<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1999
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________ to ______________
Commission File #1-10459
GENEVA STEEL COMPANY
(Exact name of registrant as specified in its charter)
UTAH 93-0942346
(State of Incorporation) (I.R.S. Employer Identification No.)
10 South Geneva Road
Vineyard, Utah
(Address of principal executive offices)
84058
(Zip Code)
Registrant's telephone number, including area code: (801) 227-9000
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
Indicate the number of shares outstanding of each class of the issuer's common
stock, as of the latest practicable date.
15,068,767 and 17,851,348 shares of Class A and Class B common stock,
respectively, outstanding as of January 31, 2000.
<PAGE> 2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
GENEVA STEEL COMPANY
DEBTOR-IN-POSSESSION
CONDENSED BALANCE SHEETS
(Dollars in thousands)
(Unaudited)
ASSETS
<TABLE>
<CAPTION>
December 31, September 30,
1999 1999
--------- ---------
<S> <C> <C>
Current assets:
Cash $ -- $ --
Accounts receivable, net 12,563 15,196
Inventories 53,935 55,460
Deferred income taxes 14,006 14,609
Prepaid expenses and other 4,728 4,584
--------- ---------
Total current assets 85,232 89,849
--------- ---------
Property, plant and equipment:
Land 1,792 1,990
Buildings 16,093 16,119
Machinery and equipment 631,416 645,943
Mineral property and development costs 1,000 1,000
--------- ---------
650,301 665,052
Less accumulated depreciation (287,572) (292,035)
--------- ---------
Net property, plant and equipment 362,729 373,017
--------- ---------
Other assets 11,652 11,850
--------- ---------
$ 459,613 $ 474,716
========= =========
</TABLE>
The accompanying notes to condensed financial statements are
an integral part of these condensed balance sheets.
Page 2 of 23
<PAGE> 3
GENEVA STEEL COMPANY
DEBTOR-IN-POSSESSION
CONDENSED BALANCE SHEETS (Continued)
------------------------------------
(Dollars in thousands)
(Unaudited)
LIABILITIES AND STOCKHOLDERS' DEFICIT
<TABLE>
<CAPTION>
December 31, September 30,
1999 1999
--------- ---------
<S> <C> <C>
Liabilities not subject to compromise:
Revolving credit facility $ 42,969 $ 55,466
Accounts payable 14,536 16,334
Accrued liabilities 14,944 18,209
Accrued payroll and related taxes 7,961 7,444
Accrued pension and profit sharing costs 1,832 963
--------- ---------
Total current liabilities 82,242 98,416
--------- ---------
Liabilities subject to compromise:
Senior notes 325,000 325,000
Accounts payable 56,712 56,633
Accrued dividends payable 28,492 28,492
Accrued interest payable 15,409 15,409
Accrued liabilities 3,238 3,404
--------- ---------
428,851 428,938
--------- ---------
Long-term employee defined benefits 10,731 10,731
--------- ---------
Deferred income tax liabilities 14,006 14,609
--------- ---------
Redeemable preferred stock
(subject to compromise) 56,188 56,001
--------- ---------
Stockholders' deficit:
Preferred stock -- --
Common stock:
Class A 92,339 92,022
Class B 9,424 9,741
Warrants to purchase Class A
common stock 4,255 4,255
Accumulated deficit (238,423) (239,997)
========= =========
Total stockholders' deficit (132,405) (133,979)
========= =========
$ 459,613 $ 474,716
========= =========
</TABLE>
The accompanying notes to condensed financial statements are
an integral part of these condensed balance sheets.
Page 3 of 23
<PAGE> 4
GENEVA STEEL COMPANY
DEBTOR-IN-POSSESSION
CONDENSED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED DECEMBER 31, 1999 AND 1998
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
1999 1998
--------- ---------
<S> <C> <C>
Net sales $ 126,169 $ 78,699
Cost of sales 126,863 108,237
--------- ---------
Gross margin (694) (29,538)
Selling, general and administrative
expenses 3,348 9,703
--------- ---------
Loss from operations (4,042) (39,241)
--------- ---------
Other income (expense):
Interest and other income 53 25
Interest expense (total contractual
interest of $9,752 in 1999) (1,485) (10,721)
Gain on asset sales 8,349 119
--------- ---------
6,917 (10,577)
--------- ---------
Income (loss) before reorganization
item and provision (benefit) for
income taxes 2,875 (49,818)
Reorganization item 1,114 --
--------- ---------
Income (loss) before provision (benefit)
for income taxes 1,761 (49,818)
Provision (benefit) for income taxes -- --
--------- ---------
Net income (loss) 1,761 (49,818)
Less redeemable preferred stock dividends
and accretion for original issue discount 187 3,191
--------- ---------
Net income (loss) applicable to common
shares $ 1,574 $ (53,009)
========= =========
Basic and diluted net income (loss) per
common share $ .09 $ (3.30)
========= =========
Weighted average common shares outstanding 16,854 16,042
========= =========
</TABLE>
The accompanying notes to condensed financial statements are
an integral part of these condensed statements.
Page 4 of 23
<PAGE> 5
GENEVA STEEL COMPANY
DEBTOR-IN-POSSESSION
CONDENSED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED DECEMBER 31, 1999 AND 1998
(Dollars in thousands)
(Unaudited)
Increase (Decrease) in Cash
<TABLE>
<CAPTION>
1999 1998
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 1,761 $(49,818)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation 10,681 11,045
Amortization 198 478
Deferred income taxes -- --
Gain on asset sales (8,349) (119)
(Increase) decrease in current
assets--
Accounts receivable, net 2,633 36,336
Inventories 1,525 18,637
Prepaid expenses and other (144) 345
Increase (decrease) in current
liabilities--
Accounts payable (2,110) (10,723)
Accrued liabilities (3,431) (5,829)
Accrued payroll and related taxes 517 (1,837)
Accrued interest payable -- 8,506
Accrued pension and profit
sharing costs 869 500
-------- --------
Net cash provided by operating
activities 4,150 7,521
-------- --------
Cash flows from investing activities:
Purchases of property, plant and equipment (639) (3,355)
Proceeds from sale of property, plant and
equipment 8,595 140
-------- --------
Net cash provided by (used for)
investing activities $ 7,956 $ (3,215)
-------- --------
</TABLE>
The accompanying notes to condensed financial statements are
an integral part of these condensed statements.
Page 5 of 23
<PAGE> 6
GENEVA STEEL COMPANY
DEBTOR-IN-POSSESSION
CONDENSED STATEMENTS OF CASH FLOWS (Continued)
THREE MONTHS ENDED DECEMBER 31, 1999 AND 1998
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
1999 1998
-------- --------
<S> <C> <C>
Cash flows from financing activities:
Borrowings from credit facilities $ 1,353 $ 1,282
Payments on credit facilities (13,850) (4,817)
Change in bank overdraft 391 (771)
-------- --------
Net cash used for financing activities (12,106) (4,306)
-------- --------
Net change in cash -- --
Cash at beginning of period -- --
-------- --------
Cash at end of period $ -- $ --
======== ========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest (net of amount capitalized) $ 1,064 $ 1,738
</TABLE>
Supplemental schedule of noncash financing activities:
For the three months ended December 31, 1999 and 1998, the Company increased
the redeemable preferred stock by $187 and $189, respectively, for the
accretion required over time to amortize the original issue discount on the
redeemable preferred stock incurred at the time of issuance. At December 31,
1999, the Company had accrued dividends payable of $28,492 (total
contractual dividends of $40,205).
The accompanying notes to condensed financial statements are
an integral part of these condensed statements.
Page 6 of 23
<PAGE> 7
GENEVA STEEL COMPANY
DEBTOR-IN-POSSESSION
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
(1) VOLUNTARY FILING FOR RELIEF UNDER CHAPTER 11 OF THE UNITED STATES
BANKRUPTCY CODE
On February 1, 1999, the Company filed a voluntary petition for relief
under Chapter 11 of the United States Bankruptcy Code in the United States
Bankruptcy Court for the District of Utah, Central Division. The filing was made
necessary by a lack of sufficient liquidity. The Company's operating results for
fiscal years 1998 and 1999 were severely affected by, among other things, the
dramatic surge in steel imports beginning in 1998. As a consequence of
record-high levels of low-priced steel imports and the resultant deteriorating
market conditions, the Company's overall price realization and shipments
declined precipitously. Decreased liquidity made it impossible for the Company
to service its debt and fund ongoing operations. Therefore, the Company sought
protection under Chapter 11 of the Bankruptcy Code. Prior to the bankruptcy
filing, the Company did not make the $9 million interest payment due January 15,
1999 under the terms of the Company's 9 1/2% senior notes due 2004. The
Bankruptcy Code generally prohibits the Company from making payments on
unsecured, pre-petition debt, including the 9 1/2% senior notes due 2004 and the
11 1/8% senior notes due 2001 (collectively, the "Senior Notes"), except
pursuant to a confirmed plan of reorganization. The Company is in possession of
its properties and assets and continues to manage its businesses as debtor-
in-possession subject to the supervision of the Bankruptcy Court. The Company
has a $125 million debtor-in-possession credit facility in place.
As of February 1, 1999, the Company discontinued accruing interest on
its Senior Notes and dividends on its redeemable preferred stock. Contractual
interest on the Senior Notes for the three months ended December 31, 1999 was
$8.3 million, which is not included in the accompanying financial statements.
Contractual dividends on the redeemable preferred stock for the three months
were $3.3 million, which is also not included in the financial statements. As of
December 31, 1999, accrued dividends on the redeemable preferred stock were
approximately $40.2 million, which is $11.7 million in excess of dividends
accrued in the accompanying balance sheet.
Pursuant to the provisions of the Bankruptcy Code, all actions to
collect upon any of the Company's liabilities as of the petition date or to
enforce pre- petition contractual obligations were automatically stayed. Absent
approval from the Bankruptcy Court, the Company is prohibited from paying
pre-petition obligations. However, the Bankruptcy Court has approved payment of
certain other pre-petition liabilities such as employee wages and benefits and
certain pre-petition obligations. Additionally, the Bankruptcy Court has
approved the retention of legal and financial professionals. As a
debtor-in-possession, the Company has the right, subject to Bankruptcy Court
approval and certain other conditions, to assume or reject any pre-petition
executory contracts and unexpired leases. Parties affected by such rejections
may file pre-petition claims with the Bankruptcy Court in accordance with
bankruptcy procedures.
Page 7 of 23
<PAGE> 8
The Company is currently developing a plan of reorganization (the "Plan
of Reorganization") through, among other things, discussions with the official
creditor committees established in the Chapter 11 proceeding. The objective of
the Plan of Reorganization is to restructure the Company's balance sheet to (i)
significantly strengthen the Company's financial flexibility throughout the
business cycle, (ii) fund required capital expenditures and working capital
needs, and (iii) fulfill those obligations necessary to facilitate emergence
from Chapter 11. In conjunction with formulating the Plan of Reorganization, the
Company, with its lender, filed an application on January 31, 2000 for a
government loan guarantee under the Emergency Steel Loan Guarantee Program (the
"Loan Guarantee Program"). The application seeks a government loan guarantee for
$110 million, which is a portion of the financing required to consummate the
Plan of Reorganization. The Plan of Reorganization contemplates that the Company
will also establish a revolving credit facility as well as receive an equity
infusion. There can be no assurance that the Company's application under the
Loan Guarantee Program will be accepted or that, with or without a guarantee,
the Company can obtain the necessary financing to consummate the Plan of
Reorganization.
Although management expects to file the Plan of Reorganization, there
can be no assurance at this time that a Plan of Reorganization will be proposed
by the Company, approved or confirmed by the Bankruptcy Court, or that, if
proposed, approved, confirmed and consummated, such plan will achieve the
objectives described above. The Bankruptcy Court has granted the Company's
request to extend its exclusive right to file a Plan of Reorganization through
February 28, 2000. While the Company has requested a further extension of the
exclusivity period through May 30, 2000, there can be no assurance that the
Bankruptcy Court will grant such extension. If the exclusivity period were to
expire or be terminated prior to confirmation of the Plan of Reorganization,
other interested parties, such as creditors of the Company, would have the right
to propose alternative plans of reorganization.
Although the Chapter 11 bankruptcy filing raises substantial doubt about
the Company's ability to continue as a going concern, the accompanying financial
statements have been prepared on a going concern basis. This basis contemplates
the continuity of operations, realization of assets, and discharge of
liabilities in the ordinary course of business. The accompanying financial
statements also present the assets of the Company at historical cost and the
current intention that they will be realized as a going concern and in the
normal course of business. A plan of reorganization will likely materially
change certain amounts currently disclosed in the financial statements.
The accompanying financial statements do not present the amount which
may ultimately be paid to settle liabilities and contingencies which may be
allowed in the Chapter 11 bankruptcy case. Under Chapter 11 bankruptcy, the
rights of, and ultimate payment by the Company to, pre-petition creditors may be
substantially altered. This could result in claims being paid in the Chapter 11
bankruptcy proceedings at substantially less than 100% of their face value. At
this time, because of material uncertainties, pre-petition claims are generally
carried at their face value in the accompanying financial statements. Moreover,
the interests of existing preferred and common shareholders could, among other
things, be eliminated. Management currently anticipates that the Plan of
Reorganization will be completed and ready to file with the Bankruptcy
Page 8 of 23
<PAGE> 9
Court during mid 2000. The Plan of Reorganization will be premised on the
Company being approved for a guarantee under the Loan Guarantee Program, and the
Company may not file its Plan of Reorganization until a decision on the loan
guarantee application has been announced. There can be no assurance as to the
actual timing for the filing of the Plan of Reorganization or the approval
thereof by the Bankruptcy Court, if at all.
(2) INTERIM CONDENSED FINANCIAL STATEMENTS
The accompanying condensed financial statements of the Company have been
prepared pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and regulations. The
accompanying unaudited condensed financial statements reflect all adjustments
(consisting only of normal recurring adjustments) which, in the opinion of
management, are necessary to present fairly the financial position and results
of operations of the Company.
It is suggested that these condensed financial statements be read in
conjunction with the financial statements and notes thereto included in the
Company's latest Annual Report on Form 10-K.
(3) INVENTORIES
Inventories were comprised of the following components (in thousands):
<TABLE>
<CAPTION>
December 31, September 30,
1999 1999
------- -------
<S> <C> <C>
Raw materials $17,444 $17,081
Semi-finished and finished goods 32,406 33,762
Operating materials 4,085 4,617
------- -------
$53,935 $55,460
======= =======
</TABLE>
(4) BASIC AND DILUTED NET INCOME (LOSS) PER COMMON SHARE
Basic net income (loss) per common share is calculated based upon the
weighted average number of common shares outstanding during the periods. Diluted
net income (loss) per common share is calculated based upon the weighted average
number of common shares outstanding plus the assumed exercise of all dilutive
securities using the treasury stock method. For the three months ended December
31, 1999, stock options and warrants prior to conversion are not included in the
calculation of diluted net income per common share because their exercise price
is greater than the Class A common stock price during the period. For the three
months ended December 31, 1998, stock options and warrants prior to conversion
are not included in the calculation of diluted net loss per common share because
their inclusion would be antidilutive. Class B common stock is included in the
weighted average number of common shares outstanding at one share for every ten
shares outstanding because the Class B common stock is convertible to Class A
common stock at this same rate.
Page 9 of 23
<PAGE> 10
The net income for the three months ended December 31, 1999 was adjusted
for the accretion required over time to amortize the original issue discount on
the redeemable preferred stock incurred at the time of issuance. The net loss
for the three months ended December 31, 1998 was adjusted for redeemable
preferred stock dividends and the accretion required over time to amortize the
original issue discount on the redeemable preferred stock incurred at the time
of issuance.
(5) SALE OF QUARRY
During the three months ended December 31, 1999, the Company finalized
an agreement to sell its quarry for $10.0 million ($1.5 million of which is
contingent upon the future issuance, by the relevant governmental entity, of a
conditional use permit) and received $8.5 million in October 1999. There can be
no assurance that the conditional use permit will be issued or that the Company
will receive the additional $1.5 million of the sale price. Pursuant to the
sale, the Company entered into a contract with the buyer of the quarry for the
purchase of limestone to meet its production requirements at a per ton price
that is lower than the Company's historical production cost.
Page 10 of 23
<PAGE> 11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Overview
On February 1, 1999, the Company filed a voluntary petition for relief
under Chapter 11 of the United States Bankruptcy Code in the United States
Bankruptcy Court for the District of Utah, Central Division. The filing was made
necessary by a lack of sufficient liquidity. The Company's operating results for
fiscal years 1998 and 1999 were severely affected by, among other things, the
dramatic surge in steel imports beginning in 1998. As a consequence of
record-high levels of low-priced steel imports and the resultant deteriorating
market conditions, the Company's overall price realization and shipments
declined precipitously. Decreased liquidity made it impossible for the Company
to service its debt and fund ongoing operations. Therefore, the Company sought
protection under Chapter 11 of the Bankruptcy Code. Prior to the bankruptcy
filing, the Company did not make the $9 million interest payment due January 15,
1999 under the terms of the Company's 9 1/2% senior notes due 2004. The
Bankruptcy Code generally prohibits the Company from making payments on
unsecured, pre-petition debt, including the 9 1/2% senior notes due 2004 and the
11 1/8% senior notes due 2001 (collectively, the "Senior Notes"), except
pursuant to a confirmed plan of reorganization. The Company is in possession of
its properties and assets and continues to manage its businesses as debtor-
in-possession subject to the supervision of the Bankruptcy Court. The Company
has a $125 million debtor-in-possession credit facility in place. (See
"Liquidity and Capital Resources.")
As of February 1, 1999, the Company discontinued accruing interest on
the Senior Notes and dividends on its redeemable preferred stock. Contractual
interest on the Senior Notes for the three months ended December 31, 1999 was
$8.3 million, which is not included in the Company's financial statements.
Contractual dividends on the redeemable preferred stock for the three months
were $3.3 million, which is also not included in the Company's financial
statements. As of December 31, 1999, accrued dividends on the redeemable
preferred stock were approximately $40.2 million, which is $11.7 million in
excess of dividends accrued in the Company's balance sheet.
Pursuant to the provisions of the Bankruptcy Code, all actions to
collect upon any of the Company's liabilities as of the petition date or to
enforce pre-petition contractual obligations were automatically stayed. Absent
approval from the Bankruptcy Court, the Company is prohibited from paying
pre-petition obligations. However, the Bankruptcy Court has approved payment of
certain other pre-petition liabilities such as employee wages and benefits and
certain pre-petition obligations. Additionally, the Bankruptcy Court has
approved the retention of legal and financial professionals. As a
debtor-in-possession, the Company has the right, subject to Bankruptcy Court
approval and certain other conditions, to assume or reject any pre-petition
executory contracts and unexpired leases. Parties affected by such rejections
may file pre-petition claims with the Bankruptcy Court in accordance with
bankruptcy procedures.
The Company is currently developing a plan of reorganization (the "Plan
of Reorganization") through, among other things, discussions with the official
creditor committees established in the Chapter 11 proceeding. The objective
Page 11 of 23
<PAGE> 12
of the Plan of Reorganization is to restructure the Company's balance sheet to
(i) significantly strengthen the Company's financial flexibility throughout the
business cycle, (ii) fund required capital expenditures and working capital
needs, and (iii) fulfill those obligations necessary to facilitate emergence
from Chapter 11. In conjunction with formulating the Plan of Reorganization, the
Company, with its lender, filed an application on January 31, 2000 for a
government loan guarantee under the Emergency Steel Loan Guarantee Program (the
"Loan Guarantee Program"). The application seeks a government loan guarantee for
$110 million, which is a portion of the financing required to consummate the
Plan of Reorganization. The Plan of Reorganization contemplates that the company
will also establish a revolving credit facility as well as receive an equity
infusion. There can be no assurance that the Company's application under the
Loan Guarantee Program will be accepted or that, with or without a guarantee,
the Company can obtain the necessary financing to consummate the Plan of
Reorganization.
Although management expects to file the Plan of Reorganization, there
can be no assurance at this time that a Plan of Reorganization will be proposed
by the Company, approved or confirmed by the Bankruptcy Court, or that, if
proposed, approved, confirmed and consummated, such plan will achieve the
objectives described above. The Bankruptcy Court has granted the Company's
request to extend its exclusive right to file a Plan of Reorganization through
February 28, 2000. While the Company has requested a further extension of the
exclusivity period through May 30, 2000, there can be no assurance that the
Bankruptcy Court will grant such extension. If the exclusivity period were to
expire or be terminated prior to the confirmation of the Plan of Reorganization,
other interested parties, such as creditors of the Company, would have the right
to propose alternative plans of reorganization.
Although the Chapter 11 bankruptcy filing raises substantial doubt about
the Company's ability to continue as a going concern, the Company's financial
statements have been prepared on a going concern basis. This basis contemplates
the continuity of operations, realization of assets, and discharge of
liabilities in the ordinary course of business. The financial statements also
present the assets of the Company at historical cost and the current intention
that they will be realized as a going concern and in the normal course of
business. A plan of reorganization will likely materially change certain amounts
currently disclosed in the Company's financial statements.
The Company's financial statements do not present the amount which may
ultimately be paid to settle liabilities and contingencies which may be allowed
in the Chapter 11 bankruptcy case. Under Chapter 11 bankruptcy, the rights of,
and ultimate payment by the Company to, pre-petition creditors may be
substantially altered. This could result in claims being paid in the Chapter 11
bankruptcy proceedings at substantially less than 100% of their face value. At
this time, because of material uncertainties, pre-petition claims are generally
carried at their face value in the financial statements. Moreover, the interests
of existing preferred and common shareholders could, among other things, be
eliminated. Management currently anticipates that the Plan of Reorganization
will be completed and ready to file with the Bankruptcy Court during mid 2000.
The Plan of Reorganization will be premised on the Company being approved for a
loan guarantee under the Loan Guarantee Program, and the Company may not file
its Plan of Reorganization until a decision on the loan
Page 12 of 23
<PAGE> 13
guarantee has been announced. There can be no assurance as to the actual timing
for the filing of the Plan of Reorganization or the approval thereof by the
Bankruptcy Court, if at all.
Results of Operations
The following table sets forth the percentage relationship of certain
cost and expense items to net sales for the periods indicated:
<TABLE>
<CAPTION>
Three Months Ended
December 31,
------------------------
1999 1998
------ ------
<S> <C> <C>
Net sales 100.0% 100.0%
Cost of sales 100.6 137.5
------ ------
Gross margin (0.6) (37.5)
Selling, general and administrative expenses 2.6 12.4
------ ------
Loss from operations (3.2) (49.9)
------ ------
Other income (expense):
Interest and other income 0.1 0.0
Interest expense (1.2) (13.6)
Gain on asset sales 6.6 0.2
------ ------
5.5 (13.4)
------ ------
Income (loss) before reorganization item and
provision (benefit) for income taxes 2.3 (63.3)
Reorganization item 0.9 --
------ ------
Income (loss) before provision (benefit)
for income taxes 1.4 (63.3)
Provision (benefit) for income taxes - -
------ ------
Net income (loss) 1.4% (63.3)%
====== ======
</TABLE>
The following table sets forth the sales product mix as a percentage of net
sales for the periods indicated:
<TABLE>
<CAPTION>
Three Months Ended
December 31,
-----------------------
1999 1998
------ ------
<S> <C> <C>
Plate 28.1% 64.0%
Sheet 54.3 12.8
Pipe 11.1 9.0
Slab 5.9 11.1
Non-Steel 0.6 3.1
------ ------
100.0% 100.0%
====== ======
</TABLE>
Page 13 of 23
<PAGE> 14
THREE MONTHS ENDED DECEMBER 31, 1999 COMPARED WITH THREE MONTHS ENDED DECEMBER
31, 1998
Net sales increased 60.3% primarily due to increased shipments of
approximately 187,900 tons offset in part by lower average selling prices for
the three months ended December 31, 1999 as compared to the same period in the
previous fiscal year. The weighted average sales price (net of transportation
costs) per ton of sheet and slab products increased by 3.6% and 18.6%,
respectively, while the weighted average sales price per ton of plate and pipe
decreased by 12.4% and 2.1% respectively, in the three months ended December 31,
1999 compared to the previous fiscal year. Shipped tonnage of sheet and pipe
products increased approximately 212,900 tons or 558.4% and 18,300 tons or
102.2%, respectively, while shipped tonnage of plate and slab products decreased
approximately 29,800 tons or 19.5% and 13,500 tons or 28.8%, respectively,
between the two periods. The changes in prices, volume and product mix were
primarily the result of the impact of increased supply from imports in the
quarter ended December 31, 1998, and the resultant trade cases that were filed
in late 1998 and early 1999.
As a result of various trade cases, as well as improving market
conditions in several foreign economies, market conditions for the Company's
products continue to improve. Both the Company's order entry and price
realization have improved significantly in recent months. Similarly, overall
price realization has increased despite a product mix shift to lower-priced
sheet. The timing and magnitude of the recent volume and pricing improvements
are generally consistent with initial market recoveries following the success of
previously- filed trade cases. Recently, President Clinton announced the relief
granted under the pending section 201 trade case with respect to certain
imported line pipe. The relief sets tariffs for the next three years on the
relevant line pipe from all but a few countries. The Company expects that the
relief granted will have a positive impact on the line pipe market. In response
to improving market conditions, the Company started a second blast furnace in
September 1999, and is currently operating near full capacity. The Company
expects in the near term that both volume and pricing will continue to improve
gradually. There can, however, be no assurance that market conditions will
continue to justify a full, two-blast furnace operation or that pricing and
order volumes will not decline.
As discussed above, the Company's overall price realization and
shipments are increasing. The Company has recently implemented or announced
several price increases. Domestic competition, however, remains intense and
imported steel continues to adversely affect the market. Moreover, additional
production capacity is being added in the domestic market. 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 higher than that of
most of the other domestic integrated producers. Consequently, the Company may
be affected by price increases or decreases more quickly than many of its
competitors. The Company intends to react to price increases or decreases in the
market as required by competitive conditions. There can be no assurance that the
Company will achieve the price increases it has announced.
Page 14 of 23
<PAGE> 15
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 significantly
affected by fluctuations in the value of the United States dollar against
several other currencies, the level of demand for steel in the United States
economy relative to steel demand in foreign economies and world economic
conditions generally. 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.
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 100.6% for the three months ended December 31, 1999, as compared to
137.5% for the same period in the previous fiscal year. The overall average cost
of sales per ton shipped decreased approximately $75 per ton between the two
periods, primarily as a result of production efficiencies associated with
returning to a two-blast furnace operating level, reduced labor costs, a shift
in product mix to lower cost coiled products and favorable costs of certain raw
materials. Operating costs per ton decreased as production volume increased in
part because fixed costs were allocated over more tons.
The Company's pellet agreement with USX expired on December 31, 1999.
The Company is negotiating with USX regarding a new pellet supply contract and
has reached an interim understanding with USX for a short-term supply
arrangement. Management believes that the Company will be able to complete a new
pellet supply contract with USX or a substitute vendor. However, there can be no
assurance that a new contract can be completed or that USX will continue to
supply pellets to the Company. If the Company is unable to enter into a new
pellet supply contract, the Company's operating results could be adversely
affected.
Depreciation costs included in cost of sales decreased approximately
$0.3 million for the three months ended December 31, 1999, compared with the
same period in the previous fiscal year. This decrease was due to a slightly
lower asset base.
Selling, general and administrative expenses for the three months ended
December 31, 1999 decreased approximately $6.4 million as compared to the same
period in the previous fiscal year. These lower expenses were due primarily to
an increase in the allowance for doubtful accounts of approximately $4.0 million
for the three months ended December 31, 1998. In addition, cost savings related
to staff and support personnel reductions has reduced the expenses.
Interest expense decreased approximately $9.2 million during the three
months ended December 31, 1999 as compared to the same period in the previous
fiscal year. As of February 1, 1999, the Company discontinued accruing interest
on the Senior Notes. Contractual interest for the three months ended December
31, 1999 was $9.8 million, which is $8.3 million in excess of recorded interest
expense. In addition, cash flow from operations of approximately $4.2 million
and proceeds from the sale of property, plant and equipment of
Page 15 of 23
<PAGE> 16
approximately $8.6 million decreased the average borrowings outstanding under
the Company's revolving credit facility as compared to the same period in the
previous fiscal year.
During the three months ended December 31, 1999, the Company recorded
approximately $1.1 million in professional fees and expenses related to its
Chapter 11 reorganization efforts. These include the professional fees and
expenses of the bondholders' and unsecured creditors' committees. These expenses
have not been included in selling, general and administrative expenses, but are
set out separately in the statement of operations.
LIQUIDITY AND CAPITAL RESOURCES
The Company's liquidity requirements arise from operating expenses,
capital expenditures and working capital requirements, including interest
payments. In the past, the Company's principal sources of capital have been from
the sale of equity; the incurrence of long-term indebtedness, including
borrowings under the Company's credit facilities; equipment lease financing;
asset sales and cash provided by operations. As of February 16, 2000, the
Company's eligible inventories, accounts receivable and equipment supported
access to $52.9 million in borrowings under the Company's credit facility. As of
February 16, 2000, the Company had $13.3 million available under the credit
facility, with $37.3 million in borrowings and $2.3 million in letters of credit
outstanding.
Besides the above-described financing activities, the Company's major
source of liquidity has been cash provided by operating activities. Net cash
provided by operating activities was $4.2 million for the three months ended
December 31, 1999, as compared with net cash provided by operating activities of
$7.5 million for the three months ended December 31, 1998. The sources of cash
for operating activities during the three months ended December 31, 1999
included net income of $1.8 million, depreciation and amortization of $10.9
million, a decrease in accounts receivable of $2.6 million, a decrease in
inventories of $1.5 million, an increase in accrued pension and profit sharing
costs of $0.9 million and an increase in accrued payroll and related taxes of
$0.5 million. These sources of cash were substantially offset by a gain on asset
sales of $8.3 million, a decrease in accounts payable of $2.1 million and a
decrease in accrued liabilities of $3.4 million.
Mannesmann Pipe and Steel ("Mannesmann") sells the Company's products to
end customers at the same sales price Mannesmann pays the Company plus a
variable commission. The Mannesmann agreement requires Mannesmann to purchase
and pay for the Company's finished goods inventory as soon as it has been
assigned to or otherwise identified with a particular order. As of December 31,
1999, the Company had received $14.5 million from Mannesmann for the purchase of
finished goods inventory assigned to discrete orders. When the funds are
received for inventory prior to shipment, the Company defers the revenue
recognition until the inventory is shipped. Therefore, until shipment occurs the
Company records the receipt of funds and the corresponding deferred revenue
liability and/or inventory reduction for the cost of the inventory in its
financial statements. The Company remains responsible for customer credit and
product quality. The Company is in the process of negotiating a termination of
the Mannesmann arrangement. The Company intends, with the cooperation of
Mannesmann to extend employment offers to certain Mannesmann
Page 16 of 23
<PAGE> 17
employees currently involved in marketing the Company's products. The Company
also is negotiating terms for phasing out the liquidity arrangement over time.
While the Company believes that the Mannesmann arrangement can be terminated
without material disruptions, there can be no assurance that the termination
will not have a material adverse effect on the Company's marketing efforts or
liquidity position.
Since its bankruptcy filing, the Company has supplemented its liquidity
by the sale of certain non-core assets. During the first quarter of fiscal year
2000, the Company completed the sale of its quarry for $10.0 million ($1.5
million of which is contingent upon the future issuance, by the relevant
governmental entity, of a conditional use permit) and received $8.5 million in
October 1999. There can be no assurance that the conditional use permit will be
issued or that the Company will receive the additional $1.5 million of the sale
price. Pursuant to the sale, the Company entered into a contract with the buyer
of the quarry for the purchase of limestone to meet its production requirements
at a per ton price that is lower than the Company's historical production cost.
Capital expenditures were $0.6 million and $3.4 million for the three
months ended December 31, 1999 and 1998, respectively. Capital expenditures for
fiscal year 2000 are estimated at approximately $30 million, which includes a
blast furnace reline, maintenance items and various projects designed to reduce
costs and increase product quality and throughput. Additional spending on
capital projects could be incurred as part of the Plan of Reorganization. Given
the Company's Chapter 11 bankruptcy proceedings, current market conditions and
the uncertainties created thereby, the Company is continuing to closely monitor
its capital spending levels. Depending on market, operational, liquidity and
other factors, the Company may elect to adjust the design, timing and budgeted
expenditures of its capital plan.
YEAR 2000 ISSUES
The Company addressed its year 2000 information system issues and
believes it has realized a smooth transition into the year 2000. The Company
remedied a few minor year 2000 related problems without any adverse affects to
its operations or administrative functions. Through December 31, 1999, the
Company had capitalized approximately $9.0 million in costs to improve the
Company's information technology systems and for year 2000 readiness efforts.
The costs included consulting, implementation and transitioning to new computer
hardware and software for the SAP enterprise-wide business systems. Costs for
training and re-engineering efforts were expensed.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's earnings are affected by changes in interest rates related
to the Company's credit facility. Variable interest rates may rise, which could
increase the amount of interest expense. At December 31, 1999, the Company had
variable rate debt outstanding from its credit facilities totaling $43.0
million. The impact of market risk is estimated using a hypothetical increase in
interest rates of one percentage point for the Company's variable rate credit
facility. Based on this hypothetical assumption, the Company would
Page 17 of 23
<PAGE> 18
have incurred approximately an additional $110,000 in interest expense for the
three months ended December 31, 1999.
FACTORS AFFECTING FUTURE RESULTS
The Company's future operations will be impacted by, among other
factors, pricing, product mix, throughput levels and production efficiencies.
The Company has efforts underway to increase prices, shift its product mix and
improve throughput rates and production efficiencies. There can be no assurance
that the Company's efforts will be successful or that sufficient demand will
exist to support the Company's efforts. Pricing and shipment levels in future
periods are key variables to the Company's future operating results that remain
subject to significant uncertainty. These variables will be affected by several
factors including the level of imports, future capacity additions, product
demand and other competitive and market conditions. Furthermore, the Chapter 11
bankruptcy filing introduces numerous uncertainties which may affect the
Company's business, results of operations and prospects. Because of the
Company's bankruptcy filing and liquidity position, the Company's financial
flexibility is limited. Many of the foregoing factors, of which the Company does
not have complete control, may materially affect the performance, financial
condition and future results of the Company. Further improvement in market
conditions will likely be necessary for the Company's production activities to
become significantly cash flow positive. A reversal in the current market trend
or a disruption in the Company's operations would likely cause the Company to
return to negative cash flow.
The short-term and long-term liquidity of the Company also is dependent
upon several other factors, including continued access to the Company's credit
facility; vendor credit support; cash needs to fund working capital as volume
increases; availability of capital; foreign currency fluctuations; capital
expenditure requirements 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.
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.
This report contains a number of forward-looking statements, including,
without limitation, statements contained in this report relating to the
Company's ability to compete against imports and the effect of imports and trade
cases on the domestic market, the Company's ability to improve and optimize
operations as well as maintaining its on-time delivery and customer service, the
Company's ability to compete with the additional production capacity being added
in the domestic market, the Company's ability to successfully reorganize under
Chapter 11 of the Bankruptcy Code (including the development of the Plan of
Reorganization), the outcome of the Company's application under the Loan
Guarantee Program, the Company's expectation that prices and shipments will
improve, the production efficiencies of a two-blast furnace operation, the
Company's ability to obtain a new pellet supply contract, the Company's
objective to increase higher-margin sales, the
Page 18 of 23
<PAGE> 19
Company's continued access to and adequacy of the Credit Facility, the
commercial and liquidity impact of terminating the Mannesmann agreement, the
level of future required capital expenditures, the effect of inflation and any
other statements contained herein to the effect that the Company or its
management "believes," "expects," "anticipates," "plans" or other similar
expressions. There are a number of important factors that could cause actual
events or the Company's actual results to differ materially from those indicated
by such forward-looking statements. These factors include, without limitation,
those described herein.
Page 19 of 23
<PAGE> 20
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On February 1, 1999, the Company filed a voluntary petition for relief
under Chapter 11 of the United States Bankruptcy Code in the United States
Bankruptcy Court for the District of Utah, Central Division. The filing was made
necessary by a lack of sufficient liquidity. The Company's operating results for
fiscal years 1998 and 1999 were severely affected by, among other things, the
dramatic surge in steel imports beginning in 1998. As a consequence of
record-high levels of low-priced steel imports and the resultant deteriorating
market conditions, the Company's overall price realization and shipments
declined precipitously. Decreased liquidity made it impossible for the Company
to service its debt and fund ongoing operations. Therefore, the Company sought
protection under Chapter 11 of the Bankruptcy Code. Prior to the bankruptcy
filing, the Company did not make the $9 million interest payment due January 15,
1999 under the terms of the Company's 9 1/2% senior notes due 2004. The
Bankruptcy Code generally prohibits the Company from making payments on
unsecured, pre-petition debt, including the 9 1/2% senior notes due 2004 and the
11 1/8% senior notes due 2001 (collectively, the "Senior Notes"), except
pursuant to a confirmed plan of reorganization. The Company is in possession of
its properties and assets and continues to manage its businesses as debtor-
in-possession subject to the supervision of the Bankruptcy Court. The Company
has a $125 million debtor-in-possession credit facility in place.
As of February 1, 1999, the Company discontinued accruing interest on
the Senior Notes and dividends on its redeemable preferred stock. Contractual
interest on the Senior Notes for the three months ended December 31, 1999 was
$8.3 million, which is not included in the Company's financial statements.
Contractual dividends on the redeemable preferred stock for the three months
were $3.3 million, which is also not included in the Company's financial
statements. As of December 31, 1999, accrued dividends on the redeemable
preferred stock were approximately $40.2 million, which is $11.7 million in
excess of dividends accrued in the Company's balance sheet.
Pursuant to the provisions of the Bankruptcy Code, all actions to
collect upon any of the Company's liabilities as of the petition date or to
enforce pre-petition contractual obligations were automatically stayed. Absent
approval from the Bankruptcy Court, the Company is prohibited from paying pre-
petition obligations. However, the Bankruptcy Court has approved payment of
certain other pre-petition liabilities such as employee wages and benefits and
certain pre-petition obligations. Additionally, the Bankruptcy Court has
approved the retention of legal and financial professionals. As a debtor-in-
possession, the Company has the right, subject to Bankruptcy Court approval and
certain other conditions, to assume or reject any pre-petition executory
contracts and unexpired leases. Parties affected by such rejections may file
pre-petition claims with the Bankruptcy Court in accordance with bankruptcy
procedures.
The Company is currently developing a plan of reorganization (the "Plan
of Reorganization") through, among other things, discussions with the official
creditor committees established in the Chapter 11 proceeding. The objective of
the Plan of Reorganization is to restructure the Company's balance sheet to (i)
significantly strengthen the Company's financial flexibility throughout the
Page 20 of 23
<PAGE> 21
business cycle, (ii) fund required capital expenditures and working capital
needs, and (iii) fulfill those obligations necessary to facilitate emergence
from Chapter 11. In conjunction with formulating the Plan of Reorganization, the
Company, with its lender, filed an application on January 31, 2000 for a
government loan guarantee under the Emergency Steel Loan Guarantee Program (the
"Loan Guarantee Program"). The application seeks a government loan guarantee for
$110 million, which is a portion of the financing required to consummate the
Plan of Reorganization. The Plan of Reorganization contemplates that the company
will also establish a revolving credit facility as well as receive an equity
infusion. There can be no assurance that the Company's application will be
accepted or that, with or without a guarantee, the Company can obtain the
necessary financing to consummate the Plan of Reorganization.
Although management expects to file the Plan of Reorganization, there
can be no assurance at this time that a Plan of Reorganization will be proposed
by the Company, approved or confirmed by the Bankruptcy Court, or that, if
proposed, approved, confirmed and consummated, such plan will achieve the
objectives described above. The Bankruptcy Court has granted the Company's
request to extend its exclusive right to file a Plan of Reorganization through
February 28, 2000. While the Company has requested a further extension of the
exclusivity period through May 30, 2000, there can be no assurance that the
Bankruptcy Court will grant such extension. If the exclusivity period were to
expire or be terminated prior to confirmation of the Plan of Reorganization,
other interested parties, such as creditors of the Company, would have the right
to propose alternative plans of reorganization.
Although the Chapter 11 bankruptcy filing raises substantial doubt about
the Company's ability to continue as a going concern, the Company's financial
statements have been prepared on a going concern basis. This basis contemplates
the continuity of operations, realization of assets, and discharge of
liabilities in the ordinary course of business. The financial statements also
present the assets of the Company at historical cost and the current intention
that they will be realized as a going concern and in the normal course of
business. A plan of reorganization will likely materially change certain amounts
currently disclosed in the Company's financial statements.
The Company's financial statements do not present the amount which may
ultimately be paid to settle liabilities and contingencies which may be allowed
in the Chapter 11 bankruptcy case. Under Chapter 11 bankruptcy, the rights of,
and ultimate payment by the Company to, pre-petition creditors may be
substantially altered. This could result in claims being paid in the Chapter 11
bankruptcy proceedings at substantially less than 100% of their face value. At
this time, because of material uncertainties, pre-petition claims are generally
carried at their face value in the accompanying financial statements. Moreover,
the interests of existing preferred and common shareholders could, among other
things, be eliminated. Management currently anticipates that the Plan of
Reorganization will be completed and ready to file with the Bankruptcy Court
during mid 2000. The Plan of Reorganization will be premised on the Company
being approved for a loan guarantee under the Loan Guarantee Program, and the
Company may not file its Plan of Reorganization until a decision on the loan
guarantee application has been announced. There can be no assurance as to the
actual timing for the filing of the Plan of Reorganization or the approval
thereof by the Bankruptcy Court, if at all.
Page 21 of 23
<PAGE> 22
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
As described above, the Company filed a voluntary petition for relief
under Chapter 11 of the United States Bankruptcy Code on February 1, 1999. The
Bankruptcy Code generally prohibits the Company from making payments on
unsecured pre-petition debt, including the 9 1/2% Senior Notes due 2004 and the
11 1/8% Senior Notes due 2001, except as provided in a confirmed plan of
reorganization. Interest payment defaults under the Senior Notes are excluded as
a cross default under the terms of the Credit Facility.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
<TABLE>
<CAPTION>
Exhibit Filed
Number Exhibit Herewith
------ ------- --------
<S> <C> <C>
10.1 Geneva Steel Union Employee Defined Benefit Plan, effective
January 1, 1999, dated December 30, 1999 X
10.2 Amendment No. 1 to the Geneva Steel Union Employee Savings
and Pension Plan, generally effective January 1, 1995, dated
August 13, 1997 X
10.3 Amendment No. 2 to the Geneva Steel Union Employee Savings
and Pension Plan, effective February 1, 1999, dated March 16,
1999 X
10.4 Amendment No. 3 to the Geneva Steel Management Employee
Savings and Pension Plan, effective February 1, 1999, dated
March 16, 1999 X
27 Financial Data Schedule X
</TABLE>
(b) Reports on Form 8-K.
The Company did not file any reports on Form 8-K during the three months
ended December 31, 1999.
Page 22 of 23
<PAGE> 23
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GENEVA STEEL COMPANY
By: /s/ Dennis L. Wanlass
-------------------------------------
Vice President, Treasurer and
Chief Financial Officer
Dated: February 18, 2000
Page 23 of 23
<PAGE> 24
EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>
Exhibit Filed
Number Exhibit Herewith
------ ------- --------
<S> <C> <C>
10.1 Geneva Steel Union Employee Defined Benefit Plan, effective
January 1, 1999, dated December 30, 1999 X
10.2 Amendment No. 1 to the Geneva Steel Union Employee Savings
and Pension Plan, generally effective January 1, 1995, dated
August 13, 1997 X
10.3 Amendment No. 2 to the Geneva Steel Union Employee Savings
and Pension Plan, effective February 1, 1999, dated March 16,
1999 X
10.4 Amendment No. 3 to the Geneva Steel Management Employee
Savings and Pension Plan, effective February 1, 1999, dated
March 16, 1999 X
27 Financial Data Schedule X
</TABLE>
<PAGE> 1
EXHIBIT 10.1
THE GENEVA STEEL
UNION EMPLOYEE DEFINED BENEFIT PLAN
Adopted Effective January 1, 1999
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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Page
<S> <C> <C>
SECTION 1. INTRODUCTION.................................................................1
SECTION 2. ELIGIBILITY AND PARTICIPATION................................................1
(a) Eligibility and Commencement of Participation................................1
(b) Participation by Reemployed Employees........................................1
(c) Termination of Participation.................................................2
SECTION 3. IMMEDIATE UNREDUCED RETIREMENT...............................................2
(a) Eligibility for Immediate Unreduced Retirement Pension.......................2
(b) Amount of Immediate Unreduced Retirement Pension.............................2
(c) Commencement of Immediate Unreduced Retirement Pension.......................2
SECTION 4. REDUCED RETIREMENT...........................................................2
(a) Eligibility for Reduced Retirement Pension...................................2
(b) Amount of Reduced Retirement Pension.........................................2
(c) Commencement of Reduced Retirement Pension...................................3
SECTION 5. PERMANENT INCAPACITY RETIREMENT..............................................3
(a) Eligibility for Permanent Incapacity Retirement Pension......................3
(b) Amount of Permanent Incapacity Retirement Pension............................3
(c) Commencement of Permanent Incapacity Retirement Pension......................3
SECTION 6. SHUTDOWN RETIREMENT BENEFIT..................................................3
(a) Eligibility for Shutdown Retirement Pension..................................3
(b) Amount of Shutdown Retirement Pension........................................4
(c) Commencement of Shutdown Retirement Pension..................................4
SECTION 7. DEFERRED VESTED BENEFIT......................................................4
(a) Eligibility for Deferred Vested Benefit......................................4
(b) Amount of Deferred Vested Pension............................................4
(c) Commencement of Deferred Vested Benefit......................................4
SECTION 8. FORM AND COMMENCEMENT OF BENEFITS............................................4
(a) Available Forms of Benefit...................................................4
(b) Forms of Pensions............................................................4
(c) Permanent Incapacity Retirement Pension......................................5
(d) Cash Out of Small Pensions...................................................5
(e) Time of Payment or Commencement of Benefits..................................5
(f) Must Elect Form of Benefit and Time of Payment or Commencement...............5
(g) Special Rules................................................................6
</TABLE>
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TABLE OF CONTENTS
(continued)
<TABLE>
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(h) Death of Spouse..............................................................6
(i) Direct Rollover of Distributions From the Plan...............................6
SECTION 9. SURVIVING SPOUSE'S BENEFIT...................................................7
(a) Commencement of Coverage.....................................................7
(b) Termination of Coverage......................................................7
(c) Amount of Surviving Spouse's Benefit.........................................7
(d) Form of Surviving Spouse's Benefit...........................................7
(e) Commencement or Payment of Surviving Spouse's Benefit........................7
(i) Participant Eligible for Immediate Benefit............................7
(ii) Participant Not Eligible for an Immediate Benefit.....................7
(f) One-Year Marriage Requirements...............................................8
(g) Claim for Surviving Spouse's Benefit; Required Information...................8
SECTION 10. OTHER DEATH BENEFITS.........................................................8
(a) Death before Commencement of Benefits........................................8
(b) Death after Commencement of Benefits.........................................8
SECTION 11. OFFSETS FOR BENEFITS UNDER THE GENEVA STEEL UNION EMPLOYEE SAVINGS AND
PENSION PLAN AND THE UNITED STATES STEEL CORPORATION PLAN FOR EMPLOYEE
PENSION BENEFITS.............................................................8
(a) General Rule.................................................................8
(b) Pension Benefit Offset.......................................................9
(c) USX Benefit Offset...........................................................9
SECTION 12. ADMINISTRATION OF THE PLAN..................................................10
(a) Plan Sponsor and Plan Administrator.........................................10
(b) Administrative Responsibilities.............................................10
(c) Management of Plan Assets...................................................10
(d) Trustees and Investment Managers............................................11
(e) Delegation of Fiduciary Responsibilities....................................11
(f) Service in Several Fiduciary Capacities.....................................12
SECTION 13. FUNDING OF THE PLAN.........................................................12
(a) Funding Policy and Method...................................................12
(b) Cost of the Plan............................................................12
(c) Contributions to the Plan...................................................12
(d) Cash Needs of the Plan......................................................13
(e) Public Accountant...........................................................13
</TABLE>
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TABLE OF CONTENTS
(continued)
<TABLE>
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(f) Enrolled Actuary............................................................13
(g) Basis of Payments to the Plan...............................................13
(h) Basis of Payments from the Plan.............................................13
(i) Return of Company Contributions.............................................13
(j) Application of Forfeitures..................................................14
SECTION 14. CLAIMS AND REVIEW PROCEDURES................................................14
(a) Inquiries and Applications for Benefits.....................................14
(b) Denial of Claims............................................................14
(c) Review of Denied Claims.....................................................15
(d) Disputes as to Permanent Incapacity.........................................15
SECTION 15. AMENDMENT AND TERMINATION OF THE PLAN.......................................15
(a) Future of the Plan..........................................................15
(b) Amendments to the Plan......................................................15
(c) Termination of the Plan.....................................................15
(d) Allocation of Trust Fund on Termination; Return of Residual Assets..........16
(e) Partial Termination of the Plan.............................................16
SECTION 16. BENEFIT LIMITATIONS.........................................................16
(a) Limitation on Benefits......................................................16
(b) Combined Limitation on Benefits and Contributions...........................17
(c) Annual Benefit..............................................................17
(d) Adjusted Dollar Limitation for Benefits Commencing At Social Security
Retirement Age, After Social Security Retirement Age or Before Age 62.......17
(i) At Social Security Retirement Age....................................17
(ii) After Social Security Retirement Age.................................17
(iii) Before Age 62........................................................17
(e) Compensation................................................................18
(f) Employer Group..............................................................18
SECTION 17. GENERAL PROVISIONS..........................................................18
(a) Benefits Not Affected by Changes in Plan After Employment Terminates........18
(b) Plan Mergers................................................................18
(c) No Assignment of Property Rights............................................18
(d) Incapacity..................................................................19
(e) No Employment Rights........................................................19
(f) Proof of Age and Marriage...................................................19
(g) Overpayments and Underpayments..............................................19
</TABLE>
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TABLE OF CONTENTS
(continued)
<TABLE>
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(h) Choice of Law...............................................................20
(i) General Information.........................................................20
(j) Spouse's Consent Required...................................................20
(k) Lost Participants...........................................................21
(l) Gender......................................................................21
SECTION 18. EFFECT OF REEMPLOYMENT......................................................21
(a) Effect of Reemployment on Benefits..........................................21
(b) Benefits After Reemployment.................................................21
(c) Special Rule for Permanent Incapacity.......................................22
SECTION 19. DEFINITIONS.................................................................22
(a) "Actuarial Equivalent" or "Actuarially Equivalent"..........................22
(b) "Affiliated Group"..........................................................22
(c) "Code"......................................................................22
(d) "Company"...................................................................22
(e) "Deferred Vested Pension"...................................................22
(f) "Eligible Employee".........................................................22
(g) "Employee"..................................................................22
(h) "ERISA".....................................................................22
(i) "50% Joint and Survivor Pension"............................................23
(j) "Geneva Plant"..............................................................23
(k) "Geneva Steel Pension Plan".................................................23
(l) "Immediate Unreduced Retirement Pension"....................................23
(m) "Individual Life Pension"...................................................23
(n) "Investment Manager"........................................................23
(o) "Normal Retirement Age".....................................................23
(p) "Normal Retirement Date"....................................................23
(q) "Offsets"...................................................................23
(r) "100% Joint and Survivor Pension"...........................................23
(s) "Participant"...............................................................23
(t) "Participating Company".....................................................23
(u) "Pension Agreement".........................................................23
(v) "Pension Benefit Offset"....................................................23
(w) "Period of Credited Service"................................................23
(i) Service with Geneva Steel Company....................................23
(ii) Service with USX Corporation.........................................24
(x) "Period of Service".........................................................24
</TABLE>
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TABLE OF CONTENTS
(continued)
<TABLE>
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Page
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(i) Period of Employment.................................................24
(ii) Period for Which Back Pay Awarded....................................24
(iii) Period Following Termination.........................................25
(iv) Service with USX Corporation.........................................25
(v) Aggregation of Periods of Service....................................25
(A) Fractional Months.............................................25
(B) Permanent Service Break.......................................25
(y) "Permanent Incapacity Retirement Pension"...................................25
(z) "Permanent Service Break"...................................................25
(aa) "Permanently Incapacitated" or "Permanent Incapacity".......................25
(bb) "Plan"......................................................................26
(cc) "Plan Benefit"..............................................................26
(dd) "Plan Year".................................................................26
(ee) "Reduced Retirement Pension"................................................26
(ff) "Shutdown Retirement Pension"...............................................26
(gg) "Subsidiary"................................................................26
(hh) "Surviving Spouse's Benefit"................................................26
(ii) "Trust".....................................................................26
(jj) "Trust Agreement"...........................................................26
(kk) "Trust Fund"................................................................26
(ll) "Trustee"...................................................................26
(mm) "USX Benefit Offset"........................................................26
(nn) "USX Pension Plan"..........................................................26
(oo) "Valuation Date"............................................................26
(pp) "Year of Credited Service"..................................................26
(qq) "Year of Service"...........................................................26
SECTION 20. EXECUTION...................................................................27
APPENDIX A
APPENDIX B
SUPPLEMENT A
SUPPLEMENT B
</TABLE>
-v-
<PAGE> 7
GENEVA STEEL
UNION EMPLOYEE DEFINED BENEFIT PLAN
Established Effective January 1, 1999
SECTION 1. INTRODUCTION.
The Geneva Steel Union Employee Defined Benefit Plan (the "Plan") is
hereby established effective January 1, 1999. The Plan shall only apply to
individuals who are Employees on or after May 1, 1998 who are covered by the
terms of the collective bargaining agreement in effect from time to time between
the United Steelworkers of America and the Company. Supplement A to the Plan
generally provides enhanced retirement benefits for certain Participants.
Supplement B to the Plan describes special rules for Participants who terminated
employment between May 1, 1998 and January 1, 1999.
The Plan and the Trust established hereunder are intended to qualify under
section 401(a) and related provisions of the Code. The Plan is subject to
further amendment pursuant to Section 15, including, without limitation,
amendments required to meet applicable rules and regulations issued by the
Secretary of the Treasury or the Secretary of Labor.
Capitalized terms used in the text of the Plan are defined in Section 19
in alphabetical order.
SECTION 2. ELIGIBILITY AND PARTICIPATION.
(a) Eligibility and Commencement of Participation.
Each Eligible Employee shall automatically commence participation in the
Plan on the later of:
(i) January 1, 1999;
(ii) the date he completes one Year of Service;
(iii) the date he attains age 21; or
(iv) the date he becomes an Eligible Employee.
(b) Participation by Reemployed Employees. If a former Participant who
had ceased to be an Employee is reemployed, such former Participant shall
automatically recommence participation on the date of reemployment or, if later,
the date he again becomes an Eligible Employee.
<PAGE> 8
(c) Termination of Participation. Each Participant's participation in
the Plan shall terminate on the date the Participant's entire Plan Benefit has
been distributed or, if earlier, on the date of his death.
SECTION 3. IMMEDIATE UNREDUCED RETIREMENT.
(a) Eligibility for Immediate Unreduced Retirement Pension. A
Participant who ceases to be an Employee on or after the date he (i) completes
30 Years of Service; (ii) attains age 62 and completes 15 Years of Service; or
(iii) attains Normal Retirement Age, shall be entitled to an Immediate Unreduced
Retirement Pension determined pursuant to Subsection (b) below.
(b) Amount of Immediate Unreduced Retirement Pension. A Participant's
Immediate Unreduced Retirement Pension shall be a monthly pension equal to (i)
$40.00 multiplied by his Years of Credited Service completed as of April 30,
2004, (ii) reduced by the Offsets, if any, described in Section 11.
(c) Commencement of Immediate Unreduced Retirement Pension. A
Participant who ceases to be an Employee prior to his Normal Retirement Date may
elect to commence his Immediate Unreduced Retirement Pension as of the first day
of any month following the month in which he ceases to be an Employee (but with
payment of such pension to be made on the last day of such month and each
applicable succeeding month), but no later than his Normal Retirement Date. A
Participant who ceases to be an Employee on or after his Normal Retirement Date
must commence payment of his Immediate Unreduced Retirement Pension as of the
first day of the month next following the month in which he ceases to be an
Employee (but with payment of such pension to be made on the last day of such
month and each applicable succeeding month).
SECTION 4. REDUCED RETIREMENT.
(a) Eligibility for Reduced Retirement Pension. A Participant who ceases
to be an Employee on or after the date he attains age 60 and completes 15 Years
of Service, but before the date he would be entitled to an Immediate Unreduced
Retirement or Shutdown Retirement Pension, shall be entitled to a Reduced
Retirement Pension determined pursuant to Subsection (b) below.
(b) Amount of Reduced Retirement Pension. A Participant's Reduced
Retirement Pension shall be a monthly pension computed under Section 3(b)(i)
above, (i) multiplied by the applicable percentage as set forth in Table 1 of
Appendix A for the Participant's age as of the date the Participant ceases to be
an Employee; and (ii) reduced by the Offsets, if any, described in Section 11.
Notwithstanding the foregoing, the amount of a Participant's Reduced Retirement
Pension shall not be less than the amount of Deferred Vested Pension that the
Participant would otherwise be entitled to under Section 7(b) as of the date
such Participant elects to have his Reduced Retirement Pension paid or commence,
if the Participant were eligible for a Deferred Vested Pension under Section
7(a).
2
<PAGE> 9
(c) Commencement of Reduced Retirement Pension. A Participant may elect
to commence payment of his Reduced Retirement Pension as of the first day of any
month following the month in which he ceases to be an Employee (but with payment
of such pension to be made on the last day of such month and each applicable
succeeding month), but no later than his Normal Retirement Date.
SECTION 5. PERMANENT INCAPACITY RETIREMENT.
(a) Eligibility for Permanent Incapacity Retirement Pension. If a
Participant who has completed 15 or more Years of Service ceases to be an
Employee because of Permanent Incapacity, and remains Permanently Incapacitated
for at least five consecutive months prior to April 30, 2004, he may elect to
receive a Permanent Incapacity Retirement Pension determined pursuant to
Subsection (b) below, prior to the date the Immediate Unreduced Retirement,
Reduced Retirement, Shutdown Retirement or Deferred Vested Pension he is
otherwise entitled to receive under Section 3, 4, 6 or 7 hereof is paid or
commences.
(b) Amount of Permanent Incapacity Retirement Pension. A Participant's
Permanent Incapacity Retirement Pension shall be a monthly pension computed
under Section 3(b)(i) above, reduced by the Offsets, if any, described in
Section 11.
(c) Commencement of Permanent Incapacity Retirement Pension. A
Participant may elect to commence payment of his Permanent Incapacity Retirement
Pension as of the first day of any month following the first period of five
consecutive months during which he is Permanently Incapacitated (but with
payment of such pension to be made on the last day of such month and each
applicable succeeding month). Payment of the Permanent Incapacity Retirement
Pension shall cease after payment is made for the month immediately preceding
the Participant's Normal Retirement Date (or such earlier date as is described
in Section 8(c)).
SECTION 6. SHUTDOWN RETIREMENT BENEFIT.
(a) Eligibility for Shutdown Retirement Pension. A Participant who
ceases to be an Employee due to a shutdown of all or substantially all of the
Geneva Plant on or before April 30, 2004, and:
(i) on or after the date he both attains age 55 and the total of
his age and his Years of Service equals at least 70;
(ii) before the date he attains age 55, and on or after the date
the total of his age and his Years of Service equals at least 80; or
(iii) before the date he attains age 55, and on or after the date he
both completes 20 Years of Service and the total of his age and his Years
of Service equals at least 65,
but before the date he would be entitled to an Immediate Unreduced Retirement
Pension, shall be entitled to a Shutdown Retirement Pension determined pursuant
to Subsection (b) below.
3
<PAGE> 10
(b) Amount of Shutdown Retirement Pension. A Participant's Shutdown
Retirement Pension shall be a monthly pension computed under Section 3(b)(i)
above, reduced by the Offsets, if any, described in Section 11.
(c) Commencement of Shutdown Retirement Pension. A Participant may elect
to commence payment of his Shutdown Retirement Pension as of the first day of
any month following the month in which he ceases to be an Employee (but with
payment of such pension to be made on the last day of such month and each
applicable succeeding month), but no later than his Normal Retirement Date.
SECTION 7. DEFERRED VESTED BENEFIT.
(a) Eligibility for Deferred Vested Benefit. A Participant who ceases to
be an Employee on or after the date he completes 5 Years of Service, but before
the date he would be entitled to a Reduced Retirement Pension, shall be entitled
to a Deferred Vested Pension determined pursuant to Subsection (b) below.
(b) Amount of Deferred Vested Pension. A Participant's Deferred Vested
Pension shall be a monthly pension computed under Section 3(b)(i) above, (i)
reduced by the Offsets, if any, described in Section 11, and (ii) multiplied by
the applicable percentage as set forth in Table 1 of Appendix A if the
Participant is younger than age 65 on the first day of the month in which such
pension is paid or commences.
(c) Commencement of Deferred Vested Benefit. Except as otherwise
provided, a Participant who has completed 15 Years of Service may elect to
commence payment of his Deferred Vested Pension as of the first day of any month
following the month in which he attains age 60 (but with payment of such pension
to be made on the last day of such month and each applicable succeeding month),
but no later than his Normal Retirement Date. A Participant who has not
completed 15 Years of Service must commence payment of his Deferred Vested
Pension on his Normal Retirement Date.
SECTION 8. FORM AND COMMENCEMENT OF BENEFITS.
(a) Available Forms of Benefit. Except as provided in Subsection (d)
below, a Participant may elect to have his Immediate Unreduced Retirement,
Reduced Retirement, Shutdown Retirement or Deferred Vested Pension paid in any
of the forms of pension specified in Subsection (b) below.
(b) Forms of Pensions. A Participant may elect any of the following
forms of pension:
(i) An Individual Life Pension, which provides monthly payments
for the Participant's life equal to the amount of his Plan Benefit. No
payments are made after the Participant's death.
4
<PAGE> 11
(ii) A 50% Joint and Survivor Pension, which provides a smaller
pension for the Participant's life than an Individual Life Pension. After
the Participant's death, 50% of such smaller pension is payable to the
Participant's spouse for the spouse's life.
(iii) A 100% Joint and Survivor Pension, which provides a smaller
pension for the Participant's life than a 50% Joint and Survivor Pension.
After the Participant's death, 100% of the amount of such smaller pension
is payable to the Participant's spouse for the spouse's life.
A 50% and a 100% Joint and Survivor Pension shall be equal to the Participant's
Individual Life Pension multiplied by the applicable percentage as set forth in
Table 2 of Appendix A.
As used herein, "spouse" means the spouse of the Participant on the date
as of which the Participant's first Plan Benefit payment is made.
(c) Permanent Incapacity Retirement Pension. The Permanent Incapacity
Retirement Pension shall be payable in monthly installments ending on the
earlier of (i) the date the Participant is no longer Permanently Incapacitated;
(ii) the date of the Participant's death; or (iii) the Participant's Normal
Retirement Date. After a Participant's Permanent Incapacity Retirement Pension
terminates, the Participant or the Participant's surviving spouse, as
applicable, may elect to commence payment of his or her Immediate Unreduced
Retirement, Reduced Retirement or Deferred Vested Pension, or Surviving Spouse's
Benefit, as applicable, at such time and in such manner as is otherwise
permitted under the terms of the Plan.
(d) Cash Out of Small Pensions. Notwithstanding any other provision of
the Plan to the contrary, if the present value of a Participant's Plan Benefit
is not more than $5,000 (including a Plan Benefit of $0) and payment of such
Benefit has not commenced, such present value shall be paid (or deemed paid if
the Benefit is $0) in a single lump sum payment of cash. After payment of a
Participant's Plan Benefit has commenced, no such lump sum payment shall be made
without the written consent of the Participant (and, if the Participant is
married, of the Participant's spouse). Similarly, if the present value of any
Surviving Spouse's Benefit is not more than $5,000 and payment of such Benefit
has not commenced, such present value shall be paid in a single lump sum payment
of cash. After payment of a Surviving Spouse's Benefit has commenced, no such
lump sum payment shall be made without the written consent of the appropriate
surviving spouse. For purposes of this Subsection, the present value of a
Participant's Plan Benefit and of a Surviving Spouse's Benefit shall be
determined as of the first day of the first month for which a distribution
hereunder is to be made, using the interest and mortality assumptions set forth
in Table 3 of Appendix A.
(e) Time of Payment or Commencement of Benefits. The rules governing the
time of payment or commencement of Plan Benefits are set forth in Sections 3
through 7 herein and Subsections (d), (f), (g) and (h) of this Section 8.
(f) Must Elect Form of Benefit and Time of Payment or Commencement.
Except as provided in Subsections (d), (g) and (h) of this Section 8, no Plan
Benefit shall be paid hereunder until the Participant has made a valid election
of the form in which his Plan Benefit is to be paid and the time such Benefit is
to commence. A Participant makes a valid election by properly
5
<PAGE> 12
completing and filing all of the prescribed forms with the Company. A
Participant may change a previous election of a form of benefit and/or of the
time a Plan Benefit is to commence at any time and as often as the Participant
desires prior to the date he ceases to be an Employee.
(g) Special Rules.
(i) Notwithstanding any other provision of the Plan to the
contrary, a Participant's Plan Benefit shall be paid or commence no later
than April 1 of the calendar year following the later of (i) the calendar
year in which the Participant attains age 70_ or (ii) the calendar year in
which the Participant retires. Notwithstanding the above, clause (ii)
above shall not apply to any Participant who is a "5-percent owner" (as
defined in section 416 of the Code) with respect to the Plan Year ending
in the calendar year in which the Participant attains age 70_.
(ii) Notwithstanding any other provision of the Plan to the
contrary, unless a Participant otherwise elects, the Participant's Plan
Benefit shall be paid or commence not later than the 60th day after the
latest of the of the close of the Plan Year in which the Participant
attains age 65, the tenth anniversary of the date the Participant's
commencement of participation in the Plan occurs or the Participant ceases
to be an Employee. For this purpose, the Participant's failure to consent
to a distribution shall be deemed an election to receive the distribution
at the latest time provided under Paragraph (i) above.
(h) Death of Spouse. If a Participant's spouse dies before the first day
of the month in which the Participant's Immediate Unreduced Retirement, Reduced
Retirement, Shutdown Retirement or Deferred Vested Pension payments, as
applicable, are to commence, the Participant shall be deemed to have elected an
Individual Life Pension.
(i) Direct Rollover of Distributions From the Plan. Notwithstanding any
contrary provision of the Plan, an eligible recipient may elect, at the time and
in the manner prescribed by the Company, to have any portion of an eligible
rollover distribution from the Plan paid directly to an eligible retirement plan
in a direct rollover, as described in section 401(a)(31) of the Code.
Notwithstanding the foregoing, the Company may prescribe rules that limit an
eligible recipient'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. As used herein, the following terms have the
following meanings:
(i) "Eligible recipient" means a Participant, the Participant's
surviving spouse, and the Participant's spouse or former spouse who is an
alternate payee pursuant to a qualified domestic relations order, as
defined in section 414(p) of the Code.
(ii) "Eligible rollover distribution" has the meaning prescribed in
section 402(f)(2)(A) of the Code, which generally includes any lump sum
distribution from the Plan, other than a distribution to the extent
required under section 401(a)(9) of the Code.
(iii) "Eligible retirement plan" means 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
6
<PAGE> 13
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 a Participant's surviving spouse, an
eligible retirement plan is an individual retirement account or individual
retirement annuity.
(iv) "Direct rollover" means a payment by the Plan to a single
eligible retirement plan specified by the eligible recipient.
SECTION 9. SURVIVING SPOUSE'S BENEFIT.
(a) Commencement of Coverage. The spouse of a Participant shall be
covered by a Surviving Spouse's Benefit commencing on the earlier of (i) the
date the Participant has completed 5 Years of Service, or (ii) the date the
Participant attains Normal Retirement Age while he is still an Employee.
(b) Termination of Coverage. Surviving Spouse's Benefit coverage shall
cease to be in effect on the earliest of (i) the first day of the first month in
which the Participant's Immediate Unreduced Retirement, Reduced Retirement,
Shutdown Retirement or Deferred Vested Pension, as applicable, is to be paid or
commence or (ii) the date the Participant no longer has a spouse.
(c) Amount of Surviving Spouse's Benefit. The Surviving Spouse's Benefit
payable with respect to a Participant who dies while coverage under the
Surviving Spouse's Benefit is in effect shall be a monthly pension equal to the
survivor's portion of the 50% Joint and Survivor Pension that would have been
payable if the Participant's employment had terminated (for a reason other than
death) on the date he died and his Plan Benefit had commenced as of the date it
is payable pursuant to Subsection (e) below. Such Surviving Spouse's Benefit
shall be payable to the Participant's surviving spouse (if any) for life.
(d) Form of Surviving Spouse's Benefit. The Surviving Spouse's Benefit
shall be paid in the form of a monthly pension for the life of the spouse.
(e) Commencement or Payment of Surviving Spouse's Benefit.
(i) Participant Eligible for Immediate Benefit. If, at the time of
death, the Participant would have been eligible to receive an Immediate
Unreduced Retirement, Reduced Retirement or Shutdown Retirement Pension, a
surviving spouse may elect to have the Surviving Spouse's Benefit commence
as of the first day of any month after the month of the Participant's
death, but no later than the Participant's Normal Retirement Date (but
with payment of such benefit to be made on the last day of such month and
each applicable succeeding month), by properly completing and filing the
prescribed form with the Company. If no election is made, such Surviving
Spouse's Benefit shall commence as of the Participant's Normal Retirement
Date (but with payment of such benefit to be made on the last day of each
month).
(ii) Participant Not Eligible for an Immediate Benefit. If, at the
time of death, the Participant would have been eligible to receive a
Deferred Vested Pension, but not an Immediate Unreduced Retirement,
Reduced Retirement or Shutdown Retirement
7
<PAGE> 14
Pension, a surviving spouse may elect to have the Surviving Spouse's
Benefit commence as of any of the applicable dates described below, by
properly completing and filing the prescribed form with the Company:
(A) If the Participant had completed 15 Years of Service, as
of the first day of any month following the month in which the
Participant would have attained age 60, but no later than the
Participant's Normal Retirement Date (but with payment of such
benefit to be made on the last day of such month and each applicable
succeeding month).
(B) If the Participant had not completed 15 Years of
Service, as of the Participant's Normal Retirement Date (but with
payment of such benefit to be made on the last day of such month and
each applicable succeeding month).
(f) One-Year Marriage Requirements. Notwithstanding any other provision
of the Plan to the contrary, if a Participant and his surviving spouse were not
married to each other throughout the 12-month period ending on the date of the
Participant's death, such spouse shall not be entitled to a Surviving Spouse's
Benefit.
(g) Claim for Surviving Spouse's Benefit; Required Information. No
Surviving Spouse's Benefit will be paid under the Plan until the eligible spouse
has filed a properly completed application for benefits with the Company on the
prescribed form and has provided the Company with all of the information that it
may need to determine the amount payable to such spouse. Payment of the
Surviving Spouse's Benefit will be delayed until the Company has received such
an application, but the first payment made will include all amounts due from the
date on which payments were to commence hereunder.
SECTION 10. OTHER DEATH BENEFITS.
(a) Death before Commencement of Benefits. If a Participant dies before
the first day of the month in which payment of his Plan Benefit is to be paid or
commence, no benefits shall be payable under the Plan, unless the Participant's
spouse is entitled to a Surviving Spouse's Benefit under Section 9.
(b) Death after Commencement of Benefits. On the death of a Participant
who was receiving a Joint and Survivor Pension, the appropriate monthly payments
under such Pension shall be continued to the Participant's spouse (if then
living) for such spouse's life. Upon the death of a Participant who was
receiving an Individual Life Pension, no further benefits shall be payable under
the Plan.
SECTION 11. OFFSETS FOR BENEFITS UNDER THE GENEVA STEEL UNION EMPLOYEE SAVINGS
AND PENSION PLAN AND THE UNITED STATES STEEL CORPORATION PLAN FOR
EMPLOYEE PENSION BENEFITS.
(a) General Rule. If a person (or persons) is or was entitled to a
benefit with respect to a Participant under the Geneva Steel Pension Plan (a
"Pension Benefit"), or is or was entitled
8
<PAGE> 15
to a benefit with respect to a Participant under the USX Pension Plan (a "USX
Benefit"), then any Immediate Unreduced Retirement, Reduced Retirement,
Permanent Incapacity Retirement, Shutdown Retirement or Deferred Vested Pension
otherwise payable under this Plan with respect to such Participant (expressed in
the form of an Individual Life Pension) shall be reduced by the Participant's
Pension Benefit Offset and/or USX Benefit Offset, as applicable, determined
pursuant to Subsections (b) and (c) below.
(b) Pension Benefit Offset.
(i) A Participant's Pension Benefit Offset shall first be
determined as an amount equal to the value of the Participant's "Pension
Contribution Account," if any, under the Geneva Steel Pension Plan as of
the Valuation Date immediately succeeding the date the Participant ceases
to be an Employee (or, if the Participant's Pension Contribution Account
was distributed prior to such Valuation Date, the amount so distributed);
(ii) If the Plan Benefit payable under this Plan with respect to
the Participant is an Immediate Unreduced Retirement, Reduced Retirement
or Shutdown Retirement Pension, the amount determined under Paragraph (i)
above shall be divided by the factor set forth in Table 4 of Appendix A
that is opposite the Participant's age (expressed as the number of years
and whole months rounded to the nearest month) as of the date the
Participant ceases to be an Employee; and the resulting Individual Life
Pension amount shall be the Pension Benefit Offset;
(iii) If the Plan Benefit payable under this Plan with respect to
the Participant is a Deferred Vested Pension, the amount determined under
Paragraph (i) above shall be divided by the factor set forth in Table 5 of
Appendix A that is opposite the Participant's age (expressed as the number
of years and whole months rounded to the nearest month) as of the date the
Participant ceases to be an Employee; and the resulting Individual Life
Pension amount shall be the Pension Benefit Offset; and
(iv) If the Plan Benefit payable under this Plan with respect to
the Participant is a Permanent Incapacity Retirement Pension, the amount
determined under Paragraph (i) above shall be divided by the factor set
forth in Table 4 of Appendix A that is opposite the age of 65 years and 0
months; and the resulting Individual Life Pension amount shall be the
Pension Benefit Offset.
(c) USX Benefit Offset.
(i) A Participant's USX Benefit Offset shall be equal to any
benefit accrued by the Participant at any time under the USX Pension Plan
(expressed in the form of an individual life annuity), including any
special payments, lump sum payments, monthly payments, and additional
pension benefits, but excluding any increase to a Participant's "regular
pension" under the USX Pension Plan for "permanent incapacity retirement,"
"70/80 retirement" or "rule-of-65 retirement," as such terms are defined
in the USX Pension Plan;
9
<PAGE> 16
(ii) If the Plan Benefit payable under this Plan with respect to
the Participant is an Immediate Unreduced Retirement, Reduced Retirement
or Shutdown Retirement Pension, the amount of the USX Benefit Offset
described in Paragraph (i) above shall be determined as of the date the
Participant ceases to be an Employee;
(iii) If the Plan Benefit payable under this Plan with respect to
the Participant is a Permanent Incapacity Retirement or Deferred Vested
Pension, the amount of the USX Benefit Offset described in Paragraph (i)
above shall be determined as of the Participant's Normal Retirement Date;
and
(iv) If (A) any portion of the USX Benefit Offset described in
Paragraph (i) above commenced in the form of a monthly annuity earlier
than the date described in Paragraph (ii) or (iii) above, as applicable
(for example, payments to a former spouse pursuant to a "qualified
domestic relations order" within the meaning of section 414(p) of the
Code), or (B) any portion of the USX Benefit Offset described in Paragraph
(i) above was paid in a form other than a monthly annuity (for example, a
Pickering settlement payment or a special initial pension payment), then
such portion of the USX Benefit Offset shall be converted to an
Actuarially Equivalent benefit in the form of an Individual Life Pension
(for the Participant's life) as of the Participant's age on the date
described in Paragraph (ii) or (iii) above, as applicable, calculated on
the basis of an interest rate of 8%, the mortality assumptions set forth
in the unadjusted UP-1984 Mortality Table and, if the Participant's age on
the date described in (ii) above is under age 55, as if the participant is
age 55. The Participant's age for purposes of Paragraph (ii) above shall
be determined as the number of years and whole months rounded to the
nearest month.
SECTION 12. ADMINISTRATION OF THE PLAN.
(a) Plan Sponsor and Plan Administrator. The Company is both the "plan
sponsor" and the "plan administrator" of the Plan for purposes of ERISA and the
Code.
(b) Administrative Responsibilities. The Company is the named fiduciary
that has the authority to control and manage the operation and administration of
the Plan. The Company shall make such rules, regulations and computations and
shall take such other action to administer the Plan as it may deem appropriate.
The Company shall have sole discretion to interpret the terms of the Plan and to
determine eligibility for benefits pursuant to the objective criteria set forth
in the Plan. The Company's rules, regulations, interpretations, computations and
other actions shall be conclusive and binding upon all persons. In administering
the Plan, the Company shall act in a nondiscriminatory manner to the extent
required by section 401 and related sections of the Code and shall at all times
discharge its duties with respect to the Plan in accordance with the standards
set forth in section 404(a)(1) of ERISA.
(c) Management of Plan Assets. The Company is a named fiduciary with
respect to the control and management of the assets of the Plan, but only to the
extent of having the authority:
(i) To appoint one or more trustees to hold assets of the Plan in
trust and to enter into a trust agreement with each trustee it appoints;
10
<PAGE> 17
(ii) To appoint one or more Investment Managers for any assets of
the Plan and to enter into an investment management agreement with each
Investment Manager it appoints;
(iii) To determine the distribution of all or any portion of the
assets of the Plan among the categories of equity, debt, real estate or
other general investment categories;
(iv) To issue specific directions to any Trustee to transfer assets
of the Plan for investment under one or more group annuity contracts
issued to the Trustee by any insurance company or companies qualified to
do business in at least one state and to instruct such Trustee as to the
exercise of any elections under any such contract; and
(v) To issue specific directions to a Trustee to allocate assets
of the Plan for investment as part of one or more group trusts maintained
by any Trustee that are exempt from Federal income tax under section
501(a) of the Code.
(d) Trustees and Investment Managers.
(i) Each 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 Company:
(A) Allocates the authority to manage such assets to one or
more Investment Managers;
(B) Directs the Trustee to transfer such assets for
investment under one or more group annuity contracts and instructs
the Trustee as to the exercise of any elections under such
contracts;
(C) Directs the Trustee to allocate certain assets for
investment as part of one or more group trusts; or
(D) Directs the Trustee as to how such assets are to be
invested among the categories of equity, debt, real estate or other
general investment categories.
(ii) Each Investment Manager shall have the exclusive authority to
manage, including the authority to acquire and dispose of, the assets of
the Plan assigned to it by the Company, except to the extent that the
Company directs the allocation of such assets among general investment
categories.
(iii) Each Trustee and each Investment Manager 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, subject to any directions of the Company with respect to the
allocation of Plan assets among general investment categories.
(e) Delegation of Fiduciary Responsibilities. The Company may engage
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
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<PAGE> 18
appropriate. By written instrument signed by both parties, the Company may
designate one or more actuaries, accountants or consultants as fiduciaries to
carry out, where appropriate, its fiduciary responsibilities under the Plan. The
Company shall not allocate or delegate to any other person any of its duties and
responsibilities under the Plan. The duties and responsibilities of the Company
under the Plan that have not been allocated or delegated to others pursuant to
the foregoing provisions of this Subsection 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. Except as provided in Subsection 14(c) relating to
Review of Denied Claims, the Company is specifically prohibited from designating
any director, officer or employee of the Company as a fiduciary and from
allocating or delegating to any such person any of its fiduciary
responsibilities under the Plan.
In communications with its employees and in any other activities relating
to the Plan, each Participating Company shall comply with the rules,
regulations, interpretations, computations and instructions issued by the
Company. With respect to matters relating to the Plan, directors, officers and
employees of a Participating Company shall act on behalf and in the name of the
Participating Company in their capacity as directors, officers and employees and
not as individual fiduciaries.
(f) 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.
SECTION 13. FUNDING OF THE PLAN.
(a) Funding Policy and Method. The Company shall determine the funding
method (i.e., actuarial cost method) and the policy to be used in determining
costs and liabilities under the Plan pursuant to section 301 et seq. of ERISA
and section 412 of the Code. The Company shall review such funding method from
time to time and, if it determines that such funding method is no longer
appropriate, it shall petition the Secretary of the Treasury for approval of a
change of funding method.
(b) Cost of the Plan. The Company shall determine the normal cost of the
Plan for each Plan Year and the amount (if any) of the unfunded past-service
cost, on the basis of the funding method established for the Plan and using
actuarial assumptions that in the aggregate are reasonable. The Company also
shall determine the contributions required to be made for each Plan Year by the
Participating Companies in order to satisfy the minimum funding standard (or
alternative minimum funding standard) for such Plan Year determined pursuant to
sections 302 through 305 of ERISA and section 412 of the Code.
(c) Contributions to the Plan. The Company shall cause the Participating
Companies to contribute to the Plan for each Plan Year the amount necessary to
satisfy the minimum funding standard (or alternative minimum funding standard)
for such Plan Year; provided, however, that such obligation shall cease upon
termination of the Plan, except as otherwise provided in ERISA. In the case of a
partial termination of the Plan, such obligation shall cease with respect to
those Participants and spouses who are affected by such partial termination,
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<PAGE> 19
except as otherwise provided in ERISA. No contributions shall be required (or
permitted) by Participants.
(d) Cash Needs of the Plan. From time to time, the Company shall
estimate the benefits and administrative expenses to be paid out of the Trust
Fund during the period for which such estimate is made and shall also estimate
the contributions to be made to the Plan during such period by or on behalf of
the Participating Companies. Such estimates shall be made on an annual,
quarterly, monthly or other basis as the Company shall determine. The Company
shall inform each Trustee and each Investment Manager of both such estimates for
each period for which such estimates are made.
(e) Public Accountant. The Company shall engage an independent qualified
public accountant to conduct such examinations and to render 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, but in such event the Company shall
engage a successor independent qualified public accountant to perform such
examinations and render such opinions.
(f) Enrolled Actuary. The Company shall engage an enrolled actuary to
prepare the actuarial statement described in section 103(d) of ERISA and to
render the opinion described in section 103(a)(4) of ERISA. The Company in its
discretion may remove and discharge the person so engaged, but in such event the
Company shall engage a successor enrolled actuary to perform such examination
and render such opinion.
(g) Basis of Payments to the Plan. From time to time, the Participating
Companies shall make such contributions to the Plan as the Company determines to
be necessary or desirable in order to fund the benefits provided by the Plan and
any expenses thereof that are paid out of the Trust Fund and in order to carry
out the obligations of the Company set forth in Subsection (c) above. All
contributions to the Plan shall be held by the Trustee in accordance with the
Trust Agreement.
(h) Basis of Payments from the Plan. All benefits payable under 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. The Trustee shall pay all
expenses of the Plan pursuant to the Trust Agreement, except such expenses as
are paid by the Company. The Company shall have complete and unfettered
discretion to determine whether an expense of the Plan shall be paid by the
Company or out of the Trust Fund, and the Company's discretion and authority to
direct the payment of expenses out of the Trust Fund shall not be limited in any
way by any prior decision or practice regarding payment of the expenses of the
Plan.
(i) Return of Company Contributions. Notwithstanding any other provision
hereof to the contrary, each contribution to the Plan made by any Participating
Company is expressly conditioned upon the deductibility of such contribution
under section 404 of the Code. If the deductibility of a contribution made by a
Participating Company is denied, the amount for which a deduction is disallowed
(reduced by any losses incurred with respect to such amount) shall be returned
to such Participating Company within 12 months after the date of the
disallowance. In addition, if any Participating Company makes a contribution to
the Plan by reason of a mistake of fact, the amount contributed by reason of
such mistake (reduced by any losses incurred with
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<PAGE> 20
respect to such amount) may be returned to such Participating Company within 12
months after the date such payment was made. Finally, if the Internal Revenue
Service determines that the Plan initially fails to meet the qualification
requirements under section 401(a) of the Code, any amounts contributed by a
Participating Company shall be returned to such Participating Company within 12
months after such determination is made by the Internal Revenue Service.
(j) Application of Forfeitures. Prior to the termination of the Plan,
all forfeitures arising under the Plan shall be applied as soon as is reasonably
practicable to reduce the employer contributions to the Plan, and under no
circumstances shall any such forfeiture be applied to increase the benefits that
any Participant would otherwise receive hereunder.
SECTION 14. CLAIMS AND REVIEW PROCEDURES.
(a) Inquiries and Applications for Benefits.
(i) All inquiries concerning the Plan or present or future rights
to benefits under the Plan and all applications for benefits under the
Plan shall be submitted to the Company at its U.S. headquarters. An
application for benefits shall be made by properly completing and filing
the prescribed application form.
(ii) If any Participant or spouse disagrees with the Company's
response to such individual's inquiry or application for benefits, the
Participant or spouse shall notify the Company in writing (at the location
set forth in Paragraph (i) above) and shall request a review of such
response. Any such notice shall be treated as a claim for benefits
hereunder. Claims relating to a Participant's or spouse's eligibility for
or amount of benefits (other than Permanent Incapacity disputes) shall be
resolved as described in (b) and (c) below. Claims relating to whether a
Participant is or continues to be Permanently Incapacitated shall be
resolved as described in (d) below.
(b) Denial of Claims. In the event that any claim for benefits is
denied, in whole or in part, the Company shall notify the claimant in writing of
such denial and of the claimant's right to a review thereof. Such written notice
shall set forth, in a manner calculated to be understood by the claimant,
specific reasons for such denial, specific references to the Plan provisions on
which such denial is based, a description of any information or material
necessary to perfect the claim, an explanation of why such material is necessary
and an explanation of the Plan's procedure for Review of Denied Claims. Such
written notice shall be given to the claimant within 90 days after the Company
receives the claim, unless special circumstances require an extension of time,
up to an additional 90 days, for processing the claim. If such an extension is
required, written notice of the extension shall be furnished to the claimant
prior to the end of the initial 90-day period. Such notice of extension shall
indicate the special circumstances requiring the extension of time and the date
by which the Company expects to render its decision on the claim for benefits.
If written notice of the denial of the claim for benefits or of the fact that an
extension of time is necessary for processing the claim is not furnished within
the time specified in this Subsection, the claim shall be deemed to be denied,
and the claimant shall be permitted to appeal such denial in accordance with the
procedure for Review of Denied Claims set forth in Subsection (c) below.
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<PAGE> 21
(c) Review of Denied Claims. Any person whose claim for benefits is
denied (or deemed denied), in whole or in part, or such person's duly authorized
representative, may appeal from such denial by submitting a written request for
a review of the claim to the Company and the United Steelworkers of America
within 30 days after receiving written notice of such denial from the Company
(or, in the case of a deemed denial, within 30 days after the claim is deemed
denied). The request for review shall be resolved in accordance with the
procedures set forth in Sections 3.D. (Step 3) and 3.E. (Arbitration) of Article
16 (Adjustment of Grievances) of the Basic Agreement between the Company and the
United Steelworkers of America dated March 1, 1998, and any successor agreements
thereto.
(d) Disputes as to Permanent Incapacity. If any difference shall arise
between the Company and any Participant as to whether such Participant is or
continues to be Permanently Incapacitated within the meaning of Section 19(aa),
such difference shall be resolved as follows:
The Participant shall be examined by a physician appointed for the purpose
by the Company and by a physician appointed for the purpose by a duly
authorized representative of the United Steelworkers of America. If they
shall disagree concerning whether the Participant is Permanently
Incapacitated, that question shall be submitted to a third physician
selected by such two physicians. The medical opinion of the third
physician, after examination of the Participant and consultation with the
other two physicians, shall decide such question. The fees and expenses of
the third physician shall be shared equally by the Company and the United
Steelworkers of America.
SECTION 15. AMENDMENT AND TERMINATION OF THE PLAN.
(a) Future of the Plan. The Company expects to continue the Plan
indefinitely. Future conditions, however, cannot be foreseen (including changes
in or termination of the Pension Agreement), and the Company shall have the
authority to amend or terminate the Plan at any time and for any reason, by
action of its board of directors or by action of a committee or individual(s)
acting pursuant to a valid delegation of authority, provided that such amendment
or termination does not violate the Pension Agreement that may be in effect at
that time.
(b) Amendments to the Plan. No amendment of the Plan shall (i) reduce
the benefit of any Participant accrued under the Plan prior to the date such
amendment is adopted, except to the extent that a reduction in accrued benefits
may be permitted by ERISA, nor (ii) divert any part of the assets of the Plan to
purposes other than the exclusive purposes of providing the benefits accrued
under the Plan to the Participants and spouses who have an interest in the Plan
and defraying the reasonable expenses of administering the Plan and the Trust
Fund.
(c) Termination of the Plan. Upon termination of the Plan:
(i) Except as otherwise provided in Subsection (d) below, no part
of the Trust Fund shall revert to any member of the Affiliated Group or be
used for or diverted to purposes other than the exclusive purposes of
providing the benefits accrued under the Plan to the Participants and
spouses who have an interest in the Plan and defraying the reasonable
expenses of administering the Plan and such termination;
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<PAGE> 22
(ii) Each Participant's right to the Participant's accrued benefit
hereunder shall become 100% vested and nonforfeitable;
(iii) The Participating Companies shall have no obligation to
continue making contributions to the Plan, except as otherwise provided in
ERISA;
(iv) Except as otherwise provided in ERISA and Subsection (f)
below, no Participating Company nor any other person shall have any
liability or obligation to provide aggregate benefits hereunder in excess
of the value of the Trust Fund, and the Participants and spouses who have
an interest in the Plan shall obtain benefits solely from the Trust Fund;
and
(v) The Trust shall continue until the Trust Fund has been
distributed as provided in Subsection (d) below.
(d) Allocation of Trust Fund on Termination; Return of Residual Assets.
Upon termination of the Plan, the Trust Fund shall be allocated by the Company
on an actuarial basis among the Participants and spouses who have an interest in
the Plan in the manner prescribed by section 4044 of ERISA. Any residual assets
of the Trust Fund remaining after such allocation shall be distributed to the
Participating Companies if (i) all liabilities of the Plan for the accrued
benefits of the Participants and spouses who have an interest in the Plan have
been satisfied and (ii) such a distribution does not contravene any provision of
law.
(e) Partial Termination of the Plan. In the event the Company determines
that there is a partial termination of the Plan (within the meaning of section
411(d)(3) of the Code):
(i) The rules set forth in Subsection (c) above shall apply, but
only with respect to the Participants and spouses who are affected by such
partial termination; and
(ii) If the accrued benefits of the Participants and spouses who
are affected by such partial termination are not fully funded, then, to
the extent required by section 401 of the Code, the Company shall
establish a method by which to separately account for the portion of the
Trust Fund that is attributable to such accrued benefits. If such separate
accounting is required, it shall be made in a manner that is consistent
with the requirements of section 4044 of ERISA.
SECTION 16. BENEFIT LIMITATIONS.
(a) Limitation on Benefits. Notwithstanding any other provision of the
Plan to the contrary, a Participant's Annual Benefit shall not exceed the
applicable limitation set forth in section 415 of the Code at any time during
any Plan Year. If a Participant's Annual Benefit would exceed the foregoing
limitation, the Participant's Annual Benefit shall be reduced by reducing the
components thereof, as necessary, in the order in which they are listed in
Subsection (c) below if the components are paid at the same time. If the
components of the Participant's Annual Benefit are paid at different times, the
components shall be reduced in the reverse order in which they are paid (i.e.,
benefits paid first are reduced last).
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(b) Combined Limitation on Benefits and Contributions. Notwithstanding
any other provision of the Plan to the contrary, effective for the sum of a
Participant's defined benefit plan fraction and the Participant's defined
contribution plan fraction shall not exceed the amount allowed under section
415(e) of the Code and the regulations issued thereunder with respect to any
Plan Year. If a Participant would exceed the foregoing limitation, the
Participant's Annual Benefit shall be reduced, as necessary, to allow the
Participant's annual additions (within the meaning of section 415(c)(2) of the
Code) under the Geneva Steel Union Employee Savings and Pension Plan and its
predecessors (and under any other plan maintained by any member of the Employer
Group to which section 415 of the Code applies and that is considered a defined
contribution plan for purposes of section 415 of the Code) to equal the maximum
permitted by law and by such Plan (or plans).
(c) Annual Benefit. For purposes of this Section, a Participant's
"Annual Benefit" shall be the sum of the following:
(i) The annual retirement benefit in the form of a straight life
annuity to which the Participant is entitled under this Plan; and
(ii) The aggregate annual retirement benefits (if any) in the form
of straight life annuities to which the Participant is entitled under all
other qualified defined benefit plans maintained by any member of the
Employer Group, excluding any benefits attributable to the Participant's
employee contributions.
(d) Adjusted Dollar Limitation for Benefits Commencing At Social
Security Retirement Age, After Social Security Retirement Age or Before Age 62.
(i) At Social Security Retirement Age. The dollar limitation
described in section 415(b)(1)(A) of the Code that is applicable at a
Participant's "social security retirement age" (as defined in section
415(b)(8) of the Code) shall be adjusted annually for increases in the
cost of living pursuant to section 415(d) of the Code.
(ii) After Social Security Retirement Age. If a Participant's
Annual Benefit commences after the Participant's social security
retirement age, the dollar limitation described in section 415(b)(1)(A) of
the Code (as adjusted annually for increases in the cost of living
pursuant to section 415(d) of the Code) for the particular Plan Year shall
not be increased. Accordingly, the same dollar limitation that is
applicable at the social security retirement age for that Plan Year shall
be applied to the Participant's Annual Benefit commencing after the
Participant's social security retirement age during that Plan Year.
(iii) Before Age 62. If a Participant's Annual Benefit commences
prior to age 62, the dollar limitation at age 62 determined pursuant to
section 415(b)(2)(C) of the Code shall be further reduced to the lesser of
the actuarially equivalent annual amount determined as of such earlier
commencement date using the factors described in (A) or (B) below:
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(A) The factors used under the applicable plans for the
particular Participant to determine the amount of the reduction for
early commencement of the Participant's Annual Benefit.
(B) Interest of 5% per year and the unadjusted UP-1984
Mortality Table for both post-benefit commencement mortality and
pre-benefit commencement mortality.
(e) Compensation. For purposes of applying the limitations of section
415 of the Code to the Plan and the other qualified defined benefit plans
maintained by any member of the Employer Group, "compensation" shall mean 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 sections
6041(d), 6051(a)(3) and 6052 of the Code and the regulations thereunder, that
are payable to a Participant by any member of the Employer Group, 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)(2) of the
Code).
(f) Employer Group. For purposes of this Section, the term "Employer
Group" shall mean the controlled group of corporations (within the meaning of
section 1563(a) of the Code, determined without regard to sections 1563(a)(4)
and 1563(e)(3)(C)) of which the Company is a member, except that the phrase
"more than 50 percent" shall be substituted for the phrase "at least 80 percent"
wherever the latter phrase occurs in section 1563(a).
SECTION 17. GENERAL PROVISIONS.
(a) Benefits Not Affected by Changes in Plan After Employment
Terminates. All benefits to which any Participant or spouse may be entitled
hereunder, and any such person's rights and obligations with respect to such
benefits, shall be determined under the Plan as in effect when the Participant
ceases to be an Employee. Such benefits, rights and obligations shall not be
affected by any subsequent change in the provisions of the Plan, unless the
Participant is reemployed as an Employee.
(b) Plan Mergers. Except as may be permitted under regulations issued
pursuant to sections 401(a)(12) and 414(l) of the Code, the Plan shall not merge
or consolidate with, nor transfer assets or liabilities to, any other plan
unless each Participant would be entitled to receive a benefit immediately after
such merger, consolidation or transfer (if the Plan then terminated) that is
equal to or greater than the benefit such Participant would have been entitled
to receive immediately before the merger, consolidation or transfer (if the Plan
had then terminated).
(c) No Assignment of Property Rights. Except as otherwise provided by
applicable law, the interest or property rights of any person in the Plan, the
Trust Fund or any distribution to be made under the Plan shall not be assigned
(either at law or in equity), alienated, anticipated or subject to attachment,
bankruptcy, garnishment, levy, execution or other legal or equitable process.
Any act in violation of this Subsection shall be void. Notwithstanding the
foregoing:
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(i) This Subsection shall not apply to the Company's withholding
of the amount of a prior excess payment made to any person under the Plan
from one or more subsequent payments due to or with respect to such
person, or to pursue other lawful means of recovering such overpayment on
behalf of the Plan in accordance with Subsection (h) below;
(ii) This Subsection shall not apply to any revocable and voluntary
arrangement whereby any person directs that all or any portion of a
benefit payable to such person under the Plan is to be paid to a third
party (which may be the Company), provided that such third party files a
written acknowledgment with the Company, in accordance with regulations
issued by the Internal Revenue Service under section 401(a)(13) of the
Code, stating that such third party has no enforceable right to receive
such benefit;
(iii) The creation, assignment or recognition of a right to all or
any portion of a Participant's Plan Benefit pursuant to a state domestic
relations order shall not constitute a violation of this Subsection,
provided such order is determined to be a "qualified domestic relations
order" (within the meaning of section 414(p) of the Code) under written
procedures adopted by the Company; and
(iv) The offset of a Participant's Plan Benefit pursuant to an
order or requirement to pay the Plan that arises under a judgment of
conviction for a crime involving the Plan, or under a civil judgment
entered by a court or a settlement agreement with the Department of Labor
for violations involving the fiduciary requirements of part 4 of subtitle
B of title I of ERISA, shall not constitute a violation of this
Subsection, provided such offset satisfies the requirements of Code
section 401(a)(13)(C).
(d) Incapacity. If the Company determines that any person is unable to
handle properly any amounts payable under the Plan, the Company may make any
arrangement for payment on such person's behalf that it determines will be
beneficial to such person, including (without limitation) the payment of such
amounts to the guardian, conservator, spouse or dependent(s) of such person.
(e) No Employment Rights. Nothing in the Plan shall be deemed to give
any individual a right to remain in the employ of any member of the Affiliated
Group nor affect the right of a member of the Affiliated Group to terminate any
individual's employment with or without cause, which right is hereby reserved.
(f) Proof of Age and Marriage. Participants and spouses shall furnish
proof of age and marital status satisfactory to the Company at such time or
times as the Company may prescribe. Subject to Subsection 8(f), the Company may
delay the disbursement of any benefit due under the Plan until all pertinent
information with respect to age and marital status has been so furnished.
(g) Overpayments and Underpayments. If any person has received a payment
from the Plan in excess of the amount to which such person is entitled under the
provisions of the Plan, the Company may withhold the excess from one or more
subsequent payments to such
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<PAGE> 26
person (or to any person who derives a right to benefits under the Plan from the
person who received the overpayment). In addition, the Company may employ any
other lawful means to recover overpayments on behalf of the Plan. If any person
has received less than the amount to which such person is entitled under the
Plan, the entire amount of the deficiency shall be paid to such person (or to
any person who derives a right to benefits under the Plan from the person who
received the underpayment), as soon as reasonably practicable after the
discovery of the underpayment.
(h) Choice of Law. The Plan and all rights hereunder 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.
(i) General Information. Each Participant shall be given a summary
explanation of the provisions of the Plan and, upon written request addressed to
the Company, shall be furnished with a copy of the Plan text, any reasonable
information regarding the Participant's status, rights and privileges under the
Plan and with all information required by law to be so furnished. In the event
of an ambiguity or conflict between any such summary explanation or any other
information furnished to a Participant and the provisions of the Plan text, or
in the event of any omission in such summary explanation or other information,
the provisions of the Plan text shall control. Subject to such limits as may be
imposed under applicable regulations issued by the Department of Labor, the
Company may impose a reasonable charge for copies of any documents provided
under this Subsection.
(j) Spouse's Consent Required. At any time during the 90-day period
ending on the first day of the month in which payment of a Participant's Plan
Benefit is to commence, a married Participant may elect an Individual Life
Pension, rather than a 50% or 100% Joint and Survivor Pension. A Participant may
revoke such an election at any time and any number of times during the 90-day
period ending on the first day of the month in which payment of a Participant's
Plan benefit is to commence. Except as set forth below, an election of an
Individual Life Pension, or a revocation of any such election, filed by a
married Participant shall not be effective unless it is signed both by such
Participant and by the Participant's spouse, the spouse's signature is witnessed
by a representative of the Company or a notary public and the spouse's consent
acknowledges the effect of the election. This requirement shall not apply in the
case of a married Participant who establishes to the Company's satisfaction
that:
(i) There is a court-approved marital settlement agreement or a
court order that authorizes the Participant to make such election,
designation or revocation without the written consent of the spouse, or
that terminates the marital property rights of the spouse in the Plan, or
that adjudicates or disposes of other marital property rights of the
parties but is silent on the question of whether the spouse has or claims
any marital property rights in the Participant's Plan Benefit;
(ii) The Participant's spouse cannot be located; or
(iii) Such signature cannot be obtained because of such other
circumstances as are permitted by regulations issued under section
417(a)(2) of the Code.
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(k) Lost Participants. If, after reasonable efforts to do so, the
Company is unable to locate any person to whom a benefit is payable hereunder by
the day a payment is due, the benefit payable to such person shall be forfeited
on that day. Any benefit that has been forfeited pursuant to the preceding
sentence shall be reinstated within 60 days after such person provides the
Company with such person's current address and properly completes and files any
prescribed form(s) with the Company.
(l) Gender. Except when otherwise indicated by the context, the use of
masculine terminology herein shall also include the feminine.
SECTION 18. EFFECT OF REEMPLOYMENT.
(a) Effect of Reemployment on Benefits. If any Participant who has
ceased to be an Employee and who is receiving pension payments hereunder is
reemployed as an Employee, such pension payments shall be suspended during the
period of such reemployment, and shall recommence in the same amount as of the
first day of the month following the month in which he subsequently ceases to be
an Employee. In addition, no pension payment on account of a prior period of
employment shall commence during the period of a Participant's reemployment.
(b) Benefits After Reemployment. When any reemployed Participant
subsequently ceases to be an Employee, the amount of the Participant's Plan
Benefit hereunder shall be equal to the sum of (i) the amount of the
Participant's Plan Benefit attributable solely to the Participant's Years of
Credited Service prior to reemployment, plus (ii) the amount of the
Participant's Plan Benefit attributable solely to the Participant's Years of
Credited Service following reemployment.
For purposes of the Plan Benefit described in Clauses (i) and (ii) above,
a reemployed Participant's vesting shall be based on the Participant's total
Years of Service before and after reemployment, if the Participant is reemployed
before suffering a Permanent Service Break. If the Participant was not vested
when he first ceased to be an Employee and is not reemployed before suffering a
Permanent Service Break, the Participant's Plan Benefit described in Clause (i)
above will be zero.
If a reemployed Participant had not commenced payment of the Plan Benefit
described in Clause (i) above prior to reemployment, then for purposes of
determining eligibility to receive the Plan Benefit described in Clause (i)
above as an Immediate Unreduced Retirement, Reduced Retirement, Permanent
Incapacity Retirement or Shutdown Retirement Pension under Sections 3, 4, 5 or
6, or eligibility to commence the Plan Benefit described in Clause (i) above as
a Deferred Vested Pension before his Normal Retirement Date under Section 7(c),
(i) the Participant's Years of Service shall be equal to his total Years of
Service before and after reemployment, and (ii) the Participant's age shall be
determined as of the termination of his subsequent period of employment.
Notwithstanding any other provision of the Plan to the contrary, if a reemployed
Participant had commenced payment of the Plan Benefit described in Clause (i)
above prior to reemployment, for the purposes described in the preceding
sentence, (i) the Participant's Years of Service shall only be equal to the
Participant's Years of Service before reemployment; and (ii) the Participant's
age shall be determined as of the termination of his first period of employment.
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(c) Special Rule for Permanent Incapacity. Notwithstanding Subsection
(b) above, if a Participant is reemployed as an Employee after a termination of
employment because of Permanent Incapacity, the amount of any Plan Benefit
payable upon subsequent termination of employment shall be determined without
regard to the rules that applied to determine the amount of his Permanent
Incapacity Retirement Pension.
SECTION 19. DEFINITIONS.
(a) "Actuarial Equivalent" or "Actuarially Equivalent" means determined
to be of equal value through the use of actuarial tables and mathematical
calculations which reflect the fact that a benefit may be payable over a longer
(or shorter) period of time or in a different form. Actuarial Equivalence for
this purpose shall be based on the tables, factors, interest assumptions and
mortality assumptions described in the Plan, including the appropriate Table of
Appendix A when applicable. The tables, factors, interest assumptions and
mortality assumptions specified in the Plan are determined by the Company and,
subject to the provisions of Section 15, may be amended by the Company at any
time.
(b) "Affiliated Group" means the Company, each Subsidiary and each other
entity that has been designated in writing as a member of the Affiliated Group
by the Company.
(c) "Code" means the Internal Revenue Code of 1986, as amended from time
to time.
(d) "Company" means Geneva Steel Company, a Utah corporation.
(e) "Deferred Vested Pension" means the benefit provided under Section
7.
(f) "Eligible Employee" means any Employee who is employed by a
Participating Company on or after May 1, 1998 and who is covered by the terms of
the collective bargaining agreement in effect from time to time between the
United Steelworkers of America and the Company, except an Employee who is:
(i) A "leased employee" (within the meaning of section 414(n) of the
Code) with respect to the Participating Company; or
(ii) A nonresident alien with respect to the United States; provided
that this clause (ii) 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.
(g) "Employee" means an individual who is (a) a common-law employee of a
member of the Affiliated Group or (b) a "leased employee" (within the meaning of
section 414(n) of the Code) with respect to a member of the Affiliated Group.
(h) "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time.
22
<PAGE> 29
(i) "50% Joint and Survivor Pension" means the form of pension described
in Paragraph 8(b)(ii).
(j) "Geneva Plant" means the Company's steel works and related
facilities located in Orem, Utah.
(k) "Geneva Steel Pension Plan" means the Geneva Steel Union Employee
Savings and Pension Plan.
(l) "Immediate Unreduced Retirement Pension" means the benefit provided
under Section 3.
(m) "Individual Life Pension" means the form of pension described in
Paragraph 8(b)(i).
(n) "Investment Manager" means a person who is an investment manager as
such term is defined in section 3(38) of ERISA.
(o) "Normal Retirement Age" means age 65.
(p) "Normal Retirement Date" means the first day of the month next
following the Participant's 65th birthday.
(q) "Offsets" means a Participant's Pension Benefit Offset and/or USX
Benefit Offset, as applicable.
(r) "100% Joint and Survivor Pension" means the form of pension
described in Paragraph 8(b)(iii).
(s) "Participant" means an Eligible Employee who has commenced
participating in the Plan pursuant to Subsection 2(a) and whose participation
has not yet terminated pursuant to Subsection 2(c).
(t) "Participating Company" means the Company and each other member of
the Affiliated Group that has been designated in writing as a Participating
Company by the Company and has accepted such designation by appropriate
corporate action.
(u) "Pension Agreement" means any agreement between the United
Steelworkers of America and the Company that provides the Company will establish
and maintain a pension plan or pension fund for Eligible Employees, and any
modification, amendment, extension or renewal of any such agreement.
(v) "Pension Benefit Offset" means the offset described in Subsection
11(b).
(w) "Period of Credited Service" means all of the following:
(i) Service with Geneva Steel Company. A Participant's Period of
Credited Service shall include the Participant's Period of Service
completed while he is covered by
23
<PAGE> 30
the terms of the collective bargaining agreement in effect from time to
time between the United Steelworkers of America and the Company, except
that an Employee's Period of Credited Service shall not include (A) a
Period of Service following termination of employment, as described in
Paragraph (x)(iii) below; and (B) any period with respect to which the
Participant accrues an unvested or vested benefit under any other funded
defined benefit pension plan, other than the USX Pension Plan.
(ii) Service with USX Corporation. A Participant's Period of
Credited Service under this Plan shall include the Participant's Period of
Service with USX Corporation, as described in Paragraph (x)(iv) below.
(x) "Period of Service" means all of the following:
(i) 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:
(A) When the Employee is absent due to lay-off, disability,
sickness or approved leaves of absence for up to 24 months.
(B) 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.
(C) When the Employee is on jury duty, approved vacation or
holiday.
(D) 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 appropriate member of the Affiliated
Group;
(ii) 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 a
member of the Affiliated Group (regardless of any mitigation of damages);
24
<PAGE> 31
(iii) Period Following Termination. An Employee's Period of Service
includes any period following the date the Employee ceases to be an
Employee due to quit, discharge or retirement, provided the Employee is
rehired within 365 days after the earlier of (A) the date of quit,
discharge or retirement; or (B) the date the Employee was first absent due
to lay-off, disability, sickness or approved leave of absence, if he
quits, is discharged or retires while he is absent due to lay-off,
disability, sickness or approved leave of absence.
(iv) Service with USX Corporation. A Participant's Period of
Service under this Plan shall include the period beginning on the
Participant's "adjusted hire date" with USX Corporation, as set forth in
Appendix B to this Plan, and ending with the date the Participant first
performed duties for an Affiliated Group member as an Employee as
described in Paragraph (i) above.
(v) Aggregation of Periods of Service. All Periods of Service
determined pursuant to this Section shall be aggregated on the basis of
whole months whether or not such Periods of Service are consecutive,
except:
(A) Fractional Months. If an Employee's Period of Service
includes a fraction of one month, one additional month of Service
shall be credited if the number of such days is 16 or more for all
purposes under the Plan, except for purposes of determining Years of
Service for eligibility to receive an Immediate Unreduced
Retirement, Reduced Retirement, Permanent Incapacity Retirement or
Shutdown Retirement Pension under Sections 3, 4, 5 or 6 or
eligibility to commence a Deferred Vested Pension before his Normal
Retirement Date under Section 7(c).
(B) Permanent Service Break. If an Employee 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.
(y) "Permanent Incapacity Retirement Pension" means the benefit provided
under Section 5.
(z) "Permanent Service Break" means a period during which the Employee's
employment relationship with an Affiliated Group member terminates when the
Employee is not fully vested and the Employee has not been reemployed as an
Employee within 60 months.
(aa) "Permanently Incapacitated" or "Permanent Incapacity" means the
condition of a Participant who has been totally disabled by bodily injury or
disease so as to be prevented thereby from engaging in any employment of the
type covered by the collective bargaining agreement in effect from time to time
between the United Steelworkers of America and the Company, and, as certified by
a qualified physician selected by the Company, the incapacity is expected to be
permanent and continuous during the remainder of the Participant's lifetime. The
permanency of incapacity may be verified by medical examination prior to a
Participant's Normal Retirement Date at any time. Incapacity contracted,
suffered or incurred while the Participant was engaged in, or resulted from his
having engaged in, a criminal enterprise, or
25
<PAGE> 32
resulting from future service in the armed forces and which prevents him from
returning to employment with the Affiliated Group and for which he receives a
military pension, shall not entitle a Participant to a Permanent Incapacity
Retirement Pension. Subject to Subsection 14(c) relating to Review of Denied
Claims, any such determination shall be conclusive and binding on all persons.
(bb) "Plan" means this Geneva Steel Union Employee Defined Benefit Plan,
as amended from time to time, including all of the Appendices and Supplements
hereto.
(cc) "Plan Benefit" means a Participant's Immediate Unreduced Retirement,
Reduced Retirement, Permanent Incapacity Retirement, Shutdown Retirement, or
Deferred Vested Pension, as applicable, and, except to the extent otherwise
provided therein, any benefit payable to such Participant under any of the
Supplements to the Plan.
(dd) "Plan Year" means the calendar year.
(ee) "Reduced Retirement Pension" means the benefit provided under
Section 4.
(ff) "Shutdown Retirement Pension" means the benefit provided under
Section 6.
(gg) "Subsidiary" means any corporation with respect to which the
Company, one or more Subsidiaries, or the Company together with one or more
Subsidiaries, own not less than 80% of the total combined voting power of all
classes of stock entitled to vote, or not less than 80% of the total value of
shares of all classes of stock.
(hh) "Surviving Spouse's Benefit" means the benefit provided under
Section 9.
(ii) "Trust" means the trust established by the appropriate Trust
Agreement.
(jj) "Trust Agreement" means the trust agreement established pursuant to
the Plan by and between the Plan Sponsor and the Trustee, as amended from time
to time.
(kk) "Trust Fund" means the trust fund(s) established by the appropriate
Trust Agreement.
(ll) "Trustee" means a trustee appointed by the Company pursuant to
Subsection 12(c) and any successor trustee appointed pursuant to the appropriate
Trust Agreement.
(mm) "USX Benefit Offset" means the offset described in Subsection 11(c).
(nn) "USX Pension Plan" means the United States Steel Corporation Plan
for Employee Pension Benefits.
(oo) "Valuation Date" means Valuation Date as that term is defined in the
Geneva Steel Pension Plan.
(pp) "Year of Credited Service" means a 12-month Period of Credited
Service.
(qq) "Year of Service" means a 12-month Period of Service.
26
<PAGE> 33
SECTION 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 on this 30th
day of December, 1999, effective as of January 1, 1999.
GENEVA STEEL COMPANY
By: \s\ Carl E. Ramnitz
-----------------------------------------
As its: Vice President of Human Resources
27
<PAGE> 34
APPENDIX A
ACTUARIAL ASSUMPTIONS, TABLES AND FACTORS
GENEVA STEEL UNION EMPLOYEE DEFINED BENEFIT PLAN
AA-COVER
<PAGE> 35
APPENDIX A
TABLE 1
REDUCTION FACTORS FOR REDUCED RETIREMENT PENSION AND
DEFERRED VESTED PENSION
<TABLE>
<CAPTION>
Age Percentage Age Percentage
--- ---------- --- ----------
<S> <C> <C> <C>
60 63.10% 62-7/12 79.51
60-1/12 63.58 62-8/12 80.11
60-2/12 64.06 62-9/12 80.71
60-3/12 64.54 62-10/12 81.32
60-4/12 65.02 62-11/12 81.93
60-5/12 65.50
60-6/12 65.98 63 82.53
60-7/12 66.45 63-1/12 83.21
60-8/12 66.93 63-2/12 83.89
60-9/12 67.41 63-3/12 84.58
60-10/12 67.89 63-4/12 85.26
60-11/12 68.37 63-5/12 85.94
63-6/12 86.62
61 68.85 63-7/12 87.30
61-1/12 69.38 63-8/12 87.99
61-2/12 69.92 63-9/12 88.67
61-3/12 70.45 63-10/12 89.35
61-4/12 70.99 63-11/12 90.03
61-5/12 71.53
61-6/12 72.06 64 90.72
61-7/12 72.60 64-1/12 91.49
61-8/12 73.14 64-2/12 92.26
61-9/12 73.67 64-3/12 93.04
61-10/12 74.21 64-4/12 93.81
61-11/12 74.75 64-5/12 94.58
64-6/12 95.36
62 75.28 64-7/12 96.13
62-1/12 75.89 64-8/12 96.91
62-2/12 76.49 64-9/12 97.68
62-3/12 77.10 64-10/12 98.45
62-4/12 77.70 64-11/12 99.23
62-5/12 78.30
62-6/12 78.91 65 100.00
</TABLE>
AA-1-1
<PAGE> 36
The above percentages shall be applied to a Reduced Retirement Pension on the
basis of the Participant's completed number of years and whole months (rounded
to the nearest month) as of the date the Participant ceases to be an Employee.
The above percentages shall be applied to a Deferred Vested Pension on the basis
of the Participant's number of years and whole months (rounded to the nearest
month) as of the first day of the month in which such pension commences.
AA-1-2
<PAGE> 37
APPENDIX A
TABLE 2
REDUCTION FACTORS FOR JOINT AND SURVIVOR PENSIONS
This Table of Percentages will be used in calculating the amounts payable if one
of the following options is applicable: the Surviving Spouse's Benefit (50%),
the 50% Joint and Survivor Pension or the 100% Joint and Survivor Pension.
<TABLE>
<CAPTION>
Participant's Age
Difference Between Ages of 51 and
Participant and Spouse Under 52 to 54 55 to 57 58 to 60 61 to 63 64 and Over
-------------------------- ----------- ------------ ------------ ------------ ------------ ------------
50% 100% 50% 100% 50% 100% 50% 100% 50% 100% 50% 100%
--- ---- --- ---- --- ---- --- ---- --- ---- --- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Participant Older
- ------------------------------
20 or more years 71% 56% 72% 57% 73% 58% 73% 58% 74% 58% 74% 58%
17, 18 or 19 years 71 56 72 58 73 59 74 60 75 60 75 60
14, 15 or 16 years 72 57 73 59 74 60 75 61 76 62 76 62
11, 12 or 13 years 73 58 74 60 75 62 77 63 77 64 78 64
8, 9 or 10 years 74 59 75 61 77 63 78 65 79 66 80 66
5, 6 or 7 years 75 60 76 62 78 65 79 67 81 68 81 69
2, 3 or 4 years 76 62 77 64 79 67 81 69 82 71 83 72
less than 2 years 77 64 79 66 81 69 83 71 84 73 85 75
Participant Younger
- ------------------------------
less than 2 years 77% 64% 79% 66% 81% 69% 83% 71% 84% 73% 85% 75%
2, 3 or 4 years 79 66 80 68 82 71 84 74 86 76 87 78
5, 6 or 7 years 80 68 82 70 84 73 86 76 88 79 89 81
8, 9 or 10 years 82 70 84 73 86 76 88 79 90 82 91 84
11, 12 or 13 years 84 73 85 75 88 79 90 82 92 85 93 87
14, 15 or 16 years 86 75 87 78 89 81 91 84 93 87 94 90
17, 18 or 19 years 87 78 89 81 91 84 93 87 95 90 96 92
20 or more years 89 80 91 83 93 87 94 89 96 92 96 93
</TABLE>
NOTES: Participant's age and spouse's age are determined as of the first day of
the month in which the joint and survivor pension is to commence, and rounded to
the nearest whole year; e.g., age 51 years, six months becomes 52. Age
differential is net difference between Participant's and spouse's ages as
rounded.
AA-2-1
<PAGE> 38
APPENDIX A
TABLE 3
SMALL PENSIONS - CALCULATION OF PRESENT VALUE OF A
PARTICIPANT'S PLAN BENEFIT AND A SURVIVING SPOUSE'S BENEFIT
(a) Participant's Benefit. For purposes of Subsection 8(d) of the Plan,
the present value of a Participant's Plan Benefit shall be calculated as
follows:
(i) First, the amount of the Participant's monthly Plan Benefit
shall be calculated as of the first day of the earliest month in which
the Participant's Plan Benefit could have commenced (under the rules set
forth in Sections 3 through 8).
(ii) Second, the present value of the monthly amount
calculated in Subparagraph (i) above shall be determined, as of
the first day of the month in which the Participant's Plan
Benefit is to be distributed under Subsection 8(d), based on the
applicable interest and mortality assumptions set forth below:
Interest Rate: the average annual interest rate on 30-year
Treasury securities for the month of November preceding the
beginning of the Plan Year in which the lump sum is to be paid.
Mortality Table: the "applicable mortality table" described in
section 417(e)(3) of the Code.
(b) Surviving Spouse's Benefit. For purposes of Subsection 8(d) of the
Plan, the present value of a Surviving Spouse's Benefit shall be calculated as
follows:
(i) First, the amount of the monthly Surviving Spouse's
Benefit shall be determined under Subsection 9(c) of the Plan.
(ii)Second, the present value of the amount calculated in
(i) above shall be determined, as of the first day of the month
in which the Surviving Spouse's Benefit is to be distributed
under Subsection 8(d), on the basis of the interest and mortality
assumptions set forth in (a) above.
AA-3-1
<PAGE> 39
APPENDIX A
TABLE 4
FACTORS FOR CONVERTING A PENSION CONTRIBUTION ACCOUNT BALANCE UNDER THE GENEVA
STEEL PENSION PLAN INTO AN INDIVIDUAL LIFE PENSION FOR IMMEDIATE UNREDUCED
RETIREMENT PENSION, REDUCED RETIREMENT PENSION, PERMANENT INCAPACITY RETIREMENT
PENSION AND SHUTDOWN RETIREMENT PENSION
BASED ON UNDERLYING ASSUMPTIONS OF 8% INTEREST AND UP-1984 MORTALITY TABLE
(FOR IMMEDIATE UNREDUCED RETIREMENT OR SHUTDOWN RETIREMENT PENSION, CONVERTS
PENSION CONTRIBUTION ACCOUNT AT PARTICIPANT'S TERMINATION OF EMPLOYMENT TO AN
ACTUARIALLY EQUIVALENT INDIVIDUAL LIFE PENSION COMMENCING AT THE LATER OF AGE 55
OR THE DATE PARTICIPANT'S EMPLOYMENT TERMINATES)
(FOR REDUCED RETIREMENT PENSION, CONVERTS PENSION CONTRIBUTION ACCOUNT AT
PARTICIPANT'S TERMINATION OF EMPLOYMENT TO AN ACTUARIALLY EQUIVALENT INDIVIDUAL
LIFE PENSION COMMENCING AT PARTICIPANT'S TERMINATION OF EMPLOYMENT)
(FOR PERMANENT INCAPACITY RETIREMENT PENSION, CONVERTS PENSION CONTRIBUTION
ACCOUNT AT PARTICIPANT'S TERMINATION OF EMPLOYMENT TO AN ACTUARIALLY EQUIVALENT
INDIVIDUAL LIFE PENSION COMMENCING AT PARTICIPANT'S TERMINATION OF EMPLOYMENT,
BASED UPON THE ASSUMPTION THAT THE PARTICIPANT IS AGE 65 AT TERMINATION OF
EMPLOYMENT)
<TABLE>
<CAPTION>
Age Age Age Age
--------------- ------------- ------------- -------------
Years Months Factor Years Months Factor Years Months Factor Years Months Factor
----- ------ ------ ----- ------ ------ ----- ------ ------ ----- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
48 0 66.6804 50 0 78.5388 52 0 92.7000 54 0 109.6980
1 67.1529 1 79.1023 1 93.3755 1 110.5118
2 67.6254 2 79.6658 2 94.0510 2 111.3256
3 68.0979 3 80.2293 3 94.7265 3 112.1394
4 68.5704 4 80.7928 4 95.4020 4 112.9532
5 69.0429 5 81.3563 5 96.0775 5 113.7670
6 69.5154 6 81.9198 6 96.7530 6 114.5808
7 69.9879 7 82.4833 7 97.4285 7 115.3946
8 70.4604 8 83.0468 8 98.1040 8 116.2084
9 70.9329 9 83.6103 9 98.7795 9 117.0222
10 71.4054 10 84.1738 10 99.4550 10 117.8360
11 71.8779 11 84.7373 11 100.1305 11 118.6498
49 0 72.3504 51 0 85.3008 53 0 100.8060 55 0 119.4636
1 72.8661 1 85.9174 1 101.5470 1 119.3093
2 73.3818 2 86.5340 2 102.2880 2 119.1550
3 73.8975 3 87.1506 3 103.0290 3 119.0007
4 74.4132 4 87.7672 4 103.7700 4 118.8464
5 74.9289 5 88.3838 5 104.5110 5 118.6921
6 75.4446 6 89.0004 6 105.2520 6 118.5378
7 75.9603 7 89.6170 7 105.9930 7 118.3835
8 76.4760 8 90.2336 8 106.7340 8 118.2292
9 76.9917 9 90.8502 9 107.4750 9 118.0749
10 77.5074 10 91.4668 10 108.2160 10 117.9206
11 78.0231 11 92.0834 11 108.9570 11 117.7663
</TABLE>
AA-4-1
<PAGE> 40
<TABLE>
<CAPTION>
Age Age Age Age
--------------- ------------- ------------- -------------
Years Months Factor Years Months Factor Years Months Factor Years Months Factor
----- ------ ------ ----- ------ ------ ----- ------ ------ ----- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
56 0 117.6120 60 0 109.5972 64 0 100.6848 68 0 91.2108
1 117.4525 1 109.4178 1 100.4902 1 91.0084
2 117.2930 2 109.2384 2 100.2956 2 90.8060
3 117.1335 3 109.0590 3 100.1010 3 90.6036
4 116.9740 4 108.8796 4 99.9064 4 90.4012
5 116.8145 5 108.7002 5 99.7118 5 90.1988
6 116.6550 6 108.5208 6 99.5172 6 89.9964
7 116.4955 7 108.3414 7 99.3226 7 89.7940
8 116.3360 8 108.1620 8 99.1280 8 89.5916
9 116.1765 9 107.9826 9 98.9334 9 89.3892
10 116.0170 10 107.8032 10 98.7388 10 89.1868
11 115.8575 11 107.6238 11 98.5442 11 88.9844
57 0 115.6980 61 0 107.4444 65 0 98.3496 69 0 88.7820
1 115.5334 1 107.2605 1 98.1527 1 88.5759
2 115.3688 2 107.0766 2 97.9558 2 88.3698
3 115.2042 3 106.8927 3 97.7589 3 88.1637
4 115.0396 4 106.7088 4 97.5620 4 87.9576
5 114.8750 5 106.5249 5 97.3651 5 87.7515
6 114.7104 6 106.3410 6 97.1682 6 87.5454
7 114.5458 7 106.1571 7 96.9713 7 87.3393
8 114.3812 8 105.9732 8 96.7744 8 87.1332
9 114.2166 9 105.7893 9 96.5775 9 86.9271
10 114.0520 10 105.6054 10 96.3806 10 86.7210
11 113.8874 11 105.4215 11 96.1837 11 86.5149
58 0 113.7228 62 0 105.2376 66 0 95.9868 70 0 86.3088
1 113.5535 1 105.0496 1 95.7886 1 86.0994
2 113.3842 2 104.8616 2 95.5904 2 85.8900
3 113.2149 3 104.6736 3 95.3922 3 85.6806
4 113.0456 4 104.4856 4 95.1940 4 85.4712
5 112.8763 5 104.2976 5 94.9958 5 85.2618
6 112.7070 6 104.1096 6 94.7976 6 85.0524
7 112.5377 7 103.9216 7 94.5994 7 84.8430
8 112.3684 8 103.7336 8 94.4012 8 84.6336
9 112.1991 9 103.5456 9 94.2030 9 84.4242
10 112.0298 10 103.3576 10 94.0048 10 84.2148
11 111.8605 11 103.1696 11 93.8066 11 84.0054
59 0 111.6912 63 0 102.9816 67 0 93.6084 71 0 83.7960
1 111.5167 1 102.7902 1 93.4086 1 83.5836
2 111.3422 2 102.5988 2 93.2088 2 83.3712
3 111.1677 3 102 4074 3 93.0090 3 83.1588
4 110.9932 4 102.2160 4 92.8092 4 82.9464
5 110.8187 5 102.0246 5 92.6094 5 82.7340
6 110.6442 6 101.8332 6 92.4096 6 82.5216
7 110.4697 7 101.6418 7 92.2098 7 82.3092
8 110.2952 8 101.4504 8 92.0100 8 82.0968
9 110.1207 9 101.2590 9 91.8102 9 81.8844
10 109.9462 10 101.0676 10 91.6104 10 81.6720
11 109.7717 11 100.8762 11 91.4106 11 81.4596
72 0 81.2472
</TABLE>
AA-4-2
<PAGE> 41
APPENDIX A
TABLE 5
FACTORS FOR CONVERTING A PENSION CONTRIBUTION ACCOUNT BALANCE
UNDER THE GENEVA STEEL PENSION PLAN INTO AN INDIVIDUAL LIFE PENSION
FOR DEFERRED VESTED PENSION
BASED ON UNDERLYING ASSUMPTIONS OF 8% INTEREST AND UP-1984 MORTALITY TABLE
(CONVERTS PENSION CONTRIBUTION ACCOUNT AT PARTICIPANT'S TERMINATION OF
EMPLOYMENT TO AN ACTUARIALLY EQUIVALENT INDIVIDUAL LIFE PENSION
COMMENCING AT AGE 65)
<TABLE>
<CAPTION>
Age Age Age Age
--------------- -------------- ------------- --------------
Years Months Factor Years Months Factor Years Months Factor Years Months Factor
----- ------ ------ ----- ------ ------ ----- ------ ------ ----- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
49 0 23.9496 52 0 30.6852 55 0 39.5448 58 0 51.3252
1 24.1203 1 30.9089 1 39.8409 1 51.7229
2 24.2910 2 31.1326 2 40.1370 2 52.1206
3 24.4617 3 31.3563 3 40.4331 3 52.5183
4 24.6324 4 31.5800 4 40.7292 4 52.9160
5 24.8031 5 31.8037 5 41.0253 5 53.3137
6 24.9738 6 32.0274 6 41.3214 6 53.7114
7 25.1445 7 32.2511 7 41.6175 7 54.1091
8 25.3152 8 32.4748 8 41.9136 8 54.5068
9 25.4859 9 32.6985 9 42.2097 9 54.9045
10 25.6566 10 32.9222 10 42.5058 10 55.3022
11 25.8273 11 33.1459 11 42.8019 11 55.6999
50 0 25.9980 53 0 33.3696 56 0 43.0980 59 0 56.0976
1 26.1845 1 33.6148 1 43.4240 1 56.5378
2 26.3710 2 33.8600 2 43.7500 2 56.9780
3 26.5575 3 34.1052 3 44.0760 3 57.4182
4 26.7440 4 34.3504 4 44.4020 4 57.8584
5 26.9305 5 34.5956 5 44.7280 5 58.2986
6 27.1170 6 34.8408 6 45.0540 6 58.7388
7 27.3035 7 35.0860 7 45.3800 7 59.1790
8 27.4900 8 35.3312 8 45.7060 8 59.6192
9 27.6765 9 35.5764 9 46.0320 9 60.0594
10 27.8630 10 35.8216 10 46.3580 10 60.4996
11 28.0495 11 36.0668 11 46.6840 11 60.9398
51 0 28.2360 54 0 36.3120 57 0 47.0100 60 0 61.3800
1 28.4401 1 36.5814 1 47.3696 1 61.8685
2 28.6442 2 36.8508 2 47.7292 2 62.3570
3 28.8483 3 37.1202 3 48.0888 3 62.8455
4 29.0524 4 37.3896 4 48.4484 4 63.3340
5 29.2565 5 37.6590 5 48.8080 5 63.8225
6 29.4606 6 37.9284 6 49.1676 6 64.3110
7 29.6647 7 38.1978 7 49.5272 7 64.7995
8 29.8688 8 38.4672 8 49.8868 8 65.2880
9 30.0729 9 38.7366 9 50.2464 9 65.7765
10 30.2770 10 39.0060 10 50.6060 10 66.2650
11 30.4811 11 39.2754 11 50.9656 11 66.7535
</TABLE>
AA-5-1
<PAGE> 42
<TABLE>
<CAPTION>
Age Age
--------------- -------------
Years Months Factor Years Months Factor
----- ------ ------ ----- ------ ------
<S> <C> <C> <C> <C> <C>
61 0 67.2420 64 0 89.1960
1 67.7857 1 89.9588
2 68.3294 2 90.7216
3 68.8731 3 91.4844
4 69.4168 4 92.2472
5 69.9605 5 93.0100
6 70.5042 6 93.7728
7 71.0479 7 94.5356
8 71.5916 8 95.2984
9 72.1353 9 96.0612
10 72.6790 10 96.8240
11 73.2227 11 97.5868
62 0 73.7664
1 74.3730
2 74.9796
3 75.5862
4 76.1928
5 76.7994
6 77.4060
7 78.0126
8 78.6192
9 79.2258
10 79.8324
11 80.4390
63 0 81.0456
1 81.7248
2 82.4040
3 83.0832
4 83.7624
5 84.4416
6 85.1208
7 85.8000
8 86.4792
9 87.1584
10 87.8376
11 88.5168
</TABLE>
AA-5-2
<PAGE> 43
SUPPLEMENT A
TO THE
GENEVA STEEL UNION EMPLOYEE DEFINED BENEFIT PLAN
SUPPLEMENTAL RETIREMENT BENEFIT
SECTION 1. PURPOSE.
This Supplemental Retirement Benefit (the "Supplemental Benefit") is
designed to provide enhanced retirement benefits under the Geneva Steel Union
Employee Defined Benefit Plan (the "Plan") to those Participants who meet the
eligibility requirements for a Supplemental Benefit as set forth herein.
This Supplement is a part of the Plan and, except as otherwise provided
herein and in procedures established by the Company, shall be administered in
accordance with the terms of the Plan. Capitalized terms used in this
Supplement, other than those terms defined herein, shall have the same meanings
given to such terms in the Plan.
SECTION 2. ELIGIBILITY FOR THE SUPPLEMENTAL BENEFIT.
(a) General Eligibility Conditions. Except as provided in Subsection (b)
below, a Participant will be eligible for the Supplemental Benefit described in
Section 3 of this Supplement if, and only if, all of the following conditions
are satisfied:
(i) The Participant ceases to be an Employee before April 30,
2001;
(ii) The Participant ceases to be an Employee before the date he
attains age 62;
(iii) The Participant ceases to be an Employee on or after the
date he (A) attains age 55 and completes 30 Years of Service; or (B)
attains age 60 and completes 15 Years of Service;
(iv) During an Application Period, in accordance with procedures
established by the Company, the Participant voluntarily elects in
writing to terminate employment with the Affiliated Group and in fact
terminates employment as of a date determined by the Company within the
applicable Supplemental Retirement Period; and
(v) The Participant is one of the Participants with the greatest
Seniority among all of the Participants who make the election described
in paragraph (iv) above during the applicable Application Period.
SA-1
<PAGE> 44
(b) Exclusions. Notwithstanding the provisions of Subsection (a) above,
an individual who is described in any of the following categories shall not be
eligible for the Supplemental Benefit described in Section 3 of this Supplement:
(i) Any individual whose employment terminates because of death;
(ii) Any individual whose employment is terminated by the
Company for just cause. If such an individual believes he was terminated
without just cause, that individual or the United Steelworkers of
America may submit a complaint or grievance pursuant to the adjustment
of grievances procedure contained in the collective bargaining agreement
in effect from time to time between the United Steelworkers of America
and the Company, and the final decision made pursuant to such procedure
shall be recognized hereunder; and
(iii) Any other individual designated as ineligible for the
Supplemental Benefit in procedures established by the Company.
SECTION 3. AMOUNT, TIME AND FORM OF SUPPLEMENTAL BENEFIT.
(a) General Rule. A Participant's Supplemental Benefit shall be a
monthly benefit equal to $300 per month, commencing as of the first day of the
month following the month in which the Participant ceases to be an Employee, and
ending with the earlier of the month in which the Participant attains age 62 or
dies. The Supplemental Benefit shall be payable simultaneously with the
Participant's Immediate Unreduced Retirement or Reduced Retirement Pension, as
applicable (except that the Supplemental Benefit shall not be payable for any
month after the month of death or attainment of age 62), and the present value
of the Supplemental Benefit (determined under Table 3 of Appendix A to the Plan)
shall be included in any lump sum payment made to the Participant under Section
8(d) of the Plan.
(b) Effect of Reemployment on Benefits. If any Participant who has
ceased to be an Employee and who is receiving Supplemental Benefit payments
hereunder is reemployed as an Employee, such benefit payments shall be suspended
during the period of such reemployment, and shall recommence in the same amount
as of the first day of the month following the month in which he subsequently
ceases to be an Employee, but only if he is younger than age 62 as of the last
day of the month immediately preceding such recommencement. In addition, no
Supplemental Benefit payments shall commence during the period of a
Participant's reemployment.
SECTION 4. DEFINITIONS.
The following terms shall have the definition set forth below when used
in this Supplement:
(a) "Application Period" shall mean the period that begins on June 19,
1998 and ends on July 15, 1998, and such subsequent periods as shall be
designated in procedures established by the Company.
SA-2
<PAGE> 45
(b) "Period of Service" shall mean the same for purposes of this
Supplement A as it is defined in the Plan, except that for purposes of
determining Years of Service for eligibility to receive a Supplemental Benefit
under Section 2(a)(iii) of this Supplement A, if an Employee's Period of Service
includes a fraction of one month, no additional month of Service shall be
credited.
(c) "Seniority" shall mean seniority as described in the terms of the
collective bargaining agreement in effect from time to time between the United
Steelworkers of America and the Company.
(d) "Supplemental Retirement Period" shall mean the period that begins
on July 31, 1998 and ends on April 30, 1999, and such subsequent periods as
shall be designated in procedures established by the Company.
SA-3
<PAGE> 46
SUPPLEMENT B
TO THE
GENEVA STEEL UNION EMPLOYEE DEFINED BENEFIT PLAN
SPECIAL RULES FOR ELIGIBLE EMPLOYEES WHO TERMINATE
EMPLOYMENT BETWEEN MAY 1, 1998 AND JANUARY 1, 1999
SECTION 1. PURPOSE.
This Supplement B provides special rules applicable to Eligible
Employees who terminate employment on or after May 1, 1998 and prior to January
1, 1999. This Supplement is a part of the Plan and, except as otherwise provided
herein and in procedures established by the Company, shall be administered in
accordance with the terms of the Plan. Capitalized terms used in this Supplement
shall have the same meanings given to such terms in the Plan.
SECTION 2. PLAN PARTICIPATION.
Any Eligible Employee who ceased to be an Employee on or after May 1,
1998 (or, if later, the date he attained age 21 and completed one Year of
Service) and before January 1, 1999, shall be treated for all purposes under the
Plan as if he had commenced participation in the Plan on the later of:
(i) May 1, 1998;
(ii) the date he completed one Year of Service;
(iii) the date he attained age 21; or
(iv) the date he became an Eligible Employee.
SECTION 3. COMMENCEMENT OF BENEFITS.
The Immediate Unreduced Retirement, Reduced Retirement, Permanent
Incapacity Retirement, Shutdown Retirement or Deferred Vested Pension, and the
Supplemental Retirement Benefit, as applicable, of an Eligible Employee
described in Section 2 of this Supplement B shall be paid or commence no earlier
than January 1999, together with a payment reflecting any amounts payable for
months between the date the Eligible Employee ceased to be an Employee in 1998
and January 1, 1999.
SB-1
<PAGE> 1
EXHIBIT 10.2
AMENDMENT NO. 1 TO THE
GENEVA STEEL UNION EMPLOYEE
SAVINGS AND PENSION PLAN
The Geneva Steel Union Employee Savings and Pension Plan (the "Plan"),
as amended and restated generally effective January 1, 1995, is hereby amended
effective (unless otherwise provided below) as of January 1, 1997 as follows:
1. The first sentence of Section 6.1 shall be amended to read as
follows:
6.1 Limitation on Contributions. The Annual Additions
allocated or contributed to a Participant for any Plan Year shall not
exceed the lesser of the following:
(a) $30,000; or
(b) 25% of the Participant's Compensation for such year.
2. Effective August 1, 1997, the first sentence of Section 7.1 shall
be amended to read as follows:
The Trust Fund shall be comprised of those Investment Funds described in
Section 7.2.
3. Effective August 1, 1997, Section 7.2 shall be amended to read as
follows:
7.2 Investment Funds. The Trust Fund established under the
Plan shall consist of the Balanced Fund, the Equity Fund, the Short-Term
Income Fund, the Bond Fund, and the Geneva Stock Fund. The Company may
change the available Investment Funds at any time in its sole discretion
by adding Investment Funds, removing Investment Funds, or changing
Investment Funds. The Balanced, Equity, Short-Term Income, Bond, and
Geneva Stock 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.
-1-
<PAGE> 2
(b) The Equity Fund shall be invested 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 short term
fixed-income investments as are authorized by the Trust Agreement.
(d) The Bond Fund shall be invested primarily in debt instruments
or other types of debt investments as are authorized by the Trust
Agreement.
(e) 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 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.
4. Effective August 1, 1997, Section 7.4 shall be amended to read as
follows:
7.4 Investment of Accounts. A Participant's Pension
Contribution Account shall be invested in the Balanced Fund, which may
consist of a Balanced Fund that is different from the Balanced Fund for
other Accounts. A Participant's Geneva Stock Account shall be invested
solely in the Geneva Stock Fund, provided, however, that a Participant
may, in accordance with Section 7.5, elect to transfer an amount from
the Geneva Stock Fund to those Investment Funds selected under this
Section. 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
Investment Funds in such whole percentages as the Participant may
specify pursuant to the election procedures prescribed by the Company.
If the Company receives no valid investment directions from the
Participant, such Accounts shall be invested entirely in the Short-Term
Income Fund. A Participant may change the investment instructions with
respect to future contributions with such frequency as shall be
established by the Company. Any such change shall be made in the manner
prescribed by the Company; however, any such rules established by the
Company shall permit changes to investment elections to be effective at
least as frequent as the first payday in any calendar quarter.
-2-
<PAGE> 3
5. Effective August 1, 1997, Section 7.5 shall be amended to read as
follows:
7.5 Transfers Among Accounts. With such frequency as shall be
established by the Company (but no less frequently than once each
quarter), a Participant may elect to transfer all or any part of his or
her Accounts (except for his or her Pension Contribution Account and
Geneva Stock Account) to one or more of the Investment Funds in the
manner prescribed by the Company. Any such transfer shall be applicable
as soon administratively feasible pursuant to the procedure established
by the Company. With respect to the Geneva Stock Account, prior to the
end of each Plan quarter, a Participant may elect to transfer ten
percent (10%) of the vested portion of his or her Geneva Stock Account
to one or more of the Investment Funds as elected under Section 7.4.
Such a transfer from the Geneva Stock Account shall be effective as soon
as administratively feasible following the end of the Plan quarter in
which the election is made. Upon attainment of age 55, a Participant may
elect prior to the end of each Plan quarter to transfer all (or any
portion in 10% increments) of his or her Geneva Stock Account to one or
more of the Investment Funds as elected under Section 7.4. Any transfer
from the Geneva Stock Fund shall be made in accordance with the
requirements of this Section 7.5 and such additional rules as may be
prescribed by the Company.
6. Effective August 1, 1997, Section 7.6 shall be amended to read as
follows:
Each Account shall be revalued at fair market value and adjusted each
Valuation Date for contributions, distributions and other items since
the last Valuation Date, 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 since the prior Valuation Date. 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 Valuation Date. For purposes of this
Section 7.6, the Company shall establish a Valuation Date at least as
frequent as the last day of each calendar quarter.
7. Section 9.4 shall be amended by deleting the third sentence
thereof, and inserting the following in its place:
Notwithstanding any other provision of the Plan to the contrary,
distribution of the Plan Benefit of a Participant shall be made no later
than April 1 of the calendar year following the later of (a) the
calendar
-3-
<PAGE> 4
year in which the Participant attains age 70 or (b) the calendar year in
which the employee retires. Notwithstanding the above, Section 9.4(b)
shall not apply to any Participant who is a "5-percent owner" (as
defined in section 416 of the Code) with respect to the Plan Year ending
in the calendar year in which the Participant attains age 70. To the
extent that the Commissioner of the Internal Revenue Service determines
in a ruling, notice or other document of general authority, that the
required beginning date set forth in the Plan prior to January 1, 1997
for distributions with respect to Participants who remain Employees on
or after attaining age 70 constitutes a "protected benefit" within the
meaning of section 411(d)(6) of the Code, the provisions of the Plan in
effect as of December 31, 1996 shall continue to apply, as elected by
the Participant.
8. Effective October 12, 1996, Section 15.8 shall be added to the
Plan as follows:
15.8 Military Service. Notwithstanding any provision of this
Plan to the contrary, contributions, benefits and service credit with
respect to qualified military service will be provided in accordance
with section 414(u) of the Code. Loan payments will be suspended under
this Plan as permitted under section 414(u)(4) of the Code.
9. Section 17.8 shall be amended by deleting the last sentence
thereof.
10. Section 17.16 shall be deleted in its entirety and the remaining
sections of the Plan renumbered accordingly. Former Section 17.17 (renumbered
Section 17.16) shall be amended to read as follows:
17.16 "Investment Funds" means the Funds established under the
Trust Fund pursuant to Section 7.2.
11. Section 1.2 of Appendix I shall be amended by replacing "3.1(c)"
with "3.1(d)."
12. Section 1.3 of Appendix I shall be amended by replacing "2.1(c)"
with "2.1(d)."
-4-
<PAGE> 5
13. Section 1.8 of Appendix I shall be amended to read as follows:
1.8 "Highly Compensated Employee" means an active Employee
who:
(a) During the look-back year received Total Compensation of more
than $80,000 (or such larger amount as may be adopted by the
Commissioner of Internal Revenue to reflect a cost-of-living adjustment)
and was a member of the Top-Paid Group; or
(b) At any time during the look-back year or the determination
year was a five-percent owner (as defined in section 416(i)(1) of the
Code).
For purposes of this Section, the determination year shall be the
Plan Year. The look-back year shall be the 12-month period immediately
preceding the determination year. The determination of who is a Highly
Compensated Employee, including the determinations of the number and
identity of Employees in the Top-Paid Group and the Total Compensation
that is considered, will be made in accordance with section 414(q) of
the Code and regulations thereunder.
The term "Highly Compensated Employee" shall also include a
former Employee who separated from service (or is deemed to have
separated) prior to the determination year, performs no service for any
member of the Affiliated Group during the determination year, and was a
Highly Compensated Employee as an active Employee for either the
separation year or any determination year ending on or after the
Employee's 55th birthday.
14. Section 1.11(e) of Appendix I shall be amended by replacing
"402(a)(8)" with "402(e)(3)."
15. Section 1.12 of Appendix I shall be amended by the addition of
the following at the end thereof:
The Company may elect, in a consistent and uniform manner, to apply one
or more of the age-and-service-based exclusions above by substituting a
younger age
-5-
<PAGE> 6
or shorter period of service, or by not excluding individuals on the
basis of age or service.
16. Section 2.1 of Appendix I shall be amended to read as follows:
2.1 Percentage Limitations. The Plan shall satisfy the average
deferral percentage test, as provided in section 401(k)(3) of the Code
and the regulations issued thereunder. Subject to the special rules
described in this Appendix, the Salary Deferral Contributions of Highly
Compensated Employees shall not exceed the limits described below:
(a) A "Deferral Percentage" shall be determined for each Highly
Compensated Employee who, at any time during the Plan Year, is a
Participant or is eligible to participate in the Plan, which Deferral
Percentage shall be the ratio, computed to the nearest one-hundredth of
one percent, of the Highly Compensated Employee's Salary Deferral
Contributions for the Plan Year to the Highly Compensated Employee's
Section 414(s) Compensation for the Plan Year;
(b) For Plan Years beginning prior to January 1, 1997, a Deferral
Percentage shall be determined for each Nonhighly Compensated Employee
who, at any time during the Plan Year, is a Participant or is eligible
to participate in the Plan, which Deferral Percentage shall be the
ratio, computed to the nearest one-hundredth of one percent, of the
Nonhighly Compensated Employee's Salary Deferral Contributions for the
Plan Year to the Nonhighly Compensated Employee's Section 414(s)
Compensation for the Plan Year;
(c) For Plan Years beginning after December 31, 1996, and except
to the extent that the Company elects (in accordance with applicable
law) to apply Subsection (b) rather than this Subsection (c), a Deferral
Percentage shall be determined for each Nonhighly Compensated Employee
who, at any time during the preceding Plan Year, was a Participant or
who was eligible to participate in the Plan, which Deferral Percentage
shall be the ratio, calculated to the nearest one-hundredth of one
percent, of the Nonhighly Compensated Employee's Salary Deferral
Contributions for the preceding Plan Year to the Nonhighly Compensated
Employee's Section 414(s) Compensation for the preceding Plan Year;
(d) The Aggregate 401(k) Contributions of Highly Compensated
Employees shall constitute Excess Before-Tax Contributions and shall be
reduced, pursuant to
-6-
<PAGE> 7
Section 2.2 of this Appendix I, to the extent that the average Deferral
Percentage (the "Before-Tax Percentage") of Highly Compensated Employees
exceeds the greater of (i) 125 percent of the Before-Tax Percentage of
Nonhighly Compensated Employees or (ii) the lesser of (A) 200 percent of
the Before-Tax Percentage of Nonhighly Compensated Employees or (B) the
Before-Tax Percentage of Nonhighly Compensated Employees plus two
percentage points.
17. Section 2.2 of Appendix I shall be amended to read as follows:
2.2 Reduction of Salary Deferred 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 on the basis
of the amount of contributions by or on behalf of each Highly
Compensated Employee. Such reductions in Before-Tax Contributions shall
be made in accordance with applicable regulations 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 of this Appendix I.
18. Section 3.1 of Appendix I shall be amended to read as follows:
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) A "Contribution Percentage" shall be determined for each
Highly Compensated Employee who, at any time during the Plan Year, is a
Participant or is eligible to participate in the Plan, which
Contribution Percentage shall be the ratio, computed to the nearest
one-hundredth of one percent, of the Highly Compensated Employee's
Aggregate 401(m) Contributions for the Plan Year to the Highly
Compensated Employee's Section 414(s) Compensation for the Plan Year;
(b) For Plan Years beginning prior to January 1, 1997, a
Contribution Percentage shall be determined for each Nonhighly
Compensated Employee who, at any time during the Plan Year, is a
Participant or is eligible to participate in the Plan, which
Con-
-7-
<PAGE> 8
tribution Percentage shall be the ratio, computed to the nearest
one-hundredth of one percent, of the Nonhighly Compensated Employee's
Aggregate 401(m) Contributions for the Plan Year to the Nonhighly
Compensated Employee's Section 414(s) Compensation for the Plan Year;
(c) For Plan Years beginning after December 31, 1996, and except
to the extent that the Company elects (in accordance with applicable
law) to apply Subsection (b) rather than this Subsection (c), a
Contribution Percentage shall be determined for each Nonhighly
Compensated Employee who, at any time during the preceding Plan Year,
was a Participant or who was eligible to participate in the Plan, which
Contribution Percentage shall be the ratio, calculated to the nearest
one-hundredth of one percent, of the Nonhighly Compensated Employee's
Aggregate 401(m) Contributions for the preceding Plan Year to the
Nonhighly Compensated Employee's Section 414(s) Compensation for the
preceding Plan Year; and
(d) The Aggregate 401(m) Contributions of Highly Compensated
Employees shall constitute Excess Aggregate 401(m) Contributions and
shall be reduced, pursuant to Section 3.2 of this Appendix I, to the
extent that the average of the Contribution Percentages (the "Aggregate
401(m) Percentage") of Highly Compensated Employees exceeds the greater
of (1) 125 percent of the Aggregate 401(m) Percentage of Nonhighly
Compensated Employees or (2) the lesser of (A) 200 percent of the
Aggregate 401(m) Percentage of Nonhighly Compensated Employees or (B)
the Aggregate 401(m) Percentage of Nonhighly Compensated Employees plus
two percentage points.
19. Section 3.2 of Appendix I shall be amended to read as follows:
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 on the basis
of the amount of contributions by or on behalf of each Highly
Compensated Employee. Such reductions shall be made in accordance with
applicable regulations and shall constitute "Excess Aggregate 401(m)
Contributions." For all affected Highly Compensated Employ-
-8-
<PAGE> 9
ees, such Excess Aggregate 401(m) Contributions shall be eliminated as
provided for in Article 5 hereof.
IN WITNESS WHEREOF, the Company hereby adopts this First Amendment this
13th day of August, 1997.
GENEVA STEEL
By /s/ C. E. RAMNITZ
------------------------------------
As Its V.P. Human Resources
--------------------------------
UNITED STEEL WORKERS OF AMERICA
By /s/ DALLAS ALEXANDER
------------------------------------
As Its Representative
--------------------------------
<PAGE> 1
EXHIBIT 10.3
AMENDMENT NO. 2 TO THE
GENEVA STEEL UNION EMPLOYEE
SAVINGS AND PENSION PLAN
The Geneva Steel Union Employee Savings and Pension Plan (the "Plan"),
as amended and restated generally effective January 1, 1995, is hereby amended
effective February 1, 1999 as follows:
Supplement A shall be added in the form attached hereto.
IN WITNESS WHEREOF, the Company hereby adopts this Second Amendment this
16 day of March, 1999.
GENEVA STEEL
By: /s/ Carl E. Ramnitz
--------------------------------------
As Its: Vice President Human Resources
<PAGE> 2
SUPPLEMENT A TO THE
GENEVA STEEL
UNION EMPLOYEE SAVINGS AND PENSION PLAN
SUSPENSION OF GENEVA STOCK ACTIVITY
The Plan provides that all or a portion of the Company's Matching
Contributions may, at the Company's discretion, be made in cash or in shares of
Geneva Stock for deposit to Participants' Geneva Stock Accounts and investment
in the Geneva Stock Fund. The Geneva Stock Fund is intended to be invested
primarily in Geneva Stock. The Geneva Stock Fund is not otherwise offered as an
Investment Fund under the Plan. Effective February 1, 1999, the Company filed
for protection under Chapter 11 of the Federal Bankruptcy Code and Geneva Stock
ceased being readily tradable on an established securities market.
Notwithstanding any provision of the Plan to the contrary, during any
period the Company determines that Geneva Stock is not readily tradable on an
established securities market and is not able to be reasonably valued through an
appraisal (the "Suspension Period"), Geneva Stock transactions under the Plan
shall be suspended in accordance with the special rules set forth below.
SPECIAL RULES IN EFFECT DURING SUSPENSION PERIOD
(a) Geneva Stock Trading. The Plan shall not purchase or sell Geneva
Stock.
(b) Matching Contributions. Matching Contributions shall be made
entirely in the form of cash for deposit to Participants' Matching
Contribution Accounts and investment in the Investment Funds as
directed by the Participants.
(c) Investment Transfers. A Participant shall be prohibited from
transferring any portion of his or her Geneva Stock Account balance
to one or more of the other Investment Funds.
(d) Determination of Maximum Loan Amount. A Participant's vested Geneva
Stock Account balance shall be excluded in the determination of the
maximum amount a Participant may borrow from his or her Accounts.
(e) Distributions Following Termination of Employment. A terminated
Participant may elect to have his or her entire Plan Benefit
distributed (a "Full Distribution") during the Suspension Period or
may elect to have all but the portion of his or her Plan Benefit
attributable
<PAGE> 3
to his or her Geneva Stock Account balance distributed (a "Partial
Distribution") during the Suspension Period and his or her Geneva
Stock Account balance distributed following the expiration of the
Suspension Period. If a Participant elects a Full Distribution, his
or her Geneva Stock Account balance shall be distributed in the form
of whole shares of Geneva Stock; any fractional share shall not be
paid and shall be treated as a forfeiture. If a Participant elects a
Partial Distribution, his or her Geneva Stock Account balance shall
be distributed as elected by the Participant in cash or in the form
of whole shares of Geneva Stock and cash in lieu of any fractional
share following the expiration of the Suspension Period.
Mandatory cash-outs shall not be made with regard to a Participant
whose Account includes a Geneva Stock Account balance. Such a
Participant may receive a Full Distribution or a Partial
Distribution upon request as described above.
(f) Other Geneva Stock Transactions. If in the normal course of the
administration of the Plan prior to the Suspension Period, a Geneva
Stock value has been utilized to perform a Plan transaction not
described above, such transaction shall be modified or suspended by
the Company as may be reasonably required to continue to administer
the Plan during the Suspension Period.
Capitalized terms used in this Supplement A that are not defined herein
shall have the same meaning as those terms do in the Plan.
<PAGE> 1
EXHIBIT 10.4
AMENDMENT NO. 3 TO THE
GENEVA STEEL MANAGEMENT EMPLOYEE
SAVINGS AND PENSION PLAN
The Geneva Steel Management Employee Savings and Pension Plan (the
"Plan"), as amended and restated generally effective January 1, 1994, is hereby
amended effective February 1, 1999 as follows:
Supplement A shall be added in the form attached hereto.
IN WITNESS WHEREOF, the Company hereby adopts this Third Amendment this
16 day of March, 1999.
GENEVA STEEL
By: /s/ Carl E. Ramnitz
--------------------------------------
As Its: Vice President Human Resources
<PAGE> 2
SUPPLEMENT A TO THE
GENEVA STEEL
MANAGEMENT EMPLOYEE SAVINGS AND PENSION PLAN
SUSPENSION OF GENEVA STOCK ACTIVITY
The Plan provides that all or a portion of the Company's Matching
Contributions may, at the Company's discretion, be made in cash or in shares of
Geneva Stock for deposit to Participants' Geneva Stock Accounts and investment
in the Geneva Stock Fund. The Geneva Stock Fund is intended to be invested
primarily in Geneva Stock. The Geneva Stock Fund is not otherwise offered as an
Investment Fund under the Plan. Effective February 1, 1999, the Company filed
for protection under Chapter 11 of the Federal Bankruptcy Code and Geneva Stock
ceased being readily tradable on an established securities market.
Notwithstanding any provision of the Plan to the contrary, during any
period the Company determines that Geneva Stock is not readily tradable on an
established securities market and is not able to be reasonably valued through an
appraisal (the "Suspension Period"), Geneva Stock transactions under the Plan
shall be suspended in accordance with the special rules set forth below.
SPECIAL RULES IN EFFECT DURING SUSPENSION PERIOD
(a) Geneva Stock Trading. The Plan shall not purchase or sell Geneva Stock.
(b) Matching Contributions. Matching Contributions shall be made entirely in
the form of cash for deposit to Participants' Matching Contribution
Accounts and investment in the Investment Funds as directed by the
Participants.
(c) Investment Transfers. A Participant shall be prohibited from
transferring any portion of his or her Geneva Stock Account balance to
one or more of the other Investment Funds.
(d) Determination of Maximum Loan Amount. A Participant's vested Geneva
Stock Account balance shall be excluded in the determination of the
maximum amount a Participant may borrow from his or her Accounts.
(e) Distributions Following Termination of Employment. A terminated
Participant may elect to have his or her entire Plan Benefit distributed
(a "Full Distribution") during the Suspension Period or may elect to
have all but the portion of his or her Plan Benefit attributable
<PAGE> 3
to his or her Geneva Stock Account balance distributed (a "Partial
Distribution") during the Suspension Period and his or her Geneva Stock
Account balance distributed following the expiration of the Suspension
Period. If a Participant elects a Full Distribution, his or her Geneva
Stock Account balance shall be distributed in the form of whole shares
of Geneva Stock; any fractional share shall not be paid and shall be
treated as a forfeiture. If a Participant elects a Partial Distribution,
his or her Geneva Stock Account balance shall be distributed as elected
by the Participant in cash or in the form of whole shares of Geneva
Stock and cash in lieu of any fractional share following the expiration
of the Suspension Period.
Mandatory cash-outs shall not be made with regard to a Participant whose
Account includes a Geneva Stock Account balance. Such a Participant may
receive a Full Distribution or a Partial Distribution upon request as
described above.
(f) Other Geneva Stock Transactions. If in the normal course of the
administration of the Plan prior to the Suspension Period, a Geneva
Stock value has been utilized to perform a Plan transaction not
described above, such transaction shall be modified or suspended by the
Company as may be reasonably required to continue to administer the Plan
during the Suspension Period.
Capitalized terms used in this Supplement A that are not defined herein
shall have the same meaning as those terms do in the Plan.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S BALANCE SHEET AND STATEMENT OF OPERATIONS AS OF AND FOR THE THREE
MONTHS ENDED DECEMBER 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS, INCLUDING THE NOTES THERETO.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-2000
<PERIOD-START> OCT-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 12,563
<ALLOWANCES> 9,978
<INVENTORY> 53,935
<CURRENT-ASSETS> 85,232
<PP&E> 650,301
<DEPRECIATION> (287,572)
<TOTAL-ASSETS> 459,613
<CURRENT-LIABILITIES> 82,242
<BONDS> 325,000
56,188
0
<COMMON> 106,018
<OTHER-SE> (238,423)
<TOTAL-LIABILITY-AND-EQUITY> 459,613
<SALES> 126,169
<TOTAL-REVENUES> 126,169
<CGS> 126,863
<TOTAL-COSTS> 126,863
<OTHER-EXPENSES> 4,462
<LOSS-PROVISION> 612
<INTEREST-EXPENSE> (1,485)
<INCOME-PRETAX> 1,761
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,761
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,761
<EPS-BASIC> .09
<EPS-DILUTED> .09
</TABLE>
