SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED]
For the Fiscal Year Ended December 31, 1998
or
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ____________ to ______________
Commission file number 1-10879
AMPHENOL CORPORATION
(Exact name of Registrant as specified in its Charter)
Delaware 22-2785165
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
358 Hall Avenue, Wallingford, Connecticut 06492
203-265-8900
(Address, including zip code, and telephone
number, including area code, of Registrant's
principal executive offices)
Securities registered pursuant to Section 12(b) of the Act:
Class A Common Stock, $.001 par value New York Stock Exchange, Inc.
(Title of each Class) (Name of each Exchange
on which Registered)
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes |X| No |_|
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. |_|
The aggregate market value of Amphenol Corporation Common Stock, $.001 Par
Value, held by non-affiliates was approximately $158 million based on the
reported last sale price of such stock on the New York Stock Exchange on
February 26, 1999.
As of February 26, 1999 the total number of shares outstanding of Common Stock
was 17,862,328.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Definitive Proxy Statement which is expected to be
filed within 120 days following the end of the fiscal year covered by this
report, are incorporated by reference into Part III hereof.
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INDEX Page
PART I 3
Item 1. Business 3
General 3
Product Development 4
Business Segments 4
International Operations 6
Customers 6
Manufacturing 7
Research and Development 7
Trademarks and Patents 8
Competition 8
Backlog 8
Employees 8
Cautionary Statements for Purposes of Forward Looking
Information 9
Item 2. Properties 10
Item 3. Legal Proceedings 10
Item 4. Submission of Matters to a Vote of Security-Holders 12
Item 4.1 Executive Officers 12
PART II 13
Item 5. Market for the Registrant's Common Stock and Related
Stockholder Matters 13
Item 6. Selected Financial Data 14
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 15
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 18
Item 8. Financial Statements and Supplementary Data 19
Report of Management 19
Independent Auditors' Reports 19
Consolidated Statement of Income 20
Consolidated Balance Sheet 21
Consolidated Statement of Changes in Shareholders' Equity
(Deficit) 22
Consolidated Statement of Cash Flow 23
Notes to Consolidated Financial Statements 24
Item 9. Changes in and Disagreements with Independent Accountants on
Accounting and Financial Disclosure 37
PART III 37
Item 10. Directors and Executive Officers of the Registrant 37
Item 11. Executive Compensation 37
Item 12. Security Ownership of Certain Beneficial Owners and Management 37
Item 13. Certain Relationships and Related Transactions 37
PART IV 38
Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K 38
Signature of the Registrant 42
Signatures of the Directors 42
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PART I
Item 1. Business
General
Amphenol Corporation ("Amphenol" or the "Company") is a leading designer,
manufacturer and marketer of electrical, electronic and fiber optic connectors,
interconnect systems and coaxial and flat-ribbon cable. The primary end markets
for the Company's products are telephone, wireless and data communications
systems; cable television systems; commercial and military aerospace
electronics; automotive and mass transportation applications; and industrial
factory automation equipment. For the year ended December 31, 1998,
approximately 53% of the Company's net sales were to the worldwide
communications market (including 23% for the cable television market), 25% were
for commercial and military aerospace and other military electronics
applications and 22% were for industrial, transportation and other applications.
The Company focuses on optimizing its mix of higher margin application-specific
products in its product offerings and maintaining continuing programs of
productivity improvement. As a result of these initiatives, the Company's
operating profit margin has increased from 13.5% in fiscal year 1993 to 16.3% in
fiscal year 1998.
The Company designs and manufactures connectors and interconnect systems
which are used primarily to conduct electrical and optical signals for a wide
range of sophisticated electronic applications. The Company believes, based
primarily on published market research, that it is one of the largest connector
manufacturers in the world and the leading supplier of high performance
environmental connectors that require superior performance and reliability under
conditions of stress and in hostile environments. Such conditions are frequently
encountered in commercial and military aerospace applications and other
demanding industrial applications such as natural resource exploration, medical
instrumentation and off-road construction. In addition, the Company has
developed a broad range of interconnect products to serve the rapidly growing
markets of wireless communications including cellular and personal communication
networks and fiber optic networks; electronic commerce including smart cards and
electronic purse applications; and automotive safety products including airbags,
pretensioner seatbelts and anti-lock braking systems. The Company is also one of
the leaders in developing interconnect products for factory automation, machine
tools and for mass transportation applications. The Company believes that the
worldwide industry for interconnect products and systems is highly fragmented
with over 2,000 producers of connectors worldwide, of which the 10 largest
accounted for a combined market share of approximately 32% in 1998. Industry
analysts estimate that the total sales for the industry were approximately $34
billion in 1998.
The Company's Times Fiber subsidiary is the world's second largest
producer of coaxial cable for the cable television market. The Company believes
that Times Fiber is one of the lowest cost producers of coaxial cable for the
cable television market, and that it is one of the technological leaders in
increasing the bandwidth of coaxial cable products. The Company's coaxial cable
and connector products are used in cable television systems including full
service cable television/telecommunication systems being installed by cable
operators and telecommunication companies offering video, voice and data
services. The Company also is a major supplier of coaxial cable to the
developing international cable television markets. In addition, the Company has
developed coaxial cable products, in conjunction with connector products, used
in the infrastructure for wireless communication systems.
The Company is a global manufacturer employing advanced manufacturing
processes. The Company's products are manufactured and assembled at facilities
in the United States, Canada, Mexico, Brazil, Germany, France, the United
Kingdom, Sweden, the Czech Republic, Estonia, Taiwan, Japan, India, the People's
Republic of China, Korea and Australia. The Company's connector products are
sold through its global sales force and
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independent manufacturers' representatives to thousands of original equipment
manufacturers ("OEMs") in 52 countries throughout the world as well as through a
global network of electronics distributors. The Company's coaxial cable products
are primarily sold to cable television operators and to telecommunication
companies who have entered the broadband communications market. In 1998,
approximately 60% of the Company's net sales were in North America, 27% were in
Europe and 13% were in Asia and other countries.
Product Development
The Company's product development strategy is to offer a broad range of
products to meet the specific interconnect requirements of its customers in its
target markets. The Company's market focus is primarily in interconnect products
for the: (1) wireless, telecom and data communications market; (2) broadband
communications, primarily cable television and the developing markets for full
service television, telephone and data communication broadband networks; (3)
commercial and military aerospace markets; (4) industrial markets, primarily
factory automation and mass transportation; and (5) automotive electronics,
primarily automotive safety devices such as airbags, pretensioner seatbelts and
anti-lock braking systems. The Company implements its product development
strategy through product design teams and collaboration arrangements with
customers which result in obtaining approved vendor status for the customer's
new products and programs. The Company further seeks to have its products become
widely accepted within the industry for similar applications and products
manufactured by other potential customers, thereby providing additional sources
of future revenue. The development of application-specific products has
decreased the significance of standard products which generally experience
greater pricing pressure. In addition to product design teams and customer
collaboration arrangements, the Company uses key account managers to manage
customer relationships on a global basis such that the Company can bring to bear
its total resources to meet the worldwide needs of its multinational customers.
The Company is also focused on making strategic acquisitions in certain markets
to further broaden and enhance its product offerings and expand its global
capabilities.
Business Segments
The following table sets forth the dollar amounts of the Company's net
sales for its business segments. For a discussion of factors affecting changes
in sales by business segment, see "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
1998 1997 1996
- --------------------------------------------------------------------------------
(dollars in thousands)
Net sales by business segment:
Interconnect products and
assemblies $718,109 $679,887 $585,033
Cable products 200,768 204,461 191,188
-------- -------- --------
$918,877 $884,348 $776,221
======== ======== ========
Net sales by geographic area:
United States operations $499,891 $462,349 $397,023
International operations (1) 418,986 421,999 379,198
-------- -------- --------
$918,877 $884,348 $776,221
======== ======== ========
- ----------
(1) Includes international coaxial cable sales, which are primarily export
sales.
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Interconnect Products and Assemblies. The Company produces a broad range
of interconnect products and assemblies primarily for voice, video and data
communication systems, commercial and military aerospace systems, automotive and
mass transportation applications, and industrial and factory automation
equipment. Interconnect products include connectors, which when attached to an
electronic or fiber optic cable, a printed circuit board or other device
facilitate electronic or fiber optic transmission. Interconnect assemblies
generally consist of a system of cable and connectors for linking electronic and
fiber optic equipment. The Company designs and produces a broad range of
connector products used in communication applications. Examples include smart
card acceptor devices used in mobile GSM telephones, cable modems and other
applications to facilitate reading data from smart cards; fiber optic couplers
and connectors used in fiber optic transmission; input/output connectors used
for linking personal computers and peripheral equipment; and sculptured flexible
circuits used for integrating printed circuit boards in communication
applications. The Company also designs and produces a broad range of radio
frequency connector products used in telecommunications, computer and office
equipment, instrumentation equipment and local area networks. The Company's
radio frequency connectors are used in base stations, hand held sets and other
components of cellular and personal communications networks. The Company has
also developed a broad line of radio frequency connectors for coaxial cable for
full service cable television/telecommunication networks. The Company believes,
based primarily on published market research, that it is the largest supplier of
circular, military-specification connectors. Such connectors require superior
performance and reliability under conditions of stress and in hostile
environments. High performance environmental connectors are generally used to
interconnect electronic and fiber optic systems in sophisticated aerospace,
military, commercial and industrial equipment. These applications present
demanding technological requirements in that the connectors can be subject to
rapid and severe temperature changes, vibration, humidity and nuclear radiation.
Frequent applications of these connectors include aircraft, guided missiles,
radar, military vehicles, equipment for spacecraft, energy, medical
instrumentation and geophysical applications and off-road construction
equipment. The Company also designs and produces industrial interconnect
products used in a variety of applications such as factory automation equipment,
mass transportation applications including railroads and marine transportation;
and automotive safety products including interconnect devices and systems used
in automotive airbags, pretensioner seatbelts and anti-lock braking systems. The
Company also designs and produces highly-engineered cable assemblies. Such
assemblies are specially designed by the Company in conjunction with OEM
customers for specific applications, primarily for computer, wired and wireless
communication systems and office equipment applications. The cable assemblies
utilize the Company's connector and cable products as well as components
purchased from others.
Cable Products. The Company designs, manufactures and markets coaxial
cable primarily for use in the cable television industry. The Company
manufactures two primary types of coaxial cable: semi-flexible, which has an
aluminum tubular shield, and flexible, which has one or more braided metallic
shields. Semi-flexible coaxial cable is used in the trunk and feeder
distribution portion of cable television systems, and flexible cable (also known
as drop cable) is used primarily for hookups from the feeder cable to the cable
television subscriber's residence. Flexible cable is also used in other
communications applications.
The rapid developments in fiber optic technologies, digital compression
(which allows several channels to be transmitted within the same bandwidth that
a single analog channel currently requires) and other communication
technologies, including the Company's development of higher capacity coaxial
cable, have resulted in technologies which enable cable television systems to
provide channel capacity in excess of 500 channels. Such expanded channel
capacity, along with other component additions, will permit cable operators to
offer full service networks with a variety of capabilities including near
video-on-demand, pay-per-view special events, home shopping networks,
interactive entertainment and education services, telephone services and
high-speed access to data resources such as the Internet. With respect to
expanded channel capacity systems, cable operators have generally adopted, and
the Company believes that for the foreseeable future will continue to adopt, a
cable system using both fiber optic cable and coaxial cable. Such systems
combine the advantages of fiber optic
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cable in transmitting clear signals over a long distance without amplification,
with the advantages of coaxial cable in ease of installation, low cost and
compatibility with the receiving components of the customer's communications
devices. The Company believes that while system operators are likely to increase
their use of fiber optic cable for the trunk and feeder portions of the cable
systems, there will be an ongoing need for high capacity coaxial cable for the
local distribution and street-to-the-home portions of the cable system.
U.S. cable system designs are increasingly being employed in international
markets where cable television penetration is low. For example, it is estimated
that in 1998 only 31% of the television households in Europe subscribed to some
form of multichannel television service as compared to an estimated subscription
rate of 66% in the U.S. The estimated subscription rates in the Asian and Latin
American markets are even lower at approximately 17% and 14%, respectively. In
terms of television households, it is estimated that there are 256 million
television households in Europe, 453 million in Asia and 96 million in Latin
America. This compares to an estimated 96 million television households in the
U.S. In 1998, the Company had sales of coaxial cable in approximately 50
countries, and the Company believes the development of cable television systems
in international markets presents a significant opportunity to increase sales of
its coaxial cable products.
The Company is also a leading producer of flat-ribbon cable, a cable made
of wires assembled side by side such that the finished cable is flat.
Flat-ribbon cable is used to connect internal components in systems with space
and component configuration limitations. The product is used in computer and
office equipment components as well as in a variety of telecommunications
applications.
International Operations
The Company believes that its global presence is an important competitive
advantage as it allows the Company to provide quality products on a timely and
worldwide basis to its multinational customers. Approximately 46% of the
Company's sales for the year ended December 31, 1998 were outside the United
States. Approximately 60% of such international sales were in Europe. The
Company has manufacturing and assembly facilities in the United Kingdom,
Germany, France, Sweden, the Czech Republic, Estonia and sales offices in most
European markets. The European operations generally have strong positions in
their respective local markets. Local operations coordinate product design and
manufacturing responsibility with the Company's other operations around the
world. The balance of the Company's international activities are located
primarily in Brazil, Canada, Mexico, Australia and the Far East, which includes
manufacturing facilities in Taiwan, India, Japan, Korea, and the People's
Republic of China. The Company's manufacturing and assembly facilities generally
serve the respective local markets. In addition, the Company has low cost
manufacturing and assembly sources in Scotland, Estonia, the Czech Republic,
Mexico and the People's Republic of China to serve regional and world markets.
Customers
The Company's products are used in a wide variety of applications by
numerous customers, none of whom accounted for more than 5% of the Company's
sales for 1998 (except for sales under contract with the U.S. Government and its
subcontractors, which accounted for 8% of 1998 sales). The Company's
participation across a broad spectrum of government programs is such that the
Company believes that no one government program accounted for more than 2% of
1998 net sales. The Company's products are sold both directly to OEMs, cable
system operators, telecommunication companies and through distributors. There
has been a trend on the part of OEM customers to consolidate their lists of
qualified suppliers to companies that have a global presence, can meet quality
and delivery standards, have a broad product portfolio and design capability,
and have competitive prices. The Company has focused its global resources to
position itself to compete effectively in this environment. The Company has
concentrated its efforts on service and productivity improvements including
advanced computer
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aided design and manufacturing systems, statistical process controls and
just-in-time inventory programs to increase product quality and shorten product
delivery schedules. The Company's strategy is to provide a broad selection of
products in the areas in which it competes. The Company has achieved a preferred
supplier designation from many of its OEM customers.
The Company's sales to distributors represented approximately 27% of the
Company's 1998 sales. The Company's recognized brand names including "Amphenol,"
"Times Fiber," "Pyle-National," "Matrix," "Spectra-Strip," "Sine," "Tuchel,"
"Kai Jack" and "Socapex," together with the Company's strong connector design-in
position (products that are specified in the plans and qualified by the OEM),
enhance its ability to reach the secondary market through its network of
distributors. The Company believes that its distributor network represents a
competitive advantage.
Manufacturing
The Company employs advanced manufacturing processes including molding,
stamping, plating, turning, extruding, die casting and assembly operations as
well as proprietary process technology for flat-ribbon and coaxial cable
production. The Company's manufacturing facilities are generally vertically
integrated operations from the initial design stage through final design and
manufacturing. Outsourcing of certain fabrication processes is used when
cost-effective. Substantially all of the Company's manufacturing facilities are
certified to the ISO9000 series of quality standards.
The Company employs a global manufacturing strategy to lower its
production costs and to improve service to customers. The Company sources its
products on a worldwide basis with manufacturing and assembly operations in
North and South America, Europe and Asia. To better serve high volume OEM
customers, the Company has established just-in-time facilities near major
customers.
The Company's policy is to maintain strong cost controls in its
manufacturing and assembly operations. The Company has undertaken programs to
rationalize its production facilities, reduce expenses and maximize the return
on capital expenditures. The programs to improve productivity are ongoing.
The Company purchases a wide variety of raw materials for the manufacture
of its products, including precious metals such as gold and silver used in
plating; brass, copper, aluminum and steel used for cable, contacts and
connector shells; and plastic materials used for cable and connector bodies and
inserts. Such raw materials are generally available throughout the world and are
purchased locally from a variety of suppliers. The Company is not dependent upon
any one source for raw materials, or if one source is used the Company attempts
to protect itself through long-term supply agreements.
Research and Development
The Company's research, development and engineering expenditures for the
creation and application of new and improved products and processes were $17.7
million, $15.3 million and $14.6 million (excluding customer sponsored programs
representing expenditures of $0.5 million, $0.2 million and $0.9 million) for
1998, 1997 and 1996, respectively. The Company's research and development
activities focus on selected product areas and are performed by individual
operating divisions. Generally, the operating divisions work closely with OEM
customers to develop highly-engineered products that meet customer needs. The
Company continues to focus its research and development efforts primarily on
those product areas that it believes have the potential for broad market
applications and significant sales within a one-to-three year period.
Trademarks and Patents
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The Company owns a number of active patents worldwide. While the Company
considers its patents to be valuable assets, the Company does not believe that
its competitive position is dependent on patent protection or that its
operations are dependent on any individual patent. The Company regards its
trademarks "Amphenol," "Times Fiber," "Pyle-National," "Matrix,"
"Spectra-Strip," "Sine," "Tuchel," "Kai Jack," and "Socapex" to be of value in
its businesses. The Company has exclusive rights in all its major markets to use
these registered trademarks.
Competition
The Company encounters competition in substantially all areas of its
business. The Company competes primarily on the basis of product quality, price,
engineering, customer service and delivery time. Competitors include large,
diversified companies, some of which have substantially greater assets and
financial resources than the Company, as well as medium to small companies. In
the area of coaxial cable for cable television, the Company believes that it and
CommScope, Inc. are the primary providers of such cable; however, CommScope is
larger than the Company in this market. In addition, the Company faces
competition from other companies that have concentrated their efforts in one or
more areas of the coaxial cable market.
Backlog
The Company estimates that its backlog of unfilled orders was $221.5
million and $209.2 million at December 31, 1998 and 1997, respectively. Orders
typically fluctuate from quarter to quarter based on customer demands and
general business conditions. Unfilled orders may be cancelled prior to shipment
of goods; however, such cancellations historically have not been material. It is
expected that all or a substantial portion of the backlog will be filled within
the next 12 months. Significant elements of the Company's business, such as
sales to the cable television industry, distributors, the computer industry, and
other commercial customers, generally have short lead times.
Therefore, backlog may not be indicative of future demand.
Employees
As of December 31, 1998, the Company had approximately 7,600 full-time
employees worldwide. Of these employees, approximately 5,400 were hourly
employees, of which approximately 2,700 were represented by labor unions, and
the remainder were salaried. The Company had a one week strike in October 1995
at its Sidney, New York facility relating to the renewal of the labor contract
at that facility with the International Association of Machinists and Aerospace
Workers. The Company has not had any other work stoppages in the past ten years.
In 1997, the United Steelworkers International Union, AFL-CIO established a
union, affecting approximately 500 employees, at the Company's plant in Chatham,
Virginia, the Company's primary plant for the production of coaxial cable. The
Company believes that it has a good relationship with its unionized and
non-unionized employees.
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Cautionary Statements for Purposes of Forward Looking Information
Statements made by the Company in written or oral form to various persons,
including statements made in filings with the SEC, that are not strictly
historical facts are "forward looking" statements. Such statements should be
considered as subject to uncertainties that exist in the Company's operations
and business environment. The following includes some, but not all, of the
factors or uncertainties that could cause the Company to fail to conform with
expectations and predictions:
- - A global economic slowdown in any one, or all, of the Company's market
segments.
- - The effects of extreme changes in monetary and fiscal policies in the U.S.
and abroad including extreme currency fluctuations and unforeseen
inflationary pressures.
- - Drastic and unforeseen price pressure on the Company's products or
significant cost increases that cannot be recovered through price
increases or productivity improvements.
- - Increased difficulties in obtaining a consistent supply of basic materials
like steel, aluminum, copper, gold or plastic resins at stable pricing
levels.
- - Unpredictable difficulties or delays in the development of new product
programs.
- - Significant changes in interest rates or in the availability of financing
for the Company or certain of its customers.
- - Rapid escalation of the cost of regulatory compliance and litigation.
- - Unexpected government policies and regulations affecting the Company or
its significant customers.
- - Unforeseen intergovernmental conflicts or actions, including but not
limited to armed conflict and trade wars.
- - Difficulties and unanticipated expense of assimilating newly-acquired
businesses.
- - Any difficulties in obtaining or retaining the management and other human
resource competencies that the Company needs to achieve its business
objectives.
- - The risks associated with any technological shifts away from the Company's
technologies and core competencies. For example, a technological shift
away from the use of coaxial cable in cable television/ telecommunication
systems could have a substantial impact on the Company's coaxial cable
business.
- - Unforeseen interruptions to the Company's business with its largest
customers, distributors and suppliers resulting from, but not limited to,
strikes, financial instabilities, computer malfunctions or inventory
excesses.
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Item 2. Properties
The Company's fixed assets include certain plants and warehouses and a
substantial quantity of machinery and equipment, most of which is general
purpose machinery and equipment using tools and fixtures and in many instances
having automatic control features and special adaptations. The Company's plants,
warehouses, machinery and equipment are in good operating condition, are well
maintained, and substantially all of its facilities are in regular use. The
Company considers the present level of fixed assets as of December
31, 1998, suitable and adequate for operations in the current business
environment. At December 31, 1998, the Company operated a total of 46 plants and
warehouses of which (a) the locations in the U.S. had approximately 1.8 million
square feet, of which .8 million square feet were leased; and (b) the locations
outside the U.S. had approximately 1.2 million square feet, of which .5 million
square feet were leased.
The Company believes that its facilities are suitable and adequate for the
business conducted therein, are being appropriately utilized consistent with
experience and have sufficient production capacity for their present intended
purposes. Utilization of the facilities varies based on demand for the products.
The Company continuously reviews its anticipated requirements for facilities
and, based on that review, may from time to time acquire or lease additional
facilities and/or dispose of existing facilities.
Item 3. Legal Proceedings
The Company and its subsidiaries have been named as defendants in several
legal actions in which various amounts are claimed arising from normal business
activities. Although the amount of any ultimate liability with respect to such
matters cannot be precisely determined, in the opinion of management, such
matters are not expected to have a material effect on the Company's financial
condition or results of operations.
Certain operations of the Company are subject to federal, state and local
environmental laws and regulations which govern the discharge of pollutants into
the air and water, as well as the handling and disposal of solid and hazardous
wastes. The Company believes that its operations are currently in substantial
compliance with all applicable environmental laws and regulations and that the
costs of continuing compliance will not have a material effect on the Company's
financial condition or results of operations.
Subsequent to the acquisition of Amphenol from Allied Signal Corporation
("Allied") in 1987, Amphenol and Allied have been named jointly and severally
liable as potentially responsible parties in relation to several environmental
cleanup sites. Amphenol and Allied have jointly consented to perform certain
investigations and remedial and monitoring activities at two sites and they have
been jointly ordered to perform work at another site. The responsibility for
costs incurred relating to these sites is apportioned between Amphenol and
Allied based on an agreement entered into in connection with the acquisition.
For sites covered by this agreement, to the extent that conditions or
circumstances occurred or existed at the time of or prior to the acquisition,
Allied is currently obligated to pay 80% of the costs up to $30 million and 100%
of the costs in excess of $30 million. At December 31, 1998, approximately $15
million of total costs have been incurred applicable to this agreement. Allied
representatives are presently working closely with the Company in addressing the
most significant potential environmental liabilities including the Sidney Center
landfill and the Richardson Hill landfill projects, as described below.
Owners and occupiers of sites containing hazardous substances, as well as
generators of hazardous substances, are subject to broad liability under various
federal and state environmental laws and regulations, including expenditures for
cleanup costs and damages arising out of past disposal activities. Such
liability in many
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cases may be imposed regardless of fault or the legality of the original
disposal activity. The Company is currently performing investigative and
monitoring activities at its manufacturing site in Sidney, New York. In
addition, the Company is currently voluntarily performing monitoring,
investigation, design and cleanup activities at two local, public off-site
disposal sites previously utilized by the Sidney facility and others. The
Company is also performing proposed remedial design activities and is currently
negotiating with respect to a third site. The Company and Allied have entered
into an administrative consent order with the United States Environmental
Protection Agency (the "EPA") and are presently determining necessary and
appropriate remedial measures for one such site (the "Richardson Hill" landfill)
used by Amphenol and other companies, which has been designated a "Superfund"
site on the National Priorities List under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980. With respect to the second
site, (the "Route 8" landfill), used exclusively by Amphenol, the Company
initiated a remediation program pursuant to a Consent Order with the New York
Department of Environmental Protection and is continuing to monitor the results
of those remediation efforts. In December 1995, the Company and Allied received
a letter from the EPA demanding that the Company and Allied accept
responsibility for the investigation and cleanup of the Sidney Center landfill,
another Superfund Site. The Sidney Center landfill was a municipal landfill site
utilized by the Company's Sidney facility and other local towns and businesses.
The Company has acknowledged that it sent general plant refuse but no hazardous
waste to the Sidney Center landfill site. In 1996, the Company and Allied
received a unilateral order from the EPA directing the Company and Allied to
perform certain investigation, design and cleanup activities at the Sidney
Center landfill site. The Company and Allied responded to the unilateral order
by agreeing to undertake certain remedial design activities. In 1997, the EPA
filed a lawsuit against the Company and Allied seeking to recover $2.7 million
for past costs expended by the EPA in connection with activities at the Sidney
Center landfill site and seeking to affix liability upon the Company and Allied
for all additional costs to be incurred in connection with all further
investigations, design and cleanup activities at the site. The Company joined
four local municipalities as co-defendants in the lawsuit. The EPA and the four
municipalities have entered into a proposed settlement agreement which is
subject to court approval. The Company and Allied are contesting the proposed
settlement agreement as being unfair and inequitable. A similar settlement
proposal has not been offered to the Company and Allied. The Company and Allied
intend to continue to vigorously defend the lawsuit although remedial design
work for the Sidney Center landfill site has continued pursuant to the 1996
unilateral order. The Company also is engaged in remediating or monitoring
environmental conditions at several of its other manufacturing facilities and
has been named as a potentially responsible party for cleanup costs at several
other off-site disposal sites. During 1998, the Company spent approximately $.2
million, net of indemnification payments received from Allied, in connection
with investigating, remediating and monitoring environmental conditions at these
facilities and sites. Amphenol expects such expenditures, net of expected
indemnification payments from Allied, to be less than $.6 million in 1999.
Since 1987, the Company has not been identified nor has it been named as a
potentially responsible party with respect to any other significant on-site or
off-site hazardous waste matters. In addition, the Company believes that all of
its manufacturing activities and disposal practices since 1987 have been in
material compliance with all applicable environmental laws and regulations.
Nonetheless, it is possible that the Company will be named as a potentially
responsible party in the future with respect to additional Superfund or other
sites. Although the Company is unable to predict with any reasonable certainty
the extent of its ultimate liability with respect to any pending or future
environmental matters, the Company believes, based upon all information
currently known by management about the Company's manufacturing activities,
disposal practices and estimates of liability with respect to all known
environmental matters, that any such liability will not be material to its
financial condition or results of operations.
11
<PAGE>
Item 4. Submission of Matters to a Vote of Security-Holders
The Annual Meeting of Stockholders was held on May 20, 1998. The following
matters were submitted to and approved by the stockholders: (i) the election of
two directors, Martin H. Loeffler and Michael W. Michelson, each for a three
year term expiring in the year 2001; (ii) ratification of Deloitte & Touche LLP
as independent accountants of the Company and (iii) ratification and approval of
the Amended 1997 Option Plan for Key Employees of Amphenol and Subsidiaries.
Item 4.1 Executive Officers
The following table sets forth the name, age and position with the Company
of each person who was an executive officer of Amphenol as of December 31, 1998.
Officers are elected to serve at the discretion of the Board of Directors in
accordance with the By-Laws of the Company. The By-Laws of the Company provide
that the Board of Directors shall elect the officers of the Company at its first
meeting held after the Annual Meeting of Stockholders of the Company. All
officers of the Company are elected to hold office until their successors are
chosen and qualified, or until their earlier resignation or removal.
Name Age Position
---- --- --------
Martin H. Loeffler 54 Chairman of the Board,
Chief Executive Officer and President
Edward G. Jepsen 55 Executive Vice President
and Chief Financial Officer
Timothy F. Cohane 46 Senior Vice President
Edward C. Wetmore 42 Secretary and General Counsel
Diana G. Reardon 39 Controller and Treasurer
Martin H. Loeffler has been a Director of Amphenol since December 1987 and
Chairman of the Board since May 1997. He has also served as President and Chief
Operating Officer of Amphenol since July 1987. He has been President and Chief
Executive Officer of the Company since May 1996.
Edward G. Jepsen has been Executive Vice President and Chief Financial
Officer of Amphenol since May 1989 and Senior Vice President and Director of
Finance since November 1988. He was also a Director of Amphenol from January
1991 to May 1997.
Timothy F. Cohane has been a Vice President of Amphenol since December
1991. He was also a Director of Amphenol from June 1987 to May 1997. He has been
President and Chief Operating Officer of the Company's Times Fiber subsidiary
since 1994.
Edward C. Wetmore has been Secretary and General Counsel of Amphenol since
1987.
Diana G. Reardon has been Treasurer of Amphenol since March 1992 and
Controller since July 1994. Prior to that she served as Assistant Controller of
the Company.
12
<PAGE>
PART II
Item 5. Market for the Registrant's Common Stock and Related Stockholder Matters
The Company effected the initial public offering of its Class A Common
Stock in November 1991. The Company's Common Stock has been listed on the New
York Stock Exchange since that time under the symbol "APH." The following table
sets forth on a per share basis the high and low closing prices for the Common
Stock for both 1998 and 1997 as reported on the New York Stock Exchange.
1998 1997
------------------ ------------------
High Low High Low
---- --- ---- ---
First Quarter 64 53 1/4 26 21 3/4
Second Quarter 61 5/8 39 38 7/8 24 1/8
Third Quarter 44 1/8 29 13/16 43 1/2 39 1/16
Fourth Quarter 35 1/16 27 1/2 56 44
As of February 26, 1999 there were 68 holders of record of the Company's
Common Stock. A significant number of outstanding shares of Common Stock are
registered in the name of only one holder, which is a nominee of The Depository
Trust Company, a securities depository for banks and brokerage firms. The
Company believes that there are a significant number of beneficial owners of its
Common Stock.
Since its initial public offering in 1991, the Company has not paid any
cash dividends on its Common Stock and its does not have any present intention
to commence payment of any cash dividends. The Company intends to retain
earnings to provide funds for the operation and expansion of the Company's
business and to repay outstanding indebtedness.
Currently the Company is restricted from declaring and paying any cash
dividends on, or repurchasing the Company's Common Stock under certain covenants
contained in the Company's debt agreements.
13
<PAGE>
Item 6. Selected Financial Data
(dollars in thousands, except per share data)
<TABLE>
<CAPTION>
Year Ended December 31,
- ----------------------------------------------------------------------------------------------------------------
1998 1997 1996 1995 1994
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Operations
Net sales $ 918,877 $ 884,348 $ 776,221 $ 783,233 $ 692,651
Income before
extraordinary item 36,510 51,264 67,578 62,858 42,400
Extraordinary loss (24,547) (4,087)
Net income 36,510 26,717 67,578 62,858 38,313
Income per common share before
extraordinary item 2.07 1.84 1.45 1.33 .91
Extraordinary loss per common share (.88) (.09)
Net income per common share 2.07 .96 1.45 1.33 .82
Financial Position
Working capital $ 163,508 $ 137,526 $ 136,864 $ 121,313 $ 95,590
Total assets 807,401 737,154 710,662 689,924 677,055
Current portion of long-term debt 1,655 212 7,759 2,670 13,925
Long-term debt 952,469 937,277 219,484 195,195 234,251
Shareholders' equity (deficit) (292,257) (343,125) 360,548 344,085 278,640
Weighted average shares
outstanding 17,663,212 27,806,260 46,649,541 47,304,180 46,611,759
</TABLE>
14
<PAGE>
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
The following discussion and analysis of the results of operations for the
three fiscal years ended December 31, 1998 has been derived from and should be
read in conjunction with the consolidated financial statements contained herein.
Results of Operations
The following table sets forth the components of net income before
extraordinary item as a percentage of net sales for the periods indicated.
<TABLE>
<CAPTION>
Year Ended December 31,
- ---------------------------------------------------------------------------------------------
1998 1997 1996
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales 100.0% 100.0% 100.0%
Cost of sales, excluding depreciation and amortization 65.5 64.7 63.7
Depreciation and amortization expense 3.8 3.6 3.7
Selling, general and administrative expense 14.4 14.1 14.8
----- ----- -----
Operating income 16.3 17.6 17.8
Interest expense (8.8) (7.3) (3.2)
Other expenses, net (.5) (.1) (.5)
Non-recurring expenses relating to Merger and Recapitalization (.3)
----- ----- -----
Income before income taxes and extraordinary item 7.0 9.9 14.1
Provision for income taxes (3.0) (4.1) (5.4)
----- ----- -----
Net income before extraordinary item 4.0% 5.8% 8.7%
===== ===== =====
- ---------------------------------------------------------------------------------------------
</TABLE>
1998 Compared to 1997
Net sales were $918.9 million for the year ended December 31, 1998
compared to $884.3 million for 1997. Sales of interconnect products and
assemblies increased 6% compared to 1997 ($718.1 - 1998; $679.9 - 1997). Such
increase is primarily due to increased sales of interconnect products and
assemblies for wireless communications, data applications and smart card
acceptor devices. Sales of interconnect products for space, military and
commercial aviation applications increased slightly and were offset by a decline
in sales for industrial applications. Sales of cable products declined 2%
compared to 1997 ($200.8 - 1998; $204.5 - 1997). Sales of coaxial cable for
cable television increased in the U.S. as cable operators began upgrading and
expanding their systems to offer enhanced services; however, the increase was
offset by declines in sales in international cable television markets, primarily
Asia and Latin America, as a result of generally weak economic conditions in
those regions. Sales of flat ribbon cable, primarily for data communication
applications, were approximately even with the prior year.
Geographically, sales in the U.S. in 1998 increased 8% compared to 1997
($499.9 million - 1998; $462.3 million - 1997); international sales for 1998,
including export sales, decreased 1% in U.S. dollars ($419.0 million - 1998;
$422.0 million - 1997) and increased approximately 1% in local currency compared
to 1997. The comparatively strong U.S. dollar in 1998 had the currency effect of
decreasing net sales by approximately $8.7 million when compared to foreign
currency translation rates in 1997.
The gross profit margin as a percentage of net sales (including
depreciation in cost of sales) decreased to 32% in 1998 from 33% in 1997. The
decrease is generally attributable to competitive pricing pressure on the
Company's coaxial cable products.
Selling, general and administrative expenses as a percentage of sales
remained relatively constant at approximately 14% in 1998 compared to 1997.
Interest expense was $81.2 million for 1998 compared to $64.7 million for
1997. The increase is due to increased debt levels resulting from the Merger and
Recapitalization in May 1997.
Other expenses, net for 1998 was $4.5 million, an increase of $3.4 million
from 1997. The 1997 period included a gain on the sale of marketable securities
of $3.9 million. See Note 9 to the Company's Consolidated Financial Statements
for details of the components of other expenses, net.
The provision for income taxes for 1998 was at an effective rate of 42.9%
compared to an effective rate of 41.2% in 1997. The increase is generally
attributable to non-deductible expenses (goodwill amortization) being a higher
percentage of pretax income.
1997 Compared to 1996
Net sales were $884.3 million for the year ended December 31, 1997
compared to $776.2 million for 1996.
15
<PAGE>
Sales of interconnect products and assemblies increased 16% compared to 1996
($679.9 - 1997; $585.0 - 1996). Such increase is primarily due to increased
sales for wireless communications, data applications and smart card acceptor
devices as well as new and enhanced electronic aerospace and avionics
interconnect systems for space, military and commercial aviation applications.
Sales of cable products increased 7% compared to 1996 ($204.5 - 1997; $191.2 -
1996). Such increase is primarily due to increased sales of coaxial cable for
international cable television applications and increased sales of flat ribbon
cable for communication applications, partially offset by a decline in sales of
coaxial cable for U.S. cable television applications as a result of soft demand
and competitive pricing pressures.
Geographically, sales in the U.S.in 1997 increased 16% compared
to 1996 ($462.3 million - 1997; $397.0 million - 1996); international sales for
1997, including export sales, increased 11% in U.S. dollars ($422.0 million -
1997; $379.2 million - 1996) and increased approximately 18% in local currencies
compared to 1996. The comparatively stronger U.S. dollar in 1997 had the
currency translation effect of decreasing net sales by approximately $24.6
million when compared to foreign currency translation rates in 1996.
The gross profit margin as a percentage of net sales (including
depreciation in cost of sales) decreased to 33% in 1997 from 34% in 1996. The
decrease is generally attributable to price reductions on the Company's coaxial
cable products partially offset by increased sales of higher margin
application-specific connector products, increased efficiencies due to increased
production rates for certain connector products and continuing cost control
programs.
Selling, general and administrative expenses as a percentage of sales
declined to approximately 14% in 1997 compared to approximately 15% in 1996
primarily as a result of higher sales volume in the 1997 period.
Interest expense was $64.7 million for 1997 compared to $24.6 million for
1996. The increase is due to increased debt levels resulting from the Merger and
Recapitalization in May 1997.
Other expenses, net for 1997 was $1.1 million, a decrease of $2.6 million
from 1996. See Note 9 to the Company's Consolidated Financial Statements for
details of the components of other expenses, net.
The provision for income taxes for 1997 was at an effective rate of 41.2%
compared to an effective rate of 38.4% in 1996. The increase is generally
attributable to non-deductible expenses (goodwill amortization) being a higher
percentage of pre-tax income.
Liquidity and Capital Resources
Cash provided by operating activities totaled $53.2 million, $86.3
million, and $68.2 million for 1998, 1997 and 1996, respectively. The decrease
in cash from operating activities in 1998 compared to 1997 is primarily
attributable to increased interest payments ($78.6 million - 1998; $53.2 million
- - 1997) on borrowings resulting from the Merger and Recapitalization and
increased income taxes paid ($26.0 million - 1998; $20.6 million - 1997). In
1997, cash from operating activities was higher than 1996 primarily because of
changes in the non-cash components of working capital primarily reflecting
higher accounts payable and accrued liabilities.
Cash from operating activities was used for capital expenditures ($26.3
million, $24.1 million and $20.4 million in 1998, 1997 and 1996, respectively),
acquisitions ($32.7 million, $4.0 million, and $29.5 million in 1998, 1997 and
1996, respectively) and to repurchase in the open market the Company's common
stock ($52.7 million - 1996).
In conjunction with the 1997 Merger and Recapitalization, the Company
entered into a $900 million Bank Agreement with a syndicate of financial
institutions, comprised of a $150 million revolving credit facility that expires
in the year 2004 and a $750 million term loan facility - $350 million (Tranche
A) maturing over a 7 year period ending 2004, $200 million (Tranche B) maturing
in 2005 and $200 million (Tranche C) maturing in 2006. In October 1997, the
Company negotiated a significant amendment and restatement to the term loan
under the Bank Agreement. The amendment extinguished the Tranche B and C
indebtedness with borrowings under a new $375 million Term Loan Tranche B. The
new Term Loan Tranche B has required amortization in 2005 and 2006. The credit
agreement is secured by pledges of 100% of the capital stock of the Company's
direct domestic subsidiaries and 65% of the capital stock of direct material
foreign subsidiaries, and the agreement requires the maintenance of certain
interest coverage and leverage ratios, and includes limitations with respect to,
among other things, indebtedness and restricted payments, including dividends on
the Company's common stock. At December 31, 1998 there were $680 million of
borrowings outstanding under the term loan facility. Availability under the
revolving credit facility at December 31, 1998 was $128,478, after reduction of
$2,022 for outstanding letters of credit.
In July 1997, the Company entered into interest rate protection agreements
that effectively fixed the Company's interest cost on $450 million of borrowings
under the Bank Agreement to the extent that LIBOR interest rates remain below 7%
for $300 million of borrowings and below 8% for $150 million of borrowings.
The Company's EBITDA as defined in the Bank Agreement was $192.1 million
and $188.5 million for 1998 and 1997, respectively. EBITDA is not a defined term
under Generally Accepted Accounting Principles (GAAP) and is not an alternative
to operating
16
<PAGE>
income or cash flow from operations as determined under GAAP. The Company
believes that EBITDA provides additional information for determining its ability
to meet future debt service requirements; however, EBITDA does not reflect cash
available to fund cash requirements.
The Company's primary ongoing cash requirements will be for debt service,
capital expenditures and product development activities. The Company's debt
service requirements consist primarily of principal and interest on bank
borrowings and interest on Senior Subordinated Notes due 2007. The Company has
not paid, and does not have any present intention to commence payment of, cash
dividends on its Common Stock. The Company expects that ongoing requirements for
debt service, capital expenditures and product development activities will be
funded by internally generated cash flow and availability under the Company's
revolving credit facility. The Company expects that capital expenditures in 1999
will be approximately $30 million. The Company's required debt amortization in
1999 is $1.7 million; the Company's required cash interest payments for 1999, at
current interest rates, are estimated at approximately $76 million. The Company
may also use cash to fund part or all of the cost of future acquisitions.
Environmental Matters
Subsequent to the acquisition of Amphenol Corporation in 1987, Amphenol
and Allied have been named jointly and severally liable as potentially
responsible parties in relation to several environmental cleanup sites. Amphenol
and Allied have jointly consented to perform certain investigations and remedial
and monitoring activities at two sites and they have been jointly ordered to
perform work at another site. The responsibility for costs incurred relating to
these sites is apportioned between Amphenol and Allied based on an agreement
entered into in connection with the acquisition. For sites covered by this
agreement, to the extent that conditions or circumstances occurred or existed at
the time of or prior to the acquisition, Allied is currently obligated to pay
80% of the costs up to $30 million and 100% of the costs in excess of $30
million. At December 31, 1998, approximately $15 million of the total costs have
been incurred applicable to this agreement. Management does not believe that the
costs associated with resolution of these or any other environmental matters
will have a material adverse effect on the Company's financial condition or
results of operations.
Inflation and Costs
The cost of the Company's products is influenced by the cost of a wide
variety of raw materials, including precious metals such as gold and silver used
in plating; aluminum, copper, brass and steel used for contacts, shells and
cable; and plastic materials used in molding connector bodies, inserts and
cable. In general, increases in the cost of raw materials, labor and services
have been offset by price increases, productivity improvements and cost saving
programs.
Risk Management
The Company has to a significant degree mitigated its exposure to currency
risk in its business operations by manufacturing and procuring its products in
the same country or region in which the products are sold so that costs reflect
local economic conditions. In other cases involving U.S. export sales, raw
materials are a significant component of product costs for the majority of such
sales and raw material costs are generally dollar based on a worldwide scale,
such as basic metals and petroleum derived materials.
Recent Accounting Change
In June 1998 the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133 (FAS 133), "Accounting for Derivative
Instruments and Hedging Activities." This statement requires that an entity
recognize all derivatives as either assets or liabilities in the Statement of
Financial Position and measure those instruments at fair value. The accounting
for changes in the fair value of a derivative (that is, gains and losses)
depends on the intended use of the derivative and its resulting designation. The
Company is in the process of evaluating the effect this new standard will have
on the Company's financial statements. The Company is required to adopt FAS 133
beginning after January 1, 2000.
Information Systems and the Year 2000
The Year 2000 issue is primarily the result of computer programs using a
two digit format, as opposed to four digits, to indicate the year. Such computer
systems will be unable to interpret dates beyond the year 1999, which could
cause a system failure or other computer errors, leading to a disruption in the
operation of such systems. In 1996, the Company began a systematic review of all
of its business information systems to ensure that the systems now in use
worldwide will be Year 2000 compliant before the turn of the century. The
Company has established a Year 2000 Program Management Group to provide overall
guidance and direction for this compliance mission. Communications were
initiated to all of the Company's business units focusing on the critical nature
of this project and the Program Management Group has continually monitored the
progress and status of each business unit. The Program Management Group has
focused its efforts on four main areas: (1) information systems software and
hardware; (2) non-information technology systems; (3) facilities equipment; and
(4) customer and vendor relationships. The Company expects its Year 2000
17
<PAGE>
conversion project to be completed on a timely basis so as to not significantly
impact business operations.
Based on the assessment efforts to date, the Company does not believe that
the Year 2000 issue will have a material adverse effect on its financial
condition or results of operations. The Company operates a number of business
units worldwide and has a large supplier base and believes that this will
mitigate any adverse impact. The Company's beliefs and expectations, however,
are based on certain assumptions and expectations that ultimately may prove to
be inaccurate. Potential sources of risk include: (a) the inability of principal
suppliers to be Year 2000 ready, which could result in delays in product
deliveries from such suppliers, (b) disruption of the product distribution
channel, including ports and transportation vendors and (c) the general
breakdown of necessary infrastructure such as electricity supply. The Company is
developing contingency plans to reduce the impact of transactions with
non-compliant suppliers and other parties. Although there can be no assurance
that multiple business disruptions caused by technology failures can be
adequately anticipated, the Company is identifying various alternatives to
minimize the potential risk to its business operations.
The Company estimates the cost for its Year 2000 compliance efforts to be
approximately $3.0 million, including the cost of new systems and upgrades some
of which will be capitalized. The cost is being funded through operating cash
flows. The Company's aggregate cost estimate does not include time and costs
that may be incurred by the Company as a result of the failure of any third
parties, including suppliers, to become Year 2000 ready or costs to implement
any contingency plans. Such costs are not anticipated to have a material impact
on the Company's financial position, results of operations or cash flows.
Euro Currency Conversion
On January 1, 1999, certain member countries of the European Union
established fixed conversion rates between their existing currencies and the
European Union's common currency (Euro). The transition period for the
introduction of the Euro is between January 1, 1999 and January 1, 2002. The
Company is addressing issues associated with the Euro conversion and although
the Company cannot predict the overall impact of the Euro conversion at this
time, the Company does not expect that the Euro conversion will have a material
adverse effect on its financial condition or results of operations.
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
The Company, in the normal course of doing business, is exposed to the
risks associated with foreign currency exchange rates and changes in interest
rates.
Foreign Currency Exchange Rate Risk
The Company conducts business in several major international currencies
through its worldwide operations, and as a result is subject to foreign exchange
exposures due to changes in exchange rates of the various currencies. Changes in
exchange rates can positively or negatively effect the Company's sales, gross
margins and retained earnings. The Company attempts to minimize currency
exposure risk by producing its products in the same country or region in which
the products are sold and thereby generating revenues and incurring expenses in
the same currency and by managing its working capital; although there can be no
assurance that this approach will be successful, especially in the event of a
significant and sudden decline in the value of any of the international
currencies of the Company's worldwide operations. In addition, the Company
periodically enters into foreign exchange contracts to hedge its transaction
exposures. At December 31, 1998 the Company had no outstanding foreign exchange
contracts. The Company does not engage in purchasing forward exchange contracts
for speculative purposes.
Interest Rate Risk
The Company is subject to market risk from exposure to changes in interest
rates based on its financing activities. The Company utilizes interest rate swap
agreements to manage and mitigate its exposure to changes in interest rates. At
December 31, 1998, the Company had interest rate protection in the form of such
swaps that effectively fixed the Company's LIBOR interest rate on $450 million
of floating rate bank debt at 5.76%. At December 31, 1998, the three month LIBOR
rate was 5.09%. Such swap agreements are in effect to the extent that LIBOR
remains below 7% for $300 million of debt and remains below 8% for an additional
$150 million of debt. These swap agreements expire in July 2002. A 10% change in
the LIBOR interest rate at December 31, 1998 would have the effect of increasing
or decreasing interest expense by approximately $1.5 million. However, if the
LIBOR interest rate increased above 7% (a 38% increase from the LIBOR interest
rate at December 31, 1998), further increases above 7% would have a more
significant effect in increasing interest expense. The Company does not expect
changes in interest rates to have a material effect on income or cash flows in
1999, although there can be no assurances that interest rates will not
significantly change.
18
<PAGE>
Item 8. Financial Statements and Supplementary Data
Report of Management
Management is responsible for the integrity and objectivity of the
financial statements and other information appearing in this annual report on
Form 10-K. The financial statements have been prepared in conformity with
generally accepted accounting principles and include amounts based on
management's best estimates and judgments, with due consideration given to
materiality. The Company maintains a system of internal accounting controls and
procedures intended to provide reasonable assurance that assets are safeguarded
and transactions are properly recorded and accounted for in accordance with
management's authorization.
Deloitte & Touche LLP has been engaged to audit the financial statements
in accordance with generally accepted auditing standards. They obtain an
understanding of the Company's accounting policies and controls, and conduct
such tests and related procedures as they consider necessary to arrive at their
opinion. The Board of Directors has appointed an Audit Committee composed of
outside directors. The Audit Committee meets periodically with representatives
of management and Deloitte & Touche LLP to discuss and review their activities
with respect to internal accounting controls and financial reporting and
auditing.
Independent Auditors' Report
To the Board of Directors and
Shareholders of Amphenol Corporation
We have audited the accompanying consolidated balance sheet of Amphenol
Corporation and subsidiaries as of December 31, 1998 and 1997, and the related
consolidated statements of income, changes in shareholders' equity (deficit),
and cash flows for the years then ended. These financial statements are the
responsibility of the Company'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 1998 and 1997 consolidated financial statements
present fairly, in all material respects, the financial position of Amphenol
Corporation and its subsidiaries at December 31, 1998 and 1997, and the results
of their operations and their cash flows for the years then ended in conformity
with generally accepted accounting principles.
Deloitte & Touche LLP
Stamford, Connecticut
January 19, 1999
Report of Independent Accountants
To the Board of Directors and
Shareholders of Amphenol Corporation
In our opinion, the consolidated statement of income, of changes in
shareholders' equity and of cash flow for the year ended December 31, 1996
(appearing on pages 20, 22 and 23 of the Amphenol Corporation 1998 Annual Report
to Shareholders which has been incorporated by reference in this Form 10-K
Annual Report) present fairly, in all material respects, the results of
operations and cash flows of Amphenol Corporation and its subsidiaries for the
year ended December 31, 1996, in conformity with generally accepted accounting
principles. These financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit of these statements in
accordance with generally accepted auditing standards which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatements. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for the opinion expressed
above. We have not audited the consolidated financial statements of Amphenol
Corporation for any period subsequent to December 31, 1996.
PricewaterhouseCoopers LLP
Hartford, Connecticut
January 14, 1997
19
<PAGE>
Consolidated Statement of Income
(dollars in thousands, except per share data)
<TABLE>
<CAPTION>
Year Ended December 31,
- --------------------------------------------------------------------------------------------------------
1998 1997 1996
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales $918,877 $884,348 $776,221
Costs and expenses:
Cost of sales, excluding depreciation and amortization 601,930 572,092 494,689
Depreciation and amortization expense 23,553 20,428 17,846
Selling, general and administrative expense 131,966 125,064 114,746
Amortization of goodwill 11,701 11,316 10,962
-------- -------- --------
Operating income 149,727 155,448 137,978
Interest expense (81,199) (64,713) (24,617)
Expenses relating to Merger and Recapitalization (Note 2) (2,500)
Other expenses, net (4,545) (1,061) (3,696)
-------- -------- --------
Income before income taxes and extraordinary item 63,983 87,174 109,665
Provision for income taxes (27,473) (35,910) (42,087)
-------- -------- --------
Income before extraordinary item 36,510 51,264 67,578
Extraordinary item:
Loss on early extinguishment of debt,
net of income taxes of $14,728 (Notes 2 and 3) (24,547)
-------- -------- --------
Net income $ 36,510 $ 26,717 $ 67,578
======== ======== ========
Net income per common share:
Income before extraordinary item $2.07 $1.84 $1.45
Extraordinary loss (.88)
----- ---- -----
Net income $2.07 $.96 $1.45
===== ==== =====
Average common shares outstanding 17,663,212 27,806,260 46,649,541
Net income per common share - assuming dilution:
Income before extraordinary item $2.03 $1.83 $1.45
Extraordinary loss (.88)
----- ---- -----
Net income $2.03 $.95 $1.45
===== ==== =====
Average common shares outstanding - assuming dilution 17,942,397 28,002,977 46,720,900
</TABLE>
20
- --------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.
<PAGE>
Consolidated Balance Sheet (dollars
in thousands, except per share data)
<TABLE>
<CAPTION>
December 31,
- -----------------------------------------------------------------------------------------------
1998 1997
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Current Assets:
Cash and short-term cash investments $ 3,095 $ 4,713
Accounts receivable, less allowance for
doubtful accounts of $1,832 and $1,633 83,065 70,037
Inventories:
Raw materials and supplies 24,806 21,115
Work in process 114,035 96,833
Finished goods 45,583 49,062
--------- ---------
184,424 167,010
Prepaid expenses and other assets 17,089 13,020
--------- ---------
Total current assets 287,673 254,780
--------- ---------
Land and depreciable assets:
Land 10,782 10,702
Buildings 68,426 64,149
Machinery and equipment 237,618 206,525
--------- ---------
316,826 281,376
Less accumulated depreciation (190,047) (169,784)
--------- ---------
126,779 111,592
Deferred debt issuance costs 16,783 19,377
Excess of cost over fair value of net assets acquired 360,265 339,223
Other assets 15,901 12,182
--------- ---------
$ 807,401 $ 737,154
========= =========
Liabilities & Shareholders' Deficit
Current Liabilities:
Accounts payable $ 67,885 $ 64,255
Accrued interest 11,306 11,442
Accrued salaries, wages and employee benefits 14,385 14,229
Other accrued expenses 28,934 27,116
Current portion of long-term debt 1,655 212
--------- ---------
Total current liabilities 124,165 117,254
--------- ---------
Long-term debt 952,469 937,277
Deferred taxes and other liabilities 23,024 25,748
Commitments and contingent liabilities (Notes 3, 7 and 10)
Shareholders' Deficit:
Class A Common Stock, $.001 par value; 40,000,000 shares authorized;
17,862,328 and 17,532,804 shares outstanding at December 31, 1998
and 1997, respectively 18 18
Additional paid-in deficit (499,928) (511,582)
Accumulated earnings 214,861 178,351
Accumulated other comprehensive income (Note 6) (7,208) (9,912)
--------- ---------
Total shareholders' deficit (292,257) (343,125)
--------- ---------
$ 807,401 $ 737,154
========= =========
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.
21
<PAGE>
Consolidated Statement of Changes in Shareholders' Equity (Deficit)
(dollars in thousands, except per share data)
<TABLE>
<CAPTION>
Accumulated
Additional Other Total
Paid-In Comprehensive Treasury Shareholders'
Common Capital Comprehensive Accumulated Income Stock Equity
Stock (Deficit) Income Earnings (Note 6) at Cost (Deficit)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance December 31, 1995 $47 $ 265,193 $ 84,056 $ (5,211) $ 344,085
Comprehensive income:
Net income [ $67,578 ] 67,578 67,578
Other comprehensive income -------
(loss), net of tax:
Unrealized loss on market-
able securities (1,085) (1,085)
Translation adjustments 647 647
Minimum pension liability
adjustment 1,762 1,762
-------
Other comprehensive income 1,324 1,324
-------
Comprehensive income [ $68,902 ]
=======
Purchase of Treasury Stock $(52,671) (52,671)
Amortization of deferred
compensation 65 65
Stock options exercised 167 167
Balance December 31, 1996 47 265,425 151,634 (3,887) (52,671) 360,548
--- ------------ -------- ---------- ------------
Comprehensive income:
Net income [ $26,717 ] 26,717 26,717
-------
Other comprehensive income
(loss), net of tax:
Reclassification adjustment
for gain on securities
realized in net income (3,687) (3,687)
Translation adjustments (8,147) (8,147)
Minimum pension liability
adjustment 5,809 5,809
-------
Other comprehensive income (6,025) (6,025)
-------
Comprehensive income [ $20,692 ]
=======
Stock subscription proceeds 532 532
Sale of 13,116,955 shares
of Common Stock (Note 2) 13 341,028 341,041
Purchase of 40,325,240 shares
of Common Stock (Note 2) (40) (1,048,450)
(1,048,490)
Fees and other expenses
related to the Merger and
Recapitalization (Note 2) (17,644) (17,644)
Retirement of Treasury Stock (2) (52,669) 52,671
Amortization of deferred
compensation 186 186
Stock options exercised 10 10
--- ------------ -------- ---------- ------------
Balance December 31, 1997 18 (511,582) 178,351 (9,912) -- (343,125)
Comprehensive income:
Net income [ $36,510 ] 36,510 36,510
-------
Other comprehensive income,
net of tax:
Translation adjustments 2,704 2,704 2,704
-------
Comprehensive income [ $39,214 ]
=======
Stock subscription proceeds 25 25
Deferred compensation 180 180
Stock issued in connection
with acquisition 11,449 11,449
--- ------------ -------- ---------- ------------
Balance December 31, 1998 $18 $ (499,928) $214,861 $ (7,208) $ (292,257)
=== ============ ======== ========== ============
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
22
<PAGE>
Consolidated Statement of Cash Flow
(dollars in thousands, except per share data)
<TABLE>
<CAPTION>
Year Ended December 31,
- -------------------------------------------------------------------------------------------------------------
1998 1997 1996
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net income $ 36,510 $ 26,717 $ 67,578
Adjustments for cash from operations:
Depreciation and amortization 35,254 31,744 28,808
Amortization of deferred debt issuance costs 2,749 2,638 691
Net extraordinary charge for write off of
deferred debt issuance costs 24,547
Non-recurring expenses relating to the Merger and
Recapitalization 2,500
Gain on sale of marketable securities (3,917)
Net change in:
Accounts receivable (2,926) (18,261) 7,315
Inventory (9,229) (17,700) (10,801)
Prepaid expenses and other assets (1,788) (2,479) 604
Accounts payable (257) 15,653 (3,411)
Accrued liabilities (4,251) 18,938 (13,644)
Accrued interest (142) 8,944 (188)
Accrued pension and post employment benefits (1,102) (4,717) (7,590)
Deferred taxes and other liabilities 57 2,607 (970)
Other (1,647) (952) (185)
----------- ----------- -----------
Cash flow provided by operations 53,228 86,262 68,207
----------- ----------- -----------
Cash flow from investing activities:
Additions to property, plant and equipment (26,340) (24,059) (20,374)
Investments in acquisitions and joint ventures (32,663) (4,000) (29,461)
Proceeds from the sale of marketable securities 7,351
----------- ----------- -----------
Cash flow used by investing activities (59,003) (20,708) (49,835)
----------- ----------- -----------
Cash flow from financing activities:
Net change in borrowings under revolving credit facilities 9,157 (20,461) 26,255
Repurchase of senior notes and subordinated debt (212,479)
Payment of fees and other expenses related to
Merger and Recapitalization (59,436)
Borrowings under Bank Agreement 750,000
Net change in receivables sold 10,000
Decrease in borrowings under Bank Agreement (5,000) (65,000)
Proceeds from the issuance of senior subordinated notes 240,000
Purchase of Amphenol Common Stock (1,048,490)
Sale of common stock related to Merger 341,041
Treasury stock repurchases (52,671)
----------- ----------- -----------
Cash flow provided by (used by) financing activities 4,157 (64,825) (26,416)
----------- ----------- -----------
Net change in cash and short-term cash investments (1,618) 729 (8,044)
Cash and short-term cash investments balance, beginning of period 4,713 3,984 12,028
----------- ----------- -----------
Cash and short-term cash investments balance, end of period $ 3,095 $ 4,713 $ 3,984
=========== =========== ===========
Cash paid during the year for:
Interest $ 78,634 $ 53,237 $ 24,180
Income taxes paid, net of refunds 26,024 20,623 54,765
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.
23
<PAGE>
Notes to Consolidated Financial Statements
(dollars in thousands, except per share data)
Note 1 - Summary of Significant Accounting Policies
Operations
Amphenol Corporation ("Amphenol" or the "Company") is in two business
segments which consist of manufacturing and selling interconnect products and
assemblies, and manufacturing and selling cable products.
Use of Estimates
The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the consolidated
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company
and its subsidiaries. All intercompany transactions have been eliminated in
consolidation.
Cash and Short-Term Cash Investments
Cash and short-term cash investments consist of cash and liquid
investments with an original maturity of less than three months.
Inventories
Inventories are stated at the lower of standard cost, which approximates
average cost, or market. The principal components of cost included in
inventories are materials, direct labor and manufacturing overhead.
Depreciable Assets
Property, plant and equipment are carried at cost. Depreciation and
amortization of property, plant and equipment are provided on a straight-line
basis over the respective asset lives determined on a composite basis by asset
group or on a specific item basis using the estimated useful lives of such
assets which range from 3 to 12 years for machinery and equipment and 20 to 40
years for buildings. It is the Company's policy to periodically review fixed
asset lives.
Deferred Debt Issuance Costs
Deferred debt issuance costs are being amortized on the interest method
over the term of the related debt and such amortization is included in interest
expense.
Excess of Cost Over Fair Value of Net Assets Acquired
The excess of cost over the fair value of net assets acquired (goodwill)
is being amortized on the straight-line basis over a period of 40 years.
Accumulated amortization was $108,674 and $96,973 at December 31, 1998 and 1997,
respectively. Management continually reassesses the appropriateness of both the
carrying value and remaining life of goodwill. Such reassessments are based on
forecasting cash flows, on an undiscounted basis, and other factors. In the
event an impairment is indicated, the amount of the impairment would be based on
estimated discounted cash flows.
Revenue Recognition
Sales and related cost of sales are recognized upon shipment of products.
Sales and related cost of sales under long-term contracts with commercial
customers and the U.S. Government are recognized as units are delivered or
services provided.
Retirement Pension Plans
Costs for retirement pension plans include current service costs and
amortization of prior service costs over periods of up to thirty years. It is
the Company's policy to fund current pension costs taking into consideration
minimum funding requirements and maximum tax deductible limitations. The expense
of retiree medical benefit programs is recognized during the employees' service
with the Company as well as amortization of a transition obligation recognized
on adoption of the accounting principle.
24
<PAGE>
Income Taxes
Deferred income taxes are provided for revenue and expenses which are
recognized in different periods for income tax and financial statement purposes.
Deferred income taxes are not provided on undistributed earnings of foreign
affiliated companies which are considered to be permanently invested.
Research and Development
Research, development and engineering expenditures for the creation and
application of new and improved products and processes were $17,669, $15,313 and
$14,550, excluding customer sponsored programs representing expenditures of
$523, $214 and $927, for the years 1998, 1997 and 1996, respectively.
Environmental Obligations
The Company recognizes the potential cost for environmental remediation
activities when assessments are made, remedial efforts are probable and related
amounts can be reasonably estimated; potential insurance reimbursements are not
recorded. The Company regularly assesses its environmental liabilities through
reviews of contractual commitments, site assessments, feasibility studies and
formal remedial design and action plans.
Net Income per Common Share
Net income per common share is based on the net income for the period
divided by the weighted average common shares outstanding. Net income per common
share assuming dilution assumes the exercise of outstanding, dilutive stock
options using the treasury stock method.
Derivative Financial Instruments
Derivative financial instruments, which are periodically used by the
Company in the management of its interest rate and foreign currency exposures,
are accounted for on an accrual basis. Income and expense are recorded in the
same category as that arising from the related asset or liability. For example,
amounts to be paid or received under interest rate swap agreements are
recognized as interest income or expense in the periods in which they accrue.
Note 2 - Merger and Recapitalization
On May 19, 1997, the Company merged with NXS Acquisition Corp., a wholly
owned subsidiary of KKR 1996 Fund L.P., KKR Partners II, L.P., and NXS
Associates, L.P., limited partnerships formed at the direction of Kohlberg
Kravis Roberts & Co. L.P. ("KKR"). The Merger had the effect of affiliates of
KKR investing $341,041 in exchange for 13,116,955 shares, or 75% of the
Company's common stock. Such equity proceeds , along with $240,000 of proceeds
from the sale of 9 7/8% Senior Subordinated Notes due 2007 and borrowings of
$750,000 under a $900,000 bank loan agreement ("Bank Agreement") were used to
repurchase 40,325,240 shares of the Company's common stock for $1,048,490,
purchase all of the Company's outstanding 10.45% Senior Notes and substantially
all of the Company's 12 3/4% Subordinated Debentures for $211,153 and pay fees
and expenses of $59,436, including $18,000 paid to KKR and $39,292 relating to
the issuance of new debt.
The Merger and related transactions have been recorded as a
recapitalization ("Merger and Recapitalization"). Expenses of $17,644 related to
the repurchase of the Company's common stock have been reflected as a reduction
of additional paid-in capital; other expenses of approximately $2,500, primarily
relating to the buyout of certain stock options, are reflected in the
accompanying Consolidated Statement of Income. In conjunction with the Merger
and Recapitalization, the Company recorded the costs associated with early
extinguishment of debt of $12,845, net of tax, as an extraordinary item in the
accompanying Consolidated Statement of Income. Such costs included the premium
associated with redemption of the Company's 10.45% Senior Notes and 12 3/4%
Subordinated Debentures and the write off of unamortized deferred debt issuance
costs. Supplemental earnings per share for 1997 assuming the Merger and
Recapitalization was completed at January 1, 1997, and excluding the impact of
related non-recurring expenses, is $1.98 per share.
25
<PAGE>
Note 3 - Long-Term Debt
Long-term debt consists of the following:
<TABLE>
<CAPTION>
December 31,
- ----------------------------------------------------------------------------------------------------
Interest Rate at
December 31, 1998 Maturity 1998 1997
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Bank Agreement:
Term loan 7.35% 2000-2006 $680,000 $685,365
Revolving credit facility 7.12% 2004 19,500
Senior subordinated notes 9.875% 2007 240,000 240,000
Notes payable to foreign banks and other debt 1.0%-21.0% 1999-2004 14,624 12,124
-------- --------
954,124 937,489
Less current portion 1,655 212
-------- --------
Total long-term debt $952,469 $937,277
======== ========
- ----------------------------------------------------------------------------------------------------
</TABLE>
In conjunction with the Merger and Recapitalization, the Company entered
into a $900,000 Bank Agreement with a syndicate of financial institutions,
comprised of a $150,000 revolving credit facility that expires in the year 2004
and a $750,000 term loan facility - $350,000 (Tranche A) maturing over a
seven-year period ending 2004, $200,000 (Tranche B) maturing in 2005 and
$200,000 (Tranche C) maturing in 2006. In October 1997, the Company negotiated a
significant amendment and restatement to the term loan under the Bank Agreement.
The amendment extinguished the Tranche B and C indebtedness with borrowings
under a new $375,000 Term Loan Tranche B with required amortization in 2005 and
2006. In conjunction with the amendment and restatement, the Company incurred an
extraordinary loss, net of tax, of $11,702 for the write off of unamortized
deferred debt issuance costs. At December 31, 1998, the Company had prepaid
$70,000 of the original term loan. Availability under the revolving credit
facility at December 31, 1998 was $128,478, after reduction of $2,022 for
outstanding letters of credit.
At December 31, 1998, interest under the Bank Agreement generally accrues
at .25% to .75% over prime or 1.50% to 2.0% over LIBOR at the Company's option.
The Company also pays certain annual agency and commitment fees. At December 31,
1998, the Company had interest rate protection in the form of swap agreements
that effectively fixed the Company's LIBOR interest rate on $450,000 of floating
rate bank debt at 5.76%. Such agreements are in effect to the extent that LIBOR
remains below 7% for $300,000 of debt and remains below 8% for an additional
$150,000 of debt. These agreements expire in July 2002.
The Bank Agreement is secured by a first priority pledge of 100% of the
capital stock of the Company's direct domestic subsidiaries and 65% of the
capital stock of direct material foreign subsidiaries, as defined in the Bank
Agreement. The Bank Agreement also requires that the Company satisfy certain
financial covenants including interest coverage and leverage ratio tests, and
includes limitations with respect to, among other things, (i) incurring debt,
(ii) creating or incurring liens, (iii) making other investments, (iv) acquiring
or disposing of assets, (v) capital expenditures, and (vi) restricted payments,
including dividends on the Company's common stock.
The 9 7/8% Senior Subordinated Notes due 2007 are general unsecured
obligations of the Company. The notes are subject to redemption at the option of
the Company, in whole or in part, beginning in 2002 at 104.938% and declining to
100% by 2005. In addition, at any time prior to 2000, the Company may, at its
option, redeem up to $96,000 of the notes at a redemption price of 109.875% with
the net cash proceeds of one or more equity offerings.
The maturity of the Company's long-term debt over each of the next five
years ending December 31, is as follows: 1999 - $1,655; 2000 - $16,573; 2001 -
$49,151; 2002 - $61,504; 2003 - $82,026.
26
<PAGE>
Note 4 - Income Taxes
The components of income before income taxes and extraordinary item and
the provision for income taxes are as follows:
Year Ended December 31,
- --------------------------------------------------------------------------------
1998 1997 1996
- --------------------------------------------------------------------------------
Income before taxes and extraordinary item:
United States $ 18,725 $ 45,354 $ 67,889
Foreign 45,258 41,820 41,776
-------- -------- --------
$ 63,983 $ 87,174 $109,665
======== ======== ========
Current provision:
United States $ 10,002 $ 21,857 $ 24,174
Foreign 17,651 12,611 15,993
-------- -------- --------
27,653 34,468 40,167
-------- -------- --------
Deferred provision:
United States $ 745 $ 1,407 $ 1,884
Foreign (925) 35 36
-------- -------- --------
(180) 1,442 1,920
-------- -------- --------
Total provision for income taxes $ 27,473 $ 35,910 $ 42,087
======== ======== ========
- --------------------------------------------------------------------------------
At December 31, 1998, the Company had $19,253 of foreign tax loss
carryforwards, of which $1,768 expire at various dates through 2003 and the
balance can be carried forward indefinitely, and $450 of tax credit
carryforwards that expire between the years 1999 and 2011. Accrued income tax
liabilities of $5,667 and $8,251 at December 31, 1998 and 1997, respectively,
are included in other accrued expenses in the Consolidated Balance Sheet.
Differences between the U.S. statutory federal tax rate and the Company's
effective income tax rate are analyzed below:
<TABLE>
<CAPTION>
Year Ended December 31,
- ------------------------------------------------------------------------------------------------------------
1998 1997 1996
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. statutory federal tax rate 35.0% 35.0% 35.0%
State and local taxes 2.1 1.4 1.5
Non-deductible purchase accounting differences 6.4 4.5 3.7
Foreign tax provisions (benefit) at rates different from the U.S. statutory rate 1.4 (2.2) .5
Tax cost (benefit) of foreign dividend income, net of related tax credits 1.4 3.1 (2.6)
Valuation allowance (.9) .1 (4.1)
Other (2.5) (.7) 4.4
---- ---- ----
Effective tax rate 42.9% 41.2% 38.4%
==== ==== ====
</TABLE>
The Company's deferred tax assets and liabilities, excluding a valuation
allowance, were comprised of the following:
December 31,
-----------------
1998 1997
------- -------
Deferred tax assets:
Accrued liabilities and reserves $ 4,415 $ 5,583
Operating loss carryforwards 7,298 7,214
Foreign tax credit carryforwards 450 348
Employee benefits 2,221 1,933
------- -------
$14,384 $15,078
======= =======
Deferred tax liabilities:
Depreciation $ 7,399 $ 8,031
Prepaid pension costs 6,103 6,984
------- -------
$13,502 $15,015
======= =======
27
<PAGE>
A valuation allowance of $9,182 and $9,731 at December 31, 1998 and 1997,
respectively, has been recorded which relates primarily to foreign net operating
loss carryforwards, tax credits and certain deferred tax deductions for which a
tax benefit is less likely than not to be received. The net change in the
valuation allowance for deferred tax assets was a reduction of $549 in 1998 and
an increase of $1,547 in 1997. The net change in the valuation allowance was
principally due to the expiration of tax credits in 1998 and the incurrence of
foreign net operating loss carryforwards in 1997. Current and non-current
deferred tax assets and liabilities within the same tax jurisdiction are offset
for presentation in the Consolidated Balance Sheet.
United States income taxes have not been provided on undistributed
earnings of international subsidiaries. The Company's intention is to reinvest
these earnings permanently or to repatriate the earnings only when it is tax
effective to do so. Accordingly, the Company believes that any United States tax
on repatriated earnings would be substantially offset by U.S. foreign tax
credits. The Company is subject to periodic audits of its various tax returns by
government agencies; management does not believe that amounts, if any, which may
be required to be paid by reason of such audits will have a material effect on
the Company's financial position or results of operations.
Note 5 - Benefit Plans and Other Postretirement Benefits
The Company and its domestic subsidiaries had a number of defined benefit
plans covering substantially all U.S. employees. Effective December 31, 1997,
the individual U.S. plans were merged into one plan . The information presented
below for U.S. plans for 1998 and 1997 is on the basis of the merged plans. Plan
benefits are generally based on years of service and compensation. The plans are
noncontributory, except for certain salaried employees. Certain foreign
subsidiaries have defined benefit plans covering their employees. The following
is a summary of the Company's defined benefit plans funded status as of the most
recent actuarial valuations (December 31, 1998 and 1997).
<TABLE>
<CAPTION>
December 31, 1998 December 31, 1997
- ------------------------------------------------------------------------------------------------------------------------------------
Accumulated Assets Accumulated Assets
Benefits Exceed Benefits Exceed
Exceed Accumulated Exceed Accumulated
Assets Benefits Assets Benefits
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Change in benefit obligation:
Benefit obligation at beginning of year $ 21,540 $ 178,982 $ 23,691 $ 166,535
Service cost 768 3,697 744 3,225
Interest cost 1,450 12,692 1,403 12,358
Plan participants' contributions 272 265
Plan amendments 4,797 1,678
Actuarial (gain) loss 762 7,955 (52) 10,819
Settlements and curtailments (609)
Foreign exchange 1,717 (223) (3,369) (452)
Benefits paid (935) (14,538) (877) (14,837)
--------- --------- --------- ---------
Benefit obligation at end of year 25,302 193,634 21,540 178,982
--------- --------- --------- ---------
Change in plan assets:
Fair value of plan assets at beginning of year 204,679 178,839
Actual return on plan assets 32,065 37,832
Employer contribution 61 3,458
Plan participants' contributions 272 265
Foreign exchange (320) (878)
Benefits paid (14,538) (14,837)
--------- --------- --------- ---------
Fair value of plan assets at end of year -- 222,219 -- 204,679
--------- --------- --------- ---------
Funded status (25,302) 28,585 (21,540) 25,697
Unrecognized net actuarial (gain) loss 1,075 (9,236) 252 (4,046)
Unrecognized prior service cost 10,076 6,609
Unrecognized transition obligation net 167 (2,540) 177 (2,867)
--------- --------- --------- ---------
(Accrued) prepaid benefit cost $ (24,060) $ 26,885 $ (21,111) $ 25,393
========= ========= ========= =========
</TABLE>
28
<PAGE>
<TABLE>
<CAPTION>
Year Ended December 31,
- --------------------------------------------------------------------------------------
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Components of net pension cost:
Service cost $ 4,465 $ 3,969 $ 3,723
Interest cost 14,142 13,761 13,707
Expected return on plan assets (18,038) (35,321) (16,193)
Net amortization and deferral of actuarial losses 983 19,417 1,321
-------- -------- --------
Net pension cost $ 1,552 $ 1,826 $ 2,558
======== ======== ========
- --------------------------------------------------------------------------------------
</TABLE>
The weighted-average discount rate and rate of increase in future
compensation levels used in determining actuarial present value of the projected
benefit obligation was 7.0% (7.25% in 1997 and 7.5% in 1996) and 3.0% (3.25% in
1997 and 3.50% in 1996), respectively. The expected long-term rate of return on
assets was 10.5%. Plan assets consist primarily of U.S. equity and debt
securities. The Company has also adopted an unfunded Supplemental Employee
Retirement Plan ("SERP") which provides for the payment of the portion of annual
pension which cannot be paid from the retirement plan as a result of regulatory
limitations on average compensation for purposes of the benefit computation. The
largest non-U.S. pension plan, in accordance with local custom, is unfunded and
had an accumulated benefit obligation of approximately $21,139 and $18,656 at
December 31, 1998 and 1997, respectively. Such obligation is included in the
Consolidated Balance Sheet and the tables above. Pension plans of certain of the
Company's other international subsidiaries generally do not determine the
actuarial value of accumulated benefits and the value of net assets on the basis
shown above. The plans, in accordance with local practices, are generally
unfunded. The vested benefit obligations of these plans are not significant.
The Company maintains self insurance programs for that portion of its
health care and workers compensation costs not covered by insurance. The Company
also provides certain health care and life insurance benefits to certain
eligible retirees through postretirement benefit programs. The Company's share
of the cost of such plans for most participants is fixed, and any increase in
the cost of such plans will be the responsibility of the retirees. The Company
funds the benefit costs for such plans on a pay-as-you-go basis. Since the
Company's obligation for postretirement medical plans is fixed and since the
accumulated postretirement benefit obligation ("APBO") and the net
postretirement benefit expense are not material in relation to the Company's
financial condition or results of operations, management believes any change in
medical costs from that estimated will not have a significant impact on the
Company. The discount rates used in determining the APBO at December 31, 1998
and 1997 were 7.0% and 7.25%, respectively.
29
<PAGE>
Summary information on the Company's postretirement medical plans as of
December 31, 1998 and 1997 is as follows:
December 31,
--------------------
1998 1997
-------- --------
Change in benefit obligation:
Benefit obligation at beginning of year $ 13,027 $ 13,102
Service cost 72 65
Interest cost 935 963
Benefits and expenses paid by Amphenol (2,616) (2,092)
Actuarial gain (loss) 1,247 989
-------- --------
Benefit obligation at end of year $ 12,665 $ 13,027
======== ========
Funded status $(12,665) $(13,027)
Unrecognized net actuarial loss 9,111 8,507
Unrecognized transition obligation 869 931
-------- --------
Accrued benefit cost $ (2,685) $ (3,589)
======== ========
Year ended December 31,
------------------------
1998 1997 1996
------ ------ ------
Components of net postretirement benefit cost:
Service cost $ 72 $ 65 $ 36
Interest cost 935 963 1,545
Amortization of transition obligation 62 62 424
Net amortization and deferral of actuarial losses 961 733 729
------ ------ ------
Net postretirement benefit cost $2,030 $1,823 $2,734
====== ====== ======
Note 6 - Shareholders' Equity (Deficit)
The Company had a stock option plan which authorized the granting of stock
options by the Board of Directors for up to a maximum of 1,000,000 shares of
Class A Common Stock (the "Old Plan"). In conjunction with the Merger and
Recapitalization, all outstanding options under the Old Plan were cancelled and
the holders of options with an exercise price less than $26.00 per share were
paid the difference between $26.00 and the exercise price. Such amount for all
of the then outstanding options was approximately $2.2 million. In May 1997, the
Company adopted the 1997 Option Plan (the "New Plan") which authorizes the
granting of stock options by a committee of the Board of Directors for up to a
maximum of 1,200,000 shares of Common Stock. In May 1998, the New Plan was
amended to increase the number of authorized shares to a maximum of 1,750,000.
Options granted under the New Plan vest ratably over a period of five years from
the date of grant and are exercisable over a period of ten years from the date
of grant. In addition, shares issued in conjunction with the exercise of stock
options under the New Plan are generally subject to a Management Stockholders'
Agreement which, among other things, places restrictions on the sale or transfer
of such shares.
Stock option plan activity for 1996, 1997, and 1998 was as follows:
30
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
Old Plan New Plan Average Price
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Options outstanding at December 31, 1995 313,844 $18.48
Options granted 173,600 23.82
Options exercised (15,005) 11.11
Options cancelled (49,001) 21.53
--------
Options outstanding at December 31, 1996 423,438 20.58
Options granted 1,190,176 26.12
Options exercised (14,001) 13.15
Options cancelled (409,437) (11,750) 20.47
-------- ---------
Options outstanding at December 31, 1997 -- 1,178,426 26.12
Options granted -- 240,460 50.82
Options cancelled -- (148,450) 51.36
-------- ---------
Options outstanding at December 31, 1998 -- 1,270,436 $27.85
======== =========
</TABLE>
The following table summarizes information about stock options outstanding
at December 31, 1998:
Options Outstanding Options Exercisable
----------------------------------- --------------------
Average Average
Exercise Price Shares Price Term Shares Price
-------------- --------- ------- ---- ------- -------
$26.00 1,137,676 $26.00 8.38 227,535 $26.00
32.00 66,060 32.00 9.82 -- --
39.93 10,000 39.93 8.63 2,000 39.93
58.00 56,700 58.00 9.27 -- --
The Company applies APB Opinion 25, "Accounting for Stock Issued to
Employees," and related interpretations in accounting for the stock option
plans. Accordingly, no compensation cost has been recognized for the plans. Had
compensation cost for the stock option plans been determined based on the fair
value of the option at date of grant consistent with the requirements of SFAS
No. 123, "Accounting for Stock-Based Compensation," the Company's income before
extraordinary item and net income and earnings per share would have been reduced
to the pro forma amounts indicated below:
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Income before
extraordinary item As reported $36,510 $51,264 $67,578
Pro forma 34,075 49,704 66,884
Income per share
before extraordinary item As reported $2.07 $1.84 $1.45
Pro forma 1.93 1.79 1.43
Income per share
before extraordinary item
- assuming dilution As reported $2.03 $1.83 $1.45
Pro forma 1.90 1.78 1.43
Net income As reported $36,510 $26,717 $67,578
Pro forma 34,075 25,157 66,884
Net income per share As reported $2.07 $ .96 $1.45
Pro forma 1.93 .90 1.43
Net income per share
- assuming dilution As reported $2.03 $ .95 $1.45
Pro forma 1.90 .90 1.43
</TABLE>
31
<PAGE>
The fair value of each stock option has been estimated at the date of
grant using the Black-Scholes option pricing model with the following
weighted-average assumptions:
1998 1997 1996
---- ---- ----
Risk free interest rate 5.1% 5.4% 6.1%
Expected life 4 years 4 years 4 years
Expected volatility 30% 30.0% 30.0%
Expected dividend yield -- -- --
The weighted-average fair values of options granted during 1998, 1997 and
1996 were $16.69, $8.36 and $7.98, respectively.
Activity in the Company's Accumulated Other Comprehensive Income accounts
for 1996, 1997 and 1998 is as follows:
<TABLE>
<CAPTION>
Cumulative
Cumulative Minimum Accumulated
Cumulative Appreciation Pension Other
Translation in Marketable Liability Comprehensive
Adjustment Securities Adjustment Income
---------- ---------- ---------- ------
<S> <C> <C> <C> <C>
Balance December 31, 1995 $(2,412) $ 4,772 $(7,571) $(5,211)
Translation adjustments 647 647
Change in appreciation in market
value of marketable securities
available-for-sale (1,085) (1,085)
Change in minimum pension
liability adjustment 1,762 1,762
------- ------- ------- -------
Balance December 31, 1996 (1,765) 3,687 (5,809) (3,887)
Translation adjustments (8,147) (8,147)
Change in appreciation in market
value of marketable securities
available-for-sale (1,140) (1,140)
Sale of available-for-sale
securities (2,547) (2,547)
Change in minimum pension
liability adjustment 5,809 5,809
------- ------- ------- -------
Balance December 31, 1997 (9,912) -- -- (9,912)
Translation adjustments 2,704 2,704
------- ------- ------- -------
Balance December 31, 1998 $(7,208) -- -- $(7,208)
======= ======= ======= =======
</TABLE>
Note 7 - Leases
At December 31, 1998, the Company was committed under operating leases
which expire at various dates through 2008. Total rent expense under operating
leases for the years 1998, 1997, and 1996 was $13,927, $11,495 and $12,216
respectively.
Minimum lease payments under non-cancelable operating leases are as
follows:
1999 $12,535
2000 9,322
2001 6,586
2002 4,763
2003 2,857
Beyond 2003 2,109
-------
Total minimum obligation $38,172
=======
32
<PAGE>
Note 8 - Reportable Business Segments and International Operations
The Company has two reportable business segments: interconnect products
and assemblies and cable products. The interconnect products and assemblies
segment produces connectors and connector assemblies primarily for the
communications, aerospace, industrial and automotive markets. The cable products
segment produces coaxial and flat ribbon cable primarily for communication
markets, including cable television. The accounting policies of the segments are
the same as those for the Company as a whole and are described in Note 1 herein.
The Company evaluates the performance of business units on, among other things,
profit or loss from operations before interest expense, goodwill and other
intangible amortization expense, headquarters' expense allocations, income taxes
and nonrecurring gains and losses. The Company's reportable segments are an
aggregation of business units that have similar production processes and
products.
<TABLE>
<CAPTION>
Interconnect products Cable
and assemblies products Total
------------------------------ ------------------------------ ------------------------------
1998 1997 1996 1998 1997 1996 1998 1997 1996
-------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Sales
- external $718,109 $679,887 $585,033 $200,768 $204,461 $191,188 $918,877 $884,348 $776,221
- intersegment 358 102 76 7,189 5,037 4,462 7,547 5,139 4,538
Depreciation and
amortization 18,235 15,029 13,110 3,039 2,960 2,306 21,274 17,989 15,416
Segment operating
income 135,739 132,520 102,937 31,880 39,313 43,818 167,619 171,833 146,755
Segment assets 311,892 256,380 232,765 55,119 58,743 51,129 367,011 315,123 283,894
Additions to property,
plant and equipment 22,483 21,275 17,654 3,834 2,666 3,388 26,317 23,941 21,042
</TABLE>
Reconciliation of segment operating income to consolidated income before taxes
and extraordinary item:
<TABLE>
<CAPTION>
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Segment operating income $ 167,619 $ 171,833 $ 146,755
Amortization of goodwill (11,701) (11,316) (10,962)
Interest expense (81,199) (64,713) (24,617)
Headquarters' expense and other net expenses (10,736) (8,630) (1,511)
--------- --------- ---------
Consolidated income before taxes
and extraordinary item $ 63,983 $ 87,174 $ 109,665
========= ========= =========
</TABLE>
Reconciliation of segment assets to consolidated total assets:
1998 1997 1996
-------- -------- --------
Segment assets $367,011 $315,123 $283,894
Goodwill 360,265 339,223 346,583
Other unallocated assets 80,125 82,808 80,185
-------- -------- --------
Consolidated total assets $807,401 $737,154 $710,662
======== ======== ========
33
<PAGE>
Geographic information:
<TABLE>
<CAPTION>
Land and
Net Sales depreciable assets
----------------------------------- ---------------------------------
1998 1997 1996 1998 1997 1996
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
United States $ 591,377 $ 581,278 $ 503,385 $ 70,072 $ 64,020 $ 60,413
Europe 245,057 230,923 233,670 43,301 36,519 33,761
Other 155,350 133,355 92,689 13,406 11,053 7,901
Eliminations (72,907) (61,208) (53,523)
--------- --------- --------- --------- --------- ---------
Total $ 918,877 $ 884,348 $ 776,221 $ 126,779 $ 111,592 $ 102,075
========= ========= ========= ========= ========= =========
</TABLE>
- --------------------------------------------------------------------------------
Revenues by geographic area are based on origin of shipment. The Company
had export sales from the United States operations of approximately $58,000,
$88,000 and $80,000 in 1998, 1997 and 1996, respectively.
Note 9 - Other Expenses, net
Other income (expense) is comprised as follows:
Year Ended December 31,
- ---------------------------------------------------------------------------
1998 1997 1996
------- ------- -------
Interest income $ 121 $ 234 $ 784
Foreign currency transaction gains 1,445 1,283 339
Program fees on sale of accounts receivable (4,121) (3,671) (3,504)
Minority interests (849) (1,042) (251)
Gain on sale of marketable securities 3,917
Agency and commitment fees (705) (678) (257)
Other (436) (1,104) (807)
------- ------- -------
$(4,545) $(1,061) $(3,696)
======= ======= =======
34
<PAGE>
Note 10 - Commitments and Contingencies
In the course of pursuing its normal business activities, the Company is
involved in various legal proceedings and claims. Management does not expect
that amounts, if any, which may be required to be paid by reason of such
proceedings or claims will have a material effect on the Company's financial
position or results of operations.
Subsequent to the acquisition of Amphenol from Allied Signal Corporation
("Allied") in 1987, Amphenol and Allied have been named jointly and severally
liable as potentially responsible parties in relation to several environmental
cleanup sites. Amphenol and Allied have jointly consented to perform certain
investigations and remedial and monitoring activities at two sites and they have
been jointly ordered to perform work at another site. The responsibility for
costs incurred relating to these sites is apportioned between Amphenol and
Allied based on an agreement entered into in connection with the acquisition.
For sites covered by this agreement, to the extent that conditions or
circumstances occurred or existed at the time of or prior to the acquisition,
Allied is currently obligated to pay 80% of the costs up to $30,000 and 100% of
the costs in excess of $30,000. At December 31, 1998, approximately $15,000 of
total costs have been incurred applicable to this agreement. Management does not
believe that the costs associated with resolution of these or any other
environmental matters will have a material adverse effect on the Company's
financial condition or results of operations.
A subsidiary of the Company has an agreement with a financial institution
whereby the subsidiary can sell an undivided interest of up to $60,000 in a
designated pool of qualified accounts receivable. The agreement expires in May
2004. Under the terms of the agreement, new receivables are added to the pool as
collections reduce previously sold accounts receivable. The Company services,
administers and collects the receivables on behalf of the purchaser. Fees
payable to the purchaser under this agreement are equivalent to rates afforded
high quality commercial paper issuers plus certain administrative expenses and
are included in other expenses, net, in the accompanying Consolidated Statement
of Income. The agreement contains certain covenants and provides for various
events of termination. In certain circumstances the Company is contingently
liable for the collection of the receivables sold; management believes that its
allowance for doubtful accounts is adequate to absorb the expense of any such
liability. At December 31, 1998 and 1997, approximately $60,000 in receivables
were sold under the agreement and are therefore not reflected in the accounts
receivable balance in the accompanying Consolidated Balance Sheet.
Note 11 - Financial Instruments
The following methods and assumptions were used to estimate the fair value
of each class of financial instruments for which it is practicable to estimate
that value:
Cash and short-term cash investments: The carrying amount approximates
fair value because of the short maturity of those instruments.
Long-term debt: The fair value of the Company's long-term debt is
estimated based on the quoted market prices for the same or similar issues or on
the current rates offered to the Company for debt of the same remaining
maturities. At December 31, 1998 and 1997, based on market quotes for the same
or similar securities it is estimated that the Company's 9 7/8% Subordinated
Debentures were trading at a premium of 5% over book value. The book value of
the Company's other long-term debt approximates fair value.
Investments: The Company periodically uses derivative financial
instruments. The instruments are primarily used to manage defined interest rate
risk, and to a lesser extent foreign exchange and commodity risks arising out of
the Company's core activities. In 1997, the Company entered into interest rate
swaps to limit exposure to interest rate fluctuations on the Company's floating
rate bank debt. At December 31, 1998 and 1997, the Company had $450,000 of
interest rate swaps outstanding as described in Note 3. While it is not the
Company's intention to terminate the interest rate swap agreements, the fair
values were estimated by obtaining quotes from brokers which represented the
amounts that the Company would receive or pay if the agreements were terminated.
These fair values indicated that termination of the agreements at December 31,
1998 and 1997 would have resulted in a pretax loss of $12,829 and $3,085,
respectively. Due to the volatility of interest rates, these estimated results
may or may not be realized.
The Company does not utilize financial instruments for trading or other
speculative purposes. It is estimated that the carrying value of the Company's
other financial instruments at December 31, 1998 and 1997 approximates fair
value.
35
<PAGE>
Note 12 - Selected Quarterly Financial Data (Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
- -----------------------------------------------------------------------------------------------------------
March 31 June 30 September 30 December 31
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1998
Net sales $228,541 $227,942 $229,018 $233,376
Gross profit, including depreciation 74,397 74,621 72,813 72,892
Net income 9,673 10,355 8,212 8,270
Net income per share .55 .59 .46 .46
Net income per share assuming dilution .54 .58 .46 .46
Stock price - High 64 61 5/8 44 1/8 35 1/16
- Low 53 1/4 39 29 13/16 27 1/2
1997
Net sales $211,773 $226,996 $223,494 $222,085
Gross profit, including depreciation 69,583 75,682 74,002 74,069
Income before extraordinary items 17,497 15,774 8,559 9,434
Income per share before extraordinary item .39 .50 .49 .54
Income per share before extraordinary item
assuming dilution .39 .49 .48 .53
Net income (loss) 17,497 2,929 8,559 (2,268)
Net income (loss) per share .39 .09 .49 (.13)
Net income (loss) per share assuming dilution .39 .09 .48 (.13)
Stock price - High 26 38 7/8 43 1/2 56
- Low 21 3/4 24 1/8 39 1/16 44
1996
Net sales $194,822 $198,921 $184,876 $197,602
Gross profit, including depreciation 66,639 67,816 63,523 66,539
Net income 16,940 17,408 16,697 16,533
Net income per share (1) .36 .37 .36 .37
Stock price - High 26 27 5/8 22 7/8 23
- Low 20 1/8 19 7/8 18 3/4 19
- -----------------------------------------------------------------------------------------------------------
</TABLE>
(1) Net income per share assuming dilution is equal to net income per share.
36
<PAGE>
Item 9. Changes in and Disagreements with Independent Accountants on Accounting
and Financial Disclosure
None.
PART III
Item 10. Directors and Executive Officers of the Registrant
Pursuant to Instruction G(3) to Form 10-K, the information required by
Item 10 with respect to the Directors of the Registrant is incorporated by
reference from the Company's definitive proxy statement which is expected to be
filed pursuant to Regulation 14A within 120 days following the end of the fiscal
year covered by this report.
The information required by Item 10 with respect to the Executive Officers
of the Registrant has been included in Part I of this Form 10-K in reliance on
Instruction G(3) of Form 10-K and Instruction 3 to Item 401(b) of Regulation
S-K.
Item 11. Executive Compensation
Pursuant to Instruction G(3) to Form 10-K, the information required in
Item 11 is incorporated by reference from the Company's definitive proxy
statement which is expected to be filed pursuant to Regulation 14A within 120
days following the end of the fiscal year covered by this report.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Pursuant to Instruction G(3) to Form 10-K, the information required in
Item 12 is incorporated by reference from the Company's definitive proxy
statement which is expected to be filed pursuant to Regulation 14A within 120
days following the end of the fiscal year covered by this report.
Item 13. Certain Relationships and Related Transactions
Pursuant to Instruction G(3) to Form 10-K, the information required in
Item 13 is incorporated by reference from the Company's definitive proxy
statement which is expected to be filed pursuant to Regulation 14A within 120
days following the end of the fiscal year covered by this report.
37
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a)(1) Consolidated Financial Statements Page
Report of Management 19
Independent Auditors' Reports 19
Consolidated Statement of Income -
Years Ended December 31, 1998, December 31, 1997, and December 31, 1996 20
Consolidated Balance Sheet -
December 31, 1998 and December 31, 1997 21
Consolidated Statement of Changes in Shareholders' Equity (Deficit) -
Years Ended December 31, 1998, December 31, 1997, and
December 31, 1996 22
Consolidated Statement of Cash Flow -
Years Ended December 31, 1998, December 31, 1997, and December 31, 1996 23
Notes to Consolidated Financial Statements 24
(a)(2) Financial Statement Schedules for the Three Years Ended December 31, 1998
All financial statement schedules are omitted because they are not applicable or
required, or because the required information is included in the consolidated
financial statements or notes thereto.
38
<PAGE>
(a) Listing of Exhibits
2.1 Agreement and Plan of Merger dated as of January 23, 1997 between NXS
Acquisition Corp. and Amphenol Corporation (incorporated by reference to
Current Report on Form 8-K dated January 23, 1997).*
2.2 Amendment, dated as of April 9, 1997, to the Agreement and Plan of Merger
between NXS Acquisition Corp. and Amphenol Corporation, dated as of
January 23, 1997 (incorporated by reference to the Registration Statement
on Form S-4 (registration No. 333-25195) filed on April 15, 1997).*
3.1 Certificate of Merger, dated May 19, 1997 (including Restated Certificate
of Incorporation of Amphenol Corporation) (filed as Exhibit 3.1 to the
June 30, 1997 10-Q).*
3.2 By-Laws of the Company as of May 19, 1997 - NXS Acquisition Corp. By-Laws
(filed as Exhibit 3.2 to the June 30, 1997 10-Q).*
4.1 Indenture between Amphenol Corporation and IBJ Schroeder Bank and Trust
Company, as Trustee, dated as of May 19, 1997, relating to Senior
Subordinated Notes due 2007 (filed as Exhibit 4.1 to the June 30, 1997
10-Q).*
10.1 Amended and Restated Receivables Purchase Agreement dated as of May 19,
1997 among Amphenol Funding Corp., the Company, Pooled Accounts Receivable
Capital Corporation and Nesbitt Burns Securities, Inc., as Agent (filed as
Exhibit 10.1 to the June 30, 1997 10-Q).*
10.2 Amended and Restated Purchase and Sale Agreement dated as of May 19, 1997
among the Originators named therein, Amphenol Funding Corp. and the
Company (filed as Exhibit 10.2 to the June 30, 1997 10-Q).*
10.3 Credit Agreement dated as of May 19, 1997 among the Company, Amphenol
Holding UK, Limited, Amphenol Commercial and Industrial UK, Limited, the
Lenders listed therein, The Chase Manhattan Bank, as Syndication Agent,
the Bank of New York, as Documentation Agent and Bankers Trust Company, as
Administrative Agent and Collateral Agent (filed as Exhibit 10.3 to the
June 30, 1997 10-Q).*
Management Contracts and Compensatory Plans (Exhibit 10.4 through 10.11).
10.4 1997 Amphenol Incentive Plan (filed as Exhibit 10.13 to the 1996 10-K).*
10.5 1998 Amphenol Incentive Plan (filed as Exhibit 10.5 to the December 31,
1997 10-K).*
10.6 1999 Amphenol Incentive Plan.
10.7 Pension Plan for Employees of Amphenol Corporation as amended and restated
effective December 31, 1997.
- ----------
* Incorporated herein by reference as stated.
39
<PAGE>
10.8 First amendment to the Pension Plan for Employees of Amphenol Corporation
dated October 1, 1998.
10.9 Second Amendment to the Pension Plan for Employees of Amphenol Corporation
dated February 4, 1999.
10.10 Amphenol Corporation Supplemental Employee Retirement Plan formally
adopted effective January 25, 1996 (filed as Exhibit 10.18 to the 1996
10-K).*
10.11 LPL Technologies Inc. and Affiliated Companies Employee Savings/401 (k)
Plan, dated and adopted January 23, 1990 (filed as Exhibit 10.19 to the
1991 Registration Statement).*
10.12 Management Agreement between the Company and Dr. Martin H. Loeffler, dated
July 28, 1987 (filed as Exhibit 10.7 to the 1987 Registration Statement).*
10.13 Amphenol Corporation Directors' Deferred Compensation Plan (filed as
Exhibit 10.11 to the December 31, 1997 10-K).*
10.14 Agreement and Plan of Merger among Amphenol Acquisition Corporation,
Allied Corporation and the Company, dated April 1, 1987, and the Amendment
thereto dated as of May 15, 1987 (filed as Exhibit 2 to the 1987
Registration Statement).*
10.15 Settlement Agreement among Allied Signal Inc., the Company and LPL
Investment Group, Inc. dated November 28, 1988 (filed as Exhibit 10.20 to
the 1991 Registration Statement).*
10.16 Registration Rights Agreement dated as of May 19, 1997, among NXS
Acquisition Corp., KKR 1996 Fund L.P., NXS Associates L.P., KKR Partners
II, L.P. and NXS I, L.L.C. (filed as Exhibit 99.5 to Schedule 13D,
Amendment No. 1, relating to the beneficial ownership of shares of the
Company's Common Stock by NXS I, L.L.C., KKR 1996 Fund, L.P., KKR
Associates (1996) L.P., KKR 1996 GP LLC, KKR Partners II, L.P., KKR
Associates L.P., NXS Associates L.P., KKR Associates (NXS) L.P., and
KKR-NXS L.L.C. dated May 27, 1997).*
10.17 Management Stockholder's Agreement entered into as of May 19, 1997 between
the Company and Martin H. Loeffler (filed as Exhibit 10.13 to the June 30,
1997 10-Q).*
10.18 Management Stockholder's Agreement entered into as of May 19, 1997 between
the Company and Edward G. Jepsen (filed as Exhibit 10.14 to the June 30,
1997 10-Q).*
10.19 Management Stockholder's Agreement entered into as of May 19, 1997 between
the Company and Timothy F. Cohane (filed as Exhibit 10.15 to the June 30,
1997 10-Q).*
10.20 1997 Option Plan for Key Employees of Amphenol and Subsidiaries (filed as
Exhibit 10.16 to the June 30, 1997 10-Q).*
10.21 Amended 1997 Option Plan for Key Employees of Amphenol and Subsidiaries
(filed as Exhibit 10.19 to the June 30, 1998 10-Q).*
- ----------
* Incorporated herein by reference as stated.
40
<PAGE>
10.22 Non-Qualified Stock Option Agreement between the Company and Martin H.
Loeffler dated as of May 19, 1997 (filed as Exhibit 10.17 to the June 30,
1997 10-Q).*
10.23 Non-Qualified Stock Option Agreement between the Company and Edward G.
Jepsen dated as of May 19,1997 (filed as Exhibit 10.18 to the June 30,
1997 10-Q).*
10.24 Non-Qualified Stock Option Agreement between the Company and Timothy F.
Cohane dated as of May 19, 1997 (filed as Exhibit 10.19 to the June 30,
1997 10-Q).*
10.25 First Amendment to Amended and Restated Receivables Purchase Agreement
dated as of September 26,1997 (filed as Exhibit 10.20 to the September 30,
1997 10-Q).*
10.26 Canadian Purchase and Sale Agreement dated as of September 26, 1997 among
Amphenol Canada Corp., Amphenol Funding Corp. and Amphenol Corporation,
individually and as the initial servicer (filed as Exhibit 10.21 to the
September 30,1997 10-Q).*
10.27 Amended and Restated Credit Agreement dated as of October 3, 1997 among
the Company, Amphenol Holding UK, Limited, Amphenol Commercial and
Industrial UK, Limited, the Lenders listed therein, The Chase Manhattan
Bank, as Syndication Agent, the Bank of New York, as Documentation Agent
and Bankers Trust Company, as Administrative Agent and Collateral Agent
(filed as Exhibit 10.22 to the September 30, 1997 10-Q).*
10.28 First Amendment dated as of May 1, 1998 to the Amended and Restated Credit
Agreement dated as of October 3, 1997 among the Company, Amphenol Holding
UK, Limited, Amphenol Commercial and Industrial UK, Limited, the Lenders
listed therein, the Chase Manhattan Bank, as Syndication Agent, the Bank
of New York, as Documentation Agent and Bankers Trust Company, as
Administrative Agent and Collateral Agent (filed as Exhibit 10.25 to the
March 31, 1998 10-Q).*
11 Statement regarding computation of per share earnings.
12 Statement regarding computation of ratio of earnings to fixed charges.
16 Letter regarding change in Certifying Accountant (filed as Exhibit 16 to
the June 20, 1997 Current Report on Form 8-K).*
21 Subsidiaries of the Company.
23 Consent of PricewaterhouseCoopers LLP.
27 Financial Data Schedule.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the last quarter of the period
covered by this report.
- ----------
* Incorporated herein by reference as stated.
41
<PAGE>
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized in the Town of
Wallingford, State of Connecticut on the 29th day of March 1999.
AMPHENOL CORPORATION
/s/ Martin H. Loeffler
---------------------------------
Martin H. Loeffler
Chairman, Chief Executive
Officer and President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and as of the date indicated below.
Signature Title Date
/s/ Martin H. Loeffler Chairman, Chief March 29, 1999
Martin H. Loeffler Executive Officer
and President
(Principal Executive Officer)
/s/ Edward G. Jepsen Chief Financial Officer March 29, 1999
Edward G. Jepsen (Principal Financial Officer and
Principal Accounting Officer)
/s/ Andrew Clarkson Director March 29, 1999
/s/ G. Robert Durham Director March 29, 1999
/s/ Henry R. Kravis Director March 29, 1999
/s/ Marc S. Lipschultz Director March 29, 1999
/s/ Michael W. Michelson Director March 29, 1999
/s/ George R. Roberts Director March 29, 1999
42
1999
AMPHENOL MANAGEMENT INCENTIVE PLAN
I. Purpose
The purpose of the Plan is to reward eligible key employees of Amphenol
Corporation and affiliated operations with cash bonus payments based on
contributions to overall results and specific accomplishments.
II. Eligibility
Select management personnel, as designated by the Chairman, President and
CEO. Generally, participation includes senior management positions,
corporate staff managers, general managers and their designated direct
reports.
III. Plan Components
There are several key performance factors which will be considered by
executive management and the Compensation Committee. These include, but
are not limited to, the following:
o Year-over-year improvement
o Accomplishments against budget
o Customer satisfaction
o Quality management
o New market/new product positioning
o Cost reductions/productivity improvements
o Balance sheet management
o Overall Amphenol performance
Financial performance will be measured by revenues, operating income, cash
flow of operating units and EPS growth for total Amphenol.
IV. Administration
o Generally, payments are made as soon as possible during the first
calendar quarter following the plan year. All payments are subject
to the recommendation of the Chairman, President and CEO and to the
approval of the Compensation Committee.
o Payments are based upon average base salary during the plan year
(new hires will be prorated accordingly if hired prior to October 1
of plan year).
o The maximum allowable payout under the plan cannot exceed 2x target
bonus as applied to average base salary.
o To be eligible for payment, a participant must be an active employee
during the payroll period of bonus payment. Exceptions must be
recommended by the Chairman, President and the CEO and be approved
by the Compensation Committee.
PENSION PLAN FOR EMPLOYEES
OF AMPHENOL CORPORATION
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I.
ELIGIBILITY
1.1. Eligibility ..........................................................2
ARTICLE II.
EMPLOYER CONTRIBUTIONS;
2.1. Payment of Contributions .............................................2
2.2. Limitation on Contribution ...........................................2
2.3. Time of Payment ......................................................3
2.4. No Additional Liability ..............................................3
ARTICLE III.
EMPLOYEE CONTRIBUTIONS
3.1. Required Contributions ...............................................3
ARTICLE IV.
PLAN BENEFITS
4.1. Plan Benefits ........................................................3
4.2. Minimum Benefit for Top Heavy Plan ...................................3
4.3. Non-Duplication of Benefits ..........................................5
4.4. Transfers; Service with Affiliated Employers .........................6
<PAGE>
ARTICLE V.
CODE SECTION 415 LIMITATIONS ON BENEFITS
5.1. Maximum Annual Benefit ...............................................6
5.2. Adjustments to Annual Benefit and Limitations ........................8
5.3. Annual Benefit Not in Excess of $10,000 ..............................10
5.4. Participation or Service Reductions ..................................10
5.5. Multiple Plan Reduction ..............................................11
5.6. Incorporation by Reference ...........................................15
ARTICLE VI.
VESTING
6.1. Vesting Rights .......................................................15
6.2. Top-Heavy Vesting ....................................................15
6.3. Service Computation Period; Service Credit ...........................15
6.4. Amendment of Vesting Schedule ........................................16
6.5. Amendments Affecting Vested and/or Accrued Benefit ...................16
6.6. No Divestiture for Cause .............................................17
ARTICLE VII.
PAYMENT OF BENEFITS
7.1. Notice ...............................................................17
7.2. Waiver of Thirty (30) Day Notice Period ..............................17
7.3. Form of Payment ......................................................18
7.4. Actuarial Equivalent Benefit .........................................18
<PAGE>
7.5. Payment Without Participant Consent ..................................18
7.6. Restrictions on Immediate Distributions ..............................18
7.7. Limitation of Benefits on Plan Termination ...........................19
7.8. Early Plan Termination Restrictions ..................................21
7.9. Suspension of Benefits ...............................................24
7.10. Restrictions on Commencement of Retirement Benefits ..................26
7.11. Minimum Distribution Requirements ....................................26
7.12. TEFRA Election Transitional Rule .....................................30
7.13. Distribution of Death Benefit ........................................31
7.14. Date Distribution Deemed to Begin ....................................33
7.15. Distribution Pursuant to Qualified Domestic Relations Orders .........33
7.16. Payment to a Person Under a Legal Disability .........................33
7.17. Unclaimed Benefits Procedure .........................................34
7.18. Direct Rollovers .....................................................35
ARTICLE VIII.
JOINT AND SURVIVOR ANNUITY REQUIREMENTS
8.1. Applicability of Provisions ..........................................35
8.2. Payment of Qualified Joint And Survivor Annuity ......................35
8.3. Payment of Qualified Pre-Retirement Survivor Annuity .................35
8.4. Notice Requirements For Qualified Joint And Survivor Annuity .........36
8.5. Notice Requirements For Qualified Pre-Retirement Survivor Annuity ....36
8.6. Qualified Election ...................................................37
<PAGE>
8.7. Election Period ......................................................38
8.8. Pre-age Thirty-five (35) Waiver ......................................38
8.9. Transitional Joint And Survivor Annuity Rules ........................38
ARTICLE IX.
QUALIFIED DOMESTIC RELATIONS ORDERS
9.1. Qualified Domestic Relations Orders ..................................41
ARTICLE X.
TRANSFERS FROM OTHER QUALIFIED PLANS; DIRECT ROLLOVERS
10.1. Transfers from Other Qualified Plans, Direct Rollovers ...............43
ARTICLE XI.
TRANSFERS; SERVICE WITH AFFILIATED EMPLOYERS
11.1. Transfers ............................................................43
ARTICLE XII.
AMENDMENT, TERMINATION, MERGER OR CONSOLIDATION
12.1. Amendment of the Plan ................................................43
12.2. Termination ..........................................................44
12.3. Merger or Consolidation of the Plan ..................................48
ARTICLE XIII.
PARTICIPATING EMPLOYERS
13.1. Adoption by Other Employers ..........................................49
13.2. Requirements of Participating Employers ..............................49
13.3. Designation of Agent .................................................50
<PAGE>
13.4. Employee Transfers ...................................................50
13.5. Participating Employer's Contribution ................................50
13.6. Discontinuance of Participation ......................................51
13.7. Plan Administrator's Authority .......................................51
ARTICLE XIV.
ADMINISTRATION OF THE PLAN
14.1. Appointment of Plan Administrator and Trustee ........................51
14.2. Plan Administrator ...................................................52
14.3. Delegation of Powers .................................................52
14.4. Trust Agreement ......................................................52
14.5. Appointment of Advisers ..............................................53
14.6. Records and Reports ..................................................53
14.7. Information From Employer ............................................54
14.8. Majority Actions .....................................................54
14.9. Expenses .............................................................54
14.10. Discretionary Acts ...................................................54
14.11. Responsibility of Fiduciaries ........................................54
14.12. Indemnity by Employer ................................................55
14.13. Claims Procedure .....................................................55
ARTICLE XV.
GENERAL
15.1. Bonding ..............................................................56
<PAGE>
15.2. Action by the Employer ...............................................57
15.3. Employment Rights ....................................................57
15.4. Alienation ...........................................................57
15.5. Governing Law ........................................................58
15.6. Conformity to Applicable Law .........................................58
15.7. Usage ................................................................58
15.8. Legal Action .........................................................58
15.9. Exclusive Benefit ....................................................58
15.10. Prohibition Against Diversion of Funds ...............................59
15.11. Return of Contribution ...............................................59
15.12. Employer's Protective Clause .........................................60
15.13. Insurer's Protective Cause ...........................................60
15.14. Receipt and Release for Payments .....................................60
15.15. Headings .............................................................60
15.16. Construction of Plan .................................................61
ARTICLE XVI.
DEFINITIONS
16.1. Accrued Benefit ......................................................61
16.2. Actuarial Equivalent .................................................61
16.3. Administrative Committee .............................................62
16.4. Affiliated Employer ..................................................62
16.5. Aggregation Group ....................................................62
<PAGE>
16.6. Anniversary Date .....................................................63
16.7. Annual Benefit .......................................................63
16.8. Annuity ..............................................................63
16.9. Annuity Starting Date ................................................63
16.10. Average Monthly Compensation .........................................64
16.11. Beneficiary ..........................................................64
16.12. Break in Service .....................................................65
16.13. Code .................................................................66
16.14. Compensation .........................................................66
16.15. Controlled Group .....................................................69
16.16. Determination Date ...................................................69
16.17. Direct Rollover ......................................................69
16.18. Disability ...........................................................69
16.19. Distributee ..........................................................70
16.20. Earliest Retirement Date .............................................70
16.21. Early Retirement Age .................................................70
16.22. Early Retirement Date ................................................70
16.23. Eligible Class .......................................................70
16.24. Eligible Retirement Plan .............................................73
16.25. Eligible Rollover Distribution .......................................73
16.26. Employee .............................................................73
16.27. Employer .............................................................73
<PAGE>
16.28. Employment Commencement Date .........................................73
16.29. Exhibit ..............................................................74
16.30. ERISA ................................................................74
16.31. Family Member ........................................................74
16.32. Fiscal Year ..........................................................74
16.33. Foreign Subsidiary ...................................................74
16.34. Forfeiture ...........................................................74
16.35. Highly Compensated Employee ..........................................75
16.36. Highly Compensated Participant .......................................76
16.37. Hour of Service ......................................................76
16.38. Inactive Participant .................................................79
16.39. Key Employee .........................................................79
16.40. Late Retirement Date .................................................80
16.41. Leased Employee ......................................................80
16.42. Limitation Year ......................................................81
16.43. Non-Highly Compensated Employee ......................................81
16.44. Non-Key Employee .....................................................81
16.45. Normal Form of Benefit ...............................................81
16.46. Normal Retirement Age ................................................81
16.47. Normal Retirement Date ...............................................81
16.48. Participant ..........................................................81
16.49. Participating Employer ...............................................81
<PAGE>
16.50. Period of Military Duty ..............................................82
16.51. Period of Service ....................................................82
16.52. Period of Severance ..................................................82
16.53. Plan .................................................................82
16.54. Plan Administrator ...................................................84
16.55. Plan Year ............................................................84
16.56. Predecessor Employer .................................................84
16.57. Present Value of Accrued Benefit .....................................84
16.58. Primary Social Security Retirement Benefit ...........................84
16.59. Qualified Domestic Relations Order ...................................85
16.60. Qualified Joint and Survivor Annuity .................................85
16.61. Qualified Pre-Retirement Survivor Annuity ............................86
16.62. Re-employment Commencement Date ......................................86
16.63. Re-entry Date ........................................................86
16.64. Regulation ...........................................................86
16.65. Retirement ...........................................................86
16.66. Social Security Retirement Age .......................................86
16.67. Spouse ...............................................................86
16.68. Straight Life Annuity ................................................87
16.69. Super Top-Heavy Plan .................................................87
16.70. Top-Heavy Group ......................................................87
16.71. Top-Heavy Plan .......................................................87
<PAGE>
16.72. Top-Heavy Ratio ......................................................88
16.73. Top-Paid Group .......................................................89
16.74. Trust Agreement ......................................................90
16.75. Trust Fund ...........................................................90
16.76. Trustee ..............................................................90
16.77. Valuation Date .......................................................90
16.78. Year of Accrual Service ..............................................90
16.79. Year of Eligibility Service ..........................................90
16.80. Year of Service ......................................................91
16.81. Year of Vesting Service ..............................................91
<PAGE>
PENSION PLAN FOR EMPLOYEES OF
AMPHENOL CORPORATION
BY RESOLUTION of its Board of Directors, on the 21st day of November,
1997, AMPHENOL CORPORATION, a Delaware corporation, has approved and adopted a
defined benefit pension plan for certain Employees, effective as of December 31,
1997, which amends and restates the Salaried Employees Pension Plan of the
Amphenol Corporation, as previously amended effective January 1, 1989
(hereinafter referred to as the "Predecessor Plan"); and which now serves as the
single plan to pay benefits to Employees previously participating in certain
other plans maintained by the Employer or its affiliates, which plans have been
merged and consolidated into the Plan effective as of December 31, 1997.
WHEREAS, Amphenol Corporation and certain of its affiliates maintain the
following defined benefit pension plans for eligible employees:
o Salaried Employees' Pension Plan of the Amphenol Corporation
o The Hourly Employees' Pension Plan of Amphenol Corporation
o Pension Plan for Hourly Paid Employees of Chatham Cable Company
o Pyle-National Retirement Plan for Salaried Employees
o LPL Technologies Inc. Retirement Plan
o Pyle-National Retirement Plan for Hourly Employees
o Pension Plan for Salaried Employees of the Sidney Division of the
Amphenol Corporation
o Pension Plan for Hourly Employees of the Sidney Division of the
Amphenol Corporation
WHEREAS, all of the aforesaid plans are to be merged and consolidated with
the Plan effective as of December 31, 1997;
1.
<PAGE>
WHEREAS, all benefits previously provided under the plans shall be
provided hereunder subsequent to the merger and consolidation;
WHEREAS, all assets of the plans shall be transferred to the Plan and
Trust and shall thereafter and on an ongoing basis be available to pay benefits
to employees and their beneficiaries;
WHEREAS, at this time the Employer desires to retain the distinct benefit
structures that applied to the participants of the plans prior to the merger and
consolidation to the greatest extent possible;
NOW, THEREFORE, the Plan is amended and restated as follows:
ARTICLE I.
ELIGIBILITY
1.1 Eligibility: The terms and conditions of eligibility shall be
determined by reference to the Exhibit attached hereto which corresponds to the
Employee's classification and status.
ARTICLE II.
EMPLOYER CONTRIBUTIONS;
2.1. Payment of Contributions: The Employer shall contribute to the Plan
from time to time such amounts as the Plan Administrator and the Employer shall
determine are necessary to provide Plan benefits. Such amounts shall be
determined under accepted actuarial methods and assumptions, and may be
contributed in cash or property.
2.2. Limitation on Contribution: Notwithstanding the foregoing, the
Employer's contribution for any Plan Year will not exceed the maximum amount
allowable as a deduction to the Employer under Code Section 404, except to the
extent necessary to satisfy the minimum funding standard required under Code
Section 412 or to correct an error, in which event, the Employer shall make a
contribution to the Plan even if it causes the limitation under Code Section 404
to be exceeded.
2.
<PAGE>
2.3. Time of Payment: The Employer will pay to the Trustee its
contribution to the Plan for each Plan Year, within the time prescribed by law,
including extensions of time, for the filing of the Employer's federal income
tax return for the Fiscal Year. In no event, however, will payment to the
Trustee be made after the expiration of the time limit prescribed for
satisfaction of the minimum funding requirements of Code Section 412.
2.4. No Additional Liability: The pension benefits to be provided under
the Plan shall be only such as can be provided by the assets of the Trust Fund
and, except as provided by law, there shall be no liability or obligation on the
part of the Employer to make any further contributions to the Plan in the event
of its termination. Except as otherwise required by ERISA or other applicable
law, no liability for the payment of benefits hereunder shall be imposed upon
the Employer, or the officers, directors or stockholders of the Employer.
ARTICLE III.
EMPLOYEE CONTRIBUTIONS
3.1. Required Contributions: The amount of contributions required of
Participants as a condition for receiving benefits provided hereunder shall be
determined by reference to the Exhibit that corresponds to the Participant's
classification and status.
ARTICLE IV
PLAN BENEFITS
4.1. Plan Benefits: A Participant's benefits shall be determined by
reference to the Exhibit corresponding to the Participant's classification and
status.
4.2. Minimum Benefit for Top-Heavy Plan:
(a) The minimum Accrued Benefit derived from Employer contributions
to be provided under this Section for each Non-Key Employee who is a Participant
during a Plan Year in which the Plan is Top-Heavy Plan shall equal the product
of (1) said Participant's Compensation averaged over the five (5) consecutive
Limitation
3.
<PAGE>
Years, (or actual number of Limitation Years, if less) which produce the highest
average and (2) the lesser of (i) two percent (2%) multiplied by Years of
Service or (ii) twenty percent (20%).
(b) For purposes of providing the aforesaid minimum benefit under
Code Section 416, a Non-Key Employee who is not a Participant solely because (1)
his Compensation is below a stated amount or (2) he declined to make required
contributions (if required) to the Plan will be considered to be a Participant
Furthermore, such minimum benefit shall be provided regardless of whether such
Non-Key Employee is employed on a specified date.
(c) For purposes of this Section, Years of Service for any Plan Year
beginning before January 1, 1984, or for any Plan Year during which the Plan was
not a Top-Heavy Plan shall be disregarded.
(d) For purposes of this Section, Compensation for any Limitation
Year ending in a Plan Year which began prior to January 1, 1984, subsequent to
the last Limitation Year during which the Plan is a Top-Heavy Plan, or in which
the Participant failed to complete a Year of Service, shall be disregarded.
(e) For the purposes of determining the top-heavy minimum benefit
under this Section, Compensation shall be limited to $200,000 (as adjusted in
such manner as permitted under Code Section 415(d)).
(f) If the Article herein entitled "Payment of Benefits" provides
for the Normal Retirement Benefit to be paid in form other than a single life
annuity, the Accrued Benefit under this Section shall be the Actuarial
Equivalent of the minimum Accrued Benefit under (a) above.
(g) If payment of the minimum Accrued Benefit commences at a date
other than Normal Retirement Date, the minimum Accrued Benefit shall be the
Actuarial Equivalent of the minimum Accrued Benefit commencing at Normal
Retirement Date.
4.
<PAGE>
(h) If a Non-Key Employee participates in this Plan and a defined
contribution plan included in a Required Aggregation Group which is top-heavy,
the minimum benefits shall be provided under this Plan.
(i) For any Plan Year when (1) the Plan is a Top-Heavy Plan but not
a Super Top-Heavy Plan and (2) a Key Employee is a Participant in both this Plan
and a defined contribution plan included in a Required Aggregation Group which
is top-heavy, the extra minimum Accrued Benefit (required by the Article herein
entitled "Section 415 Limitation on Benefits" to provide the higher limitations)
shall be provided for each Non-Key Employee who is a Participant by substituting
three percent (3%) for two percent (2%) and thirty percent (30%) for twenty
percent (20%) in (a) above.
(j) In lieu of the above, if a Non-Key Employee participates in this
Plan and a defined contribution plan included in a Required Aggregation Group
which is top-heavy, a minimum allocation of five percent (5%) of Compensation
shall be provided under the defined contribution plan. If the defined
contribution plan is amended so that the minimum benefits are no longer provided
under the defined contribution plan, the minimum benefits shall be provided
under this Plan.
However, for any Plan Year when (1) the Plan is a Top-Heavy Plan but
not a Super Top-Heavy Plan and (2) a Key Employee is a Participant in both this
Plan and a defined contribution plan included in a Required Aggregation Group
which is top-heavy, seven and one-half percent (7 1/2%) shall be substituted for
five percent (5%) above.
(k) The preceding provisions of this Section shall be inapplicable
to the extent not required of this Plan pursuant to Code Section 416(i)(4).
4.3. Non-Duplication of Benefits: If an Inactive Participant who is no
longer actively employed by the Employer again becomes actively employed by the
Employer in the same Eligible Class, any such renewed participation shall not
result in duplication of benefits. Accordingly, if such Participant has received
or was deemed to have received a distribution of a vested Accrued Benefit under
the Plan by reason of prior participation
5.
<PAGE>
(and such distribution has not been repaid to the Plan with interest as
described in the preceding paragraph within a period of the earlier of five (5)
years after the first date on which the Participant is subsequently reemployed
by the Employer or the close of the first period of five (5) consecutive Breaks
in Service commencing after the distribution), his Accrued Benefit shall be
reduced by the Accrued Benefit determined as of the date of distribution.
4.4. Transfers; Service with Affiliated Employers. The benefits provided
hereunder as to an Employee who transfers employment to or from an Affiliated
Employer or into another Eligible Class shall be determined by reference to this
Article and the Article herein entitled "TRANSFERS; SERVICE WITH AFFILIATED
EMPLOYERS."
ARTICLE V.
CODE SECTION 415 LIMITATIONS ON BENEFITS
5.1. Maximum Annual Benefit:
(a) Notwithstanding the foregoing and subject to the exceptions
below, the maximum Annual Benefit payable to a Participant under this Plan in
any Limitation Year shall equal the lesser of:
(1) $90,000, or
(2) one hundred percent (100%) of the Participant's
Compensation averaged over the three consecutive Limitation Years (or the actual
number of Limitation Years for Employees who have been employed for less than
three consecutive Limitation Years) during which the Employee had the greatest
aggregate Code Section 415 Compensation from the Employer.
(b) Notwithstanding anything in this Article to the contrary, the
maximum Annual Benefit for any Participant in a defined benefit plan in
existence on July 1, 1982, shall not be less than the "protected current accrued
benefit", payable annually, provided for under question T-3 of Internal Revenue
Notice 83-10.
6.
<PAGE>
(c) Notwithstanding anything in this Article to the contrary, if the
Plan was in existence on May 6, 1986, and had complied at all times with the
requirements of Code Section 415; the maximum Annual Benefit for any individual
who is a Participant as of the first day of the Limitation Year beginning after
December 31, 1986, shall not be less than the Current Accrued Benefit. "Current
Accrued Benefit" shall mean a Participant's Accrued Benefit under the Plan,
determined as if the Participant had separated from service as of the close of
the last Limitation Year beginning before January 1, 1987, when expressed as an
Annual Benefit within the meaning of Code Section 415(b)(2). In determining the
amount of a Participant's Current Accrued Benefit, the following shall be
disregarded: (1) any change in the terms and conditions of the Plan after May 5,
1986; and (2) any cost of living adjustment occurring after May 5, 1986.
(d) The dollar limitation under Code Section 415(b)(1)(A) stated in
paragraph (a)(1) above shall be adjusted annually as provided in Code Section
415(d) pursuant to the Regulations. The adjusted limitation is effective as of
January 1st of each calendar year and is applicable to Limitation Years ending
with or within that calendar year.
(e) The limitation stated in paragraph (a)(2) above for Participants
who have separated from service with a non-forfeitable right to an Accrued
Benefit shall be adjusted annually as provided in Code Section 415(d) pursuant
to the Regulations prescribed by the Secretary of the Treasury.
(f) For the purpose of this Article, all qualified defined benefit
plans (whether terminated or not) ever maintained by the Employer shall be
treated as one defined benefit plan, and all qualified defined contribution
plans (whether terminated or not) ever maintained by the Employer shall be
treated as one defined contribution plan.
(g) For the purpose of this Article, if the Employer is a member of
a controlled group of corporations, trades or businesses under common control
(as defined by Code Section 1563(a) or Code Section 414(b) and (c) as modified
by Code Section 425(h))
7.
<PAGE>
or is a member of an affiliated service group (as defined by Code Section
414(m)), all employees of such employers shall be considered to be employed by a
single employer.
(h) For the purpose of this Article, if this Plan is a Code Section
413(c) plan, all employers of a Participant who maintain this Plan will be
considered to be a single employer.
5.2. Adjustments to Annual Benefit and Limitations:
(a) If the Annual Benefit begins before the Participant's Social
Security Retirement Age under the Social Security Act, then the $90,000
limitation shall be reduced in such manner as the Secretary of the Treasury
shall prescribe which is consistent with the reduction for old-age insurance
benefits commencing before the Social Security Retirement Age under the Social
Security Act.
(b) Notwithstanding the aforesaid, for Limitation Years beginning
prior to January 1, 1987, the $90,000 limit shall not be reduced if the annual
benefit begins on or after age sixty-two (62). If the Annual Benefit begins
before age sixty-two (62), the $90,000 limitation shall be reduced by each month
benefits commence before the Participant attains age sixty-two (62) so that it
is the Actuarial Equivalent of the $90,000 limitation beginning at age sixty-two
(62). However, the $90,000 limitation shall not be actuarially reduced to less
than:
(1) $75,000 if the Annual Benefit commences on or after age
fifty-five (55), or
(2) the amount which is the Actuarial Equivalent of the
$75,000 limitation at age fifty-five (55) if the Annual Benefit commences prior
to age fifty-five (55).
For purposes of adjusting the $90,000 limitation applicable
prior to age sixty-two (62) or the $75,000 limitation applicable prior to age
fifty-five (55), the adjustment shall be made pursuant to the general principles
set forth in this Plan for determining Actuarial Equivalence except that the
interest rate assumption shall be the
8.
<PAGE>
greater of five percent (5%) or the rate specified in Schedule A hereto and the
mortality decrement shall be ignored to the extent that a Forfeiture does not
occur at death.
(c) If the Annual Benefit begins after the Participant's Social
Security Retirement Age or for Plan Years beginning prior to January 1, 1987,
age 65, the $90,000 limitation shall be increased so that it is the Actuarial
Equivalent of the $90,000 limitation at the Participant's Social Security
Retirement Age (or for Plan Years beginning prior to January 1, 1987, age 65).
(d) If the Annual Benefit begins before age sixty-two (62), then the
$90,000 limitation shall be reduced so that it is the Actuarial Equivalent of
the $90,000 limitation beginning at age sixty-two (62). However, the $90,000
shall not be actuarially reduced to less than:
(1) $75,000 if the Annual Benefit commences on or after age
fifty-five (55), or
(2) the amount which is the Actuarial Equivalent of the
$75,000 limitation at age fifty-five (55) if the Annual Benefit commences prior
to age fifty-five (55).
For purposes of adjusting the $90,000 limitation applicable
prior to age sixty-two (62) or the $75,000 limitation applicable prior to age
fifty-five (55), the adjustment shall be made pursuant to the general principles
used herein for determining the Actuarial Equivalent except that the interest
rate assumption shall be the greater of five percent (5%) or the rate specified
in Schedule A hereto and the mortality decrement shall be ignored to the extent
that a Forfeiture does not occur at death.
(e) For purposes of adjusting the Annual Benefit to a Straight Life
Annuity, the adjustment shall be made pursuant to Section 2.2 except that the
interest rate assumption shall be the greater of five percent (5%) or the rate
specified in Schedule A hereto.
(f) For purposes of adjusting the $90,000 limitation applicable
after age 65, the adjustment shall be made the Actuarial Equivalent except that
the interest rate
9.
<PAGE>
assumption shall be the lesser of five percent (5%) or the rate specified in
Schedule A hereto and the mortality decrement shall be ignored to the extent
that a Forfeiture does not occur at death.
(g) For purposes of adjusting the $90,000 limitation applicable
after the Participant's Social Security Retirement Age (or for Plan Years
beginning prior to January 1, 1987, age 65) the adjustment shall be made for the
Actuarial Equivalent except that the interest rate assumption shall be the
lesser of five percent (5%) or the rate specified in Schedule A hereto and the
mortality decrement shall be ignored to the extent that a Forfeiture does not
occur at death.
(h) For purposes of the aforesaid adjustments, no adjustments under
Code Section 415(d) shall be taken into account before the Limitation Year for
which such adjustment first takes effect.
(i) For purposes of this Section, no adjustment is required for
Qualified Joint and Survivor Annuity benefits, Qualified Pre-Retirement Survivor
Annuity benefits and post-retirement medical benefits.
5.3. Annual Benefit Not in Excess of $10,000: This Plan may pay an Annual
Benefit to any Participant in excess of his maximum Annual Benefit if the Annual
Benefit derived from Employer contributions under this Plan and all other
defined benefit plans maintained by the Employer does not in the aggregate
exceed $10,000 for the Limitation Year or for any prior Limitation Year and the
Employer has not at any time maintained a defined contribution plan in which the
Participant participated. For purposes of this paragraph, if this Plan provides
for voluntary or mandatory Employee contributions, such contribution will not be
considered a separate defined contribution plan maintained by the Employer.
5.4. Participation or Service Reductions: If a Participant has less than
ten (10) Years of Participation in the Plan at the time he begins to receive
benefits under the Plan, the limitations in Sections 5.1(a)(1) and 5.2 shall be
reduced by multiplying such limitations
10.
<PAGE>
by a fraction (a) the numerator of which is the number of years of participation
(or part thereof) in the Plan, and (b) the denominator of which is ten (10);
provided, however, that said fraction shall in no event be less than 1/10th. The
limitations of Sections 5.1(a)(2) and 5.3 shall be reduced in the same manner
except the preceding sentence shall be applied with respect to Years of Service
with the Employer rather than Years of Participation in the Plan. Additionally,
to the extent provided in Regulations, for years beginning after December 31,
1986, the above described reductions to the limitations in Sections 5.1(a)(1)
(except for purposes of Section 5.5(c)(2)) and 5.2 shall be applied separately
with respect to each change in the benefit structure of the Plan adopted before
August 3, 1992.
5.5. Multiple Plan Reduction:
(a) Subject to the exception in Section 5.5(f) below, if a
Participant is (or has been) a participant in one or more defined benefit plans
and one or more defined contribution plans maintained by the Employer, the sum
of the defined benefit plan fraction and the defined contribution plan fraction
for any Limitation Year may not exceed 1.0.
(b)(1) The defined benefit plan fraction is a fraction, the
numerator of which is the sum of the Participant's projected annual benefits
under all defined benefit plans (whether terminated or not) maintained by the
Employer, and the denominator of which is the lesser of one hundred twenty-five
percent (125%) of the dollar limitation determined for the Limitation Year under
Code Sections 415(b) and (d) or one hundred forty percent (140%) of the highest
average compensation, including any adjustments under Code Section 415(b).
Notwithstanding the above, if the Participant was a
Participant as of the first day of the first Limitation Year beginning after
December 31, 1986, in one or more defined benefit plans maintained by the
Employer which were in existence on May 6, 1986, the denominator of this
fraction will not be less than one hundred twenty-five percent (125%) of the sum
of the annual benefits under such plans which the Participant had accrued as of
the close of the last Limitation Year beginning before January 1, 1987,
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disregarding any changes in the terms and conditions of such plans after May 5,
1986.
The preceding sentence applies only if the defined benefit plans
individually and in the aggregate satisfied the requirements of Code Section 415
for all Limitation Years beginning before January 1, 1987.
(2) For purposes of applying the limitations of Code Section
415, the "projected annual benefit" for any Participant is the benefit, payable
annually, under the terms of the Plan determined pursuant to Regulation
1.415-7(b)(3).
(3) For purposes of applying the limitations of Code Section
415, "protected current accrued benefit" for any Participant in a defined
benefit plan in existence on July 1, 1982 will be the accrued benefit, payable
annually, provided for under question T-3 of Internal Revenue Service Notice
83-10.
(c)(1) The defined contribution plan fraction is a fraction, the
numerator of which is the sum of the annual additions to the Participant's
account under all the defined contribution plans (whether or not terminated)
maintained by the Employer for the current and all prior Limitation Years
(including the annual additions attributable to the Participant's nondeductible
Employee contributions to all defined benefit plans (whether or not terminated)
maintained by the Employer; and the annual additions attributable to all welfare
benefit funds, as defined in Code Section 419(e) or individual medical accounts,
as defined in Code Section 415(1)(2), maintained by the Employer, and the
denominator of which is the sum of the "maximum aggregate amounts" for the
current and all prior Limitation Years of service with the Employer (regardless
of whether a defined contribution plan was maintained by the Employer). The
"maximum aggregate amount" in any Limitation Year is the lesser of one hundred
twenty-five percent (125%) of the dollar limitation determined under Code
Sections 415(b) and (d) in effect under Code Section 415(c)(1)(A) or thirty-five
percent (35%) of the Participant's Section 415 Compensation for such Limitation
Year.
If the Employee was a participant as of the end of the first day of
the first Limitation Year beginning alter December 31, 1986, in one or more
defined contribution
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plans maintained by the Employer which were in existence on May 6, 1986, the
numerator of this fraction will be adjusted if the sum of this fraction and the
defined benefit fraction would otherwise exceed 1.0 under the terms of this
Plan. Under the adjustment, an amount equal to
(i) the excess of the sum of the fraction over 1.0, multiplied
by
(ii) the denominator of this fraction
will be permanently subtracted from the numerator of this fraction. The
adjustment is calculated using the fractions as they would be computed as of the
end of the last Limitation Year beginning before January 1, 1987, and
disregarding any changes in the terms and conditions of such plans made after
May 5, 1986, but using the Section 415 limitation applicable to the first
Limitation Year beginning on or after January 1, 1987.
The annual addition for any Limitation Year beginning before January
1, 1987, will not be recomputed to treat all Employee contributions as annual
additions.
(2) Notwithstanding the foregoing, the numerator of the
defined contribution plan fraction will be adjusted pursuant to Regulation
1.415-7(d)(1) and questions T-6 and T-7 of Internal Revenue Service Notice
83-10.
(3) For defined contribution plans in effect on or before June
1, 1982, the Plan Administrator may elect for any Limitation Year ending after
December 31, 1982, that the amount taken into account in the denominator for
every Participant for all Limitation Years ending before January 1, 1983 will be
an amount equal to (A) the denominator for the Limitation Year ending in 1982
determined under the law in effect for the Limitation Year ending in 1982,
multiplied by (B) the "transition fraction".
(4) For purposes of the preceding paragraph, the term
"transition fraction" will mean a fraction (A) the numerator of which is the
lesser of (i) $51,875 or (ii) 1.4 multiplied by twenty-five percent (25%) of the
Participant's 415 Compensation for the Limitation Year ending in 1981, and (B)
the denominator of which is
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the lesser of (i) $41,500 or (ii) twenty-five percent (25%) of the Participant's
415 Compensation for the Limitation Year ending in 1981.
(5) Notwithstanding the foregoing, for any Limitation Year in
which the Plan is a Top-Heavy Plan, $41,500 will be substituted for $51,875 in
determining the "transition fraction" unless the extra minimum allocation is
being provided under the Plan pursuant to Code Section 416(h)(2). However, for
any Limitation Year in which this Plan is a Super Top-Heavy Plan, $41,500 will
be substituted for $51,875 in any event.
(d) Notwithstanding the foregoing, for any Limitation Year in which
the Plan is a Top-Heavy Plan, "One Hundred Percent (100%)" will be substituted
for "One Hundred Twenty-five Percent (125%)" in paragraphs (b)(1) and (c)(1)
unless the extra minimum allocation is being provided hereunder pursuant to Code
Section 416(h)(2). However, for any Limitation Year in which the Plan is a Super
Top-Heavy Plan, "One Hundred Percent (100%)" will be substituted for "One
Hundred Twenty-five Percent (125%)" in any event.
(e) If the sum of the defined benefit plan fraction and the defined
contribution plan fraction will exceed 1.0 in any Limitation Year for any
Participant, the Plan Administrator will adjust the numerator of the defined
benefit clan fraction so that the sum of both fractions will not exceed 1.0 in
any Limitation Year for such Participant.
(f) If (1) the substitution of One Hundred Percent (100%) for One
Hundred Twenty-five Percent (125%) and $41,500 for $51,875 above, or (2) the
excess benefit accruals or annual additions provided for in Internal Revenue
Service Notice 82-19 cause the 1.0 limitation to be exceeded for any Participant
in any Limitation Year, such Participant will be subject to the following
restrictions for each future Limitation Year until the 1.0 limitation is
satisfied:
(i) the Participant's Accrued Benefit under the defined
benefit plan will not increase,
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(ii) no annual additions may be credited to a Participant's
accounts, and
(iii) no Employee contributions (voluntary or mandatory) will
be made under any defined benefit plan or any defined contribution plan of the
Employer.
5.6. Incorporation By Reference: Notwithstanding anything contained in
this Section to the contrary, the limitations, adjustments and other
requirements prescribed in this Section will at all times comply with the
provisions of Code Section 415 and the Regulation thereunder, the terms of which
are specifically incorporated herein by reference.
ARTICLE VI.
VESTING
6.1. Vesting Rights: A Participant will acquire a vested and
nonforfeitable interest in his or her Accrued Benefit attributable to Employer
contributions in accordance with the Exhibit attached hereto which corresponds
to the Participant's classification and status.
6.2. Top-Heavy Vesting: Notwithstanding the vesting provided for above,
for any Top-Heavy Plan Year, the vested portion of the Accrued Benefit of any
Participant who has one (1) Hour of Service after the Plan becomes a Top-Heavy
Plan will be a percentage of the Participant's Accrued Benefit determined on the
basis of the Participant's number of Years of Vesting Service according to the
schedule included in the Exhibit corresponding to the Participant's
classification and status.
6.3. Service Computation Period; Service Credit:
For vesting purposes, Years of Vesting Service, Breaks in Service
and any other conditions relative to vesting shall be determined by reference to
the Exhibit corresponding to the Participant's classification and status.
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6.4. Amendment of Vesting Schedule: If the Plan's vesting schedule is
amended, or the Plan is amended in any way that directly or indirectly affects
the computation of the Participant's nonforfeitable percentage or if the Plan is
deemed amended by an automatic change to or from a top-heavy vesting schedule,
each Participant with at least three (3) Years of Service with the Employer may
elect, within a reasonable period after the adoption of the amendment or change,
to have the nonforfeitable percentage computed under the Plan without regard to
such amendment or change. For Participants who do not have at least one (1) Hour
of Service in any Plan Year beginning after December 31, 1988, the preceding
sentence will be applied by the substitution of "5 Years of Service" for "3
Years of Service" where such language appears.
The period during which the election may be made will commence with the
date the amendment is adopted or deemed to be made and will end on the latest
of:
(a) sixty (60) days after the amendment is adopted;
(b) sixty (60) days after the amendment becomes effective; or
(c) sixty (60) days after the Participant is issued written notice
of the amendment by the Employer or Plan Administrator.
Notwithstanding the foregoing, no such change in the Plan's vesting
schedule or computation of a Participants nonforfeitable percentage shall apply
to a Participant unless such Participant is credited with an Hour of Service on
or after the date of the change.
6.5. Amendments Affecting Vested and/or Accrued Benefit: No amendment to
the Plan will be effective to the extent that it has the effect of decreasing a
Participant's Accrued Benefit. Notwithstanding the preceding sentence, a
Participants Accrued Benefit may be reduced to the extent permitted under
Section 412(c)(8) of the Code. For purposes of this Section, a Plan amendment
which has the effect of decreasing a Participant's Accrued Benefit or
eliminating an optional form of benefit, with respect to benefits attributable
to service before the amendment will be treated as reducing an Accrued Benefit
Furthermore, if the vesting schedule of a Plan is amended, in the case of an
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Employee who is a Participant as of the later of the date such amendment is
adopted or the date it becomes effective, the nonforfeitable percentage
(determined as of such date) of such Employee's right to his or her
Employer-provided Accrued Benefit will not be less than the percentage computed
under the Plan without regard to such amendment.
6.6. No Divestiture for Cause: Amounts vested pursuant to this Section
shall not be subject to divestiture for cause.
ARTICLE VII.
PAYMENT OF BENEFITS
7.1. Notice: The Plan Administrator shall provide the Participant with a
notice of rights of payment no less than thirty (30) and no more than ninety
(90) days before the Participant's Annuity Starting Date. Such notice shall be
in writing and shall set forth the following information:
(a) an explanation of the eligibility requirements for, the material
features of, and the relative values of the alternate forms of benefits
available hereunder; and
(b) the Participant's right to defer receipt of a Plan distribution.
Such notice shall be given to the Participant in person or shall be mailed
to the Participant's current address as reflected in the Employer's records.
7.2. Waiver of Thirty (30) Day Notice Period:
Notwithstanding the provisions of Section 7.1 above, such
distribution may commence less than thirty (30) days after the notice required
under Regulation Section 1.411(a)-11(c) is given, provided that:
(a) the Plan Administrator clearly informs the Participant that the
Participant has a right to a period of at least thirty (30) days
after receiving the notice to consider the decision of whether or
not to elect a distribution (and, if applicable, a particular
distribution option), and
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(b) the Participant, after receiving the notice, affirmatively
elects the distribution.
7.3. Form Of Payment: The automatic form of retirement benefit, and any
optional forms of benefits shall be determined by reference to the Exhibit
corresponding to the Participant's classification and status.
7.4. Actuarial Equivalent Benefit:
Except to the extent a Participant's benefit are suspended in
accordance with the rules set forth in the Section below captioned "Suspension
of Benefits", or as otherwise specifically set forth herein, the amount of any
form of benefit under the terms of this Plan will be the Actuarial Equivalent of
the Participant's Accrued Benefit in the Normal Form commencing at Normal
Retirement Age.
7.5. Payment Without Participant Consent:
(a) In the event that the Participant has terminated employment and
the Participant (and the Participant's Spouse, if applicable) neither consents
to receive a Plan distribution nor elects to defer receipt of a Plan
distribution, the Participant's Accrued Benefit shall be distributed in the
Automatic Form as soon as practicable thereafter, but in no event before the
date the Participant attains Normal Retirement Age, if such vested Accrued
Benefit exceeds $3,500.
(b) Notwithstanding the foregoing, the Plan Administrator may, upon
the Participant's termination of employment, distribute an annuity contract to
the Participant which provides that payments thereunder shall not commence until
a later date if such annuity contract satisfies the requirements of Sections
401(a)(11) and 417 of the Code.
7.6. Restrictions on Immediate Distributions:
(a) An Accrued Benefit is immediately distributable if any part of
the Accrued Benefit could be distributed to the Participant (or surviving
Spouse) before the
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Participant attains (or would have attained whether or not deceased) the later
of the Normal Retirement Age or age sixty-two (62).
(b) If the present value of a Participant's vested Accrued Benefit
derived from Employer and Employee contributions exceeds (or at the time of any
prior distribution exceeded) $3,500, and the Accrued Benefit is immediately
distributable, the Participant and his or her Spouse (or where either the
Participant or the Spouse has died, the survivor) must consent to any
distribution of such Accrued Benefit. The consent of the Participant and the
Spouse shall be obtained in writing within the 90-day period ending on the
Annuity Starting Date. The Plan Administrator shall notify the Participant and
the Participant's Spouse of the right to defer any distribution until the
Participant's Accrued Benefit is no longer immediately distributable. Such
notification shall include a general description of the material features, and
an explanation of the relative values of, the optional forms of benefit
available under the Plan in a manner that would satisfy the notice requirements
of Code Section 417(a)(3), and shall be provided no less than 30 days and no
more than 90 days prior to the Annuity Starting Date.
(c) Notwithstanding the foregoing, only the Participant need consent
to the commencement of a distribution in the form of a Qualified Joint and
Survivor Annuity while the Accrued Benefit is immediately distributable. Neither
the consent of the Participant nor the Participant's Spouse shall be required to
the extent that a distribution is required to satisfy Code Section 401(a)(9) or
Code Section 415.
7.7. Limitation of Benefits on Plan Termination: The restrictions of
paragraphs (a) and (b) below are included solely to meet the requirements of
Proposed Treasury Regulation Section 1.401(a)4-5(c). If the provisions of
paragraphs (a) and (b) below are no longer necessary to qualify the Plan under
said Proposed Regulation or the Code, said paragraphs (a) and (b) shall be
ineffective without the necessity of further amendment.
(a) In the event that the Plan is terminated, the benefit of each
Highly Compensated Participant and each former Highly Compensated Employee shall
be limited
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to a benefit which is nondiscriminatory within the meaning of Code Section
401(a)(4) and the Regulations thereunder.
(b) For Plan Years beginning on or after January 1, 1993, the
monthly payments made from the Plan to Highly Compensated Employees and to
former Highly Compensated Employees who are among the twenty-five most highly
paid Employees with the greatest Compensation in the current or any prior year,
shall be limited to an amount equal to the monthly payments that would be made
on behalf of the Employee under a Straight Life Annuity that is the Actuarial
Equivalent of the sum of the Employee's Accrued Benefit, the Employee's other
benefits under the Plan (other than a social security supplement, within the
meaning of Section 1.411(a)-7(c)(4)(ii) of the Regulations), and the amount the
Employee is entitled to receive under a social security supplement.
The restrictions of this paragraph (b) shall not apply, however, if
(1) after payment of benefits to an Employee described above,
the value of Plan assets equals or exceeds one hundred ten percent (110%) of the
value of current liabilities, as defined in Code Section 412(d)(7),
(2) the value of benefits provided under the Plan for an
Employee described above is less than one percent (1%) of the value of current
liabilities before distribution, or
(3) the value of the benefits payable under the Plan to any
Employee described above does not exceed $3,500.
(c) For purposes of this Section, the term "benefit" shall include
loans in excess of the amounts set forth in Code Section 72(p)(2)(A), any
periodic income, any withdrawal values payable to a living Employee and any
death benefits not provided for by insurance on the Employee's life.
An Employee's otherwise restricted benefit may be distributed in full to
the affected Employee if prior to receipt of the restricted amount the Employee
enters into a written agreement with the Plan Administrator to secure repayment
to the Plan of the
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restricted amount. The restricted amount is the excess of the amounts
distributed to the Employee (accumulated with reasonable interest) over the
amounts that could have been distributed to the Employee under the Normal Form
described in Section 4.1 of the Plan (accumulated with reasonable interest). The
Employee may secure repayment of the restricted amount upon distribution by: (1)
entering into an agreement for promptly depositing in escrow with an acceptable
depositary property having a fair market value equal to at least one hundred
twenty-five percent (125%) of the restricted amount, (2) providing a bank letter
of credit in an amount equal to at least one hundred percent (100%) of the
restricted amount, or (3) posting a bond equal to at least one hundred percent
(100%) of the restricted amount. If the Employee elects to post bond, the bond
will be furnished by an insurance company, bonding company or other surety for
federal bonds.
The escrow arrangement may provide that an Employee may withdraw amounts
in excess of one hundred twenty-five percent (125%) of the restricted amount. If
the market value of the property in an escrow account falls below one hundred
ten percent (110%) of the remaining restricted amount, the Employee must deposit
additional property to bring the value of the property held by the depositary up
to one hundred twenty-five percent (125%) of the restricted amount. The escrow
arrangement may provide that Employee may have the right to receive any income
from the property placed in escrow, subject to the Employee's obligation to
deposit additional property, as set forth in the preceding sentence.
A surety or bank may release any liability on a bond or letter of credit
in excess of one hundred percent (100%) of the restricted amount.
If the Plan Administrator certifies to the depositary, surety or bank that
the Employee (or the Employee's estate) is no longer obligated to repay any
restricted amount, a depositary may redeliver to the Employee any property held
under an escrow agreement, and a surety or bank may release any liability on an
Employee's bond or letter of credit.
7.8. Early Plan Termination Restrictions: Notwithstanding any provision in
this Plan to the contrary, prior to the Plan Year beginning on January 1, 1993,
and during the first ten (10) years after the effective date hereof, and if full
current costs had not been
21.
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met at the end of the first ten (10) years, until said full current costs are
met, the benefits provided by the Employer's contributions for the Participants
whose anticipated annual retirement benefit at Normal Retirement Date exceeds
$1,500 and who at the effective date of the Plan were among the twenty-five (25)
highest paid Employees of the Employer will be subject to the conditions set
forth in the following provisions:
(a) The benefit payable to a Participant described in this
Section or his Beneficiary shall not exceed the greater of the following:
(1) those benefits purchasable by the greater of (i)
$20,000, or (ii) an amount equal to 20% of the first $50,000 of the
Participant's annual Compensation multiplied by the number of years from the
effective date of the Plan to the earlier of (A) the date of termination of the
Plan, or (B) the date the benefit of the Participant becomes payable or (C) the
date of a failure on the part of the Employer to meet the full current costs of
the Plan; or
(2) if a Participant is a "substantial owner" (as
defined in ERISA Section 4022(b)(5)(A)), the present value of the benefit
guaranteed for "substantial owners" under ERISA Section 4022, or
(3) if the Participant is not a "substantial owner, the
present value of the maximum benefit provided in ERISA Section 4022(b)(3)(B),
determined on the date the Plan terminates or on the date benefits commence,
whichever is earlier and in accordance with regulations of the Pension Benefit
Guaranty Corporation.
(b) If the Plan is terminated or the full current costs
thereof have not been met at any time within ten (10) years after the effective
date, the benefits which any of the Participants described in this Section may
receive from the Employer's contribution shall not exceed the benefits set forth
in paragraph (a) above. If at the end of the first ten (10) years the full
current costs are not met, the restrictions will continue to apply until the
full current costs are funded for the first time.
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(c) If a Participant described in this Section leaves the
employ of the Employer or withdraws from participation in the Plan when the full
current costs have been met, the benefits which he may receive from the Employer
contributions shall not at any time within the first ten (10) years after the
effective date exceed the benefits set forth in paragraph (a) above, except as
provided in paragraph (i) below.
(d) These conditions shall not restrict the full payment of
any survivor's benefits on behalf of a Participant who dies while in the Plan
and the full current costs have been met.
(e) These conditions shall not restrict the current payment of
full retirement benefits called for by the Plan for any retired Participant
while the Plan is in full effect and its full current costs have been met,
provided an agreement, adequately secured, guarantees the repayment of any part
of the distribution that is or may become restricted.
(f) If the benefits of, or with respect to, any Participant
shall have been suspended or limited in accordance with the limitations of
paragraphs (a), (b),and (c) above because the full current costs of the Plan
shall not then have been met, and if such full current costs shall thereafter
be met, then the full amount of the benefits payable to such Participant shall
be resumed and the parts of such benefits which have been suspended shall then
be paid in full.
(g) Notwithstanding anything in paragraphs (a), (b) and (c)
above, if on the termination of the Plan within the first ten (10) years after
the effective date, the funds, contracts, or other property under the Plan are
more than sufficient to provide Accrued Benefits for Participants and their
Beneficiaries including fall benefits for all Participants other than such of
the twenty-five (25) highest paid Employees as are still in the service of the
Employer and also including Accrued Benefits as limited by this Section for such
twenty-five (25) highest paid Employees, then any excess of such funds,
contracts, and property shall be used to provide Accrued Benefits for the
twenty-five (25) highest paid Employees in excess of such limitations of this
Section up to the Accrued Benefits to which such Employees would be entitled
without such limitations.
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(h) In the event that Congress should provide by statute, or
the Treasury Department or the Internal Revenue Service should provide by
regulation or ruling, that the limitations provided for in this Article are no
longer necessary in order to meet the requirements for a qualified pension plan
under the Code as then in effect the limitations in this Article shall become
void and shall no longer apply without the necessity of amendment to this Plan.
(i) In the event a lump-sum distribution is made to an
Employee subject to the above restrictions in an amount in excess of that amount
otherwise permitted under this Article, an agreement shall be made, with
adequate security guaranteeing repayment of any amount of the distribution that
is restricted. Adequate security shall mean property having a fair market value
of at least one hundred twenty-five percent (125%) of the amount which would be
repayable if the Plan had terminated on the date of distribution of such lump
sum. If the fair market value of the property falls below one hundred ten
percent (110%) of the amount which would then be repayable if the Plan were then
to terminate, the distributee shall deposit additional property to bring the
value of the property to one hundred twenty-five percent (125%) of such amount.
In the event of the termination or partial termination of this Plan, the
rights of all affected Employees to benefits accrued to the date of such
termination or partial termination (to the extent funded as of such date) shall
be nonforfeitable.
7.9. Suspension of Benefits:
(a) Normal or early retirement benefits in pay status will be
suspended for each calendar month during which the Employee completes at least
40 Hours of Service as defined in Section 203(a)(3)(B) of ERISA. Consequently,
the amount of benefits which are paid later than Normal Retirement Age will be
computed without regard to amounts which would have been suspended under the
preceding sentence as if the Employee had been receiving benefits since Normal
Retirement Age.
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(b) Resumption of Payment. If benefit payments have been suspended,
payments shall resume no later than the first day of the third calendar month
after the calendar month in which the Employee ceases to be employed in
"service" as defined in ERISA Section 203(a)(3)(B). The initial payment upon
resumption shall include the payment scheduled to occur in the calendar month
when payments resume and any amounts withheld during the period between the
cessation of" service" under Section 203(a)(3)(B) of ERISA and the resumption of
payments.
(c) Notification. No payment shall be withheld by the Plan pursuant
to this Section unless the Plan Administration notifies the Employee by personal
delivery or first class mail during the first calendar month or payroll period
in which the Plan withholds payments that such Employee's benefits are
suspended. Such notification shall contain a description of the specific reasons
why benefit payments are being suspended, a description of the Plan provision
relating to the suspension of payments, a copy of such provisions, and a
statement to the effect that applicable Department of Labor regulations may be
found in Section 2530.203-3 of Title 29 of the Code of Federal Regulations.
In addition, the notice shall inform the Employee of the Plan's
procedure for affording a review of the suspension of benefits. Requests for
such reviews may be considered in accordance with the claims procedure adopted
by the Plan pursuant to Section 503 of ERISA and applicable regulations.
(d) Amount Suspended.
(1) Annuity Payments. In the case of benefits payable
periodically as a monthly basis for as long as a life (or lives) continues, such
as a Straight Life Annuity or a Qualified Joint and Survivor Annuity, an amount
equal to the portion of a monthly benefit payment derived from Employer
contributions.
(2) Other Benefit Forms. In the case of a benefit payable in a
form other than the form described in subsection (1) above, an amount equal to
the
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Employer-provided portion of benefit payments for a calendar month in which the
Employee is employed in ERISA Section 203(a)(3)(B) service, equal to the lesser
of
(i) The amount of benefits which would have been payable
to the Employee if he or she had been receiving monthly benefits under the Plan
since actual retirement based on a Straight Life Annuity commencing at actual
retirement age; or
(ii) The actual amount paid or scheduled to be paid to
the Employee for such month.
Payments which are scheduled to be paid less frequently than monthly may be
converted to monthly payments.
(e) Minimum Benefits. This Section does not apply to the minimum
benefit to which the participant is entitled under the top-heavy rules of the
Section entitled "Minimum Benefit for Top-Heavy Plan".
7.10. Restrictions on Commencement Of Retirement Benefits:
(a) Unless the Participant elects otherwise, distribution of
benefits will begin no later than the 60th day after the later of the close of
the Plan Year in which:
(1) the Participant attains Normal Retirement Age;
(2) occurs the 10th anniversary of the Plan Year in which the
Participant commenced participation in the Plan; or
(3) the Participant terminates service with the Employer.
(b) Notwithstanding the foregoing, the failure of a Participant and
the Participant's Spouse, if any, to consent to a distribution while a benefit
is payable under the Article entitled "Plan Benefits", will be deemed an
election to defer commencement of payment of any benefit sufficient to satisfy
this paragraph.
7.11. Minimum Distribution Requirements: All distributions required under
this Article will be determined and made in accordance with the minimum
distribution
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requirements of Code Section 401(a)(9) and the Regulations thereunder,
including the minimum distribution incidental benefit rules found at Regulations
Section 1.401(a)(9)-2. Life expectancy and joint and last survivor life
expectancy are computed by using the expected return multiples found in Tables V
and VI of Regulations Section 1.72-9.
(a) Required Beginning Date: The entire interest of a Participant
must be distributed or begin to be distributed no later than the Participant's
required beginning date.
(1) General Rule: The "required beginning date" of a Participant is the
first day of April of the calendar year following the calendar year in which the
Participant attains age 70-1/2.
(2) Transitional Rules: The required beginning date of a Participant who
attains age 70-1/2 before 1988 will be determined in accordance with (i) or (ii)
below:
(i) Non-5-percent owners: The required beginning date of a
Participant who is not a 5-percent owner is the first day of April of the
calendar year following the calendar year in which occurs the later of
retirement or attainment of age 70-1/2. The required beginning date of a
Participant who is not a 5-percent owner who attains age 70-1/2 during 1988 and
who has not retired as of January 1, 1989, is April 1, 1990.
(ii) 5-percent owners: The required beginning date of a Participant
who is a 5-percent owner during any year beginning after December 31, 1979 is
the first day of April following the later of:
(A) the calendar year in which the Participant attains age
70-1/2, or
(B) the earlier of the calendar year with or within which ends
the Plan Year in which the Participant becomes a 5-percent owner, or the
calendar year in which the Participant retires.
(3) A Participant is treated as a 5-percent owner for purposes of this
paragraph if such Participant is a 5-percent owner as defined in Code Section
416(i)
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(determined in accordance with Code Section 416 but without regard to whether
the Plan is a Top-Heavy Plan) at any time during the Plan Year ending with or
within the calendar year in which such owner attains age 66-1/2 or at any
subsequent Plan Year.
(4) Once distributions have begun to a 5-percent owner under this
paragraph, distributions must continue, even if the Participant ceases to be a
5-percent owner in a subsequent year.
(b) Limits On Distribution Periods: As of the first distribution
calendar year, distributions, if not made in a single sum, may only be made over
one of the following periods (or a combination thereof):
(1) the life of the Participant;
(2) the life of the Participant and a designated Beneficiary;
(3) a period certain not extending beyond the life expectancy
of the Participant; or
(4) a period certain not extending beyond the joint and last
survivor expectancy of the Participant and a designated Beneficiary.
(c) Required Distributions On Or After The Required Beginning Date:
(1) If a Participant's benefit is to be distributed over (i) a
period not extending beyond the life expectancy of the Participant or the joint
life and last survivor expectancy of the Participant and the Participant's
designated Beneficiary, or (ii) a period not extending beyond the life
expectancy of the designated Beneficiary, the amount required to be distributed
for each calendar year, beginning with distributions for the first distribution
calendar year, must at least equal the quotient obtained by dividing the
Participant's Accrued Benefit by the Applicable Life Expectancy.
(2) For calendar years beginning before 1989, if the
Participant's Spouse is not the designated Beneficiary, the method of
distribution selected
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must have assured that at least 50% of the Present Value of the Accrued Benefit
available for distribution was to be paid within the life expectancy of the
Participant.
(3) For calendar years beginning after 1988, the amount to be
distributed each year, beginning with distributions for the first distribution
calendar year, will not be less than the quotient obtained by dividing the
Participant's Accrued Benefit by the lesser of (i) the applicable life
expectancy, or (ii) if the Participant's Spouse is not the designated
Beneficiary, the applicable divisor determined from the table set forth in Q&A-4
of Proposed Regulations Section 1.401(a)(9)-2. Distributions after the death of
the Participant will be distributed using the "applicable life expectancy" as
the relevant divisor without regard to Proposed Regulations Section
1.401(a)(9)-2.
(4) The minimum distribution required for the Participant's
first distribution calendar year must be made on or before the Participant's
required beginning date. The minimum distribution for other calendar years,
including the minimum distribution for the distribution calendar year in which
the Participant's required beginning date occurs, must be made on or before
December 31 of that distribution calendar year.
(5) If the Participant's Accrued Benefit is to be distributed
in the form of an annuity purchased from an insurance company, no such annuity
contract will be purchased unless the distributions thereunder will be made in
accordance with the requirements of Code Section 401(a)(9) and the Proposed
Regulations thereunder.
(6) For purposes of determining the amount of the required
distribution for the first distribution calendar year, the Accrued Benefit to be
used will be the Accrued Benefit as of the last Valuation Date in the calendar
year immediately preceding the first distribution calendar year. For all other
years, the Accrued Benefit will be determined as of the last Valuation Date
preceding such distribution calendar year.
For purposes of this paragraph, if any portion of the minimum
distribution for the first distribution calendar year is made in the second
distribution
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calendar year on or before the required beginning date, the amount of the
minimum distribution made in the second distribution calendar year will be
treated as if it had been made in the immediately preceding distribution
calendar year for purposes of determining the Accrued Benefit.
7.12. TEFRA Election Transitional Rule:
(a) Notwithstanding the other requirements of this Article and
subject to the requirements of the Article herein entitled "Joint and Survivor
Annuity Requirements", distribution on behalf of any Participant, including a
5-percent owner, will be made in accordance with all of the following
requirements (regardless of when such distribution commences):
(1) The distribution by the Trust Fund is one which would not
have disqualified the Trust Fund under Code Section 401 (a)(9) as in effect
prior to amendment by the Deficit Reduction Act of 1984;
(2) The distribution is in accordance with a method of
distribution designated by the Participant whose interest in the Trust Fund is
being distributed or, if the Participant is deceased, by the Beneficiary of the
Participant.
(3) Such designation was made in writing, was signed by the
Participant or the Beneficiary, and was made before January 1, 1984;
(4) The Participant has accrued a benefit under the Plan as of
December 31, 1983; and
(5) The method of distribution designated by the Participant
or the Beneficiary specifies the time at which distributions will commence, the
period over which distributions will be made, and in the case of any
distribution upon the Participant's death, the beneficiaries of the Participant
listed in order of priority.
(b) A distribution upon death will not be covered by this
transitional rule unless the information in the designation contains the
required information described above with respect to the distributions to be
made upon the death of the Participant.
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(c) For any distribution which commences before January 1, 1984, but
continues after December 31, 1983, the Participant or the Beneficiary to whom
such distribution is being made will be presumed to have designated the method
of distribution under which the distribution is being made if the method of
distribution was specified in writing and the distribution satisfies the
requirements in the sub-paragraphs of (a) above.
(d) If a designation is revoked, any subsequent distribution must
satisfy the requirements of Code Section 401(a)(9) and the Proposed Regulations
thereunder. If a designation is revoked subsequent to the date distributions are
required to begin, the Plan must distribute by the end of the calendar year
following the calendar year in which the revocation occurs the total amount not
yet distributed which would have been required to have been distributed to
satisfy Code Section 401(a)(9) and the Proposed Regulations thereunder, but for
an election under the Tax Equity and Fiscal Responsibility Act ("TEFRA") Section
242(b)(2). For calendar years beginning after December 31, 1988, such
distributions must meet the minimum distribution incidental benefit requirements
in Regulations Section 1.401(a)(9)-2. Any changes in the designation will be
considered to be a revocation of the designation. However, the mere substitution
or addition of another beneficiary (one not named in the designation) under the
designation will not be considered to be a revocation of the designation so
long as such substitution or addition does not alter the period over which
distributions are to be made under the designation, directly or indirectly (for
example, by altering the relevant measuring life). If an amount is transferred
or rolled over from one plan to another plan, the rules in Q&A 1-2 and Q&A 1-3
of Proposed Treasury Regulations 1.401(a)(9)-2 will apply.
7.13. Distribution of Death Benefit:
(a) Beneficiary Designation: Each Participant will file a written
designation of Beneficiary with the Employer upon becoming a Participant in the
Plan. Such designation will remain in force until revoked by the Participant by
filing a new Beneficiary form with the Employer.
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(b) Distribution Beginning Before Death: If the Participant dies
after distribution of benefits has begun, the remaining portion of such
Participant's Accrued Benefit will continue to be distributed at least as
rapidly as under the method of distribution being used prior to the
Participant's death.
(c) Distribution Beginning After Death: If the Participant dies
before distribution of benefits begins, distribution of the Participant's
Accrued Benefit will be completed by December 31 of the calendar year in which
occurs the fifth anniversary of the Participant's death except to the extent
that an election is made to receive distributions as provided below:
(1) If any portion of the Participant's Accrued Benefit is
payable to a designated Beneficiary, distributions may be made over the life of,
or over a period certain not greater than the life expectancy of, the designated
Beneficiary commencing on or before December 31 of the calendar year immediately
following the calendar year in which the Participant died.
(2) If the designated Beneficiary is the Participant's
surviving Spouse, the date distributions are required to begin in accordance
with (1) above will not be earlier than the later of (i) December 31 of the
calendar year immediately following the calendar year in which the Participant
died, or (ii) December 31 of the calendar year in which the Participant would
have attained age 70-1/2.
If the Participant has not made an election pursuant to this paragraph
prior to death, the Participant's designated Beneficiary must elect the method
of distribution no later than the earlier of (1) December 31 of the calendar
year in which distributions would be required to begin under this Section, or
(2) December 31 of the calendar year in which occurs the fifth anniversary of
the Participant's death. If the Participant has no designated Beneficiary, or if
the designated Beneficiary does not elect a method of distribution, distribution
of the Participant's Accrued Benefit must be completed by December 31 of the
calendar year in which occurs the fifth anniversary of the Participant's death.
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For purposes of this paragraph, if the surviving Spouse dies after the
Participant but before payments to such Spouse begin, the provisions of this
paragraph, with the exception of such paragraph (2) therein, will be applied as
if the surviving Spouse were the Participant.
For purposes of this Section, any amount paid to a child of the
Participant will be treated as if it had been paid to the surviving Spouse if
the amount becomes payable to the surviving Spouse when the child attains the
age of majority.
7.14. Date Distribution Deemed to Begin: For purposes of this Article,
distribution of a Participant's interest is considered to begin on the
Participant's required beginning date (or, if the surviving Spouse dies after
the Participant but before payments to such Spouse begin, the date distribution
is required to begin to the surviving Spouse pursuant to Section 7.14(c)). If
distribution in the form of an annuity irrevocably commences to the Participant
before the required beginning date, the date distribution is considered to begin
is the date distribution actually commences.
7.15. Distribution Pursuant to Qualified Domestic Relations Orders:
Notwithstanding any other provision regarding distributions or payment of
benefits, an Alternate Payee, as defined in Code Section 414(p), will be
entitled to receive a distribution not in excess of a Participant's vested
Accrued Benefit pursuant to any final judgment, decree or order determined by
the Plan Administrator to be a Qualified Domestic Relations Order ("QDRO") as
defined in ERISA and Code Section 414(p). Such distribution will be made only in
a form of benefit available under the Plan.
7.16. Payment to a Person Under a Legal Disability: Every person receiving
or claiming benefits under the Plan shall be conclusively presumed to be
mentally competent until the date on which the Plan Administrator receives a
written notice, in a form and manner acceptable to the Plan Administrator, that
such person is incompetent, and that a guardian, conservator or other person
legally vested with the care of the person or estate has been appointed;
provided, however, that if the Plan Administrator shall find that any person to
whom a benefit is payable under the Plan is unable to care for such person's
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affairs because of incompetency, any payment due (unless a prior claim therefore
shall have been made by a duly appointed legal representative) may be paid to
the spouse, a child, a parent, a brother or sister, or to any person or
institution deemed by the Plan Administrator to have incurred expense for such
person otherwise entitled to payment. Any such payment so made shall be a
complete discharge of liability thereof under the Plan. In the event a guardian
or conservator of the estate of any person receiving or claiming benefits under
the Plan shall be appointed by a court of competent jurisdiction, retirement
payments may be made to such guardian or conservator provided that proper proof
of appointment and continuing qualification is furnished in a form and manner
acceptable to the Plan Administrator. Any payment made on behalf of any such
person as provided in this Section shall be binding on such person and shall be
in full discharge of any obligation of such payment to such person.
7.17. Unclaimed Benefits Procedure: The Plan does not require either the
Trustees or the Employer to search for, or ascertain the whereabouts of, any
Participant or Beneficiary. The Employer, by certified or registered mail
addressed to the Participant's last known address of record with the Employer,
shall notify any Participant or Beneficiary that he or she is entitled to a
distribution under the Plan. In the event that all consecutive checks in payment
of benefits under the Plan remain outstanding for a period of six (6) months,
payment of all such outstanding checks shall be stopped and the issuance of any
further checks shall be suspended until such time as the payee reestablishes
contact and claims benefits. In any event, if the Participant or Beneficiary
fails to claim benefits or make his or her whereabouts known in writing to the
Employer within twelve (12) months of the date of mailing of the notice, or
before the termination or discontinuance of the Plan, whichever should first
occur, the Employer shall treat the Participant's or Beneficiary's unclaimed
Accrued Benefit as a Forfeiture. If a Participant or Beneficiary who has
incurred a Forfeiture of his Accrued Benefit under the provisions of this
Section makes a claim at any time for his or her forfeited Accrued Benefit, the
Employer shall restore the Participant's or Beneficiary's forfeited Accrued
Benefit within sixty (60) days after the Plan Year in which the Participant or
Beneficiary makes the claim.
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7.18. Direct Rollovers: This Section applies to distributions made on or
after January 1, 1993. Notwithstanding any provision of the Plan to the contrary
that would otherwise limit a Distributee's election under this part a
Distributee may elect, at the time and in the manner prescribed by the Plan
Administrator, to have any portion of an Eligible Rollover Distribution paid
directly to an Eligible Retirement Plan specified by the Distributee in a Direct
Rollover.
ARTICLE VIII.
JOINT AND SURVIVOR ANNUITY REQUIREMENTS
8.1. Applicability Of Provisions: The provisions of this Article will
apply to any Participant who is credited with at least one Hour of Service with
the Employer on or after August 23, 1984 and such other Participants as provided
in this Article to the extent not inconsistent with the terms and provisions of
the Exhibit corresponding to the Participant's classification and status.
8.2. Payment Of Qualified Joint And Survivor Annuity: Unless an optional
form of benefit is selected pursuant to a qualified election, defined herein,
within the 90-day period ending on the Annuity Starting Date, the vested Accrued
Benefit of a married Participant will be paid in the form of a Qualified Joint
and Survivor Annuity. Any other Participant's vested Accrued Benefit will be
paid in the form of a Straight Life Annuity.
8.3. Payment Of Qualified Pre-Retirement Survivor Annuity: Unless an
optional form of benefit has been selected within the election period pursuant
to a qualified election, as defined herein, if a Participant dies before the
Annuity Starting Date, the Participant's vested Accrued Benefit will be paid to
the surviving Spouse in the form of a Qualified Pre-Retirement Survivor Annuity
if the Participant has been married to the same Spouse for at least
12-consecutive months. The surviving Spouse shall receive benefits commencing on
the Earliest Retirement Date benefits could have been paid to the Participant if
he had ceased to be an Employee on the date of his death and survived to retire.
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8.4. Notice Requirements For Qualified Joint And Survivor Annuity: In the
case of a Qualified Joint and Survivor Annuity, the Plan Administrator shall, no
less than thirty (30) days and no more than ninety (90) days prior to the
Annuity Starting Date, as defined below, provide each Participant a written
explanation of:
(a) the terms and conditions of a Qualified Taint and Survivor
Annuity;
(b) the Participant's right to make, and the effect of, an election
to waive the Qualified Joint and Survivor Annuity form of benefit;
(c) the rights of a Participant's Spouse; and
(d) the right to make, and the effect of, a revocation of a previous
election to waive the Qualified Joint and Survivor Annuity.
For purposes of this Section, the Annuity Starting Date will mean the
first day of the first period for which an amount is paid as an annuity, whether
by reason of retirement or disability.
8.5. Notice Requirements For Qualified Pre-Retirement Survivor Annuity: In
the case of a Qualified Pre-Retirement Survivor Annuity, the Plan Administrator
will provide each Participant within the applicable period for such Participant
a written explanation of the Qualified Pre-Retirement Survivor Annuity in such
terms and in such manner as would be comparable to the explanation provided for
meeting the requirements of the above Section applicable to a Qualified Joint
and Survivor Annuity. The applicable period for a Participant is whichever of
the following periods ends last:
(a) the period beginning with the first day of the Plan Year in
which the Participant attains age thirty-two (32) and ending with the close of
the Plan Year preceding the Plan Year in which the Participant attains age
thirty-five (35);
(b) a reasonable period ending after the individual becomes a
Participant;
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(c) a reasonable period ending after this paragraph ceases to apply
to the Participant;
(d) a reasonable period ending after this Article first applies to
the Participant.
Notwithstanding the foregoing, notice must be provided within a reasonable
period ending after separation from service in the case of a Participant who
separates from service before attaining age thirty-five (35).
For purposes of applying the preceding paragraph, a reasonable period
ending after the enumerated events described in paragraphs (b), (c) and (d) is
the end of the two (2) year period beginning one (1) year prior to the date the
applicable event occurs, and ending one (1) year after that date. In the case of
a Participant who separates from service before the Plan Year in which age
thirty-five (35) is attained, notice will be provided within the two (2) year
period beginning one (1) year prior to separation and ending one (1) year after
separation from service. If such a Participant thereafter returns to employment
with the Employer, the applicable period for such Participant will be
re-determined.
8.6. Qualified Election: A qualified election will mean a waiver of a
Qualified Joint and Survivor Annuity or a Qualified Pre-Retirement Survivor
Annuity. Any waiver of a Qualified Joint and Survivor Annuity or a Qualified
Pre-Retirement Survivor Annuity will not be effective unless:
(a) the Participant's Spouse consents in writing to the election;
(b) the election designates a specific Beneficiary, including any
class of Beneficiaries or any contingent Beneficiaries, which may not be changed
without spousal consent (or the Spouse expressly permits designations by the
Participant without any further spousal consent);
(c) the election designates a form of benefit payment which may not
be changed without spousal consent (or the Spouse expressly permits designations
by the Participant without any further spousal consent);
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(d) the Spouse's consent acknowledges the effect of the election;
and
(e) the Spouse's consent is witnessed by a Plan representative or
notary public.
If it is established to the satisfaction of the Plan Administrator that
there is no Spouse or that the Spouse cannot be located, a waiver which complies
with (b) and (c) above will be deemed a qualified election. Any consent by a
Spouse obtained under this provision (or establishment that the consent of a
Spouse can not be obtained) will be effective only with respect to such Spouse.
A consent that permits designations by the Participant without any requirement
of further consent by such Spouse must acknowledge that the Spouse has the right
to limit consent to a specific Beneficiary, and a specific form of benefit where
applicable, and that the Spouse voluntarily elects to relinquish either or both
of such rights. A revocation of a prior waiver may be made by a Participant
without the consent of the Spouse at any time before the commencement of
benefits. The number of revocations will not be limited. No consent obtained
under this provision will be valid unless the Participant has received notice as
provided in the paragraphs below.
13.7. Election Period: The period which begins on the first day of the
Plan Year in which the Participant attains age thirty-five (35) and ends on the
date of the Participant's death. If a Participant separates from service prior
to the first day of the Plan Year in which age thirty-five (35) is attained,
with respect to the Accrued Benefit as of the date of separation, the election
period shall begin on the date of separation.
8.8. Pre-age Thirty-five (35) Waiver: Not applicable.
8.9. Transitional Joint And Survivor Annuity Rules: Special transition
rules apply to Participants who were not receiving benefits on August 23, 1984.
(a) Any living Participant not receiving benefits on August 23,
1984, who would otherwise not receive the benefits prescribed by the previous
paragraphs of this Article, must be given the opportunity to elect to have the
prior Sections of this Article apply if such Participant is credited with at
least one (1) Hour of Service under this Plan or
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a predecessor plan in a Plan Year beginning on or after January 1, 1976 and if
such Participant had at least ten (10) Years of Service for vesting purposes
when the Participant separated from service.
(b) Any living Participant not receiving benefits on August 23,
1984, who was credited with at least one Hour of Service under this Plan or a
predecessor plan on or after September 2, 1974, and who is not otherwise
credited with any service in a Plan Year beginning on or after January 1, 1976,
must be given the opportunity to have Accrued Benefits paid in accordance with
subparagraph (d) below.
(c) The respective opportunities to elect (as described in (a) and
(b) above) must be afforded to the appropriate Participants during the period
commencing on August 23, 1984, and ending on the date benefits would otherwise
commence to said Participants.
(d) Any Participant who has elected pursuant to subparagraph (b) and
any Participant who does not elect under subparagraph (a) or who meets the
requirements of subparagraph (a) except that such Participant does not have at
least ten (10) Years of Service for vesting purposes on separation from service,
will have his or her Accrued Benefit distributed in accordance with all of the
following requirements if benefits would have been payable in the form of a life
annuity:
(1) Automatic Joint and Survivor Annuity. If benefits in the
form of a life annuity become payable to a married Participant who:
(i) begins to receive payments under the Plan on or
after Normal Retirement Age;
(ii) dies on or after Normal Retirement Age while still
working for the Employer;
(iii) begins to receive payments under the Plan on or
after the Qualified Early Retirement Age; or
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(iv) separates from service on or after attaining Normal
Retirement Age (or the Early Retirement Age) and after satisfying the
eligibility requirements for the payment of benefits under the Plan and
thereafter dies before beginning to receive such benefits, such benefits will be
paid in the form of a Qualified Joint and Survivor Annuity, unless the
Participant has elected otherwise during the election period. The election
period must begin at least six (6) months before the Participant attains
Qualified Early Retirement Age and end not more than ninety (90) days before the
commencement of benefits. Any election hereunder must be in writing and may be
changed by the Participant at any time.
(2) Election of Early Survivor Annuity. A Participant who is
employed after attaining the Qualified Early Retirement Age will be given the
opportunity to elect during the election period, to have an early survivor
annuity payable on death. If the Participant elects the early survivor annuity,
payments under such annuity must not be less than the payments which would have
been made to the Spouse under the Qualified Joint and Survivor Annuity if the
Participant had retired on the day before his or her death. Any election under
this provision will be in writing and may be changed by the Participant at any
time. The election period begins on the later of:
(i) the 90th day before the Participant attains the
Qualified Early Retirement Age, or
(ii) the date on which participation begins,
and ends on the date the Participant terminates employment with the Employer.
(3) Qualified Early Retirement Age. For purposes of this
Section, Qualified Early Retirement Age is the latest of:
(i) the earliest date, under the Plan, on which the
Participant may elect to receive retirement benefits,
(ii) the first day of the 120th month beginning before
the Participant reaches Normal Retirement Age, or
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(iii) the date the Participant begins participation.
ARTICLE IX.
QUALIFIED DOMESTIC RELATIONS ORDERS
9.1. Qualified Domestic Relations Orders: Notwithstanding any of the
provisions herein concerning alienation of Plan benefits, the Plan will honor
and abide by the terms of a domestic relations order determined by the Plan
Administrator to be a Qualified Domestic Relations Order as defined in Code
Section 414(p) ("QDRO") providing for the assignment to a Spouse or former
Spouse of the Participant of all or any portion of the Participants vested
Accrued Benefit under the Plan. The Employer will adopt guidelines for
determining the qualified status of a domestic relations order (the "Order")
which state the requirements for such Order, the procedures for review of such
Order and all other provisions required for such Order to be determined to be a
QDRO.
(a) An Order shall specifically state all of the following in order
to be deemed a QDRO:
(1) The name and last known mailing address (if any) of the
Participant and of each alternate payee covered by the Order. However, if the
Order does not specify the current mailing address of the alternate payee, but
the Plan Administrator has independent knowledge of that address, the Order may
still be a valid QDRO.
(2) The dollar amount or percentage of the Participant's
benefit to be paid by the Plan to each alternate payee, or the manner in which
the amount or percentage will be determined.
(3) The number of payments or period for which the Order
applies.
(4) The specific plan (by name) to which the Order applies.
(b) An Order shall not be deemed a QDRO if it requires the Plan to
provide:
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(1) any type or form of benefit, or any option not already
provided for in the Plan;
(2) increased benefits, or benefits in excess of the
Participant's vested rights;
(3) payment of a benefit earlier than allowed by the Plan's
earliest retirement provisions; or
(4) payment of benefits to an alternate payee which are
required to be paid to another alternate payee under another QDRO.
(c) Promptly, upon receipt of an Order which may or may not be
"Qualified", the Plan Administrator shall notify the Participant and any
alternate payee(s) named in the Order of such receipt. The Plan Administrator
may then forward the Order to the Plan's legal counsel for an opinion as to
whether or not the Order is in fact "Qualified" as defined in Code Section
414(p). Within a reasonable time after receipt of the Order, not to exceed 60
days, the Plan's legal counsel shall make a determination as to its "Qualified"
status and the Participant and any alternate payee(s) shall be promptly notified
in writing of the determination.
(d) if the "Qualified" status of the Order is in question, there
will be a delay in any payout to any payee including the Participant, until the
status is resolved. In such event, the Plan Administrator shall segregate the
amount that would have been payable to the alternate payee(s) if the Order had
been deemed a QDRO. If the Order is not Qualified, or the status is not resolved
(for example, it has been sent back to the Court for clarification or
modification) within 18 months beginning with the date the first payment would
have to be made under the Order, the Plan Administrator shall pay the segregated
amounts plus interest to the person(s) who would have been entitled to the
benefits had there been no Order. If a determination as to the Qualified status
of the Order is made after the 18-month period described above, then the Order
shall only be applied on a prospective basis. If the Order is determined to be a
QDRO, the Participant and alternate payee(s) shall
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again be notified promptly after such determination. Once an Order is deemed a
QDRO, the Plan Administrator shall pay to the alternate payee(s) all the amounts
due under the QDRO, including segregated amounts plus interest which may have
accrued during a dispute as to the Order's qualification.
(e) The Earliest Retirement Age with regard to the Participant
against whom the Order is entered shall be the date the Participant would
otherwise first be eligible for benefits under the Plan.
ARTICLE X.
TRANSFERS FROM OTHER QUALIFIED PLANS; DIRECT ROLLOVERS
10.1. Transfers From Other Qualified Plans; Direct Rollovers: Transfers or
Direct Rollovers from other qualified plans are not permitted.
ARTICLE XI.
TRANSFERS; SERVICE WITH AFFILIATED EMPLOYERS
11.1. Transfers:
In the event any Employee transfers out of an Eligible Class or from one
Eligible Class to another, such Employee shall receive credit for service and
compensation for determining eligibility, benefit accrual and vesting as set
forth in the Exhibit attached hereto corresponding to each respective Eligible
Class.
ARTICLE XII.
AMENDMENT, TERMINATION, MERGER OR CONSOLIDATION
12.1. Amendment of the Plan: The Employer, acting by its Board of
Directors, has the right to amend, modify, suspend or terminate the Plan at any
time. However, no amendment will authorize or permit any part of the Trust Fund
(other than any part that is required to pay taxes and administration expenses)
to be used for or diverted to purposes other than for the exclusive benefit of
the Participants or their Beneficiaries or estates; no amendment will cause any
reduction in the Accrued Benefit of any Participant or cause or
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permit any portion of the Trust Fund to revert to or become the property of the
Employer; except to the extent such amendment is required to qualify or maintain
the qualification of the Plan or to deduct or maintain the deductibility of
contributions made to the Plan under the applicable sections of the Code. Any
amendment will become effective as provided therein upon its execution.
For the purposes of this paragraph, an amendment to the Plan which has the
effect of:
(a) eliminating or reducing an early retirement benefit or a
retirement-type subsidy;
(b) eliminating an optional form of benefit (as provided in
Regulations under the Code); or
(c) restricting, directly or indirectly, the benefits provided to
any Participant prior to the amendment.
will be treated as reducing the Accrued Benefit of a Participant, except that an
amendment described in clause (b) (other than an amendment having an effect
described in clause (a)) will not be treated as reducing the Accrued Benefit of
a Participant to the extent so provided in Regulations or under the Code.
Amendment of the Plan by the Employer at any time when there is a
Participating Employer will only be made by written consent of each
Participating Employer.
12.2. Termination:
(a) The Employer, acting by its Board of Directors, shall have the
right to terminate the Plan by delivering to the Trustee and the Plan
Administrator written notice of such termination. However, any termination
(other than a partial termination or an involuntary termination pursuant to
ERISA Section 4042) must satisfy the requirements and follow the procedures
outlined herein and in ERISA Section 4041 for a Standard Termination or a
Distress Termination. Upon any termination (full or partial), all amounts
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shall be allocated in accordance with the provisions hereof and the Accrued
Benefit, to the extent funded as of such date, of each affected Participant
shall become fully vested and shall not thereafter be subject to Forfeiture.
Upon termination of the Plan, the Employer, by notice to the Trustee
and Plan Administrator, may direct:
(1) complete distribution of the Trust Fund to the
Participants, in cash or in kind, in a manner consistent with the requirements
of the Plan;
(2) the purchase of insurance company annuity contracts;
(3) continuation of the Trust Fund for the Plan and the
distribution of benefits at such time and in such manner as though the Plan had
not been terminated; or
(4) transfer of the assets of the Plan to another qualified
plan, provided that the trust to which the assets are transferred permits the
transfer to be made and, in the opinion of legal counsel for the Employer, the
transfer will not jeopardize the tax-exempt status of the Plan or create adverse
tax consequences for the Employer. The amounts transferred will be fully vested
at all times and will not be subject to forfeiture for any reason.
(b) Standard Termination Procedure
(1) The Plan Administrator shall first notify all "affected
parties" (as defined in ERISA Section 4001(a)(21)) of the Employer's intention
to terminate the Plan and the proposed date of termination. Such termination
notice must be provided at least sixty (60) days prior to the proposed
termination date. However, in the case of a standard termination, it shall not
be necessary to provide such notice to the Pension Benefit Guaranty Corporation
(PBGC). As soon as practicable after the termination notice is given, the Plan
Administrator shall provide a follow-up notice to the PBGC setting forth the
following:
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(i) a certification of an enrolled actuary of the
projected amount of the assets of the Plan as of the proposed date of final
distribution of assets, the actuarial present value of the "benefit liabilities"
(as defined in ERISA Section 4001(a)(16)) under the Plan as of the proposed
termination date, and confirmation that the Plan is projected to be sufficient
for such "benefit liabilities" as of the proposed date of final distribution;
(ii) a certification by the Plan Administrator that the
information provided to the PBGC and upon which the enrolled actuary based his
certification is accurate and complete; and
(iii) such other information as the PBGC may prescribe
by regulation.
The certification of the enrolled actuary and of the Plan Administrator
shall not be applicable in the case of a Plan funded exclusively by individual
insurance contracts.
(2) No later than the date on which the follow-up notice is
sent to the PBGC, the Plan Administrator shall provide all Participants and
Beneficiaries under the Plan with an explanatory statement specifying each such
person's "benefit liabilities", the benefit form on the basis of which such
amount is determined, and any additional information used in determining
"benefit liabilities" that may be required pursuant to regulations promulgated
by the PBGC.
(3) A standard termination may only take place if at the time
the final distribution of assets occurs, the Plan is sufficient to meet all
"benefit liabilities" determined as of the termination date.
(c) Distress Termination Procedure
(1) The Plan Administrator shall first notify all "affected
parties" of the Employer's intention to terminate the Plan and the proposed date
of termination. Such termination notice must be provided at least 60 days prior
to the proposed termination date. As soon as practicable after the termination
notice is given, the
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Plan Administrator shall also provide a follow-up notice to the PBGC setting
forth the following:
(i) a certification of an enrolled actuary of the
amount, as of the proposed termination date, of the current value of the assets
of the Plan, the actuarial present value (as of such date) of the "benefit
liabilities" under the Plan, whether the Plan is sufficient for "benefit
liabilities" as of such date, the actuarial present value (as of such date) of
benefits under the Plan guaranteed under ERISA Section 4022, and whether the
Plan is sufficient for guaranteed benefits as of such date;
(ii) in any case in which the Plan is not sufficient for
"benefit liabilities" as of such date, the name and address of each Participant
and Beneficiary under the Plan as of such date;
(iii) a certification by the Plan Administrator that the
information provided to the PBGC and upon which the enrolled actuary based his
certification is accurate and complete; and
(iv) such other information as the PBGC may prescribe by
regulation.
The certification of the enrolled actuary and of the Plan Administrator
shall not be applicable in the case of a Plan funded exclusively by individual
insurance contracts.
(2) A "distress termination" may only take place if:
(i) the Employer demonstrates to the PBGC that such
termination is necessary to enable the Employer to pay its debts while staying
in business, or to avoid unreasonably burdensome pension costs caused by a
decline in the Employer's work force;
(ii) the Employer is the subject of a petition seeking
liquidation in a bankruptcy or insolvency proceeding which has not been
dismissed as of the proposed termination date; or
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(iii) the Employer is the subject of a petition seeking
reorganization in a bankruptcy or insolvency proceeding which has not been
dismissed as of the proposed termination date, and the bankruptcy court (or such
other appropriate court) approves the termination and determines that the
Employer will be unable to continue in business outside a Chapter 11
reorganization process and that such termination is necessary to enable the
Employer to pay its debts pursuant to a plan of reorganization.
(d) Priority and Payment of Benefits
In the case of a distress termination, upon approval by the
PBGC that the Plan is sufficient for "benefit liabilities" or for "guaranteed
benefits", or in the case of a "standard termination", a letter of
non-compliance has not been issued within the sixty (60) day period (as
extended) following the receipt by the PBGC of the follow-up notice, the Plan
Administrator shall allocate the assets of the Plan among Participants and
Beneficiaries pursuant to ERISA Section 4044(a). As soon as practicable
thereafter, the assets of the Plan shall be distributed to the Participants and
Beneficiaries, in cash, in property, or through the purchase or irrevocable
commitments from an insurer. However, if all liabilities with respect to
Participants and Beneficiaries under the Plan have been satisfied and there
remains a balance in the Plan due to erroneous actuarial computation or any
other reason, such balance, if any, shall be returned to the Employer. In the
case of a "distress termination" in which the PBGC is unable to determine that
the Plan is sufficient for guaranteed benefits, the assets of the Plan shall
only be distributed in accordance with proceedings instituted by the PBGC.
(e) The termination of the Plan shall comply with such other
requirements and rules as may be promulgated by the PBGC under authority of
Title IV of the ERISA including any rules relating to time periods or deadlines
for providing notice or for making a necessary filing.
12.3. Merger or Consolidation of the Plan: The Plan and Trust Fund for the
Plan may be merged or consolidated with, or its assets and/or liabilities may be
transferred to, any other plan and trust. In the event of a merger,
consolidation or transfer, each
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Participant must receive a benefit immediately after the merger, consolidation
or transfer (as if the Plan had then been terminated) which is at least equal to
the benefit each Participant would have received if the Plan had terminated
immediately before the transfer, merger or consolidation. Such transfer, merger
or consolidation may not otherwise result in the elimination or reduction of any
benefit protected under Code Section 411(d)(6).
ARTICLE XIII.
PARTICIPATING EMPLOYERS
13.1. Adoption by Other Employers: Notwithstanding anything herein to the
contrary, with the consent of the Employer, any other corporation or entity,
whether an affiliate or subsidiary or not, may adopt this Plan and all of the
provisions hereof, and participate herein and be known as a Participating
Employer, by a properly executed document evidencing said intent and will of
such Participating Employer.
13.2. Requirements of Participating Employers:
(a) Each Participating Employer will use the same Trustee as
provided in this Plan.
(b) The Trustee may, but will not be required to, commingle, hold
and invest as one Trust Fund all contributions made by Participating Employers,
as well as any earnings thereon.
(c) The transfer of any Participant from or to an Employer
participating in this Plan, whether an Employee of the Employer or a
Participating Employer, will not affect such Participant's rights under the
Plan, and all amounts credited to the Participant's account as well as the
Participant's accumulated service time with the transferor or predecessor and
length of participation in the Plan, will continue to the Participant's credit.
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(d) All rights and values forfeited by termination of employment
will inure only to the benefit of the Participants of the Employer or
Participating Employer for which the forfeiting Participant was employed.
(e) Any expenses of the Plan which are to be paid by the Employer or
borne by the Trust Fund will be paid by each Participating Employer in the same
proportion that the total amount standing to the credit of all Participants
employed by such employer bears to the total amount standing to the credit of
all Participants in the Plan.
13.3. Designation of Agent: Each Participating Employer will be deemed to
be a part of this Plan; provided, however, that with respect to all of its
relations with the Trustee and Plan Administrator for purposes of this Plan,
each Participating Employer will be deemed to have designated irrevocably the
Employer as its agent. Unless the context of the Plan clearly indicates the
contrary, "Employer" will be deemed to include each Participating Employer as
related to its adoption of the Plan.
13.4. Employee Transfers: It is anticipated that an Employee may be
transferred between Participating Employers, and in the event of any such
transfer, the Employee involved will transfer any accumulated service and
eligibility. No such transfer will effect a termination of employment hereunder,
and the Participating Employer to which the Employee is transferred will
thereupon become obligated hereunder with respect to such Employee in the same
manner as was the Participating Employer from whom the Employee was transferred.
13.5. Participating Employer's Contribution: All contributions made by a
Participating Employer, as provided for in this Plan, will be determined
separately by each Participating Employer, and will be paid to and held by the
Trustee for the exclusive benefit of the Employees of such Participating
Employer and the Beneficiaries of such Employees, subject to all the terms and
conditions of this Plan. On the basis of the information furnished by the Plan
Administrator, the Trustee will keep separate books and records concerning the
affairs of each Participating Employer hereunder and as to the accounts and
credits of the Employees of each Participating Employer. The Trustee may,
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but need not, register contracts so as to evidence that a particular
Participating Employer is the interested Employer hereunder, but in the event of
an Employee transfer from one Participating Employer to another, the employing
Employer will immediately notify the Trustee thereof.
13.6. Discontinuance of Participation: Any Participating Employer will be
permitted to discontinue or revoke its participation in the Plan. At the time of
any such discontinuance or revocation, satisfactory evidence thereof and of any
applicable conditions imposed will be delivered to the Trustee. The Trustee will
thereafter transfer, deliver and assign Trust Fund assets allocable to the
Participants of such Participating Employer to such new trustee as will have
been designated by such Participating Employer, in the event that it has
established a separate pension plan for its Employees; provided, however, that
no such transfer will be made if the result is the elimination or reduction of
any protected benefits under Section 411(d) or (e) of the Code. If no successor
is designated, the Trustee will retain such assets for the Employees of said
Participating Employer. In no such event will any part of the Trust Fund as it
relates to such Participating Employer be used for or diverted for purposes
other than for the exclusive benefit of the Employees for such Participating
Employer.
13.7. Plan Administrator's Authority: The Plan Administrator will have
authority to make all necessary rules and regulations, binding upon all
Participating Employers and all Participants, to effectuate the purpose of this
Article.
ARTICLE XIV.
ADMINISTRATION OF THE PLAN
14.1. Appointment of Plan Administrator and Trustee: The Employer is
authorized to appoint the Trustee and the Plan Administrator as it deems
necessary for the proper administration of the Plan. The Employer will from time
to time informally review the performance of the Trustee, Plan Administrator or
other persons to whom duties have been delegated or allocated by it. Any person
serving as Plan Administrator may resign
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upon thirty (30) days prior written notice to the Employer. The Employer is
authorized to remove any person serving as Plan Administrator at any time and in
its sole discretion appoint a successor whenever a vacancy occurs.
14.2. Plan Administrator: The Plan Administrator is responsible for
administering the Plan for the exclusive benefit of the Participants and their
Beneficiaries, subject to the specific terms of the Plan. The Plan Administrator
will manage, operate and administer the Plan in accordance with the terms of the
Plan and will have full power and authority to construe and resolve all
questions arising in connection with the administration, interpretation, and
application of the Plan. Any determination by the Plan Administrator will be
final and binding upon all persons, and unless it can be shown to be arbitrary
and capricious will not be subject to "de novo" review. The Plan Administrator
may establish procedures, correct any defect, supply any information, or
reconcile any inconsistency in any manner and to any extent as it deems
necessary to carry out the purpose of the Plan; provided, however, that any
procedure, discretionary act, interpretation or construction be
nondiscriminatory and based upon principles consistent with the intent of the
Plan to continue to be deemed a qualified plan under the terms of Code Section
401(a). The Plan Administrator will have all powers necessary or appropriate to
accomplish its duties under this Plan.
14.3. Delegation of Powers: The Plan Administrator may appoint such
assistants or representatives as it deems necessary for the effective exercise
of its duties. The Plan Administrator may delegate to such assistants and
representatives any powers and duties, both ministerial and discretionary, as it
deems expedient or appropriate.
14.4. Trust Agreement:
(a) The Employer shall execute a Trust Agreement with a Trustee or
Trustees chosen by the Employer to hold and manager the assets of the Trust
Fund, and to receive, hold and disburse contributions, interest and other income
for the purpose of paying the pensions under the Plan and the expenses incident
to the operation and maintenance of the Plan. From time to time, one or more
investment managers may be
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appointed by the Employer to manage assets of the Trust Fund, which investment
managers shall be solely responsible for investing, reinvesting and managing the
assets of the Trust Fund. A Trustee may also be an investment manager and in the
absence of any separate agreement with an investment manager, the Trustee shall
be the investment manager.
Each Trustee and investment manager so appointed shall acknowledge
that it is a fiduciary within the meaning of ERISA, and shall be either (i) an
investment advisor registered under the Investment Advisors Act of 1940, (ii) a
bank as defined in the Investment Advisors Act of 1940, or (iii) an insurance
company qualified to manager, acquire or dispose of assets under the laws of
more than one state.
(b) The Employer shall determine the form and terms of any Trust
Agreement or investment management agreement, which may authorize the inclusion
of obligations and stock of the Employer and its subsidiaries and affiliates
among the investments of the Trust Fund (subject to the provisions of any
applicable law), and which may authorize the pooling of the Trust Fund for
investment purposes with other Internal Revenue Service qualified pension funds
of the Employer and its subsidiaries and affiliates. The Employer may modify
such Trust Agreement or investment management agreement from time to time, or
terminate them pursuant to the terms thereof. In case of a conflict between the
Plan and the Trust Agreement, the provisions of the Trust Agreement shall be
deemed controlling.
14.5. Appointment of Advisers: The Plan Administrator may appoint counsel,
specialists, advisers, and other persons as the Plan Administrator deems
necessary or desirable in connection with the administration of the Plan.
14.6. Records and Reports: The Plan Administrator will keep a record of
all actions taken. In addition, it will keep all other books, records, and other
data that are necessary for administration of the Plan, and it will be
responsible for supplying all information and reports to Participants,
Beneficiaries, the Internal Revenue Service, the Department of Labor and others
as required by law.
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14.7. Information from Employer: The Employer will supply the Plan
Administrator with full and timely information on all matters relating to the
Compensation of all Participants, their Hours of Service, their Years of
Service, their retirement, death, Disability, or termination of employment, and
such other pertinent facts as the Plan Administrator may require from time to
time. The Plan Administrator will advise the Trustee of the foregoing facts as
may be pertinent to the Trustee's duties under the Plan. The Plan Administrator
and Trustee may rely on information supplied by the Employer and will have no
duty or responsibility to verify the information.
14.8. Majority Actions: Except where there has been an allocation and
delegation of administrative authority or where specifically expressed herein to
the contrary, if there shall be more than one Plan Administrator, they shall act
by a majority of their number, but may authorize one or more of them to sign any
documents on their behalf.
14.9. Expenses: All expenses and costs of administering the Plan may be
paid out of the Trust Fund unless actually paid by the Employer. Expenses will
include any expenses incident to the functioning of the Plan Administrator,
including, but not limited to, fees of accountants, counsel, and other
specialists and their agents, and other costs of administering the Plan. Until
paid, the expenses will be considered a liability of the Trust Fund. However,
the Employer may reimburse the Trust Fund for any administrative expense
incurred. Any administrative expense paid to the Trust Fund as a reimbursement
will not be considered an Employer contribution.
14.10. Discretionary Acts: Any discretionary actions of the Plan
Administrator with respect to the administration of the Plan shall be made in a
manner which does not discriminate in favor of stockholders, officers and Highly
Compensated Employees.
14.11. Responsibility of Fiduciaries: The Plan Administrator and members
of the Administrative Committee, and their assistants and representatives shall
be free from all liability for their acts and conduct in the administration of
the Plan except for acts of willful misconduct provided, however, that the
foregoing shall not relieve any of them
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from any liability for any responsibility, obligation or duty they may have
pursuant to ERISA or the Code.
14.12. Indemnity by Employer: In the event of and to the extent not
insured against by any insurance company pursuant to provisions of any
applicable insurance policy, the Employer shall indemnify and hold harmless, to
the extent permitted by law, any individual Trustee, the Plan Administrator, and
their assistants and representatives from any and all claims, demands, suits or
proceedings which may in connection with the Plan or Trust Agreement be brought
by the Employer's Employees, Participants or their Beneficiaries or legal
representatives, or by any other person, corporation, entity, government or
agency thereof; provided, however, that such indemnification shall not apply to
any such person for such person's acts of willful misconduct in connection with
the Plan or Trust Agreement.
14.13. Claims Procedure: Claims for benefits under the Plan may be filed
with the Plan Administrator. Written notice of the disposition of a claim will
be furnished to the claimant within ninety (90) days after the application is
filed. In addition, in the event the claim is denied, the Plan Administrator
shall:
(a) state the specific reason or reasons for the denial,
(b) provide specific reference to pertinent Plan provisions on which
the denial is based,
(c) provide a description of any additional material or information
necessary for the Participant or his representative to perfect the claim and an
explanation of why such material or information is necessary, and
(d) explain the Plan's claim review procedure as contained in this
Plan.
Any claimant who has been denied a benefit by the Plan Administrator
will be entitled to request the Plan Administrator to give further consideration
to the claim by filing with the Plan Administrator a request for a hearing. The
request, together with a
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written statement of the reasons why the claimant believes the claim should be
allowed, must be filed with the Plan Administrator within sixty (60) days after
the claimant receives written notification from the Plan Administrator regarding
the denial of the claimant's claim. The Plan Administrator will conduct a
hearing within the next sixty (60) days, at which time the claimant may be
represented by an attorney or any other representative of his or her choosing
and at which time the claimant will have an opportunity to submit written and
oral evidence and arguments in support of the claim. At the hearing (or prior
thereto upon five (5) business days written notice to the Plan Administrator)
the claimant or his or her representative will have an opportunity to review all
documents in the possession of the Plan Administrator which are pertinent to the
claim at issue and its disallowance. Either the claimant or the Plan
Administrator may cause a court reporter to attend the hearing and record the
proceedings, in which event a complete written transcript of the proceedings
will be furnished to both parties by the court reporter. The full expense of the
court reporter and transcripts will be borne by the party causing the court
reporter to attend the hearing. A final decision as to the allowance of the
claim will be made by the Plan Administrator within sixty (60) days of the
hearing (unless there has been an extension of time due to special
circumstances, provided the delay and the special circumstances occasioning it
are communicated to the claimant within the sixty (60) day period). The final
decision will be written and will include specific reasons for the decision and
specific references to the pertinent Plan provisions on which the decision is
based.
ARTICLE XV.
GENERAL
15.1. Bonding: Every fiduciary, except a bank or an insurance company,
unless exempted by the Act and regulations thereunder, shall be bonded in an
amount not less than 10% of the amount of the funds such fiduciary handles;
provided, however, that the minimum bond shall be $1,000 and the maximum bond,
$500,000. The amount of funds handled by such person, group, or class to be
covered and their predecessors, if any, during the preceding Plan Year, or if
there is not preceding Plan Year, then by the amount of the
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funds to be handled during the then current year. The bond shall provide
protection to the Plan against any loss by reason of acts of fraud or dishonesty
by the fiduciary alone or in connivance with others. The surety shall be a
corporate surety company (as such term is used in ERISA Section 412(a)(2)), and
the bond shall be in a form approved by the Secretary of Labor. Notwithstanding
anything in the Plan to the contrary, the cost of such bonds shall be an expense
of and may, at the election of the Plan Administrator, be paid from the Trust
Fund or by the Employer.
15.2. Action by the Employer: Whenever the Employer under the terms of the
Plan is permitted or required to do or perform any act or matter or thing, it
shall be done and performed by a person duly authorized by its legally
constituted authority.
15.3. Employment Rights: The Plan is not to be deemed to constitute a
contract of employment between the Employer and any Participant or to be a
consideration for, or an inducement or condition of, the employment of any
Participant or Employee. Nothing contained in the Plan is to be deemed
(a) to give any Participant the right to be retained in the service
of the Employer,
(b) to interfere with the right of the Employer to discharge any
Participant at any time,
(c) to give the Employer the right to require any Employee to remain
in its employ, or
(d) to affect any Employee's right to terminate employment at any
time.
15.4. Alienation: Subject to the exceptions provided below, no benefit
payable out of the Trust Fund to any person (including a Participant or the
Participants Beneficiary) is to be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, or charge, and any
attempt to anticipate, alienate, sell, transfer, assign, pledge, encumber, or
charge will be void. Further, no such benefit shall in any manner be
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liable for, or subject to, the debts, contracts, liabilities, engagements, or
torts of any such person, nor shall it be subject to attachment or legal process
for or against such person.
This provision will not apply to the extent a Participant or
Beneficiary is indebted to the Plan, for any reason, under any provision of the
Plan.
This provision will not apply to the extent of a "Qualified Domestic
Relations Order" defined in Code Section 414(p), and those other domestic
relations orders permitted to be so treated by the Plan Administrator under the
provisions of the Retirement Equity Act of 1984.
15.5. Governing Law: This Plan will be construed and enforced according to
ERISA and the laws of the state in which the Employer has its principal office,
other than its laws respecting choice of law, to the extent not preempted by
ERISA.
15.6. Conformity to Applicable Law: It is the intention of the Employer
that the Plan, and the trust established by the Employer to implement the Plan,
be in compliance with the provisions of Sections 401 and 501 of the Code and the
requirements of ERISA, and the corresponding provisions of any subsequent laws,
and the provisions of the Plan shall be construed to effectuate such intention.
15.7. Usage: Any term used herein in the singular or plural or in the
masculine, feminine or neuter form will be construed in the singular or plural,
or in the masculine, feminine or neuter form as proper reading requires.
15.8. Legal Action: In the event any claim, suit, or proceeding is brought
regarding the Plan or Trust for the Plan established hereunder to which the
Trustee or the Plan Administrator may be a party, and the claim, suit, or
proceeding is resolved in favor of the Trustee or Plan Administrator, they will
be entitled to reimbursement from the Trust Fund for any and all costs,
attorneys' fees, and other expenses pertaining thereto incurred by them for
which they will have become liable.
15.9. Exclusive Benefit: Except as provided below and otherwise
specifically permitted by law, the Trust Fund maintained pursuant to the Plan
may not be diverted to
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or used for other than the exclusive benefit of the Participants, retired
Participants or their Beneficiaries.
15.10. Prohibition Against Diversion of Funds: Except as provided below
and otherwise specifically permitted herein or by law, it shall be impossible by
operation of the Plan by power of revocation or amendment, by the happening of
any contingency, by collateral arrangement or by any other means, for any part
of the corpus or income of any fund maintained pursuant to the Plan or any funds
contributed thereto to be used for, or diverted to, purposes other than the
exclusive benefit of former or current Participants, retired Participants, or
their Beneficiaries.
15.11. Return of Contribution: Employer contributions to the fund shall be
irrevocable except as provided below:
(a) In the event the Employer makes an excessive contribution
because of a mistake of fact (pursuant to Section 403(c)(2)(A) of ERISA), the
Employer may demand repayment of such excessive contribution at any time within
one year following the time of payment and the Trustee thereupon will return the
excessive amount to the Employer within the one-year period. Earnings of the
Plan attributable to the excess contribution will not be returned to the
Employer but any losses attributable thereto will reduce the amount so returned.
(b) In the event the Plan receives an adverse determination from the
Commissioner of the Internal Revenue with respect to its initial qualification,
any contribution made incident to the initial qualification by the Employer may
be returned to the Employer within one-year after such determination, provided
the application for the determination is made by the time prescribed by law for
filing the Employer's return for the taxable year in which the Plan was adopted,
or such later date as the Secretary of the Treasury may prescribe.
(c) Notwithstanding any provisions of the Plan to the contrary, all
contributions by the Employer are conditioned upon the deductibility of the
contributions
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by the Employer under the Code and, to the extent any such deduction is
disallowed, the Employer may, within one year following the disallowance of the
deduction, demand repayment of such disallowed contribution and the Trustee must
return the contribution within one year following the disallowance. Earnings of
the Plan attributable to the contribution for which such deduction is disallowed
may not be returned to the Employer, but any losses attributable thereto must
reduce the amount so returned.
15.12. Employer's Protective Clause: Neither the Employer nor the Trustee,
nor their successors, will be responsible for the validity of any insurance or
annuity contract issued hereunder or for the failure on the part of the insurer
to make payments provided by any contract or for the action of any person which
may delay payment or render a contract null and void or unenforceable in whole
or in part.
15.13. Insurer's Protective Clause: Any insurer who will issue contracts
hereunder will not have any responsibility for the validity of this Plan or for
the tax or legal aspects of this Plan. The insurer will be protected and held
harmless in acting in accordance with any written direction of the Trustee, and
will have no duty to see to the application of any funds paid to the Trustee,
nor will be required to question any actions directed by the Trustee.
15.14. Receipt and Release for Payments: Any payment to a Participant, a
Participant's legal representative or Beneficiary, or to any guardian appointed
for the Participant or Beneficiary will, to the extent thereof, be in full
satisfaction of all claims hereunder against the Trustee and the Employer,
either of whom may require the Participant, legal representative or Beneficiary
or guardian, as a condition precedent to such payment, to execute a receipt and
release thereof in such form as determined by the Trustee or Employer.
15.15. Headings: The headings and subheadings of this Plan have been
inserted for convenience of reference and are to be ignored in any construction
of the provisions hereof.
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15.16. Construction of Plan: The types, amounts and costs of coverage and
benefits and other terms and conditions of eligibility for participation,
coverage and benefits are set forth in separate written plans or other documents
attached hereto as Exhibits the provisions of which are incorporated herein.
This Plan shall not operate in any way to modify the terms or conditions of such
plans or be construed to require participation or coverage under such plan where
such coverage or benefits are not available to a Participant under the terms
thereof. Such separate written plans or other documents shall be controlling in
every regard to the extent there is any conflict or inconsistency between the
terms thereof and this Plan, provided, however, the terms and provisions of the
documents and the terms and provisions of the Plan shall be construed as
mutually consistent to the fullest extent possible. The Plan shall be a single
plan as defined in Reg. Sec. 1.414(1)-1(b) although there are several documents
and distinct benefit features which apply to different participants.
ARTICLE XVI.
DEFINITIONS
For purposes of the Plan, the following words and phrases will have the
following meanings unless a different meaning is expressly stated or ascribed to
them in the Exhibit corresponding to the Participant's classification and
status.
16.1. Accrued Benefit: The Retirement Benefit payable at Normal Retirement
Age determined pursuant to the Exhibit corresponding to the Employee's
classification and status accrued as of any date.
Notwithstanding the above, a Participant's Accrued Benefit derived from
Employer contributions shall not be less than the minimum Accrued Benefit
provided pursuant to the Section entitled "Minimum Benefit for Top-Heavy Plan."
16.2. Actuarial Equivalent: The conversion to a form of benefit differing
in time, period, or manner of payment from the specific benefit provided under
the Article herein entitled "Plan Benefits" accomplished by applying the
actuarial assumptions set
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forth in Schedule A attached to the Exhibit corresponding to the Employee's
classification and status.
16.3. Administrative Committee: The person or persons or entity appointed
by the Plan Administrator to administer the Plan.
16.4. Affiliated Employer: The Employer and any corporation which is a
member of a controlled group of corporations (as defined in Code Section 414(b))
which includes the Employer; any trade or business (whether or not incorporated)
which is under common control (as defined in Code Section 414(c)) with the
Employer; and any other entity required to be aggregated with the Employer
pursuant to Regulations under Code Section 414(o).
16.5. Aggregation Group: Either a Required Aggregation Group or a
Permissive Aggregation Group.
(a) Required Aggregation Group: The group of plans consisting of the
following, which are required to be aggregated:
(1) all the plans of the Employer in which a Key Employee is a
Participant during the Plan Year containing the Determination Date or any of the
preceding four Plan Years; and
(2) any other plan of the Employer which enables any plan in
which a Key Employee participates to meet the requirements of Code Section
401(a)(4) or 410.
If the Required Aggregation Group is a Top-Heavy Group, all
plans in the Required Aggregation Group in which the Determination Dates fall
within the same calendar year will be considered Top-Heavy Plans. If the
Required Aggregation is not a Top-Heavy Group, no plan in the Required
Aggregation Group will be considered a Top-Heavy Plan.
(b) Permissive Aggregation Group: The group of plans consisting of
the following:
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(1) the Required Aggregation Group; and
(2) any plan not in the Required Aggregation Group which the
Employer wishes to treat as being aggregated with the Required Aggregation
Group, provided that the resulting group, taken as a whole, would continue to
satisfy the provisions of Code Sections 401(a) and 410.
If the Permissive Aggregation Group is a Top-Heavy Group, only
those plans which are part of the Required Aggregation Group and in which the
Determination Dates fall within the same calendar year will be considered
Top-Heavy Plans. If the Permissive Aggregation Group is not a Top-Heavy Group,
then no plan in the Permissive Aggregation Group will be considered a Top-Heavy
Plan.
(c) Any terminated plan maintained by the Employer within the last
five Plan Years ending on the Determination Date will be included in determining
the Aggregation Group.
16.6. Anniversary Date: The first day of the Plan Year.
16.7. Annual Benefit: The benefit payable annually under the terms of the
Plan (exclusive of any benefit not required to be considered for purposes of
applying the limitations of Code Section 415 to the Plan) payable in the form of
a Straight Life Annuity with no ancillary benefits. If the benefit under the
Plan is payable in any other form, the Annual Benefit shall be adjusted to be
the Actuarial Equivalent of a Straight Life Annuity.
16.8. Annuity: A single premium annuity contract or an annuity under a
group annuity contract purchased by the Trustee on behalf of a Participant or
Beneficiary from an insurance company for purposes of providing the benefits
payable under the terms of the Plan.
16.9. Annuity Starting Date: The first day of the first period for which
an amount is paid as an annuity or, in the case of a benefit not payable in the
form of an annuity, the first day on which all events have occurred that
entitles the Participant to such
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benefit. In the case of a deferred annuity, the Annuity Starting Date shall be
the date on which the annuity payments are scheduled to commence.
16.10. Average Monthly Compensation: See Exhibit corresponding to
Participant's classification and status.
16.11. Beneficiary:
(a) The last person or persons designated by the Participant to
receive benefits payable under the Plan in the event of death. In the event a
Beneficiary is not designated, the Participant's surviving Spouse will be the
deemed Beneficiary. If neither a designated Beneficiary nor the Participant's
Spouse survives the Participant the Participant's estate will be deemed the
Beneficiary.
(b) Subject to the terms of any life insurance policy, any
designated Beneficiary may be changed from time to time. To change a Beneficiary
in a policy the Participant must inform the Plan Administrator and the Trustee
in writing. The Trustee must take immediate steps to complete the change with
the insurer but will not be liable for by its any delay in making the change,
unless caused by gross negligence. No change of Beneficiary will be binding upon
the insurer until forms properly executed by the Trustee have been filed with
and acknowledged by the insurer at its home office.
(c) No designation of Beneficiary or change of designation of
Beneficiary made under this Section will be effective until the Plan
Administrator and the Trustee actually receive a written notice of such
designation or change, signed by the Participant, and, if the Participant is
married and the designated Beneficiary is not the Participant's Spouse,
consented to by the Participant's Spouse. The Spouse's written consent will
acknowledge the effect of the consent and will be witnessed by the Plan
Administrator or by a notary public.
(d) No spousal consent to a Beneficiary designation is required if
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(1) The Participant's Spouse has waived the right to be the
Participant's Beneficiary and such waiver is in accordance with the last
sentence of paragraph (c) above;
(2) it is established to the satisfaction of the Plan
Administrator that
(i) the Participant has no Spouse, or
(ii) the Participant's Spouse cannot be located;
(3) no spousal consent is required in accordance with
applicable Treasury or Department of Labor Requirements.
In such event, the designation of a Beneficiary shall be made on a
form satisfactory to the Plan Administrator. A Participant may at any time
revoke his designation of a Beneficiary or change his Beneficiary by filing
written notice of such revocation or change with the Plan Administrator.
However, the Participant's Spouse must again consent in writing to any change in
Beneficiary unless the original consent acknowledged that the Spouse had the
right to limit consent only to a specific Beneficiary and that the Spouse
voluntarily elected to relinquish such right.
16.12. Break in Service: A Period of Severance of at least twelve (12)
consecutive months.
In the case of an individual who is absent from work for maternity or
paternity reasons, the 12-consecutive month period beginning on the first
anniversary of the first date of such absence will not constitute a Break in
Service. For purposes of this paragraph, an absence from work for maternity or
paternity reasons means an absence:
(1) by reason of the pregnancy of the individual,
(2) by reason of the birth of a child of the individual,
(3) by reason of the placement of a child with the individual in
connection with the adoption of such child by such individual, or
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(4) for purposes of caring for such child for a period beginning
immediately following such birth or placement.
If the Employer is a member of an affiliated service group (under Code
Section 414(m)), a controlled group of corporations (under Code Section 414(b)),
a group of trades or businesses under common control (under Code Section 414(c))
or any other entity required to be aggregated with the Employer pursuant to Code
Section 414(o) and the regulations thereunder, service will be credited for any
employment for any period of time for any other member of such group. Service
will also be credited. for any individual required under Code Section 414(n) or
414(o) and the Regulations thereunder to be considered an Employee of any
employer aggregated under Code Section 414(b), (c) or (m).
16.13. Code: The Internal Revenue Code of 1986, including any amendments
thereto.
16.14. Compensation: A Participant's wages and salaries received during
the calendar year for personal services rendered to the Employer as an Employee
in the Eligible Class, as may be modified in the Exhibit corresponding to the
Employee's classification and status.
Compensation shall also include any amount which is contributed by the
Employer pursuant to a salary reduction agreement under Code Section 401(k),
Section 402(e)(3) and Section 402(h), a simplified employee pension plan under
Code Section 408(k), a cafeteria plan under Code Section 125 or a tax-deferred
annuity under Code Section 403(b).
For years beginning after December 31, 1988, the Compensation of each
Participant which may be taken into account for determining all benefits
provided under the Plan for any Plan Year will not exceed $200,000, as adjusted
under Code Section 415(d) of the Code, except that the dollar increase in effect
on January 1 of any calendar year is effective for years beginning in such
calendar year and the first adjustment to the $200,000 limitation is effected on
January 1, 1990.
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Notwithstanding the foregoing, for Plan Years beginning after December 31,
1993, the Compensation of each Participant which may be taken into account under
the Plan will not exceed $150,000, except as adjusted as follows. For any Plan
Year beginning after December 31, 1994, such $150,000 annual compensation limit
shall be adjusted as provided under Code Section 415(d), except that such
adjustments shall only be made in increments of $10,000, rounded down, to the
next lowest multiple of $10,000. Notwithstanding the foregoing, if the Plan is
maintained pursuant to one or more collective bargaining agreements ratified
before August 10, 1993, the above provision limiting Compensation to $150,000
shall not apply to contributions made or benefits accrued pursuant to such
collective bargaining agreements for Plan Years beginning before the earlier of:
(1) January 1, 1997, or
(2) the latest of
(a) January 1, 1994, or
(b) the date on which the last of such collective
bargaining agreements terminates, without regard to any
extension, amendment, or modification made on or after August 10, 1993.
If the period for determining compensation used in calculating an
Employee's allocation for a determination period is a short plan year (i.e.
shorter than 12 months), the annual compensation limit is an amount equal to the
otherwise applicable annual compensation limit multiplied by the fraction, the
numerator of which is the number of months in the short plan year, and the
denominator of which is 12. In determining the compensation of a Participant for
purposes of this limitation, the rules of section 414(q)(6) of the Code shall
apply except in applying such rules, the term Family Member shall include only
the Spouse of the Participant and any lineal descendants of the Participant who
have not attained age 19 before the close of the Plan Year. If, as a result of
the application of such rules the adjusted, applicable annual compensation limit
is exceeded,
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then (except for purposes of determining the portion of compensation up to the
integration level if this plan provides for permitted disparity), the limitation
shall be prorated among the affected individuals in proportion to each such
individual's compensation as determined under this Section prior to the
application of this limitation or, the limitation shall be adjusted in
accordance with any other method permitted by Regulation.
If compensation for any prior determination period is taken into account
in determining an Employee's benefit for the current determination period, the
compensation for such prior year is subject to the applicable annual
compensation limit in effect for that prior year. For this purpose, for years
beginning before January 1, 1990, the applicable annual compensation limit is
$200,000.
For purposes of applying the limitations of Code Section 415, "Code
Section 415 Compensation" will include the Participant's wages, salaries, fees
for professional service and other amounts for personal services actually
rendered in the course of employment with an Employer maintaining the Plan
(including, but not limited to, commissions paid to salesmen, compensation for
services on the basis of a percentage of profits, commissions on insurance
premiums, tips and bonuses and, in the case of a Participant who is an Employee
within the meaning of Code Section 401(c)(1) and the Regulations thereunder, the
Participants Earned income (as described in Code Section 401(c)(2) and the
Regulations thereunder)) paid during the Limitation Year. "415 Compensation"
will exclude:
(a) Employer contributions to a plan of deterred compensation which
are not includible in the Employee's gross income for the taxable year in which
contributed, or Employer contributions under a simplified employee pension plan
to the extent such contributions are deductible by the Employee, or any
distributions from a plan of deferred compensation;
(b) Amounts realized from the exercise of a non-qualified stock
option, or when restricted stock (or property) held by the Employee either
becomes freely transferable or is no longer subject to a substantial risk of
forfeiture;
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(c) Amounts realized from the sale, exchange or other disposition of
stock acquired under a qualified stock option; and
(d) Other amounts which received special tax benefits, or
contributions made by the Employer (whether or not under a salary reduction
agreement) towards the purchase of an annuity described in Section 403(b) of the
Internal Revenue Code (whether or not the amounts are actually excludable from
the gross income of the Employee).
For purposes of applying the limitations of Code Section 415, "415
Compensation" for a Limitation Year is the compensation actually paid or
includible in gross income during such Limitation Year.
16.15. Controlled Group: Any group of business entities under common
control, including but not limited to proprietorships and partnerships, or a
controlled group of corporations within the meaning of Code Sections 414(b), (c)
and (d).
16.16. Determination Date: For any Plan Year subsequent to the first Plan
Year, the last day of the preceding Plan Year. For the first Plan Year, the last
day of that Plan Year.
16.17. Direct Rollover: A direct rollover is a payment by the Plan to an
Eligible Retirement Plan specified by the Distributee.
16.18. Disability: A bodily injury, disease or mental condition which
prevents the individual from engaging in any employment or occupation for wage
or profit on a continued and permanent basis for the remainder of the
individual's life, for which such individual is eligible for and receiving a
disability benefit under Title II of the Federal Social Security Act. The
permanence and degree of such incapacity will be supported by medical evidence.
No Participant shall be deemed to have incurred a Disability, if disability
results from engaging in a criminal act, a self-inflicted injury, service in the
armed forces of any county, or war, insurrection or rebellion.
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16.19. Distributee: A distributee includes an Employee or former Employee.
In addition, the Employee's or former Employee's surviving Spouse and the
Employee's or former Employee's former Spouse who is the alternate payee under a
qualified domestic relations order, as defined in Section 414(p) of the Code,
are Distributees with regard to the interest of the Spouse or former Spouse.
16.20. Earliest Retirement Date: The earliest date on which the
Participant could elect to receive retirement benefits under the Plan.
16.21. Early Retirement Age: The age on which a Participant shall have
attired the age and completed the requisite Years of Service as set forth in the
Exhibit corresponding to the Participant's classification and status.
16.22. Early Retirement Date: The first day of the month next following a
Participant's attainment of Early Retirement Age on which the Participant elects
to begin receiving his retirement benefits hereunder.
16.23. Eligible Class:
(a) With respect to benefits described in Exhibit A: Employment as a
salaried Employee at Amphenol Corporation who receives a regular stated
compensation other than a retirement payment retainer or fee, excluding
however:
(i) Any person in any other Eligible Class currently accruing
credits under the Plan or any other defined benefit pension plan to which the
Employer or any Affiliated Employer is contributing;
(ii) Any employee whose conditions of employment are
determined by collective bargaining, unless such employment shall be included in
the Plan by the express terms of a collective bargaining agreement;
(iii) Any person whose employment is not for at least 1,000
Hours of Service during any Plan Year;
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(iv) Any Employee of a Foreign Subsidiary if such Employee is
not a citizen of the United States;
(v) Any Employee of a Foreign Subsidiary if contributions
under a funded plan of deferred compensation are provided by an person or
corporation, other than the Employer, with respect to the remuneration paid to
such Employee by such Foreign Subsidiary;
(vi) Any Employee of a Foreign Subsidiary if such Employee was
not transferred by the Employer to employment with the Foreign Subsidiary
directly from employment with the Employer; and
(vii) Any Employee of Sine Systems*Pyle Connections
Corporation.
(b) With respect to benefits described in Exhibit B: Employees in a
Participating Group at Amphenol Corporation employed on an hourly basis;
excluding, however,
(i) Any Employee in any other Eligible Class who is an active
participant of the Plan or any maintained by a Participating Employer;
(ii) Any Employee whose conditions of employment are
determined by collective bargaining, unless such Employee shall be included in
the Plan by the express terms of a collective bargaining agreement;
(iii) Any Employee who is not a Spectra Strip Employee whose
regularly scheduled employment is for less than 1,000 Hours of Service during a
Plan Year;
(iv) Any Employee of a Foreign Subsidiary if such Employee is
not a citizen of the United States; and
(v) Any Employee of a Foreign Subsidiary if contributions
under a funded plan of deferred compensation are provided by any person or
corporation,
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other than the Employer, with respect to the remuneration paid to such Employee
by such Foreign Subsidiary; and
(vi) Any Employee of a Foreign Subsidiary if such Employee was
not transferred by the Employer to employment with the Foreign Subsidiary
directly from employment with the Employer.
(c) With respect to benefits described in Exhibit C: Employment as a
full or part-time employee regularly working at least 1,000 hours per year on
the salaried payroll of LPL Technologies Inc., Times Fiber Communications, Inc.
or Amphenol Corporation Headquarters; excluding, however any Amphenol operations
employee hired prior to June 1, 1987.
(d) With respect to any benefits described in Exhibit D: Employment
at the Chatham Cable Company division of times Fiber Communications, Inc.
(principally at Chatham, Virginia or Phoenix, Arizona) on an hourly basis.
(e) With respect to any benefits described in Exhibit E: Salaried
Employees of Sine Systems*Pyle Connectors Corporation who shall have been
employed at Pyle-National, Inc. on the date before the date of the merger with
The Sine Companies, Inc.
(f) With respect to benefits described in Exhibit F: Employment at
the Pyle-National Division, represented by the General Service Employees' Union,
Local No. 73 of the Service Employees' International Union, AFL-CIO.
(g) With respect to benefits described in Exhibit G: Employment as a
salaried Employee at Sidney, New York.
(h) With respect to benefits described in Exhibit H: Employment at
the Sidney Division of Amphenol Corporation (Sidney Division, Sidney, New York)
on an hourly basis, including employment as an hourly rated person on incentive
pay plan, within the scope of the collective bargaining agreement between the
Employer and the Participating Unit.
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16.24. Eligible Retirement Plan: An individual retirement account
described in Section 408(a) of the Code, an individual retirement annuity
described in Section 408(b) of the Code, an annuity plan described in Section
403(a) of the Code, or a qualified trust described in Section 401(a) of the
Code, that accepts the Distributee's Eligible Rollover Distribution. However, in
the case of an Eligible Rollover Distribution to the surviving Spouse, an
Eligible Retirement Plan is only an individual retirement account or individual
retirement annuity.
16.25. Eligible Rollover Distribution: Any distribution of all or any
portion of the balance to the credit of the Distributee, except that an eligible
rollover distribution does not include: any distribution that is one of a series
of substantially equal periodic payments (not less frequently than annually)
made for the life (or life expectancy) of the Distributee or the joint lives (or
joint life expectancies) of the Distributee and the Distributee's designated
Beneficiary, or for a specified period of ten (10) years or more; any
distribution to the extent such distribution is required under Section 401(a)(9)
of the Internal Revenue Code; and the portion of any distribution that is not
includible in gross income (determined without regard to the exclusion for net
unrealized appreciation with respect to employer securities).
16.26. Employee: Any person in the employ of the Employer or of any other
employer required to be aggregated with the Employer under Sections 414(b), (c),
(m) or (o) of the Code, excluding any person who is an independent contractor.
The term Employee will also include any Leased Employee deemed to be an
Employee of any employer described in the previous paragraph as provided in
Sections 414(n) or (o) of the Code.
16.27. Employer: Amphenol Corporation, any successor which will maintain
this Plan and any predecessor which has maintained this Plan. The Employer is a
corporation, with principal offices in the State of Connecticut.
16.28. Employment Commencement Date: The date the Employee first performs
an Hour of Service for the Employer.
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16.29 Exhibit: The attachment to this Plan which forms a part of this Plan
which describes the benefits, right and features applicable to Employees within
a certain Eligible Class. The terms of any Exhibit shall modify and supersede
the provision of this document (without regard to the Exhibit) in the event of
any inconsistency. However, notwithstanding the distinct benefit structures,
rights and features described in any Exhibit, the Plan is to be treated as a
single plan as described in Regulation Section 1.414(1)-1(b)(1) and all
provisions shall be construed in a manner consistent with such treatment.
16.30. ERISA: The Employee Retirement Income Act of 1974, as it may from
time to time be amended or supplemented.
16.31. Family Member: The Employee's spouse, any of the Employee's lineal
descendants and ascendants and the spouses of the Employee's lineal descendants
and ascendants, all as described in Code Section 414(q)(6)(B).
16.32. Fiscal Year: The Employer's accounting year of 12 months commencing
on January 1 of each year and ending the following December 31.
16.33. Foreign Subsidiary: Any corporation organized or created otherwise
than in or under the laws of the United States or any State therein or territory
thereof if:
(a) twenty percent (20%) or more of such foreign corporation's
voting stock is owned by the Employer; or
(b) fifty percent (50%) or more of such foreign corporation's voting
stock is owned by a foreign corporation described in subparagraph (a)
immediately above;
provided, in either case, that an agreement which remains in effect has been
entered into by the Employer to have the insurance system established under
Title II of the Social Security Act, as amended, extended to cover all United
States citizens who are employed by such foreign corporation; and it is not an
Affiliated Employer.
16.34. Forfeiture: That portion of a Participant's Accrued Benefit that is
not vested, and occurs on the earlier of:
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(a) the distribution of the entire vested portion of a Participant's
Accrued Benefit; or
(b) the last day of the Plan Year in which the Participant incurs
five (5) consecutive 1-Year Breaks in Service.
Furthermore, for purposes of paragraph (a) above, in the case of a
Participant who has terminated employment with the Employer, and whose vested
Accrued Benefit is zero, such Participant shall be deemed to have received a
distribution of his vested Accrued Benefit upon his termination of employment.
In addition, the term Forfeiture shall also include amounts deemed to be
Forfeitures pursuant to any other provision of this Plan.
16.35. Highly Compensated Employee: An Employee who, on the snapshot day:
(a) is a five percent (5%) owner (as defined in the definition of
"Key Employee");
(b) received Compensation from the Employer in excess of the amount
set forth in Code Section 414(q)(1)(B) (as adjusted pursuant to Section 415(d)
of the Code);
(c) received Compensation from the Employer in excess of the amount
set forth in Code Section 414(q)(1)(C) and was a member of the Top-Paid Group;
or
(d) was an officer of the Employer described in Code Section
414(q)(1)(D).
If the determination on Employee's status as a Highly Compensated Employee
is made earlier than the last day of the Plan Year, Compensation shall be
projected for the Plan Year under a reasonable method established by the
Employer.
In the event there are Employees not employed on the snapshot day that are
taken into account for purposes of the "nondiscrimination requirements"
identified in Rev.
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Proc. 93-42, the term Highly Compensated Employee shall include any eligible
Employee for the Plan Year who:
(a) terminated employment prior to the snapshot day and was a Highly
Compensated Employee in the prior year;
(b) terminated prior to the snapshot day and
(i) was a five percent (5%) owner;
(ii) has Compensation for the Plan Year greater than or equal
to the projected Compensation of any Employee who is treated as a Highly
Compensated Employee on the snapshot day (except for Employees who are Highly
Compensated Employees solely because they are five percent (5%) owners or
officers); or
(iii) is an officer and has Compensation greater than or equal
to the projected Compensation of any other officer who is a Highly Compensated
Employee on the snapshot day solely because that person is an officer.
In applying the above method in determining Highly Compensated
Employees, the terms and provisions of Regulation Section 1.414(q)-IT shall
apply to the extent that they are not inconsistent with the methods specifically
provided above and in Rev. Proc. 93-42.
16.36. Highly Compensated Participant: A Highly Compensated Employee who
has satisfied the eligibility requirements and is participating in the Plan.
16.37. Hour of Service:
(1) Each hour for which an Employee is paid, or entitled to payment,
for the performance of duties for the Employer. These hours will be credited to
the Employee for the computation period in which the duties are performed.
(2) Each hour for which an Employee is paid, or entitled to payment,
by the Employer on account of a period of time during which no duties are
performed (irrespective of whether the employment relationship has terminated)
due to vacation,
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holiday, illness, incapacity (including Disability), layoff, jury duty, military
duty or leave of absence, during the applicable computation period. These hours
include the normally scheduled work hours for the Employee during the first six
(6) months of disability or while the Employee is receiving any short-term or
long-term disability benefits under any insured or non-insured disability plan
to which the Employer contributes. Notwithstanding the above,
(a) no more than 501 Hours of Service shall be credited to an
Employee an account of any single continuous period during which the Employee
performs no duties (whether or not such period occurs in a single computation
period);
(b) an hour for which an Employee is directly or indirectly paid, or
entitled to payment, on account of a period during which no duties are performed
shall not be credited to the Employee if such payment is made or due under a
plan maintained solely for the purpose of complying with applicable worker's
compensation, or unemployment compensation or disability insurance laws; and
(c) Hours of Service shall not be credited for a payment which
solely reimburses an Employee for medical or medically related expenses incurred
by the Employee.
For purposes of this Section, a payment shall be deemed to be made by or
due from the Employer regardless of whether such payment is made by or due from
the Employer directly, or indirectly through, among others, a trust fund, or
insurer, to which the Employer contributes or pays premiums and regardless of
whether contributions made or due to the trust fund, insurer, or other entity
are for the benefit of particular Employees or are on behalf of a group of
Employees in the aggregate.
(3) Each hour for which back pay, irrespective of mitigation of
damages, is either awarded or agreed to by the Employer. The same Hours of
Service will not be credited both under paragraph (1) or paragraph (2), as the
case may be, and under this paragraph (3). These hours will be credited to the
Employee for the computation
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period or periods to which the award or agreement pertains rather than the
computation period in which the award, agreement or payment is made.
(4) Each hour of the normally scheduled work hours for each week
during any period the Employee is on any leave of absence from work with the
Employer for military service with the armed forces of the United States, but
nor to exceed the period required under the law pertaining to veteran's
reemployment rights; provided, however, if the Employee fails to report to work
at the end of such leave during which the Employee has reemployment rights, the
Employee shall not receive credit for hours on such leave.
(5) The number of normally scheduled work hours for each day of
authorized leave of absence, granted by the Employer for which the Employee is
not compensated.
Hours of Service will be credited for employment with other members
of an affiliated service group (under Code Section 414(m)), a controlled group
of corporations (under Code Section 414(b)), or a group of trades or businesses
under common control (under Code Section 414(c)) of which the adopting Employer
is a member, and any other entity required to be aggregated with the Employer
pursuant to Code Section 414(o) and the Regulations thereunder.
Hours of Service will also be credited for any individual considered
an Employee for purposes of this Plan under Code Section 414(n) or Code Section
414(o) and the Regulations thereunder.
The provisions of Department of Labor Regulations 2530.200b-2(b) and
(c) are incorporated herein by reference.
Solely to determine whether a one Year Break in Service has occurred
for eligibility or vesting purposes for an Employee who is absent on maternity
or paternity leave, a Break in Service will not be deemed to occur until the
second anniversary of the first day of the maternity or paternity leave. The
period between the first and second
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anniversaries of the maternity or paternity leave neither counts as a Break in
Service nor as a Year of Service.
Service will be determined on the basis of actual hours for which an
Employee is paid or entitled to payment. When no time records are available, the
Employee shall be given credit for Hours of Service based on the number of
normally scheduled work hours for each week the Employee is on the Employer's
payroll (which shall not be less than 40 hours per week for exempt salaried
Employees), as determined in accordance with reasonable standards and policies
from time to time adopted by the Plan Administrator pursuant to Department of
Labor Regulations Section 2530.200b-2b(b) and (c).
16.38. Inactive Participant: A former active Participant who has an
Accrued Benefit.
16.39. Key Employee: An Employee who, at any time during the Plan Year or
any of the four preceding Plan Years, is
(a) an officer of the Employer having Compensation greater than
fifty percent (50)% of the amount in effect under Section 415(b)(1)(A) of the
Code for any Plan Year;
(b) one of the ten (10) Employees having Compensation from the
Employer of more than the limitation in effect under Section 415(c)(1)(A) of the
Code and owning (or considered as owning within the meaning of Code Section 318)
the largest interests in the Employer;
(c) a five percent (5%) owner of the Employer. "Five percent (5%)
any person who owns (or is considered as owning within the meaning of Code
Section 318) more than five percent (5%) of the outstanding stock of the
Employer or stock possessing more than five percent (5%) of the total combined
voting power of all stock of the Employer, or in the case of an unincorporated
business, any person who owns more than five percent (5%) of the capital or
profits interest in the Employer; or
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(d) a one percent (1%) owner of the Employer having
Compensation from the Employer of more than $150,000. "One percent (1%) owner"
means any person who owns (or is considered as owning within the meaning of Code
Section 318) more than one percent (1%) of the outstanding stock of the Employer
or stock possessing more than one percent (1%) of the total combined voting
power of all Stock of the Employer, or in the case of an unincorporated
business, any person who owns more than one percent (1%) of the capital or
profits interest in the Employer.
For purposes of paragraph (a), no more than the lesser of (i) fifty
Employees, or (ii) the greater of ten percent (10%) of the Employees or three
Employees will be treated as officers. For purposes of paragraph (b), if two
Employees have the same interest in the Employer, the Employee having greater
Compensation from the Employer will be treated as having a larger interest. Such
term will not include any officer or Employee of an entity referred to in
Section 414(d) of the Code (relating to governmental plans). For purposes of
determining the number of officers taken into account under paragraph (a),
Employees described in Section 414(q)(8) of the Code will be excluded.
16.40. Late Retirement Date: The first day of the month coinciding with or
next following the date the Participant retires after attaining his or her
Normal Retirement Age.
16.41. Leased Employee: Any person (other than an Employee of the
Employer) who pursuant to an agreement between the Employer and any other person
("leasing organization") has performed for the Employer (or for the Employer and
related persons determined in accordance with Section 414(n)(6) of the Code)
services of a type historically performed by employees in the business field of
the Employer on a substantially full-time basis for a period of at least one
year. Contributions or benefits provided a Leased Employee by the leasing
organization which are attributable to services performed for the Employer will
be treated as provided by the Employer.
A Leased Employee will not be considered an Employee of the Employer if:
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(a) such Leased Employee is covered by a money purchase pension plan
providing:
(1) a nonintegrated employer contribution rate of at least ten
percent (10%) of compensation, as defined in Section 415(c)(3) of the Code, but
including amounts contributed pursuant to a salary reduction agreement which are
excludable from the employee's gross income under Section 125, Section
402(e)(3), Section 402(h) or Section 403(b) of the Code,
(2) immediate participation, and
(3) full and immediate vesting; and
(b) Leased Employees do not constitute more than twenty percent
(20%) of the Employer's Non-Highly Compensated Employees.
16.42. Limitation Year: The Plan Year.
16.43. Non-Highly Compensated Employee: Any Employee who is not a Highly
Compensated Employee.
16.44. Non-Key Employee: Any Employee who is not a Key Employee.
16.45. Normal Form of Benefit: The form of benefit set forth in the
Exhibit corresponding to the Participant's classification and status.
16.46. Normal Retirement Age: Age Sixty-five (65), or such other age set
forth in the Exhibit corresponding to the Participant's classification and
status.
16.47. Normal Retirement Date: The first day of the month coinciding with
or next following the date a Participant attains Normal Retirement Age.
16.48. Participant: Any Employee who has satisfied the eligibility
requirements and is participating in the Plan.
16.49. Participating Employer: Any corporation or entity, other than the
Employer, whether an affiliate or subsidiary of the Employer or not, who, with
the consent
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of the Employer and the Trustee, adopts the Plan and all of the provisions
hereof by a properly executed document evidencing said intent of such
Participating Employer.
16.50. Period of Military Duty: The period of time from the date the
Employee was first absent from active work for the Employer because of duty in
the armed forces of the United States to the date the Employee was re-employed
by the Employer at a tine when the Employee had a right to re-employment in
accordance with seniority rights as protected under Section 2021 through 2026 of
Title 38 of the U.S. Code.
16.51. Period of Service: The aggregate of all time period(s) commencing
with the Employee's Employment Commencement Date and ending on the date a Break
in Service begins.
16.52. Period of Severance: A continuous period of time of at least twelve
(12) months during which the Employee is not employed by the Employer. Such
period begins on the date the Employee retires, quits or is discharged, or if
earlier, the twelve (12) month anniversary of the date on which the Employee was
otherwise first absent from service.
16.53. Plan: The Employer's qualified retirement plan as set forth in this
document, including the Exhibits attached hereto and made a part hereof and as
hereafter amended, known as the Pension Plan for Employees of Amphenol
Corporation.
Effective February 12, 1975, the Eltra Corporation Pension Plan for
Salaried Employees was formed by the merger of the seven pension plans then
sponsored by the Eltra Corporation. Effective December 31, 1979, this plan was
amended to provide benefits to Spectra Strip employees. Effective January 1,
1982, this plan was renamed the Bunker Ramo/Eltra Corporation Pension Plan for
Salaried Employees - former Eltra Salaried Plan (the "Eltra Plan").
Effective January 1, 1976, the Bunker Ramo Profit Sharing Retirement Plan
(the "Profit Sharing Plan") was integrated and merged with the Bunker Ramo
Corporation Pension Plan, which was subsequently renamed the Bunker Ramo/Eltra
Corporation Pension Plan for Salaried Employees (the "Bunker Plan").
82.
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Effective December 9, 1985, all assets and liabilities of the Bunker Plan,
except for those related to active employees, were spunoff into the Bunker
Ramo/Eltra Corporation Retirement Plan ("B/E Retirement Plan").
Effective December 30, 1985, all assets and liabilities of the Eltra Plan,
except for those related to active and former employees of the Mergenthaler and
Spectra Strip divisions, were spunoff into five additional plans, one of which
was the NARCO Retirement Plan ("NARCO Plan").
Effective June 17, 1986, the Eltra Plan was merged with the Bunker Plan,
with each plan's benefit structure preserved. Effective August 1, 1986, the
merged plan was renamed the Allied Corporation Pension Plan for Salaried
Employees (the "Allied Plan").
Prior to December 10, 1986, all liabilities and assets of the Bunker
Ramo/Eltra Corporation Pension Plan for Hourly Rated Mergenthaler Employees
Represented by Local 365 UAW (the "Mergenthaler Plan") were merged into the
Allied Plan, with benefits for active participants equal to those under the
Eltra Plan.
Prior to December 31, 1986, all liabilities and certain assets of the
NARCO Plan and the B/E Retirement Plan were merged into the Allied Plan.
Effective January 1, 1987, assets and liabilities related to active,
terminated and retired employees of the Amphenol Corporation were spun off to
the Salaried Employees' Pension Plan of the Amphenol Corporation.
Effective January 1, 1987, assets and liabilities related to active,
terminated and retired employees of the Linotype Company were spun off to the
Linotype Company Pension Plan.
Effective December 31, 1997, all liabilities and assets of the defined
benefit pension plans then sponsored by the Employer and its affiliates were
merged with the Plan (formerly known as the Salaried Employees Pension Plan of
Amphenol Corporation) which was subsequently renamed Pension Plan for Employees
of Amphenol Corporation.
83.
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16.54. Plan Administrator: The Employer or such persons or entities
designated by the Employer to administer the Plan on behalf of the Employer. The
Plan Administrator shall be a named "fiduciary", as referred to in Section
402(a) of ERISA, with respect to the management, operation and administration of
the Plan.
16.55. Plan Year: The 12-consecutive month period designated by the
Employer beginning January 1 of each year and ending the following December 31.
16.56. Predecessor Employer: A firm absorbed by the Employer by change of
name, merger, acquisition or a change of corporate status, or a firm of which
the Employer was once a part.
16.57. Present Value of Accrued Benefit: The lump sum value of a
Participant's Accrued Benefit at a valuation date, calculated by reference to
the actuarial assumptions set forth in Schedule A attended to the corresponding
Exhibit hereto.
16.58. Primary Social Security Retirement Benefit: A Participant's Primary
Social Security Retirement Benefit is the estimated Primary Insurance Amount to
which the Participant is entitled at his Normal Retirement Date or Late
Retirement Date, if later. If a Participant's Normal Retirement Date or Late
Retirement Date precedes his Social Security Retirement Age, his Primary
Insurance Amount will be decreased by the applicable reduction factor provided
under Title II of the federal Social Security Act for the period between Normal
Retirement Date or Late Retirement Date and his Social Security Retirement Age.
If a Participant retires after his Social Security Retirement Age, his Primary
Insurance Amount will be increased by the applicable delayed retirement credit
provided under Title II of the federal Social Security Act for the period
between his Social Security Retirement Age and his actual retirement date or age
seventy (70), whichever is earlier. The failure of the Participant to receive
such amount or any portion thereof for whatever reason shall be disregarded.
When determining the Participant's Primary Insurance Amount, it will be assumed
that the Participant received Compensation for all prior years by applying a
retrospective salary scale to the Participant's Compensation which he received
during the plan year preceding his last day of employment. This
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retrospective salary scale will be based on the actual past changes in the
national average wages from year to year as determined by the Social Security
Administration. The application of this retrospective salary scale to the
Participant's Compensation which he received during the plan year preceding his
last day of employment will produce an estimate of Compensation from the
Participant's last day of employment backwards to the calendar year of the
Participant's eighteen birthday. If a Participant's last day of employment
occurs before his 65th birthday, his Compensation which he received during the
plan year preceding his last day of employment will be assumed to continue from
his last day of employment to his 65th birthday for purposes of determining his
Primary Insurance Amount. However, if the Participant provides the Employer with
satisfactory evidence of the Participant's actual past compensation for such
prior years and if such past compensation is treated as wages under the Social
Security Act, the Plan must use such actual past compensation. The Plan must
provide written notice to each Participant of the Participant's right to supply
actual compensation history and of the financial consequences of failing to
supply such history. The notice must be given each time the summary plan
description is provided to the Participant and must also be given upon the
Participant's separation from service. The notice must also state that the
Participant can obtain the actual compensation history from the Social Security
Administration.
16.59. Qualified Domestic Relations Order: A signed domestic relations
order issued by a state court which creates, recognizes or assigns to an
alternate payee(s) the fight to receive all or part of a Participant's Accrued
Benefit and which meets the requirements of Code Section 414(p).
16.60. Qualified Joint and Survivor Annuity: An annuity for the life of
the Participant with a survivor annuity for the life of the Participant's Spouse
equal to fifty percent (50%) of the amount of the annuity payable during the
joint lives of the Participant and the Participant's Spouse, and which is the
Actuarial Equivalent of the Normal Form of Benefit.
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16.61. Qualified Pre-Retirement Survivor Annuity: An annuity form of
payment for the life of the surviving Spouse of the Participant who dies prior
to his Annuity Starting Date in an amount equal to the benefit that would have
been payable if the Participant had:
(a) separated from service on the date of death (or date of
separation from service, if earlier),
(b) survived to the Earliest Retirement Age,
(c) retired as of the Earliest Retirement Age with an immediate
Qualified Joint and Survivor Annuity, and
(d) died on the day after the Earliest Retirement Age.
16.62. Re-employment Commencement Date: The date the Employee is first
credited with an Hour of Service for performing duties following a Break in
Service or Period of Severance.
16.63. Re-entry Date: The date an Inactive Participant re-enters the
Plan.
16.64. Regulation. Income Tax Regulations as promulgated by the Secretary
of the Treasury or his delegate, and as amended from time to time.
16.65. Retirement Termination of employment while in the Eligible Class:
(a) after the Participant attains Normal Retirement Age,
(b) after the Participant attains Early Retirement Age, or
(c) due to Disability.
16.66. Social Security Retirement Age: The age used as the retirement age
under Section 216(1) of the Social Security Act, except that such Section shall
be applied without regard to the age increase factor and as if the early
retirement age under Section 216(l)(2) of such Act were sixty-two (62).
16.67. Spouse: The legal husband or wife or surviving husband or wife of
the Participant who is married to, and not legally separated or divorced from
the Participant,
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and who has been so married for a period of not less than twelve (12) months as
of the annuity commencement date or date of death of the Participant, provided
that a person who was formerly legally married to a Participant will be treated
as the Spouse or surviving Spouse and a person who is currently legally married
to a Participant will not be treated as the Spouse or surviving Spouse to the
extent provided under a Qualified Domestic Relations Order.
16.68. Straight Life Annuity: An annuity payable in equal installments for
the life of the Participant that terminates upon the Participant's death.
16.69. Super Top-Heavy Plan: This Plan for any Plan Year in which, as of
the Determination Date, "90%" were substituted for "60%" where it appears in the
definition of "Top-Heavy Plan".
16.70. Top-Heavy Group: Any Aggregation Group for which the sum as of the
Determination Date of
(a) the present value of the cumulative accrued benefits for Key
Employees under all defined benefit plans included in the Aggregation Group, and
(b) the aggregate of the accrued benefit of Key Employees under all
defined contribution plans in the Aggregation Group, exceeds sixty percent (60%)
of the similar sum determined for all Employees.
16.71. Top-Heavy Plan: This Plan for any Plan Year in which, as of the
Determination Date, the sum of:
(a) the Accrued Benefits of Key Employees under this Plan and any
other defined benefit plan of the Employer which is included with this Plan in
an Aggregation Group, plus
(b) the present value of the cumulative accrued benefits for Key
Employees under any defined contribution pension plan of Employer which is
included with this Plan in an Aggregation Group, exceeds sixty percent (60%) of
a similar sum determined for all Key Employees and Non-Key Employees.
87.
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To the extent required by Code Section 416(g)(3), distributions from
such plans during the five-year period ending on the Determination Date will be
added to said Accrued Benefits and said aggregate of present values of the
cumulative accrued benefits (both for Key Employees and all Key Employees and
Non-Key Employees).
For purposes of this Section and to the extent required by Code
Section 416(g)(4)(A) and (B), rollover contributions or similar transfers
initiated by an Employee and made after December 31, 1983, and benefits and
accounts of an Employee who was a Key Employee but who will have ceased to be a
Key Employee will not be taken into account for purposes of determining whether
the Plan is a Top-Heavy Plan.
To the extent required by Code Section 416(g)(4)(E), if an Employee
has not performed services for the Employer at any time during the five (5) year
period ending on the Determination Date, any Accrued Benefits and present value
of cumulative accrued benefits for such Employee will not be taken into account
in determining whether the Plan is a Top-Heavy Plan.
16.72. Top-Heavy Ratio:
(a) If the Employer maintains one or more defined contribution plans
(including any simplified employee pension plan) and the Employer maintains or
has maintained one or more defined benefit plans which during the 5-year period
ending on the Determination Date(s) has or has had any accrued benefits, the
Top-Heavy Ratio for any Required or Permissive Aggregation Group as appropriate
is a fraction, the numerator of which is the sum of account balances under the
aggregated defined contribution plan or plans for all Key Employees, and the
present value of accrued benefits under the aggregated defined benefit plan or
plans for all Key Employees as of the Determination Date(s), and the denominator
of which is the sum of the account balances under the aggregated defined
contribution plan or plans for all participants, and the present value of
accrued benefits under the defined benefit plan or plans for all participants as
of the Determination Date(s), all determined in accordance with Section 416 of
the Code and the Regulations thereunder. The accrued benefits under a defined
benefit plan in both the
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numerator and denominator of the Top-Heavy Ratio are increased for any
distribution of an accrued benefit made in the 5-year period ending on the
Determination Date.
(b) For purposes of paragraph (a) above the value of account
balances and the Present Value of Accrued Benefits will be determined as of the
most recent Valuation Date that falls within or ends with the 12-month period
ending on the Determination Date, except as provided in Section 416 of the Code
and the Regulations thereunder for the first and second plan years of a defined
benefit plan. The account balances and accrued benefits of a Participant (1) who
is not a Key Employee but who was a Key Employee in a prior year, or (2) who has
not been credited with at least one Hour of Service with any Employer
maintaining the Plan at any time during the 5-year period ending on the
Determination Date will be disregarded. The calculation of the Top-Heavy Ratio,
and the extent to which distributions, rollovers, and transfers are taken into
account will be made in accordance with Section 416 of the Code and the
Regulations thereunder. Deductible Employee contributions will not be taken into
account for purposes of computing the Top-Heavy Ratio. When aggregating plans
the value of account balances and accrued benefits will be calculated with
reference to the Determination Dates that fall within the same calendar year.
The accrued benefit of a Participant other than a Key Employee shall be
determined under (a) the method, if any, that uniformly applied for accrual
purposes under all defined benefit plans maintained by the Employer, or (b) if
there is no such method, as if such benefit accrued not more rapidly than the
slowest accrual rate permitted under the fractional rule of Section 411(b)(1)(C)
of the Code.
16.73. Top-Paid Group: The group consisting of the top twenty percent
(20%) of Employees when ranked on the basis of Compensation paid during such
year. For purposes of determining the number of Employees in the group (but not
for purposes of determining who is in it), the following Employees will be
excluded:
(a) Employees who have not completed six (6) months of service with
the Employer.
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(b) Employees who normally work for the Employer less than seventeen
and one-half (17-1/2) hours per week.
(c) Employees who normally do not work for the Employer more than
six (6) months during any Plan Year.
(d) Employees who have not attained age twenty-one (21).
(e) Employees included in a collective bargaining unit who are
covered by an agreement between Employee representatives and the Employer, where
retirement benefits were the subject of good faith bargaining, provided that
ninety percent (90%) or more of the Employer's Employees are covered by the
agreement.
(f) Employees who are nonresident aliens and who receive no earned
income which constitutes income from sources within the United States.
16.74. Trust Agreement: The instrument executed by the Employer and the
Trustee fixing the rights and liabilities of each with respect to holding and
administering Plan assets for the purposes of the Plan.
16.75. Trust Fund: The assets of the Plan as held and administered by the
Trustee.
16.76. Trustee: The trustees named in the Trust Agreement and their
successors.
16.77. Valuation Date: The Anniversary Date of the Plan or such other date
as agreed to by the Employer and the Trustee on which Participant Accrued
Benefits are revalued.
16.78. Year of Accrual Service: As defined in the Exhibit corresponding to
the Participant's classification and status.
16.79. Year of Eligibility Service: A twelve (12) consecutive month period
(computation period) described in the Exhibit corresponding to the Employee's
classification and status.
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16.80. Year of Service: The total years of employment of an Employee with
the Employer commencing with the Employee's Employment Commencement Date, and
ending with the date such Employee quits, retires, or is discharged or released,
or the date of expiration of an Employee's authorized leave of absence.
The computation period shall be the twelve (12) month period commencing of
the Employee's Employment Commencement Date or Re-Employment Commencement Date,
and anniversaries thereof unless a different computation period is expressly
stated.
16.81. Year of Vesting Service: As defined in the Exhibit corresponding to
the Employee's classification and status.
The computation period shall be the twelve (12) month period commencing on
the Employee's Employment Commencement Date or Re-Employment Commencement Date,
and anniversaries thereof unless a different computation period is expressly
stated.
IN WITNESS WHEREOF, the amended and restated PENSION PLAN FOR EMPLOYEES OF
AMPHENOL CORPORATION is, by authority of its Board of Directors, adopted on the
day and year first above written.
AMPHENOL CORPORATION
By /s/ Edward G. Jepsen
----------------------------------
EDWARD G. JEPSEN
EXECUTIVE VICE PRESIDENT
& CHIEF FINANCIAL OFFICER
ATTEST:
/s/ Edward C. Wetmore
- ---------------------
EDWARD G. WETMORE
SECRETARY
91.
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EXHIBIT: A
ELIGIBLE CLASS:
(a) Employment as a salaried Employee at Amphenol Corporation who receives
a regular stated compensation other than a retirement payment, retainer or fee,
excluding however:
(i) Any person in any other Eligible Class currently accruing
credits under the Plan or any other defined benefit pension plan to which the
Employer or any Affiliated Employer is contributing;
(ii) Any employee whose conditions of employment are determined by
collective bargaining, unless such employment shall be included in the Plan by
the express terms of the collective bargaining agreement;
(iii) Any person whose employment is not for at least 1,000 Hours of
Service during any Plan Year;
(iv) Any Employee of a Foreign Subsidiary if such Employee is not a
citizen of the United States;
(v) Any Employee of a Foreign Subsidiary if contributions under a
funded plan of deferred compensation are provided by a person or corporation,
other than the Employer, with respect to the remuneration paid to such Employee
by such Foreign Subsidiary; and
(vi) Any employee of a Foreign Subsidiary if such Employee was not
transferred by the Employer to employment with the Foreign Subsidiary directly
from employment with the Employer.
(viii) Any employee of Sine Systems*Pyle Connectors Corporation.
The provisions of this Exhibit shall apply to those Employees identified as the
Eligible Class. This document shall be incorporated into and made a part of the
Pension Plan for Employees of Amphenol Corporation (the "Plan"). Notwithstanding
the distinct benefit structures, rights and features described in this Exhibit
or any other Exhibit, the Plan is to be treated as a single plan as described in
Regulation Section 1.414(1)-1(b)(1) and all provisions shall be construed in a
manner consistent with such treatment.
<PAGE>
EXHIBIT: B
ELIGIBLE CLASS:
(a) Employees in a Participating Group at Amphenol Corporation employed on
an hourly basis; excluding, however,
(i) Any Employee in any other Eligible Class who is an active
participant of the Plan or any Plan maintained by a Participating Employer;
(ii) Any Employee whose conditions of employment are determined by
collective bargaining, unless such Employee shall be included in the Plan by the
express terms of a collective bargaining agreement;
(iii) Any Employee who is not a Spectra Strip Employee whose
regularly scheduled employment is for less than 1,000 Hours of Service during a
Plan Year;
(iv) Any Employee of a Foreign Subsidiary if such Employee is not a
citizen of the United States;
(v) Any Employee of a Foreign Subsidiary if contributions under a
funded plan of deferred compensation are provided by any person or corporation,
other than the Employer, with respect to the remuneration paid to such Employee
by such Foreign Subsidiary; and
(vi) Any Employee of a Foreign Subsidiary if such Employee was not
transferred by the Employer to employment with the Foreign Subsidiary directly
from employment with the Employer.
The provisions of this Exhibit shall apply to those Employees identified as the
Eligible Class. This document shall be incorporated into and made a part of the
Pension Plan for Employees of Amphenol Corporation (the "Plan"). Notwithstanding
the distinct benefit structures, rights and features described in this Exhibit
or any other Exhibit, the Plan is to be treated as a single plan as described in
Regulation Section 1.414(1)-1(b)(1) and all provisions shall be construed in a
manner consistent with such treatment.
<PAGE>
EXHIBIT: C
ELIGIBLE CLASS:
(a) Employment as a full or part-time Employee regularly working at least
1,000 hours per year on the salaried payroll of LPL Technologies Inc., Times
Fiber Communications, Inc. or Amphenol Corporation Headquarters; excluding,
however any Amphenol operations employees hired prior to June 1, 1987.
The provisions of this Exhibit shall apply to those Employees identified as the
Eligible Class. This document shall be incorporated into and made a part of the
Pension Plan for Employees of Amphenol Corporation (the "Plan"). Notwithstanding
the distinct benefit structures, rights and features described in this Exhibit
or any other Exhibit, the Plan is to be treated as a single plan as described in
Regulation Section 1.414(1)-1(b)(1) and all provisions shall be construed in a
manner consistent with such treatment.
<PAGE>
EXHIBIT: D
ELIGIBLE CLASS:
(a) Employment at the Chatham Cable Company division of Times Fiber
Communications, Inc. (principally at Chatham, Virginia or Phoenix, Arizona) on
an hourly basis.
The provisions of this Exhibit shall apply to those Employees identified as the
Eligible Class. This document shall be incorporated into and made a part of the
Pension Plan for Employees of Amphenol Corporation (the "Plan"). Notwithstanding
the distinct benefit structures, rights and features described in this Exhibit
or any other Exhibit, the Plan is to be treated as a single plan as described in
Regulation Section 1.414(1)-1(b)(1) and all provisions shall be construed in a
manner consistent with such treatment.
<PAGE>
EXHIBIT: E
ELIGIBLE CLASS:
(a) Salaried Employees of Sine Systems*Pyle Connectors Corporation who
shall have been employed at Pyle-National, Inc. on the date of the merger with
The Sine Companies, Inc.
The provisions of this Exhibit shall apply to those Employees identified as the
Eligible Class. This document shall be incorporated into and made a part of the
Pension Plan for Employees of Amphenol Corporation (the "Plan"). Notwithstanding
the distinct benefit structures, rights and features described in this Exhibit
or any other Exhibit, the Plan is to be treated as a single plan as described in
Regulation Section 1.414(1)-1(b)(1) and all provisions shall be construed in a
manner consistent with such treatment.
<PAGE>
EXHIBIT: F
ELIGIBLE CLASS:
(a) Employment at the Pyle-National Division, represented by the General
Service Employees' Union, Local No. 73 of the Service Employees' International
Union, AFL-CIO.
The provisions of this Exhibit shall apply to those Employees identified as the
Eligible Class. This document shall be incorporated into and made a part of the
Pension Plan for Employees of Amphenol Corporation (the "Plan"). Notwithstanding
the distinct benefit structures, rights and features described in this Exhibit
or any other Exhibit, the Plan is to be treated as a single plan as described in
Regulation Section 1.414(1)-1(b)(1) and all provisions shall be construed in a
manner consistent with such treatment.
<PAGE>
EXHIBIT: G
ELIGIBLE CLASS:
(a) Employment as a salaried Employee at Sidney, New York
The provisions of this Exhibit shall apply to those Employees identified as the
Eligible Class. This document shall be incorporated into and made a part of the
Pension Plan for Employees of Amphenol Corporation (the "Plan"). Notwithstanding
the distinct benefit structures, rights and features described in this Exhibit
or any other Exhibit, the Plan is to be treated as a single plan as described in
Regulation Section 1.414(1)-1(b)(1) and all provisions shall be construed in a
manner consistent with such treatment.
<PAGE>
EXHIBIT: H
ELIGIBLE CLASS:
(a) Employment at the Sidney Division of Amphenol Corporation (Sidney
Division, Sidney, New York) on an hourly basis, including employment as an
hourly rated person on an incentive pay plan, within the scope of the collective
bargaining agreement between the Employer and the Participating Unit.
The provisions of this Exhibit shall apply to those Employees identified as the
Eligible Class. This document shall be incorporated into and made a part of the
Pension Plan for Employees of Amphenol Corporation (the "Plan"). Notwithstanding
the distinct benefit structures, rights and features described in this Exhibit
or any other Exhibit, the Plan is to be treated as a single plan as described in
Regulation Section 1.414(1)-1(b)(1) and all provisions shall be construed in a
manner consistent with such treatment.
FIRST AMENDMENT TO THE PENSION PLAN
FOR EMPLOYEES OF AMPHENOL CORPORATION
AMENDMENT made this 1st day of October, 1998, to the Pension Plan for
Employees of Amphenol Corporation, as amended and restated effective December
31, 1997 (the "Plan") by resolution of the Board of Directors of Amphenol
Corporation (the "Employer"), which amendment shall be effective as of January
1, 1997.
WHEREAS, Regulation Section 1.401(a)(4)-11(g) permits the adoption of an
amendment after the close of a Plan year to satisfy minimum coverage and
nondiscrimination requirements for the preceding year;
WHEREAS, the Employer desires to retroactively increase accruals for
certain employees who benefited under the Plan and expand eligibility for
certain Plan benefits, rights and features;
NOW, THEREFORE, the Plan is amended as follows:
FIRST: Section 4.1(a) of Exhibit (C) relating to Employees of Times Fiber
Communications, Inc. and Amphenol Corporation Headquarters on the salaried
payroll, is amended by adding the following paragraph to the end thereof:
"Notwithstanding the foregoing, in no event will a Participant's
Accrued Benefit as of any date after January 1, 1997, be less than one and five
tenths of one percent (1.5%) of such Participant's Average Monthly Compensation
multiplied by the aggregate number of Years of Accrual Service up to a maximum
of fifteen (15)."
SECOND: Section 4.7(b) of Exhibit (c) relating to Employees of Times Fiber
Communications, Inc. and Amphenol Corporation Headquarters on the salaried
payroll is amended by deleting the text thereof in its entirety and is replaced
by inserting the following in its place and stead:
"(b) Pre-Retirement Survivor Annuity-Death in Service:
A Pre-Retirement Survivor Annuity shall be payable with
respect to a Participant who dies before his Annuity Starting Date
if the following requirements are met:
(1) The Participant dies while an active Participant prior to
his Normal Retirement Date;
<PAGE>
-2-
(2) The Participant shall have completed Five (5) Years of
Eligibility Service; and
(3) The Participant is survived by a Spouse to whom he was
continuously married throughout the one-year period ending on
the date of his death whom he has elected as his sole primary
Beneficiary.
The Pre-Retirement Survivor Annuity shall be payable to the
Spouse of the Participant in lieu of that provided in subsection (a)
above in an amount equal to fifty percent (50%) of the benefit that
would have been payable to the Participant if the Participant had
separated from service on that date of death, and commenced benefits
in the Normal Form on his or her Normal Retirement Date; provided,
however, that if the surviving Spouse's age is more than five (5)
years less than the Participant's age (the age of each being
determined as being the age at his or her birthday nearest the date
of the Participant's death), such fifty percent (50%) shall be
decreased by subtracting therefrom one percent (1%) for each year in
excess of five (5) years that the Spouse's age is less than the
Participant's age.
The minimum Pre-Retirement Survivor Annuity payable hereunder
shall be six hundred dollars ($600.00) per year.
Benefits shall be payable on the first day of the month
following the date of the Participant's death."
THIRD: The aforesaid Plan is ratified and confirmed in each and every
other respect.
IN WITNESS WHEREOF, the above amendment is hereby adopted to be
effective as of January 1, 1997.
AMPHENOL CORPORATION
By: /s/ Martin H. Loeffler
--------------------------------
Martin H. Loeffler
Chairman, President & CEO
ATTEST: Edward C. Wetmore
-----------------
Edward C. Wetmore
Secretary
SECOND AMENDMENT TO THE
PENSION PLAN FOR EMPLOYEES OF
AMPHENOL CORPORATION
Amendment made this 4th day of February, 1999, to the Pension Plan for
Employees of Amphenol Corporation as amended and restated effective December 31,
1997, (the "Plan") by resolution of the Board of Directors Amphenol Corporation
(the "Employer");
WHEREAS, Pursuant to Article XII the Employer has the right to amend the
plan;
WHEREAS, The Employer desires to amend the Plan to comply with the
provisions of the Retirement Protection Act of 1994, which was part of the
General Agreement on Tariffs and Trade ("GATT"), the Uniformed Services
Employment and Reemployment Rights Act of 1994 ("USERRA"), The Small Business
Job Protection Act ("SBJPA") and the Taxpayer Relief Act of 1997 ("TRA '97");
NOW, THEREFORE, the Plan is hereby amended as follows:
SECTION ONE
HIGHLY COMPENSATED EMPLOYEE
(1) "Highly Compensated Employee" means any Employee who:
(a) was a 5-percent owner at any time during the Plan Year or the
preceding year, or
(b) for the preceding year had Compensation from the Employer in
excess of $80,000.
The provisions of this Section shall be effective for Plan Years beginning
after December 31, 1996, except that for purposes of determining whether an
Employee is a
<PAGE>
Highly Compensated Employee for the Plan Year beginning in 1997, these
provisions shall be treated as having been in effect for Plan Years beginning in
1996.
SECTION TWO
REPEAL OF FAMILY AGGREGATION RULE
For all purposes of the Plan, if an individual is employed by the Employer
and is a member of the family of a 5-percent owner, then such individual shall
be considered a separate Employee and any Compensation paid to such individual
and any applicable contribution or benefit on behalf of such individual shall be
treated as if it were attributable solely to that individual. Except as provided
in Treasury Regulations, this provision shall be applied in determining the
Compensation of or contributions or benefits on behalf of any Employee for
purposes of any section with respect to which a Highly Compensated Employee is
defined by reference to Section 414(q) of the Code.
The provisions of this Section shall be effective for Plan Years beginning
after December 31, 1996. For purposes of determining whether an Employee is a
Highly Compensated Employee for the 1997 Plan Year only, the family aggregation
rules are considered to have been repealed for 1996.
SECTION THREE
COMBINED DEFINED CONTRIBUTION/DEFINED BENEFIT PLAN LIMIT
For Limitation Years beginning after December 31, 1999, if an Employee is
(or has been) a Participant in one or more defined benefit plans and one or more
defined contribution plans maintained by the Employer, the sum of the defined
benefit plan fraction and the defined contribution plan fraction for any
limitation year may exceed 1.0. After the above effective date, only the
limitations of Code Section 415(b) will apply to this defined benefit plan. No
adjustment need be made to either the defined benefit or defined
2
<PAGE>
contribution fraction in the event that the combined defined benefit/defined
contribution limit exceeds 1.0 in any Limitation Year.
SECTION FOUR
LEASED EMPLOYEE
For all purposes in the Plan, "Leased Employee" means any person who is
not a common law employee of the recipient and who provides services to the
recipient if:
(1) such services are provided pursuant to an agreement between the
recipient and any other person (in this Section referred to as the "Leasing
Organization");
(2) such person has performed such services for the recipient (or for the
recipient and related persons) on a substantially full-time basis for a period
of at least one (1) year; and
(3) such services are performed under primary direction or control by the
recipient.
The provisions of this Section shall be effective for Plan Years beginning
after December 31, 1996.
SECTION FIVE
USERRA AMENDMENT
Notwithstanding any provision of this Plan to the contrary, contributions,
benefits and service credit with respect to qualified military service will be
provided in accordance with Section 414(u) of the Code.
The provisions of this Section shall be effective December 12, 1994.
3
<PAGE>
SECTION SIX
REQUIRED MINIMUM DISTRIBUTIONS
The term "required beginning date" means the pre-SBJPA required beginning
date of April 1 of the calendar year following the calendar year in which the
Participant attains age 70-1/2 regardless of whether the Participant is a
5-percent owner (as defined in Code Section 416).
The provisions of this Section shall be effective for Plan Years beginning
after December 31, 1996.
SECTION SEVEN
KEY EMPLOYEE
"Key Employee" shall mean an Employee who, at any time during the Plan
Year or any of the four (4) preceding Plan Years, is
(1) an officer of the Employer having Compensation greater than fifty
percent (50%) of the amount in effect under Section 415(b)(1)(A) of the Code for
any Plan Year;
(2) one of the ten (10) employees having Compensation from the Employer of
more than the limitation in effect under Section 415(c)(1)(A) of the Code and
owning (or considered as owning within the meaning of Code Section 318) the
largest interest in the Employer;
(3) a five percent (5%) owner of the Employer. "Five percent (5%) owner"
means any person who owns (or is considered as owning within the meaning of Code
Section 318) more than five percent (5%) of the outstanding stock of the
Employer or stock possessing more than five percent (5%) of the total combined
voting power of all stock of the
4
<PAGE>
Employer, or in the case of an unincorporated business, any person who owns more
than five percent (5%) of the capital or profits interest in the Employer; or
(4) a one percent (1%) owner of the Employer having Compensation from the
Employer of more than $150,000. "One percent (1%) owner" means any person who
owns (or is considered as owning within the meaning of Code Section 318) more
than one percent (1%) of the outstanding stock of the Employer or stock
possessing more than one percent (1%) of the total combined voting power of all
stock of the Employer, or in the case of an unincorporated business, any person
who owns more than one percent (1%) of the capital or profits interest in the
Employer.
For purposes of paragraph (a), no more than the lesser of (i) fifty (50)
employees, or (ii) the greater of ten percent (10%) of the employees or three
(3) employees will be treated as officers. For purposes of paragraph (b),if two
(2) employees have the same interest in the Employer, the employee having
greater Compensation from the Employer will be treated as having a larger
interest. Such term will not include any officer or employee of any entity
referred to in Section 414(d) of the Code (relating to governmental plans). For
purposes of determining the number of officers taken into account under
paragraph (a), employees described in Section 414(q) (5) of the Code will be
excluded.
SECTION EIGHT
OPTION TO WAIVE 30-DAY QJSA NOTICE
The plan shall provide Participants with the written explanation of the
Qualified Joint and Survivor Annuity required by Code Section 417(a)(3) no less
than 30 days and no more than 90 days before the Annuity Staffing Date. A
distribution to a Participant may commence less than 30 days after the notice
required by Code Section 417(a) (3) is given, provided that the following
requirements are met:
5
<PAGE>
(1) The Plan Administrator provides information to the Participant clearly
indicating that the Participant has a right to a period of at least 30 days to
consider whether to waive the Qualified Joint and Survivor Annuity and consent
to a form of distribution other than a Qualified Joint and Survivor Annuity.
(2) The Participant is permitted to revoke an affirmative distribution
election at least until the Annuity Staffing Date, or, if later, at any time
prior to the expiration of the 7-day period that begins the day after the
explanation of the Qualified Joint and Survivor Annuity is provided to the
Participant,
(3) The Annuity Starting Date is after the date that the explanation of
the Qualified Joint and Survivor Annuity is provided to the Participant.
However, the Annuity Starting Date may be before the date that any affirmative
distribution election is made by the Participant and before the date that the
distribution is permitted to commence under (4) below, and
(4) Distribution in accordance with the affirmative election does not
commence before the expiration of the 7-day period that begins the day after the
explanation of the Qualified Joint and Survivor Annuity is provided to the
Participant.
SECTION NINE
APPLICABLE MORTALITY TABLE AND APPLICABLE INTEREST RATE
Effective with the later of the adoption date or the first day of the Plan
Year beginning after December 31, 1997, the mortality table and the interest
rate used for the purposes of determining an Actuarial Equivalent amount (other
than non-decreasing life annuities payable for a period not less than the life
of a Participant or, in the case of a Qualified Pre-Retirement Survivor Annuity,
the life of the surviving spouse) shall be the "Applicable Mortality Table" and
the "Applicable Interest Rate" described below.
6
<PAGE>
(1) The "Applicable Mortality Table" means the mortality table prescribed
by the Secretary of the Treasury. Such table shall be based on the prevailing
commissioners' standard table (described in Code Section 807(d)(5)(A)) used to
determine reserves for group annuity contracts issued on the date as of which
present value is being determined (without regard to any other subparagraph of
Code Section 807(d)(5)).
(2) The "Applicable Interest Rate" means the annual rate of interest on
30-year Treasury securities determined as of the second calendar month (the
lookback month) preceding the first day of the Plan Year during which the
Annuity Starting Date occurs. The Applicable Interest Rate shall remain constant
for the Plan Year stability period.
Notwithstanding anything contained in this amendment or the Plan to the
contrary, a Participant's Accrued Benefit shall not be considered to be reduced
in violation of Code Section 411(d) (6) merely because of the above changes in
the interest rate and mortality assumption used to calculate Actuarial
Equivalent amounts.
The provisions of this Section shall be effective as of the Limitation
Year beginning after December 31, 1997.
SECTION TEN
ADJUSTMENTS TO ANNUAL BENEFIT AND LIMITATIONS
(1) If benefits commence prior to age 62, the dollar limitation under Code
Section 415(b) shall be the Actuarial Equivalent of the Participant's limitation
for benefits commencing at age 62, reduced for each month by which benefits
commence before the month in which the Participant attains age 62. In order to
determine Actuarial Equivalents for this purpose, the lesser of the Actuarial
Equivalent amount computed using the Plan interest rate and Applicable Mortality
Table, and the amount computed using 5% interest and the Applicable Mortality
Table shall be used. If the annual benefit is paid in a form other than a
non-decreasing life annuity payable for a period not less than the life of a
7
<PAGE>
Participant (or, in the case of a Qualified Pre-Retirement Survivor Annuity, the
life of the surviving spouse,) the Actuarial Equivalent amount shall be
determined by substituting the Applicable Interest Rate for five percent (5%) in
the preceding sentence.
(2) Further, for purposes of adjusting the benefit to a straight life
annuity, the equivalent Annual Benefit shall be the greater of the equivalent
Annual Benefit computed using the Plan interest rate and the Applicable
Mortality Table, and the equivalent Annual Benefit computed using five-percent
(5%) interest rate assumption and the Applicable Mortality Table. If the Annual
Benefit is paid in a form other than a non-decreasing life annuity payable for a
period not less than the life of a Participant or, in the case of a Qualified
Pre-Retirement Survivor Annuity, the life of the surviving spouse, the
Applicable Interest Rate shall be substituted for five percent (5%) in the
preceding sentence.
SECTION ELEVEN
IMMEDIATE CASH-OUT FOR DE MINIMIS BENEFITS
(1) If the Actuarial Equivalent present value of a Participant's vested
Accrued Benefit derived from Employer and Employee contributions does not exceed
or did not at the time of any prior distribution exceed $5,000, the Participant
will receive a single sum distribution cash or property of the Actuarial
Equivalent value of the entire rested Accrued Benefit.
(2) The monthly payments made from the Plan to Highly Compensated
Employees and to former Highly Compensated Employees who are among the twenty-
five most highly paid Employees with the greatest Compensation in the current
or any prior year, shall be limited to an amount equal to the monthly payments
that would be made on behalf of the Employee under a Straight Life Annuity that
is the Actuarial Equivalent of the sum of the Employee's other benefits under
the Plan (other than a social security supplement within the meaning of Section
1.4(a)-7(c)(4)(ii) of the Regulations), and the amount the Employee is entitled
to receive under a social security supplement.
8
<PAGE>
The provisions of this Section shall only apply to Accrued Benefits
payable by reference to an Exhibit which provided for the immediate cash-out of
de minimis benefits prior to January 1, 1998.
The provisions of this Section shall be effective for Plan Years beginning
after December 31, 1997.
The aforesaid Plan is ratified and confirmed in each and every other
respect.
AMPHENOL CORPORATION
/s/ Edward C. Wetmore
--------------------------------
Edward C. Wetmore
Secretary
EXHIBIT 11
AMPHENOL CORPORATION
Computation of Per Share Earnings
For the Three Years Ended December 31, 1998
(dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------
1998 1997 1996
---------- ---------- ----------
<S> <C> <C> <C>
Income before extraordinary item ...................... $36,510 $51,264 $67,578
Extraordinary item:
Loss on early extinguishment of debt,
net of income taxes ................................. -- (24,547) --
------- ------- -------
Net income applicable to Common Stock ................. $36,510 $26,717 $67,578
======= ======= =======
Net income per common share:
Income before extraordinary item .................... $2.07 $1.84 $1.45
Extraordinary loss .................................. -- (.88) --
----- ---- -----
Net income .......................................... $2.07 $.96 $1.45
===== ==== =====
Average common shares outstanding ..................... 17,663,212 27,806,260 46,649,541
========== ========== ==========
Net income per common share - assuming dilution:
Income before extraordinary item .................... $2.03 $1.83 $1.45
Extraordinary loss .................................. -- (.88) --
----- ----- -----
Net income .......................................... $2.03 $ .95 $1.45
===== ===== =====
Average common shares outstanding ..................... 17,663,212 27,806,260 46,649,541
Employee stock options ................................ 279,185 196,717 71,359
---------- ---------- ----------
Average common shares outstanding-assuming dilution ... 17,942,397 28,002,977 46,720,900
========== ========== ==========
</TABLE>
EXHIBIT 12
AMPHENOL CORPORATION
Ratio of Earnings to Fixed Charges
(dollars in thousands)
<TABLE>
<CAPTION>
Amphenol Historical
---------------------------------------------------------
Year Ended December 31,
---------------------------------------------------------
1998 1997 1996 1995 1994
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Income from continuing
operations before income taxes
and extraordinary items ........ $ 63,983 $ 87,174 $ 109,665 $ 104,627 $ 69,509
Non-recurring acquisition expenses -- 2,500 -- -- --
Undistributed earnings of
investments .................... -- -- -- 60 (272)
--------- --------- --------- --------- ---------
63,983 89,674 109,665 104,687 69,237
--------- --------- --------- --------- ---------
Fixed charges:
Interest ....................... 81,199 64,713 24,617 25,548 30,382
Other financing fees ........... 4,121 3,671 3,504 3,902 3,180
Appropriate portion of rentals
representative of the interest
factor ......................... 4,642 3,832 4,072 3,865 3,369
--------- --------- --------- --------- ---------
Total fixed charges ............ 89,962 72,216 32,193 33,315 36,931
--------- --------- --------- --------- ---------
Earnings from continuing operations
before undistributed earnings of
investments, income taxes, fixed
charges and extraordinary items $ 153,945 $ 161,890 $ 141,858 $ 138,002 $ 106,168
========= ========= ========= ========= =========
Ratio of earnings to fixed charges 1.7x 2.2x 4.4x 4.1x 2.9x
========= ========= ========= ========= =========
</TABLE>
EXHIBIT 21
Page 1 of 1
<TABLE>
<CAPTION>
State/Country Name(s) under which Subsidiary
List of Subsidiaries of Incorporation does business (1)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Advanced Circuit Technology, Inc. Delaware, U.S.A. Advanced Circuit Technology
Amphenol Australia Pty Ltd. Australia
Amphenol Benelux B.V. The Netherlands Amphenol
Amphenol Borg Limited England
Amphenol do Brasil Ltd. Brazil Amphenol
Amphenol Canada Corp. Ontario, Canada Amphenol
Amphenol Commercial and Industrial UK, Limited England
Amphenol Dae Shin Electronics and
Precision Co., Ltd. Korea Dae Shin Electronics
Amphenol East Asia Limited Hong Kong AEAL, AEAM, Amphenol
Amphenol Foreign Sales Corporation Barbados
Amphenol Funding Corporation Delaware, U.S.A.
Amphenol Germany GmbH Germany
Amphenol Gesellschaft m.b.H. Austria Amphenol
Amphenol Holdings Pty. Ltd. Australia
Amphenol Holding UK, Limited England
Amphenol Interconnect Products Corporation Delaware, U.S.A. AIPC
Amphenol International Ltd. Delaware, U.S.A.
Amphenol Italia, S.p.A. Italy Amphenol
Amphenol Japan K.K. Japan Amphenol
Amphenol Limited England Amphenol
Amphenol Socapex S.A.S. France Socapex
Amphenol Svenska, AB Sweden
Amphenol Aerospace France, Inc. Delaware, U.S.A.
Amphenol Commercial & Industrial
France, L.L.C. Delaware, U.S.A.
Amphenol Taiwan Corporation Taiwan Amphenol
Amphenol Technical Products International Co. Canada Technical Products International
Amphenol-Tuchel Electronics GmbH Germany Tuchel
Amphetronix Limited India Amphetronix
Amphenol-TFC (Changzhou)
Communications Equipment Co. Ltd. China Amphenol, Times Fiber, TFC
Amphenol USHoldco. Inc. Delaware, U.S.A.
Connexus AB Sweden Connexus
Connex Connector Corporation California, U.S.A. Connex
</TABLE>
- --------------------------------------------------------------------------------
(1) Each subsidiary also does business under the corresponding corporate name
listed in column 1.
<PAGE>
EXHIBIT 21
Page 2 of 2
<TABLE>
<CAPTION>
State/Country Name(s) under which Subsidiary
List of Subsidiaries of Incorporation does business (1)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Kai Jack Industrial Co., Ltd. Taiwan Kai Jack
LPL Technologies Holding GmbH Germany
Optimize Manufacturing Co. Arizona, U.S.A. Optimize
Productos de Memoria S.A. de C.V. Mexico
Pyle-National Ltd. England Pyle-National
Pyle-National of Canada Inc. Ontario, Canada Pyle-National
Spectra Strip Limited England
TFC South America S.A. Argentina Times Fiber
Sine Systems*Pyle Connectors Corporation Delaware, U.S.A. Sine, Pyle-National
Times Fiber Communications, Inc. Delaware, U.S.A. Times Fiber
Times Fiber Canada Limited Ontario, Canada Times Fiber
Matir, S.A. Uruguay
</TABLE>
- --------------------------------------------------------------------------------
(1) Each subsidiary also does business under the corresponding corporate name
listed in column 1.
EXHIBIT 23
Consent of PricewaterhouseCoopers LLP
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 333-35901) of Amphenol Corporation of our report
dated January 14, 1997, appearing on page 19 of the Annual Report on Form 10-K.
PricewaterhouseCoopers LLP
March 29, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 3,095
<SECURITIES> 0
<RECEIVABLES> 84,897
<ALLOWANCES> (1,832)
<INVENTORY> 184,424
<CURRENT-ASSETS> 287,673
<PP&E> 316,826
<DEPRECIATION> (190,047)
<TOTAL-ASSETS> 807,401
<CURRENT-LIABILITIES> 124,165
<BONDS> 0
0
0
<COMMON> 18
<OTHER-SE> (292,275)
<TOTAL-LIABILITY-AND-EQUITY> 807,401
<SALES> 918,877
<TOTAL-REVENUES> 918,877
<CGS> 601,930
<TOTAL-COSTS> 601,930
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (81,199)
<INCOME-PRETAX> 63,983
<INCOME-TAX> (27,473)
<INCOME-CONTINUING> 36,510
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 36,510
<EPS-PRIMARY> 2.07
<EPS-DILUTED> 2.03
</TABLE>
