UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
ANNUAL REPORT
PURSUANT TO SECTION 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended DECEMBER 31, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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COMMISSION FILE NUMBER 0-2537
OCLI 401(K)/ESOP PLAN
OPTICAL COATING LABORATORY, INC.
(Exact name of registrant as specified in its charter)
2789 NORTHPOINT PARKWAY, SANTA ROSA CALIFORNIA 95407-7397
- ---------------------------------------------- ----------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (707) 545-6440
--------------
SIGNATURES
OCLI 401(k)/ESOP Plan. Pursuant to the requirements of Securities
Exchange Act of 1934, the trustees have duly caused this annual
report to be signed on its behalf by the undersigned, thereunto
duly authorized.
DATE: JUNE 30, 1999 OCLI 401(K)/ESOP PLAN
BY: /S/ T. ROWE PRICE
------------------
Trustee
<PAGE>
OCLI 401(K)/ESOP PLAN
Financial Statements as of and for the Years Ended December 31, 1998
and 1997, Supplemental Schedules as of and for the Year Ended December 31,
1998 and Independent Auditors' Report
OCLI 401(K)/ESOP PLAN
TABLE OF CONTENTS
PAGE
INDEPENDENT AUDITORS' REPORT 1
FINANCIAL STATEMENTS:
Statements of Net Assets Available for Plan Benefits with Fund
Information as of
December 31, 1998 and 1997 2-3
Statements of Changes in Net Assets Available for Plan Benefits
with Fund Information
for the Years Ended December 31, 1998 and 1997 4-5
Notes to Financial Statements for the Years Ended December 31,
1998 and 1997 6-10
SUPPLEMENTAL SCHEDULES:
Item 27a - Schedule of Assets Held for Investment Purposes as of
December 31, 1998 11
Item 27d - Schedule of Reportable Transactions for the Year Ended
December 31, 1998 12
<PAGE>
INDEPENDENT AUDITORS' REPORT
Administrative Committee
OCLI 401(k)/ESOP Plan
Santa Rosa, California
We have audited the accompanying statements of net assets available
for plan benefits of the OCLI 401(k)/ESOP Plan (the "Plan") as of
December 31, 1998 and 1997, and the related statements of changes
in net assets available for plan benefits for the years then ended.
These financial statements are the responsibility of the Plan's
management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. 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, such financial statements present fairly, in all
material respects, the net assets available for plan benefits of
the Plan as of December 31, 1998 and 1997, and the changes in net
assets available for plan benefits for the years then ended in
conformity with generally accepted accounting principles.
Our audits were conducted for the purpose of forming an opinion on
the basic financial statements taken as a whole. The supplemental
schedules listed in the index are presented for the purpose of
additional analysis and are not a required part of the basic
financial statements, but are supplementary information required by
the Department of Labor's Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of
1974. The supplemental information by fund in the statements of
net assets available for benefits is presented for the purpose of
additional analysis rather than to present the net assets available
for benefits and changes in net assets available for benefits of
the individual funds. These supplemental schedules and
supplemental information are the responsibility of the Plan's
management. Such supplemental schedules and supplemental
information by fund have been subjected to the auditing procedures
applied in our audit of the basic 1998 financial statements and, in
our opinion, are fairly stated in all material respects when
considered in relation to the basic financial statements taken as a
whole.
June 4, 1999
<PAGE>
OCLI 401(k)/ESOP PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS WITH FUND
INFORMATION AS OF DECEMBER 31, 1998
Optical T. Rowe T. Rowe
Coating
Laboratory, Travelers Price Price T. Rowe
Inc. Fixed Stable Spectrum Price
Value
Common Income Common Income Balanced
Trust
Stock Fund Fund Fund Fund
ASSETS:
Investments at
fair value:
Common stock $40,006,611
Mutual funds $877,532 $5,095,889
Loans to
participants
Investments at
contract value
- -
Guaranteed
investment
contracts $ 6,119,250 $9,388,748
Total investments 40,006,611 6,119,250 9,388,748 877,532 5,095,889
NET ASSETS
AVAILABLE FOR
PLAN BENEFITS $40,006,611 $ 6,119,250 $9,388,748 $ 877,532 $5,095,889
T. Rowe T. Rowe T. Rowe T. Rowe
Price Price Price Price
Equity Mid Cap Internatio New
nal
Income Growth Stock Horizons Loans to
Fund Fund Fund Fund Participants
ASSETS:
Investments at
fair value:
Common stock
Mutual funds $ 5,547,156 $ 2,970,230 $ 848,111 $8,576,361
Loans to
participants $1,785,000
Investments at
contract value
- -
Guaranteed
investment
contracts
Total investments 5,547,156 2,970,230 848,111 8,576,361 1,785,000
NET ASSETS
AVAILABLE FOR
PLAN BENEFITS $ 5,547,156 $ 2,970,230 $ 848,111 $8,576,361 $1,785,000
Other Total
ASSETS:
Investments at
fair value:
Common stock $40,006,611
Mutual funds $ 74,082 23,989,361
Loans to
participants 1,785,000
Investments at
contract value
-
Guaranteed
investment
contracts 15,507,998
Total investments
74,082 81,288,970
NET ASSETS
AVAILABLE FOR
PLAN BENEFITS $ 74,082 $81,288,970
See notes to financial statements.
OCLI 401(k)/ESOP PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS WITH FUND
INFORMATION AS OF DECEMBER 31, 1997
Optical Coating T. Rowe T. Rowe
Laboratory, Travelers Price Price
Inc. Fixed Stable Spectrum
Value
Common Income Common Income
Trust
Stock Fund Fund Fund
ASSETS:
Investments at
fair value:
Common stock $22,016,601
Mutual funds $344,468
Loans to
participants
Investments at
contract value -
Guaranteed
investment
contracts $5,775,888 $ 8,928,579
Total investments 22,016,601 5,775,888 8,928,579 344,468
NET ASSETS
AVAILABLE
FOR PLAN BENEFITS $22,016,601 $5,775,888 $ 8,928,579 $344,468
T. Rowe T. Rowe T. Rowe
T. Rowe Price Price Price
Price Equity Mid Cap Internati
onal
Balanced Income Growth Stock
Fund Fund Fund Fund
ASSETS:
Investments at
fair value:
Common stock
Mutual funds $ 4,350,332 $4,905,394 $ 802,530 $450,621
Loans to
participants
Investments at
contract value -
Guaranteed
investment
contracts
Total investments 4,350,332 4,905,394 802,530 450,621
NET ASSETS
AVAILABLE
FOR PLAN BENEFITS $ 4,350,332 $4,905,394 $ 802,530 $450,621
T. Rowe
Price
New
Horizons Loans to
Fund Participants Total
ASSETS:
Investments at
fair value:
Common stock $22,016,601
Mutual funds $ 9,608,697 20,462,042
Loans to
participants $1,741,312 1,741,312
Investments at
contract value -
Guaranteed
investment
contracts 14,704,467
Total investments 9,608,697 1,741,312 58,924,422
NET ASSETS
AVAILABLE
FOR PLAN BENEFITS $ 9,608,697 $1,741,312 $58,924,422
See notes to financial statements.
OCLI 401(k)/ESOP PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS WITH FUND
INFORMATION AS OF DECEMBER 31, 1998
Optical Coating T. Rowe T. Rowe
Laboratory, Travelers Price Price
Inc. Fixed Stable Spectrum
Value
Common Income Common Income
Stock Fund Trust Fund Fund
ADDITIONS TO NET
ASSETS
ATTRIBUTED TO:
Contributions:
By the Company $ 976,325 $ 105,706 $ 12,018
By participating
employees 323,649 708,548 98,905
Interest $ 343,362 529,304
Dividends 20,365 56,374
Net appreciation
(depreciation) of
fair value of
investments 18,661,943 (15,823)
Total additions 19,982,282 343,362 1,343,558 151,474
DEDUCTIONS FROM NET
ASSETS
ATTRIBUTED TO:
Distributions and
withdrawals
paid to participants 1,513,430 1,458,923 58,533
Loan discharges
Administrative
expenses
Less reimbursed by
Company
Total deductions 1,513,430 - 1,458,923 58,533
NET INCREASE
(DECREASE)
BEFORE INTERFUND
TRANSFERS 18,468,852 343,362 (115,365) 92,941
INTERFUND TRANSFERS,
Net (478,842) 575,534 440,123
NET INCREASE
(DECREASE) 17,990,010 343,362 460,169 533,064
NET ASSETS AVAILABLE
FOR
PLAN BENEFITS:
Beginning of year 22,016,601 5,775,888 8,928,579 344,468
End of year $40,006,611 $6,119,250 $9,388,748 $ 877,532
T. Rowe T. Rowe T. Rowe
T. Rowe Price Price Price
Price Equity Mid Cap International
Balanced Income Growth Stock
Fund Fund Fund Fund
ADDITIONS TO NET
ASSETS
ATTRIBUTED TO:
Contributions:
By the Company $ 47,604 $ 75,077 $ 44,618 $ 15,054
By participating 604,627
employees 393,573 503,116 143,721
Interest
Dividends 148,663 418,094 59,092 31,971
Net appreciation
(depreciation) of
fair value of
investments 553,444 53,891 338,748 57,516
Total additions 1,143,284 1,151,689 945,574 248,262
DEDUCTIONS FROM NET
ASSETS
ATTRIBUTED TO:
Distributions and
withdrawals
paid to participants 266,027 414,720 21,778 4,975
Loan discharges
Administrative
expenses
Less reimbursed by
Company
Total deductions 266,027 414,720 21,778 4,975
NET INCREASE
(DECREASE)
BEFORE INTERFUND
TRANSFERS 877,257 736,969 923,796 243,287
INTERFUND TRANSFERS,
Net (131,700) (95,207) 1,243,904 154,203
NET INCREASE
(DECREASE) 745,557 641,762 2,167,700 397,490
NET ASSETS AVAILABLE
FOR
PLAN BENEFITS:
Beginning of year 4,350,332 4,905,394 802,530 450,621
End of year $ 5,095,889 $5,547,156 $2,970,230 $ 848,111
T. Rowe
Price
New
Horizons Loans to
Fund Participants Other Total
ADDITIONS TO NET
ASSETS
ATTRIBUTED TO:
Contributions:
By the Company $ 113,883 $ 1,390,285
By participating
employees 851,881 3,628,020
Interest $ 170,812 1,043,478
Dividends 451,958 1,186,517
Net appreciation
(depreciation) of
fair value of
investments 93,260 19,742,979
Total additions 1,510,982 170,812 26,991,279
DEDUCTIONS FROM NET
ASSETS
ATTRIBUTED TO:
Distributions and
withdrawals
paid to participants 674,075 4,412,461
Loan discharges 214,270 214,270
Administrative exp $ 31,189 31,189
Less reimbursed by
Company (31,189) (31,189)
Total deductions 674,075 214,270 - 4,626,731
NET INCREASE
(DECREASE)
BEFORE INTERFUND
TRANSFERS 836,907 (43,458) 22,364,548
INTERFUND TRANSFERS,
Net (1,869,243) 87,146 74,082
NET INCREASE
(DECREASE) (1,032,336) 43,688 74,082 22,364,548
NET ASSETS AVAILABLE
FOR
PLAN BENEFITS:
Beginning of year 9,608,697 1,741,312 58,924,422
End of year $ 8,576,361 $1,785,000 $ 74,082 $81,288,970
See notes to financial statements.
OCLI 401(k)/ESOP PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS WITH FUND
INFORMATION AS OF DECEMBER 31, 1997
Optical Coating T. Rowe
Laboratory, Travelers Price
Short-Term Inc. Fixed Stable Value
Income Common Income Common
Fund Stock Fund Trust Fund
ADDITIONS TO NET
ASSETS
ATTRIBUTED TO:
Contributions:
By the Company $ 589,184 $ 128,367
By participating
employees 246,287 828,516
Interest $ 323,683 624,164
Dividends 23,176
Net appreciation
(depreciation) of
fair value of
investments 4,733,922
Total additions - 5,592,569 323,683 1,581,047
DEDUCTIONS FROM NET
ASSETS
ATTRIBUTED TO:
Distributions and
withdrawals paid
to participants 639,383 565,378
Administrative
expenses
Less reimbursed
by Company
Total deductions - 639,383 - 565,378
NET INCREASE BEFORE
INTERFUND
TRANSFERS 4,953,186 323,683 1,015,669
INTERFUND TRANSFERS $(16,396,122) 162,777 105,981
NET INCREASE
(DECREASE) (16,396,122) 5,115,963 323,683 1,121,650
NET ASSETS
AVAILABLE FOR
PLAN BENEFITS:
Beginning of year 16,396,122 16,900,638 5,452,205 7,806,929
End of year $ - $22,016,601 $5,775,888 $ 8,928,579
T. Rowe T. Rowe
Price T. Rowe Price
Spectrum Price Equity
Income Balanced Income
Fund Fund Fund
ADDITIONS TO NET
ASSETS
ATTRIBUTED TO:
Contributions:
By the Company $ 4,936 $ 47,625 $ 64,538
By participating
employees 85,165 324,941 593,748
Interest 14,840
Dividends 164,028 453,702
Net appreciation
(depreciation) of
fair value of
investments 8,953 534,243 474,530
Total additions 113,894 1,070,837 1,586,518
DEDUCTIONS FROM NET
ASSETS
ATTRIBUTED TO:
Distributions and
withdrawals
paid to
participants 11,959 160,699 159,917
Administrative
expenses
Less reimbursed
by Company
Total deductions 11,959 160,699 159,917
NET INCREASE BEFORE
INTERFUND TRANSFERS 101,935 910,138 1,426,601
INTERFUND TRANSFERS 242,533 3,440,194 3,478,793
NET INCREASE
(DECREASE) 344,468 4,350,332 4,905,394
NET ASSETS
AVAILABLE FOR
PLAN BENEFITS:
Beginning of year
End of year $ 344,468 $4,350,332 $ 4,905,394
T. Rowe T. Rowe T. Rowe T. Rowe
Price Price Price Price
Equity Mid Cap International New
Income Growth Stock Horizons
Fund Fund Fund Fund
ADDITIONS TO NET
ASSETS
ATTRIBUTED TO:
Contributions:
By the Company $ 64,538 $ 22,632 $ 9,893 $ 143,816
By participating
employees 593,748 219,690 92,884 982,813
Interest
Dividends 453,702 8,336 23,848 233,335
Net appreciation
(depreciation) of
fair value of
investments 474,530 80,920 (41,316) 636,210
Total additions 1,586,518 331,578 85,309 1,996,174
DEDUCTIONS FROM NET
ASSETS
ATTRIBUTED TO:
Distributions and
withdrawals paid
to participants 159,917 31,934 22,899 362,772
Administrative
expenses
Less reimbursed
by Company
Total deductions 159,917 31,934 22,899 362,772
NET INCREASE BEFORE
INTERFUND TRANSFERS 1,426,601 299,644 62,410 1,633,402
INTERFUND TRANSFERS 3,478,793 502,886 388,211 7,975,295
NET INCREASE
(DECREASE) 4,905,394 802,530 450,621 9,608,697
NET ASSETS
AVAILABLE FOR
PLAN BENEFITS:
Beginning of year
End of year $ 4,905,394 $ 802,530 $ 450,621 $ 9,608,697
Loans to
Participants Other Total
ADDITIONS TO NET
ASSETS
ATTRIBUTED TO:
Contributions:
By the Company $ 1,010,991
By participating
employee 3,374,044
Interest $ 150,080 1,112,767
Dividends 906,425
Net appreciation
(depreciation) of
fair value of
investments 6,427,462
Total additions 150,080 - 12,831,689
DEDUCTIONS FROM NET
ASSETS
ATTRIBUTED TO:
Distributions and
withdrawals paid
to participants 1,954,941
Administrative
expenses $ 66,536 66,536
Less reimbursed
by Company (66,536) (66,536)
Total deductions - - 1,954,941
NET INCREASE BEFORE
INTERFUND
TRANSFERS 150,080 10,876,748
INTERFUND TRANSFERS 106,245 (6,793)
NET INCREASE
(DECREASE) 256,325 (6,793) 10,876,748
NET ASSETS
AVAILABLE FOR
PLAN BENEFITS:
Beginning of year 1,484,987 6,793 48,047,674
End of year $ 1,741,312 $ - $58,924,422
See notes to financial statements.
OCLI 401(K)/ESOP PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND 1997
1. SUMMARY DESCRIPTION OF PLAN
The following description of the Optical Coating Laboratory, Inc.
(the "Company") 401(k)/ESOP Plan (the "Plan") provides only general
information. Participants should refer to the Plan document for a
more complete description of the Plan's provisions.
Effective January 1, 1997, the name of the Plan was changed from
OCLI ESOP+ to OCLI 401(k)/ESOP Plan. In addition, T. Rowe Price
Trust Company was appointed trustee of the Plan and T. Rowe Price
Retirement Plan Services, Inc. was appointed recordkeeper for the
Plan.
GENERAL - The Plan is a defined contribution plan for employees of
the Company. Effective January 1, 1997, employees are eligible to
participate in the Plan on the participants' employment date. The
Plan is subject to the provisions of the Employee Retirement Income
Security Act of 1974 ("ERISA").
CONTRIBUTIONS - Under the Section 401(k) provision of the Plan, an
eligible employee may contribute from 1% to 15% of his or her
salary to the Plan up to $10,000 per year in 1998 and 1997.
Contributions by highly compensated employees may be limited by
anti-discrimination rules. Effective January 1, 1997, the Company
amended the Plan to include a matching contribution and a revision
to the annual Company profit-sharing contribution. The matching
contribution is equal to 25% of each participant's deferred income
contributions for the plan year, not to exceed 6% of the
participant's compensation. The annual Company profit-sharing
contribution is equal to 5% of the net earnings before taxes of the
Company including the Company's share of the net earnings before
taxes of its majority owned subsidiaries and joint ventures.
The annual Company contribution (in the Company's common stock) is
allocated to eligible participants based on their proportionate
percentage of the Company's total matching contributions for the
plan year.
Generally, a participant must be an employee of the Company on
December 31 to share in the annual allocation of the Company
contribution. However, if an employee retires, dies or terminates
due to disability or under the Company's Voluntary Severance Plans,
he or she will receive a Company contribution for the plan year.
PARTICIPANT ACCOUNTS - Each participating employee's share of the
net assets is segregated in an individual account.
VESTING - Both Company and employee contributions are 100% vested
at the time of contribution. Participants may withdraw their
employee contributions upon reaching age 59-1/2, under hardship
conditions, or if the participant has borrowed the maximum amount
allowed under the Plan (see below). Otherwise, employee and
Company contributions may be withdrawn only upon retirement,
disability, death or termination of service. Benefits are paid in
cash and, to the extent so invested, in Company stock.
LOANS TO PARTICIPANTS - The maximum amount a participant may borrow
is the lesser of (i) fifty percent of the total account balance of
the participant, (ii) the balance of the participant's employee
contribution amount or (iii) $50,000 reduced by the excess of the
highest outstanding balance of loans to the participant during the
one year period prior to the date of the loan minus the outstanding
balance of any loan to the participant on the date on which such
loan was made. The loan must bear a reasonable rate of interest
and the loan term cannot exceed five years unless the loan is for
the purpose of a primary residence, in which case, the loan term
cannot exceed fifteen years. A participant may have only one loan
outstanding at a time and the minimum loan amount is $500. Loan
principal and interest repayments are made via payroll deductions,
are credited directly to the participant's account and are invested
in the same investments as the employee's before tax voluntary
savings deductions. If a participant terminates employment, loan
principal and interest balances not paid within thirty days are
deemed to be taxable distributions from the Plan (see "Income
Taxes" below).
INVESTMENT OPTIONS - Upon enrollment in the Plan, a participant may
direct contributions in one or more of the following investment
options:
. Optical Coating Laboratory, Inc. common stock.
. Travelers Fixed Income Fund which consists of a Travelers
Insurance Group Annuity Contract. The contract matured on
March 31, 1999. Contributions can no longer be invested in this
fund.
. T. Rowe Price Stable Value Common Trust Fund which invests
primarily in guaranteed investment contracts.
. T. Rowe Price Spectrum Income Fund which invests primarily in
fixed income securities.
. T. Rowe Price Balanced Fund which invests primarily in common
stocks and fixed income securities.
. T. Rowe Price Equity Income Fund which invests primarily in
common stocks of established companies.
. T. Rowe Price Mid Cap Growth Fund which invests in U.S. common
stocks, foreign securities, convertible securities, and warrants.
. T. Rowe Price International Stock Fund which invests primarily
in common stocks of established non-U.S. companies.
. T. Rowe Price New Horizons Fund which invests primarily in
common stocks of small, rapidly growing companies.
Employees may change investments or transfer funds from one
investment to another on a daily basis. During 1998, at age 55 and
after, employees could transfer a portion of their Company
contribution account to one of the voluntary investments listed
above. The portion of such stock that could be sold and
transferred each plan year was 25% on a cumulative basis and
increased to 50% in the plan years following the employee's 60th
birthday.
Beginning January 1, 1999, through March 31, 1999 all participant's
investments in Company stock ("ESOP shares") may be transferred to
other investment options. This transfer will be limited to one-
third of their total ESOP shares (calculated as of January 1, 1999)
in each thirty-day period for the first 90 days of 1999. After
March 31, 1999, each participant's ESOP shares will become his or
her Optical Coating Laboratory, Inc. Stock Fund shares in the
401(k) Plan and there will be no restrictions on transfers to other
funds.
2. SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING - The financial statements of the Plan are
prepared on the accrual basis.
USE OF ESTIMATES - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions. These estimates and
assumptions affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of additions to
and deductions from net assets during the reporting period. Actual
results could differ from those estimates.
INVESTMENTS - The investments of the Plan are stated at fair value.
Quoted market prices are used to determine the fair value of
investments in Company common stock and mutual funds. Investments
in the fixed income funds, under the group annuity contracts, are
stated at contract value. Contract value represents contributions
made under the contract plus interest at the contract rate.
Investments in the money market fund are stated at cost plus
accrued interest which is fair value. Participant notes receivable
are valued at cost, which approximates fair value.
Purchase and sales of securities are recorded on a trade date
basis. Interest income is recorded on the accrual basis.
Dividends are recorded on the ex-dividend date.
INCOME TAXES - The Plan obtained its latest determination letter in
July 1995, in which the Internal Revenue Service stated that the
Plan, as amended, meets the requirements of Section 401(a) of the
Code an is exempt from federal income tax under Section 501(a) of
the Code. The Plan administrator believes that the Plan is
designed and is currently being operated in compliance with the
applicable requirements of the Internal Revenue Code, and that the
Plan was qualified and the related trust was tax-exempt as of the
financial statement date. Therefore, no provision for income taxes
has been included in the accompanying financial statements.
In accordance with Section 401(k) of the Code, employee
contributions are made on a pre-tax basis.
Employee's pre-tax contributions, employer contributions and
investment income are taxable to participants upon distribution.
Employees' after tax contributions are not taxable upon
distribution, however, amounts attributable to earnings on such
contributions are subject to income tax.
Taxable distributions or withdrawals before age 59-1/2 are subject
to a 10% federal income tax penalty unless certain exceptions
apply.
Withdrawals qualifying as lump-sum distributions under the Code may
be eligible for five or ten year forward averaging. With certain
restrictions, employees may continue to defer income taxes on their
distributions by investing them in another qualified plan within
sixty days of the distribution date. Beginning January 1, 1993,
the Plan Administrator is required to withhold 20% of the taxable
portion of withdrawals for federal income taxes, unless the
withdrawals are directly rolled over into another qualified plan or
IRA.
The foregoing abbreviated discussion of the income tax consequences
resulting from participation in the Plan is not intended to include
all tax aspects of such participation.
BENEFITS PAYABLE - Benefits are recorded when paid. Included in
net assets are deferred vested benefits of participants who have
withdrawn from participation in the Plan. Such benefits were
$1,567,954 and $432,801 at December 31, 1998 and 1997,
respectively.
3. TERMINATION OF THE PLAN
The Company has submitted a request for IRS approval to terminate
the Company's existing 401(k)/ESOP Plan and establish a new,
enhanced 401(k) Plan effective January 1, 1999. The newly proposed
plan would offer a 100% match of employee contributions for the
first 3% of salary deferred by the employee and an additional 50%
match of employee contributions for the next 3% of salary deferred
by an employee for a total match of 4.5%.
4. ADMINISTRATIVE COMMITTEE AND TRUSTEES OF THE PLAN
The Plan provides for an Administrative Committee to manage and
administer the Plan. The four members of the Administrative
Committee are appointed by the Board of Directors of the Company.
The Administrative Committee, as allowed by the Plan, delegated the
routine administration of the Plan to T. Rowe Price Retirement Plan
Services, Inc.
The Plan also provides for a trustee, whose duties are to safeguard
and value trust assets, invest and reinvest trust funds and carry
out directions of the Administrative Committee. Beginning
January 1, 1997, T. Rowe Price Trust Company assumed these duties.
Prior to January 1, 1997, these duties were performed by Wells
Fargo Bank.
5. INVESTMENT CONTRACT WITH INSURANCE COMPANY
Travelers Fixed Income Fund is a four year contract with a fixed
interest rate of 6.45% and fair value of $6,119,250. No employee
contributions are being invested in Travelers Fixed Income Fund.
6. FINANCIAL INSTRUMENTS WITH CONCENTRATION OF CREDIT RISK
Financial instruments which potentially subject the assets in the
fund to concentrations of credit risk consist principally of common
stock, group annuity contracts, and mutual funds. As described
under Investment Options, contributions made by the Company are
reinvested in Optical Coating Laboratory, Inc. common stock in
accordance with the Plan provisions and cannot be routinely
transferred. This creates a greater risk for this segment of plan
assets. As the portfolio for the remaining plan assets is well
diversified and issuers of the securities are dispersed throughout
many industries and geographies, the concentrations of credit risk
are limited for this segment of plan assets.
7. PARTY IN INTEREST TRANSACTIONS
At December 31, 1998 and 1997, the Plan's assets included Optical
Coating Laboratory, Inc. (the sponsoring Company) common stock as
follows:
1998 1997
----------- -----------
Number of shares 1,538,716 1,599,947
Cost $21,931,441 $11,051,883
Fair value 40,006,611 22,016,601
8. INVESTMENTS
The fair value or contract value of the investments that represent
more than 5% of the Plan's net assets available for benefits are as
follows:
1998 1997
----------- -----------
Optical Coating Laboratory, Inc.
common stock $40,006,611 $22,016,601
Travelers Fixed Income Fund 6,119,250 5,775,888
T. Rowe Price Stable Value Common
Trust Fund 9,388,748 8,928,579
T. Rowe Price Balanced Fund 5,095,889 4,350,332
T. Rowe Price Equity Income Fund 5,547,156 4,905,394
T. Rowe Price New Horizons Fund 8,576,361 9,608,697
** ** **
OCLI 401(k)/ESOP PLAN
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1998
DESCRIPTION OF
IDENTITY OF ISSUE INVESTMENT COST FAIR VALUE
================== ================ =========== ===========
Optical Coating Lab Inc. Common Stock $21,931,441 $40,006,611
Travelers Fixed Income Fund, 6.45% 6,119,250 6,119,250*
T. Rowe Price Stable Value Common
Trust Fund 9,388,748 9,388,748
T. Rowe Price Spectrum Income Fund 889,366 877,532
T. Rowe Price Balanced Fund 4,600,853 5,095,889
T. Rowe Price Equity Income Fund 5,530,229 5,547,156
T. Rowe Price Mid Cap Growth Fund 2,653,888 2,970,230
T. Rowe Price International Stock Fund 799,004 848,111
T. Rowe Price New Horizons Fund 8,480,583 8,576,361
Loans to participants,
including accrued interest
(interest rate range 8%-12%,
259 loans outstanding) 1,785,000
Other 74,082
----------- -----------
Total $60,393,362 $81,288,970
=========== ===========
*Represents contract value
OCLI 401(k)/ESOP PLAN
ITEM 27D - SCHEDULE OF REPORTABLE TRANSACTIONS DECEMBER 31, 1998
PURCHASES
IDENTITY OF ISSUE DESCRIPTION NUMBER COST
================== ============================== ====== ==========
T. Rowe Price Stable Value Common Trust Fund 85 $3,372,496
There were no reportable sales transactions
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration
Statement No. 33-26271 of Optical Coating Laboratory, Inc. on
Form S-8 of our report dated June 4, 1998, appearing in this Annual
Report on Form 11-K of the OCLI 401(k)/ESOP Plan for the year ended
December 31, 1998.
June 29, 1999
