such Matched Contributions;
(e) The amount of Discretionary Contributions allocated to
the Participant's Accounts under this Plan as of any
date within such year; and
(f) The amount of Qualified Nonelective Contributions
allocated to the Participant's Accounts under this Plan
as of any date within such year.
A Participant's Annual Additions shall not include Rollover
Contributions or any payments of principal or interest on a loan that
he or she has obtained from the Plan.
1.4 "Excess Aggregate Contributions" means the amount by which the
Aggregate 401(m) Contributions of Highly Compensated Employees are
reduced pursuant to Section 3.3 of this Appendix I.
1.5 "Excess Contributions" means the amount by which the Aggregate
401(k) Contributions of Highly Compensated Employees are reduced
pursuant to Section 2.4 of this Appendix I.
1.6 "Excess Deferrals" means the amount of a Participant's Salary
Deferrals and elective deferrals (within the meaning of section
402(g)(3) of the Code) that exceed the limits set forth in Section 2.1
of this Appendix I.
1.7 "Family Member" for purposes of this Appendix I, means an
individual's spouse, lineal ascendants and descendants, and the spouses
of such lineal ascendants and descendants.
1.8 "Highly Compensated Employee" for any Plan Year means any active
Employee who, during the look-back year:
(a) Received Total Compensation of more than $75,000 (or
such larger amount as may be adopted by the Commissioner
of Internal Revenue to reflect a cost-of-living
adjustment);
(b) Received Total Compensation of more than $50,000 (or
such larger amount as may be adopted by the Commissioner
of Internal Revenue to reflect a cost-of-living
adjustment) and was a member of the Top-Paid Group; or
(c) Was an officer of a member of the Affiliated Group and
received Total Compensation of more than 50% of the
dollar limitation in effect under section 415(b)(1)(A)
of the Code.
The term "Highly Compensated Employee" also includes: (1) Employees who
are both described in the preceding sentence if the term "determination
year" is substituted for the term "look-back year" and the Employee is
one of the 100 Employees who received the most Total Compensation from
members of the Affiliated Group during the determination year; and (2)
Employees who are five-percent owners at any time during the look-back
year or determination year. If no officer has satisfied the Total
Compensation requirement of (c) above during either a determination
year or look-back year, the highest paid officer for such year shall be
treated as a Highly Compensated Employee.
If an Employee is, during a determination year or look-back year, a
Family Member of either a five-percent owner who is an active or former
Employee or a Highly Compensated Employee who is one of the 10 most
Highly Compensated Employees ranked on the basis of Total Compensation
paid during such year, then the Family Member and the five-percent
owner or top-ten Highly Compensated Employee shall be aggregated. In
such case, the Family Member and the five-percent owner or top-ten
Highly Compensated Employee shall be treated as a single Employee
receiving Earnings, compensation and Plan contributions and benefits of
the Family Member and five-percent owner or top-ten Highly Compensated
Employee.
For purposes of this Section 1.8, the determination year shall be the
Plan Year. The look-back year shall be the 12-month period immediately
preceding the determination year.
The determination of who is a Highly Compensated Employee, including
the determinations of the number and identity of Employees in the Top-
Paid Group, the top 100 Employees, the number of Employees treated as
officers and the Total Compensation that is considered, will be made in
accordance with section 414(q) of the Code and regulations thereunder.
1.9 "Highly Compensated Former Employee" means a former Employee who
separated from service (or is deemed to have separated) prior to the
determination year, performs no service for any member of the
Affiliated Group during the determination year, and was a Highly
Compensated Employee as an active Employee for either the separation
year or any determination year ending on or after the Employee's 55th
birthday. The determination of who is a Highly Compensated Former
Employee will be made in accordance with section 414(q) of the Code and
regulations thereunder.
1.10 "Nonhighly Compensated Employee" for any Plan Year means any
active Employee who is not a Highly Compensated Employee.
1.11 "Section 415 Compensation" means any one of the definitions of
compensation described in Subsections (a), (b), (c) or (d) of Section
1.13 of this Appendix I received by an Employee from members of the
Section 415 Employer Group. Any definition of Section 415 Compensation
shall be used consistently to define the compensation of all Employees
taken into account in satisfying the requirements of an applicable
provision of this Appendix I for the relevant determination period.
1.12 "Section 415 Employer Group" means any group of one or more
chains of corporations connected through stock ownership with the
Company, if:
(a) Stock possessing more than 50% of the total combined
voting power of all classes of stock entitled to vote or
more than 50% of the total value of shares of all
classes of stock of each of the corporations, except the
Company, is owned by one or more of the other
corporations; and
(b) The Company owns stock possessing more than 50% of the
total combined voting power of all classes of stock
entitled to vote or more than 50% of the total value of
shares of all classes of stock of at least one of the
other corporations excluding, in computing such voting
power or value, stock owned directly by such other
corporations.
1.13 "Section 414(s) Compensation" means any one of
the following definitions of compensation received by an
Employee from members of the Affiliated Group:
(a) Compensation as defined in Treasury Regulation section
1.415-2(d) or any successor thereto;
(b) "Wages" as defined in section 3401(a) of the Code for
purposes of income tax withholding at the source, but
determined without regard to any rules that limit the
remuneration included in wages based on the nature or
location of the employment or the services performed
(such as the exception for agricultural labor in section
3401(a)(23) of the Code);
(c) "Wages" as defined in section 3401(a) of the Code for
purposes of income tax withholding at the source, plus
all other payments of compensation reportable under Code
sections 6041(d) and 6051(a)(3) and the regulations
thereunder, determined without regard to any rules that
limit such Wages or reportable compensation based on the
nature or location of the employment or the services
performed (such as the exception for agricultural labor
in section 3401(a)(23) of the Code), and modified, at
the election of the Company, to exclude amounts paid or
reimbursed for the Employee's moving expenses, to the
extent it is reasonable to believe that these amounts
are deductible by the Employee under section 217 of the
Code;
(d) Any of the definitions of Section 414(s) Compensation
set forth in Subsections (a), (b) and (c) above, reduced
by all of the following items (even if includible in
gross income): reimbursements or other expense
allowances, fringe benefits (cash and noncash), moving
expenses, deferred compensation and welfare benefits;
(e) Any of the definitions of Section 414(s) Compensation
set forth in Subsections (a), (b), (c) and (d) above,
modified to include any elective contributions made by a
member of the Affiliated Group on behalf of the Employee
that are not includible in gross income under section
125, 402(a)(8), 402(h) or 403(b) of the Code; or
(f) Any reasonable definition of compensation that does not
by design favor Highly Compensated Employees and that
satisfies the nondiscrimination requirement set forth in
Treasury Regulation section 1.414(s)-1T(d)(2) or the successor
thereto.
Any definition of Section 414(s) Compensation shall be used
consistently to define the compensation of all Employees taken into
account in satisfying the requirements of an applicable provision of
this Appendix I for the relevant determination period. For purposes of
applying the limitations set forth in Articles 2, 3 and 4 of this
Appendix I, Section 414(s) Compensation shall not include compensation
paid to an Employee for 1993 in excess of $235,840, which is the
limitation in effect for such year under Code section 401(a)(17), or
any compensation paid to an Employee for any Plan Year beginning after
December 31, 1993 in excess of $150,000 (or such other amount as may be
adopted by the Commissioner of Internal Revenue to reflect a cost-of-
living adjustment under Code section 401(a)(17).
1.14 "Top-Paid Group" for any Plan Year means the top 20% (in terms of
Total Compensation) of all Employees of the Affiliated Group, excluding
the following:
(a) Any Employee covered by a collective bargaining
agreement who is not an Eligible Employee;
(b) Any Employee who is a nonresident alien with respect to
the United States who receives no income with a source
within the United States from a member of the Affiliated
Group;
(c) Any Employee who has not completed at least 500 Hours of
Service during any six-month period at the end of the
Plan Year;
(d) Any Employee who normally works less than 17 hours per
week;
(e) Any Employee who normally works no more than six months
during any year; and
(f) Any Employee who has not attained the age of 21 at the
end of the Plan Year."
1.15 "Total Compensation" means "wages," as defined in
section 3401(a) of the Code for purposes of income tax
withholding at the source, but determined:
(a) Without regard to any rules that limit the remuneration
included in "wages" based on the nature or location of
the employment or
the services performed (such as the exception for agricultural
labor in section 3401(a)(2) of the Code); and
(b) By including amounts deferred but not refunded under a
cafeteria plan, as such term is defined in section
125(c) of the Code and under a plan, including this
Plan, qualified under section 401(k) of the Code.
ARTICLE 2. DEFERRAL AND AVERAGE DEFERRAL PERCENTAGE
LIMITATIONS.
2.1 Return of Excess Deferrals
The aggregate Salary Deferrals of any Participant for any calendar
year, together with his or her elective deferrals under any other plan
or arrangement to which section 402(g) of the Code applies and that is
maintained by any Affiliated Group member shall not exceed $7,000 (or
such larger amount as may be adopted by the Commissioner of Internal
Revenue to reflect a cost-of-living adjustment). In the event that
such aggregate Salary Deferrals and elective deferrals of any
Participant for any calendar year exceed $7,000 (or such larger amount
as may be adopted by the Commissioner of Internal Revenue to reflect a
cost-of-living adjustment), then the Participant may designate all or a
portion of such Excess Deferrals as attributable to this Plan and may
request a refund of such portion by notifying the Company in writing on
or before the March 1 next following the close of such calendar year.
If timely notice is received by the Company, then such portion of the
Excess Deferrals, and any income or loss allocable to such portion,
shall be refunded to the Participant not later than the April 15 next
following the close of such calendar year. If timely notice is not
received, then such a Participant's Excess Deferrals, and any income or
loss allocable thereto, shall be refunded to the Participant from this
Plan no later than the April 15 next following the close of such
calendar year.
In the event that a Participant's elective deferrals (within the
meaning of section 402(g)(3) of the Code) for a calendar year exceed
$7,000 (or such larger amount as may be adopted by the Commissioner of
Internal Revenue to reflect a cost-of-living adjustment) solely because
such Participant participated in this Plan and a plan or arrangement
maintained by an employer other than the Company or any member of the
Affiliated Group, then such Participant may designate all or a portion
of such Excess Deferrals as attributable to this Plan and may request a
refund of such portion by notifying the Company in writing on or before
the March 1 next following the close of such calendar year; provided,
however, that no refund shall be made from the Plan in these
circumstances unless the Participant is an Employee on the earlier of
such March 1 or the date such refund is to be made.
2.2 Average Deferral Percentage Limitation
The Plan shall satisfy the average deferral percentage test, as
provided in section 401(k)(3) of the Code and section 1.401(k)-1 of the
regulations issued thereunder. Subject to the special rules described
in Section 2.7 of this Appendix I, the Aggregate 401(k) Contributions
of Highly Compensated Employees shall not exceed the limits described
below:
(a) An Actual Deferral Percentage shall be determined for
each individual who, at any time during the Plan Year,
is a Participant (including a suspended Participant) or
is eligible to participate in the Plan, which Actual
Deferral Percentage shall be the ratio, computed to the
nearest one-hundredth of one percent, of the
individual's Aggregate 401(k) Contributions for the Plan
Year to the individual's Section 414(s) Compensation for
the Plan Year;
(b) The Actual Deferral Percentages (including zero
percentages) of Highly Compensated Employees and
Nonhighly Compensated Employees shall be separately
averaged to determine each group's Average Deferral
Percentage; and
(c) The Aggregate 401(k) Contributions of Highly Compensated
Employees shall constitute Excess Contributions and
shall be reduced, pursuant to Sections 2.3 and 2.4 of
this Appendix I, to the extent that the Average Deferral
Percentage of Highly Compensated Employees exceeds the
greater of (1) 125% of the Average Deferral Percentage
of Nonhighly Compensated Employees or (2) the lesser of
(a) 200% of the Average Deferral Percentage of Nonhighly
Compensated Employees or (B) the Average Deferral
Percentage of Nonhighly Compensated Employees plus two
percentage points.
2.3 Allocation of Excess Contributions to Highly Compensated
Employees
Any Excess Contributions for a Plan Year shall be allocated to Highly
Compensated Employees by use of a leveling process, whereby the Actual
Deferral Percentage of the Highly Compensated Employee with the highest
Actual Deferral Percentage is reduced to the extent required to (a)
eliminate all Excess Contributions or (b) cause such Highly Compensated
Employee's Actual Deferral Percentage to equal the Actual Deferral
Percentage of the Highly Compensated Employee with the next-highest
Actual Deferral Percentage. Such leveling process shall be repeated
until all Excess Contributions for such Plan Year are allocated to
Highly Compensated Employees.
2.4 Distribution of Excess Contributions;
Excess Contributions allocated to Highly Compensated Employees for the
Plan Year pursuant to Section 2.3 of this Appendix I, together with any
income or loss allocable to such Excess Contributions, shall be
distributed to such Highly Compensated Employees not later than the
March 15 next following the close of such Plan Year, if possible, and
in any event no later than the December 31 next following the close of
such Plan Year. Any Employee Contributions distributed pursuant to
this Section 2.4 shall not be treated as Matched Contributions.
2.5 Qualified Matching Contributions;
The Company, in its sole discretion, may include all or a portion of
the Matching Contributions for a Plan Year in Aggregate 401(k)
Contributions taken into account in applying the Average Deferral
Percentage limitation described in Section 2.2 of this Appendix I for
such Plan Year, provided that the requirements of Treasury Regulation
section 1.401(k)-1(b)(5) are satisfied.
2.6 Corrective Qualified Nonelective Contributions;
In order to satisfy (or partially satisfy) the Average Deferral
Percentage limitation described in Section 2.2 of this Appendix I, the
Average Contribution Percentage limitation described in Section 3.1 of
this Appendix I or the multiple-use limitation described in Section 4.2
of this Appendix I (or more than one of such limitations), the Company,
in its sole discretion, may make a Qualified Nonelective Contribution
to the Plan. Any such Qualified Nonelective Contribution shall be
allocated to the Accounts of those Participants who are eligible to
receive an allocation of Matching Contributions under Section 4.2 of
the Plan and who are Nonhighly Compensated Employees for the Plan Year
with respect to which such Qualified Nonelective Contribution is made,
beginning with the Participant with the lowest Section 414(s)
Compensation for such Plan Year and allocating the maximum amount
permissible under Section 5.1 of this Appendix I before allocating any
portion of such Qualified Nonelective Contribution to
the Participant with the next lowest Section 414(s) Compensation. Such
allocations shall continue until the Plan satisfies the Average
Deferral Percentage limitation described in Section 2.2 of this
Appendix I, the Average Contribution Percentage limitation described in
Section 3.1 of this Appendix I or the multiple-use limitation described
in Section 4.2 of this Appendix I (or more than one of such
limitations), or until the amount of such Qualified Nonelective
Contribution is exhausted.
The Company, in its sole discretion, may include all or a portion of
the Qualified Nonelective Contributions for a Plan Year in Aggregate
401(k) Contributions taken into account in applying the Average
Deferral Percentage limitation described in Section 2.2 of this
Appendix I for such Plan Year, provided that the requirements of
Treasury Regulation section 1.401(k)-1(b)(5) are satisfied.
Qualified Nonelective Contributions shall be paid to the Trustee as
soon as reasonably practicable following the close of the Plan Year and
shall be allocated to the Accounts of Nonhighly Compensated Employees
as of the last day of such Plan Year. In all other respects, the
contribution, allocation, investment, vesting and distribution of
Qualified Nonelective Contributions shall be governed by the provisions
of the Plan concerning Matching Contributions.
2.7 Special Rules
The following special rules shall apply for purposes of this Article 2:
(a) The amount of Excess Deferrals to be distributed to a
Participant for a calendar year pursuant to Section 2.1
of this Appendix I shall be reduced by the amount of any
Excess Contributions previously distributed to such
Participant for the Plan Year ending within such
calendar year;
(b) The amount of Excess Contributions to be distributed to
a Participant for a Plan Year pursuant to Section 2.2 of
this Appendix I shall be reduced by the amount of any
Excess Deferrals previously distributed to such
Participant for the calendar year ending with such Plan
Year;
(c) For purposes of applying the limitation described in
Section 2.2 of this Appendix I,
the Actual Deferral Percentage of any Highly Compensated
Employee who is eligible to make Salary Deferrals and to
make elective deferrals (within the meaning of section
402(g)(3) of the Code) under any other plans, contracts
or arrangements of the Affiliated Group shall be
determined as if all such Salary Deferrals and elective
deferrals were made under a single arrangement;
provided, however, that plans, contracts and
arrangements shall not be treated as a single
arrangement to the extent that Treasury Regulation
section 1.401(k)-1(b)(3)(ii)(B) prohibits aggregation;
(d) In the event that this Plan is aggregated with one or
more other plans in order to satisfy the requirements of
Code section 401(a)(4), 401(k) or 410(b), then all such
aggregated plans, including the Plan, shall be treated
as a single plan for all purposes under all such Code
sections (except for purposes of the average benefit
percentage provisions of Code section 410(b)(2)(A)(ii));
(e) In the event that the mandatory disaggregation rules of
Treasury Regulation section 1.401(k)-1(b)(3)(ii)(B)
apply to the Plan, or to the Plan and other plans with
which it is aggregated as described in Subsection (d)
above, then the limitation described in Section 2.2 of
this Appendix I shall be applied as if each mandatorily
disaggregated portion of the Plan (or aggregated plans)
were a single arrangement;
(f) The Actual Deferral Percentage of any of the 10 most
highly compensated Highly Compensated Employees or any
five-percent owner shall be determined by combining the
Aggregate 401(k) Contributions and Section 414(s)
Compensation of such top-10 Highly Compensated Employee
or five-percent owner with the Aggregate 401(k)
Contributions and Section 414(s) Compensation of any
Employees who are Family Members of such top-10 Highly
Compensated Employee or five-percent owner;
(g) Any Excess Contributions of any of the 10 most highly
compensated Highly Compensated Employees or five-percent
owner affected by the family-aggregation rules described
in
Subsection (f) of this Section 2.5 shall be allocated among
the individuals in each family aggregation group in
proportion to the Aggregate 401(k) Contributions of each
such individual; and
(h) Income (and loss) allocable to Excess Contributions for
the Plan Year shall be determined pursuant to the
provisions for allocating income (and loss) to a
Participant's Accounts under Section 5.7 of the Plan.
2.8 Prospective Limitations on Salary Deferrals
At any time, the Company (at its sole discretion) may reduce the
maximum rate at which any Participant may make Salary Deferrals or
After-Tax Contributions (or both) to the Plan, or the Company may
require that any Participant discontinue any or all Employee
Contributions, in order to ensure that the limitations described in
this Article 2 are met. Any reduction or discontinuance of Employee
Contributions may be applied selectively to individual Participants or
to particular classes of Participants, as the Company may determine.
Upon such date as the Company may determine, this Section 2.8 shall
automatically cease to apply until the Company again determines that a
reduction or discontinuance of Employee Contributions is required for
any Participant.
ARTICLE 3. AVERAGE CONTRIBUTION PERCENTAGE LIMITATIONS.
3.1 Average Contribution Percentage Limitation
The Plan shall satisfy the average contribution percentage test, as
provided in section 401(m)(2) of the Code and section 1.401(m)-1 of the
regulations issued thereunder. Subject to the special rules described
in Section 3.6 of this Appendix I, the Aggregate 401(m) Contributions
of Highly Compensated Employees shall not exceed the limits described
below:
(a) An Actual Contribution Percentage shall be determined
for each individual who, at any time during the Plan
Year, is a Participant (including a suspended
Participant) or is eligible to participate in the Plan,
which Actual Contribution Percentage shall be the ratio,
computed to the nearest one-hundredth of one percent, of
the individual's Aggregate 401(m) Contributions for the
Plan Year to the individual's Section 414(s)
Compensation for the Plan Year;
(b) The Actual Contribution Percentages (including zero
percentages) of Highly Compensated Employees and
Nonhighly Compensated Employees shall be separately
averaged to determine each group's Average Contribution
Percentage; and
(c) The Aggregate 401(m) Contributions of Highly Compensated
Employees shall constitute Excess Aggregate
Contributions and shall be reduced, pursuant to Sections
3.2 and 3.3 of this Appendix I, to the extent that the
Average Contribution Percentage of Highly Compensated
Employees exceeds the greater of (1) 125% of the Average
Contribution Percentage of Nonhighly Compensated
Employees or (2) the lesser of (A) 200% of the Average
Contribution Percentage of Nonhighly Compensated
Employees or (B) the Average Contribution Percentage of
Nonhighly Compensated Employees plus two percentage
points.
3.2 Allocation of Excess Aggregate Contributions to Highly
Compensated Employees
Any Excess Aggregate Contributions for a Plan Year shall be allocated
to Highly Compensated Employees by use of a leveling process, whereby
the Actual Contribution Percentage of the Highly Compensated
Employee with the highest Actual Contribution Percentage is reduced to
the extent required to (a) eliminate all Excess Aggregate Contributions
or (b) cause such Highly Compensated Employee's Actual Contribution
Percentage to equal the Actual Contribution Percentage of the Highly
Compensated Employee with the next-highest Actual Contribution
Percentage. Such leveling process shall be repeated until all Excess
Aggregate Contributions for such Plan Year are allocated to Highly
Compensated Employees.
3.3 Distribution of Excess Aggregate Contributions
Excess Aggregate Contributions allocated to Highly Compensated
Employees for the Plan Year pursuant to Section 3.2 of this Appendix I,
together with any income or loss allocable to such Excess Aggregate
Contributions, shall be distributed to such Highly Compensated
Employees not later than the March 15 next following the close of such
Plan Year, if possible, and in any event no later than the December 31
next following the close of such Plan Year. Any Employee Contributions
distributed pursuant to this Section 3.3 shall not be treated as
Matched Contributions.
3.4 Use of Salary Deferrals
The Company, in its sole discretion, may include all or a portion of
the Salary Deferrals for a Plan Year in Aggregate 401(m) Contributions
taken into account in applying the Average Contribution Percentage
limitation described in Section 3.1 of this Appendix I for such Plan
Year, provided that the requirements of Treasury Regulation section
1.401(m)-1(b)(5) are satisfied.
3.5 Corrective Qualified Nonelective Contributions
The Company, in its sole discretion, may include all or a portion of
the Qualified Nonelective Contributions made pursuant to Section 2.6 of
this Appendix I for a Plan Year in Aggregate 401(m) Contributions taken
into account in applying the Average Contribution Percentage limitation
described in Section 3.1 of this Appendix I for such Plan Year,
provided that the requirements of Treasury Regulation section 1.401(m)-
1(b)(5) are satisfied.
3.6 Special Rules
The following special rules shall apply for purposes of this Article 3:
(a) For purposes of applying the limitation described in
Section 3.1 of this Appendix I, the Actual Contribution
Percentage of any Highly Compensated Employee who is
eligible to participate in the Plan and to make employee
contributions or receive an allocation of matching
contributions (within the meaning of section
401(m)(4)(A) of the Code) under any other plans,
contracts or arrangements of the Affiliated Group shall
be determined as if Matching Contributions allocated to
such Highly Compensated Employee's Accounts and all such
employee contributions and matching contributions were
made under a single arrangement;
(b) In the event that this Plan is aggregated with one or
more other plans in order to satisfy the requirements of
Code section 401(a)(4), 401(m) or 410(b), then all such
aggregated plans, including the Plan, shall be treated
as a single plan for all purposes under all such Code
sections (except for purposes of the average benefit
percentage provisions of Code section 410(b)(2)(A)(ii));
(c) In the event that the mandatory disaggregation rules of
Treasury Regulation section 1.401(m)-1(b)(3)(ii) apply
to the Plan, or to the Plan and other plans with which
it is aggregated as described in Subsection (b) above,
then the limitation described in Section 3.1 of this
Appendix I shall be applied as if each mandatorily
disaggregated portion of the Plan (or aggregated plans)
were a single arrangement;
(d) The Actual Contribution Percentage of any of the 10 most
highly compensated Highly Compensated Employees or any
five-percent owner shall be determined by combining the
Aggregate 401(m) Contributions and Section 414(s)
Compensation of such top-10 Highly Compensated Employee
or five-percent owner with the Aggregate 401(m)
Contributions and Section 414(s) Compensation of any
Employees who are Family Members of such top-10 Highly
Compensated Employee or five-percent owner;
(e) Any Excess Aggregate Contributions of any of the 10 most
highly compensated Highly Compensated Employees or five-
percent owner affected by the family-aggregation rules
described in Subsection (d) of this Section 3.6 shall be
allocated among the individuals in each family
aggregation group in proportion to the Aggregate 401(m)
Contributions of each such individual; and
(f) Income (and loss) allocable to Excess Aggregate
Contributions for the Plan Year shall be determined
pursuant to the provisions for allocating income (and
loss) to a Participant's Accounts under Section 5.7 of
the Plan.
ARTICLE 4. MULTIPLE-USE LIMITATIONS.
4.1 Applicability of the Multiple-Use Limitation;
The limitation described in this Article 4 shall apply only if, for a
Plan Year, after the limitations of Articles 2 and 3 of this Appendix I
are applied:
(a) The Average Deferral Percentage of Highly Compensated
Employees (1) exceeds 125% of the Average Deferral
Percentage of Nonhighly Compensated Employees, but (2)
does not exceed the lesser of (A) 200% of the Average
Deferral Percentage of Nonhighly Compensated Employees
or (B) the Average Deferral Percentage of Nonhighly
Compensated Employees plus two percentage points; and
(b) The Average Contribution Percentage of Highly
Compensated Employees (1) exceeds 125% of the Average
Contribution Percentage of Nonhighly Compensated
Employees, but (2) does not exceed the lesser of (A)
200% of the Average Contribution Percentage of Nonhighly
Compensated Employees or (B) the Average Contribution
Percentage of Nonhighly Compensated Employees plus two
percentage points.
4.2 Multiple-Use Limitation
The sum of the Average Deferral Percentage and Average Compensation
Percentage of Highly Compensated Employees shall not exceed the greater
of (a) or (b) below.
(a) This limit equals the sum of:
(1) 1.25 times the greater of the Average Deferral
Percentage or Average Contribution Percentage of
Nonhighly Compensated Employees; and
(2) The lesser of (A) 200% of the lesser of the
Average Deferral Percentage or Average
Contribution Percentage of Nonhighly Compensated
Employees, or (B) the lesser of the Average
Deferral Percentage or Average Contribution
Percentage of Nonhighly Compensated Employees
plus two percentage points.
(b) This limit equals the sum of:
(1) 1.25 times the lesser of the Average Deferral
Percentage or Average Contribution Percentage of
Nonhighly Compensated Employees; and
(2) The lesser of (A) 200% of the greater of the
Average Deferral Percentage or Average
Contribution Percentage of Nonhighly Compensated
Employees, or (B) the greater of the Average
Deferral Percentage or Average Contribution
Percentage of Nonhighly Compensated Employees
plus two percentage points.
4.3 Correction of Multiple-Use Limitation
To the extent necessary, the limitation of Section 4.2 of this Appendix
I shall be satisfied by one or more of the following methods: (a) the
allocation of corrective Qualified Nonelective Contributions in the
manner set forth in Sections 2.6 or 3.5 of this Appendix I, or (b) the
distribution of Aggregate 401(m) Contributions (and income or loss
allocable thereto) to Highly Compensated Employees in the manner set
forth in Sections 3.2 and 3.3 of this Appendix I, followed by the
distribution of Aggregate 401(k) Contributions (and income or loss
allocable thereto) to Highly Compensated Employees in the manner set
forth in Sections 2.3 and 2.4 of this Appendix I.
ARTICLE 5. ALLOCATION LIMITATIONS.
5.1 Limitation on Contributions
The Annual Additions allocated or attributed to a Participant for any
calendar year shall not exceed the lesser of the following:
(a) $30,000 (or, if greater, 25% of the dollar limitation in
effect under Code section 415(b)(1)(A)); or
(b) 25% of the Participant's Section 415 Compensation for
such year.
If a Participant's Annual Additions would exceed the foregoing
limitation, then such Annual Additions shall be reduced by reducing the
components thereof as necessary in the order in which they are listed
in Section 1.3 of this Appendix I. Such reduction shall be made in
accordance with this Article 5. Any amounts so reduced shall not be
included in a Participant's Aggregate 401(k) Contributions or Aggregate
401(m) Contributions.
5.2 Effect on Future Contributions
Articles 3 and 4 of the Plan notwithstanding, the Employee
Contributions that a Participant is permitted to make and his or her
share of Company Contributions and reallocated Forfeitures shall be
reduced prospectively to the extent required by Section 5.1 of this
Appendix I. The aggregate amount of the Company Contributions that
otherwise would be made under Article 4 of the Plan shall be reduced
accordingly. Any Forfeitures that cannot be reallocated to any
Participant by reason of this Article 5 shall be credited to the
suspense account described in Section 5.4 of this Appendix I. No
Participant shall be affected by this Article 5 in any manner unless a
reduction of his or her Employee Contributions and his or her share of
Company Contributions and reallocated Forfeitures is required in order
to prevent his or her Annual Addition from exceeding the limitation set
forth in Section 5.1 of this Appendix I.
5.3 Return of Prior Employee Contributions
If the amount of any prior Employee Contribution is determined to have
been excessive by reason of this Article 5, then the amount of the
excess (adjusted to reflect any earnings, appreciation or losses
attributable to such excess) shall be refunded by the Trustee in cash
to the Participant who made such
Employee Contribution. Any Matched Employee Contributions that are
refunded under this Section 5.3 shall not be included in the Matched
Employee Contributions that attract a Matching Contribution.
5.4 Other Excess Amounts
If, as a result of the reallocation of Forfeitures or a reasonable
error in estimating a Participant's compensation, the Participant's
Annual Addition (other than Employee Contributions) exceeds his or her
Contribution Limitation, then the excess shall be transferred to a
suspense account. Any earnings, appreciation or losses attributable to
the suspense account shall be allocated to such account. All amounts
credited to the suspense account shall be applied to reduce Company
Contributions for the next Plan Year, and for succeeding Plan Years if
necessary. Such amounts shall be allocated among Participants pursuant
to Article 4 of the Plan until the suspense account is exhausted
(subject to this Article 5). The suspense account shall be invested as
the Company shall direct.
5.5 Combined Limitation on Benefits and Contributions
Except as otherwise provided in ERISA, the Tax Equity and Fiscal
Responsibility Act of 1982 or the Tax Reform Act of 1986, the sum of a
Participant's defined-benefit plan fraction and his or her defined-
contribution plan fraction shall not exceed 1.0 with respect to any
Plan Year. For purposes of this Section 5.5, the terms "defined-
benefit plan fraction" and "defined-contribution plan fraction" shall
have the meaning given to such terms by section 415(e) of the Code and
the regulations thereunder. If a Participant would exceed the
foregoing limitation, then such Participant's benefits under any
qualified defined-benefit plan that may be maintained by the Section
415 Employer Group shall be reduced as necessary to allow his or her
Annual Additions to equal the maximum permitted by Section 5.1 of this
Appendix I.
--
EXCESS-BENEFIT PLAN OF
AMERICAN PRESIDENT COMPANIES, LTD.
SECTION 1. ESTABLISHMENT AND PURPOSE OF THE PLAN.
The Plan was established by the Company effective September 1,
1983. The Plan was most recently amended and restated effective December
31, 1994. The purpose of the Plan is to supplement certain benefits under
the SMART Plan and the Retirement Plan.
SECTION 2. ELIGIBILITY AND PARTICIPATION.
Participation in this Plan shall be limited to the following:
(a) Any participant in the SMART Plan who participated
in this Plan for periods prior to 1989;
(b) Any participant in the Retirement Plan whose
benefits under the Retirement Plan are affected by the limitations
imposed under section 401(a)(17) or 415 of the Code;
(c) Any participant in the Retirement Plan whose
benefits under the Retirement Plan are affected by the Code's
requirement that salaries or bonuses deferred under the Deferred
Compensation Plan cannot be taken into account in computing such
benefits; and
(d) Any participant in the Retirement Plan:
(i) Whose actual benefits under the Retirement
Plan, at retirement, are lower than the benefits that he or
she would have received absent the modification of the
Retirement Plan's benefit formula that was adopted
effective June 1, 1989, had he or she terminated employment
with the Affiliated Group as of December 31, 1992, or, if
earlier, the actual date of such termination of employment;
and
(ii) Whose "average annual compensation" under the
Retirement Plan equals or exceeds $125,000 at any time
after May 31, 1989.
On June 1 of each year, starting with June 1, 1990, the $125,000
amount set forth in the preceding sentence shall be adjusted for
inflation by multiplying it by a fraction. The numerator of such
fraction shall be the CPI-W for U.S. Cities on the immediately
preceding February 1, and the denominator of such fraction shall
be the CPI-W for U.S. Cities on February 1, 1989.
Any other provision of the Plan notwithstanding, an individual who was not
a Participant on May 31, 1994, shall in no event become a Participant
thereafter.
SECTION 3. PLAN BENEFITS.
(a) SMART Plan Reserve Account. The Company shall maintain on
its books each Reserve Account established under the Plan for periods
prior to 1989. As of the last day of each calendar month, the Company
shall credit interest on the balance in each Reserve Account. The rate of
interest for each valuation period prior to April 1, 1990, shall be equal
to the average yield for such valuation period on the "fixed-income fund"
then maintained under the SMART Plan, or such higher rate as the Committee
may determine. The rate of interest for each valuation period after March
31, 1990, shall be equal to the average yield for such valuation period on
the Fidelity Retirement Money Market Portfolio, or such higher rate as the
Committee may determine.
(b) Distribution of Reserve Account. Following the termination
of a Participant's employment with the Affiliated Group (and in no event
earlier), the Company shall pay to the Participant the nonforfeitable
percentage of the balance credited to his or her Reserve Account. Such
nonforfeitable percentage shall be determined under the SMART Plan, in the
case of balances attributable to amounts credited in lieu of "matching con
tributions" under the SMART Plan, and shall be 100%, in the case of
balances attributable to amounts credited in lieu of "salary deferrals"
under the SMART Plan. Payments from the Reserve Account shall be made in
cash, at such time(s) and in such form (including a lump sum or periodic
installments) as the Committee shall determine in its sole discretion.
The amount of any installment shall be equal to the balance remaining in
the Reserve Account divided by the number of installments then remaining
to be paid. Any unpaid balance remaining in a Reserve Account shall
continue to be credited with interest at the rate specified in Subsection
(a) above. In the event of a Participant's death before the entire
Reserve Account has been distributed to him or her, the unpaid balance
remaining in the Participant's Reserve Account shall be paid to the
"beneficiary" designated or determined under the SMART Plan, at such
time(s) and in such form as the Committee shall determine in its sole
discretion.
(c) Amount of Retirement Plan Supplement. Each Participant
whose pension benefits under the Retirement Plan are reduced by section
401(a)(17) or 415 of the Code, by the exclusion of salaries and bonuses
deferred under the Deferred Compensation Plan from pension calculations or
by the modification of the formula for calculating his or her "retirement
income" (not including cost-of-living adjustments) that was adopted on
July 10, 1990, effective as of June 1, 1989, shall be entitled to receive
a monthly benefit under this Plan. The amount of such benefit shall be
equal to:
(i) The monthly benefit that would have been payable to
the Participant under the Retirement Plan as of December 31, 1994,
if the limitations of sections 401(a)(17) and 415 of the Code,
such exclusion and such modification (to the extent that such
modification results in a benefit reduction) did not apply; minus
(ii) The actual monthly benefit payable to the Participant
under the Retirement Plan as of December 31, 1994, giving effect
to such exclusion, such modification and the limitations of
sections 401(a)(17) and 415 of the Code (as in effect when the
benefit under this Plan is calculated).
For purposes of this Subsection (c), the modification of the Retirement
Plan formula that was adopted on July 10, 1990, effective as of June 1,
1989, shall be deemed to have resulted in a benefit reduction only to the
extent that a Participant's actual monthly benefit payment under the
Retirement Plan is less than the monthly benefit payment that such
Participant would have received if such modification had not been adopted
and the Participant had separated from employment with all members of the
Affiliated Group as of the earlier of December 31, 1992, or the
Participant's actual employment termination date. The Retirement Plan's
Actuarial Equivalency factors shall be used to make this comparison.
(d) Transition Rules. Any other provision of the Plan
notwithstanding:
(i) The amount of a Participant's benefit under Subsection
(c) above shall in no event be greater than the benefit to which
the Participant would have been entitled under Subsection (c)
above if his or her employment in the Affiliated Group had
terminated on December 31, 1994; and
(ii) The amendment of this Plan adopted effective December
31, 1994, shall in no event cause the amount of a Participant's
benefit under Subsection (c) above to be smaller than the benefit
to which the Participant would have been entitled under Subsection
(c) above if his or her employment in the Affiliated Group had ter
minated on December 31, 1994, but the amount of such benefit may
decline for reasons unrelated to such amendment.
(e) Payment of Retirement Plan Supplement. A Participant's
benefit under Subsection (c) above shall be payable to the Participant or
to any other person (including, without limitation, a surviving spouse)
who is receiving benefits under the Retirement Plan which are derived from
the Participant. Any benefit under Subsection (c) above shall be payable
in the same form and at the same times as the Participant's benefit under
the Retirement Plan (and in no event earlier), unless the Participant's
benefit under the Retirement Plan is paid in the
form of a single lump sum. In that event, the benefit under Subsection
(c) above shall be payable in the normal form of benefit provided under
the Retirement Plan, computed as if the benefit actually paid to the
Participant under the Retirement Plan were also payable in the normal
form, unless:
(i) The Participant requests in writing to receive the
benefit under Subsection (c) above in a single lump sum; and
(ii) The Committee expressly approves the Participant's
request.
In the case of a Participant who is entitled to a "COLA-Adjusted
Retirement Income" under the Retirement Plan, the amount of any periodic
benefit under Subsection (c) above shall be recalculated each year in
accordance with the provisions of the Retirement Plan relating to the
adjustment of pension benefits to reflect changes in the cost of living.
SECTION 4. ADMINISTRATION.
The Plan shall be administered by the Committee. The Committee
shall make such rules, interpretations and computations as it may deem
appropriate. Any decision of the Committee with respect to the Plan,
including (without limitation) any determination of eligibility to
participate in the Plan and any calculation of benefits hereunder, shall
be conclusive and binding on all persons.
SECTION 5. CLAIMS AND INQUIRIES.
(a) Application for Benefits. Applications for benefits and
inquiries concerning the Plan (or concerning present or future rights to
benefits under the Plan) shall be submitted to the Company in writing and
addressed to the Chair of the Committee. An application for benefits
shall be submitted on the prescribed form and shall be signed by the
Participant or, in the case of a benefit payable after his or her death,
by the beneficiary.
(b) Denial of Application. In the event that an application
for benefits is denied in whole or in part, the Chair of the Committee
shall notify the applicant in writing of the denial and of the right to a
review of the denial. The written notice shall set forth, in a manner
calculated to be understood by the applicant, specific reasons for the
denial, specific references to the provisions of the Plan on which the
denial is based, a description of any information or material necessary
for the applicant to perfect the application, an explanation of why the
material is necessary, and an explanation of the review procedure under
the Plan. The written notice shall be given to the applicant within a
reasonable period of time (not more than 90 days) after the Chair of the
Committee received the applica
tion, unless special circumstances require further time for processing and
the applicant is advised of the extension. In no event shall the notice
be given more than 180 days after the Chair of the Committee received the
application.
(c) Review Panel. The Committee shall serve as the "Review
Panel" under the Plan. The Review Panel shall have the authority to act
with respect to any appeal from a denial of benefits or a determination of
benefit rights.
(d) Request for Review. An applicant whose application for
benefits was denied in whole or in part, or the applicant's duly
authorized representative, may appeal from the denial by submitting to the
Review Panel a request for a review of the application within 90 days
after receiving written notice of the denial from the Chair of the
Committee. The Chair of the Committee shall give the applicant or his or
her representative an opportunity to review pertinent materials, other
than legally privileged documents, in preparing the request for a review.
The request for a review shall be in writing and addressed to the
Committee. The request for a review shall set forth all of the grounds on
which it is based, all facts in support of the request, and any other
matters that the applicant deems pertinent. The Review Panel may require
the applicant to submit such additional facts, documents or other material
as it may deem necessary or appropriate in making its review.
(e) Decision on Review. The Review Panel shall act on each
request for a review within 60 days after receipt, unless special
circumstances require further time for processing and the applicant is
advised of the extension. In no event shall the decision on review be
rendered more than 120 days after the Review Panel received the request
for a review. The Review Panel shall give prompt written notice of its
decision to the applicant. In the event that the Review Panel confirms
the denial of the application for benefits in whole or in part, the notice
shall set forth, in a manner calculated to be understood by the applicant,
the specific reasons for the decision and specific references to the
provisions of the Plan on which the decision is based.
(f) Rules and Interpretations. The Review Panel shall adopt
such rules, procedures and interpretations of the Plan as it deems
necessary or appropriate in carrying out its responsibilities under this
Section 5.
(g) Exhaustion of Remedies. No legal action for benefits under
the Plan shall be brought unless and until the claimant (i) has submitted
a written application for benefits in accordance with Subsection (a)
above, (ii) has been notified by the Chair of the Committee that the
application is denied, (iii) has filed a written request for a review of
the application in accordance with Subsection (d) above and (iv) has been
notified in writing that the Review Panel has affirmed the denial of the
application; provided, however, that legal action may be brought after the
Chair of the Committee or the Review Panel has failed to take any action
on the claim within the time prescribed by Subsections (b) and (e) above,
respectively.
SECTION 6. AMENDMENT AND TERMINATION.
The Company expects to continue the Plan indefinitely. Future
conditions, however, cannot be foreseen, and the Company shall have the
authority to amend or terminate the Plan at any time. In the event of an
amendment or termination of the Plan, a Participant's benefits hereunder
shall not be less than the benefits to which the Participant would have
been entitled if his or her employment in the Affiliated Group had
terminated immediately prior to such amendment or termination.
SECTION 7. EMPLOYMENT RIGHTS.
Nothing in the Plan shall be deemed to give any person a right to
remain in the employ of any Affiliated Group member or affect the right of
the Affiliated Group members to terminate such person's employment with or
without cause.
SECTION 8. NO ASSIGNMENT.
The rights of any person to payments or benefits under the Plan
shall not be made subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, attachment or garnishment by
creditors. Any act in violation of this Section 8, whether voluntary or
involuntary, shall be void.
SECTION 9. PLAN UNFUNDED.
Participants shall have the status of general unsecured creditors
of the Company. The Plan constitutes a mere promise by the Company to
make benefit payments in the future. It is the Company's intent that the
Plan be considered unfunded for tax purposes and for purposes of Title I
of ERISA.
SECTION 10. CHOICE OF LAW.
The validity, interpretation, construction and performance of the
Plan shall be governed by ERISA and, to the extent they are not preempted,
by the laws of the State of California.
SECTION 11. DEFINITIONS.
(a) "Affiliated Group" means a group of one or more chains of
corporations connected through stock ownership with the Company, if:
(i) Stock possessing at least 80% of the total combined
voting power of all classes of stock entitled to vote or at least
80% of the total value of shares of all
classes of stock of each of the corporations, except the Company,
is owned by one or more of the other corporations; and
(ii) The Company owns stock possessing at least 80% of the
total combined voting power of all classes of stock entitled to
vote or at least 80% of the total value of shares of all classes
of stock of at least one of the other corporations excluding, in
computing such voting power or value, stock owned directly by such
other corporations.
In addition, the term "Affiliated Group" includes any other entity which
the Company has designated in writing as a member of the Affiliated Group
for purposes of this Plan, the SMART Plan or the Retirement Plan. An
entity shall be considered a member of the Affiliated Group only with
respect to periods for which such designation is in effect or during which
the relationship described in Paragraphs (i) and (ii) above exists.
(b) "Code" means the Internal Revenue Code of 1986, as amended.
(c) "Committee" means the Benefits Committee appointed by the
Company's Board of Directors.
(d) "Company" means American President Companies, Ltd., a
Delaware corporation.
(e) "Deferred Compensation Plan" means the Deferred
Compensation Plan of American President Companies, Ltd., as amended, and
the 1988 Deferred Compensation Plan of American President Companies, Ltd.,
as amended.
(f) "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
(g) "Participant" means a participant in the SMART Plan or in
the Retirement Plan who participates in this Plan under Section 2.
(h) "Plan" means this Excess-Benefit Plan of American President
Companies, Ltd.
(i) "Reserve Account" means a special bookkeeping account
established under the Plan prior to 1989 to supplement allocations under
the SMART Plan.
(j) "Retirement Plan" means the American President Companies,
Ltd. Retirement Plan, as amended, or its successor.
(k) "SMART Plan" means the American President Companies, Ltd.
SMART Plan, as amended, or its successor.
SECTION 12. EXECUTION.
To record this amendment and restatement of the Plan, the Company
has caused its duly authorized officer to affix the corporate name hereto.
AMERICAN PRESIDENT COMPANIES, LTD.
By Timothy J. Windle
Assistant Secretary
--
1995 DEFERRED COMPENSATION PLAN OF
AMERICAN PRESIDENT COMPANIES, LTD.
SECTION 1. ESTABLISHMENT AND PURPOSE.
The Plan was adopted by the Board on December 9, 1994, effective as
of January 1, 1995. The Plan is intended to provide Executives with an
opportunity to defer a portion of their salaries or their bonus awards
under the Company's year-end bonus plan for executives and key employees.
The Plan is also intended to provide High-Paid Employees with an
opportunity to defer a portion of their salaries in excess of the
Compensation Limit imposed by the Code on the SMART Plan. The Plan
provides for matching contributions by the Company. It is expected that
the Plan will assist the Company in attracting and retaining employees of
outstanding achievement and ability.
SECTION 2. DEFINITIONS.
(a) "Base Salary" means the Eligible Employee's annual base
salary (as adjusted from time to time) plus commissions, before reduction
for deferrals pursuant to this Plan, the SMART Plan, the American
President Companies, Ltd. FlexPlan or any other arrangement for deferral
established by the Company.
(b) "Beneficiary" means the person or persons designated by the
Eligible Employee in writing to receive payment of any Deferral Account of
the Eligible Employee in the event of his or her death. If no designated
Beneficiary survives the Eligible Employee, the Eligible Employee's estate
shall be the Beneficiary. If a designated Beneficiary survives the
Eligible Employee but dies before receiving payment of all amounts due him
or her, the remaining amounts shall be paid to such Beneficiary's estate.
An Eligible Employee may at any time elect to change his or her
Beneficiary designation. Any such change shall be in writing and shall be
effective upon receipt by the Company prior to the death of the Eligible
Employee.
(c) "Board" means the Board of Directors of the Company, as
constituted from time to time.
(d) "Bonus Award" means the amount of compensation paid by the
Company to an Executive as a bonus award under the Company's year-end
bonus plan for executives and key employees.
(e) "Change in Control" means the occurrence of any of the
following events:
(i) A change in control required to be reported pursuant
to Item 6(e) of Schedule 14A of Regulation 14A under the Securities
Exchange Act of 1934, as amended;
(ii) A change in the composition of the Board, as a
result of which fewer than two-thirds of the incumbent directors are
directors who either (i) had been directors of the Company 24 months prior
to such change or (ii) were elected, or nominated for election, to the
Board with the affirmative votes of at least a majority of the directors
who had been directors of the Company 24 months prior to such change and
who were still in office at the time of the election or nomination; or
(iii) Any "person" (as such term is used in sections 13(d)
and 14(d) of such Act) is or becomes the beneficial owner, directly or
indirectly, of securities of the Company representing 20 percent or more
of the combined voting power of the Company's then outstanding securities
ordinarily (and apart from rights accruing under special circumstances)
having the right to vote at elections of directors (the "Base Capital
Stock"); provided, however, that any change in the relative beneficial
ownership of securities of any person resulting solely from a reduction in
the aggregate number of outstanding shares of Base Capital Stock, and any
decrease thereafter in such person's ownership of securities, shall be
disregarded until such person increases in any manner, directly or
indirectly, such person's beneficial ownership of any securities of the
Company.
(f) "Committee" means the Compensation Committee of the Board.
(g) "Compensation Limit" means the $150,000 compensation limit
described in section 401(a)(17) of the Code, as it may be revised or
adjusted from time to time.
(h) "Code" means the Internal Revenue Code of 1986, as amended.
(i) "Company" means American President Companies, Ltd., a
Delaware corporation.
(j) "Deferral Account" means an account maintained on the books
of account of the Company for an Eligible Employee under the Plan.
(k) "Election Form" means an Eligible Employee's written
election to defer compensation under the Plan. In the case of a High-Paid
Employee, such election may include a written election filed under the
SMART Plan.
(l) "Eligible Employee" means an Executive or a High-Paid
Employee.
(m) "Executive" means an executive or key employee of the
Company, or a subsidiary of the Company, who is eligible to participate in
the Plan under Section 3(a), other than an executive or key employee who
has received a distribution under Section 8(c).
(n) "Financial Hardship" means an unanticipated emergency
caused by an event which is beyond the Eligible Employee's control and
which would result in severe financial hardship to the Eligible Employee
if an early withdrawal were not permitted.
(o) "High-Paid Employee" means an employee of the Company, or a
subsidiary of the Company, whose Base Salary since the beginning of the
Year has exceeded the Compensation Limit, other than an employee who has
received a distribution under Section 8(c).
(p) "In-Service Distribution" means a distribution that occurs
while the Eligible Employee remains in employment with the Company or a
subsidiary of the Company, including (without limitation) a distribution
that occurs by reason of a Change in Control.
(q) "Interest Rate" means the 120-month rolling average yield
for 10-year United States Treasury Notes, determined for each Year as of
the December 1 that precedes such Year.
(r) "Plan" means this 1995 Deferred Compensation Plan of
American President Companies, Ltd., as amended from time to time.
(s) "Post-Termination Distribution" means a distribution that
occurs after the Eligible Employee has separated from employment with the
Company or a subsidiary of the Company for any reason.
(t) "Retirement" means a termination of employment on or after
the earlier of:
(i) The date when the Eligible Employee attains age 65; or
(ii) The earliest date when the Eligible Employee has both
(A) attained age 55 and (B) completed five years of service with the
Company and its subsidiaries, as determined by the Committee.
(u) "SMART Plan" means the American President Companies, Ltd.
SMART Plan, as amended from time to time.
(v) "Total and Permanent Disability" means that the Eligible
Employee is unable to engage in any substantial gainful activity by reason
of any medically determinable physical or mental impairment which can be
expected to result in death or
which has lasted, or can be expected to last, for a continuous period of
not less than 12 months.
(w) "Year" means a calendar year.
SECTION 3. ELIGIBILITY.
(a) Executives. The Committee, acting upon the advice of the
Chief Executive Officer of the Company or upon its own motion, shall
determine which executives and key employees will be eligible to
participate in the Plan as Executives. The Committee shall notify an
individual in writing when he or she is first designated as an Executive
for purposes of the Plan.
(b) High-Paid Employees. High-Paid Employees automatically become
eligible to participate in the Plan when their Base Salary for the Year
exceeds the Compensation Limit for the Year.
SECTION 4. ELECTION TO PARTICIPATE IN PLAN.
(a) Deferral of Bonus Awards by Executives. An Executive may
elect to participate in the Plan by filing an Election Form for Bonus
Awards with the Company on or before December 20 of any Year. Such
Election Form shall apply solely to the Bonus Award, if any, to be paid
during the next following Year. The Election Form shall specify the
percentage or amount of the Executive's Bonus Award, if any, to be
deferred as well as the time or times for payment of Post-Termination
Distributions and In-Service Distributions.
(b) Deferral of Base Salary by Executives. An Executive may
also elect to participate in the Plan by filing an Election Form for Base
Salary with the Company on or before December 20 of any Year. Such
Election Form shall apply to Base Salaries paid during subsequent Years.
The Election Form shall specify the percentage or amount of the
Executive's Base Salary to be deferred as well as the time or times for
payment of Post-Termination Distributions and In-Service Distributions.
In no event, however, shall an Executive defer more than 88 percent of his
or her Base Salary up to the Compensation Limit and 100 percent of his or
her Base Salary above the Compensation Limit. An Executive may change his
or her deferral percentage (or reduce it to zero) or specify a different
time or times for payment of Post-Termination Distributions and In-Service
Distributions by filing a new Election Form for Base Salary with the
Company on or before December 20 of any Year. The new Election Form shall
apply to Base Salaries paid during subsequent Years.
(c) New Executives. In the case of an individual who is newly
designated as an Executive under Section 3(a), the Election Forms
described in Subsections (a) and (b) above may be filed not later than 30
days after the Committee's written notice of eligibility was given. The
Election Forms shall apply
solely to the Bonus Award and Base Salaries paid after such Election Forms
are filed.
(d) High-Paid Employees. A High-Paid Employee who is not an
Executive shall only be eligible to make deferrals from his or her Base
Salary (and not from Bonus Awards). A High-Paid Employee who is not
already participating as an Executive shall automatically commence
participating in the Plan when his or her Base Salary for the Year equals
the Compensation Limit for the Year, but only if he or she has filed with
the Company an Elec-tion Form under the SMART Plan that provides for
participation in this Plan. The High-Paid Employee's initial deferral
percentage under this Plan shall be equal to the deferral percentage
elected under the SMART Plan, but in no event more than six percent of
Base Salary. A High-Paid Employee may change his or her deferral
percentage (or reduce it to zero) by filing a new Election Form with the
Company. The new Election Form shall take effect as soon as reasonably
practicable after it has been filed. In addition, a High-Paid Employee
who is not already participating as an Executive shall file with the
Company, not more than 30 days after participation commences, an Election
Form that specifies the time or times for payment of Post-Termination
Distributions and In-Service Distributions. A High-Paid Employee may
specify a different time or times for payment of Post-Termination
Distributions and In-Service Distributions by filing a new Election Form
with the Company on or before December 20 of any Year. The new Election
Form shall apply to Base Salaries paid during subsequent Years.
(e) Elections Irrevocable. Except as otherwise expressly
provided in the Plan, all elections shall be irrevocable upon filing with
the Company on Election Forms.
SECTION 5. MATCHING CONTRIBUTIONS.
(a) Amount of Matching Contributions. As of the close of each
calendar month, the Company shall credit the Deferral Account of each
Eligible Employee who is eligible to receive matching contributions under
the SMART Plan with a matching contribution under this Plan. The amount
of the matching contribution under this Plan shall be equal to:
(i) The sum of (A) the "salary deferrals" and "after-tax
contributions" made by the Eligible Employee under the SMART Plan for the
calendar month plus (B) the amount of Base Salary deferred by the Eligible
Employee under Section 4 of this Plan for the calendar month, but only to
the extent that such sum does not exceed six percent of the Eligible
Employee's Base Salary for the calendar month; minus
(ii) The aggregate amount of the "matching contributions"
allocated to the Eligible Employee under the SMART Plan for the calendar
month.
(b) Vesting. Subsection (a) above notwithstanding, matching
contributions credited in lieu of contributions under the SMART Plan (and
the interest credited thereon) shall be distributed to the Eligible
Employee only to the extent that such matching contributions (and
interest) would be vested under the SMART Plan. The balance, if any, of
such matching contributions (and interest) shall be forfeited upon the
termination of the Eligible Employee's employment.
(c) Interest. Interest credits on any matching contribution
shall commence as of the day next following the close of the calendar
month to which such contribution relates.
SECTION 6. DEFERRAL ACCOUNTS.
(a) Establishment of Deferral Accounts. The Company shall
establish on its books one or more Deferral Accounts for each Eligible
Employee.
(b) Crediting of Bonus Awards. The appropriate Deferral
Account of an Executive shall be credited with an amount equal to that
portion of each Bonus Award which would have been payable to such
Executive but for the terms of his or her deferral election. A Bonus
Award shall be credited to the Deferral Account as of the first day of the
month next following the date of such Bonus Award, and interest credits on
such Bonus Award shall commence as of such day.
(c) Crediting of Base Salaries. The appropriate Deferral
Account of an Eligible Employee shall be credited with an amount equal to
that portion of each Base Salary payment which would have been payable to
such Eligible Employee but for the terms of his or her deferral election.
Deferred Base Salary shall be credited to the Deferral Account as of the
pay date for the deferred Base Salary. Interest credits on deferred Base
Salary shall commence as of the day next following the close of the month
in which such deferred Base Salary was credited to the Deferral Account.
SECTION 7. INTEREST CREDITS AND DISTRIBUTION EVENTS.
(a) Interest Rate. Interest shall be credited each month to
all Deferral Accounts, commencing at the times specified in Section 6, at
the rate of 1/12th of the Interest Rate. Interest shall be compounded at
the end of each Year.
(b) Distributions Before Retirement. If an Eligible Employee
separates from employment with the Company and its subsidiaries for
reasons other than death or Retirement, then his or her Deferral Accounts
shall be paid in a lump sum on the first day of the calendar quarter next
following the date of termination (without regard to the Eligible
Employee's elections).
(c) Distributions After Retirement. If an Eligible Employee
separates from employment with the Company and its subsidiaries by reason
of Retirement, then his or her Deferral Accounts shall be paid in the
manner specified in his or her Election Forms.
(d) Death Before Retirement Eligibility. If an Eligible
Employee dies before becoming eligible for Retirement, then his or her
Deferral Accounts shall be paid to his or her Beneficiary in a lump sum on
the first day of the calendar quarter next following the date of death.
(e) Death After Retirement Eligibility. If an Eligible
Employee dies after becoming eligible for Retirement, then his or her
Deferral Accounts shall be paid to his or her Beneficiary in the manner
elected by the Eligible Employee in his or her Election Forms. The
Committee, however, may determine in its sole discretion that payments
from one or more of the Eligible Employee's Deferral Accounts shall be
made at an earlier date than the time or times specified in the Eligible
Employee's Election Forms.
(f) In-Service Distributions. If an Eligible Employee elected
to receive an In-Service Distribution on an Election Form, then the
distribution shall be made in accordance with such Election Form, except
that no distribution shall be made less than one year after the election
became effective.
SECTION 8. FORM AND TIME OF PAYMENT OF ACCOUNTS.
(a) Form of Distributions. Subject to Section 7, payments from
each Deferral Account shall be made only in cash and shall consist of lump
sums or annual or quarterly installments, or a combination of lump sums
and annual or quarterly installments, as elected by the Eligible Employee
on the applicable Election Form. Installments of Post-Termination
Distributions shall be paid on the first day of each calendar year or
quarter. Installments of Post-Termination Distributions shall not be paid
over a period exceeding 15 years. The amount of the installments shall be
redetermined each Year by assuming that interest will be credited on the
unpaid balance at the Interest Rate for the Year in question for the
remainder of all installment payments.
(b) Emergency Interim Distributions. In the event of an
Eligible Employee's Total and Permanent Disability or Financial Hardship,
the Committee may determine in its sole discretion that payments from one
or more of the Eligible Employee's Deferral Accounts shall be made at an
earlier date than the time or times specified on the Eligible Employee's
Election Forms. Any amount distributed by reason of Financial Hardship
shall be limited to the amount necessary to relieve such Financial
Hardship.
(c) Other Interim Distributions. Upon application of an
Eligible Employee, the Committee may determine in its sole discretion that
payments from one or more of the Eligible Employee's Deferral Accounts
shall be made at an earlier date than the time or times specified on the
Eligible Employee's Election Forms (even in the absence of a Total and
Permanent Disability or Financial Hardship). All distributions under this
Subsection (c) shall be reduced by a penalty equal to six percent of the
amount otherwise distributable, which penalty shall be forfeited to the
Company. An Eligible Employee who has received a distribution under this
Subsection (c) thereafter shall not make additional deferrals under the
Plan.
SECTION 9. NONASSIGNABILITY OF INTERESTS.
The interest and property rights of any Eligible Employee under the
Plan shall not be subject to option nor be assignable either by voluntary
or involuntary assignment or by operation of law, including (without
limitation) bankruptcy, garnishment, attachment or other creditor's
process, and any act in violation of this Section 9 shall be void.
SECTION 10. LIMITATION OF RIGHTS.
(a) General Creditor. Eligible Employees shall have the status of
general unsecured creditors of the Company. The Plan constitutes a mere
promise by the Company to make payments in the future. It is the
Company's intention that the Plan be considered unfunded for tax purposes
and for purposes of Title I of the Employee Retirement Income Security Act
of 1974, as amended.
(b) Bonus Awards. Nothing in the Plan shall be construed to
give any Eligible Employee any right to be granted a Bonus Award.
(c) Employment Agreement. Neither the Plan nor the deferral of
any Base Salary or Bonus Award, nor any other action taken pursuant to the
Plan, shall constitute or be evidence of any agreement or understanding,
express or implied, that the Company or a subsidiary will employ an
Eligible Employee for any period of time, in any position or at any
particular rate of compensation.
SECTION 11. ADMINISTRATION OF THE PLAN.
The Plan shall be administered by the Committee. The Committee
shall have full power and authority to administer and interpret the Plan,
to establish procedures for administering the Plan and to take any and all
necessary actions in connection therewith. The Committee's interpretation
and construction of the Plan shall be conclusive and binding on all
persons.
SECTION 12. CLAIMS AND INQUIRIES.
(a) Application for Benefits. Applications for benefits and
inquiries concerning the Plan (or concerning present or future rights to
benefits under the Plan) shall be submitted to the Company in writing and
addressed to the Chair of the Committee. An application for benefits
shall be submitted on the prescribed form and shall be signed by the
Eligible Employee or, in the case of a benefit payable after his or her
death, by the Beneficiary.
(b) Denial of Application. In the event that an application
for benefits is denied in whole or in part, the Chair of the Committee
shall notify the applicant in writing of the denial and of the right to a
review of the denial. The written notice shall set forth, in a manner
calculated to be understood by the applicant, specific reasons for the
denial, specific references to the provisions of the Plan on which the
denial is based, a description of any information or material necessary
for the applicant to perfect the application, an explanation of why the
material is necessary, and an explanation of the review procedure under
the Plan. The written notice shall be given to the applicant within a
reasonable period of time (not more than 90 days) after the Chair of the
Committee received the application, unless special circumstances require
further time for processing and the applicant is advised of the extension.
In no event shall the notice be given more than 180 days after the Chair
of the Committee received the application.
(c) Review Panel. The Committee shall serve as the "Review
Panel" under the Plan. The Review Panel shall have the authority to act
with respect to any appeal from a denial of benefits or a determination of
benefit rights.
(d) Request for Review. An applicant whose application for
benefits was denied in whole or in part, or the applicant's duly
authorized representative, may appeal from the denial by submitting to the
Review Panel a request for a review of the application within 90 days
after receiving written notice of the denial from the Chair of the
Committee. The Chair of the Committee shall give the applicant or his or
her representative an opportunity to review pertinent materials, other
than legally privileged documents, in preparing the request for a review.
The request for a review shall be in writing and addressed to the
Committee. The request for a review shall set forth all of the grounds on
which it is based, all facts in support of the request, and any other
matters that the applicant deems pertinent. The Review Panel may require
the applicant to submit such additional facts, documents or other material
as it may deem necessary or appropriate in making its review.
(e) Decision on Review. The Review Panel shall act on each
request for a review within 60 days after receipt, unless special
circumstances require further time for processing and
the applicant is advised of the extension. In no event shall the decision
on review be rendered more than 120 days after the Review Panel received
the request for a review. The Review Panel shall give prompt written
notice of its decision to the applicant. In the event that the Review
Panel confirms the denial of the application for benefits in whole or in
part, the notice shall set forth, in a manner calculated to be understood
by the applicant, the specific reasons for the decision and specific
references to the provisions of the Plan on which the decision is based.
(f) Rules and Interpretations. The Review Panel shall adopt
such rules, procedures and interpretations of the Plan as it deems
necessary or appropriate in carrying out its responsibilities under this
Section 12.
(g) Exhaustion of Remedies. No legal action for benefits under
the Plan shall be brought unless and until the claimant (i) has submitted
a written application for benefits in accordance with Subsection (a)
above, (ii) has been notified by the Chair of the Committee that the
application is denied, (iii) has filed a written request for a review of
the application in accordance with Subsection (d) above and (iv) has been
notified in writing that the Review Panel has affirmed the denial of the
application; provided, however, that legal action may be brought after the
Chair of the Committee or the Review Panel has failed to take any action
on the claim within the time prescribed by Subsections (b) and (e) above,
respectively.
SECTION 13. AMENDMENT OR TERMINATION OF THE PLAN.
The Board may amend, suspend or terminate the Plan at any time,
except that no amendment shall retroactively change the Interest Rate for
the period prior to the date of the amendment.
SECTION 14. CHOICE OF LAW.
The validity, interpretation, construction and performance of the
Plan shall be governed by the Employee Retirement Income Security Act of
1974, as amended, and, to the extent they are not preempted, by the laws
of the State of California (other than their choice-of-law provisions).
SECTION 15. EXECUTION.
To record the adoption of the Plan, the Company has caused its duly
authorized officer to affix the corporate name hereto.
AMERICAN PRESIDENT
COMPANIES, LTD.
By Timothy J. Windle
Assistant Secretary
--
1995 SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN OF
AMERICAN PRESIDENT COMPANIES, LTD.
SECTION 1. ESTABLISHMENT AND PURPOSE OF THE PLAN.
The Plan was established by the Company effective January 1, 1995.
The purpose of the Plan is to supplement certain benefits under the
Retirement Plan.
SECTION 2. ELIGIBILITY AND PARTICIPATION.
Participation in this Plan shall be limited to participants in the
Retirement Plan who are employed by a member of the Affiliated Group on or
after January 1, 1995, and who meet one of the following criteria:
(a) Their benefits under the Retirement Plan are
affected by the limitations imposed under section 401(a)(17) or
415 of the Code;
(b) Their benefits under the Retirement Plan are
affected by the Code's requirement that salaries or bonuses
deferred under the Deferred Compensation Plan cannot be taken into
account in computing such benefits; or
(c) Both:
(i) Their actual benefits under the Retirement
Plan, at retirement, are lower than the benefits that they
would have received had they separated from employment with
the Affiliated Group as of December 31, 1992, absent the
modification of the Retirement Plan's benefit formula that
was adopted effective June 1, 1989; and
(ii) Their "average annual compensation" under
the Retirement Plan equals or exceeds $125,000 at any time
after May 31, 1989.
On June 1 of each year, starting with June 1, 1990, the $125,000 amount
set forth in the preceding sentence shall be adjusted for inflation by
multiplying it by a fraction. The numerator of such fraction shall be the
CPI-W for U.S. Cities on the immediately preceding February 1, and the
denominator of such fraction shall be the CPI-W for U.S. Cities on
February 1, 1989.
SECTION 3. PLAN BENEFITS.
(a) Amount of Retirement Plan Supplement. Each Participant
whose pension benefits under the Retirement Plan are reduced by section
401(a)(17) or 415 of the Code, by the exclu-
sion of salaries and bonuses deferred under the Deferred Compensation Plan
from pension calculations or by the modification of the formula for
calculating his or her "retirement income" (not including cost-of-living
adjustments) that was adopted on July 10, 1990, effective as of June 1,
1989, shall be entitled to receive a monthly benefit under this Plan. The
amount of such benefit shall be equal to:
(i) The monthly benefit payment which would be payable
to the Participant under the Retirement Plan if the limitations of
sections 401(a)(17) and 415 of the Code, such exclusion and such
modification (to the extent that such modification results in a
benefit reduction) did not apply; minus
(ii) The Participant's actual monthly benefit payment
under the Retirement Plan; minus
(iii) The Participant's actual monthly benefit payment
under the Excess-Benefit Plan of American President Companies,
Ltd., as amended.
For purposes of this Subsection (a), the modification of the Retirement
Plan formula that was adopted on July 10, 1990, effective as of June 1,
1989, shall be deemed to have resulted in a benefit reduction only to the
extent that a Participant's actual monthly benefit payment under the
Retirement Plan is less than the monthly benefit payment that such
Participant would have received if such modification had not been adopted
and the Participant had separated from employment with all members of the
Affiliated Group as of December 31, 1992. The Retirement Plan's Actuarial
Equivalency factors shall be used to make this comparison.
(b) Payment of Retirement Plan Supplement. A Participant's
benefit under Subsection (a) above shall be payable to the Participant or
to any other person (including, without limitation, a surviving spouse)
who is receiving benefits under the Retirement Plan which are derived from
the Participant. Any benefit under Subsection (a) above shall be payable
in the same form and at the same times as the Participant's benefit under
the Retirement Plan (and in no event earlier), unless the Participant's
benefit under the Retirement Plan is paid in the form of a single lump
sum. In that event, the benefit under Subsection (a) above shall be
payable in the normal form of benefit provided under the Retirement Plan,
computed as if the benefit actually paid to the Participant under the
Retirement Plan were also payable in the normal form, unless:
(i) The Participant requests in writing to receive the
benefit under Subsection (a) above in a single lump sum; and
(ii) The Committee expressly approves the Participant's
request.
In the case of a Participant who is entitled to a "COLA-Adjusted
Retirement Income" under the Retirement Plan, the amount of any periodic
benefit under Subsection (a) above shall be recalculated each year in
accordance with the provisions of the Retirement Plan relating to the
adjustment of pension benefits to reflect changes in the cost of living.
SECTION 4. ADMINISTRATION.
The Plan shall be administered by the Committee. The Committee
shall make such rules, interpretations and computations as it may deem
appropriate. Any decision of the Committee with respect to the Plan,
including (without limitation) any determination of eligibility to
participate in the Plan and any calculation of benefits hereunder, shall
be conclusive and binding on all persons.
SECTION 5. CLAIMS AND INQUIRIES.
(a) Application for Benefits. Applications for benefits and
inquiries concerning the Plan (or concerning present or future rights to
benefits under the Plan) shall be submitted to the Company in writing and
addressed to the Chair of the Committee. An application for benefits
shall be submitted on the prescribed form and shall be signed by the
Participant or, in the case of a benefit payable after his or her death,
by the beneficiary.
(b) Denial of Application. In the event that an application
for benefits is denied in whole or in part, the Chair of the Committee
shall notify the applicant in writing of the denial and of the right to a
review of the denial. The written notice shall set forth, in a manner
calculated to be understood by the applicant, specific reasons for the
denial, specific references to the provisions of the Plan on which the
denial is based, a description of any information or material necessary
for the applicant to perfect the application, an explanation of why the
material is necessary, and an explanation of the review procedure under
the Plan. The written notice shall be given to the applicant within a
reasonable period of time (not more than 90 days) after the Chair of the
Committee received the application, unless special circumstances require
further time for processing and the applicant is advised of the extension.
In no event shall the notice be given more than 180 days after the Chair
of the Committee received the application.
(c) Review Panel. The Committee shall serve as the "Review
Panel" under the Plan. The Review Panel shall have the authority to act
with respect to any appeal from a denial of benefits or a determination of
benefit rights.
(d) Request for Review. An applicant whose application for
benefits was denied in whole or in part, or the applicant's duly
authorized representative, may appeal from the denial by submitting to the
Review Panel a request for a review of the application within 90 days
after receiing written notice of the denial from the Chair of the
Committee. The Chair of the Committee shall give the applicant or his or
her representative an opportunity to review pertinent materials, other
than legally privileged documents, in preparing the request for a review.
The request for a review shall be in writing and addressed to the
Committee. The request for a review shall set forth all of the grounds on
which it is based, all facts in support of the request, and any other
matters that the applicant deems pertinent. The Review Panel may require
the applicant to submit such additional facts, documents or other material
as it may deem necessary or appropriate in making its review.
(e) Decision on Review. The Review Panel shall act on each
request for a review within 60 days after receipt, unless special
circumstances require further time for processing and the applicant is
advised of the extension. In no event shall the decision on review be
rendered more than 120 days after the Review Panel received the request
for a review. The Review Panel shall give prompt written notice of its
decision to the applicant. In the event that the Review Panel confirms
the denial of the application for benefits in whole or in part, the notice
shall set forth, in a manner calculated to be understood by the applicant,
the specific reasons for the decision and specific references to the
provisions of the Plan on which the decision is based.
(f) Rules and Interpretations. The Review Panel shall adopt
such rules, procedures and interpretations of the Plan as it deems
necessary or appropriate in carrying out its responsibilities under this
Section 5.
(g) Exhaustion of Remedies. No legal action for benefits under
the Plan shall be brought unless and until the claimant (i) has submitted
a written application for benefits in accordance with Subsection (a)
above, (ii) has been notified by the Chair of the Committee that the
application is denied, (iii) has filed a written request for a review of
the application in accordance with Subsection (d) above and (iv) has been
notified in writing that the Review Panel has affirmed the denial of the
application; provided, however, that legal action may be brought after the
Chair of the Committee or the Review Panel has failed to take any action
on the claim within the time prescribed by Subsections (b) and (e) above,
respectively.
SECTION 6. AMENDMENT AND TERMINATION.
The Company expects to continue the Plan indefinitely. Future
conditions, however, cannot be foreseen, and the Company shall have the
authority to amend or terminate the Plan at any
time. In the event of an amendment or termination of the Plan, a
Participant's benefits hereunder shall not be less than the benefits to
which the Participant would have been entitled if his or her employment in
the Affiliated Group had terminated immediately prior to such amendment or
termination.
SECTION 7. EMPLOYMENT RIGHTS.
Nothing in the Plan shall be deemed to give any person a right to
remain in the employ of any Affiliated Group member or affect the right of
the Affiliated Group members to terminate such person's employment with or
without cause.
SECTION 8. NO ASSIGNMENT.
The rights of any person to payments or benefits under the Plan
shall not be made subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, attachment or garnishment by
creditors. Any act in violation of this Section 8, whether voluntary or
involuntary, shall be void.
SECTION 9. PLAN UNFUNDED.
Participants shall have the status of general unsecured creditors
of the Company. The Plan constitutes a mere promise by the Company to
make benefit payments in the future. It is the Company's intent that the
Plan be considered unfunded for tax purposes and for purposes of Title I
of ERISA.
SECTION 10. CHOICE OF LAW.
The validity, interpretation, construction and performance of the
Plan shall be governed by ERISA and, to the extent they are not preempted,
by the laws of the State of California.
SECTION 11. DEFINITIONS.
(a) "Affiliated Group" means a group of one or more chains of
corporations connected through stock ownership with the Company, if:
(i) Stock possessing at least 80% of the total combined
voting power of all classes of stock entitled to vote or at least
80% of the total value of shares of all classes of stock of each
of the corporations, except the Company, is owned by one or more
of the other corporations; and
(ii) The Company owns stock possessing at least 80% of the
total combined voting power of all classes of stock entitled to
vote or at least 80% of the total value of shares of all classes
of stock of at least one of the other corporations excluding, in
computing
such voting power or value, stock owned directly by such other
corporations.
In addition, the term "Affiliated Group" includes any other entity which
the Company has designated in writing as a member of the Affiliated Group
for purposes of this Plan or the Retirement Plan. An entity shall be
considered a member of the Affiliated Group only with respect to periods
for which such designation is in effect or during which the relationship
described in Paragraphs (i) and (ii) above exists.
(b) "Code" means the Internal Revenue Code of 1986, as amended.
(c) "Committee" means the Benefits Committee appointed by the
Company's Board of Directors.
(d) "Company" means American President Companies, Ltd., a
Delaware corporation.
(e) "Deferred Compensation Plan" means the Deferred
Compensation Plan of American President Companies, Ltd., as amended, the
1988 Deferred Compensation Plan of American President Companies, Ltd., as
amended, and the 1995 Deferred Compensation Plan of American President
Companies, Ltd., as amended.
(f) "ERISA" means the Employee Retirement Income Security Act
of 1974, as amended.
(g) "Participant" means a participant in the Retirement Plan
who participates in this Plan under Section 2.
(h) "Plan" means this 1995 Supplemental Executive Retirement
Plan of American President Companies, Ltd.
(i) "Retirement Plan" means the American President Companies,
Ltd. Retirement Plan, as amended, or its successor.
SECTION 12. EXECUTION.
To record the adoption of the Plan, the Company has caused its duly
authorized officer to affix the corporate name hereto.
AMERICAN PRESIDENT COMPANIES,
LTD.
By Timothy J. Windle
Assistant Secretary
--
DIRECTORS' INDEMNITY AGREEMENT
THIS INDEMNITY AGREEMENT, made and entered into
this 28th day of April, 1994, ("Agreement"), by and
between AMERICAN PRESIDENT COMPANIES, LTD., a Delaware corporation ("Company"),
and G. Craig Sullivan
("Director").
In consideration of the mutual promises in this Agreement, and intending
to be legally bound, the Company
and Director do hereby covenant and agree as follows:
Section 1. Services by Director. Director agrees
to serve as a director so long as he is duly appointed or elected and qualified
in accordance with the applicable provisions of the Certificate of Incorporation
and By-laws
of the Company or any subsidiary of the Company and until such time as he
resigns or fails to stand for election. Director may at any time and for any
reason resign from such position (subject to any other contractual obligation or
other obligation imposed by operation of law), in which
event the Company shall have no obligation under this Agreement to continue
Director in any such position.
Section 2. Indemnification. The Company shall indemnify
Director to the fullest extent permitted by applicable law in effect on the date
hereof or as such law may from time to time be amended (but, in the case of any
such amendment, only to the extent such amendment permits
the Company to provide broader indemnification rights than the law permitted the
Company to provide before such amend-
ment). Without in any way diminishing the scope of the indemnification provided
by this Section 2, the Company will indemnify Director if and whenever he is or
was involved in any manner (including, without limitation, as a party or as
a witness) in any threatened, pending or completed Pro-
ceeding, including without limitation any such Proceeding brought by or in the
right of the Company, by reason of the fact that he is or was an Agent or by
reason of anything
done or not done by him in such capacity, against Expenses and Liabilities
actually and reasonably incurred by Director
or on his behalf in connection with the investigation, defense, settlement or
appeal of any such Proceeding. No initial finding by the Board, its counsel,
Independent Counsel, arbitrators or the stockholders shall be effective to
deprive Director of the protection of this indemnity, nor shall a court to which
Director may apply for enforcement of this indemnity give any weight to any such
adverse finding
in deciding any issue before it, as it is intended that Director shall be paid
promptly by the Company all amounts necessary to effectuate the foregoing
indemnity in full. In
addition to, and not as a limitation of, the foregoing, the rights of
indemnification of Director provided under this Agreement shall include those
rights set forth in Sec-
tions 3, 6 and 7 below.
Section 3. Advancement of Expenses. All reason-
able Expenses incurred by or on behalf of Director shall be advanced by the
Company to Director within 20 days after the receipt by the Company of a written
request for an advance
or advances of Expenses from time to time, whether prior to or after final
disposition of a Proceeding (unless there has been a final determination that
Director is not entitled to be indemnified for such Expenses), including without
limita-
tion any Proceeding brought by or in the right of the Com-pany. Director's
entitlement to advancement of Expenses shall include those incurred in
connection with any Pro-ceeding by Director seeking an adjudication or award in
arbitration pursuant to this Agreement. The requests shall reasonably evidence
the Expenses incurred by Director in connection therewith. If required by law
at the time of
such advance, Director hereby undertakes to repay the
amounts advanced if it shall ultimately be determined that Director is not
entitled to be indemnified pursuant to the terms of this Agreement.
Section 4. Procedure for Determination of Enti-
tlement to Indemnification.
(a) Whenever Director believes that he is enti-tled to
indemnification pursuant to this Agreement, Director shall submit a written
request for indemnification to the Company to the attention of the Chairman of
the Board with a copy to the Secretary. This request shall include documen-
tation or information which is necessary for the determina-
tion of entitlement to indemnification and which is reason-
ably available to Director. Determination of Director's entitlement to
indemnification shall be made not later than 60 days after any judgment, order,
settlement, dismissal, arbitration award, conviction, acceptance of a plea of
nolo contendere or its equivalent, or other disposition or
partial disposition of any Proceeding or any other event which could enable the
Company to determine Director's entitlement to indemnification. The Chairman of
the Board
or the Secretary shall, promptly upon receipt of Director's request for
indemnification, advise the Board in writing that Director has made such request
for indemnification.
(b) The Company shall be entitled to select the forum in which
Director's entitlement to indemnification
will be heard unless a Triggering Event has occurred, in which case Director
shall be entitled to select the forum. The Company or Director, as the case may
be, shall notify
the other party in writing as to the forum selected, which selection shall be
from among the following:
( i) The stockholders of the Company;
(ii) A quorum of the Board consisting of Disinterested
Directors;
(iii) Independent Counsel, which counsel shall make the
determination in a written opinion; or
(iv) A panel of three arbitrators, one of
whom is selected by the Company, another of whom
is selected by Director and the last of whom is
selected by the first two arbitrators so selected;
or if for any reason three arbitrators are not
selected within 30 days after the appointment
of the first arbitrator, then selection of addi-
tional arbitrators to complete the three person
panel shall be made by the American Arbitration Association under its
commercial arbitration rules
now in effect.
Section 5. Presumptions and Effect of Certain Proceedings. Upon making
a request for indemnification, Director shall be presumed to be entitled to
indemnification under this Agreement and the Company shall have the burden
of proof to show that such indemnification is expressly prohibited by applicable
law in order to overcome that presumption in reaching any contrary
determination. If the person or persons so empowered to make the determination
shall have failed to make the requested indemnification within 60 days after any
judgment, order, settlement, dismissal, arbitration award, conviction,
acceptance of a plea of nolo contendere or its equivalent, or other disposi-tion
or partial disposition of any Proceeding or any other event which could enable
the Company to determine Director's entitlement to indemnification, the
requisite determination of entitlement to indemnification shall be deemed to
have been made and Director shall be absolutely entitled to indemnification
under this Agreement, absent (i) misrepre-
sentation or omission by Director of a material fact in the request for
indemnification or (ii) a specific finding that all or any part of such
indemnification is expressly prohib-
ited by law. The termination of any Proceeding by judgment, order, settlement,
arbitration award or conviction, or upon
a plea of nolo contendere or its equivalent, shall not of itself (a) adversely
affect the rights of Director to indem-
nification except as may be provided herein, (b) create a presumption that
Director did not act in good faith and in a manner which he reasonably believed
to be in or not opposed to the best interests of the Company, or (c) with
respect to
any criminal action or proceeding, create a presumption that Director had
reasonable cause to believe that his conduct
was unlawful.
Section 6. Remedies of Director in Cases of Determination not to
Indemnify or to Advance Expenses.
(a) In the event that (i) an initial determina-tion is made that
Director is not entitled to indemnifica-tion, (ii) advances are not made
pursuant to this Agreement, (iii) payment has not been timely made following a
deter-mination of entitlement to indemnification pursuant to this Agreement or
(iv) Director otherwise seeks enforcement of this Agreement, Director shall be
entitled to a final adjudication in an appropriate court of the State of Dela-
ware of his entitlement to such indemnification or advance. Alternatively,
Director at his option may seek an award in arbitration to be conducted by a
single arbitrator pursuant to the commercial arbitration rules of the American
Arbitra-tion Association now in effect, which award is to be made within 90 days
following the filing of the demand
for arbitration. The Company shall not oppose Director's right to seek any such
adjudication or arbitration award.
In any such proceeding or arbitration Director shall be presumed to be entitled
to indemnification under this Agreement and the Company shall have the burden of
proof to overcome that presumption.
(b) In the event an initial determination has
been made, in whole or in part, that Director is not enti-tled to
indemnification, the decision in the judicial proceeding or arbitration provided
in paragraph (a) of this Section 6 shall be made de novo and Director shall not
be prejudiced by reason of a determination that he is not entitled to
indemnification.
(c) If an initial determination is made or deemed to have been
made pursuant to the terms of this Agreement that indemnification of Director is
not expressly prohibited by law, Director shall be entitled to indemnification
and
the Company shall be bound by such determination in the absence of (i) a
misrepresentation or omission of a material fact by Director or (ii) a specific
finding (which has
become final) that all or any part of such indemnification
is expressly prohibited by law.
(d) The Company shall be precluded from asserting that the
procedures and presumptions of this Agreement are not valid, binding and
enforceable. The Company shall stipulate in any such court or before any such
arbitrator that the Company is bound by all the provisions of this
Agreement and is precluded from making any assertion to the contrary.
(e) Expenses incurred by Director in connection with his
request for indemnification under, seeking enforce-ment of, or to recover
damages for breach of, this Agreement shall be borne by the Company.
Section 7. Other Rights to Indemnification.
Director's rights of indemnification and advancement of expenses provided by
this Agreement shall not be deemed exclusive of any other rights to which
Director may now or
in the future be entitled under applicable law, the Certifi-cate of
Incorporation, By-laws, agreement, vote of stock-holders, resolution of
directors, or otherwise.
Section 8. Limitations on Indemnity. The Company
shall not be liable under this Agreement to make any payment to Director to the
extent that Director has already been reimbursed pursuant to such D & O
Insurance as the Company may maintain for Director's benefit. Notwithstanding
the availability of such insurance, Director also may claim indemnification from
the Company pursuant to this Agreement by assigning to the Company any claims
under such insurance to the extent Director is paid by the Company.
Section 9. Duration and Scope of Agreement;
Binding Effect. This Agreement shall continue so long as Director shall be
subject to any possible Proceeding by reason of the fact that he is or was an
Agent and shall be applicable to Proceedings commenced or continued after
execution of this Agreement, whether arising from acts or omissions occurring
before or after such execution. This Agreement shall be binding upon the
Company and its succes-sors and assigns and shall inure to the benefit of
Director and his spouse, assigns, heirs, devisees, executors, admin-istrators
and other legal representatives.
Section 10. Severability. If any provision or provisions of this
Agreement (or any portion thereof) shall be held to be invalid, illegal or
unenforceable for any reason whatsoever: (a) the validity, legality and enforce
- -ability of the remaining provisions of this Agreement shall not in any way be
affected or impaired thereby; and (b) to the fullest extent possible, the
provisions of this Agree-ment shall be construed so as to give effect to the
intent manifested by the provision held invalid, illegal or unen-forceable.
Section 11. Identical Counterparts. This Agree-
ment may be executed in one or more counterparts, each of which shall for all
purposes be deemed to be an original but
all of which together shall constitute one and the same Agreement. Only one
such counterpart signed by the party against whom enforceability is sought needs
to be produced
to evidence the existence of this Agreement.
Section 12. Interpretation of Agreement. It is understood that the
parties hereto intend this Agreement to be interpreted and enforced so as to
provide indemnification to Director to the fullest extent now or hereafter
permitted by law.
Section 13. Headings. The headings of the Sec-
tions and paragraphs of this Agreement are inserted for convenience only and
shall not be deemed to constitute part of this Agreement or to affect the
construction thereof.
Section 14. Definitions. For purposes of this Agreement:
(a) "Agent" shall mean any person who (i) is or was a director,
officer or employee of the Company or a subsidiary of the Company whether
serving in such capacity
or as a director, officer, employee, agent, fiduciary or other official of
another entity at the request, for the convenience, or to represent the
interests of the Company or a subsidiary of the Company or (ii) was a director,
officer or employee of a corporation which was a predecessor corpo-ration of the
Company or a subsidiary of the Company whether serving in such capacity or as a
director, officer,
employee, agent, fiduciary or other official of another entity at the request,
for the convenience, or to represent the interests of such predecessor
corporation.
(b) "Disinterested Director" shall mean a direc-tor of the
Company who is not or was not a party to the Proceeding in respect of which
indemnification is being sought by Director.
(c) "Expenses" shall include all direct and indirect costs
(including, without limitation, attorneys' fees, retainers, court costs,
transcripts, fees of experts, witness fees, travel expenses, duplicating costs,
printing and binding costs, telephone charges, postage, delivery service fees,
all other disbursements or out-of-pocket expenses and reasonable compensation
for time spent by Director for which he is otherwise not compensated by the
Company or any third party) actually and reasonably incurred in connection with
either the investigation, defense, settlement or appeal of a Proceeding or
establishing or enforcing a right to indemnification under this Agreement,
applicable law or otherwise; provided, however, that "Expenses" shall not
include any judgments, fines or
Employee Retirement Income Security Act of 1974 ("ERISA") excise taxes or
penalties.
(d) "Independent Counsel" shall mean a law firm
or a member of a law firm that neither is presently nor in the past five years
has been retained to represent: (i) the Company or Director in any matter
material to either party, or (ii) any other party to the Proceeding giving rise
to a claim for indemnification hereunder. Notwithstanding the foregoing, the
term "Independent Counsel" shall not include any person who, under the
applicable standards of profes-sional conduct then prevailing, would have a
conflict of interest in representing either the Company or Director in
an action to determine Director's right to indemnification under this Agreement.
(e) "Liabilities shall mean liabilities of any type
whatsoever, including, but not limited to, judgments, fines, ERISA excise taxes
and penalties, and amounts paid in settlement.
(f) "Proceeding" shall mean any action, suit, arbitration,
alternate dispute resolution mechanism, inves-tigation, administrative hearing
or any other proceeding whether civil, criminal, administrative or
investigative.
(g) "Triggering Event" shall mean the acquisition by any
person (other than the Company) of 30% or more of the outstanding shares of
common stock of the Company unless a majority of the entire Board, which shall
include the affirmative vote of at least one director from each class of the
Board, shall have earlier approved such acquisition.
Section 15. Pronouns. Use of the masculine
pronoun shall be deemed to include usage of the feminine pronoun where
appropriate.
Section 16. Modification and Waiver. No supple-
ment, modification or amendment of this Agreement shall be binding unless
executed in writing by both of the parties to this Agreement. No waiver of any
provision of this Agree-ment shall be deemed to constitute a waiver of any other
provision hereof (whether or not similar) nor shall such waiver constitute a
continuing waiver.
Section 17. Notice by Director and Defense of
Claims. Director agrees promptly to notify the Company in writing upon being
served with any summons, citation, sub-poena, complaint, indictment, information
or other document relating to any matter which may be subject to indemnifica-
tion hereunder, whether civil, criminal, administrative or investigative; but
the omission so to notify the Company
will not relieve it from any liability which it may have to Director if such
omission does not prejudice the Company's rights and if such omission does
prejudice the Company's rights, it will relieve the Company from liability only
to the extent of such prejudice; nor will such omission relieve the Company from
any liability which it may have to Director otherwise than under this Agreement.
With respect to any Proceeding as to which Director notifies the Company of the
commencement thereof:
(a) The Company will be entitled to participate therein at its
own expense; and
(b) Except as otherwise provided below, to the extent that it
may wish, the Company jointly with any other indemnifying party similarly
notified will be entitled to assume the defense thereof, with counsel reasonably
satis-factory to Director. After notice from the Company to Director of its
election so to assume the defense thereof, the Company will not be liable to
Director under this Agree-ment for any Expenses subsequently incurred by
Director in connection with the defense thereof other than reasonable costs of
investigation or as otherwise provided below. Director shall have the right to
employ his counsel in such Proceeding but the fees and expenses of such counsel
incurred after notice from the Company of its assumption of the defense thereof
shall be at the expense of Director unless (i) the employment of counsel by
Director has been authorized by the Company, (ii) Director shall have reason-
ably concluded that there may be a conflict of interest between the Company and
Director in the conduct of the defense of such action or that counsel may not be
adequately representing Director, (iii) a Triggering Event shall have occurred
or (iv) the Company shall not in fact have employed counsel to assume the
defense of such action, in each of which cases the fees and expenses of counsel
shall be at the expense of the Company. The Company shall not be entitled
to assume the defense of any Proceeding as to which Director shall have made the
conclusion provided for in (ii) above or if an event specified in (iii) above
shall have occurred.
(c) The Company shall not be liable to indemnify Director
under this Agreement for any amounts paid in settlement of any action or claim
effected without its written consent. The Company shall not settle any action
or claim in any manner which would impose any penalty or limitation on Director
without Director's written consent. Neither the Company nor Director will
unreasonably withhold their consent to any proposed settlement.
Section 18. Notices. All notices, requests,
demands and other communications hereunder shall be in
writing and shall be deemed to have been duly given if
(i) delivered by hand and receipted for by the party to whom said notice or
other communication shall have been directed or (ii) mailed by certified or
registered mail with postage prepaid, on the third business day after the date
on which it is so mailed:
(a) If to Director, to:
G. Craig Sullivan
The Clorox Company
1221 Broadway
Oakland, CA 94612
(b) If to the Company, to:
American President Companies, Ltd.
1111 Broadway
Oakland, CA 94607
Attn: Chairman of the Board
With a copy to:
Secretary
or to such other address as may have been furnished to Director by the Company
or to the Company by Director, as
the case may be.
Section 19. Governing Law. The parties agree that
this Agreement shall be governed by, and construed and enforced in accordance
with, the laws of the State of Delaware, as applied to contracts between
Delaware residents entered into and to be performed entirely within Delaware.
Section 20. Consent to Jurisdiction. The Company
and Director each hereby irrevocably consent to the juris-diction of the courts
of the State of Delaware for all purposes in connection with any action or
proceeding which arises out of or relates to this Agreement and agree that
any action instituted under this Agreement shall be brought only in the state
courts of the State of Delaware.
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement on the day and year first above written.
AMERICAN PRESIDENT COMPANIES, LTD.
By: /s/ Maryellen B. Cattani
Maryellen B. Cattani
Senior Vice President,
Secretary, and General Counsel
DIRECTOR
/s/G. Craig Sullivan
G. Craig Sullivan
--
DIRECTORS' INDEMNITY AGREEMENT
THIS INDEMNITY AGREEMENT, made and entered into
this 28th day of April, 1994, ("Agreement"), by and
between AMERICAN PRESIDENT COMPANIES, LTD., a Delaware corporation ("Company"),
and Tully M. Friedman
("Director").
In consideration of the mutual promises in this Agreement, and intending
to be legally bound, the Company
and Director do hereby covenant and agree as follows:
Section 1. Services by Director. Director agrees
to serve as a director so long as he is duly appointed or elected and qualified
in accordance with the applicable provisions of the Certificate of Incorporation
and By-laws
of the Company or any subsidiary of the Company and until such time as he
resigns or fails to stand for election. Director may at any time and for any
reason resign from such position (subject to any other contractual obligation or
other obligation imposed by operation of law), in which
event the Company shall have no obligation under this Agreement to continue
Director in any such position.
Section 2. Indemnification. The Company shall indemnify
Director to the fullest extent permitted by applicable law in effect on the date
hereof or as such law may from time to time be amended (but, in the case of any
such amendment, only to the extent such amendment permits
the Company to provide broader indemnification rights than the law permitted the
Company to provide before such amend-
ment). Without in any way diminishing the scope of the indemnification provided
by this Section 2, the Company will indemnify Director if and whenever he is or
was involved in any manner (including, without limitation, as a party or as
a witness) in any threatened, pending or completed Pro-
ceeding, including without limitation any such Proceeding brought by or in the
right of the Company, by reason of the fact that he is or was an Agent or by
reason of anything
done or not done by him in such capacity, against Expenses and Liabilities
actually and reasonably incurred by Director
or on his behalf in connection with the investigation, defense, settlement or
appeal of any such Proceeding. No initial finding by the Board, its counsel,
Independent Counsel, arbitrators or the stockholders shall be effective to
deprive Director of the protection of this indemnity, nor shall a court to which
Director may apply for enforcement of this indemnity give any weight to any such
adverse finding
in deciding any issue before it, as it is intended that Director shall be paid
promptly by the Company all amounts necessary to effectuate the foregoing
indemnity in full. In
addition to, and not as a limitation of, the foregoing, the rights of
indemnification of Director provided under this Agreement shall include those
rights set forth in Sec-
tions 3, 6 and 7 below.
Section 3. Advancement of Expenses. All reason-
able Expenses incurred by or on behalf of Director shall be advanced by the
Company to Director within 20 days after the receipt by the Company of a written
request for an advance
or advances of Expenses from time to time, whether prior to or after final
disposition of a Proceeding (unless there has been a final determination that
Director is not entitled to be indemnified for such Expenses), including without
limita-
tion any Proceeding brought by or in the right of the Com-pany. Director's
entitlement to advancement of Expenses shall include those incurred in
connection with any Pro-ceeding by Director seeking an adjudication or award in
arbitration pursuant to this Agreement. The requests shall reasonably evidence
the Expenses incurred by Director in connection therewith. If required by law
at the time of
such advance, Director hereby undertakes to repay the
amounts advanced if it shall ultimately be determined that Director is not
entitled to be indemnified pursuant to the terms of this Agreement.
Section 4. Procedure for Determination of Enti-
tlement to Indemnification.
(a) Whenever Director believes that he is enti-tled to
indemnification pursuant to this Agreement, Director shall submit a written
request for indemnification to the Company to the attention of the Chairman of
the Board with a copy to the Secretary. This request shall include documen-
tation or information which is necessary for the determina-
tion of entitlement to indemnification and which is reason-
ably available to Director. Determination of Director's entitlement to
indemnification shall be made not later than 60 days after any judgment, order,
settlement, dismissal, arbitration award, conviction, acceptance of a plea of
nolo contendere or its equivalent, or other disposition or
partial disposition of any Proceeding or any other event which could enable the
Company to determine Director's entitlement to indemnification. The Chairman of
the Board
or the Secretary shall, promptly upon receipt of Director's request for
indemnification, advise the Board in writing that Director has made such request
for indemnification.
(b) The Company shall be entitled to select the forum in which
Director's entitlement to indemnification
will be heard unless a Triggering Event has occurred, in which case Director
shall be entitled to select the forum. The Company or Director, as the case may
be, shall notify
the other party in writing as to the forum selected, which selection shall be
from among the following:
( i) The stockholders of the Company;
(ii) A quorum of the Board consisting of Disinterested
Directors;
(iii) Independent Counsel, which counsel shall make the
determination in a written opinion; or
(iv) A panel of three arbitrators, one of
whom is selected by the Company, another of whom
is selected by Director and the last of whom is
selected by the first two arbitrators so selected;
or if for any reason three arbitrators are not
selected within 30 days after the appointment
of the first arbitrator, then selection of addi-
tional arbitrators to complete the three person
panel shall be made by the American Arbitration Association under its
commercial arbitration rules
now in effect.
Section 5. Presumptions and Effect of Certain Proceedings. Upon making
a request for indemnification, Director shall be presumed to be entitled to
indemnification under this Agreement and the Company shall have the burden
of proof to show that such indemnification is expressly prohibited by applicable
law in order to overcome that presumption in reaching any contrary
determination. If the person or persons so empowered to make the determination
shall have failed to make the requested indemnification within 60 days after any
judgment, order, settlement, dismissal, arbitration award, conviction,
acceptance of a plea of nolo contendere or its equivalent, or other disposi-tion
or partial disposition of any Proceeding or any other event which could enable
the Company to determine Director's entitlement to indemnification, the
requisite determination of entitlement to indemnification shall be deemed to
have been made and Director shall be absolutely entitled to indemnification
under this Agreement, absent (i) misrepre-
sentation or omission by Director of a material fact in the request for
indemnification or (ii) a specific finding that all or any part of such
indemnification is expressly prohib-
ited by law. The termination of any Proceeding by judgment, order, settlement,
arbitration award or conviction, or upon
a plea of nolo contendere or its equivalent, shall not of itself (a) adversely
affect the rights of Director to indem-
nification except as may be provided herein, (b) create a presumption that
Director did not act in good faith and in a manner which he reasonably believed
to be in or not opposed to the best interests of the Company, or (c) with
respect to
any criminal action or proceeding, create a presumption that Director had
reasonable cause to believe that his conduct
was unlawful.
Section 6. Remedies of Director in Cases of Determination not to
Indemnify or to Advance Expenses.
(a) In the event that (i) an initial determina-tion is made that
Director is not entitled to indemnifica-tion, (ii) advances are not made
pursuant to this Agreement, (iii) payment has not been timely made following a
deter-mination of entitlement to indemnification pursuant to this Agreement or
(iv) Director otherwise seeks enforcement of this Agreement, Director shall be
entitled to a final adjudication in an appropriate court of the State of Dela-
ware of his entitlement to such indemnification or advance. Alternatively,
Director at his option may seek an award in arbitration to be conducted by a
single arbitrator pursuant to the commercial arbitration rules of the American
Arbitra-tion Association now in effect, which award is to be made within 90 days
following the filing of the demand
for arbitration. The Company shall not oppose Director's right to seek any such
adjudication or arbitration award.
In any such proceeding or arbitration Director shall be presumed to be entitled
to indemnification under this Agreement and the Company shall have the burden of
proof to overcome that presumption.
(b) In the event an initial determination has
been made, in whole or in part, that Director is not enti-tled to
indemnification, the decision in the judicial proceeding or arbitration provided
in paragraph (a) of this Section 6 shall be made de novo and Director shall not
be prejudiced by reason of a determination that he is not entitled to
indemnification.
(c) If an initial determination is made or deemed to have been
made pursuant to the terms of this Agreement that indemnification of Director is
not expressly prohibited by law, Director shall be entitled to indemnification
and
the Company shall be bound by such determination in the absence of (i) a
misrepresentation or omission of a material fact by Director or (ii) a specific
finding (which has
become final) that all or any part of such indemnification
is expressly prohibited by law.
(d) The Company shall be precluded from asserting that the
procedures and presumptions of this Agreement are not valid, binding and
enforceable. The Company shall stipulate in any such court or before any such
arbitrator that the Company is bound by all the provisions of this
Agreement and is precluded from making any assertion to the contrary.
(e) Expenses incurred by Director in connection with his
request for indemnification under, seeking enforce-ment of, or to recover
damages for breach of, this Agreement shall be borne by the Company.
Section 7. Other Rights to Indemnification.
Director's rights of indemnification and advancement of expenses provided by
this Agreement shall not be deemed exclusive of any other rights to which
Director may now or
in the future be entitled under applicable law, the Certifi-cate of
Incorporation, By-laws, agreement, vote of stock-holders, resolution of
directors, or otherwise.
Section 8. Limitations on Indemnity. The Company
shall not be liable under this Agreement to make any payment to Director to the
extent that Director has already been reimbursed pursuant to such D & O
Insurance as the Company may maintain for Director's benefit. Notwithstanding
the availability of such insurance, Director also may claim indemnification from
the Company pursuant to this Agreement by assigning to the Company any claims
under such insurance to the extent Director is paid by the Company.
Section 9. Duration and Scope of Agreement;
Binding Effect. This Agreement shall continue so long as Director shall be
subject to any possible Proceeding by reason of the fact that he is or was an
Agent and shall be applicable to Proceedings commenced or continued after
execution of this Agreement, whether arising from acts or omissions occurring
before or after such execution. This Agreement shall be binding upon the
Company and its succes-sors and assigns and shall inure to the benefit of
Director and his spouse, assigns, heirs, devisees, executors, admin-istrators
and other legal representatives.
Section 10. Severability. If any provision or provisions of this
Agreement (or any portion thereof) shall be held to be invalid, illegal or
unenforceable for any reason whatsoever: (a) the validity, legality and enforce
- -ability of the remaining provisions of this Agreement shall not in any way be
affected or impaired thereby; and (b) to the fullest extent possible, the
provisions of this Agree-ment shall be construed so as to give effect to the
intent manifested by the provision held invalid, illegal or unen-forceable.
Section 11. Identical Counterparts. This Agree-
ment may be executed in one or more counterparts, each of which shall for all
purposes be deemed to be an original but
all of which together shall constitute one and the same Agreement. Only one
such counterpart signed by the party against whom enforceability is sought needs
to be produced
to evidence the existence of this Agreement.
Section 12. Interpretation of Agreement. It is understood that the
parties hereto intend this Agreement to be interpreted and enforced so as to
provide indemnification to Director to the fullest extent now or hereafter
permitted by law.
Section 13. Headings. The headings of the Sec-
tions and paragraphs of this Agreement are inserted for convenience only and
shall not be deemed to constitute part of this Agreement or to affect the
construction thereof.
Section 14. Definitions. For purposes of this Agreement:
(a) "Agent" shall mean any person who (i) is or was a director,
officer or employee of the Company or a subsidiary of the Company whether
serving in such capacity
or as a director, officer, employee, agent, fiduciary or other official of
another entity at the request, for the convenience, or to represent the
interests of the Company or a subsidiary of the Company or (ii) was a director,
officer or employee of a corporation which was a predecessor corpo-ration of the
Company or a subsidiary of the Company whether serving in such capacity or as a
director, officer,
employee, agent, fiduciary or other official of another entity at the request,
for the convenience, or to represent the interests of such predecessor
corporation.
(b) "Disinterested Director" shall mean a direc-tor of the
Company who is not or was not a party to the Proceeding in respect of which
indemnification is being sought by Director.
(c) "Expenses" shall include all direct and indirect costs
(including, without limitation, attorneys' fees, retainers, court costs,
transcripts, fees of experts, witness fees, travel expenses, duplicating costs,
printing and binding costs, telephone charges, postage, delivery service fees,
all other disbursements or out-of-pocket expenses and reasonable compensation
for time spent by Director for which he is otherwise not compensated by the
Company or any third party) actually and reasonably incurred in connection with
either the investigation, defense, settlement or appeal of a Proceeding or
establishing or enforcing a right to indemnification under this Agreement,
applicable law or otherwise; provided, however, that "Expenses" shall not
include any judgments, fines or
Employee Retirement Income Security Act of 1974 ("ERISA") excise taxes or
penalties.
(d) "Independent Counsel" shall mean a law firm
or a member of a law firm that neither is presently nor in the past five years
has been retained to represent: (i) the Company or Director in any matter
material to either party, or (ii) any other party to the Proceeding giving rise
to a claim for indemnification hereunder. Notwithstanding the foregoing, the
term "Independent Counsel" shall not include any person who, under the
applicable standards of profes-sional conduct then prevailing, would have a
conflict of interest in representing either the Company or Director in
an action to determine Director's right to indemnification under this Agreement.
(e) "Liabilities shall mean liabilities of any type
whatsoever, including, but not limited to, judgments, fines, ERISA excise taxes
and penalties, and amounts paid in settlement.
(f) "Proceeding" shall mean any action, suit, arbitration,
alternate dispute resolution mechanism, inves-tigation, administrative hearing
or any other proceeding whether civil, criminal, administrative or
investigative.
(g) "Triggering Event" shall mean the acquisition by any
person (other than the Company) of 30% or more of the outstanding shares of
common stock of the Company unless a majority of the entire Board, which shall
include the affirmative vote of at least one director from each class of the
Board, shall have earlier approved such acquisition.
Section 15. Pronouns. Use of the masculine
pronoun shall be deemed to include usage of the feminine pronoun where
appropriate.
Section 16. Modification and Waiver. No supple-
ment, modification or amendment of this Agreement shall be binding unless
executed in writing by both of the parties to this Agreement. No waiver of any
provision of this Agree-ment shall be deemed to constitute a waiver of any other
provision hereof (whether or not similar) nor shall such waiver constitute a
continuing waiver.
Section 17. Notice by Director and Defense of
Claims. Director agrees promptly to notify the Company in writing upon being
served with any summons, citation, sub-poena, complaint, indictment, information
or other document relating to any matter which may be subject to indemnifica-
tion hereunder, whether civil, criminal, administrative or investigative; but
the omission so to notify the Company
will not relieve it from any liability which it may have to Director if such
omission does not prejudice the Company's rights and if such omission does
prejudice the Company's rights, it will relieve the Company from liability only
to the extent of such prejudice; nor will such omission relieve the Company from
any liability which it may have to Director otherwise than under this Agreement.
With respect to any Proceeding as to which Director notifies the Company of the
commencement thereof:
(a) The Company will be entitled to participate therein at its
own expense; and
(b) Except as otherwise provided below, to the extent that it
may wish, the Company jointly with any other indemnifying party similarly
notified will be entitled to assume the defense thereof, with counsel reasonably
satis-factory to Director. After notice from the Company to Director of its
election so to assume the defense thereof, the Company will not be liable to
Director under this Agree-ment for any Expenses subsequently incurred by
Director in connection with the defense thereof other than reasonable costs of
investigation or as otherwise provided below. Director shall have the right to
employ his counsel in such Proceeding but the fees and expenses of such counsel
incurred after notice from the Company of its assumption of the defense thereof
shall be at the expense of Director unless (i) the employment of counsel by
Director has been authorized by the Company, (ii) Director shall have reason-
ably concluded that there may be a conflict of interest between the Company and
Director in the conduct of the defense of such action or that counsel may not be
adequately representing Director, (iii) a Triggering Event shall have occurred
or (iv) the Company shall not in fact have employed counsel to assume the
defense of such action, in each of which cases the fees and expenses of counsel
shall be at the expense of the Company. The Company shall not be entitled
to assume the defense of any Proceeding as to which Director shall have made the
conclusion provided for in (ii) above or if an event specified in (iii) above
shall have occurred.
(c) The Company shall not be liable to indemnify Director
under this Agreement for any amounts paid in settlement of any action or claim
effected without its written consent. The Company shall not settle any action
or claim in any manner which would impose any penalty or limitation on Director
without Director's written consent. Neither the Company nor Director will
unreasonably withhold their consent to any proposed settlement.
Section 18. Notices. All notices, requests,
demands and other communications hereunder shall be in
writing and shall be deemed to have been duly given if
(i) delivered by hand and receipted for by the party to whom said notice or
other communication shall have been directed or (ii) mailed by certified or
registered mail with postage prepaid, on the third business day after the date
on which it is so mailed:
(a) If to Director, to:
Tully M. Friedman
Hellman & Friedman
One Maritime Plaza, 12th Floor
San Francisco, CA 94111
(b) If to the Company, to:
American President Companies, Ltd.
1111 Broadway
Oakland, CA 94607
Attn: Chairman of the Board
With a copy to:
Secretary
or to such other address as may have been furnished to Director by the Company
or to the Company by Director, as
the case may be.
Section 19. Governing Law. The parties agree that
this Agreement shall be governed by, and construed and enforced in accordance
with, the laws of the State of Delaware, as applied to contracts between
Delaware residents entered into and to be performed entirely within Delaware.
Section 20. Consent to Jurisdiction. The Company
and Director each hereby irrevocably consent to the juris-diction of the courts
of the State of Delaware for all purposes in connection with any action or
proceeding which arises out of or relates to this Agreement and agree that
any action instituted under this Agreement shall be brought only in the state
courts of the State of Delaware.
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement on the day and year first above written.
AMERICAN PRESIDENT COMPANIES, LTD.
By: /s/ Maryellen B. Cattani
Maryellen B. Cattani
Senior Vice President,
Secretary, and General Counsel
DIRECTOR
/s/ Tully M. Friedman
Tully M. Friedman
<TABLE>
EXHIBIT 11.1
AMERICAN PRESIDENT COMPANIES, LTD. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER COMMON SHARE
<CAPTION>
_________________________________________________________________________________________________
Year Ended December 30 December 31 December 25
1994 1993 1992
_________________________________________________________________________________________________
(In thousands, except
per share amounts)
_________________________________________________________________________________________________
PRIMARY EARNINGS PER COMMON SHARE
Income Before Cumulative
<S> <C> <C> <C>
Effect of Accounting Change $ 74,198 $ 80,109 $ 78,016
Cumulative Effect on Prior Years
of Changing the Accounting for
Revenues and Expenses (21,565)
_________________________________________________________________________________________________
Net Income $ 74,198 $ 80,109 $ 56,451
Preferred Dividends Series C (6,750) (6,750) (6,750)
_________________________________________________________________________________________________
Earnings Available $ 67,448 $ 73,359 $ 49,701
_________________________________________________________________________________________________
Weighted Average:
Common Stock 27,231 26,559 28,332
Common Stock Equivalents(1) 1,071 1,147 1,019
_________________________________________________________________________________________________
Total Shares 28,302 27,706 29,351
_________________________________________________________________________________________________
Primary Earnings Per Common
Share
Before Cumulative Effect of
Accounting Change $ 2.38 $ 2.65 $ 2.43
Cumulative Effect of
Accounting Change (0.74)
_________________________________________________________________________________________________
Primary Earnings Per Common
Share $ 2.38 $ 2.65 $ 1.69
_________________________________________________________________________________________________
FULLY DILUTED EARNINGS PER COMMON SHARE
Income Before Cumulative
Effect of Accounting Change $ 74,198 $ 80,109 $ 78,016
Cumulative Effect on Prior Years
of Changing the Accounting for
Revenues and Expenses (21,565)
_________________________________________________________________________________________________
Net Income $ 74,198 $ 80,109 $ 56,451
_________________________________________________________________________________________________
Weighted Average:
Common Stock 27,231 26,559 28,331
Common Stock Equivalents(1) 1,100 1,579 1,019
Preferred Stock Series C 3,962 3,962 3,962
_________________________________________________________________________________________________
Total Shares 32,293 32,100 33,312
_________________________________________________________________________________________________
Fully Diluted Earnings Per Common Share
Before Cumulative Effect of
Accounting Change $ 2.30 $ 2.50 $ 2.34
Cumulative Effect of
Accounting Change (0.65)
_________________________________________________________________________________________________
Fully Diluted Earnings Per
Common Share $ 2.30 $ 2.50 $ 1.69
_________________________________________________________________________________________________
(1) Assumes conversion of outstanding stock options as determined by
application of the treasury stock method.
</TABLE>
<TABLE>
EXHIBIT 21.1
AMERICAN PRESIDENT COMPANIES, LTD.
SUBSIDIARIES OF THE COMPANY
<CAPTION>
SUBSIDIARY JURISDICTION OF INCORP.
______________________________________________________________________________________________
<S> <S>
ACS CANADA, LTD. CANADA
AMERICAN CONSOLIDATION SERVICES OF NORTH AMERICA, LTD. DELAWARE
AMERICAN CONSOLIDATION SERVICES, LTD. HONG KONG
AMERICAN CONSOLIDATION SERVICES, LTD. TAIWAN
AMERICAN CONSOLIDATION SERVICES (AUSTRALIA), PTY. LTD. AUSTRALIA
AMERICAN CONSOLIDATION SERVICES (PHILIPPINES), INC. PHILIPPINES
AMERICAN PRESIDENT BUSINESS LOGISTICS SERVICES, LTD. DELAWARE
AMERICAN PRESIDENT COMPANIES FOUNDATION CALIFORNIA
AMERICAN PRESIDENT LINES CANADA, LTD. CANADA
AMERICAN PRESIDENT LINES, LTD. DELAWARE
AMERICAN PRESIDENT LINES (CHINA) COMPANY LIMITED PEOPLES REPUBLIC
OF CHINA
AMERICAN PRESIDENT LINES (LANKA) AGENCIES LIMITED SRI LANKA
AMERICAN PRESIDENT TRUCKING COMPANY, LTD. DELAWARE
APC DE MEXICO, S.A. DE C.V. MEXICO
APL AGENCIES INDIA PRIVATE LIMITED INDIA
APL (BANGLADESH) AGENCIES LIMITED BANGLADESH
APL CORPORATION DELAWARE
APL EXPRESS LTD. DELAWARE
APL EXPRESS TRANSPORTATION, LTD. DELAWARE
APL INFORMATION SERVICES, LTD. DELAWARE
APL INTERNATIONAL CORPORATION DELAWARE
APL LAND TRANSPORT SERVICES, INC. TENNESSEE
APL NEWBUILDINGS, LTD. NEVADA
ASIAN-AMERICAN CONSOLIDATION SERVICES, LTD. CALIFORNIA
CBD CONTAINERS (PVT) LIMITED SRI LANKA
CONTROLADORA APC MEXICANA, S.A. DE C.V. MEXICO
EAGLE INTERMODAL, LTD. DELAWARE
EAGLE MARINE SERVICES, LTD. DELAWARE
EAGLE MARINE SERVICES (INDIA), LTD. DELAWARE
EMS DE MEXICO, S.A. DE C.V. MEXICO
MULTI MODAL TRANSPORT INTERNATIONAL (PVT) LTD. PAKISTAN
NATOMAS REAL ESTATE COMPANY CALIFORNIA
PIONEER INTERMODAL CONTAINER SERVICES CO., LTD THAILAND
SIAM INTERMODAL SERVICES LTD. THAILAND
SONG-DOR HOLDINGS LIMITED HONG KONG
TRADE U.S.A., LTD. DELAWARE
VASCOR, LTD. DELAWARE
</TABLE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation of our report dated February 10, 1995 included in this Form 10-K,
into the company's previously filed Registration Statements on Form S-3 No. 33-
60893, and Form S-8 Nos. 2-89096, 2-89094, 33-17499, 33-28640, 33-24847, 33-
36030, 33-47492 and 33-56163.
/s/ Arthur Andersen LLP
San Francisco, California
March 10, 1995
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
The undersigned does hereby make, constitute and appoint Will M. Storey,
Maryellen B. Cattani, Timothy J. Windle and Peter A. V. Huegel, jointly and
severally, my true and lawful attorneys-in-fact, with full power of substitution
in each, for me and in my name, place and stead to execute for me and on my
behalf in each or any one of my offices and capacities with American President
Companies, Ltd. (the "Company"), as shown below, the Company's Annual Report on
Form 10-K for the year ended December 30, 1994, with exhibits thereto and other
documents in connection therewith, which the Company contemplates filing with
the Securities and Exchange Commission under the Securities Exchange Act of
1934, as amended, and any and all amendments to said Form 10-K, hereby
ratifying, approving and confirming all that any such attorney-in-fact may do by
virtue of these presents.
IN WITNESS WHEREOF, I have executed these presents this 7th day of
March, 1995.
/s/ Charles S. Arledge
Charles S. Arledge
Director
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
The undersigned does hereby make, constitute and appoint Will M. Storey,
Maryellen B. Cattani, Timothy J. Windle and Peter A. V. Huegel, jointly and
severally, my true and lawful attorneys-in-fact, with full power of substitution
in each, for me and in my name, place and stead to execute for me and on my
behalf in each or any one of my offices and capacities with American President
Companies, Ltd. (the "Company"), as shown below, the Company's Annual Report on
Form 10-K for the year ended December 30, 1994, with exhibits thereto and other
documents in connection therewith, which the Company contemplates filing with
the Securities and Exchange Commission under the Securities Exchange Act of
1934, as amended, and any and all amendments to said Form 10-K, hereby
ratifying, approving and confirming all that any such attorney-in-fact may do by
virtue of these presents.
IN WITNESS WHEREOF, I have executed these presents this 7th day of
March, 1995.
/s/ John H. Barr
John H. Barr
Director
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
The undersigned does hereby make, constitute and appoint Will M. Storey,
Maryellen B. Cattani, Timothy J. Windle and Peter A. V. Huegel, jointly and
severally, my true and lawful attorneys-in-fact, with full power of substitution
in each, for me and in my name, place and stead to execute for me and on my
behalf in each or any one of my offices and capacities with American President
Companies, Ltd. (the "Company"), as shown below, the Company's Annual Report on
Form 10-K for the year ended December 30, 1994, with exhibits thereto and other
documents in connection therewith, which the Company contemplates filing with
the Securities and Exchange Commission under the Securities Exchange Act of
1934, as amended, and any and all amendments to said Form 10-K, hereby
ratifying, approving and confirming all that any such attorney-in-fact may do by
virtue of these presents.
IN WITNESS WHEREOF, I have executed these presents this 9th day of
March, 1995.
/s/ Tully M. Friedman
Tully M. Friedman
Director
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
The undersigned does hereby make, constitute and appoint Will M. Storey,
Maryellen B. Cattani, Timothy J. Windle and Peter A. V. Huegel, jointly and
severally, my true and lawful attorneys-in-fact, with full power of substitution
in each, for me and in my name, place and stead to execute for me and on my
behalf in each or any one of my offices and capacities with American President
Companies, Ltd. (the "Company"), as shown below, the Company's Annual Report on
Form 10-K for the year ended December 30, 1994, with exhibits thereto and other
documents in connection therewith, which the Company contemplates filing with
the Securities and Exchange Commission under the Securities Exchange Act of
1934, as amended, and any and all amendments to said Form 10-K, hereby
ratifying, approving and confirming all that any such attorney-in-fact may do by
virtue of these presents.
IN WITNESS WHEREOF, I have executed these presents this 7th day of
March, 1995.
/s/ Joji Hayashi
Joji Hayashi
Director
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
The undersigned does hereby make, constitute and appoint Will M. Storey,
Maryellen B. Cattani, Timothy J. Windle and Peter A. V. Huegel, jointly and
severally, my true and lawful attorneys-in-fact, with full power of substitution
in each, for me and in my name, place and stead to execute for me and on my
behalf in each or any one of my offices and capacities with American President
Companies, Ltd. (the "Company"), as shown below, the Company's Annual Report on
Form 10-K for the year ended December 30, 1994, with exhibits thereto and other
documents in connection therewith, which the Company contemplates filing with
the Securities and Exchange Commission under the Securities Exchange Act of
1934, as amended, and any and all amendments to said Form 10-K, hereby
ratifying, approving and confirming all that any such attorney-in-fact may do by
virtue of these presents.
IN WITNESS WHEREOF, I have executed these presents this 7th day of
March, 1995.
/s/ F. Warren Hellman
F. Warren Hellman
Director
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
The undersigned does hereby make, constitute and appoint Will M. Storey,
Maryellen B. Cattani, Timothy J. Windle and Peter A. V. Huegel, jointly and
severally, my true and lawful attorneys-in-fact, with full power of substitution
in each, for me and in my name, place and stead to execute for me and on my
behalf in each or any one of my offices and capacities with American President
Companies, Ltd. (the "Company"), as shown below, the Company's Annual Report on
Form 10-K for the year ended December 30, 1994, with exhibits thereto and other
documents in connection therewith, which the Company contemplates filing with
the Securities and Exchange Commission under the Securities Exchange Act of
1934, as amended, and any and all amendments to said Form 10-K, hereby
ratifying, approving and confirming all that any such attorney-in-fact may do by
virtue of these presents.
IN WITNESS WHEREOF, I have executed these presents this 7th day of
March, 1995.
/s/ John M. Lillie
John M. Lillie
Chairman of the Board,
President, Chief Executive Officer
and Director
(Principal Executive Officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
The undersigned does hereby make, constitute and appoint Will M. Storey,
Maryellen B. Cattani, Timothy J. Windle and Peter A. V. Huegel, jointly and
severally, my true and lawful attorneys-in-fact, with full power of substitution
in each, for me and in my name, place and stead to execute for me and on my
behalf in each or any one of my offices and capacities with American President
Companies, Ltd. (the "Company"), as shown below, the Company's Annual Report on
Form 10-K for the year ended December 30, 1994, with exhibits thereto and other
documents in connection therewith, which the Company contemplates filing with
the Securities and Exchange Commission under the Securities Exchange Act of
1934, as amended, and any and all amendments to said Form 10-K, hereby
ratifying, approving and confirming all that any such attorney-in-fact may do by
virtue of these presents.
IN WITNESS WHEREOF, I have executed these presents this 7th day of
March, 1995.
/s/ Toni Rembe
Toni Rembe
Director
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
The undersigned does hereby make, constitute and appoint Will M. Storey,
Maryellen B. Cattani, Timothy J. Windle and Peter A. V. Huegel, jointly and
severally, my true and lawful attorneys-in-fact, with full power of substitution
in each, for me and in my name, place and stead to execute for me and on my
behalf in each or any one of my offices and capacities with American President
Companies, Ltd. (the "Company"), as shown below, the Company's Annual Report on
Form 10-K for the year ended December 30, 1994, with exhibits thereto and other
documents in connection therewith, which the Company contemplates filing with
the Securities and Exchange Commission under the Securities Exchange Act of
1934, as amended, and any and all amendments to said Form 10-K, hereby
ratifying, approving and confirming all that any such attorney-in-fact may do by
virtue of these presents.
IN WITNESS WHEREOF, I have executed these presents this 7th day of
March, 1995.
/s/ Timothy J. Rhein
Timothy J. Rhein
Director
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
The undersigned does hereby make, constitute and appoint Will M. Storey,
Maryellen B. Cattani, Timothy J. Windle and Peter A. V. Huegel, jointly and
severally, my true and lawful attorneys-in-fact, with full power of substitution
in each, for me and in my name, place and stead to execute for me and on my
behalf in each or any one of my offices and capacities with American President
Companies, Ltd. (the "Company"), as shown below, the Company's Annual Report on
Form 10-K for the year ended December 30, 1994, with exhibits thereto and other
documents in connection therewith, which the Company contemplates filing with
the Securities and Exchange Commission under the Securities Exchange Act of
1934, as amended, and any and all amendments to said Form 10-K, hereby
ratifying, approving and confirming all that any such attorney-in-fact may do by
virtue of these presents.
IN WITNESS WHEREOF, I have executed these presents this 7th day of
March, 1995.
/s/ Forrest N. Shumway
Forrest N. Shumway
Director
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
The undersigned does hereby make, constitute and appoint Maryellen B.
Cattani, Timothy J. Windle and Peter A. V. Huegel, jointly and severally, my
true and lawful attorneys-in-fact, with full power of substitution in each, for
me and in my name, place and stead to execute for me and on my behalf in each or
any one of my offices and capacities with American President Companies, Ltd.
(the "Company"), as shown below, the Company's Annual Report on Form 10-K for
the year ended December 30, 1994, with exhibits thereto and other documents in
connection therewith, which the Company contemplates filing with the Securities
and Exchange Commission under the Securities Exchange Act of 1934, as amended,
and any and all amendments to said Form 10-K, hereby ratifying, approving and
confirming all that any such attorney-in-fact may do by virtue of these
presents.
IN WITNESS WHEREOF, I have executed these presents this 7th day of
March, 1995.
/s/ Will M. Storey
Will M. Storey
Executive Vice President,
Chief Financial Officer, Treasurer
and Director
(Principal Financial Officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
The undersigned does hereby make, constitute and appoint Will M. Storey,
Maryellen B. Cattani, Timothy J. Windle and Peter A. V. Huegel, jointly and
severally, my true and lawful attorneys-in-fact, with full power of substitution
in each, for me and in my name, place and stead to execute for me and on my
behalf in each or any one of my offices and capacities with American President
Companies, Ltd. (the "Company"), as shown below, the Company's Annual Report on
Form 10-K for the year ended December 30, 1994, with exhibits thereto and other
documents in connection therewith, which the Company contemplates filing with
the Securities and Exchange Commission under the Securities Exchange Act of
1934, as amended, and any and all amendments to said Form 10-K, hereby
ratifying, approving and confirming all that any such attorney-in-fact may do by
virtue of these presents.
IN WITNESS WHEREOF, I have executed these presents this 7th day of
March, 1995.
/s/ G. Craig Sullivan
G. Craig Sullivan
Director
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
The undersigned does hereby make, constitute and appoint Will M. Storey,
Maryellen B. Cattani, Timothy J. Windle and Peter A. V. Huegel, jointly and
severally, my true and lawful attorneys-in-fact, with full power of substitution
in each, for me and in my name, place and stead to execute for me and on my
behalf in each or any one of my offices and capacities with American President
Companies, Ltd. (the "Company"), as shown below, the Company's Annual Report on
Form 10-K for the year ended December 30, 1994, with exhibits thereto and other
documents in connection therewith, which the Company contemplates filing with
the Securities and Exchange Commission under the Securities Exchange Act of
1934, as amended, and any and all amendments to said Form 10-K, hereby
ratifying, approving and confirming all that any such attorney-in-fact may do by
virtue of these presents.
IN WITNESS WHEREOF, I have executed these presents this 7th day of
March, 1995.
/s/ Barry L. Williams
Barry L. Williams
Director
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
The undersigned does hereby make, constitute and appoint Will M. Storey,
Timothy J. Windle and Peter A. V. Huegel, jointly and severally, my true and
lawful attorneys-in-fact, with full power of substitution in each, for me and in
my name, place and stead to execute for me and on my behalf in each or any one
of my offices and capacities with American President Companies, Ltd. (the
"Company"), as shown below, the Company's Annual Report on Form 10-K for the
year ended December 30, 1994, with exhibits thereto and other documents in
connection therewith, which the Company contemplates filing with the Securities
and Exchange Commission under the Securities Exchange Act of 1934, as amended,
and any and all amendments to said Form 10-K, hereby ratifying, approving and
confirming all that any such attorney-in-fact may do by virtue of these
presents.
IN WITNESS WHEREOF, I have executed these presents this 9th day of
March, 1995.
/s/ Maryellen B. Cattani
Maryellen B. Cattani
Executive Vice President,
General Counsel and Secretary
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Schedule contains summary information extracted from the 10-K of American
President Companies, Ltd. for the year ended December 30, 1994 and is qualified
in its entirely by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-30-1994
<PERIOD-START> JAN-1-1994
<PERIOD-END> DEC-30-1994
<CASH> 39,754
<SECURITIES> 214,898
<RECEIVABLES> 280,736<F1>
<ALLOWANCES> 0
<INVENTORY> 36,549
<CURRENT-ASSETS> 609,072
<PP&E> 1,837,097
<DEPRECIATION> 896,802
<TOTAL-ASSETS> 1,663,957
<CURRENT-LIABILITIES> 402,766
<BONDS> 386,250
<COMMON> 27,318
75,000
0
<OTHER-SE> 514,065
<TOTAL-LIABILITY-AND-EQUITY> 1,663,957
<SALES> 0
<TOTAL-REVENUES> 2,793,468
<CGS> 0
<TOTAL-COSTS> 2,592,634<F2>
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 28,994
<INCOME-PRETAX> 110,304
<INCOME-TAX> 36,106
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 74,198
<EPS-PRIMARY> 2.38
<EPS-DILUTED> 2.30
<FN>
<F1>The allowance for Doubtful Accounts, included in Reveivables, amounted to
$21,908.
<F2>The provision for doubtful accounts, included in Total-Costs, was $13,217.
</FN>
</TABLE>
