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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
/X/ Annual report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the fiscal year ended September 30, 1995, or
/ / Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from ___________ to
______________.
COMMISSION FILE NO. 1-10459
GENEVA STEEL COMPANY
(Exact name of Registrant as specified in its charter)
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UTAH 93-0942346
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
10 SOUTH GENEVA ROAD
VINEYARD, UTAH 84058
(Address of principal executive office) (Zip Code)
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Registrant's telephone number, including area code: (801) 227-9000
Securities registered pursuant to Section 12(b) of the Act:
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NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
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CLASS A COMMON STOCK, NEW YORK STOCK EXCHANGE
NO PAR VALUE PACIFIC STOCK EXCHANGE
WARRANTS TO PURCHASE
CLASS A COMMON STOCK PACIFIC STOCK EXCHANGE
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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
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Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. /X/
The aggregate market value of the Class A Common Stock held by
non-affiliates of the Registrant, based upon the closing sale price of the
Class A Common Stock on the New York Stock Exchange on December 15, 1995, was
approximately $92,908,000. Shares of Class A Common Stock held by each officer
and director and by each person who may be deemed to be an affiliate have been
excluded. As of December 15, 1995, the Registrant had 13,343,871 and
19,151,348 shares of Class A and Class B Common Stock, respectively,
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Parts of the following documents are incorporated by reference in
Parts II, III and IV of this Report: (1) Registrant's Annual Report to
Shareholders for the fiscal year ended September 30, 1995 (Parts II and IV),
and (2) Registrant's Proxy Statement for the Annual Meeting of Shareholders to
be held on March 26, 1996 (Part III).
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PART I
ITEM 1. BUSINESS.
BACKGROUND
Geneva Steel Company (the "Company" or "Geneva") owns and operates the
only integrated steel mill operating west of the Mississippi River. The
Company's mill manufactures steel slabs and hot-rolled sheet, plate and pipe
products for sale primarily in the western and central United States.
The steel mill is located 45 miles south of Salt Lake City, Utah on
approximately 1,400 acres. The steel mill's facilities include four coke oven
batteries, three blast furnaces, two Basic Oxygen Process ("Q-BOP") furnaces, a
continuous casting facility, a combination continuous rolling mill and various
finishing facilities. The Company's coke ovens produce coke from a blend of
various grades of metallurgical coal. Coke is used as the principal fuel for
the Company's blast furnaces, which convert iron ore into liquid iron. The
liquid iron is then blended with scrap metal and metallic alloys and further
refined in the Q-BOP furnaces to produce liquid steel. The liquid steel is
then processed through the continuous casting facility. Steel slabs are either
direct rolled or allowed to cool and then reheated prior to rolling. Slabs are
rolled into hot-rolled steel products (sheet, plate and pipe) in the Company's
rolling and finishing mills. The Company also sells a portion of its slabs to
other steel processors.
The Company acquired the steel mill and related facilities from USX
Corporation ("USX") on August 31, 1987 at a price of approximately $44.1
million plus the assumption of certain liabilities. USX had operated the mill
from 1944 until 1986, when it placed the mill on hot-idle status. Pursuant to
the acquisition agreement between USX and the Company, USX retained liability
for retiree life insurance, health care and pension benefits relating to
employee service prior to the acquisition. USX also indemnified the Company
for costs due to any environmental condition existing on the Company's real
property as of the acquisition date that is determined to be in violation of
environmental laws or otherwise results in the imposition of environmental
liability, subject to the Company's sharing the first $20 million of certain
clean-up costs on an equal basis. See "Environmental Matters." Since the
Company began operations, its strategy has been to be a low-cost producer of
steel products and to optimize its product quality and mix.
CAPITAL PROJECTS
Overview
In February 1990, the Company announced a major modernization program
intended to strengthen its competitive position. The modernization program was
undertaken to reduce operating costs, broaden the Company's product line,
improve product quality and increase throughput capacity. The modernization
program provides for improvements principally to the Company's ironmaking,
steelmaking, casting, rolling and finishing facilities. Management believes
that the modernization program has enabled the Company to produce the widest
continuously cast steel slabs in the world and is positioning the Company for
additional market penetration, particularly with respect to plate products.
The Company has spent approximately $83 million, $165 million and $68
million on capital projects during the fiscal years ended September 30, 1993,
1994 and 1995, respectively. These expenditures were made primarily in
connection with the Company's ongoing modernization efforts. Management
believes that the modernization projects completed to date have resulted in
production efficiencies, increased throughput capacity and improved product
quality and yield.
The Company's capital projects are under continuous review, and
depending on market, operational, liquidity and other factors, the Company may
elect to adjust the design, timing and budgeted expenditures of its capital
plan. There can be no assurance that the projected benefits of the
modernization or other capital projects will be fully achieved, sufficient
product demand will exist for the Company's additional throughput capacity, or
that the planned capital projects can be completed in a timely manner or for
the amounts budgeted. Notwithstanding completion of the modernization program
and other current capital projects, management believes that additional, future
capital projects will be critical to the Company's long-term ability to compete
and will require substantial expenditures.
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Modernization Projects
Since announcing the modernization program, the Company has (i)
completed a new continuous casting facility and related improvements, (ii)
installed two Q-BOP furnaces, (iii) completed a direct rolling and large coil
project, including installation of a coilbox and a 42-megawatt induction slab
heating furnace, (iv) completed the wide coiled plate project, (v) installed
various environmental projects, and (vi) completed various other projects. The
following discussion highlights the major projects completed during fiscal year
1995 or which remain to be completed.
Wide Plate Coiler and Related Plate Processing Facilities. The wide
coiled plate project allows the Company to produce plate in coil form up to 126
inches in width and 1 inch in thickness. The wide coils can either be shipped
directly to customers or uncoiled, sheared and leveled on the Company's new
cut-to-length line. In connection with completion of this project, the
Company also converted its broadside mill to a reversing mill. The Company
believes that the capability to produce and process wide plate in coil form is
a significant competitive advantage.
Induction Slab Heating Furnace. During the fourth fiscal quarter of
1995, the Company increased its production of higher-margin large coils due
primarily to the start-up of a new 42-megawatt induction slab heating furnace,
which is located in-line with the Company's caster and rolling mill. The new
heating facility is designed to increase slab temperature by approximately 300
degrees fahrenheit prior to rolling. The Company is continuing to integrate
the induction furnace into the production process. The Company continues to
evaluate its slab heating requirements and may elect to install additional
heating capacity.
Plasma - Fired Cupola. The Company is nearing completion of a
plasma-fired cupola ironmaking facility. The cupola functions similar to a
blast furnace although it utilizes only a fraction of the coke required by a
blast furnace to produce liquid iron. The cupola can melt scrap steel,
directly reduced iron or other metallic inputs. The cupola utilizes electric
plasma technology as a secondary fuel source to further reduce coke
requirements and substantially increase its capacity. The technology
represents a means of meeting short-term ironmaking needs while providing a
broader flexibility of inputs and decreasing coke requirements. The Company
expects the facility to become available for operation in the first calendar
quarter of 1996. The cupola will be used to replace or supplement blast
furnace iron production, particularly when scrap prices are favorable or during
relines and other periods requiring additional ironmaking capacity.
Rolling Mill Finishing Stand Improvements. The Company has a
six-stand 132-inch combination continuous rolling mill, the widest of its type
in the world, which gives the Company the flexibility to alter its mix of sheet
and plate products in response to customer demands and changing market
conditions. The final phase of the rolling mill modernization includes
hydraulic gauge control, roll bending and automatic roll change. These
improvements are designed to enhance the shape and gauge of the Company's
products and to increase throughput capacity. Substantially all of the
equipment for the rolling mill finishing stand improvements will be completed
during fiscal year 1996. The Company has elected to defer installation of that
equipment until the following fiscal year. The Company anticipates that it may
incur significant start-up and transition costs as the finishing stand
equipment is installed and implemented. Depending on market, operational,
liquidity and other factors, the Company may elect at a later date to proceed
with installation of the finishing stand equipment during the 1996 fiscal year.
Development Venture
The Company, together with Air Products and Chemicals, Inc. and
Centerior Energy Corporation, has jointly agreed to pursue a unique project at
Geneva intended to demonstrate the commercial viability of an energy efficient,
environmentally sound process for producing hot metal and electricity. This
project, known as Clean Power from Integrated Coal/Ore Reduction (CPICOR(TM)),
was selected under the United States Department of Energy's Clean Coal
Technology Demonstration Program. The project includes construction and
operation of a 3,000 ton per day COREX(R) cokeless ironmaking unit. Potential
advantages of the project for the Company include additional ironmaking
capacity, decreased dependence on coke, increased energy production and various
environmental benefits. The project, which includes up to $150 million in cost
share funding from the Department of Energy, is not anticipated to start-up
until 1999 and is still subject to a number of contingencies, including
obtaining private financing, continuing availability of the government funding
and completion of project definition activities relating to the economic
viability of the project.
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PRODUCTS
The Company's principal products are steel slabs and hot-rolled sheet,
plate and pipe products. The Company also sells non-steel materials that are
by-products of its steelmaking operations.
The Company has a 132-inch combination continuous rolling mill, the
widest of its type in the world, which gives the Company the flexibility to
alter its mix of sheet and plate products in response to customer demands and
changing market conditions and the opportunity to maximize utilization of the
facilities. Generally, the Company manufactures products in response to
specific customer orders. During fiscal year 1995, the Company increased its
percentage of plate and slab products sold. Consistent with the Company's
strategic objectives, plate shipments have increased as various upgrades to
plate processing and finishing equipment have been completed and implemented.
The Company has, however, also increased slab shipments in response to
favorable slab pricing and to maximize production from the continuous caster.
The Company intends to continue shifting its product mix toward plate and
anticipates that slab sales will continue as a means of maximizing throughput.
Product mix shifts are also determined by Geneva's product mix optimization
efforts. These efforts generally allow Geneva to focus on products with the
highest margin contribution based on throughput efficiency. The Company's
product sales mix for fiscal years 1991 through 1995 is shown below:
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FISCAL YEAR ENDED SEPTEMBER 30,
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1991 1992 1993 1994 1995
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Sheet . . . . . . . . . . . . . . . . . . . 42% 45% 56% 65% 41%
Plate . . . . . . . . . . . . . . . . . . . 42 41 31 24 35
Pipe . . . . . . . . . . . . . . . . . . . 12 11 10 7 6
Slab . . . . . . . . . . . . . . . . . . . -- -- -- 1 15
Non-steel. . . . . . . . . . . . . . . . . 4 3 3 3 3
-------- -------- -------- ------- --------
Total . . . . . . . . . . . . . . 100% 100% 100% 100% 100%
======== ======== ======== ======= ========
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Sheet. The mill produces hot-rolled sheet steel which is sold in
sheet or coil form in thicknesses of .06 to .230 of an inch and widths of 40 to
74 inches. Maximum widths vary according to thickness. Included in the sheet
products made by the Company are cut-to-length sheet, hot-rolled bands and
tempered coil. Sheet is used in a variety of applications such as storage
tanks, light structural components and supports and welded tubing.
Plate. The Company's plate products consist of hot rolled carbon and
high-strength low alloy steel plate in coil form, cut-to-length from coil and
flat rolled in widths varying from 48 to 126 inches and in thicknesses varying
from .1875 of an inch to 3 inches. Plate can be used for heavy steel
structures such as storage tanks, railroad cars, ships and bridges.
Pipe. The Company produces electric resistance welded pipe ("ERW
pipe") ranging from approximately 7 to 16 inches in diameter. ERW pipe is
manufactured by heating and fusing the edges of the steel coil to form the
pipe. The Company's ERW pipe is used primarily in pipelines, including water,
natural gas and oil transmission and distribution systems, and in standard and
structural pipe applications.
Slab and Non-Steel. The Company sells steel slabs when market
conditions are favorable and as a means of maximizing production through the
continuous caster. The Company also sells products produced by its foundry
operation and various by-products resulting from its steelmaking activities.
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MARKETING; PRINCIPAL CUSTOMERS
The Company sells its sheet and plate products primarily to steel
service centers and distributors, which in recent years have become one of the
largest customer groups in the domestic steel industry. Service centers and
distributors accounted for approximately 80% of the Company's finished product
sales (excluding slabs) in fiscal year 1995. The Company also sells its
products to steel processors and various end-users, including manufacturers of
welded tubing, highway guardrail, storage tanks, railcars, ships and
agricultural and industrial equipment. The Company believes that sales of its
products, either directly or through service centers or distributors, to
automotive or appliance manufacturers have been immaterial. The Company has
developed a broad customer base. In fiscal year 1995, the Company sold its
products domestically to approximately 175 customers in 38 states and abroad
through exporters to six customers in Canada and Mexico.
The Company sells its ERW pipe to end-users and through distributors
primarily in the western and central United States, where demand for pipe
fluctuates in partial response to oil and gas industry cycles. The Company
also occasionally sells products in the export market. Export sales, which
generally have lower margins than domestic sales, accounted for approximately
1.9%, 0.3% and 1.3% of the Company's net sales during fiscal years 1993, 1994
and 1995, respectively.
The Company's principal direct marketing efforts are in the western
and central United States. Five sales representatives are employed in the
western market, two of whom are located in the greater Los Angeles area, the
largest single market for steel in the western United States. The Company
believes that it holds a significant market share of the hot-rolled sheet and
plate sales in the eleven western states.
In the central United States, the Company currently has a small share
of the market. Management believes, however, that there are attractive
opportunities for revenue growth in this market. Substantially all of Geneva's
sales in the central United States are made through a sales arrangement with
Mannesmann Pipe and Steel Corporation ("Mannesmann"), the United States steel
marketing subsidiary of Mannesmann A.G., a major German industrial company.
The sales arrangement entitles Mannesmann to sell the Company's products in 15
central states and to certain of the Company's customers in the eastern United
States, and to receive a variable commission on its sales. Mannesmann has an
exclusive right to sell the Company's products in these areas, subject to
certain exceptions. The payment terms provide that Mannesmann make a
production prepayment of up to $10 million. The Company is currently
negotiating with Mannesmann to increase the amount of the production
prepayment to $20 million, depending on sales volumes. See "Item 7.
Management's Discussion and Analysis of Financial Condition and Results of
Operations." The prepayment is recorded as a production prepayment until the
product is shipped, at which time the sale is recorded. The Company is
currently negotiating a three year renewal of its agreement with Mannesmann and
expects the renewal to be finalized within the next several weeks. Mannesmann
accounted for approximately 42% and 36% of the Company's net sales in fiscal
years 1994 and 1995, respectively. Any termination or disruption of the
Company's arrangements with Mannesmann could have a material adverse effect on
the Company's results of operations and financial condition.
The Company's strategy is to maintain its core market in the western
United States, where its market position is the strongest, and to increase
growth in the midwest and eastern regions, while focusing on profit
maximization. The Company believes that service centers and distributors
account for a substantially larger proportion of its sales than of sales for
the industry as a whole. Demand from this customer group historically has
experienced wide fluctuations due to substantial changes in the group's
inventory levels. In view of these factors, the Company intends to develop a
more diverse customer base, including steel processors and various end-users,
while retaining strong relationships with service center and distributor
customers. The Company expects its modernization efforts to play a critical
role in the implementation of these strategies by enabling the Company to
provide higher quality products and to gain access to a wider range of
customers than previously permitted.
In October 1995, the Company and Inland Materials Distribution Group
("IMDG"), a wholly-owned subsidiary of Inland Steel Industries, announced a
tentative agreement to form a joint venture that will own and operate a wide
coiled plate processing facility in the Chicago area. The facility will be
designed to process wide coiled plate into flat plate up to one inch in
thickness and up to 96 inches (and potentially 126 inches) in width. The
facility will be capable of producing up to 500,000 tons of discrete plate
annually and is currently scheduled for completion during the first half of the
1997 calendar year. Flat plate processed on the line will be sold by the
Company directly to customers and to IMDG for distribution through its steel
service center network.
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The Company generally produces steel in response to specific orders.
As of November 30, 1995, the Company had estimated total orders on hand for
approximately 274,000 tons compared to approximately 257,000 tons as of
November 30, 1994. The Company does not believe that its orders on hand are
necessarily indicative of future operating results.
EMPLOYEES; LABOR AGREEMENT
The Company has a workforce of approximately 2,570 full-time
employees, of whom approximately 510 are salaried and approximately 2,060 are
hourly. The Company's 179 operating management personnel generally have had
considerable experience in the steel industry. Almost half have more than 20
years of industry experience, with most of the remaining managers ranging in
experience from 10 to 20 years. The Company's senior operating managers have
an average of over 25 years of industry experience.
Substantially all of the Company's hourly employees are represented by
the United Steelworkers of America under a collective bargaining agreement that
expires in March 1998. The Company believes that its labor agreement is an
important competitive advantage. Although the Company's wage rates under the
agreement are high by local standards and comparable to regional competitors,
its total hourly labor costs are substantially below recent industry averages
compiled by the American Iron and Steel Institute. Unlike labor agreements
negotiated by many other domestic integrated steel producers, the Company's
labor agreement does not contain traditional work rules, limits the Company's
financial pension obligations to a defined contribution plan and entitles the
Company to reduce its profit sharing obligations by an amount equal to a
portion of its capital expenditures. The Company did not assume any pension
obligations or retiree medical obligations related to workers' service while
the plant was owned by USX.
The Company's labor agreement also contains a performance dividend
plan designed to reward employees for increased shipments of steel products.
Compensation under the plan includes a monthly guarantee of $.33 per hour for
all union represented workers. The guaranteed payment is based on an
annualized shipment rate of 1.5 million tons. As shipments increase above this
level, compensation under the plan also increases.
The Company has also implemented a performance dividend plan for all
non-union employees that provides additional compensation as shipment levels
increase. Unlike the union plan, however, there are no guaranteed payments.
The Company's profit sharing obligations under the labor agreement are
based on earnings before taxes, extraordinary items and profit sharing. Unlike
the profit sharing arrangements of many major domestic integrated steel
producers, the Company's profit sharing obligations are reduced by an amount
equal to a portion of its capital expenditures. The Company is required to
contribute each year to the profit sharing pool 10% of earnings before taxes,
extraordinary items and profit sharing after deducting 25% of the first $50
million of capital expenditures and 30% of all additional capital expenditures
in such year (including, in each case, capital maintenance). All payments made
to workers under the union performance dividend plan are deducted from any
profit sharing obligations otherwise required.
Effective March 1, 1995, the Company established a voluntary employee
beneficiary association trust ("VEBA Trust") to fund post retirement medical
benefits for future retirees covered by the collective bargaining agreement.
Company contributions to the VEBA Trust are limited to ten cents for each hour
of work performed by employees covered by the collective bargaining agreement.
In addition, union employees provide a contribution to the VEBA Trust based on
a reduction from the performance dividend plan payment. No benefits will be
paid from the VEBA Trust prior to March 31, 1998. Eligibility requirements and
related matters will be determined at a later date.
RAW MATERIALS AND RELATED SERVICES
The Company is located near major deposits of several of the principal
raw materials used to make steel, including iron ore, high volatile coal,
limestone and natural gas. The Company believes that, in certain instances,
this proximity, together with the Company's importance as a customer to
suppliers of these materials, enhances its ability to obtain competitive terms
for these raw materials. As the Company evaluates emerging technologies for
the production of iron and steel, it intends to focus on those technologies
that allow increased utilization of resources available in the western United
States.
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Iron Ore. The Company's steelmaking process can use both iron ore and
iron ore pellets. In recent years, the Company has used a high percentage of
iron ore pellets in an effort to maximize the operating efficiencies of its
blast furnaces in response to increased production needs. Iron ore pellets are
generally purchased from USX, as discussed below, as well as on the spot
market. As the Company increases production levels, it may continue to use a
higher percentage of iron ore pellets. The Company obtains its iron ore from
deposits at mines in Utah. The ore is mined by an independent contractor under
claims owned by the Company and transported by railroad to the steel mill. The
Company expects future costs of recovery of this ore to increase gradually as
the reserves are depleted.
The Company has historically purchased iron ore pellets from USX.
Pursuant to a five year agreement entered into as of September 1, 1994, the
Company has commitments to purchase at least 2,400,000 and 2,160,000 tons in
the second and third years of the agreement, respectively, and 1,890,000 tons
in each of the fourth and fifth years of the contract. The agreement also
limits the maximum quantity of pellets USX is obligated to supply.
Coal and Coke. The coke batteries operated by the Company require a
blend of various grades of metallurgical coal. The Company currently obtains
high volatile coal from a mine in western Colorado owned by Pacific Basin
Resources under a contract that expires in March 1997, which will likely be
extended. The Company also purchases various grades of coal under short-term
contracts from sources in the eastern United States. Although the Company
believes that such coal is available from several alternative eastern
suppliers, the Company is subject to price volatility resulting from
fluctuations in the spot market. There can be no assurance that the Company's
blend of coal will not change or that its overall cost of coal will not
increase.
The Company is currently purchasing imported coke as a result of its
increasing steel production and decreasing capacity to produce its own coke as
the Company's coke ovens deteriorate. The ability of other domestic integrated
steel mills to produce coke is also decreasing, thereby increasing the demand
for purchased coke in the United States. The Company purchases coke from
sources in Japan and China. As the Company's consumption of purchased coke
increases, the Company's average cost of coke used in the manufacturing process
will be higher.
Energy. The Company's steel operations consume large amounts of
oxygen, electricity and natural gas. The Company purchases oxygen, nitrogen
and argon from two facilities located on the Company's premises which were
constructed by Air Liquide America Corporation ("Air Liquide") and Praxair,
Inc. ("Praxair"), respectively. These facilities are capable of providing
approximately 280 and 540 tons of oxygen per day under contracts which expire
in 1998 and 2006, respectively. Air Liquide has agreed to construct a new
facility to accommodate the Company's increased production levels and to
replace the existing Air Liquide facility. Under a new agreement expiring 15
years from the date of first delivery of product (presently estimated at
December, 1996), the Company will have the right to receive an average of 800
tons of gaseous oxygen per day from the new facility. Praxair will also
continue to supply product to the Company from its facility. The Company pays
a monthly charge to Praxair for the right to receive 100% of Praxair's
production and will pay a similar charge to Air Liquide to receive contract
tonnages of oxygen when the new facility is completed.
The Company generates a substantial portion of its electrical
requirements using a 50 megawatt rated generator located at the steel mill and
currently purchases most of its remaining electrical requirements from Utah
Power & Light Company ("UP&L") under a 90 megawatt interruptible power contract
expiring in 1999. The contract provides for price increases tied to the cost
of energy used by the utility to produce electricity. The Company has also
entered into a firm power contract expiring in 1999 with UP&L under which the
Company purchases additional electrical needs. The firm contract provides for
energy charges and price increases similar to the interruptible contract but
also includes a significantly higher capacity charge.
Natural gas is purchased at the wellhead in the Rocky Mountain region
and is transported to the steel mill by pipeline. The Rocky Mountain region
has substantial natural gas reserves.
Other. The Company's mill is served by both the Southern Pacific
Transportation Company ("SP") and the Union Pacific Railroad Company ("UP").
The Company believes that it is one of the largest western customers of each
railroad. The Company's location in the western United States facilitates
backhauling, which reduces freight costs. The SP and the UP recently announced
the intention to merge, subject to approval by the Interstate Commerce
Commission. The Company has expressed concerns regarding the competitive
impact of such a merger and, as a result, is in the process of negotiating a
long-term transportation contract with the UP intended to maintain a
competitive rate structure. The Company also owns
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mining claims in a limestone quarry located approximately 30 miles from the
Company's plant. The limestone is mined by the Company and transported by
railroad to the mill.
The Company uses scrap metal obtained from its own operations and
external sources in its steelmaking process. As the Company increases its
production volume, improves yield or implements steelmaking technologies that
utilize scrap, such as the plasma-fired cupola, management anticipates that
increased amounts of scrap will be purchased.
The cost of the Company's raw materials, including energy, has been
susceptible in the past to fluctuations in price and availability and is
expected to increase over time. Worldwide competition in the steel industry
has frequently limited the ability of steel producers to raise finished product
prices to recover higher raw material costs. The Company's future
profitability will be adversely affected to the extent it is unable to pass on
higher raw material costs to its customers.
COMPETITION AND OTHER MARKET FACTORS
The Company competes with domestic and foreign steel producers on the
basis of price, quality and service. Many of the Company's competitors are
larger companies, have greater capital resources and, in some cases, more
modern technology than the Company. Intense worldwide sales competition exists
for all the Company's products. Both the industry and the Company face
increasing competition from producers of certain materials such as aluminum,
composites, plastics and concrete.
The Company believes that certain of its raw material arrangements,
particularly with respect to energy, and its current labor contract are
favorable in relation to those of the domestic steel industry as a whole. The
Company currently purchases iron ore pellets and a significant portion of its
coal requirements from locations in the midwest and eastern United States, for
which it has a transportation cost disadvantage. The Company believes that its
geographic location enhances its ability to compete in the western United
States, although it has a transportation disadvantage in midwestern and eastern
markets.
Product quality has improved significantly as a result of the
continuous caster and other capital projects. The Company is presently at a
competitive disadvantage with respect to certain product quality factors
particularly with respect to sheet products. The Company believes, however,
that its ongoing modernization efforts have enhanced the competitiveness of its
products, particularly with respect to plate products. Standards of quality in
the steel industry are, nevertheless, rising as buyers continually expect
higher quality products. Foreign and domestic producers continue to invest
heavily to achieve increased production efficiencies and product quality.
The steel industry is cyclical in nature and highly competitive.
Moreover, overall throughput capacity and competition are increasing due
primarily to construction of mini-mills and improvements in production
efficiencies at existing mills. The Company, like other steel producers, is
highly sensitive to price and production volume changes. Consequently, any
downward movement could have an adverse effect on the Company's results of
operations.
Integrated steel producers are facing increasing competitive pressures
from mini-mills. Mini-mills are generally smaller volume steel producers which
use ferrous scrap metal as their basic raw material and serve regional markets.
These operations traditionally produced lower margin, commodity type steel
goods such as bars, rods and structural products. A number of mini-mills,
however, produce plate, coil and pipe products that compete directly with the
Company's products. Three mini-mills have completed or are constructing
facilities that will produce wide plate in coil form, thereby competing with
products produced by the Company. Of these facilities, one has begun
operations and a second will begin operations in the spring of 1996. Recently
developed thin slab/direct rolling techniques have also allowed mini-mills to
produce some of the types of sheet products that have traditionally been
supplied by integrated producers. Several competitors have announced or
expressed an intention to construct mini-mill facilities that, if constructed,
are expected to significantly increase domestic steel production and thereby
further increase competition.
Foreign competition is a significant factor in the steel industry and
has adversely affected product prices in the United States and tonnage sold by
domestic producers. The intensity of foreign competition is substantially
affected by fluctuations in the value of the United States dollar against
several other currencies as well as the strength of the United States economy
relative to foreign economies. In addition, many foreign steel producers are
controlled or subsidized by foreign governments whose decisions concerning
production and exports may be influenced in part by political and social policy
considerations as well as by prevailing market conditions and profit
opportunities. Domestic pricing has been
7
<PAGE> 9
adversely affected by unfairly traded imports, including most recently from
non-traditional sources such as Russia, Ukraine and China. Existing trade laws
and regulations may be inadequate to prevent unfair trade practices whereby
imports could pose increasing problems for the domestic steel industry and the
Company.
ENVIRONMENTAL MATTERS
Compliance with environmental laws and regulations is a significant
factor in the Company's business. The Company is subject to federal, state and
local environmental laws and regulations concerning, among other things, air
emissions, wastewater discharge, and solid and hazardous waste disposal. The
Company believes that it is in compliance in all material respects with all
currently applicable environmental regulations.
The Company has incurred substantial capital expenditures for
environmental control facilities, including the Q-BOP furnaces, the wastewater
treatment facility, the benzene mitigation equipment, the coke oven gas
desulfurization facility and other projects. The Company has budgeted a total
of approximately $1.7 million for environmental capital improvements in fiscal
years 1996 and 1997. Such improvements include potential upgrades to the
Company's coking emission controls. Environmental legislation and regulations
have changed rapidly in recent years and it is likely that the Company will be
subject to increasingly stringent environmental standards in the future.
Although the Company has budgeted capital expenditures for environmental
matters, it is not possible at this time to predict the amount of capital
expenditures that may ultimately be required to comply with all environmental
laws and regulations.
Under the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA"), the U.S. Environmental Protection
Agency and the states have authority to impose liability on waste generators,
site owners and operators and others regardless of fault or the legality of the
original disposal activity. Other environmental laws and regulations may also
impose liability on the Company for conditions existing prior to the Company's
acquisition of the steel mill.
At the time of the Company's acquisition of the steel mill, the
Company and USX identified certain hazardous and solid waste sites and other
environmental conditions which existed prior to the acquisition. USX has
agreed to indemnify the Company (subject to the sharing arrangements described
below) for any fines, penalties, costs (including costs of clean-up, required
studies, and reasonable attorneys' fees), or other liabilities for which the
Company becomes liable due to any environmental condition existing on the
Company's real property as of the acquisition date that is determined to be in
violation of any environmental law, is otherwise required by applicable
judicial or administrative action, or is determined to trigger civil liability
(the "Pre-existing Environmental Liabilities"). The Company has provided a
similar indemnity (but without any similar sharing arrangement) to USX for
conditions that may arise after the acquisition. Although the Company has not
completed a comprehensive analysis of the extent of the Pre-existing
Environmental Liabilities, such liabilities could be material.
Under the acquisition agreement between the two parties, the Company
and USX agreed to share on an equal basis the first $20 million of costs
incurred by either party to satisfy any government demand for studies, closure,
monitoring, or remediation at specified waste sites or facilities or for other
claims under CERCLA or the Resource Conservation and Recovery Act. The Company
is not obligated to contribute more than $10 million for the clean-up of wastes
generated prior to the acquisition. The Company believes that it has paid the
full $10 million necessary to satisfy its obligations under the cost-sharing
arrangement. USX has advised the Company, however, of its position that a
portion of the amount paid by the Company may not be properly credited against
Geneva's obligations. Although the Company believes that USX's position is
without merit, there can be no assurance that this matter will be resolved
without litigation. The Company believes that resolution of this matter will
not likely have a material adverse effect. The Company's ability to obtain
indemnification from USX in the future will depend on factors which may be
beyond the Company's control and may also be subject to dispute.
ITEM 2. PROPERTIES.
The Company's principal properties consist of the approximately
1,400-acre site on which the steel mill and related facilities are located, the
Company's iron ore mines in southern Utah and the limestone quarry near the
steel mill. The Company also leases from the State of Utah, under a lease
expiring in 2016, a 300-acre site which includes a retention pond. The
retention pond is a significant part of the Company's water pollution control
facilities. Although the Company's facilities are generally suitable to its
needs, the Company believes that such facilities will continue to require
future improvements
8
<PAGE> 10
and additional modernization projects in order to remain competitive. See Item
1. "Business--Capital Projects" and "--Competition and Other Market Factors."
ITEM 3. LEGAL PROCEEDINGS.
In addition to the matters described under Item 1.
"Business--Environmental Matters," the Company is a party to routine legal
proceedings incidental to its business. In the opinion of management, after
consultation with its legal counsel, none of the proceedings to which the
Company is currently a party to are expected to have a material adverse effect
on the Company's business or financial condition.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of security holders during the
fourth quarter of the fiscal year covered by this Report.
9
<PAGE> 11
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The Company's Class A Common Stock is listed and traded on the New
York Stock Exchange ("NYSE") and the Pacific Stock Exchange under the symbol
"GNV." The following table sets forth, for the periods indicated, the high and
low sales prices for the Class A Common Stock as reported on the NYSE Composite
Tape.
<TABLE>
<CAPTION>
Fiscal Year Ended September 30, 1994 HIGH LOW
<S> <C> <C>
First Quarter ended December 31 $ 18 1/2 $ 11 7/8
Second Quarter ended March 31 21 3/8 13 1/4
Third Quarter ended June 30 20 13 3/8
Fourth Quarter ended September 30 21 1/4 15 1/2
Fiscal Year Ended September 30, 1995 HIGH LOW
First Quarter ended December 31 $ 18 $ 12 1/4
Second Quarter ended March 31 16 9 3/4
Third Quarter ended June 30 12 7 1/8
Fourth Quarter ended September 30 9 3/4 7 3/4
</TABLE>
As of November 30, 1995, the Company had 13,343,871 shares of Class A Common
Stock outstanding, held by 646 stockholders of record, and 19,151,348 shares
of Class B Common Stock outstanding, held by five stockholders of record.
Shares of Class B Common Stock are convertible into shares of Class A Common
Stock at the rate of ten shares of Class B Common Stock for one share of Class
A Common Stock. There is no public market for the Class B Common Stock.
The Company currently anticipates that it will retain all available funds to
finance its capital expenditures and other business activities, and it does not
anticipate paying any cash dividends on the Common Stock in the foreseeable
future. In addition, the Company's revolving credit facility and senior notes
restrict the amount of dividends that the Company may pay. See Item 7.
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources" and Note 2 of Notes to
Consolidated Financial Statements included in this Report.
ITEM 6. SELECTED FINANCIAL DATA.
The information required by this Item is incorporated by reference to
page 5 of the Company's Annual Report to Shareholders for the fiscal year ended
September 30, 1995.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
The information required by this Item is incorporated by reference to
pages 6 through 11 of the Company's Annual Report to Shareholders for the
fiscal year ended September 30, 1995.
ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The information required by this Item is incorporated by reference to
pages 12 through 27 of the Company's Annual Report to Shareholders for the
fiscal year ended September 30, 1995.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
10
<PAGE> 12
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The information required by this Item is incorporated by reference to
the sections entitled "Election of Directors -- Nominees for Election as
Directors" and "Executive Officers" in the Company's definitive Proxy Statement
for the Annual Meeting of Shareholders to be held on March 26, 1996. The
definitive Proxy Statement will be filed with the Securities and Exchange
Commission not later than 120 days after September 30, 1995, pursuant to
Regulation 14A of the Securities Exchange Act of 1934, as amended.
ITEM 11. EXECUTIVE COMPENSATION.
The information required by this Item is incorporated by reference to
the sections entitled "Election of Directors -- Director Compensation" and
"Executive Compensation" in the Company's definitive Proxy Statement for the
Annual Meeting of Shareholders to be held on March 26, 1996.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information required by this Item is incorporated by reference to
the section entitled "Principal Holders of Voting Securities" in the Company's
definitive Proxy Statement for the Annual Meeting of Shareholders to be held on
March 26, 1996.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
None.
11
<PAGE> 13
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K.
(a) Documents Filed:
1. Consolidated Financial Statements. The following
Consolidated Financial Statements of the Company and
Report of Independent Public Accountants included in
the Company's Annual Report to Shareholders for the
fiscal year ended September 30, 1995 are incorporated
by reference in Item 8 of this Report:
- Report of Independent Public Accountants
- Consolidated Balance Sheets at September 30,
1995 and 1994
- Consolidated Statements of Operations for the
years ended September 30, 1995, 1994 and 1993
- Consolidated Statements of Stockholders'
Equity for the years ended September 30,
1995, 1994 and 1993
- Consolidated Statements of Cash Flows for the
years ended September 30, 1995, 1994 and 1993
- Notes to Consolidated Financial Statements
2. Financial Statement Schedule. The following
Financial Statement Schedule of the Company for the
years ended September 30, 1995, 1994 and 1993 is
filed as part of this Report and should be read in
conjunction with the Company's Consolidated Financial
Statements and Notes thereto:
Schedule Page
-------- ----
II - Valuation and Qualifying Accounts 18
Financial statements and schedules other than those
listed are omitted for the reason that they are not
required or are not applicable, or the required
information is shown in the Consolidated Financial
Statements or Notes thereto, or contained in this
Report.
(b) Reports on Form 8-K
None.
12
<PAGE> 14
(c) Exhibits
<TABLE>
<CAPTION>
EXHIBIT INCORPORATED FILED
NO. EXHIBIT BY REFERENCE HEREWITH
------- --------------------------------------------------------- --------------- ------------
<S> <C> <C> <C>
3.1 Revised Articles of Incorporation of the Registrant (1)
3.2 Articles of Amendment dated February 17, 1993 to the (2)
Registrant's Revised Articles of Incorporation
3.3 Articles of Amendment dated March 12, 1993 to the (3)
Registrant's Revised Articles of Incorporation
3.4 Restated Bylaws of the Registrant dated March 12, 1993 (2)
4.1 Specimen Certificate of the Registrant's Class A Common (1)
Stock, no par value
4.2 Specimen Certificate of the Registrant's Series B Preferred (4)
Stock, no par value
10.1 Asset Sales Agreement between USX and the Registrant dated as (1)
of June 26, 1987, as Amended and Restated August 31, 1987
10.2 Registration Rights Agreement among the signatories listed on (1)
the signature pages thereof and the Registrant dated November
6, 1989
10.3 License Agreement between ENSR Corporation and the Registrant (1)
dated December 8, 1988
10.4 Amended and Restated Revolving Credit Agreement among the (5)
Registrant, the Lender Parties named therein, Citibank, N.A.,
and Citicorp U.S.A., Inc., dated as of November 4, 1994
10.5 First Amendment to Amended and Restated Revolving Credit (6)
Agreement dated June 30, 1995
10.6 Second Amendment to Amended and Restated Revolving Credit X
Agreement dated October 31, 1995
10.7 Receivables Purchase Agreement between the Registrant and (5)
Geneva Steel Funding Corporation ("GSFC") dated as of
November 4, 1994, including Annex
10.8 Pooling and Servicing Agreement among GSFC, the Registrant (5)
and Bankers Trust Company, as trustee, dated as of November
4, 1994, including Annex
10.9 Series 1994-1 Supplement to Pooling and Servicing Agreement (5)
among GSFC, the Registrant and Bankers Trust Company, as
trustee, dated as of November 4, 1994, including Annex
10.10 Certificate Purchase Agreement among GSFC, the Registrant, (5)
Corporate Receivables Corporation, the Liquidity Providers
named therein, and Citicorp North America, Inc., dated as of
November 4, 1994, including Annex
10.11 Sales Representation Agreement between Mannesmann Pipe & (1)
Steel Corporation and the Registrant dated December 8, 1988
10.12 Amendment to Sales Representation Agreement between (7)
Mannesmann Pipe & Steel Corporation and the Registrant dated
April 18, 1991
</TABLE>
13
<PAGE> 15
<TABLE>
<CAPTION>
EXHIBIT INCORPORATED FILED
NO. EXHIBIT BY REFERENCE HEREWITH
------- --------------------------------------------------------- --------------- ------------
<S> <C> <C> <C>
10.13 Amendment to Sales Representation Agreement between (8)
Mannesmann Pipe & Steel Corporation and the Registrant dated
April 17, 1992
10.14 Geneva Steel Key Employee Plan* (9)
10.15 Amendment to Geneva Steel Key Employee Plan dated May 12, (7)
1991*
10.16 Form of Non-Statutory Stock Option Agreement* (1)
10.17 Management Employee Savings and Pension Plan, as Amended and X
Restated generally effective January 1, 1994, dated as of
July 3, 1995*
10.18 Form of revised Executive Split Dollar Insurance Agreement* (10)
10.19 Form of revised Executive Supplemental Retirement Agreement* (10)
10.20 Union Employee Savings and Pension Plan, as Amended and X
Restated effective January 1, 1995, dated as of June 22, 1995*
10.21 Collective Bargaining Agreement between United Steelworkers (6)
of America and the Registrant ("Collective Bargaining
Agreement") dated March 1, 1995*
10.22 Agreement between Union Carbide Industrial Gases, Inc. and (9)
the Registrant dated July 12, 1990, as amended August 3, 1990
(the "Union Carbide Agreement")
10.23 Amendment to the Union Carbide Agreement dated December 1, (10)
1992
10.24 Oxygen Supply Agreement between Big Three Industrial Gas, (9)
Inc. (successor in interest to Liquid Air Corporation) and
the Registrant dated September 27, 1988 and Amendment thereto
dated June 8, 1990
10.25 Coilbox License Agreement between Stelco Technical Services (1)
Limited and the Registrant dated August 23, 1989
10.26 License Agreement for the K-OBM Process between (1)
Klockner Contracting and Technologies GmbH and the Registrant
dated November 25, 1989
10.27 Special Use Lease Agreement No. 897 between the State of Utah (10)
and the Registrant dated January 13, 1992 and Amendment
thereto dated June 19, 1992
10.28 Indenture dated as of January 15, 1994 between the Registrant (11)
and Bankers Trust Company, as Trustee, including a form of 9
1/2% Senior Note due 2004
10.29 Indenture dated as of March 15, 1993 between the Registrant (3)
and The Bank of New York, as Trustee, including a form of 11
1/8% Senior Note due 2001
10.30 License Agreement relating to the desulfurization process (1)
between BS&B Engineering Company, Inc. and the Registrant
dated March 1, 1990
</TABLE>
14
<PAGE> 16
<TABLE>
<CAPTION>
EXHIBIT INCORPORATED FILED
NO. EXHIBIT BY REFERENCE HEREWITH
------- --------------------------------------------------------- --------------- ------------
<S> <C> <C> <C>
10.31 Lo-Cat(R) Licensing Agreement between ARI Technologies, Inc. (9)
and the Registrant dated April 16, 1990
10.32 Agreement relating to the closure of hazardous waste surface (9)
impoundments between USX Corporation, the Registrant and
Duncan Lagnese Associates, Incorporated dated October 22,
1990
10.33 Agreement for the Sale and Purchase of Coal among Pacific (7)
Basin Resources (a division of Oxbow Carbon and Minerals,
Inc.), Somerset Mining Company and the Registrant dated April
11, 1991
10.34 Agreement for the Sale and Purchase of Coke between the (12)
Registrant and Mitsubishi International Corporation dated
November 9, 1993 (the "Mitsubishi Agreement")
10.35 Amendment to the Mitsubishi Agreement dated as of December (13)
28, 1993
10.36 Agreement for Sale and Purchase of Coke between the (14)
Registrant and Pacific Basin Resources (a division of Oxbow
Carbon and Minerals, Inc.) dated April 29, 1994
10.37 Warrant Agreement dated as of March 16, 1993 between the (2)
Registrant and The Bank of New York, as Warrant Agent
10.38 Form of Indenture between the Registrant and the Trustee (3)
thereunder related to the Exchange Debentures, including a
form of Exchange Debenture
10.39 Taconite Pellet Sales Agreement between USX Corporation and (6)
Geneva Steel dated May 31, 1995
10.40 Industrial Gas Supply Agreement between Air Liquide America (6)
Corporation and Geneva Steel dated June 8, 1995.
13 Selected portions of the Registrant's Annual Report to X
Shareholders for the year ended September 30, 1995 which are
incorporated by reference in Parts II and IV of this Report
23 Consent of Arthur Andersen LLP, independent public X
accountants
27 Financial Data Schedule X
</TABLE>
--------------------
* Management contract or compensatory
plan or arrangement.
(1) Incorporated by reference to the
Registration Statement on Form
S-1 dated March 27, 1990, File No.
33-33319.
(2) Incorporated by reference to the
Registration Statement on Form S-3
dated June 16, 1993, File No.
33-64548.
(3) Incorporated by reference to the
Registration Statement on Form S-4
dated April 15, 1993, File No.
33-61072.
(4) Incorporated by reference to the
Registration Statement on Form S-4
dated August 9, 1993, File No.
33-61072.
15
<PAGE> 17
(5) Incorporated by reference to the
Annual Report on Form 10-K for the
fiscal year ended September 30, 1994.
(6) Incorporated by reference to the
Quarterly Report on Form 10-Q for the
fiscal quarter ended June 30, 1995.
(7) Incorporated by reference to the
Annual Report on Form 10-K for the
fiscal year ended September 30, 1991.
(8) Incorporated by reference to the
Current Report on Form 8-K dated May
22, 1992.
(9) Incorporated by reference to the
Registration Statement on Form S-1
dated November 5, 1990, File
No. 33-37238.
(10) Incorporated by reference to the
Annual Report on Form 10-K for the
fiscal year ended September 30, 1992.
(11) Incorporated by reference to the
Quarterly Report on Form 10-Q for the
fiscal quarter ended December 31,
1993.
(12) Incorporated by reference to the
Current Report on Form 8-K dated
December 2, 1993.
(13) Incorporated by reference to the
Quarterly Report on Form 10-Q for the
fiscal quarter ended March 31, 1994.
(14) Incorporated by reference to the
Quarterly Report on Form 10-Q for the
fiscal quarter ended June 30, 1994.
(d) Financial Statement Schedule
See page 18 herein.
16
<PAGE> 18
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Geneva Steel Company:
We have audited in accordance with generally accepted auditing
standards, the consolidated financial statements incorporated by reference in
Item 8 of this Form 10-K, and have issued our report thereon dated October 25,
1995 (except with respect to the matter discussed in the last paragraph of
Note 7 as to which the date is November 28, 1995). Our audit was made for the
purpose of forming an opinion on those statements taken as a whole. The
schedule listed in Item 14(a)2 is the responsibility of the Company's
management and is presented for purposes of complying with the Securities and
Exchange Commission's rules and is not part of the basic financial statements.
This schedule has been subjected to the auditing procedures applied in the
audit of the basic financial statements and, in our opinion, fairly states in
all material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Salt Lake City, Utah
October 25, 1995
17
<PAGE> 19
GENEVA STEEL COMPANY
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED SEPTEMBER 30, 1995, 1994 AND 1993
(Dollars in Thousands)
<TABLE>
<CAPTION>
Additions
Balance at Charged to Deductions, Balance
Beginning Costs and Net of at End
Description of Year Expenses Recoveries of Year
- ----------- ----------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
Year Ended September 30, 1995
Allowance for doubtful accounts . . . $3,113 $5,138 $(6,239) $2,012
====== ====== ======= ======
Year Ended September 30, 1994
Allowance for doubtful accounts . . . $2,983 $4,826 $(4,696) $3,113
====== ====== ======= ======
Year Ended September 30, 1993
Allowance for doubtful accounts . . . $3,413 $5,230 $(5,660) $2,983
====== ====== ======= ======
</TABLE>
18
<PAGE> 20
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, on December 27,
1995.
GENEVA STEEL COMPANY
By: /s/ Joseph A. Cannon
---------------------------
Joseph A. Cannon,
Chairman of the Board
and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Joseph A. Cannon Chairman of the Board and Chief December 27, 1995
- ----------------------------- Executive Officer
Joseph A. Cannon (Principal executive officer)
/s/ Robert J. Grow President and Chief Operating December 27, 1995
- ----------------------------- Officer and Director
Robert J. Grow
/s/ Richard D. Clayton Executive Vice President, December 27, 1995
- ----------------------------- Vice President of Environment
Richard D. Clayton and Director
/s/ Dennis L. Wanlass Vice President, Treasurer and December 27, 1995
- ----------------------------- Chief Financial Officer
Dennis L. Wanlass (Principal financial and
accounting officer)
/s/ A. Blaine Huntsman Director December 27, 1995
- -----------------------------
A. Blaine Huntsman
/s/ A. Thurl Jacobson Director December 27, 1995
- -----------------------------
A. Thurl Jacobson
/s/ Arch L. Madsen Director December 27, 1995
- -----------------------------
Arch L. Madsen
/s/ R. J. Shopf Director December 27, 1995
- -----------------------------
R. J. Shopf
</TABLE>
<PAGE> 1
SECOND AMENDMENT TO AMENDED
AND RESTATED REVOLVING CREDIT AGREEMENT
Second Amendment to Amended and Restated Revolving Credit Agreement
(this "Amendment"), dated as of October 31, 1995, in respect of and to that
certain Amended and Restated Revolving Credit Agreement, dated as of November 4,
1994 (as amended by this Amendment and as the same shall have been heretofore or
shall be hereafter amended, modified or supplemented, the "Credit Agreement",
and the terms defined therein and not otherwise defined herein being used herein
as therein defined), among Geneva Steel Company, a Utah corporation (the
"Borrower"), the lenders party thereto (the "Lenders"), Citibank, N.A., as
Issuer (the "Issuer") and Citicorp USA, Inc., as Agent for the Lenders (the
"Agent").
W I T N E S S E T H :
WHEREAS, the Borrower has requested that the Credit Agreement be
amended in certain respects; and
WHEREAS, the Lenders, the Issuer and the Agent are willing to amend the
Credit Agreement but only on the terms and subject to the conditions set forth
herein;
NOW THEREFORE, in consideration of the premises and the mutual
covenants hereinafter contained, the parties hereto agree as follows:
SECTION 1. Amendments to Credit Agreement. Subject to and upon the
satisfaction of the conditions set forth in Section 2 hereof, the Credit
Agreement is hereby amended as follows:
(a) Section 5.3 of the Credit Agreement is hereby amended by deleting
the Maximum Amount of Cumulative Capital Expenditures set forth therein for the
periods ending October 31, 1995, November 30, 1995, December 31, 1995, January
31, 1996 and February 29, 1996 and substituting in lieu thereof $75,000,000,
$75,000,000, $75,000,000, $82,000,000 and $82,000,000, respectively.
(b) Section 5.4 of the Credit Agreement is hereby amended by deleting
the Minimum Cash Flow amounts set forth therein for the periods ending October
31, 1995, November 30, 1995, December 31, 1995, January 31, 1996 and February
29, 1996 and substituting in lieu thereof $45,000,000, $47,500,000, $50,000,000,
$50,000,000 and $55,000,000, respectively.
<PAGE> 2
SECTION 2. Conditions Precedent.
2.1. This Amendment shall become effective (the "Effective Date") if
and when, and only when, the Agent shall have received counterparts of this
Amendment executed by the Borrower, the Agent, the Issuer and the Majority
Lenders, and the Agent shall have additionally received all of the following
documents, each document (unless otherwise indicated) being dated as of the date
hereof, in form and substance satisfactory to the Agent and in sufficient
original copies for each Lender:
(a) Certified copies of the resolutions of the Board of Directors of
the Borrower, evidencing authorization of the Borrower to enter into this
Amendment and the documents, transactions and matters contemplated hereby;
(b) A certificate of the Secretary or an Assistant Secretary of the
Borrower, certifying the names and true signatures of the officers of the
Borrower authorized to execute and deliver this Amendment on behalf of the
Borrower; and
(c) A certificate, signed by a Responsible Officer of the Borrower,
stating that the conditions specified in Section 2.2 hereof have been satisfied.
2.2. The effectiveness of this Amendment is subject to the further
conditions precedent that:
(a) The execution and delivery by the Borrower of this Amendment are
not enjoined, temporarily, preliminarily or permanently;
(b) All costs and accrued and unpaid fees and expenses owing by the
Borrower to the Agent or the Lenders, to the extent due and payable on or prior
to the Effective Date, shall have been paid; and
(c) The following statements shall be true and correct on the
Effective Date:
(i) The representations and warranties of the Borrower in
each Loan Document (after giving effect to this
Amendment) and in this Amendment are correct and
accurate on and as of the Effective Date, as though
made on and as of the Effective Date; and
2
<PAGE> 3
(ii) After giving effect to this Amendment, no Default or
Event of Default shall have occurred and be
continuing.
SECTION 3. Representations and Warranties. In order to induce the
Lenders, the Issuer and the Agent to enter into this Amendment, the Borrower
represents and warrants to the Lenders, the Issuer and the Agent as follows:
3.1. The execution, delivery and performance by the Borrower of this
Amendment and each other document and instrument to be delivered hereunder:
(a) are within the Borrower's corporate powers;
(b) have been duly authorized by all necessary corporate action,
including, without limitation, the consent of shareholders where required;
(c) do not and will not (i) contravene its Articles of Incorporation,
by-laws or other comparable governing documents, (ii) violate any Requirement of
Law (including, without limitation, Regulations G, T, U and X of the Board of
Governors of the Federal Reserve System), or any order or decree of any court or
Governmental Authority, (iii) conflict with or result in the breach of, or
constitute a default under, or result in or permit the termination or
acceleration of, any Contractual Obligation of the Borrower, or (iv) result in
the creation or imposition of any Lien upon any of the property of the Borrower;
and
(d) do not require the consent, authorization by, or approval of, or
notice to, or filing or registration with, any Governmental Authority or any
other Person, other than those which have been obtained and copies of which have
been delivered to the Agent, each of which is in full force and effect.
3.2. This Amendment has been duly executed and delivered by the
Borrower.
3.3. This Amendment is the legal, valid and binding obligation of the
Borrower, enforceable against the Borrower in accordance with its terms.
SECTION 4. Miscellaneous.
4.1. This Amendment and the rights of the parties hereto shall be
governed by, and construed in accordance with, the law of the State of New
York. Wherever possible, each provision of this Amendment shall be interpreted
in such a manner as
3
<PAGE> 4
to be effective and valid under applicable law, but if any provision of this
Amendment shall be prohibited by or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Amendment.
4.2. Any legal action or proceeding with respect to this Amendment or
any document related hereto may be brought in the courts of the State of New
York or of the United States of America for the Southern District of New York,
and, by execution and delivery of this Amendment, the Borrower hereby accepts,
and submits to, for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts. The parties hereto
hereby irrevocably waive any objection, including, without limitation, any
objection to the laying of venue or based on the grounds of forum non
conveniens, which any of them may now or hereafter have to the bringing of any
such action or proceeding in such respective jurisdictions. The Borrower agrees
that a final judgment in any such action or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law.
4.3. Nothing contained in this Section 4 shall affect the right of the
Agent, the Issuer, any Lender or any holder of a Note to serve process in any
manner permitted by law or commence legal proceedings or otherwise proceed
against the Borrower in any other jurisdiction.
4.4. Each of the parties hereto waives any right it may have to trial
by jury in respect of any litigation based on, or arising out of, under or in
connection with this Amendment, or any course of conduct, course of dealing,
verbal or written statement or action of any party hereto.
4.5. The Section titles contained in this Amendment are and shall be
without substantive meaning or content of any kind whatsoever and are not a part
of the agreement between the parties hereto.
4.6. This Amendment may be executed in any number of counterparts and
by different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
4.7. Except as expressly amended by this Amendment, the Credit
Agreement shall remain in full force and effect and is hereby ratified and
confirmed.
4
<PAGE> 5
IN WITNESS WHEREOF, each of the parties hereto has caused this
Amendment to be executed by an officer thereunto duly authorized, as of the date
first above written.
GENEVA STEEL COMPANY
By: /s/ Dennis L. Wanlass
---------------------------------
Name: Dennis L. Wanlass
Title: Vice President, Treasurer
and Chief Financial Officer
CITICORP USA, INC.,
as Agent
By: /s/ Keith R. Karako
---------------------------------
Name: Keith R. Karako
Title: Attorney-in-Fact
CITICORP USA, INC.,
as Lender
By: /s/ Keith R. Karako
---------------------------------
Name: Keith R. Karako
Title: Attorney-in-Fact
CITIBANK, N.A.,
as Issuer
By: /s/ Keith R. Karako
---------------------------------
Name: Keith R. Karako
Title: Attorney-in-Fact
5
<PAGE> 6
CORESTATES BANK, N.A.,
as Lender
By: /s/ Myron Landau
---------------------------------
Name: Myron Landau
Title: Vice President
BANK ONE, UTAH, N.A.,
as Lender
By:
---------------------------------
Name:
Title: Vice President
FIRST SECURITY BANK
OF UTAH, N.A., as Lender
By: /s/ Scott M. Eastwood
---------------------------------
Name: Scott M. Eastwood
Title: Vice President
HELLER FINANCIAL, INC., as Lender
By: /s/ Mark Admison
---------------------------------
Name: Mark Admison
Title: EX. Vice President
6
<PAGE> 1
THE GENEVA STEEL
MANAGEMENT EMPLOYEE SAVINGS AND PENSION PLAN
(As Amended and Restated Generally Effective January 1, 1994)
<PAGE> 2
TABLE OF CONTENTS
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ARTICLE 1. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-1
ARTICLE 2. ELIGIBILITY AND ENROLLMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-1
2.1 Eligible Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-1
2.2 Participation Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-2
2.3 Enrollment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-2
2.4 Rehired Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-2
2.5 Transferred Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-2
2.6 Suspension of Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-2
2.7 Termination of Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-3
ARTICLE 3. DISCRETIONARY CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-1
3.1 Amount of Discretionary Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-1
3.2 Allocation of Discretionary Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-1
ARTICLE 4. PENSION CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-1
4.1 Amount of Pension Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-1
4.2 Allocation of Pension Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-1
ARTICLE 5. SALARY DEFERRALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-1
5.1 Amount of Salary Deferrals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-1
5.2 Limitation on Salary Deferrals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-1
5.3 Election to Contribute . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-2
5.4 Amendment of Prior Elections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-3
5.5 Voluntary Suspension of Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-3
5.6 Return of Excess Salary Deferral Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-3
5.7 Investment of Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-4
ARTICLE 6. COMPANY MATCHING CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-1
6.1 Amount of Matching Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-1
6.2 Matching Contributions in Form of Geneva Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . 6-1
ARTICLE 7. CONTRIBUTION LIMITATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-1
7.1 Limitation on Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-1
7.2 Combined Limitation on Benefits and Contributions . . . . . . . . . . . . . . . . . . . . . . . . . 7-1
7.3 Excess Company Contributions and Forfeitures . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-1
7.4 Annual Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-2
7.5 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-3
7.6 Employer Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-3
ARTICLE 8. PLAN INVESTMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-1
8.1 The Trust Fund; No Reversion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-1
8.2 Investment Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-2
8.3 Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-3
8.4 Investment of Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-5
8.5 Transfers Among Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-5
8.6 Allocation of Investment Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-6
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8.7 Account Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-6
8.8 Life Insurance Fund Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-6
ARTICLE 9. VESTING AND FORFEITURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-1
9.1 100 Percent Vesting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-1
9.2 Vesting Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-1
9.3 Vesting After Prior Distributions . . . . . . . . . . . . . . . . . . . . . . . 9-2
9.4 Forfeitures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-2
ARTICLE 10. FORM OF PLAN BENEFIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-1
10.1 Amount of Plan Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-1
10.2 Normal Form of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . 10-1
10.3 Optional Forms of Distribution . . . . . . . . . . . . . . . . . . . . . . . . 10-2
10.4 Time of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-2
10.5 Death of Participant Before Distribution . . . . . . . . . . . . . . . . . . . 10-3
10.6 Small Benefits: Lump Sum . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-4
10.7 Election of Forms of Distribution . . . . . . . . . . . . . . . . . . . . . . 10-4
10.8 Information on Distribution Options . . . . . . . . . . . . . . . . . . . . . 10-6
10.9 Information on Death Benefits . . . . . . . . . . . . . . . . . . . . . . . . 10-6
10.10 Determination of Marital Status . . . . . . . . . . . . . . . . . . . . . . . 10-7
10.11 Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-7
ARTICLE 11. CLAIMS PROCEDURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11-1
11.1 Filing Claims for Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . 11-1
11.2 Denial of Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11-1
ARTICLE 12. REVIEW PROCEDURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12-1
12.1 Appointment of Review Panel . . . . . . . . . . . . . . . . . . . . . . . . . 12-1
12.2 Right to Appeal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12-1
12.3 Form of Request for Review . . . . . . . . . . . . . . . . . . . . . . . . . . 12-1
12.4 Time for Review Panel Action . . . . . . . . . . . . . . . . . . . . . . . . . 12-2
12.5 Review Panel Decisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12-2
12.6 Rules and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12-2
12.7 Exhaustion of Remedies Required . . . . . . . . . . . . . . . . . . . . . . . 12-3
ARTICLE 13. MANAGEMENT OF ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13-1
13.1 Control and Management of Plan Assets . . . . . . . . . . . . . . . . . . . . 13-1
13.2 Trustee Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13-1
13.3 Independent Qualified Public Accountant . . . . . . . . . . . . . . . . . . . 13-2
13.4 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13-2
13.5 Benefit Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13-2
ARTICLE 14. ADMINISTRATION OF THE PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . 14-1
14.1 Plan Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14-1
14.2 Employment of Advisers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14-1
14.3 Service in Several Fiduciary Capacities . . . . . . . . . . . . . . . . . . . 14-2
ARTICLE 15. AMENDMENT AND TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . 15-1
15.1 Right to Amend or Terminate . . . . . . . . . . . . . . . . . . . . . . . . . 15-1
15.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15-1
15.3 Allocation of Assets Upon Termination . . . . . . . . . . . . . . . . . . . . 15-2
</TABLE>
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ARTICLE 16. GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-1
16.1 No Assignment of Property Rights . . . . . . . . . . . . . . . . . . . . . . . . 16-1
16.2 Incompetence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-1
16.3 Unclaimed Plan Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-2
16.4 No Employment Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-2
16.5 Merger, Consolidation and Transfer of Assets or Liabilities . . . . . . . . . . 16-3
16.6 Tender Offers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-3
16.7 Choice of Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-4
ARTICLE 17. SPECIAL TOP-HEAVINESS RULES . . . . . . . . . . . . . . . . . . . . . . . . . . 17-1
17.1 Determination of Top-Heavy Status . . . . . . . . . . . . . . . . . . . . . . . 17-1
17.2 Minimum Allocations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-1
17.3 Special Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-1
(a) Aggregation Group . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-1
(b) Determination Date . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-1
(c) Key Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-1
(d) Permissive Aggregation Group . . . . . . . . . . . . . . . . . . . . . . 17-2
(e) Required Aggregation Group . . . . . . . . . . . . . . . . . . . . . . . 17-2
(f) Top-Heavy Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-2
ARTICLE 18. ROLLOVERS AND RELATED TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . 18-1
18.1 Rollover From Qualified Plan . . . . . . . . . . . . . . . . . . . . . . . . . . 18-1
18.2 Rollover From IRA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18-1
18.3 Mistaken Rollover . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18-2
18.4 Direct Rollovers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18-2
ARTICLE 19. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-1
19.1 Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-1
19.2 Affiliated Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-1
19.3 Annuity Starting Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-2
19.4 Base Pay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-2
19.5 Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-2
19.6 Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-2
19.7 Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-2
19.8 Company Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-2
19.9 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-2
19.10 Disability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-3
19.11 Discretionary Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . 19-3
19.12 Eligible Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-3
19.13 Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-3
19.14 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-4
19.15 Forfeiture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-4
19.16 Geneva Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-4
19.17 Geneva Stock Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-4
19.18 Investment Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-4
19.19 Investment Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-4
19.20 Matching Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-4
19.21 Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-4
19.22 Participating Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-4
19.23 Pension Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-4
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19.24 Period of Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-4
(a) Period of Employment . . . . . . . . . . . . . . . . . . . . . . . . . 19-4
(b) Period for Which Back Pay Awarded . . . . . . . . . . . . . . . . . . 19-6
(c) Period Following Termination . . . . . . . . . . . . . . . . . . . . . 19-6
(d) Aggregation of Periods of Service . . . . . . . . . . . . . . . . . . 19-6
(i) Fractional Months . . . . . . . . . . . . . . . . . . . . . . . . 19-7
(ii) Permanent Service Break . . . . . . . . . . . . . . . . . . . . . 19-7
19.25 Permanent Service Break . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-7
19.26 Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-7
19.27 Plan Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-7
19.28 Plan Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-7
19.29 Qualified Joint and Survivor Annuity . . . . . . . . . . . . . . . . . . . . . 19-7
19.30 Qualified Non-Elective Contributions . . . . . . . . . . . . . . . . . . . . . 19-8
19.31 Review Panel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-8
19.32 Rollover Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-8
19.33 Salary Deferral Contribution . . . . . . . . . . . . . . . . . . . . . . . . . 19-8
19.34 Trust Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-8
19.35 Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-8
19.36 Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-8
19.37 Valuation Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-8
ARTICLE 20. EXECUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20-1
APPENDIX I LIMITATIONS RELATING TO NONDISCRIMINATION TESTING
APPENDIX II PARTICIPANT LOANS
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<PAGE> 6
THE GENEVA STEEL
MANAGEMENT EMPLOYEE SAVINGS AND PENSION PLAN
(As Amended and Restated Generally Effective January 1, 1994)
ARTICLE 1. INTRODUCTION.
Basic Manufacturing and Technologies of Utah, Inc., a Utah
corporation, whose name is now Geneva Steel, established this Geneva Steel
Management Employee Savings and Pension Plan effective September 1, 1987. The
Plan was amended and restated effective September 1, 1987 and adopted January
16, 1990, to incorporate amendments that were required by the IRS as a
condition of issuing the Plans' initial determination letters and to conform to
administrative practice. The Plan was amended and restated in its entirety
generally effective July 1, 1991 to add provisions required by the Internal
Revenue Service as a condition of issuing a favorable determination letter that
the Plan is qualified under the Tax Reform Act of 1986, to add a participant
loan provision and to clarify certain provisions. The Plan was amended and
restated effective October 1, 1992 to permit Geneva Steel to contribute its
matching contributions in the form of Company stock or to invest matching
contributions in Company stock. This amendment and restatement of the Plan is
designed to comply with the qualified plan provisions of the Omnibus Budget
Reconciliation Act of 1993 and to make certain additional changes.
The Plan actually constitutes two plans: one component of the Plan is
a profit-sharing plan with a cash or deferred
1-1
<PAGE> 7
arrangement and matching contributions while the other is a money-purchase
pension plan. Both components of the Plan are intended to qualify under
section 401(a) of the Code.
1-2
<PAGE> 8
ARTICLE 2. ELIGIBILITY AND ENROLLMENT.
2.1 Eligible Employees. The term "Eligible Employee" shall mean
any Employee who is employed by a Participating Company, except an Employee who
is:
(a) A "leased employee" (within the meaning of section
414(n) of the Code) with respect to the Participating Company;
(b) Included in the bargaining unit of the Geneva Plant;
(c) A nonresident alien with respect to the United
States; provided that this Subsection (c) shall not apply to an
Employee of a Participating Company whom the Company has designated in
writing as an Eligible Employee; or
(d) Employed by a Participating Company under the
Company's "Part-Time Employment Program;" provided, however, that if
such an individual completes 1,000 hours of service (as determined by
the Company) during (i) the 12 month period beginning with the date he
or she commences employment with a Participating Company, or (ii) any
Plan Year, he or she shall be an Eligible Employee on the first day of
the 12 month period or Plan Year immediately following completion of
1,000 hours of service. Such a Participant will only be entitled to
contributions pursuant to Articles 3, 4 and 6 if he or she completes
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<PAGE> 9
1,000 hours of service during the Plan Year for which the contribution
is made.
An individual's status as an Eligible Employee shall be determined by the
Company, and such determination shall be conclusive and binding on all persons.
2.2 Participation Requirements. An Employee shall be entitled to
participate in the Plan on the date he or she first becomes an Eligible
Employee.
2.3 Enrollment. Participation in the Plan is automatic;
Participants are not required to make contributions to the Plan. Upon becoming
a Participant, each Eligible Employee shall designate a Beneficiary pursuant to
Section 10.11.
2.4 Rehired Employees. A former Participant who is rehired as an
Eligible Employee shall resume participation in the Plan on the date of
reemployment. Any other former Employee who is rehired and becomes an Eligible
Employee shall commence participation in the Plan upon becoming an Eligible
Employee.
2.5 Transferred Employees. An Employee who is transferred to the
status of an Eligible Employee shall commence participation in the Plan on the
date of transfer.
2.6 Suspension of Participation. A Participant's participation in
the Plan shall be suspended for any period of time during which the
Participant:
(a) Neither receives nor is entitled to receive any
Compensation, including (without limitation) any leave of absence
without pay; or
2-2
<PAGE> 10
(b) Does not qualify as an Eligible Employee but remains a
Participant.
A Participant shall not receive any allocation of Company Contributions or
Forfeitures with respect to a period of suspended participation. A suspended
Participant's Accounts shall remain invested as a part of the Trust Fund and
shall continue to share in the gains, income, losses and investment expenses of
the Trust Fund.
2.7 Termination of Participation. A Participant's participation
in the Plan shall terminate when his or her entire Plan Benefit has been
distributed or on the date of his or her death, whichever occurs first. In the
case of a Participant who is not entitled to a Plan Benefit, participation in
the Plan shall terminate when the Participant ceases to be an Employee.
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<PAGE> 11
ARTICLE 3. DISCRETIONARY CONTRIBUTIONS.
3.1 Amount of Discretionary Contributions. For each Plan Year,
the Participating Companies may (but need not) make a Discretionary
Contribution to the Plan. The amount of any Discretionary Contribution shall
be determined by the Company in its sole discretion. Discretionary
Contributions shall not exceed the maximum amount which is deductible for
federal income tax purposes.
3.2 Allocation of Discretionary Contributions.
Any Discretionary Contribution for a Plan Year shall be paid to the Trustee not
later than the last date prescribed by law for filing the Company's federal
income tax return for the taxable year in which such Plan Year ends (including
extensions of such date). As of the last day of each Plan Year and subject to
the contribution limitations prescribed in Article 7, any Discretionary
Contributions made for the Plan Year shall be allocated among eligible
Participants in the proportion that each such Participant's Compensation bears
to all Participants' Compensation. Any Forfeitures which arise during a Plan
Year and which are attributable to Discretionary Contributions shall be
allocated along with such Contributions. Subject to the contribution
limitations prescribed by Article 7, an eligible Participant's allocation of
Forfeitures for a Plan Year shall constitute that percentage of his or her
Compensation for such year divided by the aggregate annual Compensation of all
other eligible Participants. A Participant shall be eligible for an allocation
of Discretionary Contributions and Forfeitures for a
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<PAGE> 12
Plan Year only if the Participant was an Employee on the last day of such Plan
Year.
Each Participant's share of Discretionary Contributions and
Forfeitures attributable to Discretionary Contributions shall be credited to
his or her Discretionary Contribution Account.
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<PAGE> 13
ARTICLE 4. PENSION CONTRIBUTIONS.
4.1 Amount of Pension Contributions. For each calendar month in a
Plan Year, the Participating Companies shall make a Pension Contribution for
each Participant equal to 4% of each Participant's Compensation for the
calendar month. Effective March 1, 1995 the Pension Contribution for each
Participant shall be equal to 4 1/2% of each Participant's Compensation for the
calendar month, and effective March 1, 1996 the Pension Contribution shall be
equal to 5% of each Participant's Compensation for the calendar month.
4.2 Allocation of Pension Contributions. Each Pension
Contribution for a Plan Year shall be paid to the Trustee not later than the
earlier of the last date prescribed by law for filing the Company's federal
income tax return for the taxable year in which such Plan Year ends (including
extensions of such date) or the date eight and one-half months after the end of
such Plan Year. Subject to the contribution limitations described by Article
7, the Pension Contribution for a Plan Year shall be allocated to Participants
no later than the last day of the Plan Year, regardless of whether a
Participant was an Employee on the last day of the Plan Year. Any Forfeitures
which arise during such Plan Year and which are attributable to Pension
Contributions shall be allocated to eligible Participants in the manner
described in Section 3.2. A Participant shall be eligible for an allocation of
a Forfeiture for a Plan Year only if the Participant was an Employee on the
last day of such Plan Year.
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<PAGE> 14
Each Participant's share of Pension Contributions and Forfeitures
attributable to Pension Contributions shall be credited to his or her Pension
Contribution Account.
4-2
<PAGE> 15
ARTICLE 5. SALARY DEFERRALS.
5.1 Amount of Salary Deferrals. A Participant who is not
suspended may elect to contribute Salary Deferrals to the Plan. The amount of
such Salary Deferrals for any period of participation may be equal to any whole
percentage of the Participant's Base Pay for such period (subject to Section
5.2) but shall not exceed 15% of the Participant's Base Pay for such period.
In addition, the amount of a Participant's Salary Deferrals for any calendar
year shall not exceed $9,240, or such other amount as may be adopted by the
Commissioner of Internal Revenue to reflect a cost-of-living adjustment.
Salary Deferrals shall be made through periodic payroll deductions from the
Participant's Compensation or through such other method as may be determined by
the Company. For federal tax purposes (and, wherever permitted, for state and
local tax purposes), Salary Deferrals shall be deemed employer contributions to
the Plan, and a Participant's election to make Salary Deferrals shall
constitute an election to have the Participant's taxable compensation reduced
by the amount of the Salary Deferrals.
5.2 Limitation on Salary Deferrals. At any time, the Company (in
its sole discretion) may reduce the maximum rate at which any Participant may
make Salary Deferral Contributions to the Plan, or the Company may require that
any Participant discontinue all Salary Deferral Contributions, in order to
ensure that the actual deferral percentages meet one of the tests described in
section 401(k) of the Code. Any reduction or discontinuance of Salary
Deferral Contributions may be applied
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<PAGE> 16
selectively to individual Participants or to particular classes of
Participants, as the Company may determine. Upon such date as the Company may
determine, this Section 5.2 shall automatically cease to apply until the
Company again determines that a reduction or discontinuance of Salary Deferral
Contributions is required for any Participants. In addition to requiring a
prospective reduction or discontinuance of Salary Deferral Contributions, the
Company may distribute to any Participant such portion of the Salary Deferral
Contributions that he or she already contributed for the Plan Year as the
Company determines to be necessary to ensure that the actual deferral
percentages meet one of the tests described in section 401(k) of the Code, as
provided in Appendix I.
5.3 Election to Contribute. A Participant who wishes to make
Salary Deferrals pursuant to Section 5.1 shall file with the Company the form
prescribed for this purpose. On such form, the Participant shall specify the
rate at which he or she wishes to contribute to the Plan. An election to make
Salary Deferrals may be made effective as of the first day of a calendar
quarter, provided that notice is received by the Company no later than the
fifteenth day of the month immediately preceding the first day of the calendar
quarter. Newly hired Employees who are eligible to participate in the Plan and
who elect to make Salary Deferrals pursuant to Section 5.1, may commence Salary
Deferrals no later than the first day of the month following their date of
hire.
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<PAGE> 17
5.4 Amendment of Prior Elections. By filing the prescribed form
with the Company, a Participant who is making Salary Deferrals may change the
rate of such contributions to any other amount permitted under Section 5.1. An
election to change the rate of Salary Deferrals may be made effective as of the
first day of the first month of a calendar quarter by filing such form on or
before the fifteenth day of the month immediately preceding the first day of
the calendar quarter.
5.5 Voluntary Suspension of Contributions. By filing the
prescribed form with the Company, a Participant may elect to suspend all Salary
Deferrals. Any such election shall be effective no later than the first day of
the month following receipt of the form. A Participant who has suspended all
Salary Deferrals may elect to resume such contributions by following the
procedure prescribed by Section 5.3.
5.6 Return of Excess Salary Deferral Contributions. In the event
that a Participant made Salary Deferral Contributions under this Plan that,
when aggregated with deferrals under any other salary reduction arrangement
described in section 402(g)(3) of the Code maintained by a member of the
Affiliated Group, exceed the $8,728 limit (as adjusted) under Section 5.1 for
any calendar year, his or her excess deferrals attributable to this Plan and
any income (or losses) allocable to such excess deferrals shall be refunded to
him or her not later than the April 15 next following the close of such
calendar year.
In the event a Participant's elective deferrals for a calendar year
(including Salary Deferral Contributions under
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<PAGE> 18
this Plan) to any and all plans in which he was a participant exceed $7,000 (or
such larger amount as may be adopted by the Commissioner of Internal Revenue
under section 402(g) of the Code), then such Participant may designate all or a
portion of such excess contributed to this Plan as the amount to be refunded by
April 15 of the following calendar year. Such a refund shall be made only if
the Participant notifies the Company in the manner prescribed by the Company by
the March 1 next following the calendar year in which the excess deferrals were
made.
The nonvested portion of any Matching Contribution and any income (or
losses) allocable thereto shall be forfeited to the extent that it was
attributable to Salary Deferral Contributions that have been refunded under
this Section 5.6.
5.7 Investment of Contributions. Upon withholding, all Salary
Deferrals shall be transferred to the Trustee, for investment in the Trust Fund
as provided in Article 8, no later than 45 days after the date the Salary
Deferrals were withheld. Salary Deferrals shall be credited to the
Participant's Salary Deferral Account.
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<PAGE> 19
ARTICLE 6. COMPANY MATCHING CONTRIBUTIONS.
6.1 Amount of Matching Contributions. Each Participating Company
may make a Matching Contribution for each Participant equal to a percentage of
his or her Salary Deferral Contributions for a Plan Year. The percentage shall
be the same for all Participants. The amount or percentage of the Matching
Contribution shall be determined each Plan Year by the Company's board of
directors in its sole discretion and may be zero for a given Plan Year.
Matching Contributions shall be paid to the Trustee on a monthly basis as soon
as reasonably practicable following the close of each calendar month. Except
as provided in Section 6.2 below, Matching Contributions shall be allocated as
of the end of each calendar month to a Participant's Matching Contribution
Account. Forfeitures that arise during a Plan Year that are attributable to
Matching Contributions shall be allocated to Participant's Matching
Contribution Account in the same manner as Matching Contributions. Matching
Contributions can be reduced and/or forfeited in accordance with Appendix I.
6.2 Matching Contributions in Form of Geneva Stock. Effective
October 1, 1992, the Company may determine that all or a portion of a Matching
Contribution be paid in the form of Geneva Stock. For purposes of determining
the amount of a Participating Company's deduction under section 404 of the
Code, shares of Geneva Stock so contributed shall be valued at the closing
price of Geneva Stock as quoted on the New York Stock Exchange on the date on
which such shares are paid to the Plan. Participating Company contributions
allocated in the form of
6-1
<PAGE> 20
shares of Geneva Stock shall be valued for allocation purposes on the basis of
the closing price of Geneva Stock as quoted on the New York Stock Exchange as
of the end of the calendar month such shares are to be allocated. Matching
Contributions made in the form of Geneva Stock shall be allocated as of the end
of each calendar month to a Participant's Geneva Stock Account. Forfeitures
that arise during a Plan Year that are attributable to such Matching
Contributions shall be allocated to Participants' Geneva Stock Accounts in the
same manner as Matching Contributions made in the form of Geneva Stock.
Matching Contributions can be reduced and/or forfeited in accordance with
Appendix I.
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<PAGE> 21
ARTICLE 7. CONTRIBUTION LIMITATIONS.
7.1 Limitation on Contributions. The Annual Additions allocated
or attributed to a Participant for any Plan Year shall not exceed the lesser of
the following:
(a) $30,000 (or, if greater, 25% of the dollar limitation
in effect under Code section 415(b)(1)(A)); or
(b) 25% of the Participant's Compensation for such year.
If a Participant's Annual Additions would exceed the foregoing limitation, then
such Annual Additions shall be reduced by reducing the components thereof as
necessary in the order in which they are listed in Section 7.4.
7.2 Combined Limitation on Benefits and Contributions. The sum of
a Participant's defined-benefit plan fraction and his or her
defined-contribution plan fraction shall not exceed 1.0 with respect to any
Plan Year. For purposes of this Section 7.2, the terms "defined-benefit plan
fraction" and "defined-contribution plan fraction" shall have the meaning given
to such terms by section 415(e) of the Code and the regulations thereunder. If
a Participant would exceed the foregoing limitation, then such benefits under
any qualified defined-benefit plan that may be maintained by the Employer Group
shall be reduced as necessary to allow his or her Annual Additions to equal the
maximum permitted by Section 7.1.
7.3 Excess Company Contributions and Forfeitures. If the amount
of the Company Contributions and Forfeitures allocated or
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<PAGE> 22
attributed to a Participant for any Plan Year must be reduced to meet the
limitation described in Section 7.1, then the amount of the reduction shall be
applied to reduce the total amount that the Company otherwise would contribute
for such year pursuant to Articles 3, 4 and 6. If the amount that the Company
may contribute is thereby reduced to zero and if there are Forfeitures that
still cannot be allocated to any Participant because of the limitation
described in Section 7.1, then such Forfeitures shall be credited to an
excess-forfeiture account established under this Section 7.3. Any gains,
income or losses shall also be credited to such account. All amounts credited
to such account shall be treated as allocable Forfeitures for successive Plan
Years and shall be allocated annually pursuant to Section 3.2 until such
account is exhausted. No Company Contributions that would give rise to Annual
Additions shall be made as long as any amount remains in such account.
7.4 Annual Additions. For purposes of this Article 7, a
Participant's "Annual Additions" for a Plan Year shall be equal to the sum of
the following:
(a) The amount of Company Contributions allocated to the
Participant's Accounts under this Plan as of any date within such
year;
(b) The amount of Forfeitures allocated to the
Participant's Account under this Plan as of any date within such year;
7-2
<PAGE> 23
(c) The amount of Salary Deferral Contributions allocated
to the Participant's Account under this Plan as of any date within
such year;
(d) The amount of employer contributions and forfeitures
allocated to the Participant under any qualified defined-contribution
plan that may be maintained by the Employer Group, other than this
Plan, as of any date within such year; and
(e) The aggregate employee contributions that the
Participant contributes during such year to all qualified retirement
plans maintained by the Employer Group.
7.5 Compensation. For purposes of this Article 7, the term
"Compensation" shall be determined in accordance with sections 401(a)(17) and
415(c) of the Code. For purposes of this Article 7, the term "Compensation"
shall have the same meaning as that term is defined in Section 19.9 of the
Plan, but shall not include Salary Deferral Contributions and deferrals made to
the Company's cafeteria plan.
7.6 Employer Group. For purposes of this Article 7, the term
"Employer Group" shall mean any group of one or more chains of corporations
connected through stock ownership with the Company, if:
(a) Stock possessing more than 50 percent of the total
combined voting power of all classes of stock entitled to vote or more
than 50 percent of the total value of shares of all classes of stock
of each of the
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<PAGE> 24
corporations, except the Company, is owned by one or more of the other
corporations; and
(b) The Company owns stock possessing more than 50
percent of the total combined voting power of all classes of stock
entitled to vote or more than 50 percent of the total value of shares
of all classes of stock of at least one of the other corporations
excluding, in computing such voting power or value, stock owned
directly by such other corporations.
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<PAGE> 25
ARTICLE 8. PLAN INVESTMENTS.
8.1 The Trust Fund; No Reversion. The Trust Fund shall be
comprised of the Investment Funds described in Section 8.2. Except as provided
in Subsections (a) and (b) below, the assets of the Plan shall never inure to
the benefit of any Participating Company and shall be held for the exclusive
purpose of providing benefits to Participants or their Beneficiaries.
(a) In the case of a Company Contribution which was made
by virtue of a mistake of fact, this Section 8.1 shall not prohibit
the return of such contribution to the appropriate Participating
Company within 12 months after the payment of such contribution.
(b) All Company Contributions are conditioned upon the
deductibility thereof under section 404 of the Code. To the extent
that a deduction is disallowed for a Company Contribution, this
Section 8.1 shall not prohibit the return of such contribution (to the
extent disallowed) to the appropriate Participating Company within 12
months after the disallowance of the deduction.
(c) In the event that Company Contributions are returned
to the Participating Companies pursuant to sections (a) and (b) above,
the earnings attributable to such contributions shall not be returned
to the Participating Companies and the losses attributable to
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<PAGE> 26
such contributions shall reduce the amount returned to the
Participating Companies.
8.2 Investment Funds. The Trust Fund established under the Plan
shall consist of the Balanced Fund, the Variable Fund, the Short-Term Income
Fund, the Geneva Stock Fund, and the Life Insurance Fund. The Company may
change the available Investment Funds at any time in its sole discretion by
adding Funds, removing Funds, or changing Funds. Such Investment Funds shall
be invested and reinvested as follows:
(a) The Balanced Fund shall be invested in those
investments selected by the Company that are designed to achieve a
balance between capital appreciation and preservation of capital and
generation of income.
(b) The Variable Fund shall be invested in a mutual fund
(or funds) selected by the Company that invests primarily in equity
securities or in such other types of equity investments as are
authorized by the Trust Agreement.
(c) The Short-Term Income Fund shall be invested in a
money market fund or funds selected by the Company, or such other
short term fixed-income investments as are authorized by the Trust
Agreement.
(d) Effective October 1, 1992, the Geneva Stock Fund
shall be invested primarily in Geneva Stock, except that small
amounts in the Stock Fund may be invested in interest-bearing
short-term debt obligations, money market instruments, savings
8-2
<PAGE> 27
accounts or similar investments. The Geneva Stock Fund shall consist
of all Stock Fund investments held by the Trustee and all cash held by
the Trustee which is derived from dividends on Geneva Stock, interest
and other income from Stock Fund investments, Company Contributions to
be invested in the Geneva Stock Fund and proceeds from sales of Geneva
Stock and Stock Fund investments.
(e) The Life Insurance Fund shall be invested in life
insurance policies on the lives of those Participants who elected
before September 1, 1989 to have their Accounts invested in life
insurance contracts. As of September 1, 1989, Participants whose
Accounts were not invested in the Life Insurance Fund could not (and
still cannot) elect to invest their Accounts in the Life Insurance
Fund.
8.3 Accounts. Any or all of the following Accounts shall be
maintained, as necessary, for each Participant:
(a) A Participant's Discretionary Contribution Account
shall consist of any Discretionary Contributions made on behalf of the
Participant pursuant to Section 3.1, any Forfeitures attributable to
such Contributions that are allocated to the Participant and the
earnings, gains and losses allocable thereto.
(b) A Participant's Pension Contribution Account shall
consist of the Pension Contributions allocated
8-3
<PAGE> 28
to the Participant pursuant to Section 4.2, the Forfeitures
attributable to such Pension Contributions that are allocated to the
Participant and the earnings, gains and losses allocable thereto.
(c) A Participant's Salary Deferral Account shall consist
of any Salary Deferral Contributions that the Participant has elected
to contribute to the Plan pursuant to Section 5.1, any Qualified
Non-Elective Contributions made on behalf of the Participant pursuant
to Appendix I and the earnings, gains and losses allocable thereto.
(d) A Participant's Matching Contribution Account shall
consist of any Matching Contributions made on behalf of the
Participant under Section 6.1 that are not made or invested in Geneva
Stock, any Forfeitures attributable to such Matching Contributions
that are allocated to the Participant and the earnings, gains and
losses allocable thereto and any cash dividends on Geneva Stock.
(e) A Participant's Geneva Stock Account shall consist of
any Matching Contributions made or invested in Geneva Stock, any
Forfeitures attributable to such Matching Contributions that are
allocated to the Participant and the earnings, gains and losses
allocable thereto excluding cash dividends on Geneva Stock.
(f) A Participant's Rollover Account shall consist of any
Rollover Contributions made by the
8-4
<PAGE> 29
Participant pursuant to Article 18 and the earnings, gains and losses
allocable thereto.
8.4 Investment of Accounts. Effective October 1, 1992, a
Participant's Pension Contribution Account shall be invested solely in the
Balanced Fund. A Participant's Geneva Stock Account shall be invested solely
in the Geneva Stock Fund. A Participant's Salary Deferral Account,
Discretionary Contribution Account, Matching Contribution Account and Rollover
Account, if any, shall be apportioned among one or more of the Balanced Fund,
the Variable Fund, the Short-Term Income Fund and the Life Insurance Fund in
such whole percentages as the Participant may specify on the prescribed
election form. If the Company receives no valid investment directions from the
Participant, such Accounts shall be invested entirely in the Short-Term Income
Fund. As of the first day in any calendar quarter, a Participant may change
the investment instructions with respect to future contributions. Any such
change shall be made by properly completing and filing the prescribed form with
the Company no later than the fifteenth day of the month immediately preceding
the first day of the calendar quarter.
8.5 Transfers Among Accounts. Once each calendar quarter, except
for his or her Pension Contribution Account, and Geneva Stock Account, a
Participant may elect to transfer all or any part of his or her Accounts to one
or more of the Investment Funds by properly completing and filing the
prescribed form with the Company no later than the fifteenth day of the month
immediately preceding the first day of the calendar quarter in which
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<PAGE> 30
the transfer is to occur. Any such transfer shall apply as of the first day of
the next following calendar quarter.
8.6 Allocation of Investment Income. Each Account shall be
revalued at fair market value and adjusted as of the last day of each calendar
quarter, adjusted for contributions, distributions and other items for the
quarter, to reflect the Participant's proportionate share of any realized or
unrealized investment income, gains, losses and investment expenses of the Fund
or Funds in which such Account was invested that have accrued during the
quarter.
8.7 Account Statements. Within sixty days after the last day of
each calendar quarter (and after such other dates as the Company may
determine), there shall be prepared and delivered to each Participant a written
statement showing the fair market value of his or her Accounts as of the
applicable date. The fair market value of a share of Geneva Stock shall be the
closing price of such share as quoted on the New York Stock Exchange as of the
applicable date.
8.8 Life Insurance Fund Rules.
(a) No Participant shall have any right, title, interest or
incident of ownership in any life insurance contract purchased by the Trustee,
except at the time or times and upon the terms and conditions set forth in this
Plan. The Trustee shall be the sole owner of all incidents of ownership in
each life insurance contract but the Company may direct the Trustee as to the
exercise of all such incidents of ownership.
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<PAGE> 31
(b) The aggregate premiums for all ordinary life insurance
purchased for each Participant shall at all times be less than 50% of the
Company Contributions allocated to the Participant's Accounts, 25% in the case
of term insurance. In the event that payment of any life insurance premiums
would cause the aggregate premiums to exceed these limitations, then the
premium will not be made, and the insurance contract shall be converted to a
paid-up contract. Alternatively, the face amount of insurance shall be reduced
so that the premium will not exceed the limitations.
(c) Upon the death of a Participant, the proceeds of any life
insurance contract(s) will be paid to the Trustee and distributed in accordance
with the terms of this Plan. Upon a Participant's termination of employment or
a change in investment election, the life insurance contract must be
surrendered and the cash value of the surrendered contract shall be paid to the
Trustee to be disposed of in accordance with the terms of this Plan.
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<PAGE> 32
ARTICLE 9. VESTING AND FORFEITURES.
9.1 100 Percent Vesting. A Participant shall always be 100%
vested in his or her Salary Deferral Account and Rollover Account. A
Participant's interest in his or her Discretionary Contribution Account,
Pension Contribution Account, Geneva Stock Account and Matching Contribution
Account shall become 100% vested when the earliest of the following events
occurs:
(a) The Participant ceases to be an Employee by reason of
Disability;
(b) The Participant, before ceasing to be an Employee,
attains the age of 62 years (the normal retirement age under the
Plan);
(c) The Participant dies while employed as an Employee;
(d) The Plan is terminated, or the Plan undergoes a
partial termination which affects the Participant (including
Participants who, on the date the Plan is terminated, have not yet
incurred a Permanent Service Break), before the Participant ceases to
be an Employee;
(e) Company Contributions are completely discontinued; or
(f) The Participant had any service with an Affiliated
Group member before January 1, 1988.
9.2 Vesting Schedule. Before a Participant becomes 100% vested
under Section 9.1, the Participant shall be vested in a percentage of each of
his or her Discretionary Contribution
9-1
<PAGE> 33
Account, Pension Contribution Account, Geneva Stock Account and Matching
Contribution Account determined from the following schedule:
<TABLE>
<CAPTION>
Period of Service Vested Percentage of
Completed by Participant Participant's Accounts
- ------------------------ ----------------------
<S> <C>
Less than 12 months . . . . . . . . . 0%
12 months to 24 months . . . . . . . . 20%
24 months to 36 months . . . . . . . . 40%
36 months to 48 months . . . . . . . . 60%
48 months to 60 months . . . . . . . . 80%
60 or more months . . . . . . . . . . 100%
</TABLE>
9.3 Vesting After Prior Distributions. Section 9.2 shall be
applied as set forth in this Section 9.3 in the case of any Participant who
received one or more prior distributions from his or her Accounts, who
thereafter has not incurred a Permanent Service Break, and who is not yet 100%
vested in the Accounts. The vested portion of such Participant's Accounts
shall be determined in two steps. First, the Participant's vested percentage
under Section 9.2 shall be applied to the sum of (a) the value of the Accounts
plus (b) the aggregate amount of the Participant's prior distributions from
such Accounts. Then, the aggregate amount of the Participant's prior
distributions from such Accounts shall be subtracted.
9.4 Forfeitures. If a Participant ceases to be an Employee at a
time when he or she is less than 100% vested, then the nonvested portion of his
or her Accounts shall constitute a Forfeiture for the Plan Year during which
the earlier of the following occurs: (a) the Participant receives (or is deemed
to receive in the case of a nonvested Participant) a distribution from the Plan
in a single lump sum; or (b) the Participant
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<PAGE> 34
incurs a Permanent Service Break. The Forfeiture shall be treated as stated in
Sections 3.2, 4.2, 6.1 and 7.3. If the Participant is rehired as an Employee
before incurring a Permanent Service Break, then the principal amount of the
Forfeiture shall be reinstated to his or her Accounts as of the close of the
Plan Year in which the rehire occurs. The appropriate Participating Company
shall make a special contribution in the amount required to reinstate the
Forfeiture, to the extent any suspense account and current Forfeitures are not
sufficient. In no event shall a Participant's Forfeitures be reinstated if he
or she is not rehired as an Employee before incurring a Permanent Service
Break.
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<PAGE> 35
ARTICLE 10. FORM OF PLAN BENEFIT.
10.1 Amount of Plan Benefit. A Participant's Plan Benefit shall
consist of the Participant's entire vested interest in his or her Accounts.
The value of a Participant's Plan Benefit (including the number of shares of
Geneva Stock) shall be determined as of the Valuation Date immediately
preceding the distribution date for such Plan Benefit.
10.2 Normal Form of Distribution. A Participant's Plan Benefit
shall be distributed in the form of a nontransferable annuity contract
purchased from an insurance company selected by the Company, unless such
Participant has elected the optional form of distribution described in Section
10.3. The Participant's entire Plan Benefit shall be distributed in
substantially nonincreasing payments over a period not exceeding the greater of
(a) the Participant's own lifetime or (b) the lifetimes of the Participant and
his or her spouse. The forms of annuity contract available under the Plan are
a Qualified Joint and Survivor Annuity and a single-life annuity. In the case
of a married Participant who is living when the annuity is scheduled to
commence, the annuity contract shall provide for payments in the form of the
Qualified Joint and Survivor Annuity. In the case of an unmarried Participant,
the annuity contract shall provide for payments in the form of the single-life
annuity. Unless the Participant otherwise elects, he or she will begin to
receive the Plan Benefit not later than the 60th day after the latest of the of
the close of the Plan Year in which the Participant attains age 62, the tenth
anniversary
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<PAGE> 36
of the Participant's commencement of participation in the Plan occurs or ceases
to be an Employee."
10.3 Optional Forms of Distribution. A Participant or surviving
spouse may elect to have his or her Plan Benefit distributed in the form of a
single lump sum in cash. If Geneva Stock is liquidated for purposes of a cash
distribution the cash attributable to the shares will equal the proceeds from
the sale. A Participant or surviving spouse may also elect to have that
portion of his or her Plan Benefits attributable to the Geneva Stock Fund paid
in whole shares of Geneva Stock, plus a check for any fractional shares. The
Trustee in its discretion may purchase Geneva Stock that was distributed to a
Participant or Beneficiary at the closing price of Geneva Stock as quoted on
the New York Stock Exchange for the business day on which the Trustee receives
a written offer to sell. No commission shall be paid in connection with any
such purchase.
10.4 Time of Distribution. A Participant who is no longer an
Employee and is entitled to receive a Plan Benefit shall receive his or her
Plan Benefit as soon as reasonably practicable after the distribution date
elected by the Participant. The Participant shall elect a distribution date by
completing, signing and filing the prescribed distribution election form with
the Company. In no event shall a Participant's Plan Benefit be distributed
later than the April 1 next following the later of the calendar year in which
(a) the Participant attained age 70 1/2, if he or she remains an Employee on or
after age 62 or (b) the Participant attained age 62 if the
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<PAGE> 37
Participant ceased to be an Employee on or before that date. Unless the
Participant otherwise elects, he or she will begin to receive the Plan Benefit
not later than the 60th day after the latest of the of the close of the Plan
Year in which the Participant attains age 62, the tenth anniversary of the
Participant's commencement of participation in the Plan occurs or ceases to be
an Employee.
10.5 Death of Participant Before Distribution. If a Participant
dies before receiving his or her Plan Benefit, then such Participant's
Beneficiary shall be entitled to receive such Plan Benefit pursuant to this
Section 10.5. (Section 10.11 provides that the surviving spouse of a married
Participant shall be his or her Beneficiary, unless such Participant, with the
spouse's consent, has otherwise elected prior to his or her death.)
If the Beneficiary is the Participant's surviving spouse, the Plan
Benefit shall be distributed in the form of a nontransferable annuity contract
purchased from an insurance company selected by the Company, unless such
surviving spouse has elected the optional form of distribution described in
Section 10.3. Under the annuity contract, the Plan Benefit shall be
distributed in substantially nonincreasing payments over a period not exceeding
the surviving spouse's lifetime and commencing as soon as reasonably
practicable after the date of the Participant's death or, if later, the date
the Participant would have attained age 62. At any time prior to the date that
the surviving spouse's Plan Benefit is to be distributed
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<PAGE> 38
pursuant to the preceding sentence, the surviving spouse may elect, by filing
the prescribed form with the Company, (a) to have his or her Plan Benefit
distributed in the optional form of distribution described in Section 10.3, (b)
to have his or her Plan Benefit distributed at a specified time earlier than
that provided in the preceding sentence or (c) both. If the Participant's
Beneficiary is not his or her surviving spouse, the Plan Benefit shall be paid
in a single lump sum in cash not later than 12 months after the date of the
Participant's death.
10.6 Small Benefits: Lump Sum. Any other provision of this Article
10 notwithstanding, if the value of a Participant's entire Plan Benefit equals
$3,500 or less, then the Plan Benefit shall be paid as soon as reasonably
practicable to such Participant (or, in the case of his or her death, to the
Beneficiary), in a single lump sum in cash. If a Participant's entire Plan
Benefit exceeds $3,500 and the Participant fails to consent to an immediate
distribution, then the Participant's Plan Benefit shall not be paid before the
date on which the Participant attains age 62.
10.7 Election of Forms of Distribution. A Participant's election
of an optional form of distribution under Section 10.3 shall be made on the
prescribed form and filed with the Company. Such election may be made only
during an election period consisting of the 90 consecutive days ending on the
Participant's Annuity Starting Date. A Participant may revoke any election of
an optional form of distribution (without the consent of the Company) at any
time prior to the end of such
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<PAGE> 39
election period. If the Participant, having revoked a prior election, does not
make another election within such election period, then his or her Plan Benefit
shall be distributed in the form specified in Section 10.2. Any election
involving a waiver of the Qualified Joint and Survivor Annuity shall not take
effect unless the Participant's spouse consents in writing to the election
during such election period. The spouse's consent shall acknowledge the effect
of the Participant's election and shall be witnessed by a notary public or, if
permitted by the Company, by a representative of the Plan. A consent, once
given by a spouse, shall not be revocable by such spouse. The spouse's consent
shall not be required of the Participant if the Participant (a) establishes to
the Company's satisfaction that the spouse's consent cannot be obtained because
the spouse cannot be located or because of other reasons deemed acceptable
under applicable regulations and (b) agrees in writing that if the Company is
compelled by a court of competent jurisdiction or other authority to pay all or
any portion of the Participant's Plan Benefit to or on behalf of such spouse,
the Participant will indemnify the Company by paying to the Company, upon
written demand, an amount equal to such payment, together with reasonable
attorneys' fees and expenses. The Company may, in its sole discretion, waive
the indemnification requirement. A Participant may elect, with his or her
spouse's consent, not to take the qualified preretirement survivor annuity
described in Section 10.5 from the first day of the first Plan Year in which
the Participant attains age 35 until the Participant's death.
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<PAGE> 40
10.8 Information on Distribution Options. Within a reasonable
period before the Annuity Starting Date, the Company shall make available to
each married Participant a written explanation of the following:
(a) The terms and conditions of the Qualified Joint and
Survivor Annuity;
(b) The Participant's right to elect a form of benefit
other than a Qualified Joint and Survivor Annuity pursuant to Section
10.7;
(c) The rights of the Participant's spouse under Section
10.7;
(d) The Participant's right to revoke an election of a
form of benefit pursuant to Section 10.7; and
(e) The effect of an election or revocation described in
Subsection (b) or (d) above.
10.9 Information on Death Benefits. The Company shall provide to
each married Participant a written explanation of the death benefit for a
surviving spouse described in Section 10.5 comparable to the information on
distribution options described in Section 10.8. Such explanation shall be
provided within whichever of the following periods ends last:
(a) The three-year period beginning with the first day of
the Plan Year in which the Participant attains age 32;
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<PAGE> 41
(b) The one-year period beginning with the first day of
the first Plan Year for which the individual is a Participant; or
(c) The one-year period beginning on the date when the
Participant ceases to be an Employee, in the case of a Participant who
ceases to be an Employee before attaining age 32.
10.10 Determination of Marital Status. Whether a Participant is
married shall be determined by the Company as of his or her Annuity Starting
Date.
10.11 Beneficiary. A Participant's Beneficiary shall be the
person(s) so designated by such Participant. If the Participant has not made
an effective designation of a Beneficiary or if the named Beneficiary is not
living when a distribution is to be made, then (a) the then living spouse of
the deceased Participant shall be the Beneficiary or (b) if none, the then
living children of the deceased Participant shall be the Beneficiaries in equal
shares or (c) if none, the estate of the Participant shall be the Beneficiary.
The Participant may change his or her designation of a Beneficiary from time to
time. Any designation of a Beneficiary (or an amendment or revocation thereof)
shall be effective only if it is made in writing on the prescribed form and is
received by the Company prior to the Participant's death. Any other provision
of this Section 10.11 notwithstanding, in the case of a married Participant,
any designation of a person other than his or her spouse as Beneficiary shall
be effective only if the spouse
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<PAGE> 42
consents in writing to the designation. The spouse's consent shall be
witnessed by a notary public or, if permitted by the Company, by a
representative of the Plan. A consent to a designation of a particular
Beneficiary, once given by the spouse, shall not be revocable by such spouse.
The spouse's consent shall not be required if the Participant (a) establishes
to the Company's satisfaction that the spouse's consent cannot be obtained
because the spouse cannot be located or because of other reasons deemed
acceptable under applicable regulations and (b) agrees in writing that if the
Company is compelled by a court of competent jurisdiction or other authority to
pay all or any portion of the Participant's Plan Benefit to or on behalf of
such spouse, the Participant will indemnify the Company by paying to the
Company, upon written demand, an amount equal to such payment, together with
reasonable attorneys' fees and expenses. The Company may, in its sole
discretion, waive the indemnification requirement.
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<PAGE> 43
ARTICLE 11. CLAIMS PROCEDURE.
11.1 Filing Claims for Benefits. Claims for benefits under the
Plan shall be made in writing on the prescribed form and shall be signed by the
Participant or by his or her Beneficiary, as the case may be. All claims for
or inquiries concerning benefits under the Plan shall be submitted to the
Company at its U.S. headquarters.
11.2 Denial of Claims. In the event that any claim for benefits is
denied in whole or in part, the Company shall notify the applicant in writing
of such denial and shall advise the applicant of the right to a review thereof.
Such written notice shall set forth, in a manner calculated to be understood by
the applicant, specific reasons for the denial, specific references to the Plan
provisions on which the denial is based, a description of any information or
material necessary for the applicant to perfect the application, an explanation
of why such material is necessary and an explanation of the Plan's review
procedure. Such written notice shall be given to the applicant within 90 days
after the Company received the claim in proper form, except that such 90-day
period may be extended for an additional 90 days if special circumstances
exist. The Company shall advise the applicant of such circumstances in writing
within the first 90-day period. If the Company does not provide the applicant
with written notice of its decision within the applicable time period, the
applicant's claim shall be deemed to have been denied as of the last day of the
applicable time period.
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<PAGE> 44
ARTICLE 12. REVIEW PROCEDURE.
12.1 Appointment of Review Panel. The Company from time to time
shall appoint a Review Panel consisting of three or more individuals, who may
(but need not) be employees of the Company. The Review Panel shall be the
named fiduciary which has the authority to act with respect to appeals from
denials of claims under the Plan.
12.2 Right to Appeal. Any applicant whose claim for benefits was
denied in whole or in part (or such applicant's authorized representative) may
appeal from the denial by submitting to the Review Panel a written request for
a review of the claim within three months after receiving written notice of the
denial, or within three months after the date when a claim may be deemed to
have been denied. The Company shall give the applicant (or the applicant's
authorized representative) an opportunity to review pertinent materials, other
than legally privileged documents, in preparing such request for review.
12.3 Form of Request for Review. The request for review shall be
made in writing and shall be addressed to the Review Panel in care of the
Company at its U.S. headquarters. The request for review shall set forth all
of the grounds on which it is based, all facts in support thereof and any other
matters which the applicant deems pertinent. The Review Panel may require the
applicant to submit such additional facts, documents or other material as the
Review Panel may deem necessary or appropriate in making its review.
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<PAGE> 45
12.4 Time for Review Panel Action. The Review Panel shall act upon
each request for review within 60 days after receipt thereof, unless special
circumstances require further time for processing and the applicant is advised
of the extension. In no event shall the decision on review be rendered more
than 120 days after the Review Panel received the request for review in proper
form.
12.5 Review Panel Decisions. The Review Panel shall give prompt
written notice of its decision to the applicant and to the Company. In the
event that the Review Panel confirms the denial of the claim for benefits in
whole or in part, such notice shall set forth, in a manner calculated to be
understood by the applicant, the specific reasons for such denial and specific
references to the Plan provisions on which the decision was based. In the
event that the Review Panel determines that the claim for benefits should not
have been denied in whole or in part, the Company shall take appropriate
remedial action as soon as reasonably practicable after receiving notice of the
Review Panel's decision.
12.6 Rules and Procedures. The Review Panel shall establish such
rules, procedures and interpretations, consistent with the Plan and ERISA, as
it may deem necessary or appropriate in carrying out its responsibilities under
this Article 12. The Review Panel may require an applicant who wishes to
submit additional information in connection with an appeal from a denial of
benefits to do so at his or her own expense.
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<PAGE> 46
12.7 Exhaustion of Remedies Required. No legal or equitable action
for benefits under the Plan shall be brought unless and until the applicant (a)
has submitted a written claim for benefits in accordance with Article 11, (b)
has been notified that the claim is denied, (c) has filed a written request for
a review of the claim in accordance with this Article 12 and (d) has been
notified in writing that the Review Panel has affirmed the denial of the claim;
provided, however, that such an action may be brought after the Company or the
Review Panel has failed to act on the claim within the time prescribed in
Sections 11.2 and 12.4, respectively.
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ARTICLE 13. MANAGEMENT OF ASSETS.
13.1 Control and Management of Plan Assets. The Company is a named
fiduciary with respect to control over and management of the assets of the
Plan, but only to the extent of (a) having the duty to appoint one or more
trustees to hold all assets of the Plan in trust, (b) having the authority to
remove any trustee so appointed and to appoint one or more successor trustees,
(c) having the duty to enter into a trust agreement with each trustee or
successor trustee so appointed, (d) having the authority to select investments
for the Investment Funds, and (e) having the authority to appoint one or more
insurance companies that are qualified to do business in at least one state to
hold assets of the Plan and to enter into a contract with each insurance
company that it appoints (or to direct the Trustee to enter into such
contract). The Trust Agreement is hereby incorporated herein as a part of the
Plan.
13.2 Trustee Duties. The Trustee shall have the exclusive
authority and discretion to control and manage the assets of the Plan it holds
in trust, except to the extent that the Plan prescribes how such assets shall
be invested or the Company directs how such assets shall be invested. The
Trustee shall be solely responsible for diversifying, in accordance with
section 404(a)(1)(C) of ERISA, the investment of the assets of the Plan
assigned to it by the Company, except to the extent that the Plan prescribes or
the Company directs how such assets shall be invested.
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<PAGE> 48
13.3 Independent Qualified Public Accountant. The Company shall
engage an independent qualified public accountant to conduct such examinations
and to express such opinions as may be required by section 103(a)(3) of ERISA.
The Company in its discretion may remove and discharge the person so engaged,
in which event it shall appoint a successor independent qualified public
accountant to perform such examinations and express such opinions.
13.4 Expenses. Effective January 1, 1992, the Company shall pay
all expenses of the Plan, except such expenses as are paid out of the Trust
Fund pursuant to the Company's direction or the terms of the Trust Agreement.
The Company shall have complete and unfettered discretion to determine whether
an expense of the Plan or Trust Fund shall be paid by the Company or out of the
Trust Fund, and this Section 13.4 shall not be construed to require the Company
to pay any portion of the expenses of the Plan and Trust that the Company has
directed be paid from the Trust Fund. The Company's discretion and authority
to direct the Trust Fund to pay any reasonable expenses of the Plan and Trust
shall not be limited in any way by any prior decision or act, whether repeated
or sporadic, by the Company to pay any or all expenses of the Plan and Trust.
13.5 Benefit Payments. All benefits, payable pursuant to the Plan
shall be paid by the Trustee out of the Trust Fund pursuant to the directions
of the Company and the terms of the Trust Agreement.
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ARTICLE 14. ADMINISTRATION OF THE PLAN.
14.1 Plan Administration. The Company is the named fiduciary with
respect to the operation and administration of the Plan, and the Company is the
"administrator" and "plan sponsor" of the Plan (as such terms are used in
ERISA). The Company shall make such rules, interpretations and computations
and shall take such other actions to administer the Plan as it may deem
appropriate. Such rules, interpretations, computations and actions shall be
conclusive and binding on all persons. In administering the Plan, the Company
(a) shall act in a nondiscriminatory manner to the extent required by section
401(a) and related sections of the Code and (b) shall at all times discharge
its duties in accordance with the standards set forth in section 404(a)(1) of
ERISA.
14.2 Employment of Advisers. The Company may retain such
attorneys, actuaries, accountants, consultants or other persons to render
advice or to perform services with regard to its responsibilities under the
Plan as it shall determine to be necessary or desirable. The Company may
designate by written instrument (signed by both parties) one or more persons to
carry out, where appropriate, fiduciary responsibilities under the Plan. The
Company's duties and responsibilities under the Plan which have not been
delegated to other fiduciaries pursuant to the preceding sentence shall be
carried out by its directors, officers and employees, acting on behalf and in
the name of the Company in their capacities as directors, officers and
employees, and not as individual fiduciaries.
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<PAGE> 50
14.3 Service in Several Fiduciary Capacities. Nothing herein shall
prohibit any person or group of persons from serving in more than one fiduciary
capacity with respect to the Plan (including service both as the administrator
and as a trustee of the Plan).
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ARTICLE 15. AMENDMENT AND TERMINATION.
15.1 Right to Amend or Terminate. The Company, in its sole
discretion, and by resolution of its board of directors or by resolution of the
board's proper delegatee, reserves the right to amend or terminate the Plan or
to discontinue Company Contributions at any time and for any reason. No
amendment of the Plan, however, shall, except to the extent permitted by ERISA
or the Code (a) reduce the benefit of any Participant accrued under the Plan
prior to the date when such amendment is adopted or (b) divert any part of the
Plan's assets to purposes other than the exclusive purpose of providing
benefits to the Participants and Beneficiaries who have an interest in the Plan
and of defraying the reasonable expenses of administering the Plan.
Furthermore, and to the extent required to comply with Rule
16b-3(c)(2)(ii)(B) of the Securities and Exchange Commission, effective October
1, 1992, the Plan shall not be amended more than once every six months, other
than to comport with changes in the Code, ERISA or the regulations thereunder.
15.2 Effect of Termination. Upon termination of the Plan, no
assets of the Plan shall revert to the Participating Companies or be used for
or diverted to purposes other than the exclusive purpose of providing benefits
to Participants and Beneficiaries and of defraying the reasonable expenses of
termination (except as otherwise provided in Section 8.1). Upon termination of
the Plan, the Trust Fund shall continue in existence until it has been
distributed entirely as provided in
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Section 15.3. Notwithstanding the foregoing, effective January 1, 1987,
distributions from the 401(k) portion of the Plan will be made in accordance
with the requirements of Treasury Regulation section 1.401(k)-1(d)(3).
15.3 Allocation of Assets Upon Termination. Upon termination of
the Plan, the Trust Fund shall continue in existence until the Accounts of each
Participant have been distributed to such Participant (or to such Participant's
Beneficiary) as provided in Article 10; provided, however, that the assets of
the Plan shall be allocated in accordance with the requirements of section
403(d)(l) of ERISA.
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ARTICLE 16. GENERAL PROVISIONS.
16.1 No Assignment of Property Rights. The interest or property
rights of any person in the Plan, in any Account or in any payment to be made
under the Plan shall not be optioned, anticipated, assigned (either at law or
in equity), alienated or made subject to attachment, garnishment, execution,
levy, other legal or equitable process, or bankruptcy. Any act in violation of
this Section 16.1, whether voluntary or involuntary, shall be void. This
Section 16.1 shall not apply with respect to qualified domestic relations
orders described in section 414(p) of the Code ("QDRO"). The Company shall
establish reasonable procedures to determine the qualified status of domestic
relations orders and to administer distributions under QDROs. The Company
shall make payment to an "alternate payee" (as defined in Code section 414(p))
pursuant to a QDRO order even if the Participant has not attained the "earliest
retirement age" (within the meaning of Code section 414(p)). Any expenses
incurred by the Company in connection with recognizing and enforcing a QDRO may
be charged against the Account to which the QDRO relates.
16.2 Incompetence. If, in the opinion of the Company, any
individual becomes unable to handle properly any amounts payable to such
individual under the Plan, then the Company may make such arrangements for
payment on such individual's behalf as it determines will be beneficial to such
individual, including (without limitation) payment to such individual's
guardian, conservator, spouse or dependent.
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16.3 Unclaimed Plan Benefits. If any Plan Benefit, or a portion
thereof, would be distributable under the Plan but the Company is unable to
locate the Participant or Beneficiary to whom the distribution is payable for
three consecutive Plan Years, then the Participant's Accounts may be closed
after the third consecutive Plan Year during which such distribution is payable
but the Participant or Beneficiary cannot be found. The amount of the unpaid
Plan Benefit shall be reallocated to eligible Participants in the proportion
that each such Participant's Compensation bears to all Participants'
Compensation, unless mandatory provisions of applicable escheat laws require
another application, in which case such Plan Benefit shall be applied as such
laws require. If, however, the Participant or Beneficiary subsequently makes a
proper claim to the Company for any Plan Benefit which was reallocated and
which was not lost by reason of escheat, then such Plan Benefit (without
income, gains or other adjustment) shall be restored to the Participant's
Accounts from a special contribution made by the appropriate Participating
Company for this purpose. The Plan Benefit shall thereafter be distributable
in accordance with the terms of the Plan.
16.4 No Employment Rights. Nothing in the Plan shall be deemed to
give any individual any right to remain in the employ of any Participating
Company or to affect the right of such Participating Company to terminate such
individual's employment at any time and for any reason.
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16.5 Merger, Consolidation and Transfer of Assets or Liabilities.
The Plan shall not be merged or consolidated with any other plan, and no assets
or liabilities of the Plan shall be transferred to any other plan, unless each
Participant would receive a Plan Benefit immediately after the merger,
consolidation or transfer (if the Plan were then terminated) which is equal to
or greater than the Plan Benefit which such Participant would have been
entitled to receive immediately before such merger, consolidation or transfer
(if the Plan had then been terminated).
16.6 Tender Offers. Effective October 1, 1992, in the event that
any person or group of persons makes a tender offer subject to section 14(d) of
the Securities Exchange Act of 1934 to acquire all or part of the outstanding
shares of Geneva Stock, including the Geneva Stock held in the Trust Fund
("Acquisition Offer"), each Participant shall be entitled to direct the Trustee
confidentially to tender all or part of those shares of Geneva Stock that are
held in the Participant's Accounts. If the Trustee receives an instruction by
the date communicated by the Company to the Participant, the Trustee shall
tender such shares in accordance with such instruction. Any Geneva Stock as to
which the Trustee does not receive timely instructions shall not be tendered by
the Trustee. The Company shall distribute to each Participant all appropriate
materials pertaining to the Acquisition Offer, including the statement of the
position of the Company with respect to such offer issued pursuant to Rule
14e-2 under the Securities Exchange Act of
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<PAGE> 56
1934, as soon as practicable after such materials are issued; provided,
however, that if the Company fails to issue such statement within five business
days after the commencement of such offer, the Company shall distribute such
materials to each Participant without the statement by the Company and shall
separately distribute such statement as soon as practicable after it is issued.
16.7 Choice of Law. The Plan and all rights thereunder shall be
interpreted and construed in accordance with ERISA and, to the extent that
state law is not preempted by ERISA, the law of the State of Utah.
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ARTICLE 17. SPECIAL TOP-HEAVINESS RULES.
17.1 Determination of Top-Heavy Status. Any other provision of the
Plan notwithstanding, this Article 17 shall apply to any Plan Year in which the
Plan is a Top-Heavy Plan. The Plan shall be considered a "Top-Heavy Plan" for
a Plan Year if, as of the Determination Date for such Plan Year, the Top-Heavy
Ratio for the Aggregation Group exceeds 60%.
17.2 Minimum Allocations. For any Plan Year during which the Plan
is a Top-Heavy Plan, the Company Contributions and Forfeitures allocated to
each Participant who is not a Key Employee, but who is an Employee on the last
day of such Plan Year, shall not be less than the lesser of (a) three percent
of his or her Compensation (as defined in Section 7.5) or (b) the greatest
allocation of Salary Deferrals, Company Contributions and Forfeitures,
expressed as a percentage of Compensation, made to any Participant who is a Key
Employee."
17.3 Special Definitions. For purposes of this Article 17 only,
the following definitions shall apply:
(a) "Aggregation Group" means either the Required
Aggregation Group or any Permissive Aggregation Group, as the Company
may elect.
(b) "Determination Date" means the last day of the Plan
Year prior to the applicable Plan Year. The last day of the first
Plan Year shall be the Determination Date for that year.
(c) "Key Employee" means a key employee, as defined in
section 416(i) of the Code.
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(d) "Permissive Aggregation Group" means a group of
qualified plans which includes (i) the Required Aggregation Group and
(ii) one or more plans of a member of the Affiliated Group which are
not part of the Required Aggregation Group. A Permissive Aggregation
Group, when viewed as a single plan, must satisfy the requirements of
sections 401(a)(4) and 410 of the Code.
(e) "Required Aggregation Group" means a group of
qualified plans which includes (i) each plan of a member of the
Affiliated Group in which a Key Employee participates and (ii) each
other plan of a member of the Affiliated Group which enables any plan
in which a Key Employee participates to meet the requirements of
section 401(a)(4) or 410 of the Code.
(f) "Top-Heavy Ratio" means a percentage determined
pursuant to section 416(g) of the Code.
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ARTICLE 18. ROLLOVERS AND RELATED TRANSACTIONS.
18.1 Rollover From Qualified Plan. With the consent of the Company
an Eligible Employee may contribute all or any part of an "eligible rollover
distribution" within the meaning of Code section 402(c)(4) to the Plan, either
through an ordinary rollover or through a direct transfer in accordance with
Code section 401(a)(31) and the Regulations thereunder; provided, however, that
such eligible rollover distribution may be contributed to the Plan only if (i)
the contribution is paid entirely in the form of a cashier's check or money
order made payable to or endorsed over to the Plan or such other form
acceptable to the Company, (ii) the Eligible Employee establishes to the
satisfaction of the Company that such distribution was an eligible rollover
distribution from a plan which, at the time of the distribution, met the
requirements of section 401 of the Code, and (iii) in the case of a rollover
that is not made in accordance with the direct transfer provisions of Code
section 401(a)(31), the contribution is made within sixty (60) days after the
Eligible Employee's receipt of the eligible rollover distribution.
18.2 Rollover From IRA. With the consent of the Company an
Eligible Employee may, within sixty (60) days after the date of receipt of a
distribution from an individual retirement account which meets the requirements
of section 408 and related sections of the Code, contribute all or any part of
such distribution to the Plan; provided, however, that all or any part of such
distribution may be contributed to the Plan only if
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(i) the distribution represents the entire amount in such individual retirement
account; (ii) no part of the distribution is attributable to any source other
than a "rollover contribution" from an employees' trust described in section
401(a) of the Code which is exempt from tax under section 501(a) of such Code;
(iii) the contribution is paid entirely in the form of a cashier's check or
money order made payable to or endorsed over to the Plan or such other form
acceptable to the Company; and (iv) the Eligible Employee establishes to the
satisfaction of the Company that the conditions set forth in (i), (ii) and
(iii) above have been met and such distribution was made from an individual
retirement account which, at the time of the distribution, met the requirements
of section 408 and related sections of the Code.
18.3 Mistaken Rollover. If it is determined that a Participant's
rollover contribution did not qualify under the Code for a tax free rollover,
then as soon as reasonably possible the balance in the Participant's Rollover
Account shall be segregated from all other Plan assets, treated as a
nonqualified trust established by and for the benefit of the Participant and
distributed to the Participant. Such a mistaken rollover contribution shall be
deemed never to have been a part of the Plan and shall not adversely affect the
tax qualification of the Plan under the Code.
18.4 Direct Rollovers. Effective with respect to distributions
from the Plan made on or after January 1, 1993, notwithstanding any provision
of the Plan to the contrary that would
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otherwise limit a distributee's election under this Article, a distributee may
elect, at the time and in the manner prescribed by the Company, to have any
portion of an eligible rollover distribution paid directly to an eligible
retirement plan specified by the distributee in a direct rollover.
Notwithstanding the foregoing, the Company may prescribe rules that limit a
distributee's right to make the election described in the preceding sentence
with respect to certain de minimis distributions or divisions of the eligible
rollover distribution.
An "eligible rollover distribution" is any distribution of all or any
portion of the balance to the credit of the distributee, except that an
eligible rollover distribution does not include: any distribution that is one
of a series of substantially equal periodic payments (not less frequently than
annually) made for the life (or life expectancy) of the distributee or the
joint lives (or joint life expectancies) of the distributee and the
distributee's designated beneficiary, or for a specified period of 10 years or
more; any distribution to the extent such distribution is required under
section 401(a)(9) of the Code; and the portion of any distribution that is not
includable in gross income (determined without regard to the exclusion for net
unrealized appreciation with respect to employer securities).
An "eligible retirement plan" is an individual retirement account
described in section 408(a) of the Code, an individual retirement annuity
described in section 408(b) of the Code, an annuity plan described in section
403(a) of the Code, or a
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qualified trust described in section 401(a) of the Code, that accepts the
distributee's eligible rollover distribution. However, in the case of an
eligible rollover distribution to the surviving spouse, an eligible retirement
plan is an individual retirement account or an individual retirement annuity.
A "distributee" includes an Employee or former Employee. In addition,
the Employee's or former Employee's surviving spouse and the Employee's or
former Employee's spouse or former spouse who is the alternate payee under a
QDRO, as defined in section 414(p) of the Code and section 206(d) of ERISA, are
distributees with regard to the interest of the spouse or former spouse.
A "direct rollover" is a payment by the Plan to the eligible
retirement plan specified by the distributee.
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ARTICLE 19. DEFINITIONS.
19.1 "Accounts" means the separate accounts maintained for each
Participant as part of the Trust Fund, which include, as applicable, a
Participant's Discretionary Contribution Account, Pension Contribution Account,
Salary Deferral Account, Matching Contribution Account, Geneva Stock Account
and Rollover Account.
19.2 "Affiliated Group" means a group of one or more chains of
corporations connected through stock ownership with the Company, if:
(a) Stock possessing at least 80% of the total combined
voting power of all classes of stock entitled to vote or at least 80%
of the total value of shares of all classes of stock of each of the
corporations, except the Company, is owned by one or more of the other
corporations; and
(b) The Company owns stock possessing at least 80% of the
total combined voting power of all classes of stock entitled to vote
or at least 80% of the total value of shares of all classes of stock
of at least one of the other corporations excluding, in computing such
voting power or value, stock owned directly by such other
corporations.
In addition, the term "Affiliated Group" includes any other entity which the
Company has designated in writing as a member of the Affiliated Group for
purposes of the Plan. An entity shall be considered a member of the Affiliated
Group only with respect to periods for which such designation is in effect or
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during which the relationship described in Subsections (a) and (b) above
exists.
19.3 "Annuity Starting Date" means:
(a) The first day of the first period for which an
amount is payable as an annuity; or
(b) In the case of a benefit not payable in the form of
an annuity, the first day on which all events have occurred that
entitle the Participant to such benefit.
19.4 "Base Pay" means the Participant's salary, wages or other
regular rate of pay, including Salary Deferral Contributions and salary
reductions made pursuant to the Company's cafeteria plan, but exclusive of
bonuses, overtime, or other extraordinary compensation.
19.5 "Beneficiary" means one or more persons designated by the
Participant (or by the Plan) pursuant to Section 10.11.
19.6 "Code" means the Internal Revenue Code of 1986, as amended
from time to time.
19.7 "Company" means Geneva Steel, a Utah corporation.
19.8 "Company Contributions" means a Discretionary Contribution, a
Matching Contribution or a Pension Contribution.
19.9 "Compensation" means the total compensation paid to the
Participant (within the meaning of Treas. Reg. Section 1.415-2(d)(11)(ii)) by
a Participating Company for personal services performed while a Participant
for the Plan Year. Compensation includes Salary Deferrals and deferrals made
pursuant to the Company's cafeteria plan. "Compensation" does
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not include any compensation paid to a Participant in excess of $150,000,
adjusted in accordance with section 401(a)(17)(B) of the Code. For purposes of
applying the $150,000 limit in the preceding sentence, family members of the
Employee shall be combined with the Employee in accordance with the guidelines
established in Section 1.8 of Appendix I to the Plan, except that for purposes
of this Section 19.9, family members shall only include the Employee who is a
5% owner or one of the ten most highly compensated employees, the Employee's
spouse and the Employee's lineal descendants who have not attained age 19
before the close of the Plan Year.
19.10 "Disability" means the condition of a Participant who is
permanently unable, by reason of a physical or mental incapacity, to perform
the normal duties of his or her occupation for a Participating Company or the
duties or such other position or job that the Company makes available to the
Participant and for which the Participant is qualified by reason of his
training, education and experience, as certified by a physician selected by
such Participating Company.
19.11 "Discretionary Contributions" means an account contributed to
the Plan by a Participating Company pursuant to Section 3.1.
19.12 "Eligible Employee" is defined in Section 2.1.
19.13 "Employee" means an individual who (a) is a common-law
employee of a member of the Affiliated Group or a "leased employee" (within the
meaning of section 414(n) of the Code) with respect to a member of the
Affiliated Group.
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19.14 "ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time.
19.15 "Forfeiture" means that part of the Participant's Accounts
that has not become vested pursuant to Article 9 when he or she ceases to be an
Employee.
19.16 "Geneva Stock" means the common stock of the Company.
19.17 "Geneva Stock Fund" means the Investment Fund described in
Section 8.2.
19.18 "Investment Accounts" means those Accounts described in
Section 8.4.
19.19 "Investment Funds" means the funds established under the Trust
Fund and described in Section 8.2.
19.20 "Matching Contribution" means an amount contributed to the
Plan by a Participating Company pursuant to Section 6.1.
19.21 "Participant" means an individual whose participation in the
Plan (a) has commenced pursuant to Section 2.3, 2.4 or 2.5 and (b) has not yet
terminated pursuant to Section 2.7.
19.22 "Participating Company" means each member of the Affiliated
Group which (a) has been designated as a Participating Company by the Company
and (b) has accepted such designation by appropriate corporate action.
19.23 "Pension Contribution" means a contribution made by a
Participating Company pursuant to Article 4.
19.24 "Period of Service" means all of the following:
(a) Period of Employment. An Employee's Period of
Service shall include any period during which an
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Employee maintains an employment relationship with an Affiliated Group
member. An Employee's employment relationship with an Affiliated
Group member commences on the first date the Employee performs duties
for an Affiliated Group member for which he or she receives or is
entitled to receive compensation and ends on the date the Employee
quits, dies, is discharged or retires. An Employee shall not be
considered to have quit under the following circumstances:
(i) When the Employee is absent due to lay-off,
leave of absence, disability or sickness for up to 48 months.
(ii) When the Employee enters military service
with the United States, provided the Employee returns to
active employment with the Company within the time the
Employee's reemployment rights are protected under applicable
law. If the Employee does not so return, he or she shall be
deemed to have quit on the date of entry into military
service.
(iii) When the Employee is on jury duty, approved
vacation or holiday.
(iv) When an Employee is absent from work for any
period up to 24 months because of the Employee's pregnancy,
the birth of the Employee's child, the placement of a child
with the Employee
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for the purpose of adoption, or the care of such child
immediately following such birth or placement.
An Employee shall be deemed to have been discharged as of the earlier
of the date oral or written notice of discharge is actually received
or the date a written notice is deposited in the United States mail on
a registered or certified basis to the Employee's last known address
as reflected in the records of the Company;
(b) Period for Which Back Pay Awarded. An Employee's
Period of Service includes any period not otherwise counted as part of
a Period of Service for which the Employee is awarded, or entitled to,
back pay from the Company (regardless of any mitigation of damages);
(c) Period Following Termination. An Employee's Period
of Service includes any period following termination of his or her
employment relationship with the Company (as determined pursuant to
(i) above), provided the Employee is rehired within 365 days after
such termination;
(d) Aggregation of Periods of Service. All Periods of
Service determined pursuant to this Section 19.22 shall be aggregated
on the basis of whole calendar months whether or not such Periods of
Service are consecutive, except:
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(i) Fractional Months. If an Employee's Period of
Service commences on other than the first day of a calendar
month or ends on other than the last day of a calendar month
the days in such month or months shall be aggregated and one
additional month of Service shall be credited if the number of
such days is more than 30 but less than 59 and two additional
months shall be credited if the number of such days equals 60.
(ii) Permanent Service Break. If an Employee who
is not even partially vested incurs a Permanent Service Break,
any Period of Service prior to such Permanent Service Break
shall not be aggregated with any Period of Service after such
break.
19.25 "Permanent Service Break" means a period during which the
Employee's employment relationship with an Affiliated Group member terminates
and the Employee has not been reemployed as an Employee within 60 months.
19.26 "Plan" means this Geneva Steel Management Employee Savings and
Pension Plan, as amended from time to time.
19.27 "Plan Benefit" means the benefit payable to the Participant or
to his or her Beneficiary pursuant to Article 10.
19.28 "Plan Year" means the calendar year.
19.29 "Qualified Joint and Survivor Annuity" means a monthly annuity
which is actuarially equivalent to the Participant's Plan Benefit and which is
payable for the joint
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lives of the Participant and his or her spouse, with 50% of such annuity
continued for the life of the survivor.
19.30 "Qualified Non-Elective Contributions" means contributions
(other than Matching Contributions) made by the Employer pursuant to Section
2.3 of Appendix I to the Plan and allocated to the Participants' Qualified
Non-Elective Contributions Accounts that the Participants may not elect to
receive in cash until distributed from the Plan, that are nonforfeitable when
made, and that are distributable only as specified in Section 10.4.
19.31 "Review Panel" means the fiduciary described in Section 12.1.
19.32 "Rollover Contribution" means a contribution made by the
Participant pursuant to Article 18.
19.33 "Salary Deferral Contribution" means a contribution made by a
Participating Company on the Participant's behalf pursuant to Section 5.1.
19.34 "Trust Agreement" means the trust agreement(s) between the
Company and the Trustee, as amended from time to time.
19.35 "Trustee" means the trustee(s) appointed by the Company
pursuant to Section 13.1.
19.36 "Trust Fund" means the trust fund(s) established pursuant to
the Trust Agreement.
19.37 "Valuation Date" means the last business day of the Plan Year
and such other dates selected by the Company.
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ARTICLE 20. EXECUTION.
To record the adoption of the Plan to read as set forth herein the
Company has caused its authorized officer to execute this document this 3rd
day of July, 1995.
GENEVA STEEL
By /s/ C. E. Ramnitz
-------------------------------------
As Its V.P. Human Resources
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APPENDIX I TO THE GENEVA STEEL
MANAGEMENT EMPLOYEE SAVINGS AND PENSION PLAN
LIMITATIONS RELATING TO NONDISCRIMINATION TESTING
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Aggregate 401(m) Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Aggregate 401(m) Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Before-Tax Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.4 Combined limitation Formula . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.5 Combined Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.6 Excess Aggregate 401(m) Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.7 Excess Before-Tax Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.8 Highly Compensated Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.9 Non-Highly Compensated Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.10 Qualified Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.11 Section 414(s) Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.12 Top-Paid Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE 2. BEFORE-TAX CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.1 Percentage Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.2 Reduction of Salary Deferral Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.3 Qualified Non-Elective Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.4 Other Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE 3. MATCHING CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.1 Percentage Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.2 Reduction of Aggregate 401(m) Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.3 Other Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE 4. COMBINED LIMITATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.1 Combined Limitation Formula . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.2 Additional Reductions of Aggregate 401(m) Contributions . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE 5. DISTRIBUTIONS OF EXCESS BEFORE-TAX CONTRIBUTIONS AND EXCESS AGGREGATE 401(m) CONTRIBUTIONS . . . . . 17
5.1 Time of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.2 Income Allocable to Excess Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
</TABLE>
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APPENDIX I
LIMITATIONS RELATING TO NONDISCRIMINATION TESTING
UNDER CODE SECTIONS 401(k) and 401(m)
ARTICLE 1. DEFINITIONS.
1.1 "Aggregate 401(m) Contributions" means any Matching
Contributions allocated to the Participant for the Plan Year.
1.2 "Aggregate 401(m) Percentage" means the average
percentage determined under Section 3.1(c) of this Appendix I.
1.3 "Before-Tax Percentage" means the average percentage
determined under Section 2.1(c) of this Appendix I.
1.4 "Combined limitation Formula" means the formula
computed under Section 4.1 of this Appendix I.
1.5 "Combined Percentage" means the percentage determined
under Section 4.1(b) or 4.1(c) of this Appendix I.
1.6 "Excess Aggregate 401(m) Contributions" means the
reductions in Matching Contributions described in Section 3.2 of this Appendix
I.
1.7 "Excess Before-Tax Contributions" means the
reductions in Salary Deferral Contributions described in Section 2.2 of this
Appendix I.
1.8 "Highly Compensated Employee" for any Plan Year means
any active Employee who, during the look-back year, (a) received Total
Compensation of more than $75,000 (or such larger amount as may be provided on
account of cost of living adjustments pursuant to sections 414(q) and 415(d) of
the Code); (b) received Total Compensation of more than $50,000 (or such
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larger amount as may be provided on account of cost of living adjustments
pursuant to sections 414(q) and 415(d) of the Code) and was a member of the
Top-Paid Group; or (c) was an officer of a member of the Affiliated Group and
received Total Compensation of more than 50 percent of the dollar limitation in
effect under section 415(b)(1)(A) of the Code. The term "Highly Compensated
Employee" also includes: (a) an Employee who is both described in the preceding
sentence if the term "determination year" is substituted for the term
"look-back year" and the Employee is one of the 100 Employees who received the
most Total Compensation from the Affiliated Group during the determination
year; and (b) an Employee who is a five-percent owner at any time during the
look-back year or determination year. If no officer has satisfied the
compensation requirement of (c) above during either a determination year or
look-back year, the highest paid officer for such year shall be treated as a
Highly Compensated Employee.
The term "Highly Compensated Employee" shall also include a
former Employee who separated from service (or was deemed to have separated)
prior to the determination year, performs no service for the Affiliated Group
during the determination year, and was a Highly Compensated Employee as an
active Employee for either the separation year or any determination year ending
on or after the Employee's 55th birthday.
If an Employee is, during a determination year or look-back
year, a family member of either a five percent owner who is
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an active or former Employee or a Highly Compensated Employee who is one of the
10 most Highly Compensated Employees ranked on the basis of Total Compensation
paid during such year, then the family member and the five-percent owner or
top-ten Highly Compensated Employee shall be aggregated. In such case, the
family member and the five-percent owner or top-ten Highly Compensated Employee
shall be treated as a single Employee receiving Total Compensation and Plan
contributions and benefits of the family member and five-percent owner or
top-ten Highly Compensated Employee. The compensation and benefits
attributable to the family members and the five-percent owner or top-ten Highly
Compensated Employee shall be pro rated among the family members and the
five-percent owner or top-ten Highly Compensated Employee in the proportion
that each such individual's Compensation bears to the total of all such
individuals' Compensation. For purposes of this Section 1.8, "family member"
includes the spouse, lineal ascendants and descendants of the Employee or
former Employee and the spouses of such lineal ascendants and descendants.
For purposes of this Section 1.8, the determination year shall
be the Plan Year. The look-back year shall be the 12-month period immediately
preceding the determination year. However, the Company may elect in accordance
with Temp. Treas. Reg. section 1.414(q)-1T Q&A-14(b), to make the look-back
year calculation for a determination year on the basis of the calendar year
ending with or within the applicable determination year. If such an election
is made, the Company shall make the
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determination year calculation on the basis of the period (if any) by which the
applicable determination year extends beyond the calendar year (i.e., the lag
period). (If the Plan Year is the calendar year, this election makes the
look-back year and the determination year the same calendar year.)
The determination of who is a Highly Compensated Employee,
including the determinations of the number and identity of Employees in the
Top-Paid Group, the top 100 Employees, the number of Employees treated as
officers and the Total Compensation that is considered, will be made in
accordance with section 414(q) of the Code and regulations thereunder.
1.9 "Non-Highly Compensated Employee" means any
Participant who is not a Highly Compensated Employee.
1.10 "Qualified Plan" means a stock bonus, pension or
profit sharing plan (other than this Plan) maintained by a member of the
Affiliated Group that is intended to qualify under section 401(a) of the Code.
1.11 "Section 414(s) Compensation" means, at the
discretion of the Company, any one of the following definitions of compensation
received by an Employee from the Company or a member of the Affiliated Group
during the portion of the Plan Year that the Employee is a Participant or is
eligible to become a Participant in the Plan:
(a) Compensation as defined in Treasury Regulation
section 1.415-2(d) or any successor thereto;
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(b) "Wages" as defined in section 3401(a) of the Code for
purposes of income tax withholding at the source, but determined
without regard to any rules that limit the remuneration included in
wages based on the nature or location of the employment or the
services performed (such as the exception for agricultural labor in
section 3401(a)(23) of the Code);
(c) "Wages" as defined in section 3401(a) of the Code for
purposes of income tax withholding at the source, plus all other
payments of compensation reportable under Code sections 6041(d) and
6051(a)(3) and the regulations thereunder, determined without regard
to any rules that limit such Wages or reportable compensation based on
the nature or location of the employment or the services performed
(such as the exception for agricultural labor in section 3401(a)(23)
of the Code), and modified, at the election of the Company, to exclude
amounts paid or reimbursed for the Employee's moving expenses, to the
extent it is reasonable to believe that these amounts are deductible
by the Employee under section 217 of the Code;
(d) Any of the definitions of Section 414(s) Compensation
set forth in Subsections (a), (b) and (c) above, reduced by all of the
following items (even if includable in gross income): reimbursements
or other expense allowances, fringe benefits (cash and noncash),
moving expenses, deferred compensation and welfare benefits;
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(e) Any of the definitions of Section 414(s) Compensation
set forth in Subsections (a), (b), (c) and (d) above, modified to
include any elective 4contributions made by the Company or a member of
the Affiliated Group on behalf of the Employee that are not includable
in gross income under section 125, 402(a)(8), 402(h) or 403(b) of the
Code; or
(f) Any reasonable definition of compensation that does
not by design favor Highly Compensated Employees and that satisfies
the nondiscrimination requirement set forth in Treasury Regulation
section 1.414(s)-1(d)(2) or the successor thereto.
Any definition of Section 414(s) Compensation shall be used
consistently to define the compensation of all Employees taken into account in
satisfying the requirements of an applicable provision of this Appendix I for
the relevant determination period. For purposes of applying the limitations
set forth in Articles 2, 3 and 4 of this Appendix I, Section 414(s)
Compensation shall not include compensation paid to an Employee for a Fiscal
Year in excess of $150,000 (or such other amount as may be adopted by the
Commissioner of Internal Revenue to reflect a cost-of-living adjustment).
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1.12 "Top-Paid Group" for any Plan Year means the top 20
percent (in terms of Section 414(s) Compensation) of all Employees of the
Affiliated Group on a U.S. dollar payroll, excluding the following:
(a) Any Employee covered by a collective bargaining
agreement who is not an Eligible Employee;
(b) Any Employee who has not completed six months of
service at the end of the Plan Year;
(c) Any Employee who normally works less than 17 1/2
hours per week;
(d) Any Employee who normally works no more than six
months during any year; and
(e) Any Employee who has not attained the age of 21 at
the end of the Plan Year.
1.13 "Total Compensation" means "wages," as defined in
section 3401(a) of the Code for purposes of income tax withholding at
the source, but determined:
(a) Without regard to any rules that limit the
remuneration included in 'wages' based on the nature or location of
the employment or the services performed (such as the exception for
agricultural labor in section 3401(a)(2) of the Code); and
(b) By including amounts deferred but not refunded under
a cafeteria plan, as such term is defined in section 125(c) of the
Code and under a plan, including this Plan, qualified under section
401(k) of the Code.
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<PAGE> 80
The capitalized terms used in this Appendix I, but not defined
herein, shall have the same meaning as such terms have when used in the Geneva
Steel Management Employee Savings and Pension Plan (the "Plan"), and the terms
of the Plan are incorporated by reference into this Appendix I.
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<PAGE> 81
ARTICLE 2. BEFORE-TAX CONTRIBUTIONS.
2.1 Percentage Limitations. The Salary Deferral
Contributions attributable to Highly Compensated Employees for any Plan Year
shall not exceed the limits described below:
(a) The ratio of the Salary Deferral Contributions for
the Plan Year to the Section 414(s) Compensation for the Plan Year shall be
computed to the nearest one hundredth of one percent for each individual who at
any time during the Plan Year is a Participant of the Plan or is eligible to
become a Participant in the Plan;
(b) In the case of an individual who is a five-percent
owner or who is among the 10 most highly compensated Highly Compensated
Employees, the Section 414(s) Compensation and Salary Deferral Contributions
allocated to family members (as described in Section 1.8 of this Appendix I)
shall be attributed to such Highly Compensated Employees in computing such
ratios as prescribed in Treasury Regulation section 1.401(k)-1(f) and (g) or
any successor thereto;
(c) The average of such ratios (i.e., the Before-Tax
Percentage) shall be determined for (i) the Highly Compensated Employees and
(ii) the Non-Highly Compensated Employees; and
(d) The Salary Deferral Contributions of Highly
Compensated Employees shall be reduced to the extent necessary to establish
that the Before-Tax Percentage for the Highly Compensated Employees either:
(i) does not exceed 125 percent of the Before-Tax Percentage for the Non-Highly
Compensated Employees, or (ii) does not exceed the lower of (A) 200 percent
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of the Before-Tax Percentage for Non-Highly Compensated Employees or (B) the
Before-Tax Percentage for Non-Highly Compensated Employees plus two percentage
points.
2.2 Reduction of Salary Deferral Contributions. The
reduction of the Salary Deferral Contributions of Highly Compensated Employees
as required by Section 2.1(d) of this Appendix I shall be made by the Company
in the order of the individual ratios of such Highly Compensated Employees,
beginning with the highest of such ratios and continuing until the Before-Tax
Percentage for the Highly Compensated Employees meets either of the tests set
forth in Section 2.1(d) of this Appendix I. Such reductions in Before-Tax
Contributions shall be made in accordance with Treasury Regulation section
1.401(k)-1(f)(2) and shall constitute "Excess Before-Tax Contributions." For
all affected Highly Compensated Employees, such Excess Before-Tax Contributions
shall be eliminated as provided for in Article 5 hereof. Excess Before-Tax
Contributions of an individual who is a five-percent owner or who is among the
10 most highly compensated Highly Compensated Employees shall be allocated
among such individual's family members (as described in Section 1.8 of this
Appendix I) in proportion to the contributions attributable to each family
member that have been combined.
2.3 Qualified Non-Elective Contributions. In lieu of
reducing "Excess Before-Tax Contributions" as provided in Section 2.2 of this
Appendix I or "Excess Aggregate 401(m) Contributions" as provided in Section
3.2 of this Appendix I, the Company may make corrective Qualified Non-Elective
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Contributions on behalf of Non-Highly Compensated Employee Participants. Such
Qualified Non-Elective Contributions shall be allocated to an eligible
Participant's Salary Deferral Account in the ratio that such eligible
Participant's Base Pay for the Plan Year bears to the total Base Pay of all
eligible Participants for such Plan Year. Any Qualified Non-Elective
Contributions for a Plan Year shall be paid to the Trustee not later than the
last day of the Plan Year next following the close of the Plan Year for which
the Qualified Non-Elective Contribution is made.
2.4 Other Plans. If a Highly Compensated Employee for
any Plan Year is a participant during such Plan Year of any qualified plan that
includes a qualified cash or deferral arrangement under section 401(k) of the
Code, this Plan and such Qualified Plan(s) shall be treated as required by
Treasury Regulation section 1.401(k)-1(g)(1)(ii)(B) in applying this Article 2.
If the Plan is aggregated with any other qualified plan for purposes of Code
section 410(b), this Plan and such other qualified plan shall be treated as a
single plan in applying this Article 2.
ARTICLE 3. MATCHING CONTRIBUTIONS.
3.1 Percentage Limitations. To the extent Matching
Contributions are not treated as Salary Deferral Contributions and tested under
Article 2 of this Appendix I, the Aggregate 401(m) Contributions of Highly
Compensated Employees for any Plan Year shall not exceed the limits described
below:
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(a) The ratio of the Aggregate 401(m) Contributions for
the Plan Year to the Section 414(s) Compensation for the Plan Year shall be
computed to the nearest one hundredth of one percent for each individual who at
any time during the Plan Year is a Participant of the Plan or is eligible to
become a Participant in the Plan;
(b) In the case of an individual who is a five-percent
owner or who is among the 10 most highly compensated Highly Compensated
Employees, the Section 414(s) Compensation and the Company Contributions
allocated to family members (as described in Section 1.8 of this Appendix I)
shall be attributed to such Highly Compensated Employees in computing such
ratios as prescribed in Treasury Regulation section 1.401(m)-1(e) and (f) or
any successor thereto;
(c) The average of such ratios (i.e., the Aggregate
401(m) Percentage) shall be determined for (i) the Highly Compensated Employees
and (ii) the Non-Highly Compensated Employees; and
(d) The Aggregate 401(m) Contributions of Highly
Compensated Employees shall be reduced to the extent necessary to establish
that the Aggregate 401(m) Percentage for the Highly Compensated Employees
either: (i) does not exceed 125 percent of the Aggregate 401(m) Percentage for
the Non-Highly Compensated Employees, or (ii) does not exceed the lower of (A)
200 percent of the Aggregate 401(m) Percentage for Non-Highly Compensated
Employees or (B) the Aggregate 401(m)
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Percentage for Non-Highly Compensated Employees plus two percentage points.
3.2 Reduction of Aggregate 401(m) Contributions. The
reduction in the Aggregate 401(m) Contributions of Highly Compensated Employees
as required by Section 3.1(d) of this Appendix I shall be made by the Company,
in accordance with Treasury Regulation section 1.401(m)-1(e)(2), in the order
of the individual ratios of such Highly Compensated Employees, beginning with
the highest of such ratios and continuing until the Aggregate 401(m) Percentage
for the Highly Compensated Employees meets either of the tests set forth in
Section 3.1(d) of this Appendix I. For all affected Highly Compensated
Employees, such Excess Aggregate 401(m) Contributions shall be eliminated as
provided for in Article 5 hereof. Excess Aggregate 401(m) Contributions of an
individual who is a five-percent owner or who is among the 10 most highly
compensated Highly Compensated Employees shall be allocated among such
individual's family members (as described in Section 1.8 of this Appendix I) in
proportion to the contributions attributable to each family member that have
been combined.
3.3 Other Plans. If a Highly Compensated Employee for
any Plan Year is a participant during such Plan Year of any qualified plan that
is a qualified defined contribution plan (within the meaning of Code section
414(i)) and that provides for employee contributions and matching employer
contributions (as described in Code section 401(m)(4)(A)), this Plan and such
qualified plan(s) shall be treated as required by Treasury
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Regulation section 1.401(m)-1(f)(1)(ii)(B) in applying this Article 3. If the
Plan is aggregated with any other qualified plan for purposes of Code section
410(b), this Plan and such other qualified plan shall be treated as a single
plan in applying this Article 3.
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ARTICLE 4. COMBINED LIMITATIONS.
4.1 Combined Limitation Formula. The Combined Limitation
Formula for each Plan Year shall be computed as follows:
(a) First, the Before-Tax Percentage and Aggregate 401(m)
Percentage for Highly Compensated Employees and Non-Highly Compensated
Employees for the Plan Year shall be determined after making any reductions in
Salary Deferral Contributions and/or Aggregate 401(m) Contributions of Highly
Compensated Employees required by Sections 2.2 and 3.2 of this Appendix I
before application of the Combined Limitation Formula.
(b) Second, the sum of: (i) 125 percent of the greater
of the Before-Tax Percentage or the Aggregate 401(m) Percentage for the
Non-Highly Compensated Employees, and (ii) two (2) percentage points plus the
lesser of the Before-Tax Percentage or the Aggregate 401(m) Percentage (but not
in excess of 200 percent of the lesser of such Before-Tax Percentage and
Aggregate 401(m) Percentage) for the Non- Highly Compensated Employees shall be
determined.
(c) Third, the sum of: (i) 125 percent of the lesser of
the Before-Tax Percentage or the Aggregate 401(m) Percentage for the Non-Highly
Compensated Employees, and (ii) two (2) percentage points plus the greater of
the Before-Tax Percentage or the Aggregate 401(m) Percentage (but not in excess
of 200 percent of the lesser of such Before-Tax Percentage and
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Aggregate 401(m) Percentage) for the Non-Highly Compensated Employees shall be
determined.
(d) Fourth, the sum of the Before-Tax Percentage and
Aggregate 401(m) Percentage for the Highly Compensated Employees shall be
determined.
4.2 Additional Reductions of Aggregate 401(m)
Contributions. If, in any Plan Year, the amount determined under Section
4.1(d) of this Appendix I exceeds the greater of the amounts determined under
Section 4.1(b) or Section 4.1(c) of this Appendix I, then the Aggregate 401(m)
Contributions of Highly Compensated Employees shall be reduced, in the manner
described in Section 3.2 of this Appendix I, to the extent necessary to ensure
that the sum of the Before-Tax Percentage and Aggregate 401(m) Percentage of
the Highly Compensated Employees for the Plan Year does not exceed the greater
Combined Percentage determined under Section 4.1(b) or Section 4.1(c) of this
Appendix I in respect to Non-Highly Compensated Employees.
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ARTICLE 5. DISTRIBUTIONS OF EXCESS BEFORE-TAX CONTRIBUTIONS AND EXCESS
AGGREGATE 401(m) CONTRIBUTIONS.
5.1 Time of Distribution. Excess Before-Tax
Contributions may be distributed to the appropriate Highly Compensated
Employees by March 15 following the close of the Plan Year, but in no event
later then the close of the following Plan Year. Excess Aggregate 401(m)
Contributions (other than Excess Aggregate 401(m) Contributions that are first
forfeited as attributable to Excess Before-Tax Contributions that are refunded
for any Plan Year) shall be distributed to the appropriate Highly Compensated
Employees as follows:
(a) First, to the extent required, the vested portion of
the Matching Contributions attributable to the Participant's Salary Deferral
Contributions for such Plan Year, and any income (or losses) allocable to such
Matching Contributions, shall be distributed to him or her by the March 15 next
following the close of such Plan Year, but in no event later than the last day
of the following Plan Year.
(b) Second, to the extent required, the nonvested portion
of the Matching Contributions allocated to the Participant for such Plan Year,
and any income (or losses) allocable thereto, may be forfeited by March 15 next
following the close of the Plan Year, but in no event later than the close of
the following Plan Year, and reallocated as provided for in Section 9.4 of the
Plan. All such distributions, including income allocable thereto, shall be
designated by the Company as distributions of Excess Before-Tax Contributions
or Excess
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Aggregate 401(m) Contributions, as the case may be. In accordance with
Treasury Regulation section 1.401(k)-1(f)(5)(i), Excess Before-Tax
Contributions for a Plan Year to be distributed to a Participant shall be
reduced by excess deferrals previously distributed to such Participant for such
Participant's taxable year ending with or within such Plan Year, and excess
deferrals for a Plan Year to be distributed to a Participant shall be reduced
by Excess Before-Tax Contributions previously distributed to such Participant
for the Plan Year beginning with or within such taxable year.
5.2 Income Allocable to Excess Contributions. Income
allocable to Excess Before-Tax Contributions and Excess Aggregate 401(m)
Contributions shall be determined by the Company in accordance with Treasury
Regulation sections 1.401(k)-1(f)(4) and 1.401(m)-1(e)(3) or the successors
thereto.
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\ APPENDIX II
PARTICIPANT LOANS
Amount of Loans. A Participant who is receiving Compensation
may obtain a cash loan from the Participant's Salary Deferral, Rollover and
vested portion of his or her Matching Contribution Accounts. The minimum
amount of a loan shall be one thousand dollars ($1,000).
Aggregate Loan Limitations. No loan shall be granted under
the Plan if such loan, when aggregated with the balance of all loans the
Participant has outstanding under the Plan (and other Company plans similar to
the Plan) at the time such loan is to be made, exceeds the smallest of the
following:
(i) Fifty thousand dollars ($50,000), minus the excess of:
(A) the Participant's highest outstanding loan
balance under the Plan during the one-year period ending one
day prior to the date on which such loan is to be made over
(B) the outstanding balance of all of the
Participant's Plan loans on the date such loan is to be made;
or
(ii) Fifty (50%) percent of the vested balance of the
Participant's Salary Deferral, Rollover, Geneva Stock and Matching
Contribution Accounts.
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Terms of Loans. A loan to a Participant shall be made on such
terms and conditions as the Company may determine, provided that the loan
shall:
(i) Be evidenced by a promissory note signed by the
Participant and secured to the extent necessary by the Accounts of the
Participant (regardless of whether a particular Account provided funds
for the loan under Source of Loans below);
(ii) Bear interest at a fixed rate equal to the prime rate
of the Trustee plus one percent, in effect on the first business day
of the month in which the Company approves the loan, provided that
such rate is reasonable;
(iii) Be subject to a substantially level amortization
schedule, as determined by the Company;
(iv) Provide for loan payments
(A) to be withheld through periodic (but not less
frequently than quarterly) irrevocable payroll deductions from
the Participant's Compensation or
(B) to be paid by check or money order whenever
payroll withholding is not possible;
(v) Provide for repayment in full (including full
prepayment) on or before the earlier of
(A) the date the Participant's employment as an
Employee terminates, or
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(B) the date five (5) years after the loan is
made; and
(vi) Provide that a Participant's Accounts may not be
applied to the satisfaction of the Participant's loan obligations
before the Accounts become distributable under Article 10 of the Plan,
unless the Company determines that the loan obligations are in default
and treats such default as qualifying as a financial hardship. A
distribution on account of a loan default shall be made only if the
amount withdrawn, net of applicable federal and state taxes, does not
exceed the amount of the need, and the Participant represents to the
Company's satisfaction that the need cannot be relieved:
(A) Through reimbursement or compensation by
insurance, or otherwise,
(B) By reasonable liquidation of the
Participant's assets, to the extent such liquidation would not
itself cause an immediate and heavy financial need,
(C) By cessation of Salary Deferral
Contributions under the Plan, or
(D) By other distributions or nontaxable loans
from plans maintained by the Company or by any other employer,
or by borrowing from commercial sources on reasonable
commercial terms.
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The Participant's resources shall be deemed to include those assets of
his/her spouse and minor children that are reasonably available to the
Participant.
The Company shall exercise its discretion upon requests for
loans in a uniform and nondiscriminatory manner, consistent with the
requirements of sections 401(a)(4) and 401(k) of the Code.
Restrictions on Loans. No Participant shall have more than
one (1) loan from the Plan outstanding at the same time. A new loan may not be
obtained earlier than thirty (30) days after the end of the calendar quarter in
which the prior Plan loan is repaid.
Source of Loans. A Loan Account shall be established for each
Participant who takes a loan hereunder. The Loan Account shall be held by the
Trustee as part of the Loan Fund. The amount of the loan shall be transferred
to the Participant's Loan Account from the Participant's Salary Deferral,
Rollover and Matching Contribution Accounts and shall be disbursed from the
Loan Account. No portion of a Participant's Life Insurance Fund will be
liquidated and transferred to the Participant's Loan Account.
Disbursement of Loans. A Participant may request a loan by
filing the prescribed loan form with the Company. A loan shall be disbursed as
soon as reasonably practicable after the date on which the Company receives the
appropriately completed forms.
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Valuation Date. For purposes of this Appendix II, the balance
of a Participant's Accounts shall be determined as of the last completed
Valuation Date prior to the date on which the Company receives the
appropriately completed forms.
Loan Payments and Defaults. Principal and interest payments
on a Participant's loan shall be credited initially to the Participant's Loan
Account and shall be transferred as soon as reasonably practicable thereafter
to the Participant's other Accounts in the percentages specified by the
Participant under Section 8.4. Any loss caused by nonpayment or other default
on a Participant's loan obligations shall be borne solely by that Participant's
Accounts.
Loan Fee. Notwithstanding Section 13.4, the Company may
charge a reasonable loan set-up and servicing fee for administering a loan
under the Plan. Any such fee(s) may be deducted from the loan proceeds and/or
the Participant's Accounts.
Definitions.
(i) "Loan Account" shall mean the account
established pursuant to this Appendix II for the purpose of making Participant
loans and receiving loan repayments.
(ii) "Loan Fund" shall mean the fund invested
solely in promissory notes executed by Participants pursuant to this Appendix
II.
The capitalized terms used in this Appendix II, but not
defined herein, shall have the same meaning as such terms have
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when used in the Geneva Steel Management Employee Savings and Pension Plan (the
"Plan"), and the terms of the Plan are incorporated by reference into this
Appendix II.
Spousal Consent. No loan shall be granted pursuant to this
Appendix II to a married Participant unless the spouse of such Participant, in
accordance with the requirements of Subsection 10.7 of the Plan, and within the
90 day period before the loan is made, consents to the assignment of the Plan
Benefit as security for repayment of the loan, and any actions the Company
subsequently may take under this Appendix II to the Plan.
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<PAGE> 1
THE GENEVA STEEL
UNION EMPLOYEE SAVINGS AND PENSION PLAN
(As Amended and Restated January 1, 1995)
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TABLE OF CONTENTS
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ARTICLE 1. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-1
ARTICLE 2. ELIGIBILITY AND ENROLLMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-1
2.1 Eligible Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-1
2.2 Participation Requirements . . . . . . . . . . . . . . . . . . . . . . . . 2-1
2.3 Enrollment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-1
2.4 Rehired Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-1
2.5 Transferred Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-2
2.6 Suspension of Participation . . . . . . . . . . . . . . . . . . . . . . . . 2-2
2.7 Termination of Participation . . . . . . . . . . . . . . . . . . . . . . . 2-2
ARTICLE 3. PENSION CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-1
3.1 Amount of Pension Contributions . . . . . . . . . . . . . . . . . . . . . . 3-1
3.2 Allocation of Pension Contributions . . . . . . . . . . . . . . . . . . . . 3-1
ARTICLE 4. SALARY DEFERRALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-1
4.1 Amount of Salary Deferrals . . . . . . . . . . . . . . . . . . . . . . . . 4-1
4.2 Limitation on Salary Deferrals . . . . . . . . . . . . . . . . . . . . . . 4-1
4.3 Election to Contribute . . . . . . . . . . . . . . . . . . . . . . . . . . 4-2
4.4 Amendment of Prior Elections . . . . . . . . . . . . . . . . . . . . . . . 4-2
4.5 Voluntary Suspension of Contributions . . . . . . . . . . . . . . . . . . . 4-3
4.6 Return of Excess Salary Deferral Contributions . . . . . . . . . . . . . . 4-3
4.7 Investment of Contributions . . . . . . . . . . . . . . . . . . . . . . . . 4-3
ARTICLE 5. COMPANY MATCHING CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-1
5.1 Amount of Matching Contributions . . . . . . . . . . . . . . . . . . . . . 5-1
5.2 Matching Contributions in Form of Geneva Stock . . . . . . . . . . . . . . . 5-1
ARTICLE 6. CONTRIBUTION LIMITATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-1
6.1 Limitation on Contributions . . . . . . . . . . . . . . . . . . . . . . . . 6-1
6.2 Combined Limitation on Benefits and Contributions . . . . . . . . . . . . . 6-1
6.3 Excess Company Contributions and Forfeitures . . . . . . . . . . . . . . . 6-1
6.4 Annual Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-2
6.5 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-3
6.6 Employer Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-3
ARTICLE 7. PLAN INVESTMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-1
7.1 The Trust Fund; No Reversion . . . . . . . . . . . . . . . . . . . . . . . 7-1
7.2 Investment Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-2
7.3 Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-3
7.4 Investment of Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . 7-4
7.5 Transfers Among Accounts . . . . . . . . . . . . . . . . . . . . . . . . . 7-4
7.6 Allocation of Investment Income . . . . . . . . . . . . . . . . . . . . . . 7-5
7.7 Account Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-5
ARTICLE 8. VESTING AND FORFEITURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-1
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8.1 100 Percent Vesting . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-1
8.2 Vesting Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-1
8.3 Vesting After Prior Distributions . . . . . . . . . . . . . . . . . . . . . 8-2
8.4 Forfeitures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-2
ARTICLE 9. FORM OF PLAN BENEFIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-1
9.1 Amount of Plan Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . 9-1
9.2 Normal Form of Distribution . . . . . . . . . . . . . . . . . . . . . . . . 9-1
9.3 Optional Forms of Distribution . . . . . . . . . . . . . . . . . . . . . . 9-2
9.4 Time of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-2
9.5 Death of Participant Before Distribution . . . . . . . . . . . . . . . . . 9-3
9.6 Small Benefits:
Lump Sum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-4
9.7 Election of Forms of Distribution . . . . . . . . . . . . . . . . . . . . . 9-4
9.8 Information on Distribution Options . . . . . . . . . . . . . . . . . . . . 9-6
9.9 Information on Death Benefits . . . . . . . . . . . . . . . . . . . . . . . 9-6
9.10 Determination of Marital Status . . . . . . . . . . . . . . . . . . . . . . 9-7
9.11 Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-7
ARTICLE 10. CLAIMS PROCEDURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-1
10.1 Filing Claims for Benefits . . . . . . . . . . . . . . . . . . . . . . . 10-1
10.2 Denial of Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-1
ARTICLE 11. REVIEW PROCEDURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11-1
11.1 Appointment of Review Panel . . . . . . . . . . . . . . . . . . . . . . . 11-1
11.2 Right to Appeal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11-1
11.3 Form of Request for Review . . . . . . . . . . . . . . . . . . . . . . . 11-1
11.4 Time for Review Panel Action . . . . . . . . . . . . . . . . . . . . . . 11-2
11.5 Review Panel Decisions . . . . . . . . . . . . . . . . . . . . . . . . . 11-2
11.6 Rules and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . 11-2
11.7 Exhaustion of Remedies Required . . . . . . . . . . . . . . . . . . . . . 11-3
ARTICLE 12. MANAGEMENT OF ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12-1
12.1 Control and Management of Plan Assets . . . . . . . . . . . . . . . . . . 12-1
12.2 Trustee Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12-1
12.3 Independent Qualified Public Accountant . . . . . . . . . . . . . . . . . 12-2
12.4 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12-2
12.5 Benefit Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12-2
ARTICLE 13. ADMINISTRATION OF THE PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13-1
13.1 Plan Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . 13-1
13.2 Employment of Advisers . . . . . . . . . . . . . . . . . . . . . . . . . 13-1
13.3 Service in Several Fiduciary Capacities . . . . . . . . . . . . . . . . . 13-2
ARTICLE 14. AMENDMENT AND TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14-1
14.1 Right to Amend or Terminate . . . . . . . . . . . . . . . . . . . . . . . 14-1
14.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . 14-1
14.3 Allocation of Assets Upon Termination . . . . . . . . . . . . . . . . . . 14-1
ARTICLE 15. GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15-1
15.1 No Assignment of Property Rights . . . . . . . . . . . . . . . . . . . . 15-1
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15.2 Incompetence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15-1
15.3 Unclaimed Plan Benefits . . . . . . . . . . . . . . . . . . . . . . . . . 15-1
15.4 No Employment Rights . . . . . . . . . . . . . . . . . . . . . . . . . . 15-2
15.5 Merger, Consolidation and Transfer of Assets or Liabilities . . . . . . . 15-2
15.6 Tender Offers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15-3
15.7 Choice of Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15-4
ARTICLE 16. ROLLOVERS AND RELATED TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . 16-1
16.1 Rollover From Qualified Plan . . . . . . . . . . . . . . . . . . . . . . 16-1
16.2 Rollover From IRA . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-1
16.3 Mistaken Rollover . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-2
16.4 Direct Rollovers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-2
16.5 Transfer to Management Plan . . . . . . . . . . . . . . . . . . . . . . . 16-4
ARTICLE 17. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-1
17.1 Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-1
17.2 Affiliated Group, . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-1
17.3 Annuity Starting Date . . . . . . . . . . . . . . . . . . . . . . . . . . 17-2
17.4 Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-2
17.5 Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-2
17.6 Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-2
17.7 Company Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . 17-2
17.8 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-2
17.9 Disability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-3
17.10 Eligible Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-3
17.11 Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-3
17.12 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-3
17.13 Forfeiture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-3
17.14 Geneva Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-3
17.15 Geneva Stock Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-3
17.16 Investment Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-3
17.17 Investment Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-3
17.18 Matching Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . 17-4
17.19 Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-4
17.20 Participating Company . . . . . . . . . . . . . . . . . . . . . . . . . . 17-4
17.21 Pension Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . 17-4
17.22 Period of Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-4
(a) Period of Employment . . . . . . . . . . . . . . . . . . . . . . . . . 17-4
(b) Period for Which Back Pay Awarded . . . . . . . . . . . . . . . . . . 17-5
(c) Period Following Termination . . . . . . . . . . . . . . . . . . . . 17-6
(d) Service with U.S. Steel Corporation . . . . . . . . . . . . . . . . . 17-6
(e) Aggregation of Periods of Service . . . . . . . . . . . . . . . . . . 17-6
(i) Fractional Months . . . . . . . . . . . . . . . . . . . . . . . . 17-7
(ii) Permanent Service Break . . . . . . . . . . . . . . . . . . . . 17-7
17.23 Permanent Service Break . . . . . . . . . . . . . . . . . . . . . . . . . 17-7
17.24 Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-7
17.25 Plan Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-7
17.26 Plan Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-7
17.27 Qualified Joint and Survivor Annuity . . . . . . . . . . . . . . . . . . 17-8
17.29 Rollover Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . 17-8
17.30 Salary Deferral Contribution . . . . . . . . . . . . . . . . . . . . . . 17-8
</TABLE>
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<TABLE>
<CAPTION>
Page
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17.31 Trust Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-8
17.32 Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-8
17.33 Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-8
17.34 Valuation Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-8
ARTICLE 18. EXECUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18-1
APPENDIX I LIMITATIONS RELATING TO NONDISCRIMINATION TESTING . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Aggregate 401(m) Contributions . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Aggregate 401(m) Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Before-Tax Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.4 Combined limitation Formula . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.5 Combined Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.6 Excess Aggregate 401(m) Contributions . . . . . . . . . . . . . . . . . . . . . . 1
1.7 Excess Before-Tax Contributions . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.8 Highly Compensated Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.9 Non-Highly Compensated Employee . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.10 Qualified Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.11 Section 414(s) Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.12 Top-Paid Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE 2. BEFORE-TAX CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.1 Percentage Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.2 Reduction of Salary Deferral Contributions . . . . . . . . . . . . . . . . . . 10
2.3 Qualified Non-Elective Contributions . . . . . . . . . . . . . . . . . . . . . 10
2.4 Other Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE 3. MATCHING CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.1 Percentage Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.2 Reduction of Aggregate 401(m) Contributions . . . . . . . . . . . . . . . . . . 13
3.3 Other Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE 4. COMBINED LIMITATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.1 Combined Limitation Formula . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.2 Additional Reductions of Aggregate 401(m) Contributions . . . . . . . . . . . . 16
ARTICLE 5. DISTRIBUTIONS OF EXCESS BEFORE-TAX CONTRIBUTIONS AND EXCESS AGGREGATE 401(m)
CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.1 Time of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.2 Income Allocable to Excess Contributions . . . . . . . . . . . . . . . . . . . 18
APPENDIX I LIMITATIONS RELATING TO NONDISCRIMINATION TESTING
APPENDIX II PARTICIPANT LOANS
</TABLE>
-iv-
<PAGE> 6
THE GENEVA STEEL
UNION EMPLOYEE SAVINGS AND PENSION PLAN
(As Amended and Restated January 1, 1995)
ARTICLE 1. INTRODUCTION.
Geneva Steel established the Geneva Steel Union Pension Plan effective
September 1, 1987. A cash or deferred arrangement was added effective January
1, 1990 and the name of the Plan was changed to the Union Employee Savings and
Pension Plan. The Plan is now amended and restated in its entirety generally
effective January 1, 1995 to incorporate prior outstanding amendments and
amendments required by the Internal Revenue Service as a condition of issuing a
favorable determination letter that the Plan is qualified under section 401(a)
of the Code and to better reflect the administration of the Plan. Effective
March 1, 1996 a matching contribution will be included in the Plan.
The Plan actually constitutes two plans, one component of the Plan is
a profit-sharing plan with a cash or deferred arrangement while the other is a
money-purchase pension plan. Both components of the Plan are intended to
qualify under section 401(a) of the Code. The Plan is for that unit of
employees covered by the terms of the collective bargaining agreement in effect
from time to time and between the United Steelworkers of America and the
Company.
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<PAGE> 7
ARTICLE 2. ELIGIBILITY AND ENROLLMENT.
2.1 Eligible Employees. The term "Eligible Employee" shall mean
any Employee who is employed by a Participating Company, except an Employee who
is:
(a) A "leased employee" (within the meaning of section 414(n)
of the Code) with respect to the Participating Company;
(b) Not included in the bargaining unit of the Geneva Plant;
or
(c) A nonresident alien with respect to the United States;
provided that this Subsection (c) shall not apply to an Employee of a
Participating Company whom the Company has designated in writing as an
Eligible Employee.
An individual's status as an Eligible Employee shall be determined by the
Company, and such determination shall be conclusive and binding on all persons.
2.2 Participation Requirements. An Employee shall be entitled to
participate in the Plan on the date he or she first becomes an Eligible
Employee.
2.3 Enrollment. Participation in the Plan is automatic;
Participants are not required to make contributions to the Plan. Upon becoming
a Participant, each Eligible Employee shall designate a Beneficiary pursuant to
Section 9.11.
2.4 Rehired Employees. A former Participant who is rehired as an
Eligible Employee shall resume participation in the Plan on the date of
reemployment. Any other former Employee
2-1
<PAGE> 8
who is rehired and becomes an Eligible Employee shall commence participation in
the Plan upon becoming an Eligible Employee.
2.5 Transferred Employees. An Employee who is transferred to the
status of an Eligible Employee shall commence participation in the Plan on the
date of transfer.
2.6 Suspension of Participation. A Participant's participation in
the Plan shall be suspended for any period of time during which the
Participant:
(a) Neither receives nor is entitled to receive any
Compensation, including (without limitation) any leave of absence
without pay; or
(b) Does not qualify as an Eligible Employee but remains a
Participant.
A Participant shall not receive any allocation of Company Contributions with
respect to a period of suspended participation. A suspended Participant's
Accounts shall remain invested as a part of the Trust Fund and shall continue
to share in the gains, income, losses and investment expenses of the Trust
Fund.
2.7 Termination of Participation. A Participant's participation
in the Plan shall terminate when his or her entire Plan Benefit has been
distributed or on the date of his or her death, whichever occurs first. In the
case of a Participant who is not entitled to a Plan Benefit, participation in
the Plan shall terminate when the Participant ceases to be an Employee.
2-2
<PAGE> 9
ARTICLE 3. PENSION CONTRIBUTIONS.
3.1 Amount of Pension Contributions. For each calendar month in a
Plan Year, the Participating Companies shall make a Pension Contribution for
each Participant equal to 4% of each Participant's Compensation for the
calendar month. Effective March 1, 1995 the Pension Contribution for each
Participant shall be equal to 4 1/2% of each Participant's Compensation for the
calendar month, and effective March 1, 1996 the Pension Contribution shall be
equal to 5% of each Participant's Compensation for the calendar month.
3.2 Allocation of Pension Contributions. Each Pension
Contribution for a Plan Year shall be paid to the Trustee not later than the
earlier of the last date prescribed by law for filing the Company's federal
income tax return for the taxable year in which such Plan Year ends (including
extensions of such date) or the date eight and one-half months after the end of
such Plan Year. Subject to the contribution limitations described by Article
6, the Pension Contribution for a Plan Year shall be allocated to Participants
no later than the last day of the Plan Year, regardless of whether a
Participant was an Employee on the last day of the Plan Year. Forfeitures
shall be used to reduce Pension Contributions for the Plan Years in which they
arise.
Each Participant's share of Pension Contributions shall be credited to
his or her Pension Contribution Account.
3-1
<PAGE> 10
ARTICLE 4. SALARY DEFERRALS.
4.1 Amount of Salary Deferrals. A Participant who is not
suspended may elect to contribute Salary Deferrals to the Plan. The amount of
such Salary Deferrals for any period of participation may be equal to any whole
percentage of the Participant's Compensation for such period (subject to
Section 4.2) but shall not exceed 15% of the Participant's Compensation for
such period. In addition, the amount of a Participant's Salary Deferrals for
any calendar year shall not exceed $7,627, or such other amount as may be
adopted by the Commissioner of Internal Revenue to reflect a cost-of-living
adjustment. Salary Deferrals shall be made through periodic payroll deductions
from the Participant's Compensation or through such other method as may be
determined by the Company. For federal tax purposes (and, wherever permitted,
for state and local tax purposes), Salary Deferrals shall be deemed employer
contributions to the Plan, and a Participant's election to make Salary
Deferrals shall constitute an election to have the Participant's taxable
compensation reduced by the amount of the Salary Deferrals.
4.2 Limitation on Salary Deferrals. At any time, the Company (in
its sole discretion) may reduce the maximum rate at which any Participant may
make Salary Deferral Contributions to the Plan, or the Company may require that
any Participant discontinue all Salary Deferral Contributions, in order to
ensure that the actual deferral percentages meet one of the tests described in
section 401(k) of the Code. Any reduction or discontinuance of Salary Deferral
Contributions may be applied
4-1
<PAGE> 11
selectively to individual Participants or to particular classes of
Participants, as the Company may determine. Upon such date as the Company may
determine, this Section 4.2 shall automatically cease to apply until the
Company again determines that a reduction or discontinuance of Salary Deferral
Contributions is required for any Participants. In addition to requiring a
prospective reduction or discontinuance of Salary Deferral Contributions, the
Company may distribute to any Participant such portion of the Salary Deferral
Contributions that he or she already contributed for the Plan Year as the
Company determines to be necessary to ensure that the actual deferral
percentages meet one of the tests described in section 401(k) of the Code, as
provided in Appendix I.
4.3 Election to Contribute. A Participant who wishes to make
Salary Deferrals pursuant to Section 4.1 shall file with the Company the form
prescribed for this purpose. On such form, the Participant shall specify the
rate at which he or she wishes to contribute to the Plan. An election to make
Salary Deferrals may be made effective as of the first payday of the first
month of a calendar quarter, provided that notice is received by the Company no
later than the fifteenth day of the month immediately preceding such payday.
4.4 Amendment of Prior Elections. By filing the prescribed form
with the Company, a Participant who is making Salary Deferrals may change the
rate of such contributions to any other amount permitted under Section 4.1. An
election to change the rate of Salary Deferrals may be made effective as of
4-2
<PAGE> 12
the first payday of the first month of a calendar quarter by filing such form
on or before the fifteenth day of the month immediately preceding such payday.
4.5 Voluntary Suspension of Contributions. By filing the
prescribed form with the Company, a Participant may elect to suspend all Salary
Deferrals. Any such election shall be effective no later than the first payday
in any month upon receipt of such form on or before the fifteenth day of the
month immediately preceding such payday. A Participant who has suspended all
Salary Deferrals may elect to resume such contributions by following the
procedure prescribed by Section 4.3.
4.6 Return of Excess Salary Deferral Contributions. In the event
that a Participant made Salary Deferral Contributions under this Plan that,
when aggregated with deferrals under any other salary reduction arrangement
described in section 402(g)(3) of the Code, maintained by a member of the
Affiliated Group, exceed the $7,000 limit (or such larger amount as may be
adopted by the Commissioner of Internal Revenue to reflect a cost-of-living
adjustment) under Section 4.1 for any calendar year, his or her excess
deferrals attributable to this Plan and any income (or losses) allocable to
such excess deferrals shall be refunded to him or her not later than the April
15 next following the close of such calendar year.
In the event a Participant's elective deferrals for a calendar year
(including Salary Deferral Contributions under this Plan) to any and all plans
in which he was a participant exceed $7,000 (or such larger amount as may be
adopted by the
4-3
<PAGE> 13
Commissioner of Internal Revenue under section 402(g) of the Code), then such
Participant may designate all or a portion of such excess contributed to this
Plan as the amount to be refunded by April 15 of the following calendar year.
Such a refund shall be made only if the Participant notifies the Company in the
manner prescribed by the Company by the March 1 next following the calendar
year in which the excess deferrals were made.
4.7 Investment of Contributions. Upon withholding, all Salary
Deferrals shall be transferred to the Trustee for investment in the Trust Fund
within the Short-Term Income Fund pending investment as provided in Article 7
no later than 45 days after the date the Salary Deferrals were withheld.
Salary Deferrals shall be credited to the Participant's Salary Deferral
Account.
4-4
<PAGE> 14
ARTICLE 5. COMPANY MATCHING CONTRIBUTIONS.
5.1 Amount of Matching Contributions. Effective March 1, 1996,
each Participating Company may make a Matching Contribution for each
Participant equal to 25% of his or her Salary Deferral Contributions up to the
first 4% of Compensation for a Plan Year. Matching Contributions shall be paid
to the Trustee on a monthly basis as soon as reasonably practicable following
the close of each calendar month. Except as provided in Section 5.2 below,
Matching Contributions shall be allocated as of the end of each calendar month
to a Participant's Matching Contribution Account. Forfeitures that arise
during a Plan Year that are attributable to Matching Contributions shall be
used to reduce Matching Contributions for the Plan Years in which they arise.
Matching Contributions can be reduced and/or forfeited in accordance with
Appendix I.
5.2 Matching Contributions in Form of Geneva Stock. Effective
March 1, 1996, the Company may determine that all or a portion of a Matching
Contribution be paid in the form of Geneva Stock. For purposes of determining
the amount of a Participating Company's deduction under section 404 of the
Code, shares of Geneva Stock so contributed shall be valued at the closing
price of Geneva Stock as quoted on the New York Stock Exchange as of the end of
the calendar month such shares are to be allocated. Participating Company
contributions allocated in the form of shares of Geneva Stock shall be valued
for allocation purposes on the basis of the closing price of Geneva Stock as
quoted on the New York Stock Exchange as of the end of
5-1
<PAGE> 15
the calendar month such shares are to be allocated. Matching Contributions
made in the form of Geneva Stock shall be allocated as of the end of each
calendar month to a Participant's Geneva Stock Account. Forfeitures that arise
during a Plan Year that are attributable to such Matching Contributions shall
be used to reduce Matching Contributions for the Plan Years in which they
arise. Matching Contributions can be reduced and/or forfeited in accordance
with Appendix I.
5-2
<PAGE> 16
ARTICLE 6. CONTRIBUTION LIMITATIONS.
6.1 Limitation on Contributions. The Annual Additions allocated
or attributed to a Participant for any Plan Year shall not exceed the lesser of
the following:
(a) $30,000 (or, if greater, 25% of the dollar limitation in
effect under Code section 415(b)(1)(A)); or
(b) 25% of the Participant's Compensation for such year.
If a Participant's Annual Additions would exceed the foregoing
limitation, then such Annual Additions shall be reduced by reducing
the components thereof as necessary in the order in which they are
listed in Section 6.4.
6.2 Combined Limitation on Benefits and Contributions. The sum of
a Participant's defined-benefit plan fraction and his or her
defined-contribution plan fraction shall not exceed 1.0 with respect to any
Plan Year. For purposes of this Section 6.2, the terms "defined- benefit plan
fraction" and "defined-contribution plan fraction" shall have the meaning given
to such terms by section 415(e) of the Code and the regulations thereunder. If
a Participant would exceed the foregoing limitation, then such benefits under
any qualified defined-benefit plan that may be maintained by the Employer Group
shall be reduced as necessary to allow his or her Annual Additions to equal the
maximum permitted by Section 6.1.
6.3 Excess Company Contributions and Forfeitures. If the amount
of the Company Contributions and Forfeitures allocated or attributed to a
Participant for any Plan Year must be reduced to
6-1
<PAGE> 17
meet the limitation described in Section 6.1, then the amount of the reduction
shall be applied to reduce the total amount that the Company otherwise would
contribute for such year pursuant to Article 3. If the amount that the Company
may contribute is thereby reduced to zero and if there are Forfeitures that
still cannot be allocated to any Participant because of the limitation
described in Section 6.1, then such Forfeitures shall be credited to an
excess-forfeiture account established under this Section 6.3. Any gains,
income or losses shall also be credited to such account. All amounts credited
to such account shall be treated as allocable Forfeitures for successive Plan
Years and shall be allocated annually pursuant to Section 3.2 until such
account is exhausted. No Company Contributions that would give rise to Annual
Additions shall be made as long as any amount remains in such account.
6.4 Annual Additions. For purposes of this Article 6, a
Participant's "Annual Additions" for a Plan Year shall be equal to the sum of
the following:
(a) The amount of Company Contributions allocated to the
Participant's Accounts under this Plan as of any date within such
year;
(b) The amount of Salary Deferral Contributions allocated to
the Participant's Account under this Plan as of any date within such
year;
(c) The amount of employer contributions and forfeitures
allocated to the Participant under any qualified defined-contribution
plan that may be
6-2
<PAGE> 18
maintained by the Employer Group, other than this Plan, as of any date
within such year; and
(d) The aggregate employee contributions that the Participant
contributes during such year to all qualified retirement plans
maintained by the Employer Group.
6.5 Compensation. For purposes of this Article 6, the term
"Compensation" shall be determined in accordance with sections 401(a)(17) and
415(c) of the Code.
6.6 Employer Group. For purposes of this Article 6, the term
"Employer Group" shall mean any group of one or more chains of corporations
connected through stock ownership with the Company, if:
(a) Stock possessing more than 50 percent of the total
combined voting power of all classes of stock entitled to vote or more
than 50 percent of the total value of shares of all classes of stock
of each of the corporations, except the Company, is owned by one or
more of the other corporations; and
(b) The Company owns stock possessing more than 50 percent of
the total combined voting power of all classes of stock entitled to
vote or more than 50 percent of the total value of shares of all
classes of stock of at least one of the other corporations excluding,
in computing such voting power or value, stock owned directly by such
other corporations.
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<PAGE> 19
ARTICLE 7. PLAN INVESTMENTS.
7.1 The Trust Fund; No Reversion. The Trust Fund shall be
comprised of the three Investment Funds described in Section 7.2. Except as
provided in Subsections (a), (b) and (c) below, the assets of the Plan shall
never inure to the benefit of any Participating Company and shall be held for
the exclusive purpose of providing benefits to Participants or their
Beneficiaries.
(a) In the case of a Company Contribution which was made by
virtue of a mistake of fact, this Section 7.1 shall not prohibit the
return of such contribution to the appropriate Participating Company
within 12 months after the payment of such contribution.
(b) All Company Contributions are conditioned upon the
deductibility thereof under section 404 of the Code. To the extent
that a deduction is disallowed for a Company Contribution, this
Section 7.1 shall not prohibit the return of such contribution (to the
extent disallowed) to the appropriate Participating Company within 12
months after the disallowance of the deduction.
(c) In the event that Company Contributions are returned
pursuant to sections (a) or (b) above, earnings attributable to such
contributions shall not be returned to the appropriate Participating
Company but losses attributable to such contributions shall reduce the
amount returned to the Participating Company.
7-1
<PAGE> 20
7.2 Investment Funds. The Trust Fund established under the Plan
shall consist of the Balanced Fund, the Variable Fund and the Short-Term
Income Fund. Effective March 1, 1996, the Trust Fund shall include the Geneva
Stock Fund. The Company may change the available Investment Funds at any time
in its sole discretion by adding Funds, removing Funds, or changing Funds.
Such Funds shall be invested and reinvested as follows:
(a) The Balanced Fund shall be invested in those investments
selected by the Company that are designed to achieve a balance between
capital appreciation and preservation of capital and generation of
income.
(b) The Variable Fund shall be invested in a mutual fund (or
funds) selected by the Company that invests primarily in equity
securities or in such other types of equity investments as are
authorized by the Trust Agreement.
(c) The Short-Term Income Fund shall be invested in a money
market fund or funds selected by the Company, or such other short term
fixed-income investments as are authorized by the Trust Agreement.
(d) The Geneva Stock Fund shall be invested primarily in
Geneva Stock, except that small amounts in the Stock Fund may be
invested in interest-bearing short-term debt obligations, money market
instruments, savings accounts or similar investments. The Geneva
Stock Fund shall consist of all Stock Fund investments held by the
Trustee and all cash held by the Trustee
7-2
<PAGE> 21
which is derived from dividends on Geneva Stock, interest and other
income from Stock Fund investments, Company Contributions to be
invested in the Geneva Stock Fund and proceeds from sales of Geneva
Stock and Stock Fund investments.
7.3 Accounts. Any or all of the following Accounts shall be
maintained, as necessary, for each Participant:
(a) A Participant's Pension Contribution Account shall
consist of the Pension Contributions allocated to the Participant
pursuant to Section 3.2, and the earnings, gains and losses allocable
thereto.
(b) A Participant's Salary Deferral Account shall consist of
any Salary Deferral Contributions that the Participant has elected to
contribute to the Plan pursuant to Section 4.1, and the earnings,
gains and losses allocable thereto.
(c) A Participant's Matching Contribution Account shall
consist of any Matching Contributions made on behalf of the
Participant under Section 5.1 that are not made or invested in Geneva
Stock, any Forfeitures attributable to such Matching Contributions
that are allocated to the Participant as Matching Contributions and
the earnings, gains and losses allocable thereto and any cash
dividends on Geneva Stock.
(d) A Participant's Geneva Stock Account shall consist of any
Matching Contributions made or invested
7-3
<PAGE> 22
in Geneva Stock, any Forfeitures attributable to such Matching
Contributions that are allocated to the Participant as Matching
Contributions and the earnings, gains and losses allocable thereto
excluding cash dividends on Geneva Stock.
(e) A Participant's Rollover Account shall consist of any
Rollover Contributions made by the Participant pursuant to Article 16
and the earnings, gains and losses allocable thereto.
7.4 Investment of Accounts. A Participant's Pension Contribution
Account shall be invested solely in the Balanced Fund. A Participant's Geneva
Stock Account shall be invested solely in the Geneva Stock Fund. A
Participant's Salary Deferral Account, Matching Contribution Account and
Rollover Account, if any, shall be apportioned among one or more of the
Short-Term Income Fund and the Balanced Fund and the Variable Fund in such
whole percentages as the Participant may specify on the prescribed election
form. If the Company receives no valid investment directions from the
Participant, such Accounts shall be invested entirely in the Short-Term Income
Fund. As of the first payday in any calendar quarter, a Participant may change
the investment instructions with respect to future contributions. Any such
change shall be made by properly completing and filing the prescribed form with
the Company no later than the fifteenth day of the month immediately preceding
the first day of the calendar quarter in which the change is to occur.
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<PAGE> 23
7.5 Transfers Among Accounts. Once each calendar quarter, except
for his or her Pension Contribution Account and Geneva Stock Account, a
Participant may elect to transfer all or any part of his or her Accounts to one
or more of the Investment Funds by properly completing and filing the
prescribed form with the Company no later than the fifteenth day of the month
immediately preceding the first day of the quarter in which the transfer is to
occur. Any such transfer shall apply as of the first day of the next following
calendar quarter and shall be made as soon as reasonably practicable after such
date.
7.6 Allocation of Investment Income. Each Account shall be
revalued at fair market value and adjusted as of the last day of each calendar
quarter, adjusted for contributions, distributions and other items for the
quarter, to reflect the Participant's share of any realized or unrealized
investment income, gains, losses and investment expenses of the Fund or Funds
in which such Account was invested that have accrued during the quarter. A
Participant's share shall be proportionate to the ratio that the adjusted
balance in his or her Account bears to the total adjusted balances of all
Accounts invested in the Funds determined as of the end of the calendar
quarter.
7.7 Account Statements. Within 60 days after the last day of each
calendar quarter (and after such other dates as the Company may determine),
there shall be prepared and delivered to each Participant a written statement
showing the fair market value of his or her Salary Deferral Account as of the
applicable date. Pension statements are prepared and delivered annually.
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<PAGE> 24
The fair market value of a share of Geneva Stock shall be the closing price of
such share as quoted on the New York Stock Exchange as of the applicable date.
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<PAGE> 25
ARTICLE 8. VESTING AND FORFEITURES.
8.1 100 Percent Vesting. A Participant shall always be 100%
vested in his or her Salary Deferral Account and Rollover Account. A
Participant's interest in his or her Pension Contribution Account, Geneva Stock
Account and Matching Contribution Account shall become 100% vested when the
earliest of the following events occurs:
(a) The Participant ceases to be an Employee by reason of
Disability;
(b) The Participant, before ceasing to be an Employee,
attains the age of 62 (the normal retirement age under the Plan);
(c) The Participant dies while employed as an Employee;
(d) The Plan is terminated, or the Plan undergoes a partial
termination which affects the Participant (including Participants who,
on the date the Plan is terminated, have not yet incurred a Permanent
Service Break), before the Participant ceases to be an Employee; or
(e) Company Contributions are completely discontinued.
8.2 Vesting Schedule. Before a Participant becomes 100% vested
under Section 8.1, the Participant shall be vested in a percentage of each of
his or her Pension Contribution Account, Geneva Stock Account and Matching
Contribution Account determined from the following schedule:
8-1
<PAGE> 26
<TABLE>
<CAPTION>
Period of Service Vested Percentage of
Completed by Participant Participant's Accounts
------------------------ ----------------------
<S> <C>
Less than 12 months 0%
12 months to 24 months 20%
24 months to 36 months 40%
36 months to 48 months 60%
48 months to 60 months 80%
60 or more months 100%
</TABLE>
8.3 Vesting After Prior Distributions. Section 8.2 shall be
applied as set forth in this Section 8.3 in the case of any Participant who
received one or more prior distributions from his or her Pension Contribution
Account, who thereafter has not incurred a Permanent Service Break, and who is
not yet 100% vested in the Account. The vested portion of such Participant's
Account shall be determined in two steps. First, the Participant's vested
percentage under Section 8.2 shall be applied to the sum of (a) the value of
the Account plus (b) the aggregate amount of the Participant's prior
distributions from such Account. Then, the aggregate amount of the
Participant's prior distributions from such Account shall be subtracted.
8.4 Forfeitures. If a Participant ceases to be an Employee at a
time when he or she is less than 100% vested, then the nonvested portion of his
or her Accounts shall constitute a Forfeiture for the Plan Year during which
the earlier of the following occurs: (a) the Participant receives (or is deemed
to receive in the case of a nonvested Participant) a distribution from the Plan
in a single lump sum; or (b) the Participant incurs a Permanent Service Break.
The Forfeiture shall be treated as stated in Sections 3.2, 5.1 and 5.2. If the
Participant is rehired as an Employee before incurring a
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<PAGE> 27
Permanent Service Break, then the principal amount of the Forfeiture shall be
reinstated to his or her Accounts as of the close of the Plan Year in which the
rehire occurs. The appropriate Participating Company shall make a special
contribution in the amount required to reinstate the Forfeiture, to the extent
any suspense account and current Forfeitures are not sufficient. In no event
shall a Participant's Forfeitures be reinstated if he or she is not rehired as
an Employee before incurring a Permanent Service Break.
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<PAGE> 28
ARTICLE 9. FORM OF PLAN BENEFIT.
9.1 Amount of Plan Benefit. A Participant's Plan Benefit shall
consist of the Participant's entire vested interest in his or her Accounts.
The value of a Plan Benefit (including the number of shares of Geneva Stock)
shall be determined as of the Valuation Date immediately preceding the
distribution date for such Plan Benefit.
9.2 Normal Form of Distribution. A Participant's Plan Benefit
shall be distributed in the form of a nontransferable annuity contract
purchased from an insurance company selected by the Company, unless such
Participant has elected the optional form of distribution described in Section
9.3. The Participant's entire Plan Benefit shall be distributed in
substantially nonincreasing payments over a period not exceeding the greater of
(a) the Participant's own lifetime or (b) the lifetimes of the Participant and
his or her spouse. The forms of annuity contract available under the Plan are
a Qualified Joint and Survivor Annuity and a single-life annuity. In the case
of a married Participant who is living when the annuity is scheduled to
commence, the annuity contract shall provide for payments in the form of the
Qualified Joint and Survivor Annuity. In the case of an unmarried Participant,
the annuity contract shall provide for payments in the form of the single-life
annuity. Unless the Participant otherwise elects, he or she will begin to
receive the Plan Benefit not later than the 60th day after the latest of the of
the close of the Plan Year in which the Participant attains age 62, the tenth
anniversary of the
9-1
<PAGE> 29
Participant's commencement of participation in the Plan occurs or the
Participant ceases to be an employee.
9.3 Optional Forms of Distribution. A Participant or surviving
spouse may elect to have his or her Plan Benefit distributed in the form of a
single lump sum in cash. If Geneva Stock is liquidated for purposes of a cash
distribution the cash attributable to the shares will equal the proceeds from
the sale. A Participant or surviving spouse may also elect to have that
portion of his or her Plan Benefits attributable to the Geneva Stock Fund paid
in whole shares of Geneva Stock, plus a check for any fractional shares. The
Trustee in its discretion may purchase Geneva Stock that was distributed to a
Participant or Beneficiary at the closing price of Geneva Stock as quoted on
the New York Stock Exchange for the business day on which the Trustee receives
a written offer to sell. No commission shall be paid in connection with any
such purchase.
9.4 Time of Distribution. A Participant who is no longer an
Employee and is entitled to receive a Plan Benefit shall receive his or her
Plan Benefit as soon as reasonably practicable after the distribution date
elected by the Participant. The Participant shall elect a distribution date by
completing, signing and filing the prescribed distribution election form with
the Company. In no event shall a Participant's Plan Benefit be distributed
later than the April 1 next following the later of the calendar year in which
(a) the Participant attained age 70 1/2, if he or she remains an Employee on or
after age 62 or (b) the Participant attained age 62 if the Participant ceased
to
9-2
<PAGE> 30
be an Employee on or before that date. Unless the Participant otherwise
elects, he or she will begin to receive the Plan Benefit not later than the
60th day after the latest of the close of the Plan year in which the
Participant attains age 62, completes 10 years of participation in the Plan, or
ceases to be an Employee.
9.5 Death of Participant Before Distribution. If a Participant
dies before receiving his or her Plan Benefit, then such Participant's
Beneficiary shall be entitled to receive such Plan Benefit pursuant to this
Section 9.5. (Section 9.11 provides that the surviving spouse of a married
Participant shall be his or her Beneficiary, unless such Participant, with the
spouse's consent, has otherwise elected prior to his or her death.)
If the Beneficiary is the Participant's surviving spouse, the Plan
Benefit shall be distributed in the form of a nontransferable annuity contract
purchased from an insurance company selected by the Company, unless such
surviving spouse has elected the optional form of distribution described in
Section 9.3. Under the annuity contract, the Plan Benefit shall be distributed
in substantially nonincreasing payments over a period not exceeding the
surviving spouse's lifetime and commencing as soon as reasonably practicable
after the date of the Participant's death or, if later, the date the
Participant would have attained age 62. At any time prior to the date that the
surviving spouse's Plan Benefit is to be distributed pursuant to the preceding
sentence, the surviving spouse may elect, by
9-3
<PAGE> 31
filing the prescribed form with the Company, (a) to have his or her Plan
Benefit distributed in the optional form of distribution described in Section
9.3, (b) to have his or her Plan Benefit distributed at a specified time
earlier than that provided in the preceding sentence or (c) both. If the
Participant's Beneficiary is not his or her surviving spouse, the Plan Benefit
shall be paid in a single lump sum in cash not later than 12 months after the
date of the Participant's death.
9.6 Small Benefits: Lump Sum. Any other provision of this
Article 9 notwithstanding, if the value of a Participant's entire Plan Benefit
equals $3,500 or less, then the Plan Benefit shall be paid as soon as
reasonably practicable to such Participant (or, in the case of his or her
death, to the Beneficiary), in a single lump sum in cash. If a Participant's
entire Plan Benefit exceeds $3,500 and the Participant fails to consent to an
immediate distribution, then the Participant's Plan Benefit shall not be paid
before the date on which the Participant attains age 62.
9.7 Election of Forms of Distribution. A Participant's election
of an optional form of distribution under Section 9.3 shall be made on the
prescribed form and filed with the Company. Such election may be made only
during an election period consisting of the 90 consecutive days ending on the
Participant's Annuity Starting Date. A Participant may revoke any election of
an optional form of distribution (without the consent of the Company) at any
time prior to the end of such election period. If the Participant, having
revoked a prior election, does not
9-4
<PAGE> 32
make another election within such election period, then his or her Plan Benefit
shall be distributed in the form specified in Section 9.2. Any election
involving a waiver of the Qualified Joint and Survivor Annuity shall not take
effect unless the Participant's spouse consents in writing to the election
during such election period. The spouse's consent shall acknowledge the effect
of the Participant's election and shall be witnesses by a notary public or, if
permitted by the Company, by a representative of the Plan. A consent, once
given by a spouse, shall not be revocable by such spouse. The spouse's consent
shall not be required of the Participant if the Participant (a) establishes to
the Company's satisfaction that the spouse's consent cannot be obtained because
the spouse cannot be located or because of other reasons deemed acceptable
under applicable regulations and (b) agrees in writing that if the Company is
compelled by a court of competent jurisdiction or other authority to pay all or
any portion of the Participant's Plan Benefit to or on behalf of such spouse,
the Participant will indemnify the Company by paying to the Company, upon
written demand, an amount equal to such payment, together with reasonable
attorneys' fees and expenses. The Company may, in its sole discretion, waive
the indemnification requirement. A Participant may elect, with his or her
spouse's consent, not to take the qualified preretirement survivor annuity
described in Section 9.5 from the first day of the first Plan Year in which the
Participant attains age 35 until the Participant's death.
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<PAGE> 33
9.8 Information on Distribution Options. Within a reasonable
period before the Annuity Starting Date, the Company shall make available to
each married Participant a written explanation of the following:
(a) The terms and conditions of the Qualified Joint and
Survivor Annuity;
(b) The Participant's right to elect a form of benefit other
than a Qualified Joint and Survivor Annuity pursuant to Section 9.7;
(c) The rights of the Participant's spouse under Section 9.7;
(d) The Participant's right to revoke an election of a form
of benefit pursuant to Section 9.7; and
(e) The effect of an election or revocation described in
Subsection (b) or (d) above.
9.9 Information on Death Benefits. The Company shall provide to
each married Participant a written explanation of the death benefit for a
surviving spouse described in Section 9.5 comparable to the information on
distribution options described in Section 9.8. Such explanation shall be
provided within whichever of the following periods ends last:
(a) The three-year period beginning with the first day of the
Plan Year in which the Participant attains age 32;
(b) The three-year period beginning with the first day of the
first Plan Year for which the individual is a Participant; or
9-6
<PAGE> 34
(c) The one-year period beginning on the date when the
Participant ceases to be an Employee, in the case of a Participant who
ceases to be an Employee before attaining age 32.
9.10 Determination of Marital Status. Whether a Participant is
married shall be determined by the Company as of his or her Annuity Starting
Date.
9.11 Beneficiary. A Participant's Beneficiary shall be the
person(s) so designated by such Participant. If the Participant has not made
an effective designation of a Beneficiary or if the named Beneficiary is not
living when a distribution is to be made, then (a) the then living spouse of
the deceased Participant shall be the Beneficiary or (b) if none, the then
living children of the deceased Participant shall be the Beneficiaries in equal
shares or (c) if none, the estate of the Participant shall be the Beneficiary.
The Participant may change his or her designation of a Beneficiary from time to
time. Any designation of a Beneficiary (or an amendment or revocation thereof)
shall be effective only if it is made in writing on the prescribed form and is
received by the Company prior to the Participant's death. Any other provision
of this Section 9.11 notwithstanding, in the case of a married Participant, any
designation of a person other than his or her spouse as Beneficiary shall be
effective only if the spouse consents in writing to the designation. The
spouse's consent shall be witnessed by a notary public or, if permitted by the
Company, by a representative of the Plan. A consent to a designation of a
9-7
<PAGE> 35
particular Beneficiary, once given by the spouse, shall not be revocable by
such spouse. The spouse's consent shall not be required if the Participant (a)
establishes to the Company's satisfaction that the spouse's consent cannot be
obtained because the spouse cannot be located or because of other reasons
deemed acceptable under applicable regulations and (b) agrees in writing that
if the Company is compelled by a court of competent jurisdiction or other
authority to pay all or any portion of the Participant's Plan Benefit to or on
behalf of such spouse, the Participant will indemnify the Company by paying to
the Company, upon written demand, an amount equal to such payment, together
with reasonable attorneys' fees and expenses. The Company may, in its sole
discretion, waive the indemnification requirement.
9-8
<PAGE> 36
ARTICLE 10. CLAIMS PROCEDURE.
10.1 Filing Claims for Benefits. Claims for benefits under the
Plan shall be made in writing on the prescribed form and shall be signed by the
Participant or by his or her Beneficiary, as the case may be. All claims for
or inquiries concerning benefits under the Plan shall be submitted to the
Company at its U.S. headquarters.
10.2 Denial of Claims. In the event that any claim for benefits is
denied in whole or in part, the Company shall notify the applicant in writing
of such denial and shall advise the applicant of the right to a review thereof.
Such written notice shall set forth, in a manner calculated to be understood by
the applicant, specific reasons for the denial, specific references to the Plan
provisions on which the denial is based, a description of any information or
material necessary for the applicant to perfect the application, an explanation
of why such material is necessary and an explanation of the Plan's review
procedure. Such written notice shall be given to the applicant within 90 days
after the Company received the claim in proper form, except that such 90-day
period may be extended for an additional 90 days if special circumstances
exist. The Company shall advise the applicant of such circumstances in writing
within the first 90-day period. If the Company does not provide the applicant
with written notice of its decision within the applicable time period, the
applicant's claim shall be deemed to have been denied as of the last day of the
applicable time period.
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<PAGE> 37
ARTICLE 11. REVIEW PROCEDURE.
11.1 Appointment of Review Panel. The Company from time to time
shall appoint a Review Panel consisting of three or more individuals, who may
(but need not) be employees of the Company; provided, however, one member shall
be an Eligible Employee. The Review Panel shall be the named fiduciary which
has the authority to act with respect to appeals from denials of claims under
the Plan.
11.2 Right to Appeal. Any applicant whose claim for benefits was
denied in whole or in part (or such applicant's authorized representative) may
appeal from the denial by submitting to the Review Panel a written request for
a review of the claim within three months after receiving written notice of the
denial, or within three months after the date when a claim may be deemed to
have been denied. The Company shall give the applicant (or the applicant's
authorized representative) an opportunity to review pertinent materials, other
than legally privileged documents, in preparing such request for review.
11.3 Form of Request for Review. The request for review shall be
made in writing and shall be addressed to the Review Panel in care of the
Company at its U.S. headquarters. The request for review shall set forth all
of the grounds on which it is based, all facts in support thereof and any other
matters which the applicant deems pertinent. The Review Panel may require the
applicant to submit such additional facts, documents or other material as the
Review Panel may deem necessary or appropriate in making its review.
11-1
<PAGE> 38
11.4 Time for Review Panel Action. The Review Panel shall act upon
each request for review within 60 days after receipt thereof, unless special
circumstances require further time for processing and the applicant is advised
of the extension. In no event shall the decision on review be rendered more
than 120 days after the Review Panel received the request for review in proper
form.
11.5 Review Panel Decisions. The Review Panel shall give prompt
written notice of its decision to the applicant and to the Company. In the
event that the Review Panel confirms the denial of the claim for benefits in
whole or in part, such notice shall set forth, in a manner calculated to be
understood by the applicant, the specific reasons for such denial and specific
references to the Plan provisions on which the decision was based. In the
event that the Review Panel determines that the claim for benefits should not
have been denied in whole or in part, the Company shall take appropriate
remedial action as soon as reasonably practicable after receiving notice of the
Review Panel's decision.
11.6 Rules and Procedures. The Review Panel shall establish such
rules, procedures and interpretations, consistent with the Plan and ERISA, as
it may deem necessary or appropriate in carrying out its responsibilities under
this Article 11. The Review Panel may require an applicant who wishes to
submit additional information in connection with an appeal from a denial of
benefits to do so at his or her own expense.
11-2
<PAGE> 39
11.7 Exhaustion of Remedies Required. No legal or equitable action
for benefits under the Plan shall be brought unless and until the applicant (a)
has submitted a written claim for benefits in accordance with Article 10, (b)
has been notified that the claim is denied, (c) has filed a written request for
a review of the claim in accordance with this Article 11 and (d) has been
notified in writing that the Review Panel has affirmed the denial of the claim;
provided, however, that such an action may be brought after the Company or the
Review Panel has failed to act on the claim within the time prescribed in
Sections 10.2 and 11.4, respectively.
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<PAGE> 40
ARTICLE 12. MANAGEMENT OF ASSETS.
12.1 Control and Management of Plan Assets. The Company is a named
fiduciary with respect to control over and management of the assets of the
Plan, but only to the extent of (a) having the duty to appoint one or more
trustees to hold all assets of the Plan in trust, (b) having the authority to
remove any trustee so appointed and to appoint one or more successor trustees,
(c) having the duty to enter into a trust agreement with each trustee or
successor trustee so appointed, (d) have the authority to select investments
for the Investment Funds, and (e) having the authority to appoint one or more
insurance companies that are qualified to do business in at least one state to
hold assets of the Plan and to enter into a contract with each insurance
company that it appoints (or to direct the Trustee to enter into such
contract). The Trust Agreement is hereby incorporated herein as a part of the
Plan.
12.2 Trustee Duties. The Trustee shall have the exclusive
authority and discretion to control and manage the assets of the Plan it holds
in trust, except to the extent that the Plan prescribes how such assets shall
be invested or the Company directs how such assets shall be invested. The
Trustee shall be solely responsible for diversifying, in accordance with
section 404(a)(1)(C) of ERISA, the investment of the assets of the Plan
assigned to it by the Company, except to the extent that the Plan prescribes or
the Company directs how such assets shall be invested.
12-1
<PAGE> 41
12.3 Independent Qualified Public Accountant. The Company shall
engage an independent qualified public accountant to conduct such examinations
and to express such opinions as may be required by section 103(a)(3) of ERISA.
The Company in its discretion may remove and discharge the person so engaged,
in which event it shall appoint a successor independent qualified public
accountant to perform such examinations and express such opinions.
12.4 Expenses. All expenses of the Plan and the Trust Fund (except
investment expenses) shall be paid by the Company.
12.5 Benefit Payments. All benefits, payable pursuant to the Plan
shall be paid by the Trustee out of the Trust Fund pursuant to the directions
of the Company and the terms of the Trust Agreement.
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<PAGE> 42
ARTICLE 13. ADMINISTRATION OF THE PLAN.
13.1 Plan Administration. The Company is the named fiduciary with
respect to the operation and administration of the Plan, and the Company is the
"administrator" and "plan sponsor" of the Plan (as such terms are used in
ERISA). The Company shall make such rules, interpretations and computations
and shall take such other actions to administer the Plan as it may deem
appropriate. Such rules, interpretations, computations and actions shall be
conclusive and binding on all persons. In administering the Plan, the Company
(a) shall act in a nondiscriminatory manner to the extent required by section
401(a) and related sections of the Code and (b) shall at all times discharge
its duties in accordance with the standards set forth in section 404(a)(1) of
ERISA.
13.2 Employment of Advisers. The Company may retain such
attorneys, actuaries, accountants, consultants or other persons to render
advice or to perform services with regard to its responsibilities under the
Plan as it shall determine to be necessary or desirable. The Company may
designate by written instrument (signed by both parties) one or more persons to
carry out, where appropriate, fiduciary responsibilities under the Plan. The
Company's duties and responsibilities under the Plan which have not been
delegated to other fiduciaries pursuant to the preceding sentence shall be
carried out by its directors, officers and employees, acting on behalf and in
the name of the Company in their capacities as directors, officers and
employees, and not as individual fiduciaries.
13-1
<PAGE> 43
13.3 Service in Several Fiduciary Capacities. Nothing herein shall
prohibit any person or group of persons from serving in more than one fiduciary
capacity with respect to the Plan (including service both as the administrator
and as a trustee of the Plan).
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<PAGE> 44
ARTICLE 14. AMENDMENT AND TERMINATION.
14.1 Right to Amend or Terminate. The Company reserves the right
to amend or terminate the Plan or to discontinue the Company contributions at
any time and for any reason by resolution of the Company's board of directors
or the board's proper delegatee. No amendment of the Plan, however, shall,
except to the extent permitted by ERISA or the Code (a) reduce the benefit of
any Participant accrued under the Plan prior to the date when such amendment is
adopted or (b) divert any part of the Plan's assets to purposes other than the
exclusive purpose of providing benefits to the Participants and Beneficiaries
who have an interest in the Plan and of defraying the reasonable expenses of
administering the Plan.
14.2 Effect of Termination. Upon termination of the Plan, no
assets of the Plan shall revert to the Participating Companies or be used for
or diverted to purposes other than the exclusive purpose of providing benefits
to Participants and Beneficiaries and of defraying the reasonable expenses of
termination (except as otherwise provided in Section 7.1). Upon termination of
the Plan, the Trust Fund shall continue in existence until it has been
distributed entirely as provided in Section 14.3. Notwithstanding the
foregoing, distributions from the 401(k) portion of the Plan will be made in
accordance with the requirements of Treasury Regulation section
1.401(k)-1(d)(3).
14.3 Allocation of Assets Upon Termination. Upon termination of
the Plan, the Trust Fund shall continue in existence until the Accounts of each
Participant have been distributed to
14-1
<PAGE> 45
such Participant (or to such Participant's Beneficiary) as provided in Article
9; provided, however, that the assets of the Plan shall be allocated in
accordance with the requirements of section 403(d)(l) of ERISA.
14-2
<PAGE> 46
ARTICLE 15. GENERAL PROVISIONS.
15.1 No Assignment of Property Rights. The interest or property
rights of any person in the Plan, in any Account or in any payment to be made
under the Plan shall not be optioned, anticipated, assigned (either at law or
in equity), alienated or made subject to attachment, garnishment, execution,
levy, other legal or equitable process, or bankruptcy. Any act in violation of
this Section 15.1, whether voluntary or involuntary, shall be void. This
Section 15.1 shall not apply with respect to qualified domestic relations
orders described in section 414(p) of the Code. The Company shall establish
reasonable procedures to determine the qualified status of domestic relations
orders and to administer distributions under qualified domestic relations
orders. The Company shall make payment to an "alternate payee" (as defined in
Code section 414(p)) pursuant to a qualified domestic relations order even if
the Participant has not attained the "earliest retirement age" (within the
meaning of Code section 414(p)).
15.2 Incompetence. If, in the opinion of the Company, any
individual becomes unable to handle properly any amounts payable to such
individual under the Plan, then the Company may make such arrangements for
payment on such individual's behalf as it determines will be beneficial to such
individual, including (without limitation) payment to such individual's
guardian, conservator, spouse or dependent.
15.3 Unclaimed Plan Benefits. If any Plan Benefit, or a portion
thereof, would be distributable under the Plan but the
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<PAGE> 47
Company is unable to locate the Participant or Beneficiary to whom the
distribution is payable for three consecutive Plan Years, then the
Participant's Accounts may be closed after the third consecutive Plan Year
during which such distribution is payable but the Participant or Beneficiary
cannot be found. The amount of the unpaid Plan Benefit shall be reallocated to
eligible Participants in the proportion that each such Participant's
Compensation bears to all Participants' Compensation, unless mandatory
provisions of applicable escheat laws require another application, in which
case such Plan Benefit shall be applied as such laws require. If, however, the
Participant or Beneficiary subsequently makes a proper claim to the Company for
any Plan Benefit which was reallocated and which was not lost by reason of
escheat, then such Plan Benefit (without income, gains or other adjustment)
shall be restored to the Participant's Accounts from a special contribution
made by the appropriate Participating Company for this purpose. The Plan
Benefit shall thereafter be distributable in accordance with the terms of the
Plan.
15.4 No Employment Rights. Nothing in the Plan shall be deemed to
give any individual any right to remain in the employ of any Participating
Company or to affect the right of such Participating Company to terminate such
individual's employment at any time and for any reason.
15.5 Merger, Consolidation and Transfer of Assets or Liabilities.
The Plan shall not be merged or consolidated with any other plan, and no assets
or liabilities of the Plan shall
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be transferred to any other plan, unless each Participant would receive a Plan
Benefit immediately after the merger, consolidation or transfer (if the Plan
were then terminated) which is equal to or greater than the Plan Benefit which
such Participant would have been entitled to receive immediately before such
merger, consolidation or transfer (if the Plan had then been terminated).
15.6 Tender Offers. Effective March 1, 1996, in the event that any
person or group of persons makes a tender offer subject to section 14(d) of the
Securities Exchange Act of 1934 to acquire all or part of the outstanding
shares of Geneva Stock, including the Geneva Stock held in the Trust Fund
("Acquisition Offer"), each Participant shall be entitled to direct the Trustee
confidentially to tender all or part of those shares of Geneva Stock that are
held in the Participant's Accounts. If the Trustee receives an instruction by
the date communicated by the Company to the Participant, the Trustee shall
tender such shares in accordance with such instruction. Any Geneva Stock as to
which the Trustee does not receive timely instructions shall not be tendered by
the Trustee. The Company shall distribute to each Participant all appropriate
materials pertaining to the Acquisition Offer, including the statement of the
position of the Company with respect to such offer issued pursuant to Rule
14e-2 under the Securities Exchange Act of 1934, as soon as practicable after
such materials are issued; provided, however, that if the Company fails to
issue such statement within five business days after the commencement of such
offer, the Company
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shall distribute such materials to each Participant without the statement by
the Company and shall separately distribute such statement as soon as
practicable after it is issued.
15.7 Choice of Law. The Plan and all rights thereunder shall be
interpreted and construed in accordance with ERISA and, to the extent that
state law is not preempted by ERISA, the law of the State of Utah.
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ARTICLE 16. ROLLOVERS AND RELATED TRANSACTIONS.
16.1 Rollover From Qualified Plan. With the consent of the Company
an Eligible Employee may contribute all or any part of an "eligible rollover
distribution" within the meaning of Code section 402(c)(4) to the Plan, either
through an ordinary rollover or through a direct transfer in accordance with
Code section 401(a)(31) and the Regulations thereunder; provided, however, that
such eligible rollover distribution may be contributed to the Plan only if (a)
the contribution is paid entirely in the form of a cashier's check or money
order made payable to or endorsed over to the Plan or such other form
acceptable to the Company, (b) the Eligible Employee establishes to the
satisfaction of the Company that such distribution was an eligible rollover
distribution from a plan which, at the time of the distribution, met the
requirements of section 401 of the Code, and (c) in the case of a rollover that
is not made in accordance with the direct transfer provisions of Code section
401(a)(31), the contribution is made within sixty (60) days after the Eligible
Employee's receipt of the eligible rollover distribution.
16.2 Rollover From IRA. With the consent of the Company an
Eligible Employee may, within sixty (60) days after the date of receipt of a
distribution from an individual retirement account which meets the requirements
of section 408 and related sections of the Code, contribute all or any part of
such distribution to the Plan; provided, however, that all or any part of such
distribution may be contributed to the Plan only if
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(a) the distribution represents the entire amount in such individual retirement
account; (b) no part of the distribution is attributable to any source other
than a "rollover contribution" from an employees' trust described in section
401(a) of the Code which is exempt from tax under section 501(a) of such Code;
(c) the contribution is paid entirely in the form of a cashier's check or money
order made payable to or endorsed over to the Plan or such other form
acceptable to the Company; and (d) the Eligible Employee establishes to the
satisfaction of the Company that the conditions set forth in (a), (b) and (c)
above have been met and such distribution was made from an individual
retirement account which, at the time of the distribution, met the requirements
of section 408 and related sections of the Code.
16.3 Mistaken Rollover. If it is determined that a Participant's
rollover contribution did not qualify under the Code for a tax free rollover,
then as soon as reasonably possible the balance in the Participant's Rollover
Account shall be segregated from all other Plan assets, treated as a
nonqualified trust established by and for the benefit of the Participant and
distributed to the Participant. Such a mistaken rollover contribution shall be
deemed never to have been a part of the Plan and shall not adversely affect the
tax qualification of the Plan under the Code.
16.4 Direct Rollovers. Notwithstanding any provision of the Plan
to the contrary that would otherwise limit a distributee's election under this
Article, a distributee may
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elect, at the time and in the manner prescribed by the Company, to have any
portion of an eligible rollover distribution paid directly to an eligible
retirement plan specified by the distributee in a direct rollover.
Notwithstanding the foregoing, the Company may prescribe rules that limit a
distributee's right to make the election described in the preceding sentence
with respect to certain de minimis distributions or divisions of the eligible
rollover distribution.
An "eligible rollover distribution" is any distribution of all or any
portion of the balance to the credit of the distributee, except that an
eligible rollover distribution does not include: any distribution that is one
of a series of substantially equal periodic payments (not less frequently than
annually) made for the life (or life expectancy) of the distributee or the
joint lives (or joint life expectancies) of the distributee and the
distributee's designated beneficiary, or for a specified period of 10 years or
more; any distribution to the extent such distribution is required under
section 401(a)(9) of the Code; and the portion of any distribution that is not
includable in gross income (determined without regard to the exclusion for net
unrealized appreciation with respect to employer securities).
An "eligible retirement plan" is an individual retirement account
described in section 408(a) of the Code, an individual retirement annuity
described in section 408(b) of the Code, an annuity plan described in section
403(a) of the Code, or a
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<PAGE> 53
qualified trust described in section 401(a) of the Code, that accepts the
distributee's eligible rollover distribution. However, in the case of an
eligible rollover distribution to the surviving spouse, an eligible retirement
plan is an individual retirement account or an individual retirement annuity.
A "distributee" includes an Employee or former Employee. In addition,
the Employee's or former Employee's surviving spouse and the Employee's or
former Employee's spouse or former spouse who is the alternate payee under a
QDRO, as defined in section 414(p) of the Code and section 206(d) of ERISA, are
distributees with regard to the interest of the spouse or former spouse.
A "direct rollover" is a payment by the Plan to the eligible
retirement plan specified by the distributee.
16.5 Transfer to Management Plan. If an Employee ceases to be an
Eligible Employee and commences participation in the Company's Management
Employee Savings and Pension Plan, his or her Accounts may be transferred, at
the request of the Participant, to that Plan and he or she shall be subject to
that Plan's vesting schedule; provided, however, that the Participant shall
suffer no reduction in the vested percentage of his or her Accounts transferred
to the Plan.
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<PAGE> 54
ARTICLE 17. DEFINITIONS.
17.1 "Accounts" means the separate accounts maintained for each
Participant as part of the Trust Fund, which include, as applicable, a
Participant's Pension Contribution Account, Salary Deferral Account, Matching
Contribution Account, Geneva Stock Account and Rollover Account.
17.2 "Affiliated Group" means a group of one or more chains of
corporations connected through stock ownership with the Company, if:
(a) Stock possessing at least 80% of the total combined
voting power of all classes of stock entitled to vote or at least 80%
of the total value of shares of all classes of stock of each of the
corporations, except the Company, is owned by one or more of the other
corporations; and
(b) The Company owns stock possessing at least 80% of the
total combined voting power of all classes of stock entitled to vote
or at least 80% of the total value of shares of all classes of stock
of at least one of the other corporations excluding, in computing such
voting power or value, stock owned directly by such other
corporations.
In addition, the term "Affiliated Group" includes any other entity which the
Company has designated in writing as a member of the Affiliated Group for
purposes of the Plan. An entity shall be considered a member of the Affiliated
Group only with respect to periods for which such designation is in effect or
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during which the relationship described in Subsections (a) and (b) above
exists.
17.3 "Annuity Starting Date" means:
(a) The first day of the first period for which an amount is
payable as an annuity; or
(b) In the case of a benefit not payable in the form of an
annuity, the first day on which all events have occurred that entitle
the Participant to such benefit.
17.4 "Beneficiary" means one or more persons designated by the
Participant (or by the Plan) pursuant to Section 9.11.
17.5 "Code" means the Internal Revenue Code of 1986, as amended
from time to time.
17.6 "Company" means Geneva Steel, a Utah corporation.
17.7 "Company Contributions" means a Pension Contribution.
17.8 "Compensation" means the total compensation paid to the
Participant (within the meaning of Treas. Reg. Section 1.415-2(d)(11)(ii)) by
a Participating Company for personal services performed while a Participant
for the Plan Year. Compensation for each Plan Year shall not exceed $150,000,
as adjusted annually by the Secretary of the Treasury to reflect increases in
the cost of living. For purposes of applying the 150,000 limitation in the
preceding sentence, family members of the Employee shall be combined with the
Employee in accordance with the guidelines established in Section 1.8 of
Appendix I to the Plan.
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17.9 "Disability" means the condition of a Participant who is
permanently unable, by reason of a physical or mental incapacity, to perform
the normal duties of his or her occupation for a Participating Company or the
duties or such other position or job that the Company makes available to the
Participant and for which the Participant is qualified by reason of his
training, education and experience, as certified by a physician selected by
such Participating Company.
17.10 "Eligible Employee" is defined in Section 2.1.
17.11 "Employee" means an individual who (a) is a common-law
employee of a member of the Affiliated Group or a "leased employee" (within the
meaning of section 414(n) of the Code) with respect to a member of the
Affiliated Group.
17.12 "ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time.
17.13 "Forfeiture" means that part of the Participant's Accounts
that has not become vested pursuant to Article 8 when he or she ceases to be an
Employee.
17.14 "Geneva Stock" means the common stock of the Company.
17.15 "Geneva Stock Fund" means the Investment Fund described in
Section 7.2.
17.16 "Investment Accounts" means those Accounts described in
Section 7.4.
17.17 "Investment Funds" means the funds established under the Trust
Fund and described in Section 7.2.
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<PAGE> 57
17.18 "Matching Contribution" means an amount contributed to the
Plan by a Participating Company pursuant to Section 5.1.
17.19 "Participant" means an individual whose participation in the
Plan (a) has commenced pursuant to Section 2.3, 2.4 or 2.5 and (b) has not yet
terminated pursuant to Section 2.7.
17.20 "Participating Company" means each member of the Affiliated
Group which (a) has been designated as a Participating Company by the Company
and (b) has accepted such designation by appropriate corporate action.
17.21 "Pension Contribution" means a contribution made by a
Participating Company pursuant to Article 3, including any Forfeitures.
17.22 "Period of Service" means all of the following:
(a) Period of Employment. An Employee's Period of
Service shall include any period during which an Employee maintains an
employment relationship with an Affiliated Group member. An
Employee's employment relationship with an Affiliated Group member
commences on the first date the Employee performs duties for an
Affiliated Group member for which he or she receives or is entitled to
receive compensation and ends on the date the Employee quits, dies, is
discharged or retires. An Employee shall not be considered to have
quit under the following circumstances:
(i) When the Employee is absent due to lay-off,
disability or sickness for up to 48 months.
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(ii) When the Employee enters military service
with the United States, provided the Employee returns to
active employment with the Company within the time the
Employee's reemployment rights are protected under applicable
law. If the Employee does not so return, he or she shall be
deemed to have quit on the date of entry into military
service.
(iii) When the Employee is on jury duty, approved
vacation or holiday.
(iv) When an Employee is absent from work for any
period up to 24 months because of the Employee's pregnancy,
the birth of the Employee's child, the placement of a child
with the Employee for the purpose of adoption, or the care of
such child immediately following such birth or placement.
An Employee shall be deemed to have been discharged as of the earlier
of the date oral or written notice of discharge is actually received
or the date a written notice is deposited in the United States mail on
a registered or certified basis to the Employee's last known address
as reflected in the records of the Company;
(b) Period for Which Back Pay Awarded. An Employee's
Period of Service includes any period not otherwise counted as part of
a Period of Service for which the Employee is awarded, or entitled to,
back
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<PAGE> 59
pay from the Company (regardless of any mitigation of damages);
(c) Period Following Termination. An Employee's Period
of Service includes any period following termination of his or her
employment relationship with the Company (as determined pursuant to
(i) above), provided the Employee is rehired within 365 days after
such termination;
(d) Service with U.S. Steel Corporation. In computing
the Period of Service included in determining a Participant's vested
percentage, all of a Participant's years of service in the employ of
U.S. Steel Corporation are to be taken into account if such years of
service would have been taken into account under the provisions of
this Plan if this Plan had then been in existence and if such years of
service had been spent in the service of the Company, and if the
Participant was identified as an employee on the records of U.S. Steel
Corporation at the time the Geneva Steel Works were acquired by the
Company, and if the Participant was immediately thereafter transferred
to the employ of the Company from U.S. Steel Corporation.
(e) Aggregation of Periods of Service. All Periods of
Service determined pursuant to this Section 17.22 shall be aggregated
on the basis of whole
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calendar months whether or not such Periods of Service are
consecutive, except:
(i) Fractional Months. If an Employee's Period
of Service commences on other than the first day of a calendar
month or ends on other than the last day of a calendar month
the days in such month or months shall be aggregated and one
additional month of Service shall be credited if the number of
such days is more than 30 but less than 59 and two additional
months shall be credited if the number of such days equals 60.
(ii) Permanent Service Break. If an Employee who
is not even partially vested incurs a Permanent Service Break,
any Period of Service prior to such Permanent Service Break
shall not be aggregated with any Period of Service after such
break.
17.23 "Permanent Service Break" means a period during which the
Employee's employment relationship with an Affiliated Group member terminates
and the Employee has not been reemployed as an Employee within 60 months.
17.24 "Plan" means this Geneva Steel Union Employee Savings and
Pension Plan, as amended from time to time.
17.25 "Plan Benefit" means the benefit payable to the Participant or
to his or her Beneficiary pursuant to Article 9.
17.26 "Plan Year" means the calendar year.
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17.27 "Qualified Joint and Survivor Annuity" means a monthly annuity
which is actuarially equivalent to the Participant's Plan Benefit and which is
payable for the joint lives of the Participant and his or her spouse, with 50%
of such annuity continued for the life of the survivor.
17.28 "Review Panel" means the fiduciary described in Section 10.1.
17.29 "Rollover Contribution" means a contribution made by the
Participant pursuant to Article 16.
17.30 "Salary Deferral Contribution" means a contribution made by a
Participating Company on the Participant's behalf pursuant to Section 4.1.
17.31 "Trust Agreement" means the trust agreement(s) between the
Company and the Trustee, as amended from time to time.
17.32 "Trustee" means the trustee(s) appointed by the Company
pursuant to Section 12.1.
17.33 "Trust Fund" means the trust fund(s) established pursuant to
the Trust Agreement.
17.34 "Valuation Date" means the last business day of the Plan Year
and such other dates selected by the Company.
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ARTICLE 18. EXECUTION.
To record the adoption of the Plan to read as set forth herein the
Company has caused its authorized officer to execute this document this 22nd
day of June, 1995.
GENEVA STEEL
By /s/ C.E. Ramnitz
--------------------------
As its V.P. Human Resources
THE UNITED STEELWORKERS OF AMERICA
By /s/ Dallas Alexander
--------------------------
As its Sub Director Sub 5 District 12
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APPENDIX I TO THE GENEVA STEEL
UNION EMPLOYEE SAVINGS AND PENSION PLAN
LIMITATIONS RELATING TO NONDISCRIMINATION TESTING
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Aggregate 401(m) Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Aggregate 401(m) Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Before-Tax Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.4 Combined limitation Formula . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.5 Combined Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.6 Excess Aggregate 401(m) Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.7 Excess Before-Tax Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.8 Highly Compensated Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.9 Non-Highly Compensated Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.10 Qualified Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.11 Section 414(s) Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.12 Top-Paid Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE 2. BEFORE-TAX CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.1 Percentage Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.2 Reduction of Salary Deferral Contributions . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.3 Qualified Non-Elective Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.4 Other Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE 3. MATCHING CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.1 Percentage Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.2 Reduction of Aggregate 401(m) Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.3 Other Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE 4. COMBINED LIMITATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.1 Combined Limitation Formula . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.2 Additional Reductions of Aggregate 401(m) Contributions . . . . . . . . . . . . . . . . . . . . 16
ARTICLE 5. DISTRIBUTIONS OF EXCESS BEFORE-TAX CONTRIBUTIONS AND EXCESS AGGREGATE 401(m)
CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.1 Time of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.2 Income Allocable to Excess Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
</TABLE>
<PAGE> 64
APPENDIX I
LIMITATIONS RELATING TO NONDISCRIMINATION TESTING
UNDER CODE SECTIONS 401(k) and 401(m)
ARTICLE 1. DEFINITIONS.
1.1 "Aggregate 401(m) Contributions" means any Matching
Contributions allocated to the Participant for the Plan Year.
1.2 "Aggregate 401(m) Percentage" means the average
percentage determined under Section 3.1(c) of this Appendix I.
1.3 "Before-Tax Percentage" means the average percentage
determined under Section 2.1(c) of this Appendix I.
1.4 "Combined limitation Formula" means the formula
computed under Section 4.1 of this Appendix I.
1.5 "Combined Percentage" means the percentage determined
under Section 4.1(b) or 4.1(c) of this Appendix I.
1.6 "Excess Aggregate 401(m) Contributions" means the
reductions in Matching Contributions described in Section 3.2 of this Appendix
I.
1.7 "Excess Before-Tax Contributions" means the
reductions in Salary Deferral Contributions described in Section 2.2 of this
Appendix I.
1.8 "Highly Compensated Employee" for any Plan Year means
any active Employee who, during the look-back year, (a) received Total
Compensation of more than $75,000 (or such larger amount as may be provided on
account of cost of living adjustments pursuant to sections 414(q) and 415(d) of
the Code); (b) received Total Compensation of more than $50,000 (or such
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<PAGE> 65
larger amount as may be provided on account of cost of living adjustments
pursuant to sections 414(q) and 415(d) of the Code) and was a member of the
Top-Paid Group; or (c) was an officer of a member of the Affiliated Group and
received Total Compensation of more than 50 percent of the dollar limitation in
effect under section 415(b)(1)(A) of the Code. The term "Highly Compensated
Employee" also includes: (a) an Employee who is both described in the preceding
sentence if the term "determination year" is substituted for the term
"look-back year" and the Employee is one of the 100 Employees who received the
most Total Compensation from the Affiliated Group during the determination
year; and (b) an Employee who is a five-percent owner at any time during the
look-back year or determination year. If no officer has satisfied the
compensation requirement of (c) above during either a determination year or
look-back year, the highest paid officer for such year shall be treated as a
Highly Compensated Employee.
The term "Highly Compensated Employee" shall also include a
former Employee who separated from service (or was deemed to have separated)
prior to the determination year, performs no service for the Affiliated Group
during the determination year, and was a Highly Compensated Employee as an
active Employee for either the separation year or any determination year ending
on or after the Employee's 55th birthday.
If an Employee is, during a determination year or look-back
year, a family member of either a five percent owner
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who is an active or former Employee or a Highly Compensated Employee who is one
of the 10 most Highly Compensated Employees ranked on the basis of Total
Compensation paid during such year, then the family member and the five-percent
owner or top-ten Highly Compensated Employee shall be aggregated. In such
case, the family member and the five-percent owner or top-ten Highly
Compensated Employee shall be treated as a single Employee receiving Total
Compensation and Plan contributions and benefits of the family member and
five-percent owner or top-ten Highly Compensated Employee. The compensation
and benefits attributable to the family members and the five-percent owner or
top-ten Highly Compensated Employee shall be pro rated among the family members
and the five-percent owner or top-ten Highly Compensated Employee in the
proportion that each such individual's Compensation bears to the total of all
such individuals' Compensation. For purposes of this Section 1.8, "family
member" includes the spouse, lineal ascendants and descendants of the Employee
or former Employee and the spouses of such lineal ascendants and descendants.
For purposes of this Section 1.8, the determination year shall
be the Plan Year. The look-back year shall be the 12-month period immediately
preceding the determination year. However, the Company may elect in accordance
with Temp. Treas. Reg. section 1.414(q)-1T Q&A-14(b), to make the look-back
year calculation for a determination year on the basis of the calendar year
ending with or within the applicable determination year. If such an election
is made, the Company shall make the
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determination year calculation on the basis of the period (if any) by which the
applicable determination year extends beyond the calendar year (i.e., the lag
period). (If the Plan Year is the calendar year, this election makes the
look-back year and the determination year the same calendar year.)
The determination of who is a Highly Compensated Employee,
including the determinations of the number and identity of Employees in the
Top-Paid Group, the top 100 Employees, the number of Employees treated as
officers and the Total Compensation that is considered, will be made in
accordance with section 414(q) of the Code and regulations thereunder.
1.9 "Non-Highly Compensated Employee" means any
Participant who is not a Highly Compensated Employee.
1.10 "Qualified Plan" means a stock bonus, pension or
profit sharing plan (other than this Plan) maintained by a member of the
Affiliated Group that is intended to qualify under section 401(a) of the Code.
1.11 "Section 414(s) Compensation" means, at the
discretion of the Company, any one of the following definitions of compensation
received by an Employee from the Company or a member of the Affiliated Group
during the portion of the Plan Year that the Employee is a Participant or is
eligible to become a Participant in the Plan:
(a) Compensation as defined in Treasury Regulation
section 1.415-2(d) or any successor thereto;
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(b) "Wages" as defined in section 3401(a) of the Code for
purposes of income tax withholding at the source, but determined
without regard to any rules that limit the remuneration included in
wages based on the nature or location of the employment or the
services performed (such as the exception for agricultural labor in
section 3401(a)(23) of the Code);
(c) "Wages" as defined in section 3401(a) of the Code for
purposes of income tax withholding at the source, plus all other
payments of compensation reportable under Code sections 6041(d) and
6051(a)(3) and the regulations thereunder, determined without regard
to any rules that limit such Wages or reportable compensation based on
the nature or location of the employment or the services performed
(such as the exception for agricultural labor in section 3401(a)(23)
of the Code), and modified, at the election of the Company, to exclude
amounts paid or reimbursed for the Employee's moving expenses, to the
extent it is reasonable to believe that these amounts are deductible
by the Employee under section 217 of the Code;
(d) Any of the definitions of Section 414(s) Compensation
set forth in Subsections (a), (b) and (c) above, reduced by all of the
following items (even if includable in gross income): reimbursements
or other expense allowances, fringe benefits (cash and noncash),
moving expenses, deferred compensation and welfare benefits;
-5-
<PAGE> 69
(e) Any of the definitions of Section 414(s) Compensation
set forth in Subsections (a), (b), (c) and (d) above, modified to
include any elective contributions made by the Company or a member of
the Affiliated Group on behalf of the Employee that are not includable
in gross income under section 125, 402(a)(8), 402(h) or 403(b) of the
Code; or
(f) Any reasonable definition of compensation that does
not by design favor Highly Compensated Employees and that satisfies
the nondiscrimination requirement set forth in Treasury Regulation
section 1.414(s)-1(d)(2) or the successor thereto.
Any definition of Section 414(s) Compensation shall be used
consistently to define the compensation of all Employees taken into account in
satisfying the requirements of an applicable provision of this Appendix I for
the relevant determination period. For purposes of applying the limitations
set forth in Articles 2, 3 and 4 of this Appendix I, Section 414(s)
Compensation shall not include compensation paid to an Employee for a Fiscal
Year in excess of $150,000 (or such other amount as may be adopted by the
Commissioner of Internal Revenue to reflect a cost-of-living adjustment).
-6-
<PAGE> 70
1.12 "Top-Paid Group" for any Plan Year means the top 20
percent (in terms of Section 414(s) Compensation) of all Employees of the
Affiliated Group on a U.S. dollar payroll, excluding the following:
(a) Any Employee covered by a collective bargaining
agreement who is not an Eligible Employee;
(b) Any Employee who has not completed six months of
service at the end of the Plan Year;
(c) Any Employee who normally works less than 17 1/2
hours per week;
(d) Any Employee who normally works no more than six
months during any year; and
(e) Any Employee who has not attained the age of 21 at
the end of the Plan Year.
1.13 "Total Compensation" means "wages," as defined in
section 3401(a) of the Code for purposes of income tax withholding at the
source, but determined:
(a) Without regard to any rules that limit the
remuneration included in 'wages' based on the nature or location of
the employment or the services performed (such as the exception for
agricultural labor in section 3401(a)(2) of the Code); and
(b) By including amounts deferred but not refunded under
a cafeteria plan, as such term is defined in section 125(c) of the
Code and under a plan, including this Plan, qualified under section
401(k) of the Code.
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<PAGE> 71
The capitalized terms used in this Appendix I, but not defined
herein, shall have the same meaning as such terms have when used in the Geneva
Steel Union Employee Savings and Pension Plan (the "Plan"), and the terms of
the Plan are incorporated by reference into this Appendix I.
-8-
<PAGE> 72
ARTICLE 2. BEFORE-TAX CONTRIBUTIONS.
2.1 Percentage Limitations. The Salary Deferral
Contributions attributable to Highly Compensated Employees for any Plan Year
shall not exceed the limits described below:
(a) The ratio of the Salary Deferral Contributions for
the Plan Year to the Section 414(s) Compensation for the Plan Year shall be
computed to the nearest one hundredth of one percent for each individual who at
any time during the Plan Year is a Participant of the Plan or is eligible to
become a Participant in the Plan;
(b) In the case of an individual who is a five-percent
owner or who is among the 10 most highly compensated Highly Compensated
Employees, the Section 414(s) Compensation and Company Contributions allocated
to family members (as described in Section 1.8 of this Appendix I) shall be
attributed to such Highly Compensated Employees in computing such ratios as
prescribed in Treasury Regulation section 1.401(k)-1(f) and (g) or any
successor thereto;
(c) The average of such ratios (i.e., the Before-Tax
Percentage) shall be determined for (i) the Highly Compensated Employees and
(ii) the Non-Highly Compensated Employees; and
(d) The Salary Deferral Contributions of Highly
Compensated Employees shall be reduced to the extent necessary to establish
that the Before-Tax Percentage for the Highly Compensated Employees either:
(i) does not exceed 125 percent of the Before-Tax Percentage for the Non-Highly
Compensated Employees, or (ii) does not exceed the lower of (A) 200 percent
-9-
<PAGE> 73
of the Before-Tax Percentage for Non-Highly Compensated Employees or (B) the
Before-Tax Percentage for Non-Highly Compensated Employees plus two percentage
points.
2.2 Reduction of Salary Deferral Contributions. The
reduction of the Salary Deferral Contributions of Highly Compensated Employees
as required by Section 2.1(d) of this Appendix I shall be made by the Company
in the order of the individual ratios of such Highly Compensated Employees,
beginning with the highest of such ratios and continuing until the Before-Tax
Percentage for the Highly Compensated Employees meets either of the tests set
forth in Section 2.1(d) of this Appendix I. Such reductions in Before-Tax
Contributions shall be made in accordance with Treasury Regulation section
1.401(k)-1(f)(2) and shall constitute "Excess Before-Tax Contributions." For
all affected Highly Compensated Employees, such Excess Before-Tax Contributions
shall be eliminated as provided for in Article 5 hereof. Excess Before-Tax
Contributions of an individual who is a five-percent owner or who is among the
10 most highly compensated Highly Compensated Employees shall be allocated
among such individual's family members (as described in Section 1.8 of this
Appendix I) in proportion to the contributions attributable to each family
member that have been combined.
2.3 Qualified Non-Elective Contributions. In lieu of
reducing "Excess Before-Tax Contributions" as provided in Section 2.2 of this
Appendix I or "Excess Aggregate 401(m) Contributions" as provided in Section
3.2 of this Appendix I, the Company may make corrective Qualified Non-Elective
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<PAGE> 74
Contributions on behalf of Non-Highly Compensated Employee Participants. Such
Qualified Non-Elective Contributions shall be allocated to an eligible
Participant's Salary Deferral Account in the ratio that such eligible
Participant's Compensation for the Plan Year bears to the total Compensation of
all eligible Participants for such Plan Year. Any Qualified Non-Elective
Contributions for a Plan Year shall be paid to the Trustee not later than the
last day of the Plan Year next following the close of the Plan Year for which
the Qualified Non-Elective Contribution is made.
2.4 Other Plans. If a Highly Compensated Employee for
any Plan Year is a participant during such Plan Year of any qualified plan that
includes a qualified cash or deferral arrangement under section 401(k) of the
Code, this Plan and such Qualified Plan(s) shall be treated as required by
Treasury Regulation section 1.401(k)-1(g)(1)(ii)(B) in applying this Article 2.
If the Plan is aggregated with any other qualified plan for purposes of Code
section 410(b), this Plan and such other qualified plan shall be treated as a
single plan in applying this Article 2.
-11-
<PAGE> 75
ARTICLE 3. MATCHING CONTRIBUTIONS.
3.1 Percentage Limitations. To the extent Matching
Contributions are not treated as Salary Deferral Contributions and tested under
Article 2 of this Appendix I, the Aggregate 401(m) Contributions of Highly
Compensated Employees for any Plan Year shall not exceed the limits described
below:
(a) The ratio of the Aggregate 401(m) Contributions for
the Plan Year to the Section 414(s) Compensation for the Plan Year shall be
computed to the nearest one hundredth of one percent for each individual who at
any time during the Plan Year is a Participant of the Plan or is eligible to
become a Participant in the Plan;
(b) In the case of an individual who is a five-percent
owner or who is among the 10 most highly compensated Highly Compensated
Employees, the Section 414(s) Compensation and the Company Contributions
allocated to family members (as described in Section 1.8 of this Appendix I)
shall be attributed to such Highly Compensated Employees in computing such
ratios as prescribed in Treasury Regulation section 1.401(m)-1(e) and (f) or
any successor thereto;
(c) The average of such ratios (i.e., the Aggregate
401(m) Percentage) shall be determined for (i) the Highly Compensated Employees
and (ii) the Non-Highly Compensated Employees; and
(d) The Aggregate 401(m) Contributions of Highly
Compensated Employees shall be reduced to the extent necessary to establish
that the Aggregate 401(m) Percentage for the Highly
-12-
<PAGE> 76
Compensated Employees either: (i) does not exceed 125 percent of the Aggregate
401(m) Percentage for the Non-Highly Compensated Employees, or (ii) does not
exceed the lower of (A) 200 percent of the Aggregate 401(m) Percentage for
Non-Highly Compensated Employees or (B) the Aggregate 401(m) Percentage for
Non-Highly Compensated Employees plus two percentage points.
3.2 Reduction of Aggregate 401(m) Contributions. The
reduction in the Aggregate 401(m) Contributions of Highly Compensated Employees
as required by Section 3.1(d) of this Appendix I shall be made by the Company,
in accordance with Treasury Regulation section 1.401(m)-1(e)(2), in the order
of the individual ratios of such Highly Compensated Employees, beginning with
the highest of such ratios and continuing until the Aggregate 401(m) Percentage
for the Highly Compensated Employees meets either of the tests set forth in
Section 3.1(d) of this Appendix I. For all affected Highly Compensated
Employees, such Excess Aggregate 401(m) Contributions shall be eliminated as
provided for in Article 5 hereof. Excess Aggregate 401(m) Contributions of an
individual who is a five-percent owner or who is among the 10 most highly
compensated Highly Compensated Employees shall be allocated among such
individual's family members (as described in Section 1.8 of this Appendix I) in
proportion to the contributions attributable to each family member that have
been combined.
3.3 Other Plans. If a Highly Compensated Employee for
any Plan Year is a participant during such Plan Year of any
-13-
<PAGE> 77
qualified plan that is a qualified defined contribution plan (within the
meaning of Code section 414(i)) and that provides for employee contributions
and matching employer contributions (as described in Code section
401(m)(4)(A)), this Plan and such qualified plan(s) shall be treated as
required by Treasury Regulation section 1.401(m)-1(f)(1)(ii)(B) in applying
this Article 3. If the Plan is aggregated with any other qualified plan for
purposes of Code section 410(b), this Plan and such other qualified plan shall
be treated as a single plan in applying this Article 3.
-14-
<PAGE> 78
ARTICLE 4. COMBINED LIMITATIONS.
4.1 Combined Limitation Formula. The Combined Limitation
Formula for each Plan Year shall be computed as follows:
(a) First, the Before-Tax Percentage and Aggregate 401(m)
Percentage for Highly Compensated Employees and Non-Highly Compensated
Employees for the Plan Year shall be determined after making any reductions in
Salary Deferral Contributions and/or Aggregate 401(m) Contributions of Highly
Compensated Employees required by Sections 2.2 and 3.2 of this Appendix I
before application of the Combined Limitation Formula.
(b) Second, the sum of: (i) 125 percent of the greater
of the Before-Tax Percentage or the Aggregate 401(m) Percentage for the
Non-Highly Compensated Employees, and (ii) two (2) percentage points plus the
lesser of the Before-Tax Percentage or the Aggregate 401(m) Percentage (but not
in excess of 200 percent of the lesser of such Before-Tax Percentage and
Aggregate 401(m) Percentage) for the Non- Highly Compensated Employees shall be
determined.
(c) Third, the sum of: (i) 125 percent of the lesser of
the Before-Tax Percentage or the Aggregate 401(m) Percentage for the Non-Highly
Compensated Employees, and (ii) two (2) percentage points plus the greater of
the Before-Tax Percentage or the Aggregate 401(m) Percentage (but not in excess
of 200 percent of the lesser of such Before-Tax Percentage and
-15-
<PAGE> 79
Aggregate 401(m) Percentage) for the Non-Highly Compensated Employees shall be
determined.
(d) Fourth, the sum of the Before-Tax Percentage and
Aggregate 401(m) Percentage for the Highly Compensated Employees shall be
determined.
4.2 Additional Reductions of Aggregate 401(m)
Contributions. If, in any Plan Year, the amount determined under Section
4.1(d) of this Appendix I exceeds the greater of the amounts determined under
Section 4.1(b) or Section 4.1(c) of this Appendix I, then the Aggregate 401(m)
Contributions of Highly Compensated Employees shall be reduced, in the manner
described in Section 3.2 of this Appendix I, to the extent necessary to ensure
that the sum of the Before-Tax Percentage and Aggregate 401(m) Percentage of
the Highly Compensated Employees for the Plan Year does not exceed the greater
Combined Percentage determined under Section 4.1(b) or Section 4.1(c) of this
Appendix I in respect to Non-Highly Compensated Employees.
-16-
<PAGE> 80
ARTICLE 5. DISTRIBUTIONS OF EXCESS BEFORE-TAX CONTRIBUTIONS AND EXCESS
AGGREGATE 401(m) CONTRIBUTIONS.
5.1 Time of Distribution. Excess Before-Tax
Contributions may be distributed to the appropriate Highly Compensated
Employees by March 15 following the close of the Plan Year, but in no event
later then the close of the following Plan Year. Excess Aggregate 401(m)
Contributions (other than Excess Aggregate 401(m) Contributions that are first
forfeited as attributable to Excess Before-Tax Contributions that are refunded
for any Plan Year) shall be distributed to the appropriate Highly Compensated
Employees as follows:
(a) First, to the extent required, the vested portion of
the Matching Contributions attributable to the Participant's Salary Deferral
Contributions for such Plan Year, and any income (or losses) allocable to such
Matching Contributions, shall be distributed to him or her by the March 15 next
following the close of such Plan Year, but in no event later than the last day
of the following Plan Year.
(b) Second, to the extent required, the nonvested portion
of the Matching Contributions allocated to the Participant for such Plan Year,
and any income (or losses) allocable thereto, may be forfeited by March 15 next
following the close of the Plan Year, but in no event later than the close of
the following Plan Year, and reallocated as provided for in Section 10.4 of the
Plan.
All such distributions, including income allocable thereto, shall be designated
by the Company as distributions of Excess
-17-
<PAGE> 81
Before-Tax Contributions or Excess Aggregate 401(m) Contributions, as the case
may be. In accordance with Treasury Regulation section 1.401(k)-1(f)(5)(i),
Excess Before-Tax Contributions for a Plan Year to be distributed to a
Participant shall be reduced by excess deferrals previously distributed to such
Participant for such Participant's taxable year ending with or within such Plan
Year, and excess deferrals for a Plan Year to be distributed to a Participant
shall be reduced by Excess Before-Tax Contributions previously distributed to
such Participant for the Plan Year beginning with or within such taxable year.
5.2 Income Allocable to Excess Contributions. Income
allocable to Excess Before-Tax Contributions and Excess Aggregate 401(m)
Contributions shall be determined by the Company in accordance with Treasury
Regulation sections 1.401(k)-1(f)(4) and 1.401(m)-1(e)(3) or the successors
thereto.
-18-
<PAGE> 82
APPENDIX II
PARTICIPANT LOANS
Amount of Loans. A Participant who is receiving Compensation may
obtain a cash loan from the Participant's Salary Deferral, Matching and
Rollover Accounts. The minimum amount of a loan shall be one thousand dollars
($1,000).
Aggregate Loan Limitations. No loan shall be granted under the Plan if
such loan, when aggregated with the balance of all loans the Participant has
outstanding under the Plan at the time such loan is to be made, exceeds the
smallest of the following:
(i) Fifty thousand dollars ($50,000), minus the excess of:
(A) the Participant's highest outstanding loan
balance under the Plan during the one-year period ending one
day prior to the date on which such loan is to be made over
(B) the outstanding balance of all of the
Participant's Plan loans on the date such loan is to be made;
or
(ii) Fifty (50%) percent of the balance of the
Participant's Salary Deferral and Rollover Accounts under the Plan.
Terms of Loans. A loan to a Participant shall be made on such terms
and conditions as the Company may determine, provided that the loan shall:
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<PAGE> 83
(i) Be evidenced by a promissory note signed by the
Participant and secured to the extent necessary by the Accounts of the
Participant (regardless of whether a particular Account provided funds
for the loan under Source of Loans below);
(ii) Bear interest at a fixed rate equal to the prime rate
of the Trustee plus one percent, in effect on the first business day
of the month in which the Company approves the loan, provided that
such rate is reasonable;
(iii) Be subject to a substantially level amortization
schedule, as determined by the Company;
(iv) Provide for loan payments
(A) to be withheld through periodic (but not less
frequently than quarterly) irrevocable payroll deductions from
the Participant's Compensation or
(B) to be paid by check or money order whenever
payroll withholding is not possible;
(v) Provide for repayment in full (including full
prepayment) on or before the earlier of
(A) the date the Participant's employment as an
Employee terminates, or
(B) the date five (5) years after the loan is
made; and
(vi) Provide that a Participant's Accounts may not be
applied to the satisfaction of the Participant's loan
-2-
<PAGE> 84
obligations before the Accounts become distributable under Article 9
of the Plan, unless the Company determines that the loan obligations
are in default and treats such default as qualifying as a financial
hardship. A distribution on account of a loan default shall be made
only if the amount withdrawn, net of applicable federal and state
taxes, does not exceed the amount of the need, and the Participant
represents to the Company's satisfaction that the need cannot be
relieved:
(i) Through reimbursement or compensation by insurance,
or otherwise,
(ii) By reasonable liquidation of the Participant's
assets, to the extent such liquidation would not itself cause an
immediate and heavy financial need,
(iii) By cessation of Salary Deferrals under the Plan, or
(iv) By other distributions or nontaxable loans from plans
maintained by the Company or by any other employer, or by borrowing
from commercial sources on reasonable commercial terms.
The Participant's resources shall be deemed to include those assets of
his/her spouse and minor children that are reasonably available to the
Participant.
The Company shall exercise its discretion upon requests for
loans in a uniform and nondiscriminatory
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<PAGE> 85
manner, consistent with the requirements of sections 401(a)(4) and
401(k) of the Code.
Restrictions on Loans. No Participant shall have more than one (1)
loan from the Plan outstanding at the same time. A new loan may not be
obtained earlier than thirty (30) days after the end of the calendar quarter in
which the prior Plan loan is repaid.
Source of Loans. A Loan Account shall be established for each
Participant who takes a loan hereunder. The Loan Account shall be held by the
Trustee as part of the Loan Fund. The amount of the loan shall be transferred
to the Participant's Loan Account from the Participant's Salary Deferral and
Rollover Accounts (but not from the Geneva Stock Account) and shall be
disbursed from the Loan Account.
Disbursement of Loans. A Participant may request a loan by filing the
prescribed loan form with the Company. A loan shall be disbursed as soon as
reasonably practicable after the date on which the Company receives the
appropriately completed forms.
Valuation Date. For purposes of this Appendix II, the balance of a
Participant's Accounts shall be determined as of the last completed Valuation
Date prior to the date on which the Company receives the appropriately
completed forms.
Loan Payments and Defaults. Principal and interest payments on a
Participant's loan shall be credited initially to the Participant's Loan
Account and shall be transferred as soon as reasonably practicable thereafter
to the Participant's other Accounts in the percentages specified by the
Participant under
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<PAGE> 86
Section 6.4. Any loss caused by nonpayment or other default on a Participant's
loan obligations shall be borne solely by that Participant's Accounts.
Loan Fee. Notwithstanding Section 12.4, the Company may charge a
reasonable loan set-up and servicing fee for administering a loan under the
Plan. Any such fee(s) may be deducted from the loan proceeds and/or the
Participant's Accounts.
Definitions.
(i) "Loan Account" shall mean the account established
pursuant to this Appendix II for the purpose of making loans to
Participants.
(ii) "Loan Fund" shall mean the fund invested solely in
promissory notes executed by Participants pursuant to this Appendix
II.
The capitalized terms used in this Appendix II, but not defined
herein, shall have the same meaning as such terms have when used in the Geneva
Steel Union Employee Savings and Pension Plan (the "Plan"), and the terms of
the Plan are incorporated by reference into this Appendix II.
Spousal Consent. No loan shall be granted pursuant to this Appendix
II to a married Participant unless the spouse of such Participant, in
accordance with the requirements of Subsection 9.7 of the Plan, and within the
90 day period before the loan is made, consents to the assignment of the Plan
Benefit as security for repayment of the loan, and any actions the Company
subsequently may take under this Appendix II to the Plan.
-5-
<PAGE> 1
SELECTED FINANCIAL DATA
(Dollars in thousands, except per share and per ton data)
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------
OPERATING STATISTICS 1995 1994 1993 1992 1991
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net sales $665,699 $486,062 $465,181 $420,026 $445,981
Gross margin 71,508 15,514 21,723 13,735 52,801
Income (loss) from operations 47,713 (6,791) 1,102 (8,587) 30,920
Income (loss) before extraordinary item 11,604 (16,696) (8,606) (13,092) 17,554
Net income (loss) 11,604 (26,230) (8,606) (13,092) 17,554
Net income (loss) applicable to common shares 3,606 (33,276) (12,072) (13,092) 17,554
Net income (loss) per common share before
extraordinary item .24 (1.57) (.80) (.87) 1.17
Net income (loss) per common share .24 (2.20) (.80) (.87) 1.17
<CAPTION>
-----------------------------------------------------------------------------------------------------------
BALANCE SHEET STATISTICS 1995 1994 1993 1992 1991
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cash and cash equivalents $ 12,808 $ -- $ 64,267 $ 3,122 $ 45,597
Working capital 33,045 46,797 89,167 75,654 105,926
Current ratio 1.29 1.49 2.04 2.33 2.77
Property, plant and equipment, net 470,390 453,286 314,590 252,797 204,150
Total assets 628,797 606,815 498,384 390,462 375,888
Long-term debt 342,033 357,348 224,991 178,182 160,000
Redeemable preferred stock 51,031 43,032 35,986 -- --
Stockholders' equity 108,074 103,664 135,775 141,832 154,416
Long-term debt as a percentage
of stockholders' equity 316% 345% 166% 126% 104%
<CAPTION>
-----------------------------------------------------------------------------------------------------------
ADDITIONAL STATISTICS 1995 1994 1993 1992 1991
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Operating income (loss) per ton shipped $ 24.99 $ (4.63) $ .73 $ (6.49) $ 24.27
Capital expenditures 68,025 164,918 82,534 66,617 113,410
Depreciation and amortization 39,308 29,870 23,150 21,136 14,728
Cash flows from operating activities 81,985 (27,469) 64,394 8,200 47,782
Raw steel production (net tons in thousands) 2,145 1,890 2,000 1,769 1,708
Steel products shipped (net tons in thousands) 1,909 1,467 1,511 1,323 1,274
-----------------------------------------------------------------------------------------------------------
</TABLE>
PRICE RANGE OF COMMON STOCK
----------------------------------------------------------------------------
The following table sets forth, for the periods indicated, the high and low
sales prices for the Class A common stock as reported on the NYSE Composite
Tape.
----------------------------------------------------------------------------
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------
FISCAL YEAR ENDED SEPTEMBER 30, 1994 HIGH LOW
-----------------------------------------------------------------------------------------------------------
<S> <C> <C>
First Quarter ended December 31 $ 18 1/2 $ 11 7/8
Second Quarter ended March 31 21 3/8 13 1/4
Third Quarter ended June 30 20 13 3/8
Fourth Quarter ended September 30 21 1/4 15 1/2
-----------------------------------------------------------------------------------------------------------
<CAPTION>
-----------------------------------------------------------------------------------------------------------
FISCAL YEAR ENDED SEPTEMBER 30, 1995 HIGH LOW
-----------------------------------------------------------------------------------------------------------
<S> <C> <C>
First Quarter ended December 31 $ 18 $ 12 1/4
Second Quarter ended March 31 16 9 3/4
Third Quarter ended June 30 12 7 1/8
Fourth Quarter ended September 30 9 3/4 7 3/4
-----------------------------------------------------------------------------------------------------------
</TABLE>
As of November 30, 1995, the Company had 13,343,871 shares of Class A common
stock outstanding held by 646 stockholders of record, and 19,151,348 shares of
Class B common stock outstanding held by five stockholders of record.
<PAGE> 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following table sets forth the percentage relationship of certain cost and
expense items to net sales for the years indicated:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30, 1995 1994 1993
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales 100.0% 100.0% 100.0%
Cost of sales 89.3 96.8 95.3
----------------------------------
Gross margin 10.7 3.2 4.7
Selling, general and administrative expenses 3.5 4.6 4.4
----------------------------------
Income (loss) from operations 7.2 (1.4) 0.3
Other income (expense):
Interest and other income 0.1 0.3 0.4
Interest expense (4.6) (4.4) (3.7)
Other expense (0.4) -- --
----------------------------------
Income (loss) before provision (benefit) for income taxes
and extraordinary item 2.3 (5.5) (3.0)
Provision (benefit) for income taxes 0.6 (2.1) (1.2)
----------------------------------
Income (loss) before extraordinary item 1.7% (3.4)% (1.8)%
----------------------------------
</TABLE>
The following table sets forth the sales product mix as a percentage of net
sales for the years indicated:
----------------------------------------------------------------------------
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30, 1995 1994 1993
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Sheet 40.7% 65.3% 56.4%
Plate 35.1 23.5 30.8
Pipe 6.4 6.9 9.7
Slab 15.0 1.0 --
Non-steel 2.8 3.3 3.1
----------------------------------
100.0% 100.0% 100.0%
----------------------------------
-------------------------------------------------------------------------------------------------
</TABLE>
FISCAL YEAR ENDED SEPTEMBER 30, 1995 COMPARED
WITH FISCAL YEAR ENDED SEPTEMBER 30, 1994
Net sales increased 37.0% due to increased shipments of
approximately 441,700 tons and increased average selling prices for
the year ended September 30, 1995 as compared to the previous fiscal
year. The weighted average sales price (net of transportation costs)
per ton of sheet, plate, pipe and slab products increased by 5.4%,
9.9%, 11.5% and 6.2%, respectively, in the year ended September 30,
1995 compared to the previous fiscal year. The overall average selling
price realization per ton also increased between the years as a result
of a shift in product mix to higher-priced plate products. This
increase was offset, in part, by the Company's increased sales of
lower-priced slab products. Consistent with the Company's strategic
objectives, plate shipments have increased as various upgrades to
plate processing and finishing equipment have been completed and
implemented. The Company intends to continue shifting its product mix
toward plate. The Company increased slab shipments in response to
favorable slab pricing and to maximize production from the continuous
caster. Despite weakening slab prices, the Company expects that
slab sales will continue as a means of maximizing throughput. Shipped
tonnage of plate, pipe and slabs increased approximately 276,400 tons
or 86.2%, 12,700 tons or 14.5% and 350,300 tons or 1,762.5%,
respectively, while shipped tonnage of sheet decreased approximately
197,700 tons or 19.0% between the two years.
Pricing for hot-rolled sheet, plate, pipe and slab products
weakened late in the fiscal year as a result of efforts by service
centers to reduce high inventory levels, an increase in domestic
hot-rolled capacity and other market factors. Pricing has also been
adversely affected by unfairly traded imports, including most recently
from non-traditional sources such as Russia, Ukraine and China. The
Company's bookings in the first fiscal quarter have reflected
additional price reductions.
<PAGE> 3
Based on recent orders, pricing may be stabilizing. The Company
intends to react to price increases or decreases in the market as
justified by competitive conditions. The Company sells substantially
all of its products in the spot market at prevailing market prices.
The Company believes its percentage of such sales is significantly
higher than that of most of the other domestic integrated producers.
Consequently, the Company may be affected by price increases and
decreases more quickly than many of its competitors.
During the fourth fiscal quarter, the Company increased its
production of higher-margin large coils due primarily to the start-up
of a new 42-megawatt induction slab heating furnace, which is located
in-line with the Company's caster and rolling mill. The Company is
continuing to integrate the induction furnace into the production
process. The Company continues to evaluate its slab heating
requirements and may elect to install additional heating capacity.
Cost of sales includes raw materials, labor costs, energy
costs, depreciation and other operating and support costs associated
with the production process. The Company's cost of sales, as a
percentage of net sales, decreased to 89.3% for the year ended
September 30, 1995 from 96.8% for the previous fiscal year as a result
of higher average selling prices and lower operating costs. The
average cost of sales per ton shipped decreased approximately $9 per
ton between the two years. The decreased cost per ton resulted from
lower operating costs and from increased sales of lower-cost slab
products offset, in part, by a shift in product mix to higher-cost
plate products. Costs decreased primarily as a result of increased
production efficiencies associated with completed capital projects,
increased production throughput and other operating improvements
offset, in part, by higher depreciation expense, increased raw
materials costs and higher wages and benefits. The Company expects to
achieve additional improvements in operating efficiencies in future
periods as a result of reduced labor costs per ton, increased
production throughout, reduction of start-up and transition costs and
improved yields. The Company expects, however, that certain raw
materials costs will increase in future periods. The Company
anticipates higher iron ore pellet costs. During the year, the Company
finalized a five-year iron ore pellet supply agreement with USX
Corporation. Pricing under the agreement is generally based upon an
index and resulted in an increase in finished product cost of
approximately $3 per ton effective in September 1995.
Construction is nearing completion on a new plasma-fired
cupola ironmaking facility. The Company expects the facility to become
available for operation in the first calendar quarter of 1996. The
cupola will be used to replace or supplement blast furnace iron
production, particularly when scrap prices are favorable or during
relines and other periods requiring additional ironmaking capacity.
The Company expects the facility lease cost of the cupola to add
approximately $2 per ton to finished product cost. The impact of the
cupola facility on finished product cost will be dependent on raw
materials costs, particularly scrap, and the level of integration of
the cupola.
Start-up and transition costs associated with implementation
of ongoing capital projects have adversely affected the Company's
operating results, including finished product throughput and yields.
The Company expects that the first fiscal quarter will be similarly
affected by integration of projects such as the induction furnace and
wide coiled plate project. The Company has, however, completed and
implemented several of its capital projects and has deferred
completion of additional major projects, particularly with respect to
the rolling mill finishing stand improvements. The Company expects
that start-up and transition costs will decline significantly as
current capital projects are fully implemented and operations are
stabilized.
Depreciation costs included in cost of sales increased
approximately $11.2 million for the year ended September 30, 1995
compared with the previous fiscal year. This increase was due to
increases in the asset base resulting from capital expenditures.
Depreciation expense will further increase due to implementation of
the Company's capital projects.
Selling, general and administrative expenses for the year
ended September 30, 1995 increased approximately $1.5 million as
compared to the previous fiscal year. The higher expenses resulted
primarily from increased salaries and wages and outside services.
Interest and other income decreased approximately $1.1 million
during the year ended September 30, 1995 as compared to the previous
fiscal year as a result of a decrease in the amount of invested cash
and cash equivalents.
Interest expense increased approximately $8.9 million during
the year ended September 30, 1995 as compared to the previous fiscal
year. Interest expense increased due to higher levels of borrowing and
decreased capitalized interest during the year ended September 30,
1995 offset, in part, by a reduction in interest rates as a result of
restructuring the Company's debt during fiscal year 1994.
<PAGE> 4
Other expense was $2.4 million for the year ended September
30, 1995. Other expense reflects the costs incurred in connection with
the Company's receivables securitization facility, which was
established by the Company in November 1994.
The provision for income taxes for the year ended September
30, 1995 was reduced by utilization of a net operating loss
carryforward and a $1.2 million income tax benefit resulting from a
reassessment of the Company's deferred income tax liabilities. As a
result, the Company's effective tax rate was 24% for the year ended
September 30, 1995. The Company expects its effective tax rate in
future periods to be near the statutory income tax rate of
approximately 38%.
FISCAL YEAR ENDED SEPTEMBER 30, 1994 COMPARED
WITH FISCAL YEAR ENDED SEPTEMBER, 30, 1993
Net sales increased 4.5% while shipments decreased by
approximately 43,300 tons, or 2.9%, for the year ended September 30,
1994 as compared to the previous fiscal year. The increased sales
resulted from increased average selling prices on all products. The
weighted average sales price (net of transportation costs) per ton of
sheet, plate and pipe products increased by 12.2%, 6.1% and 0.6%,
respectively, in the year ended September 30, 1994 compared to the
previous fiscal year. The overall average selling price realization
per ton also increased between the years; however, this increase was
offset, in part, by a shift in product mix to lower priced sheet
products from higher priced plate and pipe products. The shift in
product mix was due primarily to the Company's suspension of certain
plate production while upgrades to various processing equipment were
being implemented and to favorable pricing associated with sheet
products. The decrease in total shipments resulted primarily from
lower production due to production inefficiencies and interruptions
associated with completion and implementation of various capital
projects. Shipped tonnage of sheet increased approximately 74,300 tons
or 7.7%, while shipped tonnage of plate and pipe decreased
approximately 106,200 tons or 24.9% and 31,200 tons or 26.3%,
respectively, between the two years.
The Company's cost of sales, as a percentage of net sales,
increased to 96.8% for the year ended September 30, 1994 from 95.3%
for the previous fiscal year as a result of higher operating costs
offset, in part, by higher average selling prices. The average cost of
sales per ton shipped increased approximately $27 per ton between the
two years. The increased cost per ton was offset, in part, by a shift
in product mix to lower cost sheet products. Costs increased primarily
as a result of production inefficiencies and transition costs
associated with construction and implementation of various
modernization and capital projects. Costs also increased due to repair
work at the blast furnace operations, increased depreciation expense,
increased coke costs as a result of purchasing coke to supplement
internal coke production, higher wages and benefits as required by the
union labor agreement and increases in certain other operating costs.
Depreciation costs included in cost of sales increased
approximately $5.4 million for the year ended September 30, 1994
compared with the previous fiscal year. This increase was due to
increases in the asset base resulting from capital expenditures.
Selling, general and administrative expenses for the year
ended September 30, 1994 increased approximately $1.7 million as
compared to the previous fiscal year. The higher expenses resulted
primarily from increased wages and salaries and increased outside
services in fiscal year 1994.
Interest and other income decreased approximately $0.3 million
during the year ended September 30, 1994 as compared to the previous
fiscal year as a result of a decrease in the amount of invested cash
and cash equivalents.
Interest expense increased approximately $4.6 million during
the year ended September 30, 1994 as compared to the previous fiscal
year. Increased interest expense due to higher levels of borrowing in
fiscal year 1994 was partially offset by an increase in capitalized
interest and a reduction in interest rates as a result of
restructuring the Company's debt.
In February 1994, the Company completed a public offering of
$190 million aggregate principal amount of 9 1/2% senior notes (the "9
1/2% Senior Notes"). A portion of the proceeds from the offering was
used to repay an aggregate of approximately $90 million principal
amount of senior and subordinated term debt bearing a weighted average
interest rate of 11.24%, plus contractual prepayment premiums of
approximately $12.3 million. In addition, deferred loan costs of
approximately $1.6 million were expensed in connection with the early
extinguishment of the debt. The prepayment premiums and deferred loan
costs have been reflected as an extraordinary item in the Company's
fiscal year 1994 statement of operations.
<PAGE> 5
LIQUIDITY AND CAPITAL RESOURCES
The Company's liquidity requirements arise from capital expenditures
and working capital requirements, including interest payments. The
Company has met these requirements over the past three years
principally from the incurrence of additional long-term indebtedness,
including borrowings under the Company's revolving credit facility,
fundings under its accounts receivable securitization facility,
equipment lease financing and cash provided by operations.
In March 1993, the Company issued in a public offering $135
million principal amount of 11 1/8% senior notes (the "11 1/8% Senior
Notes" and together with the 9 1/2% Senior Notes, the "Senior Notes").
The 11 1/8% Senior Notes mature in 2001, are unsecured and require
interest payments semi-annually on March 15 and September 15. After
March 1998, the 11 1/8% Senior Notes are redeemable, in whole or in
part, at the option of the Company, subject to certain redemption
premiums. A portion of the proceeds from the 11 1/8% Senior Notes
offering was used to repurchase, at par value, approximately $70
million aggregate principal amount of term debt.
In connection with the offering of the 11 1/8% Senior Notes,
the Company issued $40 million of 14% cumulative redeemable
exchangeable preferred stock (the "Redeemable Preferred Stock") at a
price of $100 per share and warrants to purchase an aggregate of
1,132,000 shares of Class A common stock. The Redeemable Preferred
Stock consists of 400,000 shares, no par value, with a liquidation
preference of approximately $142 per share as of September 30, 1995.
Dividends accrue at a rate equal to 14% per annum of the liquidation
preference and, except as provided below, are payable quarterly in
cash from funds legally available therefor. For dividend periods
ending before April 1996, the Company may, at its option, add
dividends to the liquidation preference in lieu of payment in cash.
In fiscal years 1995, 1994 and 1993, the Company elected to add the
applicable dividends to the liquidation preference. The Company will
continue to add the dividends to the liquidation preference through
March 1996. The Redeemable Preferred Stock is exchangeable, at the
Company's option, into subordinated debentures of the Company due 2003
(the "Exchange Debentures"). However, the financial covenants
governing the Company's revolving credit facility currently limit the
Company's ability to incur additional indebtedness, including the
exchange of the Redeemable Preferred Stock. The Company is obligated
to redeem all of the Redeemable Preferred Stock in March 2003 from
funds legally available therefor. The Company's ability to pay cash
dividends on the Redeemable Preferred Stock is subject to compliance
with the covenants and tests contained in the indentures governing the
Senior Notes and in the Company's revolving credit facility. After
March 1998, both the Redeemable Preferred Stock and/or the Exchange
Debentures are redeemable, at the Company's option, subject to certain
redemption premiums. While not affecting net income/loss, dividends
and the accretion required over time to amortize the original issue
discount associated with the Redeemable Preferred Stock will
negatively impact quarterly earnings per share, which impact is
currently $.14 per share per quarter. The warrants to purchase the
Company's Class A common stock are exercisable at $11 per share,
subject to adjustment in certain circumstances, and expire in March
2000.
In February 1994, the Company completed a public offering of
$190 million principal amount of 9 1/2% Senior Notes. The 9 1/2%
Senior Notes mature in 2004, are unsecured and require interest
payments semi-annually on January 15 and July 15. After January 1999,
the 9 1/2% Senior Notes are redeemable, in whole or in part, at the
option of the Company, subject to certain redemption premiums. A
portion of the proceeds from the 9 1/2% Senior Notes offering was used
to repay the Company's remaining outstanding term debt of
approximately $90 million aggregate principal amount and to pay
contractual prepayment premiums of approximately $12.3 million.
In November 1994, the Company amended and restated its
revolving credit facility with a syndicate of banks led by Citicorp
USA, Inc., as agent (the "Revolving Credit Facility"), which is used
primarily for the working capital and capital expenditure needs of the
Company. The Revolving Credit Facility, in the amount of up to $45
million, is secured by the Company's inventories, unsold accounts
receivable, and general intangibles, and proceeds thereof, and expires
on April 30, 1999. The amount available to the Company under the
Revolving Credit Facility currently ranges from 50% to 55%, in the
aggregate, of eligible inventories. At December 22, 1995, the
Company's eligible inventories supported full access to the $45
million Revolving Credit Facility. Interest is payable monthly at the
defined base rate (8.75% at
<PAGE> 6
November 30, 1995) plus 1.75% or the defined LIBOR rate (5.75% at
November 30, 1995) plus 3.0%. The Company's ability to borrow under
the Revolving Credit Facility is subject to compliance with various
financial covenants and tests contained therein. As of December 22,
1995, the Company had $19.8 million in borrowings and $9.3 million in
letters of credit outstanding under the Revolving Credit Facility.
The debt instruments governing the Revolving Credit Facility
and the Senior Notes contain cross default and other customary
provisions. Financial covenants contained in the Revolving Credit
Facility and/or the Senior Notes also include, among others, a
limitation on dividends and distributions on capital stock of the
Company, a tangible net worth maintenance requirement, a current ratio
maintenance requirement, a leverage ratio maintenance requirement, an
interest coverage requirement, a cumulative cash flow requirement, a
cumulative capital expenditure limitation, a limitation on the
incurrence of additional indebtedness unless certain financial tests
are satisfied, a limitation on mergers, consolidations and
dispositions of assets and a limitation on liens. In the event of a
change in control, the Company must offer to purchase all Senior Notes
then outstanding at a premium. In June and October 1995, the Company
entered into amendments modifying the financial covenants and tests
contained in the Revolving Credit Facility. The Company will likely be
required to seek additional amendments of the Revolving Credit
Facility in the future based on actual operating results or capital
spending.
In November 1994, the Company also executed agreements to
create and fund a five-year accounts receivable securitization
facility of up to $65 million (the "Receivables Facility"). Under the
Receivables Facility, the Company sells substantially all of its
accounts receivable to a wholly-owned special purpose subsidiary,
Geneva Steel Funding Corporation ("GSFC"). GSFC transfers the accounts
receivable purchased from the Company to a trust in exchange for
certain trust certificates representing ownership interests in the
assets of the trust. One of the trust certificates is then sold to an
institutional investor and the related proceeds are used by GSFC to
pay the Company for the receivables purchased by GSFC. During the term
of the Receivables Facility, the cash generated by collection of the
receivables will be used to purchase additional receivables or make
payments to the investor. GSFC will purchase substantially all of the
Company's receivables on an ongoing basis. Pursuant to the Receivables
Facility, the Company acts as servicer for the accounts receivable.
The yield on amounts funded by the institutional investor
under the Receivables Facility is the applicable commercial paper rate
(5.27% at November 30, 1995) plus 0.5%. In addition, GSFC pays a
0.375% fee on unfunded amounts. Funding availability under the
Receivables Facility is based on eligible receivables as defined in
the applicable agreements. At December 22, 1995, $29.7 million was
available under the Receivables Facility, of which $29.7 million had
been funded. The Company is not subject to any financial ratio tests
under the Receivables Facility, but the agreements governing the
Receivables Facility provide for early termination and payment upon
certain events, which include the incurrence of losses or
delinquencies on the receivables in excess of certain levels or the
bankruptcy or insolvency of the Company. The principal benefit of the
Receivables Facility is to reduce the Company's cost of funding
related to its working capital needs.
Besides these and other financing activities, the Company's
major source of liquidity has been cash provided by operating
activities. Net cash provided by operating activities was $82.0
million for the year ended September 30, 1995 compared with net cash
used for operating activities of $27.5 million and net cash provided
by operating activities of $64.4 million for the years ended September
30, 1994 and 1993, respectively. The $82.0 million provided by
operating activities during the year ended September 30, 1995 was
generated primarily as a result of fundings under the Company's
Receivables Facility of $34.7 million, depreciation and amortization
of $39.3 million, an increase in accounts payable and accrued
liabilities of $15.7 million, net income of $11.6 million and an
increase in deferred income taxes of $6.4 million. These sources of
cash flow were offset, in part, by a $22.0 million increase in
accounts receivable primarily associated with higher shipment levels
and a $3.9 million increase in inventories. The Company also
increased its cash flow during the period through $16.0 million in
sale-leaseback transactions of manufacturing equipment.
Capital expenditures were approximately $68 million, $165
million and $83 million for fiscal years 1995, 1994 and 1993,
respectively. Capital expenditures for fiscal year 1996 are estimated
at $38.0 million, which includes $9.0
<PAGE> 7
million in capital spending previously scheduled for fiscal year 1995.
Capital projects for fiscal year 1996 consist of a blast furnace
reline and various other projects designed to reduce costs and
increase product quality and throughput. Substantially all of the
equipment for the rolling mill finishing stand improvements will be
completed during fiscal year 1996. The Company has, however, elected
to defer installation of that equipment until the following fiscal
year. Depending on market, operational, liquidity and other factors,
the Company may elect to adjust the design, timing and budgeted
expenditures of its capital plan. In particular, the Company may elect
at a later date to proceed with installation of the finishing stand
equipment during the 1996 fiscal year, which would result in an
increase in capital spending of as much as $11.0 million. The Company
anticipates that it may incur significant start-up and transition
costs when the equipment is installed and implemented. The Revolving
Credit Facility contains certain limitations on capital expenditures
that are dependent, in part, on the Company's actual cash flows. If
the Company fails to achieve anticipated operating and cash flow
results, such limitations could preclude the Company from making
capital expenditures in the amounts that are currently anticipated.
The Company is required to make substantial interest and
dividend payments on the Senior Notes; its Redeemable Preferred Stock
or, in the alternative, Exchange Debentures; and outstanding balances
under the Revolving Credit Facility, together with interest on any
additional funding that may be necessary for capital expenditures
and other working capital needs. Currently, the Company's annual cash
interest expense is approximately $36.0 million and its annual
preferred stock dividends are approximately $8.1 million. As stated
earlier, dividends not paid in cash before April 1996 will be added to
the liquidation preference of the Redeemable Preferred Stock. In
addition, the Company will incur costs based on the yield applicable
to funded amounts under the Receivables Facility.
As discussed above, the Company's future operations will be
impacted by, among others, pricing, product mix, throughput levels and
improvements in production efficiencies. The Company has efforts
underway to increase production throughput and efficiency and to shift
its product mix to higher-margin plate products. Pricing in future
periods is a key variable that remains subject to uncertainty. There
can be no assurance that the Company can achieve the anticipated
product mix improvements, production efficiencies, and throughput
levels or that sufficient demand will exist to support the Company's
additional throughput capacity.
The Company also has several efforts underway to improve its
liquidity position, including as discussed below. The Company is
currently pursuing a modification to its Receivables Facility that, if
completed, would allow access to approximately $10 to $15 million in
additional fundings thereunder. The Company previously entered into an
agreement with one of its major customers, whereby the customer makes
a production prepayment of up to $10 million upon entry of new orders.
The Company is currently negotiating an increase in the maximum amount
of production prepayments to $20 million, which at current sales
levels would increase production prepayments to approximately
$15 million. The Company is also attempting to reduce inventories,
including through utilization of just-in-time suppliers or consigned
inventories of certain raw materials. There can, however, be no
assurance that the above efforts will be successful.
The short-term and long-term liquidity of the Company is
dependent upon several factors, including the Company's ongoing
operations, availability of financing, foreign currency fluctuations,
competitive and market forces, capital expenditures and general
economic conditions. Moreover, the United States steel market is
subject to cyclical fluctuations that may affect the amount of cash
internally generated by the Company and the ability of the Company to
obtain external financing. Although the Company believes that the
anticipated cash from future operations, fundings under the
Receivables Facility and borrowings under the Revolving Credit
Facility will provide sufficient liquidity for the Company to meet its
debt service requirements and to fund ongoing operations, including
required capital expenditures, there can be no assurance that these or
other possible sources will be adequate. Moreover, because of the
Company's current leverage situation, its financial flexibility is
limited.
Inflation can be expected to have an effect on many of the
Company's operating costs and expenses. Due to worldwide competition
in the steel industry, the Company may not be able to pass through
such increased costs to its customers.
<PAGE> 8
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO GENEVA STEEL COMPANY:
We have audited the accompanying consolidated balance sheets of Geneva Steel
Company (a Utah corporation) and subsidiary as of September 30, 1995 and 1994,
and the related consolidated statements of operations, stockholders' equity and
cash flows for each of the three years in the period ended September 30, 1995.
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, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Geneva Steel
Company and subsidiary as of September 30, 1995 and 1994, and the results of
their operations and their cash flows for each of the three years in the period
ended September 30, 1995 in conformity with generally accepted accounting
principles.
/s/ ARTHUR ANDERSEN LLP
- ------------------------
Salt Lake City, Utah
October 25, 1995
(except with respect to the matter discussed in the last paragraph of
Note 7 as to which the date is November 28, 1995)
<PAGE> 9
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
ASSETS SEPTEMBER 30, 1995 1994
------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 12,808 $ --
Accounts receivable, less allowance for doubtful
accounts of $2,012 and $3,113, respectively 35,178 47,907
Inventories 89,909 86,009
Deferred income taxes 6,885 6,407
Prepaid expenses and other 2,661 2,838
---------------------------
Total current assets 147,441 143,161
---------------------------
Property, Plant and Equipment:
Land 1,941 1,931
Buildings 16,092 16,092
Machinery and equipment 576,066 521,729
Mineral property and development costs 8,425 8,425
---------------------------
602,524 548,177
Less accumulated depreciation (132,134) (94,891)
---------------------------
Net property, plant and equipment 470,390 453,286
---------------------------
Other Assets 10,966 10,368
---------------------------
$628,797 $ 606,815
---------------------------
------------------------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------------------------------------------------------------------------------
Current Liabilities:
Accounts payable $ 67,939 $ 57,021
Accrued liabilities 19,045 14,471
Accrued payroll and related taxes 10,667 9,178
Production prepayments 10,000 10,000
Accrued interest payable 4,610 4,580
Accrued pension and profit sharing costs 2,135 1,114
---------------------------
Total current liabilities 114,396 96,364
---------------------------
Long-Term Debt 342,033 357,348
---------------------------
Deferred Income Tax Liabilities 13,263 6,407
---------------------------
Commitments and Contingencies (Note 5)
Redeemable Preferred Stock, Series B, no par value;
400,000 shares authorized, issued and outstanding,
with a liquidation value of $56,753 and $49,457, respectively 51,031 43,032
---------------------------
Stockholders' Equity:
Preferred stock, no par value; 3,600,000 shares authorized
for all series, excluding Series B, none issued -- --
Common stock-
Class A, no par value; 60,000,000 shares authorized, 14,695,265 and
14,556,431 shares issued, respectively 87,926 87,193
Class B, no par value; 50,000,000 shares authorized, 19,251,348
and 20,639,688 shares issued and outstanding, respectively 10,163 10,896
Warrants to purchase Class A common stock 5,360 5,360
Retained earnings 22,754 19,266
Less 1,379,863 and 1,450,049 Class A common stock treasury shares,
respectively, at cost (18,129) (19,051)
---------------------------
Total stockholders' equity 108,074 103,664
---------------------------
$628,797 $ 606,815
---------------------------
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these balance sheets.
----------------------------------------------------------------------------
<PAGE> 10
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30, 1995 1994 1993
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales $ 665,699 $ 486,062 $ 465,181
Cost of sales 594,191 470,548 443,458
--------------------------------------------
Gross margin 71,508 15,514 21,723
Selling, general and administrative expenses 23,795 22,305 20,621
--------------------------------------------
Income (loss) from operations 47,713 (6,791) 1,102
--------------------------------------------
Other income (expense):
Interest and other income 520 1,583 1,885
Interest expense (30,579) (21,722) (17,096)
Other expense (2,386) -- --
--------------------------------------------
(32,445) (20,139) (15,211)
--------------------------------------------
Income (loss) before provision (benefit) for income taxes
and extraordinary item 15,268 (26,930) (14,109)
Provision (benefit) for income taxes 3,664 (10,234) (5,503)
--------------------------------------------
Income (loss) before extraordinary item 11,604 (16,696) (8,606)
Loss on early extinguishment of debt (net of benefit for
income taxes of $4,429) -- (9,534) --
--------------------------------------------
Net income (loss) 11,604 (26,230) (8,606)
Less redeemable preferred stock dividends and
accretion for original issue discount 7,998 7,046 3,466
--------------------------------------------
Net income (loss) applicable to common shares $ 3,606 $ (33,276) $ (12,072)
--------------------------------------------
Income (loss) per common share before extraordinary item $ .24 $ (1.57) $ (.80)
Extraordinary item per common share -- (.63) --
--------------------------------------------
Net income (loss) per common share $ .24 $ (2.20) $ (.80)
--------------------------------------------
Weighted average common shares outstanding 15,330 15,129 15,059
--------------------------------------------
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these statements.
----------------------------------------------------------------------------
<PAGE> 11
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Dollars in thousands)
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
SHARES ISSUED AMOUNT WARRANTS
------------------- ------------------- TO PURCHASE
COMMON COMMON COMMON COMMON COMMON RETAINED TREASURY
CLASS A CLASS B CLASS A CLASS B CLASS A EARNINGS STOCK TOTAL
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at September 30, 1992 14,189,871 24,305,288 $ 85,180 $ 12,830 $ -- $ 64,676 $ (20,854) $ 141,832
Capitalization to common stock of
S Corporation stockholders
distributions for income taxes
returned to Company -- -- 9 2 -- -- -- 11
Conversion of Class B common
stock into Class A common stock 171,015 (1,710,150) 903 (903) -- -- -- --
Issuance of Class A common stock
to employee savings plan -- -- 2 -- -- (62) 704 644
Redeemable preferred stock dividends -- -- -- -- -- (3,099) -- (3,099)
Redeemable preferred stock accretion
for original issue discount -- -- -- -- -- (367) -- (367)
Issuance of 1,132,000 warrants to
purchase Class A common stock
in connection with issuance of
redeemable preferred stock -- -- -- -- 5,360 -- -- 5,360
Net loss -- -- -- -- -- (8,606) -- (8,606)
---------------------------------------------------------------------------------------------
Balance at September 30, 1993 14,360,886 22,595,138 86,094 11,929 5,360 52,542 (20,150) 135,775
Exercise of options to purchase
Class A common stock -- -- (76) -- -- -- 449 373
Conversion of Class B common
stock into Class A common stock 195,545 (1,955,450) 1,033 (1,033) -- -- -- --
Issuance of Class A common stock
to employee savings plan -- -- 142 -- -- -- 650 792
Redeemable preferred stock dividends -- -- -- -- -- (6,358) -- (6,358)
Redeemable preferred stock accretion
for original issue discount -- -- -- -- -- (688) -- (688)
Net loss -- -- -- -- -- (26,230) -- (26,230)
---------------------------------------------------------------------------------------------
Balance at September 30, 1994 14,556,431 20,639,688 87,193 10,896 5,360 19,266 (19,051) 103,664
Conversion of Class B common
stock into Class A common stock 138,834 (1,388,340) 733 (733) -- -- -- --
Issuance of Class A common stock
to employee savings plan -- -- -- -- -- (118) 922 804
Redeemable preferred stock dividends -- -- -- -- -- (7,296) -- (7,296)
Redeemable preferred stock accretion
for original issue discount -- -- -- -- -- (702) -- (702)
Net income -- -- -- -- -- 11,604 -- 11,604
---------------------------------------------------------------------------------------------
Balance at September 30, 1995 14,695,265 19,251,348 $ 87,926 $ 10,163 $ 5,360 $ 22,754 $ (18,129) $ 108,074
---------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these statements.
----------------------------------------------------------------------------
<PAGE> 12
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
YEAR ENDED SEPTEMBER 30, 1995 1994 1993
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash Flows From Operating Activities:
Net income (loss) $ 11,604 $ (26,230) $ (8,606)
Adjustments to reconcile net income (loss) to net cash
provided by (used for) operating activities:
Depreciation and amortization 39,308 29,870 23,150
Deferred income tax provision (benefit) 6,378 (15,619) 2,218
(Increase) decrease in current assets -
Accounts receivable, net 12,729 (1,650) 4,148
Inventories (3,900) (22,779) (3,958)
Income taxes receivable -- -- 15,239
Prepaid expenses and other 177 (1,412) 3,237
Increase (decrease) in current liabilities -
Accounts payable 10,918 4,039 19,104
Accrued liabilities 2,231 2,661 4,743
Accrued payroll and related taxes 1,489 600 654
Production prepayments -- -- 4,001
Accrued interest payable 30 3,047 29
Accrued pension and profit sharing costs 1,021 4 435
--------------------------------------------
Net cash provided by (used for) operating activities 81,985 (27,469) 64,394
Cash Flows From Investing Activities:
Purchase of property, plant and equipment (68,025) (164,918) (82,534)
Proceeds from sale of property, plant and equipment 15,966 -- --
Change in other assets (889) -- --
--------------------------------------------
Net cash used for investing activities $(52,948) $(164,918) $(82,534)
--------------------------------------------
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these statements.
----------------------------------------------------------------------------
<PAGE> 13
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30, 1995 1994 1993
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash Flows From Financing Activities:
Proceeds from issuance of long-term debt $ -- $222,348 $135,000
Payments on long-term debt (15,315) (89,991) (88,191)
Proceeds from issuance of redeemable preferred stock, net of offering costs -- -- 32,521
Proceeds from issuance of warrants to purchase
Class A common stock, net of offering costs -- -- 5,360
Payments for deferred loan costs and other assets (1,724) (5,513) (6,062)
Proceeds from exercise of options to purchase
Class A common stock -- 373 --
Issuance of Class A common stock to employee savings plan 804 792 644
Other 6 111 13
-----------------------------------
Net cash provided by (used for) financing activities (16,229) 128,120 79,285
-----------------------------------
Net increase (decrease) in cash and cash equivalents 12,808 (64,267) 61,145
Cash and cash equivalents at beginning of year -- 64,267 3,122
-----------------------------------
Cash and cash equivalents at end of year $ 12,808 $ -- $ 64,267
-----------------------------------
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest (net of amount capitalized) $ 34,357 $ 16,559 $ 14,655
Income taxes 250 512 --
</TABLE>
Supplemental schedule of noncash financing activities:
For the years ended September 30, 1995, 1994 and 1993, the Company
increased the redeemable preferred stock liquidation preference by $7,296,
$6,358 and $3,099, respectively, in lieu of paying a cash dividend. In
addition, for the same years, redeemable preferred stock was increased by
$702, $688 and $367, respectively, for the accretion required over time to
amortize the original issue discount on the redeemable preferred stock
incurred at the time of issuance.
The accompanying notes to consolidated financial statements are an integral
part of these statements.
----------------------------------------------------------------------------
<PAGE> 14
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share data)
1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Geneva Steel
Company and its wholly-owned subsidiary (collectively, the "Company").
Intercompany balances and transactions have been eliminated in
consolidation.
NATURE OF OPERATIONS
The Company's steel mill manufactures steel slabs and hot-rolled sheet,
plate and pipe products for sale to various distributors, steel processors
and end-users primarily in the western and central United States.
CASH AND CASH EQUIVALENTS
For purposes of the consolidated statements of cash flows, the Company
considers all highly liquid income-earning securities with an initial
maturity of ninety days or less to be cash equivalents. Cash equivalents
are stated at cost plus accrued interest, which approximates fair market
value. The Company's cash management system utilizes a revolving credit
facility with a syndicate of banks and an accounts receivable
securitization facility (see notes 2 and 9).
INVENTORIES
Inventories include costs of material, labor and manufacturing overhead.
Inventories are stated at the lower of cost (using a weighted-average
method) or market value. The composition of inventories as of September 30,
1995 and 1994 was as follows:
<TABLE>
<CAPTION>
------------------------------------------------------------------
1995 1994
------------------------------------------------------------------
<S> <C> <C>
Raw materials $27,784 $31,608
Semi-finished and finished goods 54,191 46,302
Operating materials 7,934 8,099
-------------------------
$89,909 $86,009
-------------------------
------------------------------------------------------------------
</TABLE>
Operating materials consist primarily of production molds, platforms for
the production molds and furnace lining refractories.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost and depreciated using the
straight-line method over their estimated useful lives as follows:
Buildings 31.5 years
Machinery and Equipment 2-30 years
Interest related to the construction or major rebuild of facilities is
capitalized and amortized over the estimated life of the related asset.
Capitalization of interest ceases when the asset is placed in service. The
Company capitalized approximately $5,674, $12,053 and $7,696 of interest
during the years ended September 30, 1995, 1994 and 1993, respectively.
Maintenance and repairs are charged to expense as incurred and costs
of improvements and betterments are capitalized. Upon disposal, related
costs and accumulated depreciation are removed from the accounts and
resulting gains or losses are reflected in income.
Major spare parts for machinery and equipment are capitalized and
included in machinery and equipment in the accompanying consolidated
financial statements. Major spare parts are depreciated using the
straight-line method over the useful lives of the related machinery and
equipment.
Costs incurred in connection with the construction or major rebuild of
facilities are capitalized as construction in progress. No depreciation is
recognized on these assets until placed in service. As of September 30,
1995 and 1994, approximately $80,876 and $63,889 respectively, of
construction in progress was included in machinery and equipment in the
accompanying consolidated financial statements.
Mineral property and development costs are depleted using the units of
production method based upon estimated recoverable reserves. Accumulated
depletion is included in accumulated depreciation in the accompanying
consolidated financial statements.
<PAGE> 15
OTHER ASSETS
Other assets consist primarily of deferred loan costs incurred in
connection with obtaining long-term financing. These costs are being
amortized on a straight-line basis over the term of the applicable
financing agreement. Accumulated amortization totaled $3,023 and $3,659 at
September 30, 1995 and 1994, respectively.
PRODUCTION PREPAYMENTS
The Company has production prepayment terms with a major customer. The
prepayment is recorded as a production prepayment liability until the
product is shipped, at which time the sale is recorded. As of September 30,
1995 and 1994, production prepayments of $10,000 are included in the
accompanying consolidated financial statements.
REVENUE RECOGNITION
Sales are recognized when the product is shipped to the customer. Sales are
reduced by the amount of customer claims. As of September 30, 1995 and
1994, reserves for estimated customer claims of $1,202 and $1,811,
respectively, were included in the allowance for doubtful accounts in the
accompanying consolidated financial statements.
INCOME TAXES
The Company recognizes a liability or asset for the deferred tax
consequences of temporary differences between the tax basis of assets or
liabilities and their reported amounts in the consolidated financial
statements that will result in taxable or deductible amounts in future
years when the reported amounts of the assets or liabilities are recovered
or settled.
RECENT ACCOUNTING PRONOUNCEMENTS
In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 121, "Accounting for the
Impairment of Long-Lived Assets." In October 1995, the Financial Accounting
Standards Board issued SFAS No. 123, "Accounting for Stock-Based
Compensation." The Company is required to adopt SFAS No. 121 and SFAS No.
123 in fiscal year 1997. These new accounting standards are not expected to
have a significant impact on the Company's consolidated financial
statements when implemented.
NET INCOME (LOSS) PER COMMON SHARE
Net income (loss) per common share is based upon the weighted average
number of common and common equivalent shares outstanding during the
periods presented. Common equivalent shares consist of warrants and options
to purchase Class A common stock which have a dilutive effect when applying
the treasury stock method. Class B common stock is included in the weighted
average number of common shares outstanding at one share for every ten
shares outstanding as the Class B common stock can be converted into Class
A common stock at this same rate. Also, the Class B common stock is
entitled to one-tenth of the dividends and other distributions paid to
Class A common stockholders. The holders of both classes of common stock
are entitled to one vote per share.
The net income (loss) for the years ended September 30, 1995, 1994 and 1993
was adjusted for redeemable preferred stock dividends and accretion
required over time to amortize the original issue discount on the
redeemable preferred stock incurred at the time of issuance.
2 LONG-TERM DEBT
Long-term debt as of September 30, 1995 and 1994 consisted of the
following:
---------------------------------------------------------------------------
1995 1994
---------------------------------------------------------------------------
[S] [C] [C]
Senior term notes issued publicly, interest payable
semi-annually at 9.5%, principal due January 15,
2004, unsecured $190,000 $190,000
Senior term notes issued publicly, interest payable
semi-annually at 11.125%, principal due March 15,
2001, unsecured 135,000 135,000
Revolving credit facility from a syndicate of banks,
interest is payable monthly at the defined base
rate (8.75% at September 30, 1995) plus 1.75%,
due April 30, 1999 (see discussion below), secured
by inventories and unsold accounts receivable 17,033 32,348
---------------------
$342,033 $357,348
---------------------
---------------------------------------------------------------------------
<PAGE> 16
The aggregate amounts of principal maturities of long-term debt as of
September 30, 1995 were as follows:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------
YEAR ENDING SEPTEMBER 30,
---------------------------------------------------------------------------
<S> <C>
1996 $ --
1997 --
1998 --
1999 17,033
2000 --
Thereafter 325,000
--------
$342,033
--------
---------------------------------------------------------------------------
</TABLE>
In November 1994, the Company amended and restated its revolving
credit facility with a syndicate of banks led by Citicorp USA, Inc., as
agent (the "Revolving Credit Facility"), which is used primarily for the
working capital and capital expenditure needs of the Company. The
Revolving Credit Facility, in the amount of up to $45,000, is secured by
the Company's inventories, unsold accounts receivable, and general
intangibles, and proceeds thereof, and expires on April 30, 1999. The
amount available to the Company under the Revolving Credit Facility
generally ranges from 50% to 55%, in the aggregate, of eligible
inventories. Interest is payable monthly at the defined base rate (8.75% at
September 30, 1995) plus 1.75% or the defined LIBOR rate (5.75% at
September 30, 1995) plus 3.0%. The Company pays a monthly commitment fee
based on an annual rate of .50% of the average unused portion of the
borrowing limit under the Revolving Credit Facility.
During the years ended September 30, 1995, 1994 and 1993, the Company
retired certain term loans and revolving credit facilities. Deferred loan
costs applicable to debt retired were expensed by the Company and are
included in the accompanying consolidated financial statements.
The debt instruments governing the Revolving Credit Facility, the
$190,000 9 1/2% Senior Notes (the "9 1/2% Senior Notes") and the $135,000
11 1/8% Senior Notes (the "11 1/8% Senior Notes" and together with the 9
1/2% Senior Notes, the "Senior Notes") contain cross default and other
customary provisions. Financial covenants contained in the Revolving Credit
Facility and/or the Senior Notes also include, among others, a limitation
on dividends and distributions on capital stock of the Company, a tangible
net worth maintenance requirement, a leverage ratio maintenance
requirement, an interest coverage requirement, a cumulative cash flow
requirement, a cumulative capital expenditure limitation, a limitation on
the incurrence of additional indebtedness unless certain financial tests
are satisfied, a limitation on mergers, consolidations and dispositions of
assets and a limitation on liens. Based on such covenants, as of September
30, 1995, $9,837 of the Company's retained earnings balance was restricted
from payment of cash dividends. In the event of a change in control, the
Company must offer to purchase all Senior Notes then outstanding at a
premium. The Company is in compliance with the covenants and tests
contained in the Revolving Credit Facility and the Senior Notes.
The Company estimates that the aggregate fair market value of its debt
and related obligations was approximately $271,308 as of September 30,
1995. These estimates were based on quoted market prices or current rates
offered for debt with similar terms and maturities.
3 MAJOR CUSTOMER (DISTRIBUTOR) AND INTERNATIONAL SALES
During the years ended September 30, 1995, 1994 and 1993, the Company
derived approximately 36%, 42% and 41%, respectively, of its net sales
through one customer, who is a distributor to other companies.
International sales during the years ended September 30, 1995, 1994 and
1993 did not exceed 10%.
<PAGE> 17
4 INCOME TAXES
The provision (benefit) for income taxes for the years ended September
30, 1995, 1994 and 1993 consisted of the following:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------
1995 1994 1993
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Current income tax provision (benefit):
Federal $ (2,375) $ 1,163 $ (6,201)
State (339) (207) (1,520)
-------------------------------------------
(2,714) 956 (7,721)
-------------------------------------------
Deferred income tax provision (benefit):
Federal 4,543 (9,080) 1,424
State 649 (924) 794
Change in valuation allowance 1,186 (1,186) --
-------------------------------------------
6,378 (11,190) 2,218
-------------------------------------------
Provision (benefit) for income taxes $ 3,664 $(10,234) $ (5,503)
-------------------------------------------
</TABLE>
The provision (benefit) for income taxes as a percentage of income (loss)
for the years ended September 30, 1995, 1994 and 1993 differs from the
statutory federal income tax rate due to the following:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------
1995 1994 1993
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Statutory federal income tax rate 35.0% (35.0)% (34.8)%
State income taxes, net of federal income taxes 3.3 (3.3) (3.3)
Change in valuation allowance (7.8) 4.4 --
Reassessment of deferred income tax liabilities (8.0) -- --
Other 1.5 (4.1) (0.9)
-------------------------------------------
Effective income tax rate 24.0% (38.0)% (39.0)%
-------------------------------------------
</TABLE>
The components of the net deferred income tax assets and liabilities as of
September 30, 1995 and 1994 were as follows:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------
1995 1994
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
Deferred income tax assets:
Net operating loss carryforward $ 16,346 $ 24,986
Inventory costs capitalized 3,949 4,178
Alternative minimum tax credit carryforward 6,748 6,748
Accrued vacation 1,802 1,696
Allowance for doubtful accounts 956 684
General business credits 2,911 2,271
Other 306 343
---------------------------
Total deferred income tax assets 33,018 40,906
Valuation allowance -- (1,186)
---------------------------
33,018 39,720
---------------------------
Deferred income tax liabilities:
Accelerated depreciation (34,022) (34,977)
Mineral property development costs (2,335) (2,141)
Operating materials (3,039) (2,559)
Other -- (43)
---------------------------
Total deferred income tax liabilities (39,396) (39,720)
---------------------------
Net deferred income tax liabilities $ (6,378) $ --
---------------------------
</TABLE>
As of September 30, 1995, the Company had a net operating loss carryforward
and an alternative minimum tax credit carryforward for tax reporting
purposes of approximately $42,678 and $6,748, respectively. The net
operating loss carryforward expires in 2009.
----------------------------------------------------------------------------
<PAGE> 18
5 COMMITMENTS AND CONTINGENCIES
CAPITAL PROJECTS
The Company has initiated substantial capital expenditures to modernize its
steelmaking, casting, rolling and finishing facilities, thereby reducing
overall operating costs, broadening the Company's product line, improving
product quality and increasing throughput capacity. The Company has spent
approximately $68,000 and $165,000 on capital projects during the fiscal
years ended September 30, 1995 and 1994, respectively. These expenditures
were made primarily in connection with the Company's ongoing modernization
efforts. For fiscal year 1996, the Company has identified approximately
$38,000 in potential capital expenditures. These expenditures include a
blast furnace reline and various other projects designed to reduce costs
and increase product quality and throughput. Depending on market,
operational, liquidity and other factors, the Company may elect to adjust
the design, timing and budgeted expenditures of its capital plan. In
particular, the Company may elect at a later date to proceed with
installation of the finishing stand equipment during the 1996 fiscal year,
which would result in an increase in capital spending of as much as
$11,000.
LEGAL MATTERS
The Company is subject to various legal matters, which it considers normal
for its business activities. Management, after consultation with the
Company's legal counsel, believes that these matters will not have a
material impact on the financial condition of the Company.
ENVIRONMENTAL MATTERS
Compliance with environmental laws and regulations is a significant factor
in the Company's business. The Company is subject to federal, state and
local environmental laws and regulations concerning, among other things,
air emissions, wastewater discharge, and solid and hazardous waste
disposal. The Company believes that it is in compliance in all material
respects with all currently applicable environmental regulations.
The Company has incurred substantial capital expenditures for
environmental control facilities, including the Q-BOP furnaces, the
wastewater treatment facility, the benzene mitigation equipment, the coke
oven gas desulfurization facility and other projects. The Company has
budgeted a total of approximately $1,700 for environmental capital
improvements in fiscal years 1996 and 1997. Such improvements include
potential upgrades to the Company's coking emission controls. Environmental
legislation and regulations have changed rapidly in recent years and it is
likely that the Company will be subject to increasingly stringent
environmental standards in the future. Although the Company has budgeted
for capital expenditures for environmental matters, it is not possible at
this time to predict the amount of capital expenditures that may ultimately
be required to comply with all environmental laws and regulations.
Under the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA"), EPA and the states have
authority to impose liability on waste generators, site owners and
operators and others regardless of fault or the legality of the original
disposal activity. Other environmental laws and regulations may also impose
liability on the Company for conditions existing prior to the Company's
acquisition of the steel mill.
At the time of the Company's acquisition of the steel mill, the
Company and USX Corporation ("USX") identified certain hazardous and solid
waste sites and other environmental conditions which existed prior to the
acquisition. USX has agreed to indemnify the Company (subject to the
sharing arrangements described below) for any fines, penalties, costs
(including costs of clean-up, required studies and reasonable attorneys'
fees), or other liabilities for which the Company becomes liable due to any
environmental condition existing on the Company's real property as of the
acquisition date that is determined to be in violation of any environmental
law, is otherwise required by applicable judicial or administrative action,
or is determined to trigger civil liability (the "Pre-existing
Environmental Liabilities"). The Company has provided a similar indemnity
(but without any similar sharing arrangement) to USX for conditions that
may arise after the acquisition. Although the Company has not completed a
comprehensive analysis of the extent of the Pre-existing Environmental
Liabilities, such liabilities could be material.
<PAGE> 19
Under the acquisition agreement between the two parties, the Company
and USX agreed to share on an equal basis the first $20,000 of costs
incurred by either party to satisfy any government demand for studies,
closure, monitoring, or remediation at specified waste sites or facilities
or for other claims under CERCLA or the Resource Conservation and Recovery
Act. The Company is not obligated to contribute more than $10,000 for the
clean-up of wastes generated prior to the acquisition. The Company believes
that it has paid the full $10,000 necessary to satisfy its obligations
under the cost-sharing arrangement. USX has advised the Company, however,
of its position that a portion of the amount paid by the Company may not be
properly credited against the Company's obligations. Although the Company
believes that USX's position is without merit, there can be no assurance
that this matter will be resolved without litigation. The Company believes
that resolution of this matter will not likely have a material adverse
effect. The Company's ability to obtain indemnification from USX in the
future will depend on factors which may be beyond the Company's control and
may also be subject to dispute.
PURCHASE COMMITMENTS
Effective September 27, 1988, the Company entered into an agreement, which
was subsequently amended on June 8, 1990, to purchase a minimum of
approximately 207 million standard cubic feet of oxygen each month. The
contract expires on April 1, 1998. The contract price is adjusted
semi-annually based on the change in the Producer Price Index for
Industrial Commodities ("PPI"). The Company has agreed to pay all sales and
excise taxes levied against the supplier.
Effective September 1, 1989, the Company entered into an agreement to
purchase interruptible and firm back-up power through January 31, 1999. For
interruptible power, the Company pays an energy charge adjusted annually to
reflect changes in the supplier's average energy costs and facilities
charge, based on 90,000 kilowatts, adjusted annually to reflect changes in
the supplier's per megawatt fixed transmission investment. For firm back-up
power, the Company pays a monthly facilities charge based on 20,000
kilowatts that remains constant, and demand and energy charges based on
actual usage. On November 3, 1993, the Company executed a firm power
contract with the same supplier for additional power needs. Under this
contract, the Company will pay the same energy price as under the
interruptible contract and a power charge based on the supplier's filed
industrial tariff.
Effective April 1, 1991, the Company entered into a six-year agreement
to purchase high-volatile metallurgical-grade coking coal. The Company has
commitments to purchase a minimum of 180,000 tons of high-volatile
metallurgical-grade coking coal in each remaining contract year. The
purchase price is adjusted in each contract year based on the change in the
PPI.
Effective July 12, 1990, the Company entered into an agreement, which
was subsequently amended in December 1992, to purchase 100% of the oxygen,
nitrogen and argon produced at a facility located at the Company's steel
mill which is owned and operated by an independent party. The contract
expires in September 2006 and specifies that the Company will pay a base
monthly charge that is adjusted semi-annually each January 1 and July 1
based upon a percentage of the change in the PPI.
Effective January 1, 1994, the Company entered into a nine-year
agreement to purchase metallurgical coke. The Company has commitments to
purchase a minimum of 274,000 tons of coke at a specified price in the
second and third contract years. The quantity and price for subsequent
years will be as agreed by the parties.
Effective September 1, 1994, the Company entered into a five year
agreement to purchase taconite pellets. The Company has commitments to
purchase 2,400,000 and 2,160,000 tons in the second and third years of the
contract, respectively, and 1,890,000 tons in each of the fourth and fifth
years of the contract. Prices are adjusted each year based on an index
related to the "Cartier Pellets Price".
Effective June 6, 1995, the Company entered into an agreement to
purchase 800 tons a day of oxygen from a new plant being constructed at the
Company's steel mill which will be owned and operated by an independent
party. Upon completion of the new oxygen plant, the Company will pay a
monthly facility charge which will be adjusted semi-annually each January 1
and July 1 based on an index. The contract continues for fifteen years
after the completion of the plant.
<PAGE> 20
LEASE OBLIGATIONS
The Company leases certain facilities and equipment used in its operations.
Management expects that, in the normal course of business, leases that
expire will be renewed or replaced by other leases. The aggregate
commitments under non-cancelable operating leases at September 30, 1995,
were as follows:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------
YEAR ENDING SEPTEMBER 30,
----------------------------------------------------------------------------
<S> <C>
1996 $ 7,943
1997 7,822
1998 7,128
1999 7,079
2000 7,067
Thereafter 35,283
--------
$ 72,322
--------
----------------------------------------------------------------------------
</TABLE>
Total rental expense for non-cancelable operating leases was approximately
$3,931 and $1,505 for the years ended September 30, 1995 and 1994,
respectively.
LETTERS OF CREDIT
As of September 30, 1995, the Company had outstanding letters of credit
totaling approximately $7,950.
6 REDEEMABLE PREFERRED STOCK
In March 1993, the Company issued $40,000 of 14% cumulative redeemable
exchangeable preferred stock (the "Redeemable Preferred Stock") and related
warrants to purchase an aggregate of 1,132,000 shares of Class A common
stock.
The Redeemable Preferred Stock consists of 400,000 shares, no par
value, with a liquidation preference of approximately $142 per share as of
September 30, 1995. Dividends accrue at a rate equal to 14% per annum of
the liquidation preference and, except as provided below, are payable
quarterly in cash from funds legally available therefor. For dividend
periods ending before April 1996, the Company may, at its option, add
dividends to the liquidation preference in lieu of payment in cash. During
the years ended September 30, 1995 and 1994, the Company increased the
liquidation value of the Redeemable Preferred Stock to $56,753 and $49,457,
respectively, by adding dividends to the liquidation preference. The
Company will continue to add the dividends to the liquidation preference
through March 1996. The Redeemable Preferred Stock is exchangeable, at the
Company's option, into subordinated debentures of the Company due 2003 (the
"Exchange Debentures"). However, the financial covenants governing the
Company's Revolving Credit Facility currently limit the Company's ability
to incur additional indebtedness. The Company is obligated to redeem all of
the Redeemable Preferred Stock in March 2003 from funds legally available
therefor. The Company's ability to pay cash dividends on the Redeemable
Preferred Stock is subject to compliance with the covenants and tests
contained in the indentures governing the Senior Notes and in the Revolving
Credit Facility. After March 1998, both the Redeemable Preferred Stock
and/or the Exchange Debentures are redeemable, at the Company's option,
subject to certain redemption premiums. The warrants to purchase Class A
common stock are exercisable at $11 per share, subject to adjustment in
certain circumstances, and expire in March 2000.
The Company estimates that the aggregate fair market value of its
Redeemable Preferred Stock was approximately $42,565 at September 30, 1995.
The Company estimates that the aggregate fair market value of its warrants
to purchase Class A common stock was approximately $3,113 at September 30,
1995. The Company's estimates for the Redeemable Preferred Stock and
warrants to purchase Class A common stock were based on quoted market
prices.
<PAGE> 21
7 STOCK OPTIONS
Effective January 2, 1990, the Company granted options to purchase 330,000
shares of Class A common stock to key employees at an exercise price of
$10.91 per share. The stock options became fully exercisable on January 2,
1995. The stock options remain exercisable until the earlier of 90 days
after the employee's termination of employment or ten years from the date
such stock options were granted.
Effective July 20, 1990, the Company's Board of Directors adopted a
Key Employee Plan (the "Employee Plan") which was approved by the Company's
stockholders in January 1991. The Employee Plan provides that incentive and
nonstatutory stock options to purchase Class A common stock and
corresponding stock appreciation rights may be granted. The Employee Plan
provides for issuance of up to 1,000,000 shares of Class A common stock,
with no more than 750,000 shares of Class A common stock cumulatively
available upon exercise of incentive stock options.
The Employee Plan Committee (the "Committee"), consisting of outside
directors, shall determine the time or times when each incentive or
nonstatutory stock option vests and becomes exercisable; provided no stock
option shall be exercisable within six months of the date of grant (except
in the event of death or disability) and no incentive stock option shall be
exercisable after the expiration of ten years from the date of grant. The
exercise price of incentive stock options to purchase Class A common stock
shall be at least the fair market value of the Class A common stock on the
date of grant. The exercise price of nonstatutory options to purchase
Class A common stock is determined by the Committee.
Stock option activity for the years ended September 30, 1995, 1994 and 1993
consisted of the following:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------
NUMBER OF PRICE PER
SHARES SHARE RANGE
---------------------------------------------------------------------------------------------
<S> <C> <C>
Outstanding at September 30, 1992 376,800 $ 7.88-10.91
Granted 155,900 11.75-12.93
Cancelled (1,700) 7.88-11.75
-----------------------------
Outstanding at September 30, 1993 531,000 7.88-12.93
Granted 128,700 15.00-16.50
Exercised (34,200) 10.91
Cancelled (4,100) 7.88-11.75
-----------------------------
Outstanding at September 30, 1994 621,400 7.88-16.50
Granted 131,100 10.88-11.96
Cancelled (1,200) 7.88-11.75
-----------------------------
Outstanding at September 30, 1995 751,300 $ 7.88-16.50
-----------------------------
---------------------------------------------------------------------------------------------
</TABLE>
Options to purchase 356,920, 237,600 and 177,600 shares of Class A
common stock were exercisable on September 30, 1995, 1994 and 1993,
respectively. Effective November 28, 1995, the Company's Board of Directors
repriced all stock options granted in fiscal years 1995, 1994 and 1993 at
$7.75 per share (market price at November 28, 1995 was $7.00 per share).
8 EMPLOYEE BENEFIT PLANS
UNION SAVINGSAND PENSION PLAN
The Company has a savings and pension plan which provides benefits for all
eligible employees covered by the collective bargaining agreement. This
plan is comprised of two qualified plans: (1) a union employee savings
401(K) plan with a cash or deferred compensation arrangement and (2) a
noncontributory defined contribution pension plan.
Participants may direct the investment of funds related to their
deferred compensation in this plan. Beginning March 1, 1996, the Company
will match participants' contribution to the savings plan at 25% up to 4%
of their compensation. For the pension plan, the Company contributed 4 1/2%
of each participant's compensation
<PAGE> 22
to this plan from March 1, 1995 through September 30, 1995. For the period
from October 1, 1994 through February 28, 1995 and for the years ended
September 30, 1994 and 1993, the Company contributed 4% of each
participant's compensation to this plan. Total contributions by the Company
for the years ended September 30, 1995, 1994 and 1993 were $3,485, $3,086
and $2,675, respectively. The participants vest in these contributions at
20% for each year of service and become fully vested after five years.
MANAGEMENT EMPLOYEE SAVINGS AND PENSION PLAN
The Company has a savings and pension plan which provides benefits for all
eligible employees not covered by the collective bargaining agreement. This
plan is comprised of two qualified plans: (1) a management employee savings
401(k) plan with a cash or deferred compensation arrangement and
discretionary matching contributions and (2) a noncontributory defined
contribution pension plan.
Participants may direct the investment of funds related to their
deferred compensation in this plan. The employee savings plan provides for
discretionary matching contributions as determined each plan year by the
Company's Board of Directors. The Board of Directors elected to match
participants' contribution to the employee savings plan up to 4% of their
compensation for fiscal years 1995, 1994 and 1993. For the pension plan,
the Company contributed 4 1/2% of each participant's compensation to this
plan from March 1, 1995 through September 30, 1995. For the period from
October 1, 1994 through February 28, 1995 and for the years ended September
30, 1994 and 1993, the Company contributed 4% of each participant's
compensation to this plan. During the years ended September 30, 1995, 1994
and 1993, total contributions by the Company were $1,981, $1,780 and
$1,567, respectively. The participants vest in the Company's contributions
at 20% for each year of service and become fully vested after five years.
VOLUNTARY EMPLOYEE BENEFICIARY ASSOCIATION TRUST
Effective March 1, 1995, the Company established a voluntary employee
beneficiary association trust ("VEBA Trust") to fund post-retirement
medical benefits for future retirees covered by the collective bargaining
agreement. Company contributions to the VEBATrust are limited to ten cents
for each hour of work performed by employees covered by the collective
bargaining agreement. In addition, union employees provide a contribution
to the VEBA Trust based on a reduction from their performance dividend plan
payment. No benefits will be paid from the VEBA Trust prior to March 31,
1998. Eligibility requirements and related matters will be determined at a
later date.
PROFIT SHARING AND BONUS PROGRAMS
The Company has a profit sharing program for full-time union eligible
employees. Participants receive payments based upon operating income
reduced by an amount equal to a portion of the Company's capital
expenditures. No profit sharing and bonus payments were accrued in the
years ended September 30, 1995, 1994 and 1993.
During the year ended September 30, 1993, the Company implemented a
performance dividend plan designed to reward employees for increased
shipments. As shipments increase above an annualized rate of 1.5 million
tons, compensation under this plan increases. Payments made under the
performance dividend plan are deducted from any profit sharing obligations
to the extent such obligations exceed the performance plan payments in any
given fiscal year. During the years ended September 30, 1995, 1994 and
1993, performance dividend plan expenses were $6,391, $1,885 and $484,
respectively.
SUPPLEMENTAL EXECUTIVE PLANS
The Company maintains insurance and retirement agreements with certain of
the management employees and executive officers. Pursuant to the insurance
agreements, the Company pays the annual premiums and receives certain
policy proceeds upon the death of the retired management employee or
executive officer. Pursuant to the retirement agreements, the Company
provides for the payment of supplemental benefits to certain management
employees and executive officers upon retirement.
9 ACCOUNTS RECEIVABLE SECURITIZATION FACILITY
In November 1994, the Company executed agreements to create and fund a five
year accounts receivable securitization facility of up to $65,000 (the
"Receivables Facility"). Under the Receivables Facility the Company sells
substantially all of its accounts receivable to a wholly-owned special
purpose subsidiary, Geneva Steel Funding Corporation ("GSFC"). GSFC
<PAGE> 23
transfers the accounts receivable purchased from the Company to a trust in
exchange for certain trust certificates representing ownership interests in
the assets of the trust. One of the trust certificates is then sold to an
institutional investor and the related proceeds are used by GSFC to pay the
Company for the receivables purchased by GSFC. During the term of the
Receivables Facility, the cash generated by collection of the receivables
will be used to purchase additional receivables or make payments to the
investor. GSFC will purchase substantially all of the Company's receivables
on an ongoing basis. Pursuant to the Receivables Facility, the Company acts
as servicer for the accounts receivable.
The yield on amounts funded by the institutional investor under the
Receivables Facility is the applicable commercial paper rate (5.26% at
September 30, 1995) plus 0.5%. In addition, GSFC pays a 0.375% fee on
unfunded amounts. Funding availability under the Receivables Facility is
based on eligible receivables as defined in the applicable agreements. The
Company is not subject to any financial ratio tests under the Receivables
Facility, but the agreements governing the Receivables Facility provide for
early termination and payment upon certain events, which include the
incurrence of losses or delinquencies on the receivables in excess of
certain levels or the bankruptcy or insolvency of the Company. The trust
certificates received by GSFC from the trust are solely the asset of GSFC.
In the event of a liquidation of GSFC, such creditors would be entitled to
satisfy their claims from GSFC based on their fixed payment allocation
percentage representing their pro rata share of funding to total trust
assets.
10 SUBSEQUENT EVENT
In October 1995, the Company and Inland Materials Distribution Group
("IMDG"), a wholly-owned subsidiary of Inland Steel Industries, announced a
tentative agreement to form a joint venture that will own and operate a
wide coiled plate processing facility in the Chicago area. The facility
will be designed to process wide coiled plate into flat plate up to one
inch in thickness and up to 96 inches (and potentially 126 inches) in
width. The facility will be capable of producing up to 500,000 tons of
discrete plate annually and is currently scheduled for completion during
the first half of the 1997 calendar year. Flat plate processed on the line
will be sold by the Company directly to customers and to IMDG for
distribution through its steel service center network.
11 SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
A summary of quarterly financial information for the years ended September
30, 1995 and 1994 is as follows:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------
1995 QUARTERS FIRST SECOND THIRD FOURTH
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $164,424 $157,213 $175,196 $168,866
Gross margin 15,944 15,812 23,059 16,693
Net income 1,008 1,131 5,696 3,769
Net income (loss) applicable to common shares (898) (837) 3,667 1,674
Net income (loss) per common share (.06) (.06) .24 .11
<CAPTION>
------------------------------------------------------------------------------------------------------------------------
1994 QUARTERS FIRST SECOND THIRD FOURTH
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $127,099 $121,115 $113,195 $124,653
Gross margin 11,473 1,899 (855) 2,997
Income (loss) before extraordinary item (a) 1,710 (4,680) (7,074) (6,652)
Net income (loss) 1,710 (13,938) (7,074) (6,928)
Net income (loss) applicable to common shares 31 (15,671) (8,862) (8,774)
Net income (loss) per common share before extraordinary item .002 (.43) (.59) (.56)
Net income (loss) per common share .002 (1.04) (.59) (.58)
</TABLE>
(a) The extraordinary item is a loss on early extinguishment of debt in
the second quarter of fiscal year 1994 with an adjustment in the fourth
quarter of fiscal year 1994.
----------------------------------------------------------------------------
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation of our report incorporated by reference in this Form 10-K, into
the Company's previously filed Registration Statement on Form S-8, File No.
33-40867 and the Company's previously filed Registration Statement on Form S-3,
File No. 33-64548.
ARTHUR ANDERSEN LLP
Salt Lake City, Utah
December 27, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANTS CONSOLIDATED BALANCE SHEET AND CONSOLIDATED STATEMENT OF OPERATIONS
AS OF AND FOR THE YEAR ENDED SEPTEMBER 30, 1995 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH CONSOLIDATED FINANCIAL STATEMENTS, INCLUDING THE NOTES
THERETO.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-START> OCT-01-1994
<PERIOD-END> SEP-30-1995
<EXCHANGE-RATE> 1
<CASH> 12,808,000
<SECURITIES> 0
<RECEIVABLES> 35,178,000
<ALLOWANCES> 2,012,000
<INVENTORY> 89,909,000
<CURRENT-ASSETS> 147,441,000
<PP&E> 602,524,000
<DEPRECIATION> 132,134,000
<TOTAL-ASSETS> 628,797,000
<CURRENT-LIABILITIES> 114,396,000
<BONDS> 342,033,000
51,031,000
0
<COMMON> 79,960,000
<OTHER-SE> 28,114,000
<TOTAL-LIABILITY-AND-EQUITY> 628,797,000
<SALES> 665,699,000
<TOTAL-REVENUES> 665,699,000
<CGS> 594,191,000
<TOTAL-COSTS> 594,191,000
<OTHER-EXPENSES> 23,795,000
<LOSS-PROVISION> 5,138,000
<INTEREST-EXPENSE> 32,445,000
<INCOME-PRETAX> 15,268,000
<INCOME-TAX> 3,664,000
<INCOME-CONTINUING> 11,604,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,604,000
<EPS-PRIMARY> .24
<EPS-DILUTED> .24
</TABLE>
