<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended JANUARY 29, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
FOR THE TRANSITION PERIOD FROM TO
------- -------
COMMISSION FILE NUMBER 0-12102
HADCO CORPORATION
-----------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MASSACHUSETTS 04-2393279
- ------------- ----------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
12A MANOR PARKWAY, SALEM, NEW HAMPSHIRE 03079
- --------------------------------------- -----
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (603) 898-8000
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Registrant has 13,801,568 shares of Common Stock, $0.05 Par Value,
----------
outstanding at March 10, 2000.
--
<PAGE> 2
HADCO CORPORATION AND SUBSIDIARIES
INDEX
PART I - FINANCIAL INFORMATION PAGE
Item 1. Financial Statements
Consolidated Condensed Balance Sheets as of
January 29, 2000 (unaudited) and October 30, 1999.................. 3
Consolidated Condensed Statements of Operations
for the Three Months ended January 29, 2000 and
January 30, 1999 (unaudited)....................................... 4
Consolidated Condensed Statements of Cash Flows
for the Three Months ended January 29, 2000 and
January 30, 1999 (unaudited)....................................... 5
Notes to Consolidated Condensed Financial
Statements......................................................... 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations............................. 15
Item 3. Quantitative and Qualitative Disclosures about Market Risk...... 18
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.............................................. 19
Item 2. Changes in Securities........................................... 19
Item 6. Exhibits and Reports on Form 8-K................................ 19
SIGNATURE ................................................................... 20
2
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
HADCO CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands, except per share data)
<TABLE>
<CAPTION>
January 29, October 30,
2000 1999
----------- -----------
(unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents ...................................................... $ 885 $ 9,078
Accounts receivable, net of allowance of $1,472 in 2000
and $1,478 in 1999 ....................................................... 123,684 116,580
Inventories .................................................................... 60,392 63,926
Deferred tax asset ............................................................. 18,671 11,480
Prepaid expenses and other current assets ...................................... 8,299 7,688
--------- ---------
Total current assets ..................................................... 211,931 208,752
Property, Plant and Equipment, net .................................................... 319,560 328,181
Acquired Intangible Assets, net ....................................................... 176,268 179,319
Other Assets .......................................................................... 8,205 8,571
--------- ---------
$ 715,964 $ 724,823
========= =========
LIABILITIES AND STOCKHOLDERS' INVESTMENT
Current Liabilities:
Current portion of long-term debt .............................................. $ 2,362 $ 2,515
Accounts payable ............................................................... 79,669 100,100
Accrued payroll and other employee benefits .................................... 26,449 36,419
Other accrued expenses ......................................................... 16,648 21,937
--------- ---------
Total current liabilities ................................................ 125,128 160,971
--------- ---------
Long-Term Debt, net of current portion ................................................ 287,910 278,309
--------- ---------
Deferred Tax Liability ................................................................ 64,496 57,342
--------- ---------
Other Long-Term Liabilities ........................................................... 9,192 9,192
--------- ---------
Commitments and Contingencies
Stockholders' Investment:
Common stock, $.05 par value;
Authorized - 50,000 shares
Issued and outstanding - 13,749 in 2000 and 13,631 in 1999 ............... 689 683
Paid-in capital ................................................................ 183,529 179,528
Deferred compensation .......................................................... (1,029) (184)
Retained earnings .............................................................. 46,049 38,982
--------- ---------
Total stockholders' investment ........................................... 229,238 219,009
--------- ---------
$ 715,964 $ 724,823
========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated condensed
financial statements.
3
<PAGE> 4
HADCO CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
-------------------------
January 29, January 30,
2000 1999
----------- -----------
<S> <C> <C>
Net Sales ...................................................... $ 244,743 $ 235,979
Cost of Sales .................................................. 203,802 203,546
--------- ---------
Gross Profit ............................................. 40,941 32,433
Operating Expenses ............................................. 20,726 17,918
Amortization of Goodwill and Acquired Intangible Assets ........ 3,052 3,077
--------- ---------
Income from Operations ................................... 17,163 11,438
Interest and Other Income, net ................................. 920 601
Interest Expense ............................................... (6,684) (8,696)
--------- ---------
Income Before Provision for Income Taxes .............. 11,399 3,343
Provision for Income Taxes ..................................... 4,332 1,329
--------- ---------
Net Income ............................................... $ 7,067 $ 2,014
========= =========
Net Income per Share:
Basic ......................................... $ 0.52 $ 0.15
========= =========
Diluted ....................................... $ 0.51 $ 0.15
========= =========
Weighted Average Shares Outstanding:
Basic ......................................... 13,671 13,422
========= =========
Diluted ....................................... 13,940 13,651
========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated condensed
financial statements.
4
<PAGE> 5
HADCO CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
-----------------------
January 29, January 30,
2000 2000
----------- -----------
<S> <C> <C>
Cash Flows from Operating Activities:
Net income .......................................................... $ 7,067 $ 2,014
Adjustments to reconcile net income to net cash provided by (used in)
operating activities -
Depreciation and amortization ................................. 20,489 19,406
Deferred compensation and deferred taxes ...................... 80 (339)
Director and executive officer stock grants ................... -- 390
Loss (Gain) on disposal of fixed assets ....................... (30) 29
Changes in assets and liabilities -
Increase in accounts receivable ............................... (7,104) (3,860)
Decrease (Increase) in inventories ............................ 3,534 (3,877)
Increase in prepaid expenses and other current assets ......... (611) (507)
Decrease in refundable taxes .................................. -- 9,644
Decrease (Increase) in other assets ........................... 366 (1,564)
Decrease in accounts payable and accrued expenses ............. (35,690) (3,513)
-------- --------
Net Cash Provided by (Used in) Operating Activities ...... (11,899) 17,823
-------- --------
Cash Flows from Investing Activities:
Purchases of property, plant and equipment .......................... (8,817) (16,645)
Proceeds from sale of property, plant and equipment ................. 30 --
-------- --------
Net Cash Used in Investing Activities .................... (8,787) (16,645)
-------- --------
Cash Flows from Financing Activities:
Principal payments of long-term debt ................................ (15,552) (20,836)
Net proceeds from issuance of long-term debt ........................ 25,000 20,000
Proceeds from exercise of stock options ............................. 650 207
Proceeds from employee stock purchase plan .......................... 1,843 1,574
Tax benefit from exercise of nonqualified stock options ............. 552 334
-------- --------
Net Cash Provided by Financing Activities ................ 12,493 1,279
-------- --------
Net Increase (Decrease) in Cash and Cash Equivalents ...................... (8,193) 2,457
Cash and Cash Equivalents, Beginning of Period ............................ 9,078 7,169
-------- --------
Cash and Cash Equivalents, End of Period .................................. $ 885 $ 9,626
======== ========
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest ...................................................... $ 11,201 $ 13,509
======== ========
Income taxes (net of refunds) ................................. $ 2,928 $ 61
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated condensed
financial statements.
5
<PAGE> 6
HADCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(unaudited)
1. OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
---------------------------------------------------------
Hadco Corporation (the "Company" or "Hadco") was incorporated in
Massachusetts in 1966. Principal products and services of the Company
include:
PRINTED CIRCUITS:
Printed circuits are the basic platform used to interconnect
microprocessors, integrated circuits and other components essential to the
functioning of electronic systems. The Company provides customers with
printed circuit designs and fabricates the printed circuit for the
customer. The design and fabricated printed circuits are sold either
separately or as a complete package. The majority of printed circuits
fabricated by the Company are based on designs provided by the customer.
VALUE ADDED MANUFACTURING:
Value Added Manufacturing (VAM) primarily consists of backplane and system
assemblies. Backplane assemblies are generally larger and thicker printed
circuits on which connectors are mounted to receive and interconnect
printed circuits, integrated circuits and other electronic components.
System assemblies include the backplane, power supply, fan card, cabling
and system chassis.
The consolidated condensed financial statements reflect the application of
certain accounting policies as described in this note and elsewhere in the
accompanying notes to the consolidated condensed financial statements, as
well as the Company's Annual Report on Form 10-K for the fiscal year ended
October 30, 1999. These financial statements should be read in conjunction
with the financial statements and related disclosures included in the
above-referenced SEC filings.
INTERIM FINANCIAL STATEMENTS
----------------------------
The accompanying consolidated condensed balance sheet as of January 29,
2000, and the consolidated condensed statements of operations for the three
months ended January 29, 2000 and January 30, 1999 and the consolidated
condensed statements of cash flows for the three month periods ended
January 29, 2000 and January 30, 1999 are unaudited, but in the opinion of
management, include all adjustments (consisting only of normal, recurring
adjustments) necessary for a fair presentation of results for these interim
periods. Results of operations for the interim periods are not necessarily
indicative of results to be expected for the entire year or any future
period.
NET INCOME PER SHARE
--------------------
A reconciliation of basic and diluted weighted average shares outstanding
is as follows:
<TABLE>
<CAPTION>
Three Months Ended
-------------------------
January 29, January 30,
2000 1999
----------- ----------
(in thousands)
<S> <C> <C>
Basic weighted average shares outstanding .... 13,671 13,422
Weighted average common equivalent shares .... 269 229
------ ------
Diluted weighted average shares outstanding .. 13,940 13,651
====== ======
</TABLE>
Diluted weighted average shares outstanding for the three month periods
ended January 29, 2000 and January 30, 1999 do not include 595,130 and
698,224 common equivalent shares, respectively, as their effect would be
anti-dilutive.
6
<PAGE> 7
HADCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(unaudited)
2. INVENTORIES
-----------
Inventories are stated at the lower of cost or market on a first-in,
first-out (FIFO) basis, and consist of the following (in thousands):
<TABLE>
<CAPTION>
January 29, October 30,
2000 1999
----------- -----------
<S> <C> <C>
Raw Materials ....... $22,424 $18,679
Work-in-process ..... 37,968 45,247
------- -------
$60,392 $63,926
======= =======
</TABLE>
3. LONG-TERM DEBT
--------------
Long-term debt consists of the following (in thousands):
<TABLE>
<CAPTION>
January 29, October 30,
2000 1999
----------- -----------
<S> <C> <C>
Variable rate mortgages .................................. $ 617 $ 640
Revolving credit facility ................................ 85,000 75,000
9 1/2% Senior Subordinated Notes due 2008 ................ 199,439 199,422
Obligations under capital leases with interest rates
ranging from 7% to 7.75% ................................. 5,216 5,762
--------- ---------
290,272 280,824
Less - Current portion ................................... (2,362) (2,515)
--------- ---------
$ 287,910 $ 278,309
========= =========
</TABLE>
Based on the amount outstanding on the Company's credit facility as of
January 29, 2000, the Company has approximately $113.75 million of
borrowings available.
4. BUSINESS SEGMENTS AND GEOGRAPHIC AREAS
--------------------------------------
During the fourth quarter of fiscal 1999, the Company adopted Statement of
Financial Accounting Standards ("SFAS") NO. 131, Disclosure about Segments
of an Enterprise and Related Information. The Company's businesses are
internally reported as two segments. These segments, which are based on
differences in products, technologies, and services, are Printed Circuits
and Value Added Manufacturing (VAM). Hadco evaluates performance of these
segments based on profit or loss from operations, not including
non-recurring charges.
Transactions between segments are recorded at fair market value. Costs of
centralized sales, marketing and administration are allocated to the
segments receiving benefits of the centralized functions. Unallocated
general corporate expenses include the elimination of inter-segment
profits, the costs of executive management for the Company, plus the
amortization of acquired intangibles and goodwill relating to acquisitions.
Management does not represent that these segments, if operated separately,
would report the operating income and other financial information shown.
7
<PAGE> 8
HADCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(unaudited)
4. BUSINESS SEGMENTS AND GEOGRAPHIC AREAS (CONTINUED)
--------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended
------------------------------
January 29, January 30,
2000 1999
--------- ---------
<S> <C> <C>
Net Sales:
Printed Circuits .................................................. $ 219,145 $ 196,371
VAM ............................................................... 32,923 45,292
Elimination ....................................................... (7,325) (5,684)
--------- ---------
$ 244,743 $ 235,979
========= =========
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended
------------------------------
January 29, January 30,
2000 1999
--------- ---------
<S> <C> <C>
Operating Income:
Printed Circuits .................................................. $ 22,469 $ 12,864
VAM ............................................................... 46 1,309
Unallocated general corporate ..................................... (5,352) (2,735)
--------- ---------
$ 17,163 $ 11,438
========= =========
Depreciation and Amortization:
Printed Circuits .................................................. $ 16,119 $ 14,962
VAM ............................................................... 880 791
Unallocated general corporate ..................................... 3,490 3,653
--------- ---------
$ 20,489 $ 19,406
========= =========
Capital Expenditures:
Printed Circuits .................................................. $ 7,198 $ 15,907
VAM ............................................................... 1,100 200
Unallocated general corporate ..................................... 519 538
--------- ---------
$ 8,817 $ 16,645
========= =========
</TABLE>
<TABLE>
<CAPTION>
As of
------------------------------
January 29, October 30,
Identifiable Assets: 2000 1999
--------- ---------
<S> <C> <C>
Printed Circuits .................................................. $ 459,087 $ 462,211
VAM ............................................................... 45,852 48,608
Unallocated general corporate ..................................... 211,025 214,004
--------- ---------
$ 715,964 $ 724,823
========= =========
</TABLE>
8
<PAGE> 9
HADCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(unaudited)
4. BUSINESS SEGMENTS AND GEOGRAPHIC AREAS (CONTINUED)
--------------------------------------------------
The following is a reconciliation of segment operating income to
consolidated income before provision for income taxes:
<TABLE>
<CAPTION>
Three Months Ended
------------------------------
January 29, January 30,
2000 1999
----------- -----------
<S> <C> <C>
Total operating income for reportable segments ................... $ 17,163 $ 11,438
Unallocated amounts:
Interest and other income, net ............................ 920 601
Interest expense .......................................... (6,684) (8,696)
--------- ---------
Income before provision for income taxes ......................... $ 11,399 $ 3,343
========= =========
</TABLE>
The following summarizes financial information by geographic areas:
<TABLE>
<CAPTION>
Three Months Ended
------------------------------
January 29, January 30,
2000 1999
----------- -----------
<S> <C> <C>
Net Sales:
United States ........................................ $ 173,042 $ 181,735
Canada ............................................... 34,826 23,975
Europe ............................................... 17,819 13,715
Asia ................................................. 18,206 14,048
Other ................................................ 850 2,506
--------- ---------
$ 244,743 $ 235,979
========= =========
</TABLE>
<TABLE>
<CAPTION>
As of
------------------------------
January 29, October 30,
2000 1999
----------- -----------
<S> <C> <C>
Long-lived assets:
United States ........................................ $ 455,064 $ 466,434
Asia ................................................. 48,762 49,420
Europe ............................................... 207 217
--------- ---------
$ 504,033 $ 516,071
========= =========
</TABLE>
5. SUPPLEMENTAL GUARANTOR CONSOLIDATING CONDENSED FINANCIAL STATEMENTS
-------------------------------------------------------------------
Basis of presentation. The Company sold on May 18, 1998, $200 million
aggregate principal amount of 9 1/2% Senior Subordinated Notes due in 2008
(the "Notes"). The Notes are fully and unconditionally guaranteed on a
senior subordinated basis, jointly and severally, by certain of the
Company's wholly-owned domestic subsidiaries (the "Guarantors"). The
Guarantors are Hadco Santa Clara, Inc., Hadco Phoenix, Inc., CCIR of Texas
Corp., and CCIR of California Corp. The consolidating condensed financial
statements of the Guarantors are presented below and should be read in
connection with the Consolidated Condensed Financial Statements of the
Company. Separate financial statements of the Guarantors are not presented
because (i) the Guarantors are wholly-owned and have fully and
unconditionally guaranteed the Notes on a joint and several basis and (ii)
the Company's management has determined such separate financial statements
are not material to investors and believes the consolidating condensed
financial statements presented are more meaningful in understanding the
financial position of the Guarantors.
There are no significant restrictions on the ability of the Guarantors to
make distributions to the Company.
9
<PAGE> 10
HADCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
5. SUPPLEMENTAL GUARANTOR CONSOLIDATING CONDENSED FINANCIAL STATEMENTS
-------------------------------------------------------------------
(Continued)
CONSOLIDATING CONDENSED BALANCE SHEET
(unaudited)
<TABLE>
<CAPTION>
As of January 29, 2000
----------------------------------------------------------------
Guarantor Non-Guarantor Parent Elimination Consolidated
Subsidiaries Subsidiaries Corporation Entries Total
--------- --------- --------- --------- --------
(in thousands)
<S> <C> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ (1,743) $ 912 $ 1,716 $ -- $ 885
Accounts receivable, net 51,745 8,351 63,588 -- 123,684
Inventories 27,206 6,464 26,722 -- 60,392
Deferred tax asset -- -- 18,671 -- 18,671
Prepaid and other current assets 1,283 234 6,782 -- 8,299
--------- --------- --------- --------- --------
Total current assets 78,491 15,961 117,479 -- 211,931
Property, Plant and Equipment, net 137,863 48,968 132,729 -- 319,560
Intercompany Receivable 24,890 4,582 44,280 (73,752) --
Investments in Subsidiaries 11,288 -- 282,904 (294,192) --
Acquired Intangible Assets, net 176,268 -- -- -- 176,268
Other Assets 22 -- 8,183 -- 8,205
--------- --------- --------- --------- --------
$ 428,822 $ 69,511 $ 585,575 $(367,944) $715,964
========= ========= ========= ========= ========
LIABILITIES AND STOCKHOLDERS' INVESTMENT
Current Liabilities:
Current portion of long-term debt $ 2,134 $ 73 $ 155 $ -- $ 2,362
Accounts payable 31,135 5,833 42,701 -- 79,669
Intercompany payable 27,516 46,236 -- (73,752) --
Accrued payroll and other
employee benefits 2,312 354 23,783 -- 26,449
Other accrued expenses 40,751 274 (24,350) -- 16,648
--------- --------- --------- --------- --------
Total current liabilities 103,848 52,743 42,289 (73,752) 125,128
--------- --------- --------- --------- --------
Long-Term Debt, net of current portion 2,849 25 285,036 -- 287,910
--------- --------- --------- --------- --------
Deferred Tax Liability 44,676 -- 19,820 -- 64,496
--------- --------- --------- --------- --------
Other Long-Term Liabilities -- -- 9,192 -- 9,192
--------- --------- --------- --------- --------
Stockholders' Investment:
Common stock, $0.05 par value;
Authorized - 50,000 shares
Issued and outstanding - 13,749 11 29,655 689 (29,666) 689
Paid-in capital 400,616 130 183,529 (400,746) 183,529
Deferred compensation -- -- (1,029) -- (1,029)
Retained earnings (123,178) (13,042) 46,049 136,220 46,049
--------- --------- --------- --------- --------
Total stockholders' investment 277,449 16,743 229,238 (294,192) 229,238
--------- --------- --------- --------- --------
$ 428,822 $ 69,511 $ 585,575 $(367,944) $715,964
========= ========= ========= ========= ========
</TABLE>
10
<PAGE> 11
HADCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
5. SUPPLEMENTAL GUARANTOR CONSOLIDATING CONDENSED FINANCIAL STATEMENTS
-------------------------------------------------------------------
(Continued)
CONSOLIDATING CONDENSED BALANCE SHEET
<TABLE>
<CAPTION>
As of October 30, 1999
---------------------------------------------------------------------
Guarantor Non-Guarantor Parent Elimination Consolidated
Subsidiaries Subsidiaries Corporation Entries Total
------------ ------------ ----------- ------- -----
(in thousands)
<S> <C> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ (2,679) $ 1,378 $ 10,379 $ -- $ 9,078
Accounts receivable, net 49,926 7,566 59,088 -- 116,580
Inventories 28,085 6,590 29,251 -- 63,926
Deferred tax asset -- -- 11,480 -- 11,480
Prepaid and other current assets 2,221 244 5,223 -- 7,688
--------- --------- -------- --------- --------
Total current assets 77,553 15,778 115,421 -- 208,752
Property, Plant and Equipment, net 141,510 49,638 137,033 -- 328,181
Intercompany Receivable 24,783 3,122 46,365 (74,270) --
Investments in Subsidiaries 12,162 -- 280,444 (292,606) --
Acquired Intangible Assets, net 179,319 -- -- -- 179,319
Other Assets 29 -- 8,542 -- 8,571
--------- --------- -------- --------- --------
$ 435,356 $ 68,538 $ 587,805 $(366,876) $724,823
========= ========= ======== ========= ========
LIABILITIES AND STOCKHOLDERS' INVESTMENT
Current Liabilities:
Current portion of long-term debt $ 2,114 $ 73 $ 328 $ -- $ 2,515
Accounts payable 41,842 5,583 52,675 -- 100,100
Intercompany payable 28,089 46,181 -- (74,270) --
Accrued payroll and other
employee benefits 1,628 300 34,491 -- 36,419
Other accrued expenses 37,355 97 (15,515) -- 21,937
--------- --------- -------- --------- --------
Total current liabilities 111,028 52,234 71,979 (74,270) 160,971
--------- --------- -------- --------- --------
Long-Term Debt, net of current portion 3,307 43 274,959 -- 278,309
--------- --------- -------- --------- --------
Deferred Tax Liability 44,676 -- 12,666 -- 57,342
--------- --------- -------- --------- --------
Other Long-Term Liabilities -- -- 9,192 -- 9,192
--------- --------- -------- --------- --------
Stockholders' Investment:
Common stock, $0.05 par value;
Authorized - 50,000 shares
Issued and outstanding - 13,631 11 29,655 683 (29,666) 683
Paid-in capital 400,616 -- 179,528 (400,616) 179,528
Deferred compensation -- -- (184) -- (184)
Retained earnings (124,282) (13,394) 38,982 137,676 38,982
--------- --------- -------- --------- --------
Total stockholders' investment 276,345 16,261 219,009 (292,606) 219,009
--------- --------- -------- --------- --------
$ 435,356 $ 68,538 $ 587,805 $(366,876) $ 724,823
========= ========= ======== ========= ========
</TABLE>
11
<PAGE> 12
HADCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
5. SUPPLEMENTAL GUARANTOR CONSOLIDATING CONDENSED FINANCIAL STATEMENTS
-------------------------------------------------------------------
(Continued)
CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended January 29, 2000
-----------------------------------------------------------------------
Guarantor Non-Guarantor Parent Elimination Consolidated
Subsidiaries Subsidiaries Corporation Entries Total
------------ ------------ ----------- ------- -----
(in thousands)
<S> <C> <C> <C> <C> <C>
Net Sales $ 103,661 $ 15,061 $ 126,021 $ -- $ 244,743
Cost of Sales 93,472 14,061 96,269 -- 203,802
--------- -------- --------- -------- ---------
Gross Profit 10,189 1,000 29,752 -- 40,941
Operating Expenses 2,271 910 17,545 -- 20,726
Amortization of Goodwill and Acquired
Intangible Assets 3,052 -- -- -- 3,052
--------- -------- --------- -------- ---------
Income From Operations 4,866 90 12,207 -- 17,163
Interest and Other Income, net 499 428 (1,233) 1,226 920
Interest Expense (68) (5) (6,611) -- (6,684)
--------- -------- --------- -------- ---------
Income Before Provision for
Income Taxes 5,297 513 4,363 1,226 11,399
Provision for Income Taxes 3,319 161 852 -- 4,332
Equity in Income (Loss) of Subsidiary (874) -- -- (1,456) --
--------- -------- --------- -------- ---------
Net Income $ 1,104 $ 352 $ 5,841 $ (230) $ 7,067
========= ======== ========= ======== =========
</TABLE>
<TABLE>
<CAPTION>
For the Three Months Ended January 30, 1999
-----------------------------------------------------------------------
Guarantor Non-Guarantor Parent Elimination Consolidated
Subsidiaries Subsidiaries Corporation Entries Total
------------ ------------ ----------- ------- -----
(in thousands)
<S> <C> <C> <C> <C> <C>
Net Sales $ 114,955 $ 10,507 $ 110,517 $ -- $ 235,979
Cost of Sales 105,210 10,859 87,477 -- 203,546
--------- -------- --------- -------- ---------
Gross Profit 9,745 (352) 23,040 -- 32,433
Operating Expenses 2,170 678 15,070 -- 17,918
Amortization of Goodwill and Acquired
Intangible Expenses 3,077 -- -- -- 3,077
--------- -------- --------- -------- ---------
Income (Loss) From Operations 4,498 (1,030) 7,970 -- 11,438
Interest and Other Income, net (150) (626) 1,371 6 601
Interest Expense (198) (6) (8,492) -- (8,696)
--------- -------- --------- -------- ---------
Income (Loss) Before Provision for 4,150 (1,662) 849 6 3,343
Income Taxes
Provision for Income Taxes 2,873 -- (1,544) -- 1,329
Equity in Income (Loss) of Subsidiary (1,668) -- (385) 2,053 --
--------- -------- --------- -------- ---------
Net Income (Loss) $ (391) $ (1,662) $ 2,008 $ 2,059 $ 2,014
========= ======== ========= ======== =========
</TABLE>
12
<PAGE> 13
HADCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
5. SUPPLEMENTAL GUARANTOR CONSOLIDATING CONDENSED FINANCIAL STATEMENTS
-------------------------------------------------------------------
(Continued)
CONSOLIDATING CONDENSED STATEMENT OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended January 29, 2000
----------------------------------------------------------------------
Guarantor Non-Guarantor Parent Elimination Consolidated
Subsidiaries Subsidiaries Corporation Entries Total
------------ ------------ ----------- ------- -----
(in thousands)
<S> <C> <C> <C> <C> <C>
Net cash provided by (used in) operating
activities $ 4,556 $ 635 $ (18,316) $ 1,226 $ (11,899)
-------- -------- --------- -------- ---------
Cash Flows from Investing Activities:
Foreign Sales Corp. dividend -- (1,226) 1,226 -- --
Purchase of property, plant and equipment (3,207) (1,083) (4,527) -- (8,817)
Proceeds from sale of property, plant and
equipment 25 -- 5 -- 30
Investments in subsidiaries -- 1,226 -- (1,226) --
-------- -------- --------- -------- ---------
Net cash used in investing activities (3,182) (1,083) (3,296) (1,226) (8,787)
-------- -------- --------- -------- ---------
Cash Flows from Financing Activities:
Principal payments of long-term debt (438) (18) (15,096) -- (15,552)
Proceeds from issuance of long-term debt -- -- 25,000 -- 25,000
Proceeds from exercise of stock options -- -- 650 -- 650
Proceeds from the employee stock
purchase plan -- -- 1,843 -- 1,843
Tax benefit from exercise of stock options -- -- 552 -- 552
-------- -------- --------- -------- ---------
Net cash provided by (used in)
financing activities (438) (18) 12,949 -- 12,493
-------- -------- --------- -------- ---------
Net Increase (Decrease) in Cash and Cash
Equivalents 936 (466) (8,663) -- (8,193)
Cash and Cash Equivalents,
Beginning of Period (2,679) 1,378 10,379 -- 9,078
-------- -------- --------- -------- ---------
Cash and Cash Equivalents,
End of Period $ (1,743) $ 912 $ 1,716 $ -- $ 885
======== ======== ========= ======== =========
</TABLE>
13
<PAGE> 14
HADCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
5. SUPPLEMENTAL GUARANTOR CONSOLIDATING CONDENSED FINANCIAL STATEMENTS
-------------------------------------------------------------------
(Continued)
CONSOLIDATING CONDENSED STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
For the Three Months Ended January 30, 1999
--------------------------------------------------------------------------------
Guarantor Non-Guarantor Parent Elimination Consolidated
Subsidiaries Subsidiaries Corporation Entries Total
------------ ------------ ----------- ------- -----
(in thousands)
<S> <C> <C> <C> <C> <C>
Net cash provided by operating activities $ 4,937 $ 4,190 $ 8,690 $ 6 $ 17,823
------- ------- -------- ---- --------
Cash Flows from Investing Activities:
Foreign Sales Corp. dividend -- (6) 6 -- --
Purchase of property, plant and equipment (5,254) (3,119) (8,272) -- (16,645)
Investments in subsidiaries -- 6 -- (6) --
------- ------- -------- ---- --------
Net cash used in investing activities (5,254) (3,119) (8,266) (6) (16,645)
------- ------- -------- ---- --------
Cash Flows from Financing Activities:
Principal payments of long-term debt (436) (206) (20,194) -- (20,836)
Proceeds from issuance of long-term debt -- -- 20,000 -- 20,000
Proceeds from exercise of stock options -- -- 207 -- 207
Proceeds from the employee stock
purchase plan -- -- 1,574 -- 1,574
Tax benefit from exercise of stock options -- -- 334 -- 334
------- ------- -------- ---- --------
Net cash provided by (used in)
financing activities (436) (206) 1,921 -- 1,279
------- ------- -------- ---- --------
Net Increase (Decrease) in Cash and Cash
Equivalents (753) 865 2,345 -- 2,457
Cash and Cash Equivalents,
Beginning of Period 836 2 6,331 -- 7,169
------- ------- -------- ---- --------
Cash and Cash Equivalents,
End of Period $ 83 $ 867 $ 8,676 $ -- $ 9,626
======= ======= ======== ==== ========
</TABLE>
14
<PAGE> 15
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Except for the historical information contained in this Quarterly Report on Form
10-Q, the matters discussed below or elsewhere in this Quarterly Report on Form
10-Q are forward-looking statements that involve risks and uncertainties. Hadco
Corporation makes such forward-looking statements under the provisions of the
"Safe Harbor" section of the Private Securities Litigation Reform Act of 1995.
Any forward-looking statements should be considered in light of the factors
described below in this Item 2 and under "Year 2000 Readiness Disclosure
Statement" and "Factors That May Affect Future Results" below. Actual results
may vary materially from those projected, anticipated or indicated in any
forward-looking statements. In this Quarterly Report on Form 10-Q, the words
"anticipates," "believes," "expects," "intends," "future," "could," "may," and
similar words or expressions (as well as other words or expressions referencing
future events, conditions or circumstances) identify forward-looking statements.
As used herein, the terms "Company" and "Hadco," unless otherwise indicated or
the context otherwise requires, refer to Hadco Corporation and its subsidiaries.
RESULTS OF OPERATIONS - FIRST QUARTER
- -------------------------------------
Net sales for the first quarter of fiscal 2000 increased 3.7%, or $8.8 million,
over net sales for the same period in fiscal 1999. Printed circuit net sales
increased 11.1%, or $21.1 million, in the first quarter of fiscal 2000 from the
comparable period in fiscal 1999 due to higher unit shipments and a shift in mix
towards higher priced printed circuits with more layers and greater densities.
This increase was partially offset by a 2.6 percentage point decline in average
pricing for printed circuits. VAM net sales decreased 27.3%, or $12.3 million,
in the first quarter of fiscal 2000 from $45.3 million in the comparable period
in fiscal 1999. VAM net sales decreased due to reduced production of low margin
assembly products.
The gross profit margin increased to 16.7% of net sales for the quarter ended
January 29, 2000 from 13.7% in the comparable quarter in fiscal 1999. Better
capacity utilization of printed circuit operations caused gross margins to
increase 5.6 percentage points, and the production of higher-margin assembly
products in the VAM segment increased gross margins by 0.5 percentage point.
These increases in gross margin were offset by lower pricing on printed
circuits, which decreased gross margins by 2.2 percentage points, and by lower
capacity utilization of VAM operations, which caused gross margins to decrease
by 0.9 percentage point. The changes in the VAM segment were a result of
management's decision to cease production of low margin assembly products.
Operating expenses increased by $2.8 million for the first quarter of fiscal
2000 over the first quarter of fiscal 1999. Operating expenses as a percent of
net sales increased to 8.5% in the first quarter of fiscal 2000 versus 7.6% in
the comparable period of fiscal 1999. The increase is due to an increase of $1.8
million in selling expenses from expanded sales coverage, an increase of $0.8
million in general and administrative expenses and slightly higher research and
development expenses. The Company includes in operating expenses charges for
actual expenditures and accruals, based on estimates, for environmental matters.
To the extent and in amounts Hadco believes circumstances warrant, it will
continue to accrue and charge to operating expenses cost estimates relating to
known environmental matters.
Interest and other income increased slightly for the quarter ended January 29,
2000 as compared to the comparable quarter in the prior fiscal year due to
higher average cash balances available for investing. Interest expense decreased
in the first quarter of fiscal 2000 as compared to the first quarter of fiscal
1999 due to lower average outstanding debt balances during the first quarter of
fiscal 2000 as compared to the first quarter of fiscal 1999.
15
<PAGE> 16
INCOME TAXES
- ------------
The Company provides for income taxes on an interim basis using its anticipated
effective annual income tax rate. The Company anticipates an effective annual
income tax rate for fiscal 2000 of 38%, which is slightly less than the combined
federal and state statutory rates. The anticipated effective rate was increased
by amortization of goodwill (which is not tax deductible), offset by the benefit
of the Company's foreign sales corporation, research and development tax credits
and various state investment tax credits. The effective tax rate for fiscal 2000
is based on current tax laws.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Net cash used in operating activities for the first quarter of fiscal 2000 was
$11.9 million, as compared to net cash provided by operations in the first
quarter of fiscal 1999 of $17.8 million, a difference of $29.7 million. This
decrease resulted primarily from a reduction of $35.7 million in accounts
payable and accrued expenses. This decrease was offset by an increase of $6.1
million in earnings before non-cash items in the first quarter of fiscal 2000
versus the first quarter of fiscal 1999. The decrease in accounts payable and
accrued expenses is a result of higher incentive compensation accrued in fiscal
1999 and paid during the first quarter of fiscal 2000; in addition, the Company
incurred a significant amount of capital expenditures during the fourth quarter
of fiscal 1999, which were paid during the first quarter of fiscal 2000.
Net cash used in investing activities in the first quarter of fiscal 2000 was
$8.8 million, a decrease of $7.9 million from the first quarter of fiscal 1999,
due to lower capital expenditures.
Net cash provided by financing activities was $12.5 million in the first quarter
of fiscal 2000 as compared to $1.3 million in the comparable period in the prior
year. The increase was primarily due to borrowings on the Company's credit
facility to fund operating activities during the first quarter of fiscal 2000,
as described above.
At January 29, 2000, the Company had working capital of $86.8 million and a
current ratio of 1.69, as compared to working capital of $47.8 million and a
current ratio of 1.30 at October 30, 1999. The increase in working capital
resulted primarily from an increase in accounts receivable, as customer order
and shipment rates increased late in the quarter, combined with the reductions
in accounts payable noted above.
The Company believes its current borrowing capacity, coupled with the funds
generated from the Company's operations will be sufficient to fund its
anticipated working capital, capital expenditure and debt payment requirements
through fiscal year 2000. Because the Company's capital requirements cannot be
predicted with certainty, however, there is no assurance that the Company will
not require additional financing during this period. There is no assurance that
any additional financing will be available on terms satisfactory to the Company
or not disadvantageous to the Company's security holders, including the holders
of the Notes.
The Company believes the ultimate disposition of known environmental matters
will not have a material adverse effect upon the liquidity, capital resources,
business or consolidated financial position of the Company. However, one or more
of such environmental matters could have a significant negative impact on the
Company's consolidated financial results for a particular reporting period.
YEAR 2000 READINESS DISCLOSURE STATEMENT
- ----------------------------------------
As part of the Year 2000 project, the Company completed an internal assessment
of its operations to determine the extent to which the Company could be
adversely affected by Year 2000 issues. This internal assessment included both
Information Technology (IT) systems and non-IT systems.
The critical software systems used by the Company to run its business include
MFG/PRO, PeopleSoft, Oracle, and Corsair. The Company conducted testing of its
various IT systems, running programs with dates including and after the Year
2000. During these tests the Company did not experience problems processing data
or effecting transactions.
16
<PAGE> 17
YEAR 2000 READINESS DISCLOSURE STATEMENT (CONTINUED)
- ----------------------------------------------------
The Company's internal assessment of its manufacturing equipment for Year 2000
compliance was done on a plant-by-plant basis and was completed in May 1999.
Thereafter, software upgrades were installed in certain manufacturing systems.
The Company tested the new software and did not encounter date-related
processing issues. There can be no assurance, however, that the Company's
testing of its various IT systems and manufacturing equipment and software was
sufficient to discover all Year 2000 issues. Year 2000 issues not discovered by
the Company could have a material adverse effect on the Company's business,
results of operations and financial condition.
In fiscal 1999, the Company developed business continuity/contingency plans for
all its facilities. Such plans cover Year 2000 issues and potential disruptions.
There can be no assurance that the implementation of business
continuity/contingency plans developed by the Company will result in alleviation
or remediation of any business interruption or disruption that the Company may
experience.
As part of the Year 2000 project, the Company surveyed all of its active
suppliers to determine their Year 2000 compliance status. The Company worked
with its key suppliers to obtain more detailed information about their
compliance status, and performed on-site assessment of certain critical
suppliers. The Company also completed contingency plans for addressing potential
supply disruptions. There can be no assurance that the Company will not
experience disruption in its supply chain, or that its contingency plans will
alleviate or remedy any disruption experienced.
The Company has not to date encountered any date-related processing issues or
any business interruption in connection with the Year 2000 roll-over to January
1, 2000. The Company did, however, experience a greater than seasonal reduction
of customer orders due to Year 2000 concerns, particularly in the computer
server market, during the first two months of its first fiscal quarter, November
and December 1999. Customer order rates in January 2000 were 33% higher than in
the November/December 1999 period, across all end markets of the Company's
customer base.
To date, approximately 30,500 hours of employee time have been devoted to Year
2000 issues and approximately $5.9 million has been expended in systems upgrades
directly relating to Year 2000. The source of these funds has been the working
capital of the Company.
A software or system Year 2000 compliance failure, with respect to the Company's
internal systems, software and equipment or that of third party service
providers, major customers or suppliers, could prevent the Company from
fulfilling customer orders. Any such failure, if not quickly remedied, would
have a material adverse effect on the Company's business, results of operations,
and financial condition. The lost revenues that would result from the Company's
inability to operate even one of its major volume manufacturing plants for any
significant period of time would have a material adverse effect on the Company.
The Company could face an even greater risk of significant damages if the
Company were to be found responsible for the shutdown of one of its customers'
facilities. This could occur if the Company was unable to supply parts integral
to the end products manufactured by the Company's customers. In such
circumstances, the legal liability of the Company could have a material adverse
effect on the Company's business, results of operations, and financial
condition.
FACTORS THAT MAY AFFECT FUTURE RESULTS
- --------------------------------------
This Quarterly Report on Form 10-Q contains various "forward-looking" statements
within the meaning of the Securities Litigation Reform Act of 1995, including,
but not limited to, those concerning gross and operating margins, Year 2000
readiness and compliance, the sufficiency of the Company's working capital, and
environmental matters. In this Form 10-Q, the words "anticipates," "believes,"
"expects," "intends," "future," "could," "may," and similar words and
expressions (as well as other words or expressions referencing future events,
conditions or circumstances) identify forward-looking statements. Such
forward-looking statements involve risks and uncertainties that could cause
actual results to differ materially from those projected,
17
<PAGE> 18
FACTORS THAT MAY AFFECT FUTURE RESULTS (CONTINUED)
- --------------------------------------------------
anticipated or indicated in the forward-looking statements. Potential risks and
uncertainties include, but are not limited to, such factors as: the Company's
dependence on the electronics industry; fluctuations in quarterly operating
results; the variability of customer orders; significant portions of released
backlog may be subject to cancellation or postponement without penalty; the
effect of unforeseen problems in the Company's computer systems and those of
third parties with which the Company deals; the effect of acquisitions on the
Company; the ability of the Company to compete successfully in the future; the
rapid technological change and continuing process development that characterizes
the Company's markets; manufacturing process disruptions; the operation of the
Company's Malaysia facility; the Company's significant customer concentration;
the Company's ability to obtain, integrate, manage and utilize manufacturing
capacity; the Company's ability to manage its growth; environmental matters; the
availability of raw materials, production services and components, and price
fluctuations in such materials, services and components; the Company's
dependence on key personnel; the Company's ability to protect its intellectual
property; and certain anti-takeover provisions applicable to the Company.
Further information on factors that could cause actual results to differ from
those anticipated is detailed in various publicly available documents filed by
the Company from time to time with the Securities and Exchange Commission. Such
information includes, but is not limited to, those factors appearing under the
caption "Factors That May Affect Future Results" and elsewhere in the Company's
Annual Report on Form 10-K for the year ended October 30, 1999. Any
forward-looking statement should be considered in light of these factors.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
DERIVATIVE FINANCIAL INSTRUMENTS, OTHER FINANCIAL INSTRUMENTS, AND DERIVATIVE
COMMODITY INSTRUMENTS
SFAS No. 107 requires disclosure about fair value of financial instruments.
Financial instruments consist of cash equivalents, accounts receivable, accounts
payable and long-term debt obligations. The fair value of these financial
instruments approximates their carrying amount, except for the 9 1/2% Senior
Subordinated Notes (the "Notes"), at January 29, 2000. The fair market value of
the Notes was $191 million with a carrying amount of $199.4 million at January
29, 2000. Although the fair market value of the Notes is less than the carrying
amount, settlement at the reported fair value is not possible due to
cost-prohibitive redemption premiums.
PRIMARY MARKET RISK EXPOSURES
The Company's primary market risk exposures are in the areas of interest rate
risk and foreign currency exchange rate risk. The Company incurs interest
expense on loans made under the Company's credit facility at interest rates
which are fixed for a maximum of six months. At January 29, 2000, the Company's
outstanding borrowings under the credit facility were $85.0 million, at a
weighted average interest rate of 6.75%. This interest rate is a combination of
two Eurodollar loans, one for $50.0 million maturing February 25, 2000 and one
for $20.0 million maturing February 18, 2000, both at a rate of 6.625%. The
balance was comprised of a $10.0 million overnight swing-line loan at 6.75% and
a $5.0 million overnight base rate loan at 8.5%. The Company has the option to
fix the interest rates on the Eurodollar rate loans for periods of one, two,
three or six months. The Eurodollar Rate is subject to market risks and will
fluctuate.
Substantially all of the Company's business outside the United States is
conducted in U.S. dollar denominated transactions. The Company does operate a
volume manufacturing facility in Malaysia. Some of the expenses of this facility
are denominated in Malaysian ringgits. Expenses denominated in ringgits include
local salaries and wages, utilities and some operating supplies. The Company
also funds a small sales offices in Ireland and Great Britain, where expenses
are paid in British Pounds, Irish Punts and Eurodollars. However, the Company
believes that these operating expenses will not have a material adverse effect
on the Company's business, results of operations or financial condition.
18
<PAGE> 19
PART II - OTHER INFORMATION
ITEM 1. - LEGAL PROCEEDINGS
In February 2000, the federal government moved for entry of the Consent Decree
in the Auburn Road environmental litigation. The Court must still approve the
Consent Decree. Under the terms of the Consent Decree, the Company is a cash-out
party and does not have responsibility for performance of ongoing remedial or
monitoring work at the site.
ITEM 2. - CHANGES IN SECURITIES
Pursuant to the Company's Executive Incentive Compensation Deferred Bonus Plan,
as Amended and Restated December 9, 1999 (the "Executive Bonus Plan"), certain
executives of the Company received payment of a portion of their incentive
compensation for fiscal 1999 in the form of restricted Common Stock of the
Company issued under the 1998 Stock Plan. On December 9, 1999, the executives
received an aggregate of 19,805 shares of restricted Common Stock pursuant to
the Executive Bonus Plan. The aggregate value of all such shares issued on
December 9, 1999 to executives was $962,325 (based on a fair market value on
that date of $48.59 per share).
ITEM 6. - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
*10.1 Hadco Corporation Executive Incentive Compensation Deferred
Bonus Plan, as Amended and Restated December 9, 1999
*10.2 Form of Agreement, as amended, pursuant to Hadco Corporation
Executive Incentive Compensation Deferred Bonus Plan, as Amended and
Restated December 9, 1999
*10.3 Hadco Corporation Retirement Plan Amendment Exhibit "A", as
amended December 9, 1999
27. Financial Data Schedule
* Indicates a management contract or any compensatory plan, contract
or arrangement required to be filed as an exhibit pursuant to Item
6(a).
(b) Reports on Form 8-K None
19
<PAGE> 20
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Hadco Corporation
Date: March 10, 2000 By: /s/ F. GORDON BITTER
------------------------------
F. Gordon Bitter
Senior Vice President and Chief Financial
Officer (principal financial officer and
principal accounting officer)
20
<PAGE> 1
Exhibit 10.1
HADCO CORPORATION
EXECUTIVE INCENTIVE COMPENSATION DEFERRED BONUS PLAN
AS AMENDED AND RESTATED DECEMBER 9, 1999
This Executive Incentive Compensation Deferred Bonus Plan (the "Plan")
is established by HADCO Corporation to provide incentive to key executives who
contribute to the profits of the corporation by their ability, industry, loyalty
or exceptional service, through making them participants in its success.
SECTION 1: ELIGIBILITY TO PARTICIPATE. Participants in this Plan shall
be active employees of HADCO Corporation (the "Corporation") or its subsidiaries
or affiliates who are employed in an executive or managerial capacity and who
are designated to receive incentive compensation awards under the Corporation's
executive incentive compensation program, as determined by the Compensation
Committee of the Board of Directors of the Corporation (the "Committee").
SECTION 2: DETERMINATION AND PARTIAL DEFERRAL OF INCENTIVE
COMPENSATION. The Committee shall determine for each fiscal year of the
Corporation the amount of incentive compensation to be awarded to each of the
Corporation's designated key executives, in accordance with criteria established
by the Committee and approved by the Board of Directors as part of the
Corporation's executive incentive compensation program.
Payment of sixty percent (60%) of the amount of incentive compensation
awarded to each designated key executive for each year shall be made in a lump
sum in cash (subject to applicable tax withholdings and deductions) as soon as
practicable after the date the award is declared. Payment of the remaining forty
percent (40%) of such incentive compensation award (referred to herein as the
"deferred bonus amount") shall be made (a) in the case of awards made through
calendar year 1997, in cash (subject to applicable tax withholdings and
deductions) in three equal installments over a period of three years commencing
on the one year anniversary date of the award, subject to and in accordance with
the provisions of this Plan, and (b) in the case of awards made in calendar year
1998 or thereafter, in shares of restricted stock (as further described in
Section 6 hereof) of the Corporation valued in accordance with and subject to
all the terms and conditions of the Hadco Corporation 1998 Stock Plan, as
Amended and Restated March 3, 1999 and as amended from time to time (the "1998
Plan").
SECTION 3: NOTIFICATION AND DESIGNATION OF BENEFICIARIES. Each
designated key executive who is awarded incentive compensation under HADCO
Corporation's executive incentive compensation program for any year shall be
notified by the Corporation of such award and of his participation in this Plan
for such year. Each participant shall file with the Corporation a written
designation of beneficiary or beneficiaries to receive any amounts payable with
respect to the participant in the event of his death, which designation may be
changed from time to time by the filing of a written designation naming a new
beneficiary or beneficiaries. If a participant
<PAGE> 2
dies without designating a beneficiary, or if the designated beneficiary is not
then in existence, any amounts payable with respect to the participant shall be
paid to the participant's estate.
SECTION 4: ACCOUNTS FOR DEFERRED BONUSES TO BE PAID IN CASH.
4.1 For all deferred bonuses which are to be paid to the participant in
cash, as provided in Section 2 hereof, the Corporation shall maintain an account
(the "Cash Account") for each participant in this Plan, which shall be credited
with the participant's cash deferred bonus amount and the amount of any deemed
interest pursuant to subsection 4.2 and debited for any distributions to the
participant pursuant to Section 5. No money shall actually be allocated to any
account, as such accounts shall be of a memorandum nature maintained by the
Corporation for accounting purposes and shall not be representative of any
identifiable assets.
4.2 The undistributed portion of each Cash Account shall be deemed to
earn interest in arrears annually at in interest rate one point above the prime
rate as published in the Wall Street Journal for the last business day of the
previous fiscal year. Interest shall be determined from the last day of the
fiscal year for which the incentive compensation award was made to the close of
the next fiscal year of the Corporation or, if earlier, to the close of the
fiscal year immediately preceding the date of distribution of all or part of a
participant's Cash Account (except as provided in subsection 5.3 in the event of
a distribution on account of involuntary termination of employment or retirement
or in the event of distribution in connection with a Change of Control as
provided in subsection 5.4 hereof). Interest shall be credited to each
participant's Cash Account annually.
4.3 The Corporation shall furnish to each participant a statement of
amounts credited to or debited from his Cash Account during each fiscal year,
within ninety (90) days after the end of the calendar year in which such fiscal
year ends.
SECTION 5: DISTRIBUTIONS FROM CASH ACCOUNTS.
5.1 Each installment of a cash deferred bonus amount to be paid to a
participant shall be made on or about the anniversary date of the original
declaration of the award, commencing on the first such anniversary; provided,
however, that the participant remains employed by the Corporation or any
subsidiary or affiliate as of the date payment is due. Each installment payment
shall include interest on that portion of the bonus to be then distributed,
calculated in accordance with subsection 4.2.
5.2 If a participant voluntarily terminates his employment with the
Corporation without the prior consent of the chief executive officer of the
Corporation, other than by reason of his retirement at or after the normal
retirement date as described in the HADCO Corporation Retirement Plan or if a
participant's employment is terminated by the Corporation for cause as defined
herein, he shall forfeit any remaining unpaid installments of his deferred bonus
amount and all deemed interest, if any, credited to his account. If the
participant is the chief executive officer of the Corporation, such forfeiture
shall occur if he voluntarily terminates his employment with the Corporation
without the prior consent of the Board of Directors of the Corporation, other
than by reason of his retirement at or after the normal retirement date as
described in the
2
<PAGE> 3
HADCO Corporation Retirement Plan. For purposes of this Plan, employment shall
not be deemed terminated if the participant remains employed by the Corporation
or any subsidiary or affiliate thereof. For purposes of this Agreement, the
Corporation shall have "cause" to terminate the Executive in the event of: (a)
the willful and continued failure by the Executive to substantially perform
his/her duties, after demand for substantial performance is delivered by the
Corporation to the Executive identifying with specificity the grounds for the
Corporation's belief that the Executive has not substantially performed his/her
duties; (b) the permanent physical or mental incapacity of the Executive; (c)
the commission by the Executive of any act of fraud or embezzlement relating to
the property of the Corporation and/or the services to be provided by the
Executive; or (d) the Executive's unauthorized disclosure of proprietary
confidential information of the Corporation or the Executive's engaging in
competition with the Corporation.
5.3 If a participant is involuntarily terminated from employment
without cause, including by reason of his death or disability or if termination
of employment of a participant is due to retirement at or after the normal
retirement date as described in the HADCO Corporation Retirement Plan, the
balance of the participant's cash deferred bonus amount plus interest determined
to the date of such involuntary termination or retirement, as the case may be,
shall be paid to the participant or his designated beneficiary or beneficiaries
as soon as practicable after the event giving rise to the termination. For
purposes hereof, the definition of "disability" as set forth in the HADCO
Corporation Retirement Plan shall apply.
5.4 Upon any sale of all or substantially all of the assets of the
Corporation, or upon a merger, consolidation or tender offer in respect of which
the stockholders holding all of the Corporation's outstanding voting securities
immediately prior to the consummation thereof hold less than 50% of all of the
Corporation's outstanding voting securities immediately after such consummation
(each of the foregoing sale, merger, consolidation or tender offer hereinafter
called an "Acquisition"), then the date upon which the full balance of the
participant's cash deferred bonus amount under this Plan will be fully vested
and due and payable shall be automatically accelerated to occur immediately
prior to the consummation of such Acquisition.
SECTION 6: RESTRICTED STOCK
6.1 To the extent that the deferred bonus amount is to be paid to a
participant in restricted stock ("Restricted Stock"), as provided in Section 2
hereof, the number of shares of stock to be awarded to the participant shall be
determined by dividing the dollar equivalent of the deferred bonus amount by the
fair market value of the Corporation's common stock, as determined in accordance
with the 1998 Plan, on the day the incentive compensation award is declared. If
any fractional share of stock is calculated to be due a participant, then the
number of shares of Restricted Stock shall be rounded up to the nearest whole
share and the participant's incentive compensation award shall be deemed
adjusted accordingly.
6.2 All Restricted Stock to be issued to a participant under this Plan
shall be issued under all the terms and conditions of the 1998 Plan.
3
<PAGE> 4
6.3 If, for any reason, including without limitation restrictions
imposed by the securities laws or any stock exchange, the Corporation deems it
impractical or imprudent, in its sole judgment, to issue shares of Restricted
Stock to a participant, then the deferred bonus amount due the participant in
Restricted Stock shall be replaced by a cash deferred bonus amount with all of
the attributes of, and the same distribution schedule as, the cash deferred
bonus amount described elsewhere in this Plan.
SECTION 7: MISCELLANEOUS PROVISIONS RELATING TO PAYMENTS.
7.1 No participant shall have any option or right to choose the amounts
or dates of payment of distributions payable to him under this Plan.
7.2 All payments under this Plan shall be made from the general assets
of the Corporation and no assets shall be segregated or placed in trust for the
purpose of funding such payments. Participants under this plan shall have the
status of general unsecured creditors of the Corporation.
7.3 No participant or beneficiary shall have the right to alienate,
anticipate, pledge, encumber or assign any of the payments which he may expect
to receive, contingently or otherwise, under this Plan, and no payments or
rights of any participant or beneficiary shall be subject to attachment,
garnishment or their legal or equitable process available to any creditor.
7.4 The Corporation shall have the right to accelerate the payment of
any cash distribution payable under this Plan.
7.5 The Corporation shall have the right to withhold from any
distribution under this Plan the amount of any federal, state or local
withholding taxes due with respect to such distribution, as well as the
employee's share of any payroll taxes relating thereto. Without limiting the
generality of the foregoing, the Corporation may condition the release of cash
deferred bonus amounts upon the participant's making arrangements satisfactory
to the Corporation for payment of withholding taxes due in connection with the
payment of the cash deferred bonus amount.
SECTION 8: ADMINISTRATION OF PLAN. All determinations, decisions and
directions made or given by the Board of Directors or the Committee under or
with respect to this Plan shall be final and conclusive. The determination of
the Board of Directors or the Committee on any question concerning or involving
the interpretation and administration of this Plan shall be final and
conclusive, and nothing in the Plan shall be deemed to give any officer or
employee of the Corporation, his legal representatives or assigns, any right to
participate in the Corporation's executive incentive compensation program or
this Plan except to the extent, if any, that the Committee may have determined
or approved. The Board of Directors, in passing on the matters which it is
required to approve, may in its discretion rely upon the recommendations made by
the Committee with respect thereto.
4
<PAGE> 5
SECTION 9: AMENDMENT OR TERMINATION. The Board of Directors may, from
time to time, amend, suspend, or terminate, in whole or in part, any or all of
the provisions of the Plan; provided, however, that no amendment, suspension or
termination shall reduce the right of any participant to receive distributions
of amounts awarded to him prior to the effective date of such amendment,
suspension or termination. Notice of any amendment, suspension or termination of
the Plan shall be given to each participant who is affected thereby. This Plan
may also be terminated in the event of the bankruptcy, insolvency,
reorganization or winding up of the affairs of the Corporation.
SECTION 10: GENERAL.
10.1 This Plan shall be governed by and interpreted under the laws of
the Commonwealth of Massachusetts.
10.2 This Plan shall not be interpreted to constitute a contract of
employment and nothing herein shall give any participant or employee the right
to remain in the employ of the Corporation or its subsidiaries or affiliates, or
interfere with the Corporation's right to terminate his employment at any time.
10.3 The Committee shall have the authority to interpret this Plan and
to prescribe and rescind rules and regulations relating to it. The
interpretation and construction by the Committee of any provisions of this Plan
or of any right related to an incentive compensation award granted under this
Plan shall be final unless otherwise determined by the Board of Directors of the
Corporation. No member of the Board of Directors or of the Committee shall be
liable, in respect to this Plan, for any act, whether of commission or omission,
taken by any other member or by any officer, agent or employee of the
Corporation or its subsidiaries or affiliates nor, except in circumstances
involving his own bad faith, for anything done or omitted to be done by him.
10.4 It is intended that cash distributions under this Plan will be
taxable income to the participants in the calendar year in which they are made.
However, neither the Corporation, the Committee nor any employee, officer or
agent thereof guarantees that any particular federal, state or local tax
consequences will occur as a result of participation in this Plan and each
participant shall be responsible for the tax consequences to him of
participating in this Plan. Notwithstanding the preceding sentence, if the
Internal Revenue Service shall at any time interpret this Plan to be ineffective
with regard to the deferral of a participant's income, and that interpretation
becomes final and unappealable, then the Corporation shall distribute to the
participant from the unpaid portion of his cash deferred bonus amount an amount
equal to such income tax liability (but not more than the remaining unpaid
portion of his cash deferred bonus amount). Any remaining portion of the cash
deferred bonus amount shall continue to be subject to the remaining provisions
of this Plan.
SECTION 11: EFFECTIVE DATE. This Plan shall be effective commencing
with incentive compensation awards made with respect to the Corporation's fiscal
year ending October 26, 1996 and shall continue for each fiscal year thereafter
until terminated as provided herein.
5
<PAGE> 6
IN WITNESS WHEREOF, this Plan was adopted by the Board of Directors of
HADCO Corporation the 17th day of May 1996, and has been amended and restated
this 9th day of December, 1999.
ATTEST: HADCO CORPORATION,
A MASSACHUSETTS CORPORATION
/s/ James C. Hamilton By: /s/ Andrew E. Lietz
James C. Hamilton, Clerk ITS DULY AUTHORIZED PRESIDENT
6
<PAGE> 1
Exhibit 10.2
AGREEMENT
AGREEMENT made as of the ____ day of ____________, [1999/2000], by and
between Hadco Corporation, a Massachusetts corporation with a usual place of
business in Salem, New Hampshire (hereinafter the "Company"), and _____________,
of _______________ (hereinafter the "Executive"). This Agreement and the
incentive compensation award hereunder are made pursuant and subject to, and are
governed by, the terms and conditions of the Hadco Corporation 1998 Stock Plan,
as Amended and Restated March 3, 1999 and as it may be amended from time to time
(the "1998 Stock Plan"), and the terms and conditions of the 1998 Stock Plan are
incorporated herein by reference, made a part hereof and shall control in the
event of any conflict between the terms of the 1998 Stock Plan and any terms of
this Agreement. A copy of the 1998 Stock Plan has been delivered to the
Executive.
Section 1. Grant of Restricted Stock. The Company grants to the
Executive as an incentive compensation award, on the terms and conditions
hereinafter set forth,_(_) shares of the Company's Common Stock, $0.05 par
value (the "Restricted Stock"), at the current fair market value of
_________________ ($ _____) Dollars per share.
Section 2. Representations and Agreements of Executive; Restrictions on
Restricted Stock.
A. The Executive understands and acknowledges that the Restricted Stock
will be lettered or restricted stock, that the Restricted Stock has not been
registered under the Securities Act or any state securities laws and is being
granted under the exemption to registration provided in Section 3(b) of the
Securities Act and Regulation D promulgated thereunder and/or Section 4(2) of
the Securities Act, and that this transaction has not been reviewed or passed
upon by any federal or state agency. The Executive further understands and
acknowledges that each certificate for the Restricted Stock issued in connection
with this Agreement shall contain the following restrictive legends:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933. These shares have been
acquired for investment and not with a view to distribution or resale,
and may not be sold, mortgaged, pledged, hypothecated or otherwise
transferred without an effective registration statement of such shares
under the Securities Act of 1933, or an opinion of counsel for Hadco
Corporation that registration is not required under such Act.
The shares represented by this certificate are subject to
risks of forfeiture as described in a certain Agreement dated as of
[___________, 2000], a copy of which the Company will furnish to the
holder of this certificate upon request and without charge."
<PAGE> 2
B. The Executive represents and warrants that he is acquiring the
Restricted Stock for purposes of long-term investment, for the personal account
of the Executive, and with no present intention of reselling, distributing or
otherwise transferring the Restricted Stock or any portion of the Restricted
Stock, and that the Executive has no contract, undertaking or arrangement with
any person or entity to sell or transfer all or any portion of the Restricted
Stock to that person or entity, or to have that person or entity sell for him
all or any portion of the Restricted Stock, or to afford or allow any
participation in the Restricted Stock by any other person or entity.
C. The Executive realizes that (i) the acquisition of the Restricted
Stock is a long-term investment; (ii) the Executive must bear the economic risk
of investment for an indefinite period of time because the Restricted Stock has
not been registered under applicable state and federal securities laws and,
therefore, cannot be sold or otherwise transferred unless it is subsequently
registered or exemptions from registration are available; and (iii) the
transferability of the Restricted Stock is restricted, and (a) requires
conformity with the restrictions contained in paragraphs 2.A, 2.D and 3.A of
this Agreement, (b) will be further restricted by legends placed on the
certificate representing the Restricted Stock referring to the applicable
restrictions on transferability, and (c) may be subject to a stop transfer order
until such time as transfer of the Restricted Stock may be effected without
violation of all applicable state and federal securities laws.
D. The Executive agrees and understands that the Restricted Stock is
subject to forfeiture by the Executive in the event of termination of his
employment with the Company within three years of the date of declaration of the
incentive compensation award of which the Restricted Stock constitutes a
deferred bonus amount, all as more fully set forth in this Agreement. The
Executive further agrees and understands that the Restricted Stock may not be
sold, mortgaged, pledged, hypothecated or otherwise transferred by the Executive
until on or after the three year anniversary of the date of declaration of the
incentive compensation award of which the Restricted Stock constitutes a
deferred bonus amount. Notwithstanding the foregoing, the Restricted Stock may
be relieved of these risks of forfeiture and restrictions on transfer described
above pursuant to the provisions of Sections 3.B or 3.C of this Agreement.
Moreover, the Company shall have the right to accelerate the lapse of these
risks of forfeiture and restrictions on transfer on the Restricted Stock at any
time.
E. The Executive understands and agrees that the Restricted Stock is to
be issued from the pool of shares of Common Stock reserved for the 1998 Stock
Plan.
F. The Executive understands and agrees that neither the Company, the
Board of Directors, any committee of the Board of Directors nor any employee,
officer or agent thereof guarantees that any particular federal, state or local
tax consequences will occur as a result of this Agreement and/or the issuance of
the Restricted Stock. The Executive hereby agrees that he alone shall be
responsible for the tax consequences of this Agreement and the issuance of the
Restricted Stock.
2
<PAGE> 3
Section 3. Termination.
A. If the Executive voluntarily terminates his employment with the
Company other than by reason of his retirement at or after the normal retirement
date as described in the Hadco Corporation Retirement Plan or if the Executive's
employment is terminated by the Company for cause as defined herein, he shall
forfeit the Restricted Stock if the Restricted Stock has not been held for at
least three years after the date of declaration of the incentive compensation
award of which the Restricted Stock was a part. For purposes hereof, employment
shall not be deemed terminated if the Executive remains employed by the Company
or any subsidiary or affiliate thereof. For purposes of this Agreement, the
Company shall have "cause" to terminate the Executive in the event of: (a) the
willful and continued failure by the Executive to substantially perform his
duties, after demand for substantial performance is delivered by the Company to
the Executive identifying with specificity the grounds for the Company's belief
that the Executive has not substantially performed his duties; (b) the permanent
physical or mental incapacity of the Executive; (c) the commission by the
Executive of any act of fraud or embezzlement relating to the property of the
Company and/or the services to be provided by the Executive; or (d) the
Executive's unauthorized disclosure of proprietary confidential information of
the Company or the Executive's engaging in competition with the Company.
B. If the Executive is involuntarily terminated from employment without
cause as defined herein, including by reason of his death or disability or if
termination of employment of the Executive is due to retirement at or after the
normal retirement date as described in the Hadco Corporation Retirement Plan,
the Restricted Stock held by the Executive at the time of termination shall be
relieved of the restrictions contained in Sections 2.D and 3.A of this Agreement
(but not of any securities law restrictions which may apply to the Restricted
Stock or its disposition). For purposes hereof, the definition of "disability"
as set forth in the Hadco Corporation Retirement Plan shall apply.
C. Upon any sale of all or substantially all of the assets of the
Company, or upon a merger, consolidation or tender offer in respect of which the
stockholders holding all of the Company's outstanding voting securities
immediately prior to the consummation thereof hold less than 50% of all of the
Company's outstanding voting securities immediately after such consummation
(each of the foregoing sale, merger, consolidation or tender offer hereinafter
called an "Acquisition"), then the date upon which the Restricted Stock shall be
relieved of the restrictions contained in Sections 2.D and 3.A of this Agreement
(but not of any securities law restrictions which may apply to the Restricted
Stock or its disposition) shall be automatically accelerated to occur
immediately prior to the consummation of such Acquisition.
Section 4. Effect Upon Employment. Neither the 1998 Stock Plan nor this
Agreement or the grant of the Restricted Stock, nor any other plan of the
Company, confers any right upon the Executive with respect to the continuation
of his employment or business relationship with the Company or any of its
3
<PAGE> 4
subsidiaries or affiliates. Nothing contained herein shall be construed as
interfering with or restricting the right of the Company or any of its
subsidiaries or affiliates to terminate the Executive's employment or business
relationship at any time free from any liability or claim under the 1998 Stock
Plan, this Agreement or any other plan of the Company.
Section 5. Status as a Stockholder. Prior to the three (3) year
anniversary of the date of declaration of the incentive compensation award of
which the Restricted Stock was a part and after issuance of a certificate
representing the Restricted Stock, the Executive shall have all rights as a
stockholder except as specifically set forth herein.
Section 6. Notices. Any notice permitted or required under this
Agreement shall be sufficient if made in writing and mailed, postage prepaid, or
delivered in hand to the parties as follows: (a) as to the Company, to its
Treasurer at the principal office of the Company; and (b) as to the Executive,
at the address listed for the Executive on the books of the Company or the books
of the Stock Transfer Agent, or (c) as to either party, at such other address as
shall be designated by the addressee in a written notice to the other complying
as to delivery with the terms of this Section 6.
Section 7. Governing Law. This Agreement shall be governed by, and
construed and enforced in accordance with, the substantive laws of the
Commonwealth of Massachusetts without giving effect to the principles of the
conflicts of laws thereof.
Section 8. Entire Agreement. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all prior or contemporaneous agreements and understandings, written
or oral, relating to the subject matter hereof. No modification or addition to
this Agreement shall be valid unless in writing, specifically referring to this
Agreement and signed by both parties hereto. No waiver of any rights under this
Agreement shall be valid unless in writing and signed by the party to be charged
with such waiver. No waiver of any term or condition contained in this Agreement
shall be deemed or construed as a further or continuing waiver of such term or
condition, unless the waiver specifically provides otherwise.
Section 9. Binding Effect. This Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective heirs, executors,
administrators, representatives, successors and assigns, subject to the
limitations set forth herein; provided, however, that as respects the Executive,
this Agreement and his rights thereunder are deemed to be personal in nature and
may not be assigned or transferred.
Section 10. Interpretation and Construction. Any interpretation or
construction of this Agreement by the Company's Board of Directors, or a duly
authorized committee appointed by the Board, shall be final, conclusive and
binding on all interested parties. The section headings are for convenience of
reference only and shall not be deemed germane to the interpretation or
construction of this Agreement.
Section 11. Survival. All representations, warranties and
acknowledgments made in this Agreement shall survive the issuance and delivery
of the certificate or certificates
4
<PAGE> 5
representing the Restricted Stock.
Section 12. Withholding Taxes. If the Company or any of its
subsidiaries or affiliates in its discretion determines that it is obligated to
withhold any tax in connection with the grant of the Restricted Stock, or in
connection with the transfer of, or the lapse of restrictions on, any Restricted
Stock or other property acquired pursuant hereto, the Executive hereby agrees
that he will pay any such withholding taxes and if the Executive does not pay
such withholding taxes, the Company or any of its subsidiaries or affiliates may
withhold from the Executive's wages or other remuneration the appropriate amount
of tax. At the discretion of the Company or any of its subsidiaries or
affiliates, the amount required to be withheld may be withheld in cash from such
wages or other remuneration or in kind from the Restricted Stock or other
property otherwise deliverable to the Executive.
Section 13. Severability. The invalidity, illegality or
unenforceability of any provision of this Agreement shall in no way affect the
validity, legality or enforceability of any other provision.
Section 14. Provision of Documentation to Executive. By signing this
Agreement the Executive acknowledges receipt of a copy of this Agreement and a
copy of the 1998 Stock Plan.
Section 15. Tax Treatment. It is intended that the Restricted Stock
distribution hereunder shall be taxable income to the Executive in the calendar
year in which the substantial risk of forfeiture with respect to the stock
lapses (or in such earlier calendar year during which the Executive files an
effective election under Section 83(b) of the Internal Revenue Code). However,
neither the Company, the Committee nor any employee, officer or agent thereof
guarantees that any particular federal, state or local tax consequences will
occur as a result of participation in the 1998 Stock Plan or as a result of this
Agreement and the issuance of the Restricted Stock, and the Executive is
responsible for the tax consequences to him of participating in the 1998 Stock
Plan, of this Agreement and of the issuance of the Restricted Stock.
Notwithstanding the preceding sentence, if the Internal Revenue Service shall at
any time interpret this Agreement and the terms hereunder to be ineffective with
regard to the deferral of the Executive's income, and that interpretation
becomes final and unappealable, then the Company shall distribute to the
Executive, free of the forfeiture provisions thereof (but not of any securities
law restrictions which may apply to the shares or their disposition), a portion
of the Restricted Stock equal in value to such income tax liability (but not
more than the remaining portion of the Restricted Stock). Any remaining portion
of the Restricted Stock shall continue to be subject to the remaining provisions
of this Agreement.
5
<PAGE> 6
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first above written.
HADCO CORPORATION
By:
-----------------------------
--------------------------------
Executive
6
<PAGE> 1
Exhibit 10.3
HADCO CORPORATION
CLERK'S CERTIFICATE
The undersigned, JAMES C. HAMILTON, hereby certifies that he is the
duly elected Clerk of HADCO CORPORATION, a Massachusetts corporation, that the
following resolution was duly adopted by the Board of Directors of the
Corporation at a meeting held on December 9 and 10, 1999, and that Exhibit A
attached hereto is a true and complete copy of the amendments referred to in
said resolution:
VOTED: To amend the Hadco Corporation Retirement Plan in accordance
with Exhibit "A" hereto.
IN WITNESS WHEREOF, I have set my hand and the seal of the Corporation
this 29h day of February 2000.
Attest:
/s/ James C. Hamilton
-----------------------------------
JAMES C. HAMILTON, Clerk
<PAGE> 2
HADCO CORPORATION RETIREMENT PLAN AMENDMENT
EXHIBIT "A"
1. The definition of "Entry Date" in Section 1.17 is amended to read as follows,
effective for Plan Years beginning on or after January 1, 2000 (new language is
in BOLD):
"1.17 ENTRY DATE SHALL MEAN, FOR PLAN YEARS BEGINNING ON OR AFTER JANUARY 1,
2000, THE FIRST DAY OF ANY CALENDAR MONTH FOLLOWING THE DATE A PARTICIPANT MEETS
THE ELIGIBILITY REQUIREMENTS OF SECTION 2.01 OF THE PLAN. FOR PLAN YEARS ENDING
ON OR BEFORE DECEMBER 31, 1999, ENTRY DATE shall mean any January 1, April 1,
July 1 or October 1 following the date a Participant meets the eligibility
requirements of Section 2.01 of the Plan."
2. The first paragraph of Section 2.01, relating to eligibility to participate
in the Plan, is amended to read as follows, effective for Plan Years beginning
on or after January 1, 2000 (new language is in BOLD):
"2.01 INITIAL PARTICIPATION
For Plan Years ending on or before December 31, 1987, each Employee,
other than an Employee who is covered by a collective bargaining agreement under
which retirement benefits were the subject of good faith bargaining, shall
commence participation hereunder on the first day of the month next following
his completion of a Participation Computation Period during which he completed
one thousand (1,000) Hours of Service, but in no event earlier than the
Effective Date. For Plan Years beginning on or after January 1, 1988, each
Employee, other than an Employee who is covered by a collective bargaining
agreement under which retirement benefits were the subject of good faith
bargaining, shall commence participation hereunder on the Entry Date next
following the completion of a six month period of service with the Employer
without regard to the number of Hours of Service completed. FOR PLAN YEARS
BEGINNING ON OR AFTER JANUARY 1, 2000, EACH EMPLOYEE, OTHER THAN AN EMPLOYEE WHO
IS COVERED BY A COLLECTIVE BARGAINING AGREEMENT UNDER WHICH RETIREMENT BENEFITS
WERE THE SUBJECT OF GOOD FAITH BARGAINING, SHALL COMMENCE PARTICIPATION
HEREUNDER ON THE ENTRY DATE NEXT FOLLOWING THE COMPLETION OF A ONE-MONTH PERIOD
OF SERVICE WITH THE EMPLOYER WITHOUT REGARD TO THE NUMBER OF HOURS COMPLETED,
BUT IN NO EVENT PRIOR TO FEBRUARY 1, 2000."
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<FISCAL-YEAR-END> OCT-28-2000
<PERIOD-START> OCT-31-1999
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