<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
--------------------
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JANUARY 31, 1999
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER -- 0-20490
--------------------
THE CARBIDE/GRAPHITE GROUP, INC.
(Exact Name of Registrant as Specified in Charter)
Delaware 25-1575609
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Code)
One Gateway Center, 19th Floor
Pittsburgh, PA 15222
(412) 562-3700
(Address, including zip code, and
telephone number, including area code,
of principle executive offices)
- --------------------------------------------------------------------------------
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
----- -----
As of the close of business on March 12, 1999, there were 8,357,842 shares of
the Registrant's $0.01 par value Common Stock outstanding.
<PAGE> 2
THE CARBIDE/GRAPHITE GROUP, INC.
INDEX TO FORM 10-Q
<TABLE>
<CAPTION>
ITEM DESCRIPTION PAGE
------------- ------------------------------------------------------------------ ---------
<S> <C> <C>
PART I
------
1 Index to Financial Statements ................................... 2
2 Management's Discussion and Analysis of Financial
Condition and Results of Operations ........................ 13
3 Quantitative and Qualitative Disclosure
About Market Risk .......................................... 19
PART II
-------
1 Legal Proceedings ............................................... 20
2 Changes in Securities ........................................... *
3 Defaults Upon Senior Securities ................................. *
4 Submission of Matters to a Vote of Security Holders ............. 22
5 Other Information ............................................... *
6 Index to Exhibits and Reports on Form 8-K ....................... 23
Signatures ...................................................... 24
</TABLE>
- -----------------
* Item not applicable to the Registrant for this filing on Form 10-Q.
1
<PAGE> 3
PART I
Item 1
INDEX TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Condensed Consolidated Balance Sheets
as of January 31, 1999 and July 31, 1998 ........................................ 3
Unaudited Consolidated Statements of Operations
for the Quarters and Six Months Ended January 31, 1999 and 1998 ................. 4
Unaudited Consolidated Statement of Stockholders' Equity
for the Six Months Ended January 31, 1999 ....................................... 5
Unaudited Consolidated Statements of Cash Flows
for the Quarters and Six Months Ended January 31, 1999 and 1998 ................. 6
Footnotes to Unaudited Condensed Consolidated Financial Statements ................... 7
</TABLE>
2
<PAGE> 4
THE CARBIDE/GRAPHITE GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
as of January 31, 1999 and July 31, 1998
(in thousands, except share information)
<TABLE>
<CAPTION>
January 31, July 31,
1999 1998*
----------- --------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Accounts receivable -- trade, net of allowance for doubtful
accounts: $2,025 at January 31 and July 31 ......................... $47,058 $50,469
Inventories (Note 2) ................................................... 71,062 68,839
Other current assets ................................................... 24,966 25,073
-------- --------
Total current assets ............................................... 143,086 144,381
Property, plant and equipment, net ......................................... 130,227 137,603
Other assets ............................................................... 7,161 7,115
-------- --------
Total assets ................................................... $280,474 $289,099
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accrued expenses:
Accounts payable ..................................................... $10,697 $15,525
Antitrust claims reserve (Note 4) .................................... 31,241 36,538
Other current liabilities ............................................ 24,566 22,189
-------- --------
Total current liabilities .......................................... 66,504 74,252
Long-term debt ............................................................. 112,950 110,232
Other liabilities .......................................................... 19,345 19,801
-------- --------
Total liabilities ................................................ 198,799 204,285
-------- --------
Stockholders' equity:
Preferred stock, $0.01 par value; 2,000,000 shares
authorized; none outstanding ............................................... - -
Common stock, $0.01 par value; 18,000,000 shares authorized;
shares issued: 9,927,042 at January 31 and 9,884,542 at July 31;
shares outstanding: 8,357,842 at January 31 and 8,699,542 at
July 31 (Note 5) .................................................... 99 99
Additional paid-in capital, net of $1,398 equity issue costs ........... 36,540 36,243
Retained earnings ..................................................... 55,690 55,197
Other stockholders' equity items ...................................... (10,654) (6,725)
-------- --------
Total stockholders' equity ...................................... 81,675 84,814
-------- --------
Total liabilities and stockholders' equity ..................... $280,474 $289,099
======== ========
</TABLE>
- -------------------
* Condensed from audited fiscal 1998 balance sheet.
The accompanying notes are an integral part of the Unaudited Condensed
Consolidated Financial Statements.
3
<PAGE> 5
THE CARBIDE/GRAPHITE GROUP, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
for the quarters and six months ended January 31, 1999 and 1998
(in thousands, except share and per share data)
<TABLE>
<CAPTION>
Quarter Ended January 31, Six Months Ended January 31,
-------------------------- ----------------------------
1999 1998 1999 1998
--------- --------- ---------- ----------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Net sales ....................................... $58,165 $74,814 $127,517 $148,208
Operating costs and expenses:
Cost of goods sold .......................... 49,469 60,293 108,801 119,629
Selling, general and administrative ......... 3,398 4,389 6,982 8,136
Other expense (Note 5) ...................... - - 8,043 -
--------- --------- --------- ---------
Operating income ........................ 5,298 10,132 3,691 20,443
Other costs and expenses:
Interest expense, net ....................... 1,475 1,152 2,933 2,625
--------- --------- --------- ---------
Income before income taxes and
extraordinary loss .................... 3,823 8,980 758 17,818
Provision for taxes on income (Note 3) .......... 1,337 3,142 265 6,327
--------- --------- --------- ---------
Income before extraordinary loss ........ 2,486 5,838 493 11,491
Extraordinary loss on early extinguishment of
debt, net of $3,769 tax benefit (Note 5) ...... - - - (6,417)
--------- --------- --------- ---------
Net income .......................... $2,486 $5,838 $493 $5,074
========= ========= ========= =========
Earnings per share information (Note 1):
Weighted average common shares
outstanding .................................... 8,353,342 8,706,272 8,440,459 8,680,522
--------- --------- --------- ---------
Weighted average common and common
equivalent shares outstanding .................. 8,380,867 8,908,818 8,468,833 8,916,716
--------- --------- --------- ---------
Income before extraordinary loss:
Basic ....................................... $0.30 $0.67 $0.06 $1.32
Diluted ..................................... $0.30 $0.66 $0.06 $1.29
Extraordinary loss on early extinguishment of debt:
Basic ....................................... - - - (0.74)
Diluted ..................................... - - - (0.72)
--------- --------- --------- ---------
Net income:
Basic ....................................... $0.30 $0.67 $0.06 $0.58
========= ========= ========= =========
Diluted ..................................... $0.30 $0.66 $0.06 $0.57
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of the Unaudited Condensed
Consolidated Financial Statements.
4
<PAGE> 6
THE CARBIDE/GRAPHITE GROUP, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
for the six months ended January 31, 1999
(in thousands, except share amounts)
<TABLE>
<CAPTION>
Common Stock Additional Other
Comprehensive ------------------------ Paid-In Retained Stockholders'
Income Shares Amount Capital Earnings Equity Items
----------------- ------------ ---------- ------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Balance at July 31, 1998 *.......... 9,884,542 $99 $36,243 $55,197 ($6,725)
Net income ........................ $493 493
=================
Exercise of stock options ......... 42,500 297 (26)
Purchase of treasury stock ......... (3,903)
------------ ---------- ------------- ------------ ---------------
Balance at January 31,
1999 (Unaudited) ................ 9,927,042 $99 $36,540 $55,690 ($10,654)
============ ========== ============= ============ ===============
</TABLE>
- -----------------
* Condensed from audited fiscal year 1998 statement of stockholders'
equity.
The accompanying notes are an integral part of the Unaudited Condensed
Consolidated Financial Statements.
5
<PAGE> 7
THE CARBIDE/GRAPHITE GROUP, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
for the quarters and six months ended January 31, 1999 and 1998
(in thousands)
<TABLE>
<CAPTION>
Quarter Ended January 31, Six Months Ended January 31,
------------------------- ----------------------------
1999 1998 1999 1998
-------- --------- --------- --------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Net income ............................................... $2,486 $5,838 $493 $5,074
Adjustments for noncash transactions:
Depreciation and amortization .......................... 4,161 3,237 8,580 6,377
Amortization of debt issuance costs .................... 36 33 72 99
Amortization of intangible assets ...................... 22 95 43 179
Adjustments to deferred taxes .......................... 10 8 (1,843) 21
Loss on the impairment of assets ....................... - - 5,742 -
Extraordinary loss on early extinguishment of debt ...... - - - 10,186
Increase (decrease) in cash from changes in:
Accounts receivable .................................... 4,190 (1,978) 3,411 (1,639)
Inventories ............................................ (3,394) (3,028) (3,223) (5,441)
Income taxes ........................................... 1,275 2,813 443 235
Other current assets ................................... 189 (212) 739 586
Accounts payable and accrued expenses .................. (12,849) 4,678 (10,845) (5,316)
Net change in other non-current
assets and liabilities ............................... 95 16 599 (138)
------- ------- ------- -------
Net cash provided by (used for) operations ......... (3,779) 11,500 4,211 10,223
------- ------- ------- -------
Investing activities:
Capital expenditures ................................... (3,172) (18,843) (5,971) (35,249)
Proceeds from short-term investments .................... - - - 15,750
------- ------- ------- -------
Net cash used for investing activities ............. (3,172) (18,843) (5,971) (19,499)
------- ------- ------- -------
Financing activities:
Repurchase of Senior Notes, including
premium of $8,077 .................................... - - - (88,030)
Proceeds from revolving credit facility ................ 15,300 28,250 33,770 112,050
Repayment on revolving credit facility ................. (12,350) (23,200) (30,970) (29,100)
Other .................................................. 4,001 2,293 (1,040) 6,421
------- ------- ------- -------
Net cash provided by financing activities .......... 6,951 7,343 1,760 1,341
------- ------- ------- -------
Net change in cash and cash equivalents .................. - - - (7,935)
Cash and cash equivalents, beginning of period ........... - - - 7,935
------- ------- ------- -------
Cash and cash equivalents, end of period ................. - - - -
======= ======= ======= =======
</TABLE>
The accompanying notes are an integral part of the Unaudited Condensed
Consolidated Financial Statements.
6
<PAGE> 8
THE CARBIDE/GRAPHITE GROUP, INC. AND SUBSIDIARIES
FOOTNOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
The Carbide/Graphite Group, Inc. and Subsidiaries herein are referenced
as the "Company." The Company's current fiscal year ends July 31, 1999.
1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
INTERIM ACCOUNTING
The Company's Annual Report on Form 10-K for its fiscal year ended July
31, 1998 includes additional information about the Company, its operations and
its consolidated financial statements, and contains a summary of significant
accounting policies followed by the Company in preparation of its consolidated
financial statements and should be read in conjunction with this quarterly
report on Form 10-Q. These policies were also followed in preparing the
Unaudited Condensed Consolidated Financial Statements included herein. The 1998
year-end consolidated balance sheet data contained herein were derived from
audited financial statements, but does not include all disclosures required by
generally accepted accounting principles.
In the opinion of management, all adjustments that are of a normal and
recurring nature necessary for a fair statement of the results of operations of
these interim periods have been included. The net income for the six months
ended January 31, 1999 is not necessarily indicative of the results to be
expected for the full fiscal year. The Management Discussion and Analysis that
follows these notes contains additional information on the results of operations
and financial position of the Company. These comments should be read in
conjunction with these financial statements.
EARNINGS PER SHARE
The following tables provide a reconciliation of the income and share
amounts for the basic and diluted earnings per share computations before
extraordinary loss for the quarters and six months ended January 31, 1999 and
1998 (dollar amounts in thousands):
<TABLE>
<CAPTION>
For the quarters ended January 31,
--------------------------------------------------------------------------------
1999 1998
---------------------------------- -----------------------------------
Per Per
Share Share
Income Shares Amount Income Shares Amount
------ --------- ------ ------ --------- ------
<S> <C> <C> <C> <C> <C> <C>
Basic earnings per share....... $2,486 8,353,342 $0.30 $5,838 8,706,272 $0.67
===== =====
Effect of dilutive securities:
Options for common stock..... - 27,525 - 202,546
------ --------- ------ ---------
Diluted earnings per share .... $2,486 8,380,867 $0.30 $5,838 8,908,818 $0.66
====== ========= ===== ====== ========= =====
</TABLE>
7
<PAGE> 9
THE CARBIDE/GRAPHITE GROUP, INC. AND SUBSIDIARIES
FOOTNOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS--CONTINUED
<TABLE>
<CAPTION>
For the quarters ended January 31,
--------------------------------------------------------------------------------
1999 1998
---------------------------------- -----------------------------------
Per Per
Share Share
Income Shares Amount Income Shares Amount
------ --------- ------ ------ --------- ------
<S> <C> <C> <C> <C> <C> <C>
Basic earnings per share....... $493 8,440,459 $0.06 $11,491 8,680,522 $1.32
===== =====
Effect of dilutive securities:
Options for common stock..... - 28,374 - 236,194
------ --------- ------ ---------
Diluted earnings per share .... $493 8,468,833 $0.06 $11,491 8,916,716 $1.29
====== ========= ===== ======= ========= =====
</TABLE>
The weighted-average number of options for common stock outstanding for
the quarter and six months ended January 31, 1999 were 441,000 and 442,500,
respectively, versus 369,250 and 411,917 for the quarter and six months ended
January 31, 1998, respectively.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board has issued several new
financial accounting and reporting standards that the Company will be required
to adopt in this and the coming fiscal years. The Company is required to adopt
SFAS #131, "Disclosures about Segments of an Enterprise and Related Information"
(SFAS #131) and SFAS #132, "Employers' Disclosure about Pensions and Other
Postretirement Benefits - an amendment to FASB Statements #87, #88 and #106"
(SFAS #132) for its fiscal year ending July 31, 1999. SFAS #131 will require the
Company to expand its disclosure of information on its reportable segments. SFAS
#132 standardizes the disclosure requirements for pensions and other
postretirement benefits.
The Company is also required to adopt SFAS #133, "Accounting for
Derivative Instruments and Hedging Activities" (SFAS #133) for its fiscal year
ending July 31, 2000. SFAS #133 establishes accounting and reporting standards
for derivatives and hedging activities. The Company has not yet completed its
evaluation of the financial accounting and reporting impact of SFAS #133.
8
<PAGE> 10
THE CARBIDE/GRAPHITE GROUP, INC. AND SUBSIDIARIES
FOOTNOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS--CONTINUED
2 INVENTORIES:
Inventories consisted of the following (in thousands):
<TABLE>
<CAPTION>
January 31, July 31,
1999 1998
----------- --------
<S> <C> <C>
Finished goods ............................. $20,274 $15,061
Work in process ............................ 39,967 36,672
Raw materials .............................. 14,030 18,545
------- -------
74,271 70,278
LIFO reserve ............................... (13,718) (12,545)
------- -------
60,553 57,733
Supplies ................................... 10,509 11,106
======= =======
$71,062 $68,839
======= =======
</TABLE>
3 INCOME TAXES:
The provision for income taxes for the quarters and six months ended
January 31, 1999 and 1998 are summarized by the following effective tax rate
reconciliations:
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
January 31, January 31,
--------------------- --------------------
1999 1998 1999 1998
----- ----- ----- -----
<S> <C> <C> <C> <C>
Federal statutory tax rate ................ 35.0 % 35.0 % 35.0 % 35.0 %
Effect of:
State taxes, net of federal benefit .. 1.4 1.4 1.4 1.4
Foreign sales corporation benefit .... (1.6) (1.6) (1.6) (1.6)
Other ................................ 0.2 0.2 0.2 0.7
----- ----- ----- -----
Effective tax rate ................. 35.0 % 35.0 % 35.0 % 35.5 %
===== ===== ===== =====
</TABLE>
The income tax provision for the quarter and six months ended January
31, 1999 were recorded based on the Company's projected effective income tax
rate for the fiscal year ending July 31, 1999.
4 CONTINGENCIES:
In May 1997, the Company was served with a subpoena issued by a Grand
Jury empanelled by the United States District Court for the Eastern District of
Pennsylvania. The Company was advised by attorneys for the Department of Justice
(DOJ) that the Grand Jury is investigating price fixing by producers of graphite
products in the United States and abroad during the past five years. The Company
is cooperating with the DOJ in the investigation. The DOJ has granted the
Company and certain former and present senior executives the opportunity to
participate in its Corporate Leniency Program and the Company has entered into
an agreement with the DOJ under which the Company and such executives who
cooperate will not be subject to criminal prosecution with respect to the
investigation if charges are issued by the Grand Jury. Under the agreement, the
9
<PAGE> 11
THE CARBIDE/GRAPHITE GROUP, INC. AND SUBSIDIARIES
FOOTNOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS--CONTINUED
Company has agreed to use its best efforts to provide for restitution to its
domestic customers for actual damages if any conduct of the Company which
violated the Federal Antitrust Laws in the manufacture and sale of such graphite
products caused damage to such customers.
Subsequent to the initiation of the DOJ investigation, four civil cases
were filed in the United States District Court for the Eastern District of
Pennsylvania in Philadelphia asserting claims on behalf of a class of purchasers
for violations of the Sherman Act. These cases, which have been consolidated,
name the Company, UCAR International, Inc. (UCAR), SGL Carbon Corporation (SGL
Corp.) and SGL Carbon AG (SGL) as defendants (together, the Named Defendants)
and seek treble damages. On March 30, 1998, a number of purchasers who were
previously included in the purported class of plaintiffs covered by the
consolidated case initiated a separate action in the same District Court which
asserts substantially the same claims and seeks the same relief as the
consolidated case and names the Named Defendants, as well as Showa Denko Carbon,
Inc. (Showa Denko). Thereafter, six additional groups of purchasers who were
previously included in the purported class of plaintiffs covered by the
consolidated case instituted their own actions against the Named Defendants,
Showa Denko and, in several cases, certain present or former related parties of
UCAR and Showa Denko, asserting substantially the same claims and seeking the
same relief as in the consolidated case. Three such actions were filed in the
United States District Court for the Eastern District of Pennsylvania on April
3, 1998, April 17, 1998 and May 14, 1998, respectively. One action was filed in
the United States District Court for the Northern District of Ohio on April 17,
1998 but has been transferred to the Eastern District of Pennsylvania for
pre-trial proceedings. Another action was filed in the United States District
Court for the Western District of Pennsylvania on June 17, 1998 but has also
been transferred to the Eastern District of Pennsylvania for pre-trial
proceedings. The complaints or amended complaints in some of the cases have also
named as defendants other companies including Mitsubishi Corporation, Tokai
Carbon U.S.A., Inc. and related companies. On December 7, 1998, the Company was
served with a complaint filed by Chapparrel Steel Company against the Named
Defendants, Showa Denko and parties related to Showa Denko and UCAR in state
court in Ellis County, Texas alleging violations of various Texas state
antitrust laws and seeking treble damages. Chaparral Steel Company has filed an
amended complaint adding two additional related plaintiffs.
On February 10, 1999, a U.S. corporation which allegedly made purchases
on behalf of two foreign entities and a group of 22 foreign purchasers which are
based in several foreign countries filed a complaint against the Company, UCAR,
SGL, Tokai Carbon Co., Ltd., Tokai Carbon U.S.A., Inc., Nippon Carbon Co., Ltd.,
SEC Corporation and certain present and former related parties of UCAR in United
States District Court for the Eastern District of Pennsylvania. This case
asserts substantially the same claims and seeks the same relief as the
consolidated case.
The Company understands that defendants UCAR and Showa Denko have
reached settlement agreements with the class action plaintiffs, which have been
approved by the court, and have also settled claims brought by various
individual purchasers. The Company further understands that UCAR and Showa Denko
have pleaded guilty to antitrust conspiracy charges filed by the DOJ and have
been ordered to pay fines in connection with those guilty pleas.
The Company has also advised the Commission of the European Communities
(the European Commission) that it wishes to invoke its Leniency Notice.
Generally under these guidelines, the European Commission may substantially
reduce fines and other penalties if a company cooperates with the European
Commission and in the judgment of the European Commission provides significant
information. The Company understands that the European Commission will determine
any fines at the completion of its proceedings that may not be concluded for a
year or more.
10
<PAGE> 12
THE CARBIDE/GRAPHITE GROUP, INC. AND SUBSIDIARIES
FOOTNOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS--CONTINUED
On June 18, 1998, a group of Canadian purchasers filed a lawsuit in the
Ontario Court (General Division) claiming a conspiracy and violations of the
Canadian Competition Act. The Canadian lawsuit names the Named Defendants and
Showa Denko, as well as several present or former parents, subsidiaries and/or
affiliates of UCAR, SGL and Showa Denko. The Canadian Competition and Consumer
Law Division (Canadian Division) has initiated an inquiry and the Company is
cooperating fully with the authorities conducting that inquiry pursuant to an
agreement with the Director of Research and Investigation of the Canadian
Division under which the Company and its present and former officers, directors
and employees will not be subject to criminal prosecution.
During fiscal 1998, the Company recorded a $38 million pre-tax charge
($25 million after expected tax benefits) for potential liabilities resulting
from civil lawsuits, claims, legal costs and other expenses associated with the
pending antitrust matters (the Antitrust Charge). Based on the information
currently available to the Company to date (including the nature of the
antitrust claims against the Company and its defenses), the Company presently
believes the Antitrust Charge should be appropriate under the present
assumptions to address the resolution of the civil suits and other claims and
costs associated with the antitrust investigations. The Company understands that
defendants UCAR and Showa Denko have reached settlements at substantially higher
amounts with the class action plaintiffs and various individual purchasers. In
light of these and other future developments and other factors, the actual
liabilities, costs and expenses resulting from the antitrust matters (including
the European Commission antitrust investigation) could differ materially from
the current estimate which could adversely affect the Company's financial
condition and its ability to service its currently planned liquidity needs.
The Company is also involved in various legal proceedings considered
incidental to the conduct of its business or otherwise not material in the
judgement of management. Management does not believe that its loss exposure
related to these cases is materially greater than amounts provided in the
consolidated balance sheet as of January 31, 1999. As of January 31, 1999, a
$0.1 million reserve has been recorded to provide for estimated exposure on
claims for which a loss is deemed probable.
5. OTHER ITEMS:
OTHER EXPENSE
During the six months ended January 31, 1999, the Company announced
plans to close certain baking and graphitizing operations at its St. Marys,
Pennsylvania plant. Other expense in the six months ended January 31, 1999
represents an $8.0 million pre-tax charge to provide for the estimated cost of
the facility closure activities. Included in this charge is $5.7 million for the
net write-off of impaired fixed assets and spare parts inventory, $1.4 million
for hourly and salary workforce severance costs and $0.9 million in other
closure-related costs.
EXTRAORDINARY LOSS ON THE EARLY EXTINGUISHMENT OF DEBT
The extraordinary loss on the early extinguishment of debt in the six
months ended January 31, 1998 represents the premium paid to Senior Note holders
in connection with a tender of substantially all of the Company's 11.5% Senior
Notes and the write off of unamortized deferred financing fees associated with
the Senior Notes tendered and a revolving credit facility replaced in connection
with the tender.
11
<PAGE> 13
THE CARBIDE/GRAPHITE GROUP, INC. AND SUBSIDIARIES
FOOTNOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS--CONTINUED
SHARE REPURCHASE PROGRAM
During the six months ended January 31, 1999, the Company repurchased
384,200 shares of Common Stock under its share repurchase program at a total
cost of $3.9 million. The Company is authorized to spend an additional $4.6
million under its share repurchase program.
12
<PAGE> 14
PART I
Item 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following table sets forth certain financial information for the
quarters and six months ended January 31, 1999 and 1998 and should be read in
conjunction with the unaudited condensed consolidated financial statements,
including the notes thereto, appearing elsewhere in this Quarterly Report on
Form 10-Q:
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
January 31, January 31,
----------------------- --------------------------
1999 1998 1999 1998
------- ------- -------- --------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Net sales:
Graphite electrode products .............. $44,595 $55,196 $98,098 $109,306
Calcium carbide products ................. 13,570 19,618 29,419 38,902
------- ------- -------- --------
Total net sales .................... $58,165 $74,814 $127,517 $148,208
======= ======= ======== ========
Percentage of net sales:
Graphite electrode products .............. 76.7% 73.8% 76.9% 73.8%
Calcium carbide products ................. 23.3 26.2 23.1 26.2
------- ------- -------- --------
Total net sales .................... 100.0% 100.0% 100.0% 100.0%
======= ======= ======== ========
Gross profit as a percentage
of segment net sales:
Graphite electrode products .............. 16.2% 20.0% 15.6% 20.3%
Calcium carbide products ................. 10.7 17.7 11.4 16.5
Percentage of total net sales:
Total gross profit ....................... 15.0% 19.4% 14.7% 19.3%
Selling, general and administrative ...... 5.8 5.9 5.5 5.5
Operating income ......................... 9.1 13.5 2.9 13.8
Income before extraordinary loss .......... 4.3 7.8 0.4 7.8
</TABLE>
---------------
Net sales for the quarter ended January 31, 1999 were $58.2 million
versus $74.8 million in the prior year comparable quarter. Graphite electrode
product sales for the quarter ended January 31, 1999 were $44.6 million versus
$55.2 million in the prior year comparable quarter. Calcium carbide product
sales were $13.6 million versus $19.6 million in the prior year comparable
quarter. Net sales for the six months ended January 31, 1999 were $127.5 million
versus $148.2 million in the prior year comparable period. For the six months
ended January 31, 1999, graphite electrode product sales decreased 10.3% to
$98.1 million, while calcium carbide product sales decreased 24.4% to $29.4
million.
Within the graphite electrode products segment, graphite electrode net
sales were $29.2 million, a 28.4% decrease resulting from a 24.4% decrease in
electrode shipments and a 5.2% decrease in average electrode prices. Graphite
electrode shipments for the quarter ended January 31, 1999 were 23.0 million
pounds versus 30.4 million pounds in last year's comparable period. Weakness in
certain regions of the global economy is having
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a negative impact on demand for electric arc furnace steel and, as a result,
graphite electrode shipments and prices. Graphite electrode shipments to
domestic customers decreased 26.2% during the quarter ended January 31, 1999
from last year's comparable quarter while shipments to foreign customers were
off 22.3%. The decrease in shipments to domestic customers was largely due to
reduced electric arc furnace production rates during the quarter as steel
producers extended seasonal shutdowns in response to record levels of steel
imports experienced in the United States. Electrode shipments to foreign steel
producers were lower primarily due to weaker demand for steel in certain regions
of the world. Lower demand for electric arc furnace steel and, as a result,
graphite electrodes may continue for the next several quarters. Domestic and
foreign electrode shipments as a percentage of total electrode shipments for the
quarter ended January 31, 1999 were 52.8% and 47.2%, respectively, versus 54.0%
and 46.0%, respectively, in last year's comparable quarter. Average domestic
electrode prices during the quarter ended January 31, 1999 were down 8.8% from
last year's comparable quarter while average foreign net prices were unchanged
primarily as a result of a weaker U.S. dollar exchange rate. Also during the
quarter ended January 31, 1999, one of the Company's graphite customers, Dow
Chemical Company, Inc. (Dow), announced its intention to permanently close its
magnesium production facility in Freeport, Texas. The Company previously
supplied Dow with all of its graphite anode needs under a long-term supply
agreement. The cancellation of the supply agreement accounts for approximately 8
million pounds of graphite production capacity. In connection with the Company's
cost savings program (discussed below), the Company has eliminated a significant
amount of the costs associated with producing the graphite anodes previously
supplied to Dow. With the weak demand for graphite electrodes, the Company does
not believe that the graphite anodes previously supplied to Dow will be replaced
with sales of electrodes or other graphite products for at least the next
several quarters. Needle coke sales during the quarter ended January 31, 1999
were $10.0 million versus $10.1 million a year ago. A 20.9% increase in needle
coke shipments was offset by an 18.0% decrease in needle coke prices. The
decrease in needle coke prices was due primarily to the lower demand for
graphite electrodes described above, which in turn has resulted in weakening
demand for needle coke industry-wide. Graphite specialty product sales during
the quarter ended January 31, 1999 were $5.3 million versus $4.3 million in the
prior year comparable quarter. The increase in sales was attributable to
increased shipments of bulk graphite, partially offset by a decline in shipments
of granular graphite.
For the six months ended January 31, 1999, graphite electrode sales
were $68.2 million, a 16.1% decrease from the prior year comparable period
resulting from a 12.3% decline in shipments and a 3.7% decline in electrode
prices. Shipments of graphite electrodes for the six months ended January 31,
1999 were 53.1 million pounds versus 60.5 million pounds in last year's
comparable period. Domestic and foreign electrode shipments as a percentage of
total electrode shipments for the six months ended January 31, 1999 were 54.0%
and 46.0%, respectively, versus 52.9% and 47.1%, respectively, in the prior year
comparable period. The domestic electrode price was down 6.8% while the foreign
electrode price was down 1.7%. Needle coke sales for the six months ended
January 31, 1999 were $18.6 million versus $18.3 million in the prior year
comparable period. The increase in needle coke sales was due to a 21.4% increase
in needle coke shipments, partially offset by a 16.1% decrease in average needle
coke prices. Graphite specialty product sales for the six months ended January
31, 1999 were $11.3 million versus $9.8 million in the prior year comparable
period, with the increase resulting from increased sales of bulk graphite.
Within the calcium carbide product segment, pipeline acetylene sales
for the quarter ended January 31, 1999 were $3.9 million versus $7.7 million in
the prior year comparable quarter. The decrease was the result of a significant
decrease in shipments to pipeline acetylene customers. International Specialty
Products (ISP), the Company's largest pipeline acetylene customer, has indicated
that they will replace purchases from the Company with material sourced from
their European operations which may reduce their demand for the Company's
acetylene by as much as 75% of their historical levels. This reduction in demand
may be permanent. Partially offsetting the sales effect of the lower deliveries
to pipeline acetylene customers was an increase in average pipeline acetylene
prices resulting from the fixed cost component of the Company's acetylene supply
contracts. Sales of calcium carbide for metallurgical applications of $4.7
million represented an 18.2% decrease from a year ago, primarily due to lower
shipments. Weakness in domestic steel production by integrated steel producers,
coupled with lower prices for magnesium (a substitute product) and selective
promotion of magnesium over
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<PAGE> 16
calcium carbide by a major distributor, resulted in the lower sales levels.
Calcium carbide for fuel gas applications totaled $3.7 million for the quarter
ended January 31, 1999, a 29.0% decrease from a year ago resulting primarily
from lower shipments. Net sales of calcium carbide products are expected to
remain at these levels throughout the balance of fiscal 1999 and, potentially,
beyond as a result of weak demand and increased competition.
For the six months ended January 31, 1999, pipeline acetylene sales
were $9.6 million versus $14.9 million for the comparable period a year ago, a
35.6% decrease resulting from lower shipments. Sales of calcium carbide for
metallurgical applications were $10.1 million, a 17.4% decrease from a year ago
resulting primarily from lower shipments. Sales of calcium carbide for fuel gas
applications were $7.5 million versus $9.9 million a year ago, with the decrease
resulting from lower shipments and prices. All other calcium carbide product
sales for the six months ended January 31, 1999 totaled $2.3 million versus $1.9
million a year ago.
Gross profit as a percentage of graphite electrode product sales for
the quarter ended January 31, 1999 was 16.2% versus 20.0% in the prior year
comparable quarter. Gross profit as a percentage of graphite electrode product
sales for the six months ended January 31, 1999 was 15.6% versus 20.3% in the
prior year comparable period. The decrease in the gross margin in both periods
was the result of lower prices of graphite electrodes and needle coke and the
decrease in shipments of graphite electrodes. In addition, depreciation and
amortization was approximately $0.9 million and $2.2 million higher during the
quarter and six months ended January 31, 1999, respectively. Partially
offsetting the effect of the above was a decline in decant oil costs, which were
29.3% and 21.7% lower during the current quarter and six-month period,
respectively.
Gross profit as a percentage of calcium carbide product sales for the
quarter ended January 31, 1999 was 10.7% versus 17.7% in the prior year
comparable quarter. Gross profit as a percentage of calcium carbide product
sales for the six months ended January 31, 1999 was 11.4% versus 16.5% in the
prior year comparable period. The decrease in the gross margin in both periods
was the result of lower sales in the carbide business.
In response to weak demand for many of the Company's products, the
Company has initiated a comprehensive cost savings program. A component of this
program is the closure of two high-cost graphite production facilities at the
Company's St. Marys, Pennsylvania plant. This cost savings program, coupled with
the commissioning of two major capital projects in the Company's graphite
business in February 1999, will reduce staffing levels by approximately 230
employees Company wide, or approximately 20%, by the end of fiscal 1999. Cost
reduction efforts instituted in response to the lower demand for pipeline
acetylene by ISP will take effect over the remainder of the current fiscal year.
The Company is also attempting to lower raw material, transportation and other
costs to help offset the negative effect of lower sales.
Selling, general and administrative expenditures for the quarter ended
January 31, 1999 were $3.4 million versus $4.4 million in the comparable quarter
a year ago. Total expenses incurred in last year's second quarter were unusually
high due to a one-time charge of $0.3 million for consulting expenditures, as
well as increased legal fees and marketing expenditures in the graphite
electrode products business. Also, general operating expenses were lower during
the current quarter due to the Company's cost savings program. Selling, general
and administrative expenditures for the six months ended January 31, 1999 were
$7.0 million versus $8.1 million in the comparable period a year ago. The
decrease was primarily the result of the items noted in the quarterly discussion
above.
During the six months ended January 31, 1999 and in connection with the
Company-wide cost savings program, the Company announced plans to close certain
baking and graphitizing operations at its St. Marys, PA plant resulting in a 12%
reduction in the Company's graphite electrode production capacity. The Company
estimates that it is now capable of producing 110 million pounds of graphite
electrodes per year. Other expense in the six months ended January 31, 1999
represents an $8.0 million pre-tax charge to provide for the estimated cost of
the facility closure activities. Included in this charge is $5.7 million for the
net write-off of impaired fixed assets and spare parts inventory, $1.4 million
for hourly and salary workforce severance costs and $0.9 million in other
closure-related costs.
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<PAGE> 17
Net interest expense for the quarter ended January 31, 1999 was $1.5
million, including $1.9 million of interest expense associated with the
Company's revolving credit facility and $0.1 million in bank fees, less $0.5
million in capitalized interest. Net interest expense for the quarter ended
January 31, 1998 was $1.2 million, including $1.4 million of interest expense
associated with the revolving credit facility and $0.2 million in bank fees,
less $0.4 million in capitalized interest. Net interest expense for the six
months ended January 31, 1999 was $2.9 million, including $3.7 million of
interest expense associated with the Company's revolving credit facility and
$0.2 million in bank fees, less $1.0 million in capitalized interest. Net
interest expense for the six months ended January 31, 1998 was $2.6 million,
including $1.9 million of interest expense associated with the revolving credit
facility, $1.5 million of interest expense associated with the 11.5% Senior
Notes previously outstanding and $0.3 million in bank fees, less capitalized
interest of $0.8 million and interest income of $0.2 million.
The income tax provision for the quarter and six months ended January
31, 1999 was recorded based on the Company's projected effective income tax rate
for the fiscal year ending July 31, 1999. The current year effective rate
differs from the federal statutory rate due primarily to state taxes, offset by
benefits derived from the Company's foreign sales corporation.
As a result of a tender of the Company's Senior Notes and a related
revolving credit facility refinancing, the Company recorded a $6.4 million net
extraordinary loss on the early extinguishment of debt during the six months
ended January 31, 1998. This extraordinary charge represents the premium paid to
Senior Note holders in connection with the tender and the write off of
unamortized deferred financing fees associated with the Senior Notes tendered
and a revolving credit facility replaced in connection with the tender.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board has issued several new
financial accounting and reporting standards that the Company will be required
to adopt in the coming fiscal years. The Company is required to adopt SFAS #131,
"Disclosures about Segments of an Enterprise and Related Information" (SFAS
#131) and SFAS #132, "Employers' Disclosure about Pensions and Other
Postretirement Benefits - an amendment to FASB Statements #87, #88 and #106"
(SFAS #132) for fiscal year ending July 31, 1999. SFAS #131 will require the
Company to expand its disclosure of information on its reportable segments. SFAS
#132 standardizes the disclosure requirements for pensions and other
postretirement benefits.
The Company is also required to adopt SFAS #133, "Accounting for
Derivative Instruments and Hedging Activities" (SFAS #133) for its fiscal year
ending July 31, 2000. SFAS #133 establishes accounting and reporting standards
for derivatives and hedging activities. The Company has not yet completed its
evaluation of the financial accounting and reporting impact of SFAS #133.
LIQUIDITY AND CAPITAL RESOURCES
LIQUIDITY
The Company's liquidity needs are primarily for capital expenditures,
working capital and debt service on its revolving credit facility. The weakness
in certain regions of the global economy and its impact on demand for the
Company's products has resulted in the deferment of certain discretionary
capital projects, including a $40 million project to install a longitudinal
graphitizing facility. The Company believes that its cash flows from operations
and availability under its revolving credit facility should be sufficient to
fund all of its currently planned liquidity needs through at least the
expiration of its revolving credit facility in September 2002, although such
liquidity needs may be adversely impacted by the terms and conditions of any
settlements of pending antitrust claims. In the event these resources are not
sufficient to fund the Company's planned capital expenditures, service its
indebtedness and pay any other obligation including those that may arise from
pending
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<PAGE> 18
legal proceedings and the resolution of current antitrust matters, the Company
may be required to refinance its revolving credit facility, obtain additional
funding or further delay discretionary capital projects. If the Company were
required to refinance its revolving credit facility or obtain additional funding
to satisfy its liquidity needs, there can be no assurance that sources of funds
would be available in amounts sufficient for the Company to meet its obligations
or on terms favorable to the Company.
In connection with the tender of substantially all of the Company's
Senior Notes in fiscal 1998, the Company entered into an agreement with a
consortium of banks led by PNC Bank for a new, 5-year, $150 million revolving
credit facility with a $15 million sub-limit for letters of credit (the 1997
Revolving Credit Facility, as amended). The 1997 Revolving Credit Facility
replaced the Company's previous credit facility. Interest under the 1997
Revolving Credit Facility is based on, at the option of the Company, either PNC
Bank's prime rate or a floating LIBOR rate plus a spread (currently 1.0%) based
on a leverage calculation (specifically, the Consolidated Total Indebtedness to
Adjusted EBITDA Ratio). As of January 31, 1999, the interest rate on borrowings
outstanding under the 1997 Revolving Credit Facility was 6.0%. Repayment of
funds borrowed under the new credit agreement is not required until the
expiration of the facility on September 25, 2002. The most restrictive covenants
under the 1997 Revolving Credit Facility include a minimum Interest Coverage
Ratio of 3.5 to 1.0, a maximum Consolidated Total Indebtedness to EBITDA Ratio
of 3.0 to 1.0 and a minimum Consolidated Tangible Net Worth, all as defined in
the 1997 Revolving Credit Facility agreement. During the fiscal year ended July
31, 1998, the 1997 Revolving Credit Facility was amended to incorporate the
Antitrust Charge. The financial covenants in the 1997 Revolving Credit Facility
agreement were generally amended to exclude the effects of the Antitrust Charge,
although the cash flow impact associated with any future settlements of pending
antitrust claims will effectively reduce EBITDA in the computation of the
Consolidated Total Indebtedness to EBITDA Ratio computed for pricing purposes in
the future. The 1997 Revolving Credit Facility is collateralized with
receivables and inventory.
On March 4, 1998, the Company's Board of Directors authorized the
expenditure of up to $10 million to repurchase the Company's Common Stock.
Subject to price and market considerations and applicable securities laws, such
purchases may be made from time to time in open market, privately negotiated or
other transactions. No time limit was placed on the duration of the repurchase
program. The extent and timing of any repurchases will depend on market
conditions and other corporate considerations, including the Company's liquidity
needs. During the six months ended January 31, 1999, the Company repurchased
384,200 shares of Common Stock at a total cost of $3.9 million. The Company has
repurchased a total of 437,200 shares of Common Stock under the repurchase
program at a total cost of $5.4 million. The Company is authorized to spend an
additional $4.6 million under the repurchase program.
CASH FLOW INFORMATION
Cash flow used by operations for the quarter ended January 31, 1999 was
$3.8 million. Cash inflows from net income plus non-cash items of $6.7 million
were more than offset by $10.5 million in net cash outflows from changes in
working capital items, including a $12.8 million net cash outflow from
reductions in accounts payable and accrued expenses. Major cash outlays during
the quarter included $4.3 million in settlement payments and legal fees
associated with the pending antitrust investigation, $1.1 million in severance
and other related costs associated with the St. Marys graphite production
facility closure and $1.3 million in net interest payments. Cash flow provided
by operations for the six months ended January 31, 1999 was $4.2 million. Cash
inflows from net income plus non-cash items of $14.4 million, which includes the
$5.2 million net charge for the graphite production facility closure, were
offset by a $10.2 million net cash outflow from changes in working capital
items. Major cash outlays during the six-month period included $5.3 million in
settlement payments and legal fees associated with the pending antitrust
investigation, $1.1 million in severance and other related costs associated with
the St. Marys graphite production facility closure, $3.1 million in net interest
payments and $1.7 million in tax payments.
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Investing activities for the quarter and six months ended January 31,
1999 included $3.2 million and $6.0 million, respectively, in capital
expenditures. The Company believes that most of its future investing activity
cash flow requirements will be for capital expenditures. The Company believes
that its future cash flow provided by operations and borrowings under its
revolving credit facility will be adequate to fund its currently planned
investing needs in the future.
Cash flow provided by financing activities for the quarter ended
January 31, 1999 was $7.0 million, including a $3.0 million net inflow from the
1997 Revolving Credit Facility and a $4.1 million net change in the Company's
overdrafts. Cash flow provided by financing activities for the six months ended
January 31, 1999 was $1.8 million, including a $2.8 million net inflow from the
1997 Revolving Credit Facility.
OTHER ITEMS
ENVIRONMENTAL
In the process of developing permit applications for facility upgrades
at the Company's Niagara Falls, NY and St. Marys, PA graphite plants, the
Company determined that certain parameters in its air permits do not reflect
current operations. The Company is working to resolve this issue and has advised
the appropriate state environmental authorities. The Company's plan to resolve
this issue at its Niagara Falls, NY plant has been preliminarily approved by the
State of New York environmental authority. This plan will require the Company to
spend approximately $0.3 million in capital improvements to achieve resolution.
At this time, the Company cannot determine the magnitude of the costs or fines
that may be incurred to resolve the issue at its St. Marys, PA plant.
YEAR 2000 COMPLIANCE
The Company is in the process of modifying, upgrading and replacing
certain components of its computer software, operating systems and manufacturing
process control systems to accommodate the Year 2000 changes required for
correct recording of dates in the year 2000 and beyond. The Company has adopted
a comprehensive Year 2000 compliance action plan that includes (i) inventorying
all of its information technology (IT) systems, manufacturing process control
systems and non-IT systems, (ii) assessing these systems and resources for Year
2000 compliance, (iii) remedying and replacing non-compliant systems, (iv)
testing upgraded systems for compliance, and (v) developing contingency plans.
The Company is in the final stages of its action plan and believes that its
significant IT and non-IT systems will be Year 2000 compliant by mid-1999. The
Company believes that its current plan will adequately address the Year 2000
issue and the Company does not expect to experience significant operational
problems associated with Year 2000 compliance once its program is complete.
The Company is also evaluating the Year 2000 compliance programs of its
critical customers, suppliers and service providers in an attempt to determine
the adequacy of their programs in addressing the Year 2000 issue. This
evaluation includes the distribution of questionnaires to such parties and the
development of contingency plans that assume the failure of a third party
critical to the Company's business. The Company believes that the most
reasonably likely worst-case scenario for the Company with respect to the Year
2000 issue is the failure of a critical vendor, including but not limited to a
utility supplier, or the failure of a critical customer, including electric arc
furnace steel producers who use a substantial amount of power in their
production process. A failure by a critical supplier or group of critical
customers could negatively impact sales, profits and cash flows. The Company
believes that the formulation of contingency plans will help mitigate exposure
and losses should such a failure occur. However, because the Company's overall
Year 2000 compliance is contingent upon the readiness of its critical vendors
and customers, there can be no assurance that the Company's Year 2000 compliance
programs will adequately address Year 2000 issues not under its direct control.
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FORWARD-LOOKING STATEMENTS
This report may contain forward-looking statements that are based on
current expectations, estimates and projections about the industries in which
the Company operates, management's beliefs and assumptions made by management.
Words such as "expects," "anticipates," "intends," "plans," "believes,"
"estimates" and variations of such words and similar expressions are intended to
identify such forward-looking statements. These statements constitute
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933, and are subject to the safe harbor created thereby. These
statements are based on a number of assumptions that could ultimately prove
inaccurate and, therefore, there can be no assurance that such statements will
prove to be accurate. Factors that could affect actual future results include
the developments related to the antitrust investigations by the DOJ, the
antitrust enforcement authorities of the European Union or related civil
lawsuits as well as the assertion of other claims relating to such
investigations or lawsuits or the subject matter thereof. Such factors also
include the possibility that increased demand or prices for the Company's
products may not occur or continue, changing economic and competitive conditions
(including currency exchange rate fluctuations), technological risks and other
risks, costs and delays associated with the start-up and operation of major
capital projects (including the Company's modernization program), changing
governmental regulations (including environmental rules and regulations) and
other risks and uncertainties, including those detailed in this and the
Company's other filings with the Securities and Exchange Commission. Neither the
statements contained in this report nor any reserve or charge recorded by the
Company relating to civil lawsuits or claims shall be deemed to constitute an
admission as to any liability in connection with the subject matter thereof. The
Company does not undertake to publicly update any forward-looking statement,
whether as a result of new information, future events or otherwise.
Item 3
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
There have not been any material changes in the Company's exposures to
market risk during the six months ended January 31, 1999 that would require an
update to the disclosures provided in the Company's Annual Report on Form 10-K
for the fiscal year ended July 31, 1998.
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PART II
Item 1
LEGAL PROCEEDINGS
In May 1997, the Company was served with a subpoena issued by a Grand
Jury empanelled by the United States District Court for the Eastern District of
Pennsylvania. The Company was advised by attorneys for the Department of Justice
(DOJ) that the Grand Jury is investigating price fixing by producers of graphite
products in the United States and abroad during the past five years. The Company
is cooperating with the DOJ in the investigation. The DOJ has granted the
Company and certain former and present senior executives the opportunity to
participate in its Corporate Leniency Program and the Company has entered into
an agreement with the DOJ under which the Company and such executives who
cooperate will not be subject to criminal prosecution with respect to the
investigation if charges are issued by the Grand Jury. Under the agreement, the
Company has agreed to use its best efforts to provide for restitution to its
domestic customers for actual damages if any conduct of the Company which
violated the Federal Antitrust Laws in the manufacture and sale of such graphite
products caused damage to such customers.
Subsequent to the initiation of the DOJ investigation, four civil cases
were filed in the United States District Court for the Eastern District of
Pennsylvania in Philadelphia asserting claims on behalf of a class of purchasers
for violations of the Sherman Act. These cases, which have been consolidated,
name the Company, UCAR International, Inc. (UCAR), SGL Carbon Corporation (SGL
Corp.) and SGL Carbon AG (SGL) as defendants (together, the Named Defendants)
and seek treble damages. On March 30, 1998, a number of purchasers who were
previously included in the purported class of plaintiffs covered by the
consolidated case initiated a separate action in the same District Court which
asserts substantially the same claims and seeks the same relief as the
consolidated case and names the Named Defendants, as well as Showa Denko Carbon,
Inc. (Showa Denko). Thereafter, six additional groups of purchasers who were
previously included in the purported class of plaintiffs covered by the
consolidated case instituted their own actions against the Named Defendants,
Showa Denko and, in several cases, certain present or former related parties of
UCAR and Showa Denko, asserting substantially the same claims and seeking the
same relief as in the consolidated case. Three such actions were filed in the
United States District Court for the Eastern District of Pennsylvania on April
3, 1998, April 17, 1998 and May 14, 1998, respectively. One action was filed in
the United States District Court for the Northern District of Ohio on April 17,
1998 but has been transferred to the Eastern District of Pennsylvania for
pre-trial proceedings. Another action was filed in the United States District
Court for the Western District of Pennsylvania on June 17, 1998 but has also
been transferred to the Eastern District of Pennsylvania for pre-trial
proceedings. The complaints or amended complaints in some of the cases have also
named as defendants other companies including Mitsubishi Corporation, Tokai
Carbon U.S.A., Inc. and related companies. On December 7, 1998, the Company was
served with a complaint filed by Chapparrel Steel Company against the Named
Defendants, Showa Denko and parties related to Showa Denko and UCAR in state
court in Ellis County, Texas alleging violations of various Texas state
antitrust laws and seeking treble damages. Chaparral Steel Company has filed an
amended complaint adding two additional related plaintiffs.
On February 10, 1999, a U.S. corporation which allegedly made purchases
on behalf of two foreign entities and a group of 22 foreign purchasers which are
based in several foreign countries filed a complaint against the Company, UCAR,
SGL, Tokai Carbon Co., Ltd., Tokai Carbon U.S.A., Inc., Nippon Carbon Co., Ltd.,
SEC Corporation and certain present and former related parties of UCAR in United
States District Court for the Eastern District of Pennsylvania. This case
asserts substantially the same claims and seeks the same relief as the
consolidated case.
The Company understands that defendants UCAR and Showa Denko have
reached settlement agreements with the class action plaintiffs, which have been
approved by the court, and have also settled claims brought by various
individual purchasers. The Company further understands that UCAR and Showa Denko
have
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pleaded guilty to antitrust conspiracy charges filed by the DOJ and have been
ordered to pay fines in connection with those guilty pleas.
The Company has also advised the Commission of the European Communities
(the European Commission) that it wishes to invoke its Leniency Notice.
Generally under these guidelines, the European Commission may substantially
reduce fines and other penalties if a company cooperates with the European
Commission and in the judgment of the European Commission provides significant
information. The Company understands that the European Commission will determine
any fines at the completion of its proceedings that may not be concluded for a
year or more.
On June 18, 1998, a group of Canadian purchasers filed a lawsuit in the
Ontario Court (General Division) claiming a conspiracy and violations of the
Canadian Competition Act. The Canadian lawsuit names the Named Defendants and
Showa Denko, as well as several present or former parents, subsidiaries and/or
affiliates of UCAR, SGL and Showa Denko. The Canadian Competition and Consumer
Law Division (Canadian Division) has initiated an inquiry and the Company is
cooperating fully with the authorities conducting that inquiry pursuant to an
agreement with the Director of Research and Investigation of the Canadian
Division under which the Company and its present and former officers, directors
and employees will not be subject to criminal prosecution.
During fiscal 1998, the Company recorded a $38 million pre-tax charge
($25 million after expected tax benefits) for potential liabilities resulting
from civil lawsuits, claims, legal costs and other expenses associated with the
pending antitrust matters (the Antitrust Charge). Based on the information
currently available to the Company to date (including the nature of the
antitrust claims against the Company and its defenses), the Company presently
believes the Antitrust Charge should be appropriate under the present
assumptions to address the resolution of the civil suits and other claims and
costs associated with the antitrust investigations. The Company understands that
defendants UCAR and Showa Denko have reached settlements at substantially higher
amounts with the class action plaintiffs and various individual purchasers. In
light of these and other future developments and other factors, the actual
liabilities, costs and expenses resulting from the antitrust matters (including
the European Commission antitrust investigation) could differ materially from
the current estimate which could adversely affect the Company's financial
condition and its ability to service its currently planned liquidity needs.
The Company is also involved in various legal proceedings considered
incidental to the conduct of its business or otherwise not material in the
judgement of management. Management does not believe that its loss exposure
related to these cases is materially greater than amounts provided in the
consolidated balance sheet as of January 31, 1999. As of January 31, 1999, a
$0.1 million reserve has been recorded to provide for estimated exposure on
claims for which a loss is deemed probable.
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Item 4
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On December 3, 1998, the Company held its Annual Meeting of
Stockholders in Pittsburgh, PA (the Meeting). At the Meeting, Mr. James G.
Baldwin, Mr. James R. Ball and Mr. Nicholas T. Kaiser were each re-elected to
the Company's Board of Directors for terms expiring at the Annual Meeting of
Stockholders in 2001. The remained of the Board is comprised of Mr. Walter B.
Fowler, Mr. Paul F. Balser, Mr. Robert M. Howe, Mr. Ronald B. Kalich and Mr.
Charles E. Slater. Also at the Meeting, PricewaterhouseCoopers LLP was ratified
as the Company's independent accountants for its fiscal year ending July 31,
1999 and stockholders approved the 1998 Stock-Based Incentive Compensation Plan.
Total shares of Common Stock issued and outstanding as of October 26, 1998, the
date of record for the Meeting, were 8,362,342. 7,841,913 shares of Common Stock
were represented at the Meeting. Tabulations of votes cast were as follows:
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FOR BOARD OF DIRECTORS FOR WITHHELD AUTHORITY
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James G. Baldwin 7,828,156 13,757
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James R. Ball 7,831,119 10,794
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Nicholas T. Kaiser 7,815,486 26,427
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FOR PRICEWATERHOUSECOOPERS LLP
- -------------------------------------------------------------------------------
For 7,837,586
- -------------------------------------------------------------------------------
Against 2,027
- -------------------------------------------------------------------------------
Abstain 2,300
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
FOR THE 1998 STOCK-BASED INCENTIVE COMPENSATION PLAN
- -------------------------------------------------------------------------------
For 4,644,765
- -------------------------------------------------------------------------------
Against 1,884,212
- -------------------------------------------------------------------------------
Abstain 7,667
- -------------------------------------------------------------------------------
Broker Non-Votes 1,305,269
- -------------------------------------------------------------------------------
22
<PAGE> 24
PART II
Item 6
EXHIBITS AND REPORTS ON FORM 8-K
A. INDEX TO EXHIBITS
10.29 Agreement between the Company (Electrode Unit) and Oil,
Chemical and Atomic Workers International Union and Local
Union Number 8-23516 dated January 25, 1999.
10.32 The 1998 Stock-Based Incentive Compensation Plan
B. REPORTS ON FORM 8-K
None.
23
<PAGE> 25
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the following authorized officers on March 12, 1999.
<TABLE>
<CAPTION>
SIGNATURE TITLE
----------------------------------------------------------------------------------------------------
<S> <C>
/S/ WALTER B. FOWLER CHIEF EXECUTIVE OFFICER (PRINCIPAL EXECUTIVE OFFICER)
--------------------------------
(WALTER B. FOWLER)
/S/ STEPHEN D. WEAVER VICE PRESIDENT - FINANCE AND CHIEF FINANCIAL OFFICER
-------------------------------- (PRINCIPAL FINANCIAL OFFICER)
(STEPHEN D. WEAVER)
/S/ JEFFREY T. JONES CONTROLLER - CORPORATE FINANCE
-------------------------------- (PRINCIPAL ACCOUNTING OFFICER)
(JEFFREY T. JONES)
VICE PRESIDENT AND GENERAL MANAGER,
/S/ MICHAEL F. SUPON ELECTRODES AND GRAPHITE SPECIALTY PRODUCTS
--------------------------------
(MICHAEL F. SUPON)
VICE PRESIDENT AND GENERAL MANAGER,
/S/ ARARAT HACETOGLU CARBIDE PRODUCTS
--------------------------------
(ARARAT HACETOGLU)
VICE PRESIDENT AND GENERAL MANAGER,
/S/ JIM J. TRIGG SEADRIFT COKE, L.P.
--------------------------------
(JIM J. TRIGG)
</TABLE>
24
<PAGE> 1
Exhibit 10.29
INDEX
ARTICLE - NUMERICAL
-------------------
ARTICLE SUBJECT PAGE
- ------- ------- ----
I Recognition 5
II Equal Opportunity 5
III Union Security and Checkoff 5
IV Union Responsibility Clause 8
V Grievance Procedure 8
VI Arbitration 10
VII Strikes and Lockouts 11
VIII Discharge Cases and Suspensions 11
IX Hours of Work 12
X Reporting Pay 14
XI Call-In Pay 14
XII Holiday Pay 15
XIII Vacations 16
XIV Military Service 19
XV Bereavement Pay 19
XVI Overtime Dinners 20
XVII Incentive Program 20
XVIII Insurance Benefits 26
XIX Pension Plan 30
XX Seniority 30
XXI Bulletin Board 43
XXII Safety and Health 44
XXIII Supervisory Clause 46
XXIV Leave of Absence 46
XXV Management 47
XXVI Overtime Distribution 47
XXVII Jury Duty 55
XXVIII Validity 55
XXIX Scope of Agreement 55
XXX Term of Contract 56
Ex. 1A Labor Grade Schedule
Non-Incentive Rates 58
Ex. 1B Labor Grade Schedule
Incentive Rates 65
Ex. 2 Apprentice Rates 69
Ex. 3 Job Classification Groups 70
1
<PAGE> 2
INDEX
ARTICLE - ALPHABETICAL
----------------------
ARTICLE SUBJECT PAGE
- ------- ------- ----
Ex. 2 Apprentice Rates 69
VI Arbitration 10
XV Bereavement Pay 19
XXI Bulletin Board 43
XI Call-In Pay 14
VIII Discharge Cases and Suspensions 11
II Equal Opportunity 5
V Grievance Procedure 8
XII Holiday Pay 15
IX Hours of Work 12
XVII Incentive Program 20
XVIII Insurance Benefits 26
Ex. 3 Job Classification Groups 70
XXVII Jury Duty 55
Ex. 1A Labor Grade Schedule
Non-Incentive Rates 58
Ex. 1B Labor Grade Schedule
Incentive Rates 65
XXIV Leave of Absence 46
XXV Management 47
XIV Military Service 19
XVI Overtime Dinners 20
XXVI Overtime Distribution 47
XIX Pension Plan 30
I Recognition 5
X Reporting Pay 14
XXII Safety and Health 44
XXIX Scope of Agreement 55
XX Seniority 30
VII Strikes and Lockouts 11
XXIII Supervisory Clause 46
XXX Successor Clause 56
XXX Term of Contract 56
IV Union Responsibility Clause 8
III Union Security and Checkoff 5
XIII Vacations 16
XXVIII Validity 55
2
<PAGE> 3
INDEX
TOPIC - ALPHABETICAL
--------------------
TOPIC PAGE
- ----- ----
Apprentice Rates 69
Arbitration 10
Processing 10
Pay 10
Assignments 32
Bank Vacation Days 18
Bereavement Pay 19
Bulletin Board 43
Bumping Procedure 36
Call-In 14
Checkoff 5
Compensable Injury Pay 46
Discharges 11
Equal Opportunity 5
Farmout 39
Glasses - Reimbursement 46
Grievance Procedure 8
Health 44
Holiday Pay 15
Hours of Work 12
House Memo 48
Imminent Danger 44
Incentive 20
Insurance Benefits 26
Job Bidding 37
Job Classification Groups 70
Jury Duty 55
Layoffs 36
Leave of Absence 46
Lockouts 11
Maintenance Relief Man 41
Management 47
Medical Program 45
Military Service 19
Overtime Dinners (Meal Tickets) 20
Overtime Distribution 47
Charges 50
Deviations 50
Paredowns 35
Pension Plan 30
3
<PAGE> 4
INDEX
TOPIC - ALPHABETICAL (CONT.)
----------------------------
TOPIC PAGE
- ----- ----
Preamble 5
Progression - Regression 34
Promotional Procedure 37
Qualified 37
Bidding 37
Bumping 36
Overtime 47
Rates of Pay
Incentive 65
Non-Incentive 58
Recall 37
Recognition 5
Relief Operators 41
Reporting Pay 14
Safety 44
Scope of Agreement 55
Seniority 30
Rank 31
Termination of 39
Union Officers 38
Shift Change 12
Shift - Continuous 12
Shift Differential 14
Shoes - Reimbursement 46
Strikes 11
Summer Employees 7
Supervisory Clause 46
Suspensions 11
Temporary Transfers 38
Term of Contract 56
Transfers 38
Toxic Materials 45
Union Responsibilities 8
Vacations 16
Bank Days 18
Retirees 17
Validity 55
4
<PAGE> 5
PREAMBLE
This Agreement is entered into this 28th day of May, 1998, between The
Carbide/Graphite Group Inc., with respect to that portion of its manufacturing
facilities located in Niagara Falls, New York (hereinafter referred to as the
"Company") and its Local Union 8-23516 (hereinafter referred to jointly as the
"Union").
ARTICLE I
RECOGNITION
SECTION 1.01 In accordance with the certification of the National Labor
Relations Board in Case No. 3-RC-2628 and in Case No 3-RC-5150, the Company
recognizes the Union as the exclusive bargaining agent for the following
bargaining unit:
All hourly paid production and maintenance employees, including
factory clerks, research maintenance mechanics, research janitors, but
excluding bricklayers, guards, office clerical employees, laboratory
employees, professional employees, all other employees and all other
supervisors, as defined in the National Labor Relations Act.
The Agreement shall apply to and only to employees of the Company at
Niagara Falls, New York.
ARTICLE II
EQUAL OPPORTUNITY
SECTION 2.01 The Company and the Union agree that this agreement including
wages, shall be applied equally to all employees without regard to race, creed,
color, sex, age, national origin, religion, veteran status and disability
status. Any word used in the masculine gender applies also to the feminine
gender.
ARTICLE III
UNION SECURITY AND CHECKOFF
SECTION 3.01 As a condition of employment, all employees covered by this
Agreement shall, sixty (60) calendar days after the date of hiring, become
members of the Union and remain members in good standing in the Union during the
term of this Agreement by tendering the periodic dues and initiation fees
uniformly required as a condition of acquiring and retaining membership.
SECTION 3.02 All employees eligible to join the bargaining unit may at the time
of their employment, but in any event will, after thirty-one days (31) calendar
days, sign an application for membership into the Union. Such application shall
not become effective until the expiration of sixty (60) calendar days from the
employee's original employment date.
5
<PAGE> 6
SECTION 3.03 The foregoing provisions are not effective unless the Union
complies with mandatory governmental regulations covering Union security.
SECTION 3.04 Any employee who signs a card authorizing the Company to deduct his
or her Union dues and initiation fee from his or her wages shall, upon receipt
of such notice by the Company, have such Union dues and initiation fee deducted
from his or her wages by the Company on the first payroll period in each month.
Such sums shall be paid monthly by the Company to the Financial Secretary of the
Union.
SECTION 3.05 It is the intent of the parties hereto that the wording of the
union security provision and the checkoff provision comply with applicable
mandatory governmental regulations governing same. If either provision or both
provisions are found to be incorrect, the Company and the Union will immediately
make any necessary changes to comply with the applicable governmental
regulations.
SECTION 3.06 The Union further agrees not to, in any way, discriminate against
any employee who fails to request deduction of his Union dues through payroll
procedures.
SECTION 3.07 The authorization for dues deduction shall be in the following
form:
I, the undersigned hereby request and authorize The Carbide/Graphite Group, Inc.
of Niagara Falls, New York, to deduct from my wages the initiation fee and Union
dues in accordance with the Conditions and By-Laws of the Oil, Chemical and
Atomic Workers International Union and its Local 8-23516.
This assignment shall remain in effect and shall be irrevocable unless I am
transferred to a position not in the bargaining unit or revoke it by sending
written notice to the Company and the Financial Secretary of the Union, by
registered mail, during a period of no less than ten (10) days and not more than
fifteen (15) days immediately preceding any yearly period subsequent to the date
of this assignment or immediately preceding the date of the termination of the
collective bargaining Agreement between the Company and the Union, whichever
occurs sooner, and shall be automatically renewed as an irrevocable checkoff
from year to year unless duly revoked as hereinbefore provided.
Witness ______________________________________________________________
Init. Rein. Date ______________________________________________________________
Signature ______________________________________________________________
Hiring Date ______________________________________________________________
Clock No. ______________________________________________________________
SECTION 3.08 The Union shall indemnify and hold Company harmless against any and
all claims, demands, suits or other forms of liability that shall arise out of
or by reason of action taken or not taken by the Company in reliance upon
documents or cards or other information furnished to the Company by the Union in
complying with any of the provisions of this Article.
6
<PAGE> 7
SECTION 3.09 Summer employees as a condition of employment shall, upon
accumulation of sixty (60) calendar days after the date of hiring, become
members of the Union and remain members in good standing during the remainder of
their temporary employment. Such employees may be terminated by the Company at
any time during such temporary employment and are not guaranteed reemployment.
7
<PAGE> 8
Neither shall such employees have seniority rights over any permanent employee.
Such summer employees shall acknowledge in writing, within thirty (30) days of
their employment, their understanding of this Section 3.09 and its applicability
to them. These temporary employees will be hired as General Laborers, but will
receive the rate of the job classification in accordance with Exhibit 1A to
which assigned.
ARTICLE IV
UNION RESPONSIBILITY CLAUSE
SECTION 4.01 The Union recognizes that a fair wage rate can be maintained only
by producing a fair day's work. The Union and its members will cooperate in
achieving such a level of productivity, consistent with the health and welfare
of its employees. Both parties recognize that in order to achieve these
objectives, there should be maintained an attitude of mutual respect, fairness
and sincerity.
SECTION 4.02 The Union agrees that this contract is binding on each and every
member of the Union, its officers and individual members and accepts full
responsibility for carrying out all of the provisions of the contract.
ARTICLE V
GRIEVANCE PROCEDURE
SECTION 5.01 Definition of a Grievance. The "grievance" as used in this
Agreement shall mean any alleged violation of the terms, conditions or
provisions of this Agreement.
SECTION 5.02 Grievance Procedure. In an effort to resolve any such dispute, the
Company and Union shall adhere to the following successive steps:
1. The grievance must be taken up within thirty (30) days of occurrence by
the employee(s) involved with the Supervisor of the department in which
the employee(s) is working. The Department Steward, or, in his absence,
the Chief Steward may represent the employee(s). If neither the
Department Steward nor Chief Steward are available, any Officer of the
Union Grievance Committee may represent the employee(s). Every effort
shall be made by the Union and Company to resolve disputes in the first
step meeting. If a settlement is not reached within two (2) working
days of presenting the grievance, the matter may be referred to Step 2.
In the event that a settlement is reached at the first step, a
memorandum of settlement will be signed and copies forwarded to the
Chief Steward and the designated Management Representative.
2. The grievant, the Steward involved, the Chief Steward, the Supervisor
involved, the Department Head, if involved, and the designated
Management representative will meet for discussion. This meeting shall
take place within two
8
<PAGE> 9
(2) working days. At this meeting the grievance shall be reduced to
writing and the Chief Steward will be permitted the assistance of one
duly authorized Union Officer. The written grievance shall set forth
the Article(s) and Section(s) alleged to have been violated. The
Company and the Union spokesmen at this Step 2 meeting may mutually
agree to excuse certain participants from such meeting.
If the grievance is not settled within five (5) working days, it shall
be referred to:
3. The Grievance Committee and the Representative of the Oil, Chemical and
Atomic Workers International Union, who shall meet with the Management
Committee, within five (5) working days after the grievance has been
referred for the purpose of resolving the grievance. The Grievance
Committee meeting at this step of the Grievance Procedure shall consist
of not more than six (6) employees of the plant. Either party shall be
permitted to call such involved employees as may be necessary to
properly present all facts in the dispute.
The Company will give its answer within five (5) working days following
the meeting.
SECTION 5.03 If the decision of Management at this meeting is not satisfactory,
the Union may appeal this decision in writing, by requesting arbitration within
seven (7) calendar days of such decision. Should the Union fail to make such an
appeal, the matter shall be considered closed.
SECTION 5.04 Upon the expiration of the seven (7) calendar days set forth in
Section 5.03 above, the Union shall within ten (10) calendar days thereafter
make a request by written notice to the Director of the Federal Mediation and
Conciliation Service in accordance with Section 6.01. Should the Union fail to
make such request, the matter shall be considered closed.
SECTION 5.05 The Company and Union may at any time by mutual agreement refer a
grievance directly to arbitration in accordance with Article VI.
SECTION 5.06 The time limit in the steps of the Grievance Procedure set forth
may be extended by mutual consent in writing.
SECTION 5.07 In the processing of a grievance. If needed by the Department
Steward, the Chief Steward shall have the authority to investigate and assist in
the processing of a grievance. If the need arises, the Chief Steward will be
permitted the assistance of one duly authorized Union Officer selected by the
Union to aid and assist him.
SECTION 5.08 Adjustments on grievances within the first fifteen (15) days from
the date of the occurrence will be retroactive if warranted to date of
occurrence. Adjustments on grievances filed from the sixteenth (16th) to the
thirtieth (30th) days will be retroactive, if warranted, to the date of filing.
9
<PAGE> 10
ARTICLE VI
ARBITRATION
SECTION 6.01 Any grievance which remains unsettled after exhausting the
procedure under Article V may be submitted to arbitration upon the written
request of the Union, provided such request is made within seven (7) days of the
Company's final decision given under Section 5.02 The Company will type the
appropriate Federal Mediation and Conciliation form requesting a panel of
arbitrators from a list maintained by said service. The request will be signed
by the Chief Steward and forwarded by him to the Mediation Service.
SECTION 6.01A Prior to requesting a panel from the Federal Mediation and
Conciliation Service, the parties shall within not more than ten (10) days
attempt to mutually agree upon an arbitrator from the Federal Mediation
Conciliation Service panels or from any other sources.
SECTION 6.02 A panel of arbitrators will be requested from the Director of the
Federal Mediation and Conciliation Service by the party seeking arbitration. In
the event that the parties hereto fail to agree on an arbitrator after
exhausting three (3) panels, then the parties will request the Federal Mediation
and Conciliation Service Director to appoint an arbitrator.
SECTION 6.03 Cases involving suspension or discharge may be scheduled for
arbitration by mutual agreement before grievances previously filed. The request
to schedule grievances for arbitration in this manner shall be made in writing.
SECTION 6.04 The Company and the Union shall attempt to mutually agree in
writing as to the statement of the issue to be arbitrated and the arbitrator
shall confine his decision to the particular matter thus specified. In the event
of a failure of the parties to agree on a statement of the issue to be
submitted, each party shall provide the arbitrator a written statement of the
issue. From the two statements, the arbitrator will select the statement of
issue which most clearly sets forth the issue between the parties.
The issue statements will reference the written grievance.
SECTION 6.05 The arbitrator's decision and award shall be made in writing within
thirty (30) days after the close of the hearing unless the parties mutually
agree in writing to extend such time period.
SECTION 6.06 The award of an arbitrator shall be final and binding upon all
parties to this Agreement, provided, however, that the arbitrator shall have no
authority or jurisdiction to add to, detract from or in any way alter the
provisions of this Agreement.
SECTION 6.07 The Company and the Union shall bear equally the fee and expense of
the arbitration.
SECTION 6.08 Unless there is written mutual agreement between the parties that
more than one grievance may be heard by an arbitrator, an arbitrator will be
restricted to ruling on only one grievance.
10
<PAGE> 11
SECTION 6.09 The Company will provide compensation for the Union Representatives
who participate in an arbitration for the time lost from work. Such compensation
will be limited to three (3) members of the Union Committee plus the grievant
and the Steward.
ARTICLE VII
STRIKES AND LOCKOUTS
SECTION 7.01 The Union will not cause or officially sanction its members to
cease or take part in any strikes (including sitdowns, stay-ins, slowdowns or
any other stoppages of work) and will cooperate with the Company in every way
possible to prevent any such stoppages of work and to terminate such stoppages
that may occur as soon as possible. In the event of any strikes or willful
interferences with regular production by any employee, the Company has the right
at its option to discipline or discharge one or more of the employees taking
part in or responsible for such action, without limitations by any provision of
this Agreement; except in the event the Union believes any employee has been
unjustly disciplined or discharged under the terms of this Section, the Union
shall have the right to appeal through the Grievance Procedure set forth within
this Agreement.
ARTICLE VIII
DISCHARGE CASES AND SUSPENSIONS
SECTION 8.01 The Department Steward or the Chief Steward or, in his absence, any
member of the Union Committee will be notified as promptly as possible of
discharges affecting employees in the collective bargaining unit.
SECTION 8.02 In the event an employee is discharged or suspended from his
employment and believes he has been unjustly dealt with, such discharge or
suspension shall constitute a case arising under the method of adjusting
grievances. The Union may, however institute such cases in the second step of
the Grievance Procedure. The Company may, nevertheless place the discharge or
suspension in effect and discontinue the services of the employee pending
settlement of the matter. Such cases of discharge or suspension must be
submitted on appropriate grievance forms by the employee or his department
steward or, in the absence of the steward, by a member of the Union Committee to
the Human Resources Department within three (3) working days from the date of
discharge or suspension; otherwise there shall be no recourse.
SECTION 8.03 All grieved cases of discharge or suspension shall be taken up
within twenty-four (24) hours (excluding Saturday, Sunday and holidays) from
receipt of the grievance. If an employee is reinstated, he may or may not be
compensated, wholly or partly, as mutually agreed upon between the Company and
the Union or, in the case of arbitration, as directed by the arbitrator.
SECTION 8.04 The Company shall have the right to make reasonable rules and
regulations governing the conduct of employees within the plant. Existing rules
shall be reduced to writing and, when the Company institutes a new rule or
changes an
11
<PAGE> 12
existing rule, it will advise the Union Committee and post said rule or rules.
In the event that the Union believes any of the rules to be unreasonable, they
shall have the right to resort to the Grievance Procedure.
SECTION 8.05 It is further agreed that the Company will remove as of the
anniversary dates of the agreement from the employee records all violations of
Company Rules, other than absenteeism notices, of more than one year's standing.
This is to apply to those records one year old as of the above dates.
ARTICLE IX
HOURS OF WORK
SECTION 9.01A All hours of work performed in excess of eight (8) hours in one
workday, or when such hours cut across two (2) work days and are not part of an
employees regularly scheduled hours, or in excess of forty (40) hours in one
workweek, shall be paid at time and one-half the employee's regular rate of pay.
Employees will be paid one and one-half times the regular rate for work
performed on Sunday. No employee shall be paid both daily and weekly overtime
for the same hours so worked. It is also further understood that there will not
be pyramiding of premium pay in any manner.
SECTION 9.01B All work performed on Saturday (excluding continuous shift
employees) will be paid at a rate of one and one-half times the regular rate of
pay, provided the employee has not been absent during his regularly scheduled
workweek or unless such absence has been excused by Management.
It is understood that Management shall not be obligated to assign Saturday work
to any employee who has been absent during his regularly scheduled workweek
unless he is low man on overtime and has been excused from work.
SECTION 9.01C Continuous shift employees who are required to work on their
regularly scheduled days off will be paid time and one-half for all hours worked
on such days provided they are not absent on any day in their regularly
scheduled week unless such absence has been excused.
SECTION 9.02 The normal workweek shall be forty (40) hours per week, divided
into five (5) eight (8) hour days during the first five (5) days of the work
week, Monday to Friday inclusive, except for continuous shift operations.
SECTION 9.03 DAY SHIFT. Employees working the day shift will commence work at
8:00 a.m. and complete their tour of duty at 4:30 p.m. Employees on this shift
will be permitted a one-half hour lunch period without pay.
SECTION 9.04 SHIFT WORKERS. Employees designated as shift workers will commence
work in accordance with the following schedule: First Shift - 12:00 midnight to
8:00 a.m.; Second Shift - 8:00 a.m to 4:00 p.m.; Third Shift - 4:00 p.m. to
midnight. Shift workers will be provided an opportunity to eat lunch (maximum 20
minutes) without loss of pay.
12
<PAGE> 13
SECTION 9.05 CONTINUOUS SHIFT WORKERS. Employees assigned to continuous
operation shall work according to a work schedule which will provide:
1. A normal workweek forty (40) hours or forty-eight (48) hour workweek
occurring once in every four (4) week period.
2. A long weekend once every four (4) weeks.
3. No employee will be required to work more than thirteen (13)
consecutive days in a two (2) week period.
4. Scheduled days off shall be consecutive within the workweek.
5. Deviations from the continuous shift schedules are permitted in the
event unusual illness or absenteeism interferes with the normal
operation of the schedule.
6. Continuous shift workers will be permitted to take lunch (a maximum
of 20 minutes) without loss of pay.
SECTION 9.06 Whenever it is necessary to schedule shift work within a department
which normally operates on a day shift basis, or day shift work within a
department which normally operates on shift work, selection of personnel for the
shift work or day shift work will be made on the following basis:
1. The most senior qualified employees who volunteer.
2. If the shift cannot be filled by volunteers, then the junior qualified
employees within the department shall be scheduled for the shift work.
When an employee volunteers and is accepted for a shift assignment and
the schedule has been arranged, there will be no changes made until a
bona fide opening exists and he bids successfully for it.
SECTION 9.07 Janitorial Service. Employees performing janitorial service will be
assigned work schedules consistent with the need.
SECTION 9.08 Whenever an employee trades or changes a shift (exception:
scheduled change of shift) or fills in as a vacation replacement, the following
procedure will apply:
1. When two employees, with the consent of their supervisor, trade shifts,
each employee will assume the seniority of the other employee for that
particular shift.
2. When an employee requests from his supervisor that he be permitted to
come in and work a shift other than the one he was regularly scheduled
for and the supervisor gives such permission, the employee involved
will be treated as having the lowest seniority on that shift.
13
<PAGE> 14
3. When an employee is assigned by his supervisor to fill in for another
employee who is on vacation, the replacement will assume the schedule
of the employee he is replacing.
4. No employee shall receive daily overtime in any workday for a regular
shift, resulting from a shift change for the employee's convenience,
even though the shifts are consecutive. This application is for a (1)
one day shift change.
SECTION 9.09 When an employee who is normally considered a shift worker or
continuous shift worker is permanently moved to a steady day job, the employee
thus transferred will be transferred in such a manner that the first calendar
week he is assigned as a day shift worker he will be treated as a shift worker.
SECTION 9.10 Washup. A maximum of ten (1O) minutes for washup may be permitted
at the end of a complete shift, but shall not be used to interrupt the
completion of a job or operation.
SECTION 9.11A Maintenance and Production workers including employees as defined
in Article I, Section 1.01, who are shift workers and employed on the first and
third shifts, shall receive 30 cents per hour for work performed on the first
shift and 25 cents per hour for work performed on the third shift, in addition
to their regular hourly rate.
SECTION 9.11B Employees engaged in continuous operations shall receive 40 cents
per hour for work performed on the first shift, 25 cents per hour for work
performed on the second shift, and 35 cents per hour for work performed on the
third shift, in addition to their regular hourly rate, while working on
continuous shift.
SECTION 9.11C The workweek shall begin with the first shift starting Monday at
12:01 a.m. The workday shall begin with the 12:01 a.m. shift starting on that
day.
ARTICLE X
REPORTING PAY
SECTION 10.01 An employee who reports to work as scheduled and has not been told
by the Company during the previous day not to so report, shall receive not less
than four (4) hours of any available work and pay therefor, or not less than
four (4) hours pay, at the discretion of the Company. This provision shall not
apply should work be suspended due to conditions beyond the Company's control.
ARTICLE XI
CALL-IN PAY
SECTION 11.01 An employee who is contacted to return to work with less than four
(4) hours notice shall be given double time pay for all hours worked up to the
beginning of
14
<PAGE> 15
the employee's regular shift with a minimum of four (4) hours pay at double
time, regardless of the number of hours worked less than four (4) hours. After
the employee has worked eight (8) consecutive hours, the employee shall be paid
at time and one-half the employee's regular rate of pay.
ARTICLE XII
HOLIDAY PAY
SECTION 12.01 Employees shall receive eight (8) hours pay based upon their
average earnings over the two (2) week period worked preceding the holiday and
is to be based on a straight forty (40) hour week and is not to include overtime
payment and shift differential payment to compensate for time lost for the
following holidays when not worked, providing the employee works the scheduled
workday preceding and the scheduled workday following such holiday unless the
employee has Company permission in writing to be absent:
Day Before Christmas Memorial Day
Christmas Day 4th of July
Day Before New Years Labor Day
New Year's Day Thanksgiving Day
Washington's Birthday Day After Thanksgiving
Good Friday
In addition, a floating holiday will be observed each contract year. The
administration of the floating holiday will be handled in the same manner as if
it was a bank day.
SECTION 12.02 When any of the aforementioned holidays shall fall on a Saturday,
the day preceding the holiday, Friday, shall be recognized as the holiday. When
they fall on a Sunday, the day following the holiday, Monday, shall be
recognized as the holiday. If employees are required to work on any of the
aforementioned holidays, they shall receive eight (8) hours pay for the holiday
plus time and one-half for the hours worked on the holiday.
SECTION 12.03 Whenever such a holiday shall fall in an employee's scheduled
workweek and the employee would have been scheduled to work the holiday, such
holiday will be figured as eight (8) hours worked toward computing the forty
(40) hour workweek.
SECTION 12.04 Whenever one of the aforementioned holidays falls on a scheduled
day off of a continuous shift worker, the continuous shift worker thus scheduled
off will receive eight (8) hours pay as computed in the same manner as outlined
in Section 12.01.
15
<PAGE> 16
SECTION 12.05 When such a call-in occurs as outlined under Article XI on a
holiday, the four (4) hours call-in pay will be figured at double time the
employee's regular rate. SECTION 12.06 The Company agrees to post a notice three
(3) days prior to a holiday stating that departments would be required to work
on the holiday.
SECTION 12.07 If an employee has been told to report for work on a holiday and
fails to do so, he shall receive neither pay nor credit for that day unless
excused by the Company.
SECTION 12.08 If a department or shift is not scheduled to work and conditions
arise which make it necessary for work to be performed in the department or
shift, every effort will be made to perform said work by volunteers, in
accordance with seniority, starting with the senior employee normally performing
the work on the shift. The application of seniority in this case shall apply to
steady day workers who would otherwise be scheduled to work that shift.
SECTION 12.09 In the event it is found, after posting a notice, that a
department or shift is not scheduled to work a holiday and conditions arise
which require work in that department or on a specific shift and senior
employees have been excused, then employees with the least seniority on the
shift will be required to perform the necessary work.
SECTION 12.10 Whenever such a holiday shall fall in any employee's vacation
period, he shall receive eight (8) hours pay in the same manner as computed
under Section 12.01.
ARTICLE XIII
VACATIONS
SECTION 13.01 An employee, who having completed one (1) year of continuous
service as of his anniversary of hire, will be eligible to receive one (1)
week's vacation with pay. However, subsequent earned one (1) week's vacation may
be taken from January 1 to December 31 thereafter.
SECTION 13.02 Any employee, who having completed two (2) years of continuous
service as of his anniversary of hire, will be eligible to receive two (2)
weeks' vacation with pay. If a person for the first time would be eligible for a
two (2) weeks' vacation in any one (1) calendar year, he may be permitted by the
Company to take the first of these two (2) weeks after January 1 of that year
and to take the second week after he has been in the Company's employ for two
(2) years of his anniversary of hire. Subsequent earned two (2) weeks' vacation
may be taken from January 1 to December 31.
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<PAGE> 17
SECTION 13.03 Any employee, who having completed the required number of years of
continuous service as of his anniversary of hire, will be eligible and receive
vacation with pay according to the following schedule:
Five (5) to Nine (9) Years ......................................Three (3) Weeks
Ten (10) to Seventeen (17) Years .................................Four (4) Weeks
Eighteen (18) to Twenty-Nine (29) Years ..........................Five (5) Weeks
Thirty (30) Years .................................................Six (6) Weeks
SECTION 13.04 When an employee for the first time would be eligible for an
additional week's vacation in any one (1) calendar year, he may be permitted by
the Company to take his previously earned vacation in accordance with the above
schedule after January 1 of that year and the additional week's vacation may be
taken after the employee has been in the Company's employ for the required
length of service, as of his anniversary of hire, thereafter subsequent earned
vacation may be taken between January 1 and December 31.
SECTION 13.05 Vacation period to run from January 1 to December 31.
SECTION 13.06 Vacations shall not be postponed, carried over or accumulated from
year to year; however, upon request, Management will permit employees with
fifteen (15) years of continuous service to defer one (1) week of their vacation
to the following year providing it does not interfere with the granting of other
vacations and the efficiency of plant operations. In the event more than one
such employee requests the same vacation period and only one can be spared,
seniority will apply.
SECTION 13.07 Vacations will, as far as possible, be granted for the period
preferred by the employee in accordance with seniority, but the final decision
as to the allotment of vacation periods is reserved exclusively by the Company
in order to insure the proper operation of the plant. Every eligible employee
will be notified of his vacation allowance and period at least one (1) week in
advance, but the Company reserves the right to make changes in vacation periods
when such action by reason of emergency or the occurrence of an unexpected event
makes it necessary.
SECTION 13.08 Vacation pay of each employee shall be forty (40) hours and shall
be based upon his average hourly rate of the first four (4) of the five (5)
payroll weeks worked immediately preceding the scheduled vacation period.
SECTION 13.09 If, in the opinion of the Management, the granting of vacations
would interfere with the attainment of maximum production, the Company shall
have the right to require any eligible employee to continue to work and receive
his vacation pay as provided above in lieu of actual vacation from work. Both
parties agree, however, that so far as possible eligible employees shall receive
the benefits of an actual vacation from work.
SECTION 13.10 PRORATA VACATION. Any employee entitled to a vacation under this
contract, who leaves the employ of the Company during the years that this
contract is in
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<PAGE> 18
force and before he has reached his vacation, will receive earned vacation pay.
However, an employee who retires under a Company Pension Plan will be granted
prorata vacation pay for the year in which he retires based on one-twelfth
(1/12th) of the vacation entitlement in that year for each full month worked
after January.
SECTION 13.11 BANK VACATION DAYS. Employees with one (1) year of Company service
or more, on the first day of the calendar year, may select to take one (1) week
of their annual vacation one (1) day at a time, or employees with two (2) years
of Company service or more may select to take two (2) weeks of their annual
vacation one (1) day at a time, or employees with five (5) years of Company
service or more may select to take three (3) weeks of their annual vacation one
(1) day at a time in any combination of days, not to exceed four (4) days in any
one week. Employees who are entitled to four (4) or more weeks of vacation may
take bank days for all but one (1) week of their vacation.
1. The absence must be for a full day or days on which the employee is
scheduled to work.
2. Vacations will normally be scheduled in units of full weeks. Employees
who choose to select a week of their scheduled vacation as a "bank
week" will do so when scheduling their full week vacations. It is this
"bank" week which the eligible employee may take in units of one (1),
two (2), three (3), or four (4) days at a time. Those employees
eligible for two (2) or three (3) bank weeks shall select their second
and third "bank week" after all employees in their vacation group have
selected all their eligible vacation weeks. Such selection of the
second and third "bank week" shall be made in order of seniority prior
to April 15 and on a first-come, first-serve basis after April 15.
3. Any unused portion of vacation in the "bank week" must be taken during
the period scheduled as the "bank week." The employee must specify the
days on which he will take the unused vacation days on his first
regularly scheduled workday in the week prior to the "bank week."
4. Approvals for "bank week" vacation days will be made on a first-come,
first-serve basis. If more than one request is made on the same day,
Company service will prevail within the same job classification.
5. Requests for "bank week" vacations days will not be received more than
one (1) calendar month in advance nor later than three (3) working days
prior to the vacation period desired. Such requests will be made to the
employee's immediate supervisor.
6. In cases of non-occupational sickness or injury where the employee is
eligible for group insurance benefits, the supervisor may approve "bank
week" vacation days for the initial waiting period even though no prior
request has been submitted. The supervisor may also approve "bank week"
vacation days, without prior request, in compelling cases of warranted
and unavoidable
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personal situations where absence is inevitable. Such requests must be made
during or immediately following the absence.
ARTICLE XIV
MILITARY SERVICE
SECTION 14.01 The parties will observe applicable laws pertaining to employees
entering or returning from service in the military forces of the United States.
SECTION 14.02 Employees actively employed by the Company entering the active
military service of the United States of America will be granted an allowance as
follows:
1. Employees having a minimum of one (1) year's service will receive two
(2) weeks pay.
2. All employees having two (2) years of service or better will receive
four (4) weeks pay.
Such pay is to be given immediately after the employee is actually in the armed
services and is to be figured on the same basis as the vacation pay allowances
as outlined under Article XIII, Section 13.08. However, if an employee
volunteers for the armed services, they must complete ninety (90) days in armed
services to qualify for the benefits in 1 or 2 above.
SECTION 14.03 In addition, the provisions of Section 13.10 under Article XIII
will be applicable to all employees who enter the active military service of the
United States.
ARTICLE XV
BEREAVEMENT PAY
SECTION 15.01 When a member of the immediate family of an employee who has
completed their six (60) day probationary period with this Company shall die,
the Company, upon proper notice, will grant an excused absence from the hours an
employee is scheduled for work for the three (3) consecutive scheduled work
days, such time off must occur within seven days of the date of death (the date
of death will be considered day one). The Company will pay the employee the
scheduled hours not worked during said three (3) days at the employee's average
hourly rate. The average hourly rate is to be figured on the employee's earnings
the two (2) week period preceding the date of death and such earnings are to be
based on a straight forty (40) hour week and are not to include overtime payment
and shift differential.
SECTION 15.02 The term "immediate family" shall include only father and mother,
husband or wife, son or daughter, brother or sister, mother-in-law and
father-in-law, grandchildren (following a normal birth), and grandparents.
SECTION 15.03 In the event that said death should occur on a Thursday and the
funeral would not be held until the following Monday, the three (3) days excused
absence and
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<PAGE> 20
the three (3) days pay heretofore mentioned shall be extended to and included
the Monday following such death.
SECTION 15.04 When a brother or sister-in-law of an employee who has completed
the sixty (60) day probationary period with this Company shall die, the Company,
upon proper notice, will grant an excused absence from the hours an employee is
scheduled for work on the day of the funeral. The Company will pay the employee
the scheduled hours not worked on the day of the funeral computed on the same
basis as in 15.01 above.
SECTION 15.05 AN EMPLOYEE SHALL NOT BE PAID BEREAVEMENT PAY IF THEY ARE BEING
PAID VACATION PAY, HOLIDAY PAY OR WEEKLY ACCIDENT AND SICKNESS BENEFITS.
SECTION 15.06 No pay allowance will be granted in a case where, because of
distance or other causes, the employee does not attend the funeral of the
deceased.
ARTICLE XVI
OVERTIME DINNERS
SECTION 16.01 Overtime. After regular shift:
01/25/99 01/22/01
-------- --------
2 hours to 5 hours $6.50 $7.00 Per Ticket
5 hours or more $7.00 $8.00 Per Ticket
SECTION 16.02 Call-In. If an employee is called in and required by their
supervisor to report as soon as possible, they will receive a $6.50 ticket if
they work four (4) hours; and, if they work more than six (6) hours, they will
receive an additional $7.00 ticket. If the employee works less than four (4)
hours, no ticket will be issued.
If an employee is called in and required by their supervisor to report as soon
as possible and reports at least seven (7) hours before their regular shift,
they will receive two (2) $6.50 tickets for call-in and an additional $7.00
ticket for their regular shift.
If an employee is given an hour's notice; i.e., time called until time punched
in, or if the supervisor tells the employee to pack a lunch or eat before they
report for work, no tickets will be issued. If the employee then works their
regular shift, they will receive a $6.50 ticket.
ARTICLE XVII
INCENTIVE PROGRAM
It is the intent of the Company to expand the incentive system as rapidly as
possible and to obtain maximum incentive coverage. This does not guarantee that
all jobs will be placed on the Incentive Plan.
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<PAGE> 21
Normal Time Study Procedure for establishing or revising an incentive standard
will be as follows:
1. Observe method of operation.
2. Have supervisor notify operator of method to be followed during study,
also reason and type of study to be made.
3. Complete time study.
4. Develop standard by leveling elemental time values and applying
allowances as prescribed.
Four types of studies will be used:
1. Method Studies to:
(a) Determine costs.
(b) Determine if there are bona fide changes.
(c) New jobs.
2. Time Studies to:
(a) Establish incentive rates.
3. Check Studies to:
(a) Determine correctness of rates. (Procedure will start at (2) of
preceding paragraph.)
4. Joint Check Studies to:
(a) Determine correctness of rate and/or bona fide changes.
(Procedure will start at (2) of preceding paragraph.)
Time values shall be established so as to permit a normal qualified employee
working at an incentive pace to earn 25% above his base rate.
All jobs that are time studied and for which rates have been set will be posted
within three (3) working days.
All rates established on or after the effective date of this Agreement shall
have the classified rate as the base rate.
The Company shall recognize a Union Time Study Representative and an alternate
whose duties shall be limited to the duties as outlined in this Article.
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<PAGE> 22
The Union Time Study Representative will be assigned to regularly work the
second shift during the Monday through Friday workweek on a job for which they
are qualified.
The Union Time Study Representative shall be provided with or have access to the
records of the Time Study Department. Other than if it be absolutely necessary
in the processing of a grievance, the time study information and records
furnished to the Union Time Study Representative by the Company cannot be
removed from the Company premises. In the event that it is deemed necessary in
the processing of a grievance to take such records off the premises, the Union
Time Study Representative must sign a receipt for such written information and
records that they request to remove from the Company's premises. In no event
will the records or information being made available to the Union Time Study
Representative be passed on to Company competitors.
The Union Time Study Representative and the alternate shall not be subject to
the layoff provision of the contract, in effect, they will have super seniority
but shall be subject to all other provisions of the contract.
No Union Time Study Representative or alternate shall be promoted or transferred
out of the bargaining unit until they are released by the Executive Committee of
the Union.
Time values shall be established for each job classification made subject to the
incentive system, which shall be determined by the use of recognized time study
principles on the basis of fairness and equity consistent with a proper quality
of workmanship, efficient operation and reasonable working capacity of skilled
employees. The time values shall be established so that a time allowance,
exclusive of direct allowances and noncyclic allowances, on the study of a
minimum of 15% shall be included. This 15% is composed of 5% personal and 10%
stress and fatigue allowances and will be the minimum assigned to present
bulk-type operations.
Additional stress allowances will be applied elementally in accordance with the
following chart:
L M H
Stress Stress Stress
------ ------ ------
Major work stress on small
muscle groups, such as
hands, fingers and elbows.
0 0 5%
Major work stress on muscle
groups, such as shoulders,
arms and legs.
0 10% 15%
Major work stress on large
muscle groups, such as
back muscles.
10% 20% 35%
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It is recognized that the normal time for work requiring large muscle groups
cannot be reduced by operator effort to the extent of the improvements which can
be attained for work requiring the smaller muscle groups. For this reason, the
standard allowance applicable to individual elements may vary in accordance with
the preceding scale of standard allowances.
Noncyclic elements shall be recorded and included in the established time value
on the basis of their frequency of expected occurrence, but not to exceed a
period of one (1) shift. Noncyclic elements are those elements that occasionally
occur, but are not basically a part of the regular operation. All noncyclic
elemental recordings will be identified with full explanation as to what the
operator was doing during the noncyclic time. The frequency of occurrence on the
noncyclic elements shall be recorded on the method sheet filed in the Shop
Methods Binder. Any dispute over the frequency of occurrence should be resolved
by the Union Time Study Representative and Company Time Study Representative.
Operator performances vary, therefore, a leveling factor must be used.
A leveling factor of 100% will indicate an incentive pace of 25% above a normal
day work pace. Performances above and below this 100% pace will be rated
accordingly.
Elemental times are totaled to determine the operation time.
The operation time required is increased by a minimum of 15%, exclusive of
supplemental allowances, which shall represent the allowances for personal
needs, stress and fatigue. The result indicates the incentive pace time.
One hour is divided by the incentive pace time to determine the pieces per hour.
Since these pieces per hour represent incentive production, the job base rate
must be increased 25% to determine the incentive pay.
The incentive pay divided by incentive production results in the price per
piece. The operator shall be informed of this price.
The price per piece is divided into the job rate to determine standard pieces
per hour, and one hour divided by the standard pieces per hour results in the
standard hours per piece for payroll calculation.
Any bona fide change in methods, machines, tools, fixtures, materials, design,
quality, specifications or other conditions which affects the work content will
require a new time study. Permanent time value established may be changed only
to the extent of the justified change in the elements affected.
Changes in elemental times of machine-controlled elements will be accepted as
bona fide changes and therefore, be subject to restudy of those elements.
Deviations in method of operation due to physical power or dexterity are not to
be construed as bona fide method changes and, therefore, shall not be subject to
restudy for the purpose of changing rates.
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<PAGE> 24
Where the method machines, tools, fixtures, materials, design, quality,
specifications or other conditions which affect the work content of an incentive
job have been changed, the incentive rate shall remain in effect until the job
has been restudied and a new rate established. The new rate shall be retroactive
to the date of change and notification. When the size of a crew increases or
decreases, the old rate will immediately be canceled. A new time study will be
instituted and the results of the study will be retroactive to the date of
change. It is further agreed to give priority to the above restudy. When a
substitute rate is improperly applied, the correct proper rate will be applied.
Only qualified operators who normally perform the operation shall be time
studied or check studied for the purpose of establishing or checking a rate.
Practice time studies taken by a trainee of the Company and the Union shall be
exchanged by the interested parties and shall not be used for the purpose of
establishing rates or data.
After making a time study to establish an incentive rate, the Time Study
Engineer will leave a copy of the efficiency ratings with the operator before
leaving the department and will forward an additional copy to the Union Time
Study Representative.
After the rate is established, the Time Study Engineer will deliver to the
supervisor of the department a copy of the time study, the method sheet and
established rate. At the same time, the Time Study Engineer will deliver a copy
of the time study, the method sheet and established rate to the Union Time Study
Representative, if requested. Incentive rates will go into effect as of the date
of the time study used to establish the method and the rate.
When it is necessary to establish a separate operation in conjunction with a job
normally on incentive, a separate incentive rate shall be established for the
added operation. Where there is difficulty with a job on incentive, a separate
incentive rate shall be established for the existing conditions. In both cases
the rates shall be retroactive to the time of notification to the Company of
such existing conditions.
Time Study Engineers will isolate those time values included in the job standard
for abnormal conditions such as excessive heat, dust, fumes and exposure to
elements encountered in the performance of a job. Such time values separately
noted and rated full time at 100 are subject to review under the Time Study and
Grievance Procedures.
When a joint study for rechecking a rate has been made, the Time Study Engineer
and the Union Time Study Representative will exchange copies of their time
studies.
There shall be no interference with the Company and Union Time Study
Representatives in the performance of their duties.
In the Finishing Department, the classified rate of the job shall apply for
setup when performed by the operator who shall run the job. "Available work"
means that work which is scheduled to be run at the start of each
respective shift.
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The Job Classification Chart will be used in determining the proper
classification of new jobs.
New jobs that are assigned after the effective date of this Agreement, which are
similar to jobs that have incentive rates established, shall be time studied and
a time value established within three (3) working days under normal conditions.
When an operation in the Finishing Department has been time studied under
conditions of reasonable operator efficiency or the method of operation is such
that a fair standard cannot be established because of tolerance or conditions of
work requiring special skills, this operation will be paid for the classified
rate of labor grade 4 incentive until conditions permit establishing a fair
standard, at which time the incentive standard would be established on the
proper classified rate.
If, in the opinion of the Time Study Engineer, conditions of reasonable operator
efficiency (including excessive time taken for abnormal conditions) do not exist
when making a time study or check study, they shall immediately notify the Union
Time Study Representative for a joint observation. If it is agreed that a
satisfactory efficiency (including excessive time taken for abnormal conditions)
does not exist, the normal classified rate will remain in effect until such time
as a reasonable efficiency permits a study satisfactory to both parties.
Any grievance arising from the administration of the incentive system will be
handled as follows: After the Time Study Engineer has set a standard rate and
the operator after a reasonable effort feels that the rate is not satisfactory,
they may request a recheck of the standard through the supervisor. If the Time
Study Engineer does not recheck the standard within an hour (assuming a Time
Study Engineer is available) from the time of the request, the Union Time Study
Representative will be notified at that time; or, if after a recheck by the Time
Study Engineer the operator is not satisfied with the standard, the operator may
request the supervisor to call the Union Time Study Representative. If the Union
Time Study Representative and the Time Study Engineer cannot agree a joint study
shall be taken by the Company and the Union Time Study Representative. The
results thereof will be discussed by these analysts in an effort to reach
agreement. If no agreement can be reached, the matter may be submitted under the
Grievance Procedure, beginning with Step 2 of the Grievance Procedure, but
pending a determination thereunder the standard determined by the Company shall
not be changed under the Grievance Procedure unless proved to be erroneous.
A "reasonable effort," for the purpose of this paragraph, shall mean continuous
working on the job in question of not less than three (3) hours. Any adjustment
made as a result of a grievance submitted under this Article shall be
retroactive to the date of the grievance plus the time spent during the
reasonable effort period.
No grievance shall be recognized on an incentive job which rate has been
determined through the Grievance Procedure except where there has been a change
in method,
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machines, tools, fixtures, materials, design, quality, specifications or other
conditions which affects the work content of an incentive job. Incentive systems
other than that which is described herein will be described in pamphlets issued
to employees covered by those incentive systems which will be deemed a part of
this Agreement.
It is recognized that the Company Time Study Representative may issue temporary
substitute rates when permanent rates are not available.
ARTICLE XVIII
INSURANCE BENEFITS
SECTION 18.01 BASIC LIFE INSURANCE. The Company has in effect the following
insured benefit plans covering bargaining unit employees:
LIFE INSURANCE $28,000 (Effective February 1, 1999)
$30,000 (Effective February 1, 2000)
AND $31,000 (Effective February 1, 2001)
$33,000 (Effective February 1, 2002)
AD&D $35,000 (Effective February 1, 2003)
ADDITIONAL GROUP TERM LIFE INSURANCE: The Company agrees to make available to
the Union an elective employee paid life insurance plan for the purchase of
additional life insurance.
1. Bargaining unit employees will be able to elect additional term life
insurance.
2. The amount of the elected life insurance will be an amount equal to the
annual Company provided (free) amount of life insurance specified in the
labor agreement
3. There will be a designated (30) Thirty Day enrollment period during which
any bargaining unit employee may enroll by completing and submitting
appropriate enrollment forms. Employees must be actively at work in order
to enroll. Following the initial (30) thirty day open enrollment,
subsequent enrollment will be offered annually during enrollment for
medical benefits. New Hires will be allowed open enrollment if they elect
coverage prior to their first eligibility. Employees electing additional
life insurance benefits after the designated (30) thirty day enrollment
period or employees who elect to increase the amount of coverage from their
initial election at open enrollment will be required to submit evidence of
insurability.
4. Payroll deductions (monthly) will be made in accordance with the amount
elected based on the table below. If the amounts shown below are increased
by the carrier or provider, the employee deduction will be increased
accordingly.
5. The elective term life insurance will become effective the first of the
month following enrollment and/or approval and will end on the last day of
the last period for which you made the required premium contribution.
Conversion to a private policy following the termination of coverage is not
provided by the Company, however it may be available through the
independent carrier.
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<PAGE> 27
MEDICAL Effective February 1, 1999, the Company will offer active employees the
choice between three groups of medical insurance. The choices, including monthly
employee contributions, are as follows
MEDICAL PLAN OPTION #A1 - COMMUNITY BLUE II
-------------------------------------------
Three tier
New CB ($10/$10) Advantage ($0/$20 or $5/$15)
$0 Hospital inpatient co-pay $10 PCP $10SP or Advantage ($0/$20 or $5/$15)
Managed RX plan, no contraceptives, $5 co-pay
Dependent/student to age 23.
In Patient Treatment for Alcoholism and Substance Abuse
Enternal Prosthetic and Orthotic Appliances
MONTHLY CONTRIBUTION #A1 02/01/99 - 01/25/04
-------------------
Individual $ 6.40
Two-Person $11.00
Family $16.00
MEDICAL PLAN OPTION #A2: B.C./B.S. 60/61 PLAN (COMMUNITY RATED)
---------------------------------------------------------------
Hospital Contract: Standard Hospital 42/43
Hospital Riders: Medical Riders
- ---------------- --------------
$100 Deductible Rider 8 Dependent to Age 23
Rider 8 - Dependent to Age 23 Rider 22
Rider 46 - Pre-Care Program
(Hospital Pre-Certification) Prescription Drug Riders
------------------------
Rider 65 - NYS Mandate 1998 RX Rider DB - $5.00/$10.00 Co-Pay
Medical Contract: Select Contract 60/61 No Contraceptives
Major Medical Riders RX Rider 8 - $5.00/$10.00 Co-Pay
- --------------------
BCMM-7 Rider FF - $100 Deductible No Contraceptives
BCMM-7 Rider 8 - $100 Deductible
MONTHLY CONTRIBUTION #A2 02/01/99
--------
Individual $30.00
Family $75.00
NOTE: Each year 10% of the increase in premium will be added to the employee
contribution, but the maximum increase for single shall be $10.00 (max of $40.00
per month) and family shall be $25.00 (max of $100.00 per month) during the life
of the agreement.
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<PAGE> 28
MEDICAL PLAN OPTION #A3 LABOR HEALTH (HMO)
------------------------------------------
(For Employees with Eligible Dependents from Age 19-25 ONLY)
NYS Mandate 1998 Three tier
Labor Health $8 Drug: Labor Health $3
Labor Health Life Insurance DEPENDENT & STUDENTS TO AGE 25
Substance Abuse Rider External Prosthetic and Orthotic
Appliances
MEDICAL PLAN OPTION #A4 LABOR HEALTH (HMO)
------------------------------------------
(For Employees with Eligible Dependents to Age 19)
NYS Mandate 1998 Three tier
Labor Health $8 Drug: Labor Health $3
Labor Health Life Insurance DEPENDENT TO AGE 19
Substance Abuse Rider External Prosthetic and Orthotic
Appliances
MONTHLY CONTRIBUTION A3 & A4 02/01/99 - 01/31/01 02/01/01 - 01/25/04
------------------- -------------------
Individual $10.00 $12.00
Two-Person $16.00 $19.00
Family $22.00 $26.00
NOTE: If at anytime during the life of this agreement, the cost of the Labor
Health Plan exceeds the cost of the present Community Blue I plan, the Company
may substitute Community Blue I coverage in lieu of the Labor Health Plan.
RETIREE MEDICAL:
MEDICAL PLAN OPTION #R1 COMMUNITY BLUE II
-----------------------------------------
Three tier Dependent & Students to age 19
NYS Mandate 1998 Advantage out-of network BENEFITS
New CB ($10/$10) Advantage
($0/$20 or $5/$15) $0 Hospital inpatient co-pay
Managed RX plan, no contraceptives,
CB $5 co-pay / Deductible $250
Advantage $5/$10 Coinsurance 20%
Out of Pocket Max $2,000
MEDICAL PLAN OPTION #R2 B.C./B.S. 60/61 (COMMUNITY RATED)
---------------------------------------------------------
Same as Active Plan with the exception that Dependent Children/Student coverage
is only to age 19.
NOTE: Effective February 1, 1999, retirees will have the choice to elect either
Retiree 1 or Retiree 2 medical plan. The Company will pay, for future retirees,
50% of the Retiree 1 HMO medical plan amount of coverage as described herein for
active employees with 25 years of service who retire having reached age 62 until
they reach age 65. (The 50% of the Retiree 1 HMO medical plan amount will also
be applied toward the medical of employees who elect to retire under the BC/BS
60-61 plan having met the same criteria as stated above.)
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<PAGE> 29
ELIGIBILITY FOR DISABILITY RETIREE MEDICAL INSURANCE: Employees who retire after
February 1, 1999 from active service because of a disability, having 25 years of
service, and who remain in the Company medical plan from the time they elect
their disability retirement will, having reached age 55 be eligible for the 50%
reduced medical premium. (Example: an active employee who becomes disabled,
retiring at age 50 with 25 yrs. of service, and remains active in the Company
medical plan would be responsible to contribute the full cost of the medical
premium to the Company until they reach age 55. When they reach age 55 they
would then become eligible for the reduced premium coverage from age 55 until
they reach age 65.)
Except as provided herein, the parties have agreed to share equally all future
increases in medical benefits.
Effective February 1, 1999, the Company will pay 50% of the C.B. II HMO amount
of medical coverage as described herein for active employees with 25 years of
service who retire having reached age 62 until they reach age 65. (The 50% of
the HMO amount will also be applied toward the medical of employees who elect to
retire under the BC/BS 60-61 plan having met the same criteria as stated above.)
The Company may designate a carrier other than Blue Cross/Blue Shield, provided
that the benefits are equal or better than the present coverage.
FAS 106: The Company's contribution for retiree medical coverage in the future
shall be limited to the amount of the Company contributions as of January 26,
2004, based upon the rate for retirees as a separately rated group.
DENTAL PLAN The Company agrees to provide the following non-contributory dental
plan coverage effective February 1, 1999:
- - 100% Preventative (no deductible)
- - 50% Restorative ($25 deductible)
- - 50% Prosthodontics ($25 deductible)
- - 50% Orthodontic Lifetime maximum of ($1,000) one thousand dollars per
dependent.
- - Dependent coverage to age 23.
For all covered services, there will be a maximum of $1,000 in benefits per
person, per year.
WEEKLY SICK $310/week (Effective February 1, 1999)
AND ACCIDENT $320/week (Effective February 1, 2000
BENEFITS FOR $330/week (Effective February 1, 2001)
NON-OCCUPATIONAL $345/week (Effective February 1, 2002)
INJURIES $355/week (Effective February 1, 2003)
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LONG TERM DISABILITY
- --------------------
1. The Company agrees to take payroll deductions for an "employee pays all"
long term disability coverage.
2. The Company and Union will cooperate in establishing parameters for this
coverage and obtaining quotes from insurance carriers.
3. The Union recognizes that insurance carriers will require a set percent
rate of participation by employees in order to underwrite LTD coverage. If
this percent rate is not achieved, these items of agreement will terminate
and LTD coverage will not be offered.
SECTION 18.02 Employees will not be required to contribute toward the group
insurance program (except as provided herein).
SECTION 18.03 At their option, a new employee, during their probationary period,
may become eligible to participate in the Hospital-Surgical Plan on an
employee's contribution basis at the first of the month following hire. New
employees having completed their probationary period will become eligible to
participate in the full group insurance plan at the first of the month after the
completion of their probationary period.
SECTION 18.04 All employees not participating in the above program will receive
benefits as provided under the New York State Disability Benefits Law. Benefit
plan booklets describing in detail the various plans are available to employees
upon request.
ARTICLE XIX
PENSION PLAN
SECTION 19.01 The Pension Plan for Hourly Rated Employees shall continue in
effect up to and including January 25, 2004.
In addition to the above, a 401K SAVINGS PLAN will be established with no
Company match.
SECTION 19.02 The Company agrees to provide future retired employees, under the
Pension Plan, with a $2,000 Life Insurance Policy and pay the premium therefor
effective February 1, 1999.
ARTICLE XX
SENIORITY
SECTION 20.01 New employees shall be placed on a sixty (60) day PROBATIONARY
PERIOD during which time the Company will determine their aptitude and fitness
for continued employment. By written mutual consent, this probationary period
may be extended. However, if such new employees are continued in employment
after such probationary period, their seniority shall commence from the original
employment date.
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SECTION 20.02 In all cases of transfers or recalls, other than bids, the
employee shall retain seniority in, and the right to return to, their old job
classification group for a period of three (3) months and if work becomes
available during that period, they will be returned to their old job
classification group. If an employee does not return to their old job
classification group during said three (3) month period, they will after
completing three 3 months of employment in the new job classification group, be
credited with their full plant-wide seniority in the new classification group.
When the employee completes three (3) months of employment in the new job
classification group, they cannot return to their previous job classification
group. In the event of a paredown in the new job classification group within the
aforesaid three (3) month period, the employee having been previously qualified
by the supervisor, will have their plant wide seniority apply. Otherwise they
shall be transferred to their previous job classification group when work
becomes available. An employee who does not leave the job classification group
shall have the right to return to their old job classification if work becomes
available during this three (3) month period.
In the event of a job classification group shutdown, employees in the job
classification group affected by such shutdown will be returned to their
previous job classification group as soon as work becomes available. Until such
time, they shall be assigned to such other work as may be available.
In the event the job classification group which was shut down is reopened, the
employees will be given the opportunity to return in reverse order of their
separation from that job classification group.
In such cases, the three (3) month period mentioned above will not apply.
SECTION 20.03 Seniority records shall be maintained and available for
inspection. The original list for each department shall be posted within the
department by the Company and shall be revised semi-annually. Any protests as to
such seniority must be made within ten (10) days after such posting semi-annual
revision. At the expiration of the said ten (10) day period, the Company will
not be liable for any adjustment other than the correcting of the record.
SECTION 20.04 Seniority rank is based on the day, month and the year of the last
hiring date in the plant. If two or more employees start on the same day, the
order in which they are interviewed and hired will determine their order of
seniority rank.
SECTION 20.05 When a bargaining unit employee is transferred to a non-bargaining
unit position or is placed in training for such a position, the employee will be
removed from the bargaining unit.
In the event it is necessary to return the employee to the bargaining unit
within three (3) months, they will be assigned to an available job or jobs which
they are able to perform within such department, or elsewhere in the plant,
until such time as the employee bids another vacancy and is given the job.
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An employee that has been out of the bargaining unit for more than three (3)
months and it is necessary for the employee to return to the bargaining unit,
they will be offered an available job even though in so doing it necessitates
the laying off of the least senior employee in the plant. After ninety (90) days
on the job, they will pick up their plant-wide seniority.
For employee(s) leaving the bargaining unit after November 19, 1968, upon their
return to the bargaining unit, their plant-wide seniority will not be credited
with time spent in the non-bargaining unit.
SECTION 20.06 ASSIGNMENT OF EMPLOYEES. Employees within classification, at the
beginning of a shift, will be assigned to the incentive work then available in
accordance with their seniority. Thereafter, incentive work within their
classification will be given to the unassigned senior qualified employees as it
becomes available.
In the Graphitizing and Baking Departments, "available work" shall mean that
work intended to be performed on that shift. It is recognized that schedule
changes by Production Control or furnace repairs may cause exceptions.
Provided there is loading in the Baking Department on a shift, the senior
qualified Loader and Unloader will be given the loading assignment.
FINISHING DEPARTMENT
Once an operator has demonstrated their ability to properly set up and operate a
particular operation within a classification, they shall be paid the classified
rate. From that point on, the supervisor attempts to give these employees the
maximum amount of available incentive work by seniority, in accordance with
Section 20.06 (first paragraph). "Available work" means that work which is
prepared to be run at the start of each respective shift.
SHIPPER "A"
One capable of performing any job in the Shipping Department for which they will
receive their Shipper "A" rate or incentive earnings, whichever is greater.
MAINTENANCE
Recognizing the fact that many mechanical jobs on the plant cranes and hoists
are being performed by the Electrical group, Management will assign the
qualified employee(s) available for the job. Jobs that are electrical
troubleshooting and repair will be performed by the Electrical group.
The jobs that are mechanical troubleshooting and repair will be performed by the
Mechanical group. The jobs that are welding layout and repair will be performed
by the Welding group.
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When there exists a job that is both mechanical and electrical, the Mechanical
and Electrical employee(s) will work and perform together as a group.
When there exists a job that is both mechanical and welding layout and repair,
the Mechanical and Welding employee(s) will work and perform together as a
group.
When there exists a job that is both electrical and welding layout and repair,
the Electrical and Welding employee(s) will work and perform together as a
group.
This covers service, repairs, alterations and emergency breakdowns on both
regular and off shifts.
The evaluation of the type of work required shall be made by supervision.
SIDE BLOCK AREA
The Side Block Area employees will be selected by canvassing in the Furnace
Repair group for "A" Furnace Repair Side Block Area, "B" Furnace Repair Side
Block Area and "A" Furnace Repair Helper Side Block Area. Selection of personnel
for work in the Side Block Area will be made on the following basis:
1. The most senior qualified employees who volunteer.
2. If the Side Block Area classifications cannot be filled by volunteers, then
the junior qualified employees in the Furnace Repair classification shall
be assigned to the Side Block Area.
3. When an employee volunteers (or if no volunteer is available, the junior
employee who is assigned) and is assigned to a Side Block Area Furnace
Repair classification, there will be no changes made until a bona fide
opening exists.
Side Block Area employees will not share holiday work with other Furnace Repair
employees, and those employees will not share with Side Block Area employees.
When a Side Block Area employee is absent from work due to vacation or extended
illness (more than two (2) weeks), selection procedure for replacement will be
in accordance with the selection procedure above for the duration of the
replacement.
1. For absence of less than two (2) weeks, assignments will be made on a
day-to-day basis to cover the absent Side Block Area employee if it is
determined by supervision that a replacement is needed.
If Management determines that the Side Block Area will not function for a
prescribed period of time, Side Block Area employees will be assigned to their
designated classifications in the Furnace Repair group. Once assigned to a
specific classification, they will be averaged in on the overtime sheet for that
particular classification until such time as the Side Block Area resumes
operation.
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SECTION 20.07 PROGRESSION-REGRESSION. Because of the Progression in the Job
Classification Groups listed below, the following departmental rules shall
apply:
1. FINISHING
Master Tool Grinder
Tool Grinder
Tool Crib Attendant
Note: Should an operator make a setup and operate a particular operation and
subsequently another operator (who is presumed to be qualified to make the
setup) performs this particular operation, they will be permitted to work on the
incentive rate. Following this, if they are required to make the setup and fail
to demonstrate their ability to do so properly, they will receive the training
rate.
2. SHIPPING: Shipper "A"
Miscellaneous Shipper
Upon entering the Shipping Department as a permanent employee, a worker will
become a Miscellaneous Shipper.
After working six (6) months as Miscellaneous Shipper, the employee will
automatically progress to "A" Shipper if they have demonstrated proficiency on
the job and are qualified, or they will be removed from the job classification
group.
Note: It is understood that classified rates of pay for 801, 802, and 803 will
remain in effect.
3. BAKE: Loader/Unloader
Furnace Helper
When, because of temporary changes in the work load, it is necessary to increase
the number of operators within a classification, or to fill in for an employee
who does not report for work because of illness or vacation, the senior
qualified employee in the line of progression will be given the assignment. If
no qualified employee is available, then the senior employee in the line of
progression will be assigned the job assignment.
In the event there is no work available in any of the above listed Baking
classifications at the beginning of a shift, the affected employee or employees
will then be assigned to available work in the next lowest classification,
incentive or non-incentive, in accordance with their seniority, and they will
receive the classified rate or incentive earnings of the job to which they are
assigned. Regression will be in the reverse order of progression.
For the purpose of this progression, it is understood that an employee must have
had sufficient basic training in the next lowest classification.
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4. FURNACE REPAIR
Upon entering the Furnace Repair group as a permanent employee, a worker will
become a "B" Helper in this group.
Within three (3) months after an employee is placed and works in the Furnace
Repair group as a "B" Helper, the employee shall be promoted to an "A" Helper or
be removed from the group.
After working twenty-four (24) months as an "A" Helper and having acquired the
ability to read simple blueprints and demonstrated proficiency of the job, they
will be promoted to a "B" Furnace Repairman, if qualified, or be removed from
the Job Classification Group.
"B" Furnace Repairman will be promoted to an "A" Furnace Repairman after
eighteen (18) months, provided they meet the requirements of the job
qualifications.
Employees of the Furnace Repair group will be assigned as needed.
PLANT 6 Upon entering the Plant 6 group as a permanent employee, a worker will
become a Utility Helper in this group.
Within three (3) months after an employee is placed and works in the Plant 6
group as a Utility Helper, the employee shall be promoted to a Utility Operator
or be removed from the group.
Employees of the Plant 6 group will be assigned as needed within Plant 6.
SECTION 20.08 PARE-DOWN. A "PARE-DOWN" SHALL BE DEFINED AS A REDUCTION IN THE
WORK FORCE OF A DEPARTMENT THAT DOES NOT RESULT IN A PLANT-WIDE LAYOFF. When a
paredown occurs in a job classification the employee(s) affected by a pare-down
will then have their choice by seniority from such work as is available in their
department. If there is no available work within the department, the pared-down
employee(s) will be allowed to displace the most junior employee(s) within the
department. Any employee displaced from the department as a result of a
paredown, not resulting in a plant layoff will then have their choice by
seniority from any permanent job vacancy(s) that are available in the plant, if
no permanent vacancy exists, they may choose from available work in the plant.
In all instances seniority shall have first preference. (Note: A pared down
employee may not displace an employee(s) on a protected job in the department or
plant, unless the pared-down employee was previously qualified on such protected
job and the displacing employee is physically capable of performing the duties
of the position). If an employee is assigned to fill a job for an employee off
on medical leave, they will not accrue seniority within that classification. In
the event there is insufficient available work to avoid layoff, the provisions
of Section 20.10 apply.
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SECTION 20.09 In an effort to prevent layoffs in a case of emergency
shutdowns or short departmental layoffs of one week or less duration (two
weeks in the event of fuel shortages), the Company will make every effort
to place employees thus affected on other jobs throughout the plant,
providing work is available and the employees thus affected are capable of
performing the work required on the positions that are available. Should
some work be available within or out of the department, this work will be
performed by the senior qualified employee.
SECTION 20.10 REDUCTION IN FORCE. It is agreed that in cases of layoffs of more
than one (1) week's duration, seniority shall apply to all employees on a
plant-wide basis. Employees affected by reduction in force shall exercise their
plant-wide seniority as follows:
1. Employees in an affected job classification who are the least senior will
displace the least senior employees in their Job Classification Group,
provided the displacing employees are qualified.
2. An employee displaced from a Job Classification Group will have their
choice by seniority from the jobs that are available (from the same number
of the least senior employees as are being affected by the reduction in
force) provided the displacing employee is physically capable and except in
displacements which
involve protected job classifications in Labor Grades 1 through 8 as listed:
Electrician "A" Utility Fce. Repairman Lathe 15 Operator "A"
Millwright "A" Fce. Patrolman "A" M&B Threader
Welder Plant 1 Speci.Prod. Proc. "A" Nigata Threader
Industrial Truck Mechanic P.I. Operator Dow Threaders
Master Tool Grinder Tool Grinder Nipple Threader
Control Operator MM & E Utility Operator Electrode Threader
Bake Firing Operator "A" Plant 1 Crance Operator "A"
The displacing employee must have:
(a) worked in the job classification previously for three (3) months, or
(b) have past experience or training reflected in Company records which
demonstrates that they are qualified to perform the job.
When an employee is not qualified or fails to qualify, they will be assigned to
available work. If there is no available work, they shall have one opportunity
to displace the least senior employee in the plant as otherwise provided, or
take a layoff.
When an employee has exhausted their displacement rights or has refused to
exercise displacement rights, as herein provided, the employee will be laid off.
In the event that an employee in a job classification subject to
progression-regression is to be affected by reduction in force, the provisions
of Section 20.07 will be exhausted before the provisions of this Section.
Employees who are removed from their jobs due to a disqualification, paredown or
are recalled will be given a permanent job classification in accordance with
their seniority as soon as an opening occurs on a job they are able to perform
and there are no
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bidders who accept the job opening. If said employee does not qualify in this
department, then they are assigned to the available job or jobs which they are
able to perform within such department, or elsewhere in the plant, until such
time as the employee bids another vacancy and is given the job.
It is further agreed between the Company and the Union that every effort will be
made by the Company to notify the Union Committee as far in advance as possible
of impending layoffs. The Company will discuss with the Union Committee the best
method of notification and procedure to follow on general layoffs so that every
effort will be made to give the affected employee one (1) day advance
notification of layoff.
SECTION 20.11 RECALL. When there is an increase in the working force after a
general layoff and there are no successful bidders for the job to be filled,
employees laid off will be recalled in accordance with their seniority. The
employee must accept the recall or be terminated, in accordance with Section
20.17 (4).
SECTION 20.12 PROMOTIONAL PROCEDURE. All job vacancies will be posted in the
department wherein the vacancy occurs and at the punch clock for a period of
four (4) days, excluding Saturdays, Sundays and holidays. All requests for the
filling of such individual vacancies must be made in writing by employees
seeking to fill the job posted, within the four (4) day period, and such
requests must be on file in the Human Resource Office. The Company will hold all
job bids until the successful bidder has qualified for the job.
Thereafter, the bids shall be destroyed.
Employees going on vacation and/or leave of absence may place an advance bid for
a job for a thirty (30) day period prior to posting. Employees on vacation or
leave of absence may also bid a job during the four (4) day posting period.
Under no circumstances will a bid be held by the Company or considered in
filling of jobs in the plant, except while the employee is absent from work for
any of the above reasons for periods not to exceed sixty (60) days. If the
successful bidder who is on vacation or leave or absence does not return within
sixty (60) days, they will no longer be considered for the job and will be
assigned to available work if their former job has been filled.
In the filling of such jobs, the job shall be given to the senior employee in
the department who has the ability to do the job and they shall have a minimum
of eighty (80) hours to qualify. Said eighty (80) hours may be shortened or
lengthened by Company and Union agreement and is in no way to interfere with the
Company's right to discipline this employee in accordance with Company Rules.
In the event no employee in the department files a request, or does not have the
ability to do the job, then the senior employee in the plant who has submitted a
job request for the job and who has the ability to do the job will be given the
job and they shall have a minimum of eighty (80) hours to qualify. Said eighty
(80) hours may be shortened or lengthened by Company and Union agreement and is
in no way to interfere with the Company's rights to discipline this employee in
accordance with Company Rules.
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A successful bidder will either be moved on the Monday next following the
completion of eighty (80) hours after being awarded the bid, or, if not moved,
they shall receive the base rate of the job to which they are bidding, if it is
higher.
If an employee does not refuse a bid within twenty-four (24) hours of being
awarded the job, they must accept the job. Their seniority in the new job
classification group will begin on the day they are awarded the bid. If an
employee does not qualify during the trial period agreed upon, the job shall be
filled from the original job requests without the posting of another job vacancy
notice.
If they (the second applicant) do not qualify after the eighty (80) hour minimum
trial period, the second job vacancy notice will be posted and new job requests
will be considered in accordance with the procedure set forth herein.
When an employee bids into a Job Classification Group, they shall have bidding
rights in the Job Classification Group only after they have completed the eighty
(80) hour qualifying period and then their service will be only that which they
have acquired in the new Job Classification Group until they have completed
ninety (90) days, at which time they are credited with full plant-wide
seniority. The bidding employee shall have no bidding rights outside of the Job
Classification Group until they have completed ninety (90) days in the Job
Classification Group, except for job classifications which would otherwise be
filled by outside hire.
An employee may not successfully exercise bidding rights more than twice in a
calendar year period to move to a new job classification Group, unless it
involves bidding to a higher rated job. However, this one (1) year limitation
will be waived in the case of employees affected by a general layoff.
SECTION 20.13 Union Officers (President, First Vice President, Second Vice
President, Recording Secretary, Secretary Treasurer, Chief Steward and Union
Safety Representative) who have a minimum of two (2) years seniority shall have
super-seniority for layoffs purposes; however, they will be subject to all other
provisions of this contract.
SECTION 20.14 The President, Chief Steward, Time Study Representative, Union
Safety Representative, and Recording Secretary will be assigned to regularly
work with the second shift during the Monday to Friday workweek on a job for
which they are qualified.
SECTION 20.15 TEMPORARY TRANSFER. If, for the convenience of the Company, an
employee is transferred temporarily from one department to another and/or from a
higher rated job to a lower rated job, the employee will receive the rate of the
higher rated job. Temporary transfers, as used in this Section, will be
considered to be those transfers which are up to two (2) calendar weeks in
duration; however, this period may be longer than two (2) weeks when the
temporarily transferred employee is filling in for an employee who is absent due
to illness or vacation.
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After a shift has started, when an employee is moved to a lower rated job and
not replaced on their old job, they will receive the rate of the job to which
they were moved.
When an employee is replaced on the original job from which they were moved, by
a junior employee, they will receive the classified rate of the job they left or
were moved to, whichever is higher.
If an employee is transferred from a lower rated job to a higher rated job, and
the employee is capable of performing the duties of the higher rated job
(capable to mean quantity and quality of standard production) they shall receive
the higher rate.
An employee transferred from one job to another due to conditions resulting from
waiting for available materials or waiting for operable equipment, the employee
thus transferred shall receive their classified rate or the classified rate for
the job, if qualified, to which they were transferred, or the training rate of
the job, whichever is higher. In the event that there is no available material
or available operable equipment, the employee shall receive the rate for the job
they are assigned to. "Available work" to mean that work which is scheduled to
run at the start of each respective shift.
SECTION 20.16 FARMOUT. A "farmout" is defined as an assignment of work to an
employee in a department other than their own on a day-to-day basis. It is
further agreed that in all cases of farmouts, the senior employee shall replace
the junior employee in the department, providing the senior employee is capable
of performing the work of the junior employee and such capability shall be a
matter of record.
This procedure shall be followed only at the beginning of a shift and at no
other time. This procedure shall be followed regardless of the different
starting time for a shift (first, second or third) within the department. After
job assignments have been made at the beginning of the shift, employees who have
completed their assignments may be farmed out for the remainder of the day
rather than taking a junior employee away from a job which is in progress.
This is not to be construed that a senior employee may arbitrarily pick their
job in the Department.
SECTION 20.17(A) TERMINATION OF SENIORITY. An employee's seniority shall cease
for any of the following reasons:
1. If they quit.
2. If they are discharged.
3. If absent from work without notice to the Company, for five (5)
consecutive working days and provided such absences are unexcused.
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4. If laid off and notified at last known address to return to work, they
do not report to work within fourteen (14) calendar days.
5. When layoff exceeds the following:
(a) For employees with less than three (3) years of seniority: twelve
(12) months.
(b) For employees with three (3) years through seven (7) years of
seniority: twenty-four (24) months.
(c) For employees with more than seven (7) years of seniority:
thirty-six (36) months.
6. A. When absences for non-occupational illness exceeds the following:
(1) For employees with less than five (5) years of seniority:
twenty-four (24) months.
(2) For employees with more than five (5) years of seniority:
forty eight (48) months.
B. Seniority shall not accumulate beyond twelve (12) months for
those with less than five years of seniority; twenty-four months
for those with more than five (5) years of seniority.
C. In order to keep non-occupational illness leave continuing, the
employee must provide acceptable written medical proof of
continuing disability to the Company every six (6) months on
forms provided by the Company. Failure to do so will result in
the loss of seniority.
7. When an employee on leave of absence or medical leave is found to be
working elsewhere without prior permission of the Company.
8. Termination or cessation of seniority as used in this Section 20.17
would mean termination of employment.
SECTION 20.17(B) TERMINATION OF SENIORITY. Continuation of Benefits during
Layoff or Leave:
MEDICAL BENEFITS will cease after the following period during layoff or leave:
1. For employees with less than five (5) years of seniority: twelve
(12) months.
2. For employees with more than five (5) years of seniority:
twenty-four (24) months
o Employees on layoff will be allowed to continue medical coverage provided
they remit the full premium cost to the Company for the period they are
eligible for recall in items 1 and 2 above.
VACATION AND HOLIDAYS will cease after the following period during non
occupational illness leave:
1. For employees with less than five (5) years of seniority:
twelve (12) months.
2. For employees with more than five (5) years of seniority:
twenty-four (24) months
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SECTION 20.18 RELIEF OPERATORS
1. In order to provide a continuing source of trained employees for
permanent placement as well as backup coverage during illness,
vacations and other emergencies on certain of the more significant
jobs, as determined by the Company, the parties agree to establish the
job of Relief Operator.
2. The selecting and utilizing of Relief Operators other than Bake Firing
Operator will be as follows:
(a) The job of Relief Operator will be posted in accordance with
the provisions of Section 20.12 of the current labor
Agreement. Relief Operators will be selected first from within
the department in which the relief training occurs. If there
are no bids for the relief openings from within the
department, an employee from another department will be
considered.
(b) An employee may hold only one relief job at any given time.
(c) When a permanent opening occurs in a classification for which
there is a Relief Operator, and there is an employee who was
removed from this classification as a result of a reduction in
classification who does not leave the department, this
employee will retain their rights to that job classification
without the necessity of bidding. The employee thus affected
shall have a prior right to be assigned to that job
classification over the relief operator. In the event that
there are two or more classified and qualified Relief
Operators, the senior employee will be given first preference.
Seniority in this instance will be determined by length of
time on the relief job. A Relief Operator will be considered
classified and qualified in accordance with existing practice
and Section 20.12.
(d) If a relief employee refuses a permanent opening in their
relief classification, they will be removed as a Relief
Operator on that job and may not bid it again until a second
posting occurs.
(e) An employee will, while training and serving as Relief
Operator, retain their seniority and job status in their
permanent classification until they are given the relief job
on a permanent basis.
(f) While serving as a Relief Operator, an employee is not
eligible for overtime until all permanent employees in the
classification have been canvassed. Overtime worked or refused
by the employee in their relief capacity is charged back
against their permanent classification. While serving as a
Relief Operator an employee is still eligible for overtime in
their permanent classification.
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(g) An employee will not be moved from their permanent
classification to a
(h) relief classification if overtime is created unless:
1. All employees in their relief classification refuse
the overtime.
2. The overtime remains in their permanent
classification and is accepted.
3. If the overtime is refused as above, the employee of
the affected job classification where relief is
sought, may be forced to work.
3. The selecting and utilizing of Relief Bake Firing Operators will be as
follows:
(a) The job of Relief Bake Firing Operator will be posted in
accordance with the provisions of Section 20.12 of the current
labor Agreement. Relief Bake Firing Operators will be selected
first from within the department in which the relief opening
occurs. If there are no bids for the relief opening from
within the department, an employee from another department
will be considered.
(b) An employee may hold only one relief job at any given time.
(c) When a permanent Bake Firing Operator opening occurs, the
Relief Bake Firing Operator, if classified and qualified, will
be given the first opportunity to fill the job. In the event
that there are two or more classified and qualified Relief
Bake Firing Operators, the senior employee will be given first
preference. Seniority in this instance will be determined by
length of time on the relief job. A Relief Bake Firing
Operator will be considered classified and qualified in
accordance with existing practice and Section 20.12.
(d) If the Relief Bake Firing Operator refuses a permanent opening
as a Bake Firing Operator, they will be removed as the Relief
Operator and may not bid it again until a second posting
occurs.
(e) An employee who successfully bids the position of Relief Bake
Firing Operator will not retain their seniority or job status
in their former classification. They will be considered a
Bake Department employee and, as such, while not functioning
in a relief capacity, be assigned to other duties in the
Bake Department.
(f) In the assignment of "other duties" under (e) herein, the
employee will not participate in incentive loading, incentive
unloading or incentive cleaning operations.
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SECTION 20.19 MAINTENANCE RELIEF PERSON
1. The Maintenance Relief Person is utilized to provide coverage for
absent Maintenance personnel working continuous shift in the Electrical
Welding, Mobile and Mechanical Areas. Selection and assignment of the
Maintenance Relief Person will be as follows:
(a) In January, one day shift employee from each area is selected
for the year. The senior employee who volunteers will be
utilized or, if there are no volunteers, the junior employee
will be assigned.
(b) The Maintenance Relief Person/Area Relief Person will be used
to cover for absent continuous shift employees during the
period of May 1 to October 31. When the Maintenance Relief
Person/Area Relief Person substitutes during this period, they
will assume the schedule of the employee they are replacing.
When not substituting, they will be assigned to a straight
eight (8) hour day including a twenty (20) minute paid lunch
period.
(c) Prior to May and following October 31, the Maintenance Relief
Person/Area Relief Person, when substituting, will also assume
the shift of the employee they replace. However, when not
substituting, they will maintain their regular shift of eight
(8) hours with a half hour unpaid lunch; except for one week
following a substitution, they will be placed on the straight
eight (8) hour schedule with the twenty (20) minute lunch
period.
The Maintenance Relief Person, when assigned to substitute will do so for a
period of at least one week.
In the event that a substitution assignment of the Relief Person would directly
result in overtime coverage of their absence, they will not be so assigned.
If the Maintenance Relief Person is substituting and a second employee is
required to cover a continuous shift absence, the Maintenance Relief Person upon
completion of their substitution will relieve the second employee. The second
employee upon completion of their substitution will be placed on a straight
eight (8) hour with a twenty (20) minute paid lunch for one week.
ARTICLE XXI
BULLETIN BOARD
SECTION 21.01 In addition to the bulletin board now provided in the Industrial
Service Building, the Company will make available to the Union, space on all
departmental bulletin boards in the plant for the posting of Union notices
relating to meetings, dues, entertainment or other non-controversial Union
business. The Union notice shall have the official seal or stamp and shall be
submitted to the Human Resource Manager who will affix his/her stamp prior to
posting. There shall be no distribution or posting of
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pamphlets, advertising, political matter, notices or writing of any kind on the
Company property except as herein provided.
ARTICLE XXII
SAFETY AND HEALTH
SECTION 22.01 GENERAL DUTY CLAUSE. The Company shall institute and maintain all
reasonable and necessary precautions for safeguarding the health and safety of
its employees, and all employees are expected to cooperate in the implementation
thereof. Both the Company and the Union recognize the Company's primary
responsibility to provide for the prevention, correction and elimination of all
unhealthy and unsafe working conditions and practices. Departmental safety
meetings will be held on a monthly basis on the day shift.
SECTION 22.02 There shall be established a joint management labor Health and
Safety Committee, consisting of three (3) Company and three (3) Union
representatives. Time spent in such monthly meetings by the Union
representatives will be compensated at the employee's regular straight-time
hourly rate.
The Committee shall hold meetings as often as necessary upon call of a majority
of the members, but not less than once each month, at a regularly scheduled time
and place for the purpose of jointly considering, inspecting, investigating and
reviewing health and safety conditions and practices and investigating accidents
and for the purpose of jointly making constructive recommendations to eliminate
unhealthy and unsafe conditions and practices and to improve existing health and
safety conditions and practices. It is understood that the Company reserves the
right to establish and implement reasonable health and safety rules.
All matters considered and handled by the Committee shall be reduced to writing,
and joint minutes of all meetings of the Committee shall be made and maintained.
SECTION 22.03 IMMINENT DANGER. When an employee feels that a condition(s) exists
on their job which could reasonably be expected to cause death or serious
physical harm immediately or before the imminence of such danger can be
eliminated, they shall immediately report the condition(s) to their Supervisor.
If there is a dispute as to whether the conditions(s) is such that it could
cause death or serious physical harm immediately or before the imminence of such
danger can be eliminated the Supervisor shall, upon request of the employee,
call the Union Safety Representative or in their absence the alternate and the
Company Safety Engineer or in their absence an alternate. The employee will not
lose pay while attempts are made to resolve the problem; they may, however, be
assigned alternate work. It is agreed that neither the Company nor the Union
will accept or tolerate employee claims of imminent danger which are capricious
or otherwise not based on an actual fear that imminent danger does exist.
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SECTION 22.04 The Union Safety Representative or alternate will participate
withoutloss of pay in the routine housekeeping and safety inspection in
those weeks in which the Joint Committee is not meeting, it being
understood that the Union Safety Representative or alternate will be so
selected that they can be spared from their job and, if they have to be
replaced on their job, such replacement will not result in premium or
penalty pay or affect the efficiency of the plant. The Union Safety
Representative will be excused from their job without loss of pay to
respond to requests made in accordance with the imminent danger procedures
herein. The Union Safety Representative may invoke the imminent danger
procedures provided the imminent danger satisfies the definition as set
forth herein. The Union Safety Representative will be the primary liaison
with the Company Safety Engineer. Communications to the Company concerning
health and safety matters from bargaining unit employees will be channeled
through the Union Safety Representative.
SECTION 22.05 TOXIC MATERIALS. Where in the performance of their job an employee
uses or comes into contact with a toxic material as listed in the toxic
substance list published in accord with Section 20(a) (6) of the OSHA and found
in this plant, the employee will be informed of the allowable exposure standard,
the symptoms of overexposure, the precautions to be taken and the appropriate
medical remedy or antidote.
SECTION 22.06 INSPECTION OF FACILITIES. In the discussion of a specific health
and safety item by the Joint Health and Safety Committee, either party, at its
own expense, may arrange for an inspection tour by an appropriate independent
agency in the health and safety field or by a health and safety specialist from
the International Union. Such inspection will be scheduled at a time and in a
manner so as not to unduly interrupt production and will be limited to the
specific area(s) involved in the item of discussion. In addition to the
inspecting party, of non-employees, tours shall be made in the company of the
Union Safety Representative and the Company Safety Engineer. SECTION 22.07 In
the event that there is dispute over whether a work assignment will be performed
because of safety or health reasons, which results in an employee being
suspended or discharged, the Union may immediately institute the procedures of
Article VI, Arbitration.
SECTION 22.08 MEDICAL PROGRAM. Each employee with five (5) or more years of
service will be eligible to receive a chest X-ray, a pulmonary function test, a
hearing test, and a CEA blood test once every three (3) years. Employees will be
informed of any abnormal condition which is detected.
SECTION 22.09 All state and federal occupational health and safety standards
shall be adhered to and, in the event of differing standards, the stand which
gives the greatest protection to employees shall be that which is applied.
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SECTION 22.10
1. The Company will contribute the amounts listed below each year to each
employee for the purchase of SAFETY SHOES excluding probationary
employees and summer employees covered in section 3.09 of this
agreement.
$100.00 per year effective January 25 1999
$105.00 per year effective January 24, 2000
$110.00 per year effective January 22, 2001
$115.00 per year effective January 20, 2002
$120.00 per year effective January 19, 2003
The Furnace Processors in Graph and the Mass Bake Loader will receive
one (1) additional pair per year if needed.
2. The Company will pay up to $125.00 EVERY TWO (2) YEARS FOR OSHA
APPROVED SAFETY GLASSES provided the employee presents a prescription
that is less than one (1) year old. This amount will be increased to
$150.00 EFFECTIVE JANUARY 21, 2002.
SECTION 22.11 If an employee must leave their work because of a compensable
injury while at work on the day of the injury, they will be paid their base wage
rate for the remainder of the shift.
ARTICLE XXIII
SUPERVISORY CLAUSE
SECTION 23.01 Supervisory employees shall not perform the work of bargaining
unit employees covered by this Agreement. This is not intended to preclude
supervisors from performing work relating to the instruction and training of
employees; experimental and development work; the protection of life, limb,
property or equipment; urgent shipments of materials in the absence of qualified
bargaining unit employees; sorting and for handling of stock in the Stock
Department; intricate setups by Supervisors in conjunction with operators; and
established clerical practices performed by supervisory personnel.
ARTICLE XXIV
LEAVE OF ABSENCE
SECTION 24.01 Upon written request from the Union, the Company shall grant no
more than three (3) employees, at any time, time off without pay to such
employees as designated to attend union schools, International Union and
District Council conventions, conferences and local conferences provided
reasonable notice has been given to the Company and the absence of such
employees from their regular duties will not, in the Company's judgment,
seriously affect production in the employee's respective departments and
provided further that such periods of "time off" shall not exceed the necessary
time required to attend such functions. In addition, the granting of such leaves
of absence for each respective cause, as outlined above, will be limited to the
times required for each cause.
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SECTION 24.02 In no instances are leaves of absence to be granted to employees
who are employed elsewhere or who are seeking other employment.
SECTION 24.03 Leaves of absence for reason of personal illness may be granted to
any employee by the Company whenever, in the Company's judgment, such leave of
absence is justifiable. In the granting of each and every leave of absence, the
Company reserves the right to outline the conditions under which such leave of
absence is to be granted.
SECTION 24.04 No leave of absence thus granted shall entail any loss to an
employee's seniority during periods other than what is specified for in Section
20.17. SECTION 24.05 FAMILY LEAVE. The parties agree that they shall comply with
the Family And Medical Leave Act of 1993. In administering family leave, the
Company and Union shall comply with regulations/directions promulgated by the
federal government. The parties agree that maternity shall continue to be
treated as a disability in accordance with federal/state statues.
SECTION 24.06 UNION LEAVE. Any bargaining unit employee with at least five (5)
years of service, appointed or elected to Union duties in the Oil, Chemical, and
Atomic Workers International Union, shall be granted a one (1) year leave of
absence with seniority accumulative while in such service. Renewal will be
granted each year for a one year extension of such leave upon application, in
writing, requesting such renewal. Benefit coverage will cease during such leave.
ARTICLE XXV
MANAGEMENT
SECTION 25.01 The management of the plant and the direction of the working
forces and of the affairs of the Company, including the right to hire, suspend
or discharge for proper cause and the right from time to time make factory rules
not inconsistent with any of the terms of this Agreement, and the right to
relieve employees from duty because of lack of work or for other legitimate
reasons, is vested exclusively in the Company, provided that an employee
unjustly affected hereunder may have recourse to the Grievance Procedure as
outlined in Article V.
ARTICLE XXVI
OVERTIME DISTRIBUTION
SECTION 26.01 Definitions. "Job" as used herein is a specific work assignment
within a classification that an employee normally does or is doing at the time
the overtime occurs.
"Qualified" means the ability to perform a specific work assignment, quality and
quantity wise, as substantiated by records, except for general labor
assignments. When no qualified employee is available and another employee is
assigned to the job, such assignment does not necessarily constitute
qualification as intended herein.
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SECTION 26.02 General Rules. Overtime is to be assigned to the qualified,
classified person who normally performs the job within the classification and
will, at the start of each year be offered in accordance with seniority until
such time as all of the employees who normally perform the job within the job
classification have been given the opportunity to work or refuse overtime.
Thereafter, overtime is to be assigned to the qualified, classified employee who
normally performs the job within the job classification who is lowest in
overtime so that the allocation of overtime among employees normally performing
the job within the job classification will be distributed as equally as possible
on a yearly basis. In the event that senior employees whose turn it is to work
the overtime refuse overtime, the junior qualified employee(s) normally doing
the job within the job classification must accept the overtime assignment.
Rather than assign employees to work two (2) 12-hour shifts to cover twenty-four
(24) hours, after the beginning of the employees' workweek, the Company will
first canvass the low qualified, classified employees to work the available
overtime on a voluntary basis, then, if necessary, direct the junior qualified
employees normally doing the job within the job classification. (This does not
affect the Control Room deviation.)
All overtime records, used for the purpose of allocating overtime, will start as
of January 1 of each year and be accumulated through and including December 31
of that year. There will be no carry-over from year to year. All overtime will
be charged uniformly.
Management shall keep records of overtime assignments and will post such records
and such records are to remain posted in the department and shall, as near as
possible, be brought up to date daily. Should there be any defacing, tampering
or unauthorized changing of such records, the Management will not be responsible
for the accuracy of such records. In addition, the defacing, tampering with, or
changing of such records by any unauthorized employee or employees will be cause
for immediate discharge. The steward shall have the right to check such records
(Overtime and Call-Ins) and shall verify them at least daily to determine if
inequities exist in the distribution of overtime and to check the reason for
such inequities. It shall be the duty of the steward to immediately notify the
Supervisor of existing inequities and determine with the Supervisor as to what
may be done to adjust such inequities.
AN ERROR IN OVERTIME ASSIGNMENT MUST BE DOCUMENTED BY A HOUSE MEMO INITIATED BY
A STEWARD AND ACKNOWLEDGED BY THE SUPERVISOR. The House Memo must be submitted
to the Supervisor within 72 hours of the erroneous assignment (120 hours in the
case of Continuous Shift Workers) or the right to advance a claim of erroneous
overtime assignment is abandoned. If a repeat violation occurs after a House
Memo has been filed with the Supervisor, the employee will receive pay in lieu
of the work assignment erroneously not assigned. As of January 1 of each year,
the record will be clear as to such House Memos.
Employees transferred into a department or to a new job classification will be
charged with average overtime hours of the employees within the same job
classification doing the same job after they have completed eighty (80) hour
trial period or the probationary period for new employees. Employees newly
assigned to a job classification may not be assigned work overtime unless they
are qualified and unless all employees of the job
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classification have been offered such overtime assignment first. However, new
employees who have not completed the sixty (60) day probationary period may not
be assigned to work overtime until all other employees of the job classification
have been canvassed, after which the option is available to the Company to
assign or not assign such employees.
It is the intent of the parties that this agreement on overtime shall not be
used for the purpose of requiring unnecessary call-ins. It is recognized that
before resorting to call-ins, the Company has the right to fill the job
assignment with an available qualified employee.
It is recognized that, when an employee is temporarily assigned to another job
classification, the overtime charges will be recorded in the job classification
where the employee is permanently assigned.
In no event will a separate agreement relative to overtime distribution made
between employees, stewards, and supervisor be recognized.
Overtime resulting from a call-in will be charged as overtime.
When overtime occurs on a job, the regular departmental employee doing the job
at the time the overtime occurs will first be offered the opportunity to stay
and work the overtime (regardless of his position on the overtime list) on the
job unless the foreman assigns a following shift worker to relieve him. The
above paragraph applies to Maintenance employees, Factory Clerks, and/or other
employees specifically designated elsewhere in this Agreement.
Time and one-half shall be paid for all time in excess of eight (8) hours in any
one day or for over forty (40) hours in any one week, whichever is greater.
Employees will be paid one and one-half times the regular rate for work
performed on Sunday. No employees will be paid both daily and weekly overtime
for the same hours so worked. It is also further understood that there will not
be pyramiding of premium pay in any manner.
It is also understood that the employee's first obligation is overtime
assignments in his own permanent classification. The Company is not obligated to
recanvass employees for overtime assignments in other classifications once the
employee has refused overtime work in his permanent classification.
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SECTION 26.03 PROCEDURE FOR OVERTIME CHARGES.
1. Overtime shall be charged when:
Employee works the overtime.
Employee refuses overtime when it is his turn to work and someone else
works the overtime.
It is his turn to work the overtime and he is off due to illness or
vacation, or absent from work for any other reason.
An employee, other than a continuous shift worker, is scheduled to work
a Saturday and receives premium pay for hours worked. The hours worked
shall be charged as overtime and credited against his overtime record.
An employee canvassed for work on a Holiday will be charged for the
hours worked or refused.
2. Overtime shall not be charged when:
Employee is sent home by the Company due to illness or injury. The
hours he is excused from work on that day only will not be charged.
Union President, Vice President, Second Vice President, Secretary
Treasurer, Chief Steward, Union Time Study Representative and Union
Safety Representative refuse overtime due to scheduled Union-Management
meeting.
Continuous shift workers are scheduled for a 48-hour workweek once
every four weeks. The 8 hours over the 40 hours will not be charged as
overtime worked.
SECTION 26.04 DEVIATIONS. It is recognized that in some departments deviations
from this foregoing procedure are necessary to more equally distribute overtime.
Because of this, the Company and the Union have negotiated the following
departmental overtime deviations:
Finishing Department (including Finishing Tool Crib)
- ----------------------------------------------------
1. Tool Crib Overtime - Finishing Department
-----------------------------------------
a) If Threader and/or Lathe 15 and/or processing nipples is
being performed, an employee will be scheduled for the Tool
Crib.
b) If salvage operations are being performed, no employee will be
scheduled for the Tool Crib.
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2. Lathe 15 Overtime - Finishing Department
----------------------------------------
When overtime is needed to complete setups on Lathe 15, the Lathe 15
Operator on the shift will be assigned to complete the setup unless he
is replaced by an employee from the incoming shift.
When overtime is needed to complete setups on any M & B type lathes in
the Finishing Department, the operator on the job will be assigned to
complete the setup unless replaced by an employee from the incoming
shift.
Weekend overtime will be offered to the senior qualified operator
within the job classification who is low in overtime (regardless of who
performed the job during the week). In the event all employees in the
job classification are working or have refused the overtime, other
qualified employees may be assigned work in the job classification. In
no event will their seniority be integrated with the regular employees
in the job classification on weekend assignments inasmuch as Section
20.06 (first paragraph) applies and assignment by
progression-regression (which is the method used during the week) does
not apply.
It is agreed and understood that all employees covered in this deviation shall
be qualified to perform the job assignments.
Graphitizing Department - Plants 2-5
- ------------------------------------
1. It is the intent of this deviation to equalize overtime within the job
classifications and thus assign overtime to the senior classified
employee who is low in overtime.
2. When overtime occurs on a job at the end of a shift and it is necessary
to hold an employee over to finish a job, such overtime will be
assigned to the senior classified employee working on that shift who is
low in overtime.
3. An employee will not be held over to finish a job if the work is to be
assigned to a following shift worker.
4. When an employee is to be scheduled to work several hours ahead of his
normal shift, the senior classified employee who is low in overtime
will be called first.
Graphitizing Department - Plant 1
- ---------------------------------
1. It is the intent of this deviation to equalize overtime within the job
classifications and thus assign overtime to the senior classified
employee who is low in overtime.
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2. When overtime occurs on a job at the end of a shift and it is necessary
to hold an employee over to finish a job, such overtime will be
assigned to the senior classified employee working on that shift who is
low in overtime.
3. An employee will not be held over to finish a job if the work is to be
assigned to a following shift worker.
4. When an employee is to be scheduled to work several hours ahead of his
normal shift, the senior classified employee who is low in overtime
will be called first.
Control Room
- ------------
1. Twelve (12) hour shifts will be regularly scheduled 11:00 P.M. to 11:00
A.M., and 11:00 A.M. to 11:00 P.M. If in certain circumstances it is
mutually beneficial to both parties to work other hours, they will be
so scheduled.
2. Sixteen (16) hour shifts will be scheduled only when very severe
attendance problems occur.
Factory Clerks
- --------------
When overtime occurs on a job, the regular departmental employee doing the job
at the time the overtime occurs will first be offered the opportunity to stay
and work the overtime, except that among Factory Clerks (assigned to the
Receiving Department) the qualified employee who is low in overtime will be
assigned.
Maintenance Department
- ----------------------
If overtime arises after noon on Friday, the employee who is low at the time the
assignment is made shall be entitled to the overtime to be worked on Friday or
Saturday. The hours which he is scheduled to work overtime shall be added to the
overtime list on that Friday.
Tool Crib Attendant
- -------------------
1. When the Maintenance Tool Crib Attendant is operating on a two-shift
basis and whenever five (5) or more Maintenance Department employees
(not including the Shift Electrician, Mechanic, Mobile Maintenance,
Block Area and Furnace Maintenance employees) are scheduled to work
overtime, a Tool Crib Attendant will be provided.
2. If employees classified as Tool Crib Attendants do not choose to work
the overtime, the Utility Man who is low in overtime will be given the
overtime opportunity. In the event all the Utility Men refuse the
opportunity to work the overtime, the Lubricator classification will be
canvassed starting with the low man in overtime.
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3. In the event overtime for the Tool Crib Attendant is required and after
canvassing the incumbents, it is established that employees classified
as Utility Men and Lubricators do not elect to work the overtime, the
junior Tool Crib Attendant on weekends or the shift Tool Crib
Attendant during the week will be forced to work in accordance with
Article XXVI of the Agreement. In the event there is no one in the
Tool Crib Attendant classification available and employees in the
Utility Man as well as the Lubricator classification elect not to work
the overtime, the junior employee in the Utility Man classification
will be assigned to the overtime.
Area Skilled Craftsmen
- ----------------------
1. Area Skilled Craftsmen (Electricians "A" in Mill-Mix and Plant VI and
Millwrights "A" in Bake, Research, Mill-Mix, Finishing and Plant VI)
will be selected for various departments by:
(a) Canvassing all qualified Skilled Craftsmen, in accordance with
their seniority, for volunteers.
(b) If, after canvassing, the senior qualified Skilled Craftsmen
refuse the job opportunities, then the junior qualified
employees will be assigned to fill the vacancies.
2. While the Area Skilled Craftsman's assignment will be to a specific
department on a regular basis, the Area Skilled Craftsmen may be
assigned other Maintenance work in the interest of the efficient and
safe operation of the plant.
3. Overtime and call-in assignments for Area Skilled Craftsmen will be
based on the following rules:
(a) Area Skilled Craftsmen will have preference to overtime and
call-in assignments within their assigned areas, unless such
overtime occurs on a job at the end of a shift. In such a
case, the employee doing the job at the time the overtime
occurs will first be offered the opportunity to stay and work
the overtime.
(b) When Central Maintenance is performing a job in an area that
has an assigned Area Skilled Craftsman and overtime occurs on
the job at the end of the shift, Central Maintenance personnel
will be canvassed for the overtime assignment. If all Central
Maintenance employees refuse the overtime assignment, the Area
Skilled Craftsman will be canvassed before the junior
employees from Central Maintenance are assigned to work the
overtime.
(c) When overtime is required in an area that has an assigned Area
Skilled Craftsman, the Area Skilled Craftsman will first be
offered the assignment. If he refuses, Central Maintenance
employees will be canvassed to work the overtime assignment.
Should all Central Maintenance employees
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refuse the overtime assignment, the Area Skilled Craftsman
will be required to stay and work the overtime.
(d) When there is no overtime to be performed within the assigned
area of an Area Skilled Craftsman, the Area Skilled Craftsman
may be assigned to other overtime within the plant after the
Central Maintenance crew has been assigned.
4. Area Skilled Craftsmen will be assigned to work holidays in accordance
with the schedule of the area in which they are assigned. The
determination of whether or not the Area Skilled Craftsman will work on
a holiday will be made by the supervision in his assigned area.
5. (a) When the Area Skilled Craftsman is absent from work due to
vacation or extended illness [more than one (1) week] the
selection procedure for Area Skilled Craftsmen, contained in
1(a) and (b) of this Section will be utilized to determine who
will fill in for the permanent Area Skilled Craftsman.
(b) For absences of less than one (1) week, assignments will be
made on a day-to-day basis to cover the absent Area Skilled
Craftsman if it is determined by supervision that an Area
Skilled Craftsman is required.
Side Block Area: Overtime and call-in assignments for the Side Block Area will
be based on the following rules:
1. Normal complement Side Block Area employees will have preference to
overtime and call-in assignments in that area.
2. When overtime is required in the Side Block Area, the normal complement
employees will first be offered the assignment. If they refuse, regular
classified, qualified Furnace Maintenance employees will be canvassed
to work the overtime assignment. Should all regular Furnace Maintenance
employees refuse the overtime assignment, the normal complement Side
Block Area employees will be required to work the overtime.
3. When there is no overtime to be performed within the Side Block Area,
or if the Side Block Area is not operating, the normal complement Side
Block Area employees may be assigned to other overtime within the
Furnace Maintenance Department after the regular Furnace Maintenance
employees have been assigned.
Furnace Repair
- --------------
1. For purposes of applying these Overtime Distribution provisions,
Furnace Repairman "A" and "B" shall be considered as one Furnace
Repairman classification and Furnace Repair Helpers "A" and "B" shall
be considered as one Furnace Repair Helper classification.
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2. Overtime will be offered to the employee on the job regardless of his
classification. However, should the employee on the job not work the
overtime, the Repairman or the Helpers will be canvassed depending on
the nature of the work. In the event it is necessary to force the
employees to work, the number of Furnace Repair group employees needed
will be assigned from the least senior qualified employees in the
Furnace Repair group.
ARTICLE XXVII
JURY DUTY
SECTION 27.01 The Company will pay to an employee reporting for required jury
duty requiring absence from regularly scheduled work according to the following:
1. For each day served, up to ten (10), the Company will pay the employee
the employee's base rate of pay.
2. For each consecutive additional day served, over ten (10), the
difference between the amount received for such jury service and his
lost earnings calculated using the base rate of pay.
The employee shall provide a statement from the court showing time served and
payment received.
ARTICLE XXVIII
VALIDITY
SECTION 28.01 In the event that any applicable federal, state and/or local law
is in conflict with any of the terms or conditions of this Agreement, the
parties hereto agree to meet for the purpose of amending such section or
provision to conform with the applicable law or any judicial interpretation
thereof.
SECTION 28.02 It is recognized and agreed that this Agreement may be amended by
mutual consent, in writing, between the parties hereto. All future amendments,
supplements and departmental agreements reduced to writing and signed by the
parties hereto shall become and will be recognized as part of this Agreement in
the same manner as if incorporated herein and made a part hereto.
ARTICLE XXIX
SCOPE OF AGREEMENT
SECTION 29.01 This Agreement and attachments constitute the entire and the sole
responsibility of the Company to the employees in this bargaining unit. There
are no oral agreements or tacit understanding between the parties hereto.
The parties acknowledge that during the negotiations which led to this Agreement
each had the unqualified and unlimited right to bargain on all areas of
collective bargaining. Therefore, each party relieves the other of any
obligations it might have to bargain with
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the other during the term of this Agreement on matters not specifically included
in this Agreement.
The above language does not preclude the Company and the Union from meeting
during the term of this Agreement for the purpose of making language and other
changes, provided that such changes are mutually agreed upon.
ARTICLE XXX
TERM OF CONTRACT
SECTION 30.01 This Agreement shall remain in full force and effect for a period
of sixty (60) months from JANUARY 25, 1999 UNTIL 12:01 A.M. JANUARY 26, 2004 and
shall automatically renew itself for successive periods of one (1) year
thereafter unless either party gives written notice to the other at least sixty
(60) days prior to the expiration date of intention to modify, amend, alter or
terminate this Agreement.
SECTION 30.02 WHILE THE COMPANY HAS NO CURRENT INTENTION TO SELL OR DISPOSE OF
THE ASSETS OF THE NIAGARA PLANT, IT IS AGREED THAT THE COMPANY WILL ADVISE ANY
PROSPECTIVE PURCHASER OF SAID FACILITY OF THE EXISTENCE OF THIS LABOR CONTRACT.
IN THE EVENT A PURCHASER RETAINED A MAJORITY OF THE EMPLOYEES IN THE BARGAINING
UNIT AT THE NIAGARA PLANT, SUCH PURCHASER SHALL HAVE THE OBLIGATION TO RECOGNIZE
THE UNION AS THE COLLECTIVE BARGAINING REPRESENTATIVE OF THE EMPLOYEES COVERED
BY THIS LABOR CONTRACT AND SHALL NEGOTIATE IN GOOD FAITH WITH THE UNION
CONCERNING THEIR TERMS AND CONDITIONS OF EMPLOYMENT.
56
<PAGE> 57
THE CARBIDE/GRAPHITE GROUP, INC.
--------------------------------
WALTER E. DAMIAN LAWRENCE. A. BASTA
V.P. Human Resources Manager, Human Resources
JOHN P. MONAGO, JR. MILLARD E. WALCK
V.P. & Plant Manager Plant Controller
OIL, CHEMICAL AND ATOMIC
WORKERS INTERNATIONAL UNION
LOCAL 8-23516
-------------
RICHARD SIRIANNI EDGAR TOWNSEND
President, Local 8-23516 Financial Secretary
JERRY WOODRING ROBERT NAREHOOD
Secretary Chief Steward
ROBERT BUTSKI MICHAEL WIENKE
Vice President Time Study Representative
DANIEL GILLIAM TERRY LEWIS
Vice President Safety Representative
JOSEPH SEBASTIAN
International Representative
District 8 OCAWIU
57
<PAGE> 58
EXHIBIT #1A
LABOR GRADE SCHEDULE
NON-INCENTIVE RATES
It is agreed and understood that the wage structure for this plant is based upon
job evaluation.
The present job evaluation plan shall be used in evaluating new jobs and in
re-evaluating existing jobs when changes in the job content occur. In the event
no agreement is reached, it is agreed it shall be handled under the Grievance
Procedure.
Note: All employees who received a red circle rate on the basis of the November
1968 job evaluation program will continue to receive that rate until such time
as the employee leaves the job or the job is abolished.
ANY EMPLOYEE HIRED AFTER THE EFFECTIVE DATE OF THIS AGREEMENT WILL BE PAID $3.00
(THREE DOLLARS) LESS THAN THE APPROPRIATE WAGE RATE IN THIS EXHIBIT #1A AND #1B.
THEY WILL RECEIVE AN INCREASE OF $0.50 (FIFTY CENTS) FOR EACH SIX (6) MONTHS
COMPLETED UNTIL HE ATTAINS THE RATE OF PAY OF THE JOB ASSIGNED. THE $0.50 (FIFTY
CENT) INCREASE WILL BE EFFECTIVE ON THE MONDAY FOLLOWING THE COMPLETION OF THE
SIX (6) MONTH PERIOD. MAINTENANCE EMPLOYEES IN LABOR GRADE 1 WILL BE CONSIDERED
EXEMPT FROM THIS SCHEDULE.
58
<PAGE> 59
THE FOLLOWING JOBS MARKED WITH * WILL NO LONGER BE CONSIDERED EXEMPT FROM BUMP
UNDER ARTICLE XX, SECTION 20.10 OF THIS AGREEMENT.
<TABLE>
<CAPTION>
EFFECTIVE JANUARY 25, 1999 JANUARY 24, 2000
- --------- ---------------------------- ---------------------------
TRAINING CLASSIFIED TRAINING CLASSIFIED
RATE RATE RATE RATE
---- ---- ---- ----
<S> <C> <C> <C> <C>
LABOR GRADE 1
Electrician "A" 18.42 18.87
Millwright "A" 18.42 18.87
Welder 18.42 18.87
Industrial Truck Mechanic 18.42 18.87
Master Tool Grinder 18.11 18.26 18.56 18.71
LABOR GRADE 2
Control Operator 16.42 16.64 16.87 17.09
Furnace Repairman "A" 16.63 17.08
LABOR GRADE 3
Bake Firing Operator "A" 16.15 16.60
Utility Furnace Repairman 16.15 16.60
LABOR GRADE 4
Furnace Repairman "B" 15.85 16.30
LABOR GRADE 5
Furnace Patrolman "A" 15.69 16.14
LABOR GRADE 6
Lubrication Mechanic 15.59 16.04
Bake General Utility Operator * 15.49 15.59 15.94 16.04
Pitch Impregnator Operator 15.59 16.04
Special Product Processor "A" 15.59 16.04
Final Inspector 15.59 16.04
Salvage Inspector 15.59 16.04
LABOR GRADE 7
Tool Grinder 15.37 15.49 15.82 15.94
MM&E Utility Operator * 15.39 15.49 15.84 15.94
Utility Person (Maintenance) 15.49 15.94
</TABLE>
59
<PAGE> 60
<TABLE>
<CAPTION>
JANUARY 22, 2001 JANUARY 21, 2002 JANUARY 20, 2003
------------------------------- ------------------------------ --------------------------
TRAINING CLASSIFIED TRAINING CLASSIFIED TRAINING CLASSIFIED
RATE RATE RATE RATE RATE RATE
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
19.32 19.77 20.17
19.32 19.77 20.17
19.32 19.77 20.17
19.32 19.77 20.17
19.01 19.16 19.46 19.61 19.86 20.01
17.32 17.54 17.77 17.99 18.17 18.39
17.53 17.98 18.38
17.05 17.50 17.90
17.05 17.50 17.90
16.75 17.20 17.60
16.59 17.04 17.44
16.49 16.94 17.37
16.39 16.49 16.84 16.94 17.24 17.37
16.49 16.94 17.37
16.49 16.94 17.37
16.49 16.94 17.37
16.49 16.94 17.37
16.27 16.39 16.72 16.84 17.12 17.24
16.27 16.39 16.72 16.84 17.12 17.24
16.39 16.84 17.24
</TABLE>
60
<PAGE> 61
<TABLE>
<CAPTION>
EFFECTIVE JANUARY 25, 1999 JANUARY 24, 2000
- --------- --------------------------- --------------------------
TRAINING CLASSIFIED TRAINING CLASSIFIED
RATE RATE RATE RATE
---- ---- ---- ----
<S> <C> <C> <C> <C>
LABOR GRADE 8
Forklift Operator "A" * 15.37 15.82
(Inside & Outside Stock)
Furnace Repairman Helper "A" 15.37 15.82
Payloader Operator "A" * 15.29 15.37 15.74 15.82
Product Processor * 15.29 15.37 15.74 15.82
Salvage Operator 15.29 15.37 15.74 15.82
Tool Crib Attendant (Finish.) 15.37 15.82
Tool Crib Attendant (Maint.) * 15.37 15.82
Special Product Processor "B" 15.29 15.37 15.74 15.82
Utility Operator (Plant I) 15.37 15.82
LABOR GRADE 9
Waste Materials Handler 15.29 15.37 15.74 15.82
Bake Firing Operator "B" 15.19 15.29 15.64 15.74
Crane Operator "B" 15.19 15.29 15.64 15.74
Furnace Patrolman "B" 15.19 15.29 15.64 15.74
Pitch Impregnation Helper 15.19 15.29 15.64 15.74
LABOR GRADE 10
Furnace Repairman Helper "B" 15.19 15.64
Payloader Operator "B" 15.13 15.19 15.58 15.64
Bake Firing Operator "C" 15.13 15.19 15.58 15.64
Furnace Material Handler 15.13 15.19 15.58 15.64
Forklift Operator (Bulk Stores) 15.13 15.19 15.58 15.64
LABOR GRADE 11
Forklift Operator "B" 15.07 15.13 15.52 15.58
(Inside & Outside Stock)
Truck Driver 15.07 15.13 15.52 15.58
LABOR GRADE 12
Unloader Cars (Bulk Stores) 15.07 15.13 15.52 15.58
Office Janitor & Plant 15.07 15.52
Street Sweeper 15.07 15.52
LABOR GRADE 13
General Labor (All Depts.) 15.03 15.48
Material Handler-Janitor (Finishing)
15.03 15.48
</TABLE>
61
<PAGE> 62
<TABLE>
<CAPTION>
JANUARY 22, 2001 JANUARY 21, 2002 JANUARY 20, 2003
-------------------------------- ----------------------------- --------------------------
TRAINING CLASSIFIED TRAINING CLASSIFIED TRAINING CLASSIFIED
RATE RATE RATE RATE RATE RATE
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
16.27 16.72 17.12
16.27 16.72 17.12
16.19 16.27 16.64 16.72 17.04 17.12
16.19 16.27 16.64 16.72 17.04 17.12
16.19 16.27 16.64 16.72 17.04 17.12
16.27 16.72 17.12
16.27 16.72 17.12
16.19 16.27 16.64 16.72 17.04 17.12
16.19 16.27 16.64 16.72 17.04 17.12
16.19 16.27 16.64 16.72 17.04 17.12
16.09 16.19 16.54 16.64 16.94 17.04
16.09 16.19 16.54 16.64 16.94 17.04
16.09 16.19 16.54 16.64 16.94 17.04
16.09 16.19 16.54 16.64 16.94 17.04
16.09 16.54 16.94
16.03 16.09 16.48 16.54 16.88 16.94
16.03 16.09 16.48 16.54 16.88 16.94
16.03 16.09 16.48 16.54 16.88 16.94
16.03 16.09 16.48 16.54 16.88 16.94
15.97 16.03 16.42 16.48 16.82 16.88
15.97 16.03 16.42 16.48 16.82 16.88
15.97 16.03 16.38 16.48 16.78 16.88
15.97 16.42 16.82
15.97 16.42 16.82
15.93 16.38 16.78
15.93 16.38 16.78
</TABLE>
62
<PAGE> 63
<TABLE>
<CAPTION>
EFFECTIVE JANUARY 25, 1999
- --------- ---------------------------
6 MO 12 MO 18 MO
---- ----- -----
<S> <C> <C> <C> <C>
Factory Clerks ** 15.49 15.58 15.63 15.69
<CAPTION>
EFFECTIVE JANUARY 24, 2000
- --------- ---------------------------
6 MO 12 MO 18 MO
---- ----- -----
<S> <C> <C> <C> <C>
Factory Clerks ** 15.94 16.03 16.08 16.14
EFFECTIVE JANUARY 22, 2001
- --------- ---------------------------
6 MO 12 MO 18 MO
---- ----- -----
<S> <C> <C> <C> <C>
Factory Clerks ** 16.39 16.48 16.53 16.59
</TABLE>
** (Not evaluated for Pay Rates)
63
<PAGE> 64
<TABLE>
<CAPTION>
EFFECTIVE JANUARY 21, 2002
- --------- ---------------------------
6 MO 12 MO 18 MO
---- ----- -----
<S> <C> <C> <C> <C>
Factory Clerks ** 16.84 16.93 16.98 17.04
<CAPTION>
EFFECTIVE JANUARY 20, 2003
- --------- ---------------------------
6 MO 12 MO 18 MO
---- ----- -----
<S> <C> <C> <C> <C>
Factory Clerks ** 17.24 17.33 17.38 17.44
</TABLE>
** (Not evaluated for Pay Rates)
64
<PAGE> 65
EXHIBIT 1B
LABOR GRADE SCHEDULE INCENTIVE RATES
<TABLE>
<CAPTION>
EFFECTIVE JANUARY 25, 1999 JANUARY 24, 2000
- --------- ---------------------------- -------------------------
TRAINING CLASSIFIED TRAINING CLASSIFIED
RATE RATE RATE RATE
---- ---- ---- ----
<S> <C> <C> <C> <C>
LABOR GRADE 1 16.27 16.72
LABOR GRADE 2 15.98 16.43
LABOR GRADE 3 15.77 16.22
LABOR GRADE 4 15.47 15.92
LABOR GRADE 5 15.31 15.76
LABOR GRADE 6
Lathe 15 Operator "A" 15.21 15.66
Ring Fce. Processor-NC Crane 15.21 15.66
LABOR GRADE 7
Lathe 15 Operator "B" 14.99 15.10 15.44 15.55
M&B Threader 14.99 15.10 15.44 15.55
Niigata Threader 14.99 15.10 15.44 15.55
Dow Threader 14.99 15.10 15.44 15.55
Shipper "A" 14.99 15.10 15.44 15.55
LABOR GRADE 8
Crane Operator "A" 14.99 15.44
Threader 14.91 14.99 15.36 15.44
Utility Operator (Pl. VI) * 14.91 14.99 15.36 15.44
</TABLE>
65
<PAGE> 66
EXHIBIT 1B
LABOR GRADE SCHEDULE INCENTIVE RATES
<TABLE>
<CAPTION>
JANUARY 22, 2001 JANUARY 21, 2002 JANUARY 20, 2003
------------------------------ ---------------------------- -----------------------------
TRAINING CLASSIFIED TRAINING CLASSIFIED TRAINING CLASSIFIED
RATE RATE RATE RATE RATE RATE
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
17.17 17.62 18.02
16.88 17.33 17.73
16.67 17.12 17.52
16.37 16.82 17.22
16.21 16.66 17.06
16.11 16.56 16.96
16.11 16.56 16.96
15.89 16.00 16.34 16.45 16.74 16.85
15.89 16.00 16.34 16.45 16.74 16.85
15.89 16.00 16.34 16.45 16.74 16.85
15.89 16.00 16.34 16.45 16.74 16.85
15.89 16.00 16.34 16.45 16.74 16.85
15.89 16.34 16.74
15.81 15.89 16.26 16.34 16.66 16.74
15.81 15.89 16.26 16.34 16.66 16.74
</TABLE>
66
<PAGE> 67
EXHIBIT 1B
LABOR GRADE SCHEDULE INCENTIVE RATES
<TABLE>
<CAPTION>
EFFECTIVE JANUARY 25, 1999 JANUARY 24, 2000
- --------- -------------------------- ---------------------------
TRAINING CLASSIFIED TRAINING CLASSIFIED
RATE RATE RATE RATE
---- ---- ---- ----
<S> <C> <C> <C> <C>
LABOR GRADE 9
Crane Operator "B" 14.80 14.91 15.25 15.36
Loader & Unloader (Bake) 14.80 14.91 15.25 15.36
Ring Furnace Processor 14.80 14.91 15.25 15.36
Machine Operator (Finishing) 14.80 14.91 15.25 15.36
Elec. & Nip. Assembler 14.80 14.91 15.25 15.36
OD Operator 14.80 14.91 15.25 15.36
LABOR GRADE 10
Furnace Processor 14.74 14.80 15.19 15.25
Electrode Bundler Lathe 15 14.74 14.80 15.19 15.25
Utility Helper (Pl. VI) 14.74 14.80 15.19 15.25
LABOR GRADE 11
LABOR GRADE 12
Bagging Dust (Finishing) 14.65 14.69 15.10 15.14
Miscellaneous Shipper 14.65 14.69 15.10 15.14
Bundler (Outside Stock) 14.65 14.69 15.10 15.14
LABOR GRADE 13 14.65 15.10
</TABLE>
67
<PAGE> 68
EXHIBIT 1B
LABOR GRADE SCHEDULE INCENTIVE RATES
<TABLE>
<CAPTION>
JANUARY 22, 2001 JANUARY 21, 2002 JANUARY 20, 2003
------------------------------ ------------------------------ ----------------------------
TRAINING CLASSIFIED TRAINING CLASSIFIED TRAINING CLASSIFIED
RATE RATE RATE RATE RATE RATE
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
15.70 15.81 16.15 16.26 16.55 16.66
15.70 15.81 16.15 16.26 16.55 16.66
15.70 15.81 16.15 16.26 16.55 16.66
15.70 15.81 16.15 16.26 16.55 16.66
15.70 15.81 16.15 16.26 16.55 16.66
15.70 15.81 16.15 16.26 16.55 16.66
15.64 15.70 16.09 16.15 16.49 16.55
15.64 15.70 16.09 16.15 16.49 16.55
15.64 15.70 16.09 16.15 16.49 16.55
15.55 15.59 16.00 16.04 16.40 16.44
15.55 15.59 16.00 16.04 16.40 16.44
15.55 15.59 16.00 16.04 16.40 16.44
15.55 16.00 16.40
</TABLE>
68
<PAGE> 69
EXHIBIT 2
APPRENTICE RATES
<TABLE>
<CAPTION>
EFFECTIVE EFFECTIVE EFFECTIVE EFFECTIVE EFFECTIVE
1/25/99 1/24/00 1/22/01 1/21/02 1/20/03
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
STARTING
RATE 16.67 17.12 17.57 18.02 18.42
06TH MONTH 16.89 17.34 17.79 18.24 18.64
12TH MONTH 17.11 17.56 18.01 18.46 18.86
18TH MONTH 17.33 17.78 18.23 18.68 19.08
24TH MONTH 17.55 18.00 18.45 18.90 19.30
30TH MONTH 17.77 18.22 18.67 19.12 19.52
36TH MONTH 17.99 18.44 18.89 19.34 19.74
42ND MONTH 18.21 18.66 19.11 19.56 19.96
48TH MONTH 18.42 18.87 19.32 19.77 20.17
("A" RATE)
</TABLE>
69
<PAGE> 70
EXHIBIT 3
JOB CLASSIFICATION GROUPS
GROUP I
MAINTENANCE
Apprentice Electrician
Apprentice Millwright
Apprentice Welder
Electrician "A"
Furnace Repairman "A"
Furnace Repairman "B"
Furnace Repairman Helper "A"
Furnace Repairman Helper "B"
Lubrication Mechanic
Maintenance Utility Man
Millwright "A"
Tool Crib Attendant (Maintenance)
Utility Furnace Repairman
Welder 1st Class
GROUP II
FINISHING
Bagger-Dust (Finishing)
Electrode Bundler Lathe 15
Machine Operator
Lathe 15 Operator "A"
Lathe 15 Operator "B"
Master Tool Grinder
Material Handler-Janitor (Finishing)
M&B Threader
Salvage Operator
Threader
Tool Crib Attendant (Finishing)
Tool Grinder
Dow Threader
Nigata-Threader
O.D. Operator
Final Inspector
Salvage Inspector
Electrode & Nipple (Preset)
70
<PAGE> 71
GROUP III
BULK STORES
Car Unloader (Bulk Stores)
Forklift Operator (Bulk Stores)
Payloader Operator "A"
Payloader Operator "B"
Street Sweeper
Truck Driver
Waste Material Handler
GROUP IV
CONTROL ROOM
Control Operator
Furnace Patrol "A"
Furnace Patrol "B"
GROUP V
PITCH IMPREGNATION
P.I. Operator
P.I. Helper
GROUP VI
BAKE
Bake Firing Operator "A"
Bake Firing Operator "B"
Bake Firing Operator "C"
Bake General Utility Operator
Crane Operator "A"
Crane Operator "B"
Janitor (Bake)
Loader & Unloader (Bake)
GROUP VII*
GRAPH
Crane Operator "A"
Crane Operator "B"
Furnace Material Handler
Furnace Processor
Janitor (Graph)
Product Processor
71
<PAGE> 72
GROUP VIII
MILL MIX
Mill Mix & Extrusion Utility Operator
Janitor (Mill Mix)
GROUP IX*
STOCK
Bundler (Outside Stock)
Forklift Operator "A" (Inside Stock)
Forklift Operator "B" (Inside Stock)
Forklift Operator "A" (Outside Stock)
Forklift Operator "B" (Outside Stock)
GROUP X
SHIPPING
Forklift Operator "A" (Shipping)
Shipper "A"
Shipper "B"
Miscellaneous Shipper
GROUP XI
PLANT I
Special Product Processor "A"
Special Product Processor "B"
Utility Operator (Plant 1)
Crane Operator "A"
Crane Operator "B"
GROUP XII
JANITOR
Janitor
GROUP XIII
CLERKS
Clerks
GROUP XIV
PLANT VI
Utility Helper (Plant 6)
Utility Operator (Plant 6)
Janitor
72
<PAGE> 73
* These Job Classification Groups are to be considered as smaller sub-groups
for the purpose of bidding. In the case of the sub-groups set forth below,
the selection of bidders shall be one (1) from the sub-group, or if there
is no successful bidder from the sub-group, two (2) from the Job
Classification Group (department), or if there is no successful bidder from
the Job Classification Group, three (3) from the plant. The sub-groups are:
Stock
-----
Inside Stock
Outside Stock
73
<PAGE> 1
Exhibit 10.32
THE CARBIDE/GRAPHITE GROUP, INC.
1998 STOCK-BASED INCENTIVE COMPENSATION PLAN
TABLE OF CONTENTS
Page
1. Purpose of the Plan.......................................................1
2. Definitions...............................................................1
3. Eligibility...............................................................5
4. Administration of Plan....................................................5
4.1 Membership in Committee.........................................5
4.2 Administration by Committee.....................................5
4.3 Grants..........................................................5
4.4 Terms of Awards.................................................6
4.5 Administration and Interpretation...............................6
4.6 Compensation; Expenses..........................................6
4.7 Consultants.....................................................6
4.8 Liability.......................................................6
4.9 Meetings........................................................7
5. Shares of Stock Subject to the Plan.......................................7
5.1 Shares Available for Awards.....................................7
5.2 No Reduction in Shares..........................................7
6. Options...................................................................7
6.1 Option Agreement................................................7
6.2 Option Price....................................................7
6.3 Term of Option..................................................8
6.4 Incentive Stock Option..........................................8
6.5 Restriction on Transferability..................................8
6.6 Payment of Option Price.........................................8
6.7 Termination by Death............................................9
6.8 Termination by Reason of Retirement or Disability...............9
6.9 Other Termination...............................................9
6.10 Cancellation and Regrant.......................................9
7. Stock Appreciation Rights................................................10
-i-
<PAGE> 2
7.1 Grant of SARs..................................................10
7.2 Exercise Price.................................................10
7.3 Payment upon Exercise..........................................10
7.4 Automatic Exercise.............................................11
7.5 Limited SARs...................................................11
7.6 Terms and Conditions...........................................11
7.7 Cancellation and Regrant.......................................11
8. Adjustments Upon Changes in Capitalization...............................11
9. Effective Date, Termination and Amendment................................12
10. Execution and Delivery of Stockholders Agreement........................12
11. Non-Assignability.......................................................12
12. Performance-Based Compensation..........................................13
13. General Provisions......................................................13
13.1 No Right to Employment.......................................13
13.2 Transfer of Employment.......................................13
13.3 Taxes........................................................13
13.4 Grants to Employees Outside the United States................13
13.5 Governing Law................................................14
13.6 Compliance with Law..........................................14
13.7 Amending of Awards...........................................14
13.8 No Limit on Compensation.....................................13
13.9 No Shareholder Rights........................................14
13.10 No Fractional Shares.........................................14
13.11 Headings.....................................................14
14. Change in Control.......................................................14
-ii-
<PAGE> 3
THE CARBIDE/GRAPHITE GROUP, INC.
1998 STOCK-BASED INCENTIVE COMPENSATION PLAN
(As of September 16, 1998)
1. Purpose of the Plan
The purpose of the Plan is to assist the Company, and its Subsidiaries and
Affiliates, in attracting and retaining valued employees by offering them a
greater stake in the Company's success and a closer identity with it, and to
encourage ownership of the Company's stock by such employees.
2. Definitions
2.1. "Affiliate" means any entity other than a Subsidiary in which the
Company has a substantial direct or indirect equity interest, as determined
by the Board. Notwithstanding the foregoing, "Affiliate" shall be deemed to
include Seadrift, L.P.
2.2. "Award" means an award of Options or SARs or any combination
thereof under the Plan.
2.3. "Award Share" means any share of Common Stock purchased upon the
exercise of an Option or SAR.
2.4. "Board" means the Board of Directors of the Company.
2.5. "Cause" means conduct on the part of a Holder that involves (i)
misappropriation of funds, (ii) willful and material misrepresentation to
the directors and officers of Employer, (iii) willful failure to perform
the Holder's duties, (iv) gross negligence in the performance of Holder's
duties, (v) serious misconduct that is injurious to the Company, (vi)
habitual insobriety, (vii) substance abuse, or (viii) the Holder's
conviction of or a plea of guilty or nolo contendere to a felony or other
crime involving moral turpitude.
2.6. "Change in Control" means a change in control of the Company of a
nature that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the 1934 Act, whether or
not the Company is then subject to such reporting requirement; provided
that without limitation, a Change in Control shall be deemed to have
occurred if (i) any individual, partnership, firm corporation, association,
trust unincorporated organization or other entity, or any syndicate or
group deemed to be a person under Section 14(d)(2) of the 1934 Act), is or
becomes the "beneficial owner" (as defined in Rule 13d-3 of the General
Rules and Regulations under the 1934 Act), directly or indirectly, of
securities of the Company
<PAGE> 4
representing twenty percent (20%) or more of the combined voting
power of the Company's then outstanding securities entitled to vote in the
election of directors of the Company; or (ii) during any period of two (2)
consecutive years (not including any period prior to the execution of this
Plan), individuals who at the beginning of such period constitute the Board
and any now directors, whose election by the Board or nomination for
election by the Company's stockholders was approved by a vote of a majority
of the directors then still in office who either were directors at the
beginning of the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute a majority
thereof.
2.7. "Code" means the Internal Revenue Code of 1986, as amended.
2.8. "Common Stock" means the common stock of the Company, par value
$.01 a share, or such other class or kind of shares or other securities
resulting from the application of Section 8.
2.9. "Company" means The Carbide/Graphite Group, Inc., a Delaware
corporation, or any successor corporation.
2.10. "Committee" means the committee designated by the Board to
administer the Plan under Section 4. The Committee shall have at least two
members, each of whom shall be both a Non-Employee Director and an Outside
Director.
2.11. "Disability" means termination of employment with the Company or
any of its Subsidiaries or Affiliates as a result of an Employee's
inability to perform substantially his or her duties and responsibilities
to the Company or any of its Subsidiaries or Affiliates by reason of a
physical or mental disability or infirmity (i) for a continuous period of
six months or (ii) at such earlier time as such Employee submits medical
evidence satisfactory to the Committee that such Employee has a physical or
mental disability or infirmity that will likely prevent such Employee from
substantially performing his or her duties and responsibilities for six
months or longer. The date of such Disability shall be the earlier of the
last day of such six-month period or the day on which such Employee submits
such evidence. Solely for purposes of Incentive Stock Options, however,
"Disability" means "permanent and total disability" as defined in section
22(e)(3) of the Code.
2.12. "Employee" means an officer or other key employee, consultant or
advisor of the Company, a Subsidiary or an Affiliate, including a director
who is such an employee, consultant or advisor. Solely for purposes of
Incentive Stock Options, however, "Employee" means an employee within the
meaning of section 3401(c) of the Code.
- 2-
<PAGE> 5
2.13. "Fair Market Value" means, on any given date,
(i) the mean between the highest and lowest prices of actual
sales of shares of Common Stock on the principal national securities
exchange on which the Common Stock is listed on such date or, if
Common Stock was not traded on such date or, if no sale was made on
such principal exchange, on the next preceding day on which the Common
Stock was traded; or
(ii) if the Common Stock is not then listed on an exchange but is
quoted on NASDAQ or a similar quotation system, the mean between the
Closing bid and asked prices per share for the Common Stock as quoted
on NASDAQ or similar quotation system on such date; or
(iii) if the Common Stock is not listed on a principal national
securities exchange, the fair market value as determined in good faith
by the Committee.
2.14. "Freestanding SAR" means an SAR awarded by the Committee under
Section 7 that is not related to an Option.
2.15. "Holder" means an Employee to whom an Award is made.
2.16. "Incentive Stock Option" means a stock option intended to meet
the requirements of an incentive stock option, as defined in section 422 of
the Code, and designated as such by the Committee.
2.17. "Limited SAR" means an SAR awarded by the Committee under
Section 7 that is exercisable only in the event of a Change in Control.
2.18. "1934 Act" means the Securities Exchange Act of 1934, as
amended.
2.19. "Non-Employee Director" means a director who:
(i) is not currently an officer or employee of the Company or any
parent, Affiliate, or Subsidiary thereof);
(ii) does not receive compensation, either directly or
indirectly, from the Company or any parent, Affiliate or Subsidiary
thereof for services rendered as a consultant or in any capacity other
than as a director, except for an amount that does not exceed the
dollar amount for which disclosure would be required pursuant to Rule
404(a) of Regulation S-K promulgated by the Securities and Exchange
Commission;
- 3 -
<PAGE> 6
(iii) does not possess an interest in any other transaction for
which disclosure would be required pursuant to Rule 404(a) of
Regulation S-K;
(iv) is not engaged in a business relationship for which
disclosure would be required pursuant to Rule 404(b) of Regulation
S-K; and
(v) otherwise meets the definition of a "Non-Employee Director"
under Rule 16b-3 promulgated by the Securities and Exchange Commission
or any successor definition adopted by the Securities and Exchange
Commission.
2.20. "Non-Qualified Option" means a stock option not intended to be
an Incentive Stock Option, and designated as a Non-Qualified Option.
2.21. "Option" means the right, granted from time to time under the
Plan, to purchase Common Stock for a specified period of time at a stated
price. An Option may be an Incentive Stock Option or a Non-Qualified
Option.
2.22. "Outside Director" means a member of the Board who:
(i) is not a current employee of the Company or any parent,
Affiliate, or Subsidiary;
(ii) is not a former employee of the Company, its Subsidiaries or
Affiliates who receives during the year compensation for prior
services with the Company or any parent, Affiliate or Subsidiary
(other than benefits under a tax-qualified retirement plan);
(iii) has not been an officer of the Company or any parent,
Affiliate or Subsidiary; and
(iv) does not receive any remuneration from the Company or any
parent, Affiliate or Subsidiary (either directly or indirectly) in any
capacity other than as Director. This definition of "Outside Director"
shall be interpreted and applied in a manner consistent with the
requirements of Treasury Regulation Section 1.162-27(e)(3).
2.23. "Plan" means The Carbide/Graphite Group, Inc. 1998 Stock-Based
Incentive Compensation Plan herein set forth, as amended from time to time.
2.24. "Retirement" means retirement from the active employment of the
Company, a Subsidiary or an Affiliate pursuant to the relevant provisions
of the applicable retirement plan of such entity or as otherwise determined
by the Board.
- 4 -
<PAGE> 7
2.25. "SAR" means the right to receive, in cash or in Common Stock, as
determined by the Committee, the increase in the Fair Market Value of the
Common Stock underlying the SAR from the date of grant to the date of
exercise, awarded by the Committee under Section 7.
2.26. "Subsidiary" means any corporation (other than the Company) in
an unbroken chain of corporation beginning with the Company (or any
subsequent parent of the Company) if each of the corporations other than
the last corporation in the unbroken chain owns stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.
2.27. "Tandem SAR" means an SAR awarded by the Committee under Section
7 in tandem with all or a portion of a related Option.
2.28. "Ten Percent Stockholder" means a person who on any given date
owns, either directly or indirectly (taking into account the attribution
rules contained in section 424(d) of the Code), stock possessing more than
ten percent (10%) of the total combined voting power of all classes of
stock of the Company or a Subsidiary.
3. Eligibility
Any Employee is eligible to receive an Award, except that any Employee
employed by an Affiliate shall not be eligible to receive an Incentive
Stock Option.
4. Administration of Plan
4.1. Membership in Committee. Members of the Committee shall be
appointed by and hold office at the pleasure of the Board. Committee
members may resign at any time by delivering written notice to the Board.
Vacancies in the Committee may be filled by the Board.
4.2. Administration by Committee. The Plan shall be administered by
the Committee.
4.3. Grants. The Committee shall have full power to interpret and
administer the Plan, and full authority to act in selecting the Employees
to whom Awards shall be granted, in determining the times at which such
Awards may be granted, in determining the time and manner in which Options
may be exercised, in determining the type and amount of Awards to be
granted to each such Employee, and in determining the terms and conditions
of Awards granted under the Plan and the terms of agreements that shall be
entered into with Holders. Each grant of an Award shall be approved by the
Committee as required by Note 3 to Rule 16b-3 under the 1934 Act.
- 5 -
<PAGE> 8
4.4. Terms of Awards. Such powers shall include, but not be limited
to, the power to determine whether and under what circumstances an Option
may be exchanged for cash, Common Stock, or some combination thereof; to
determine whether, to what extent and under what circumstances an Award is
made and operates on a tandem basis with other Awards made hereunder; to
determine whether, to what extent and under what circumstances Common Stock
or cash payable with respect to an Award shall be deferred either
automatically or at the election of the Holder (including the power to add
deemed earnings to any such deferral); and to condition an Award upon the
attainment of specified performance goals.
4.5. Administration and Interpretation. The Committee shall have the
power to adopt regulations for carrying out the Plan and to make changes in
such regulations as it shall, from time to time, deem advisable. The
Committee shall have the power unilaterally and without approval of any
Holder to amend an existing Award in order to carry out the purposes of the
Plan, so long as such an amendment does not take away any benefit granted
to the Holder by the Award and so long as the amended Award comports with
the terms of the Plan. Any amendment adverse to the Holder shall require
the written consent of the Holder, unless such amendment is necessary, as
determined by the Committee, to comply with any federal or state securities
law or regulation. The Committee shall have the full and final authority in
its sole discretion to interpret the provisions of the Plan and to decide
all questions of fact arising in the application of the Plan's provisions,
and to make all determinations necessary or advisable for the
administration of the Plan. Any interpretation by the Committee of the
terms and provisions of the Plan and the administration thereof, and all
action taken by the Committee, shall be final and binding on Employees and
Holders.
4.6. Compensation; Expenses. Members of the Committee shall receive
such compensation for their services as may be determined by the Board. All
expenses and liabilities which members of the committee incur in connection
with the administration of the Plan shall be paid by the Company.
4.7. Consultants. The Committee may, with the approval of the Board,
employ attorneys, consultants, accountants and other service providers. The
Committee, the Board, the Company and the Company's officers shall be
entitled to rely upon the advice and opinions of any such person.
4.8. Liability. No member of the Committee or the Board shall be
personally liable for any action, determination or interpretation made with
respect to the Plan and all members of the Committee shall be fully
protected by the Company in respect of any such action, determination or
interpretation in the manner provided in the Company's bylaws.
- 6-
<PAGE> 9
4.9. Meetings. The Committee shall maintain a written record of its
proceedings. A majority of the committee shall constitute a quorum, and the
acts of a majority of the members present at any meeting at which a quorum
is present, or acts unanimously approved in writing, shall be the acts of
the committee.
5. Shares of Stock Subject to the Plan
5.1. Shares Available for Awards. Subject to adjustment as provided in
Section 8, the total number of shares of Common Stock available for Awards
under the Plan shall be 450,000 shares; provided, however, that no Employee
may be granted Incentive Stock Options first exercisable in any one
calendar year for shares of Common Stock having an aggregate Fair Market
Value in excess of $100,000.
5.2. No Reduction in Shares. Any shares issued by the Company through
the assumption or substitution of outstanding grants from an acquired
company shall not reduce the total number of shares available for Awards
under the Plan. The grant of any Awards payable in cash also shall not
reduce the total number of shares available for Awards under the Plan. Any
shares issued hereunder may consist, in whole or in part, of authorized and
unissued shares or treasury shares. If any shares subject to any Award
granted hereunder are forfeited or such Award otherwise terminates without
the issuance of such shares or the payment of other consideration in lieu
of such shares, the shares subject to such Award, to the extent of any such
forfeiture or termination, shall again be available for Awards under the
Plan.
6. Options
The grant of Options shall be subject to the following terms and
conditions:
6.1. Option Agreement. Any Option granted under the Plan shall be
evidenced by a written Option Agreement executed by the Company and the
Participant, which agreement shall conform to the requirements of the Plan
and may contain such other provisions not inconsistent with the terms of
the Plan as the Committee shall deem advisable. Each Option Agreement shall
state whether the Option is an Incentive Stock Option or a Non-Qualified
Stock Option.
6.2. Option Price. The price at which Common Stock may be purchased
upon exercise of an Option shall be determined by the Committee but shall
be not less than the Fair Market Value of such shares on the date of grant.
In the case of any Incentive Stock Option granted to a Ten Percent
Stockholder, the option price per share shall not be less than one hundred
ten percent (110%) of the Fair Market Value of such share on the date of
grant. Notwithstanding the foregoing, the Committee shall have the
authority to reprice the option at any time pursuant to section 6.10.
- 7 -
<PAGE> 10
6.3. Term of Option. The Option Agreements shall specify when an
Option may be exercisable and the terms and conditions applicable thereto.
The term of an Option shall in no event be greater than ten (10) years
(five (5) years in the case of an Incentive Stock Option granted to a Ten
Percent Stockholder). Options granted under the Plan may be subject to a
vesting schedule set forth in the applicable Option Agreement. The
restrictions and conditions with respect to the time and method of vesting
of Options shall be as prescribed by the Committee except that no Option
may be exercisable before six (6) months from the date of grant.
6.4. Incentive Stock Option. Each provision of the Plan and each
Option agreement relating to an Incentive Stock Option shall be construed
so that each Incentive Stock Option shall be an incentive stock option as
defined in Section 422 of the Code, and any provisions thereof that cannot
be so construed shall be disregarded. In no event may a Holder be granted
Incentive Stock Options that do not comply with such grant and vesting
limitations as may be prescribed by section 422(b) of the Code.
6.5. Restriction on Transferability. No Incentive Stock Option shall
be transferable otherwise than by will or the laws of descent and
distribution and, during the lifetime of the Holder, shall be exercisable
only by the Holder. Upon the death of a Holder, the person to whom the
rights have passed by will or by the laws of descent and distribution may
exercise an Option only in accordance with this Section 6.
6.6. Payment of Option Price. The Committee shall establish the time
and the manner in which an Option may be exercised. The option price of the
shares of Common Stock received upon the exercise of an Option shall be
paid in full in cash at the time of exercise or, with the consent of the
Committee, in whole or in part in shares of Common Stock valued at Fair
Market Value on the date of exercise. With the consent of the Committee,
payment upon the exercise of a Non-Qualified Stock Option may be made in
whole or in part by the delivery of additional, unexercised Non-Qualified
Stock Options (based on the difference between the Fair Market Value of the
Common Stock for which they are exercisable and the exercise price of such
additional Non-Qualified Stock Options). With the consent of the Committee,
the option price may also be paid in full by the delivery of a properly
executed exercise notice, together with irrevocable instructions to a
Company-designated broker to promptly deliver to the company the amount of
sale or loan proceeds required to pay the option price.
6.7. Termination by Death. If a Holder's employment by the Company or
Subsidiary or Affiliate terminates by reason of death, any Option held by
such Holder may thereafter be exercised, to the extent such Option was
exercisable at the time of such Holder's death or on such accelerated basis
as the Committee may determine at or after the grant, or may thereafter
become exercisable by the legal representative of the Holder or by any
person to whom the rights have passed by will or by the laws of descent and
- 8 -
<PAGE> 11
distribution, for a period of twelve (12) months from the date of such
death or until the expiration of the stated term of such Option, whichever
period is shorter.
6.8. Termination by Reason of Retirement or Disability. If a Holder's
employment by the Company or Subsidiary or Affiliate terminates by reason
of Disability or Retirement, any Option held by such Holder may thereafter
be exercised by the Holder (or, where appropriate, the Holder's legal
representative), to the extent it was exercisable at the time of
termination or on such accelerated basis as the Committee may determine at
or after grant, for a period of eighteen (18) months from the date of such
termination of employment or until the expiration of the stated term of
such Option, whichever period is shorter; provided, however, that if the
Holder dies within such eighteen (18) month period, any unexercised Option
held by such Holder shall thereafter be exercisable to the extent to which
it was exercisable (whether by acceleration or otherwise) at the time of
death (or on such accelerated basis as the Committee may determine) for a
period of twelve (12) months from the date of such death or until the
expiration of the stated term of such Option, whichever period is shorter.
In the event of termination of employment by reason of Disability or
Retirement, if an Incentive Stock Option is exercised after the expiration
of the exercise periods that apply for purposes of section 422 of the Code,
such Incentive Stock Option will thereafter be treated as a Non-Qualified
Stock Option.
6.9. Other Termination. If a Holder's employment by the Company or
Subsidiary or Affiliate terminates for any reason other than death,
Disability or Retirement, the Option shall be exercisable, to the extent
otherwise then exercisable, for the lesser of three (3) months from the
date of such termination of employment or the balance of such Option's
term, after which such Option will terminate.
6.10. Cancellation and Regrant. Subject to Article 5 and the specific
limitations on Awards contained in this Plan, the Committee from time to
time may authorize, generally or in specific cases only, for the benefit of
any Holder any adjustment in the exercise or purchase price, the vesting
schedule, the number of shares subject to, the restrictions upon or the
term of, an Award granted under this Article by cancellation of an
outstanding Award and a subsequent regranting of an Award, by amendment, by
substitution of an outstanding Award, by waiver or by other legally valid
means. Such amendment or other action may result among other changes in an
exercise price which is higher or lower than the exercise or purchase price
of the original Award or prior Award, provide for a greater or lesser
number of shares subject to the Award, or provide for a longer or shorter
vesting or exercise period. Any Incentive Stock Options subject to such
amendment or other action shall become Non-Qualified Options. In no event
shall any amendment or other action result in an exercise price below the
Fair Market Value on the date of such amendment or other action, or a
maximum exercise period greater than ten (10) years.
- 9 -
<PAGE> 12
7. Stock Appreciation Rights
The grant of SARs shall be subject to the following terms and
conditions:
7.1. Grant of SARs. SARs are rights to receive a payment in cash or
Common Stock, as selected by the Committee. The value of these rights,
which are determined by the appreciation in value of Common Stock, shall be
evidenced by SAR agreements. Such agreements shall conform to the
requirements of the Plan and may contain such other provisions as the
Committee shall deem advisable, including, if applicable, a limit on the
timing of the election and exercise of an SAR. An SAR may be granted in
tandem with all or a portion of a related Option under the Plan or may be
granted separately. A Tandem SAR may be granted either at the time of the
grant of the Option or, with respect to a Non-Qualified Option, at any time
thereafter during the term of the Option. A Tandem SAR shall be exercisable
only to the extent that the related Option is exercisable. In no event
shall any SAR be exercisable within the first six (6) months of its grant.
7.2. Exercise Price. The exercise price of a Tandem SAR shall be the
option price under the related Option. The exercise price of a Freestanding
SAR shall be not less than one hundred percent (100%) of the Fair Market
Value of the Common Stock, as determined by the Committee on the date of
grant of the Freestanding SAR. The exercise price of a SAR may be modified
at any time pursuant to section 7.7.
7.3. Payment upon Exercise. An SAR shall entitle the recipient to
receive a payment equal to the excess of the Fair Market Value of the
shares of Common Stock covered by the SAR on the date of exercise over the
exercise price of the SAR. Such payment may be in cash, in shares of Common
Stock, or any combination thereof, as the Committee shall determine. Upon
exercise of a Tandem SAR as to some or all of the shares of Common Stock
covered by the grant, the related Option shall be canceled automatically to
the extent of the number of shares of Common Stock covered by such
exercise, and such shares shall no longer be available for delivery under
the Option pursuant to Section 6. Conversely, if the related Option is
exercised as to some or all of the shares of Common Stock covered by the
grant, the related Tandem SAR, if any, shall be canceled automatically to
the extent of the number of shares of Common Stock covered by the Option
exercise.
7.4. Automatic Exercise. To the extent an SAR (or related Option) has
not been exercised on its expiration, it will be exercised automatically
and paid in the form determined by the Committee.
7.5. Limited SARs. The Committee may also grant Limited SARs under
this Section. Such Limited SARs shall become exercisable only in the event
of a Change in
- 10 -
<PAGE> 13
Control, subject to such terms and conditions as the Committee may
specify at the time of grant. Limited SARs shall be settled solely in cash.
7.6. Terms and Conditions. SARs shall be subject to the same terms and
conditions applicable to Options as stated in Section 6.3, 6.5, 6.7, 6.8,
and 6.9. SARs shall also be subject to such other terms and conditions not
inconsistent with the Plan as shall be determined by the Committee.
7.7. Cancellation and Regrant. Subject to Article 5 and the specific
limitations on Awards contained in this Plan, the Committee from time to
time may authorize, generally or in specific cases only, for the benefit of
any Holder any adjustment in the exercise or purchase price, the vesting
schedule, the number of shares subject to, the restrictions upon or the
term of, an Award granted under this Article by cancellation of an
outstanding Award and a subsequent regranting of an Award, by amendment, by
substitution of an outstanding Award, by waiver or by other legally valid
means. Such amendment or other action may result among other changes in an
exercise price which is higher or lower than the exercise or purchase price
of the original Award or prior Award, provide for a greater or lesser
number of shares subject to the Award, or provide for a longer or shorter
vesting or exercise period. In no event shall any amendment or other action
result in an exercise price below the Fair Market Value on the date of such
amendment or other action, or a maximum exercise period greater than ten
(10) years.
8. Adjustments Upon Changes in Capitalization
In the event of a reorganization, recapitalization, stock split, spin-off,
split-off, split up, stock dividend, issuing of stock rights, combination of
shares, merger, consolidation or any other change in the corporate structure of
the Company affecting Common Stock, or a sale by the Company of all of its
assets, or any distribution to stockholders other than a cash dividend, the
Board shall make appropriate adjustments in the number and kind of shares
authorized by the Plan and any adjustments to outstanding Awards as it
determines appropriate. No fractional shares of Common Stock shall be issued
pursuant to such an adjustment. The Fair Market Value of any fractional shares
resulting from adjustments pursuant to this Section shall, where appropriate, be
paid in cash to the Holder.
9. Effective Date, Termination and Amendment
The Plan was adopted by the Board on September 16, 1998 and shall become
effective on December 3, 1998, upon stockholder approval. The Plan shall remain
in full force and effect until the earlier of September 16, 2008 or the date it
is terminated by the Board. The Board and the Committee shall have the power to
amend, suspend or terminate the Plan at any time; provided no such amendment
shall be made without stockholder approval that shall:
- 11 -
<PAGE> 14
(i) increase (except as provided in Section 8) the total number of
shares available for issuance pursuant to the Plan;
(ii) change the class of employees eligible to be Holders;
(iii) withdraw the administration of the Plan from the Committee;
(iv) change the provisions of this Section 9; or
(v) make possible suit against a Holder under Section 16(b) of the
1934 Act for exercise of Options or SARs under the Plan; or
(vi) otherwise require stockholder approval.
10. Execution and Delivery of Stockholders Agreement
Unless otherwise determined by the Committee, no shares of Common Stock
shall be issued or transferred pursuant to an Award unless and until the Holder,
or any person to whom rights have passed by will or by laws of descent and
distribution, has executed and delivered to the Company or the Committee the
Stockholders Agreement, by and among the Company and the Management Stockholders
named therein in substantially the form approved by the Committee.
11. Non-Assignability
Awards may not be pledged, assigned or transferred for any reason during
the Holder's lifetime, and any attempt to do so shall be void and the relevant
Award shall be forfeited.
12. Performance-Based Compensation
It is intended that all compensation income recognized by any Holder as the
result of the exercise of Options or SARs, or the disposition of shares of
Common Stock acquired on exercise of Options or SARs, shall be considered
performance-based compensation excludable from such Holder's "applicable
employee remuneration" pursuant to section 162(m)(4)(C) of the Code.
13. General Provisions
13.1. No Right to Employment. Nothing contained in the Plan, or any
Award granted pursuant to the Plan, shall confer upon any Employee any
right with respect to continuance of employment by the Company, a
Subsidiary or Affiliate (as the case may be), nor interfere in any way with
the right of the Company, a Subsidiary or Affiliate to terminate the
employment of any Employee at any time.
- 12 -
<PAGE> 15
13.2. Transfer of Employment. For purposes of the Plan, transfer of
employment between the Company and its Subsidiaries and Affiliates shall
not be deemed termination of employment.
13.3. Taxes. The Company shall have the power to withhold, or require
a Participant to remit to the Company, all taxes required to be paid in
connection with any Award, the exercise thereof and the transfer of shares
of Common Stock pursuant to this Plan. Notwithstanding the foregoing, every
Holder shall be responsible for making appropriate provisions for all taxes
required to be withheld in connection with any Award, the exercise thereof,
and the transfer of shares of Common Stock pursuant to the Plan. Such
responsibility shall extend to all applicable Federal, state, local or
foreign withholding taxes. Upon the exercise of Options of SARs, the
Company shall have the right to retain cash otherwise due the Holder or the
number of shares of Common Stock the Fair Market Value of which equals the
amount to be withheld in satisfaction of the applicable withholding taxes.
Agreements evidencing such Awards shall contain appropriate provisions to
effect withholding in this manner.
13.4. Grants to Employees Outside the United States. Without amending
the Plan, Awards may be granted to Employees who are not United States
citizens or who are employed outside the United States or both, on such
terms and conditions different from those specified in the Plan as may be
necessary or desirable, in the judgment of the Committee, to further the
purpose of the Plan.
13.5. Governing Law. To the extent that Federal laws (including, but
not limited to, the 1934 Act, the Code and the Employee Retirement Income
Security Act of 1974, as amended) do not otherwise control, the Plan and
all determinations made and actions taken pursuant hereto shall be governed
by the laws of the State of Delaware and construed accordingly.
13.6. Compliance with Law. The Plan and each Award under the Plan
shall be subject to the requirement that if at any time the Committee shall
determine that (a) the listing, registration or qualification of the Award
Shares upon any securities exchange or under any state or federal law, (b)
the consent or approval of any government regulatory body or (c) an
agreement by the recipient of an Award with respect to the disposition of
the Award Shares is necessary or desirable as a condition of, or in
connection with, the Plan or the granting of such Award or the issue or
purchase of the Award Shares thereunder, the Award may not be consummated
in whole or in part until such listing, registration, qualification,
consent, approval or agreement shall have been effected or obtained free of
any conditions not acceptable to the Committee. The Company may require the
Holder to take any action necessary to meet such requirements.
13.7. Amending of Awards. The Committee may amend any outstanding
Awards to the extent it deems appropriate. Such amendment may be made by
- 13 -
<PAGE> 16
the Committee without the consent of the Holder, except in the case of
amendments adverse to the Holder, in which case the Holder's consent is
required to any such amendment.
13.8. No Limit on Compensation. Nothing contained in the Plan, or any
Award granted pursuant to the Plan, shall be construed to limit the right
of the Company to establish other plans or to pay compensation to its
employees, in cash or property, or in any other manner which is not
expressly authorized under the Plan.
13.9. No Shareholder Rights. The Holder shall have no rights as a
shareholder with respect to shares of Common Stocks subject to an Award
unless and until certificates for the Award Shares are issued.
13.10. No Fractional Shares. An Option may be exercised only for a
whole number of shares of Common Stock.
13.11. Headings. Section headings are included only for ease of
reference. Headings are not intended to constitute substantive provisions
of the Plan and shall not be used to interpret the scope of this Plan or
the rights or obligations of the Company in any way.
14. Change in Control
Notwithstanding any other provision of the Plan to the contrary, upon the
occurrence of a Change in Control all outstanding Options and SARs shall become
immediately exercisable and shall remain exercisable for 30 days following the
Employee's involuntary termination (other than for Cause) within eighteen (18)
months following such Change in Control.
- 14 -
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL
STATEMENTS IN THE COMPANY'S QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTERLY
PERIOD ENDED JANUARY 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1999
<PERIOD-START> AUG-01-1998
<PERIOD-END> JAN-31-1999
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 49,083
<ALLOWANCES> (2,025)
<INVENTORY> 71,062
<CURRENT-ASSETS> 143,086
<PP&E> 330,195
<DEPRECIATION> (199,968)
<TOTAL-ASSETS> 280,474
<CURRENT-LIABILITIES> 66,504
<BONDS> 112,950
0
0
<COMMON> 99
<OTHER-SE> 81,576
<TOTAL-LIABILITY-AND-EQUITY> 280,474
<SALES> 127,517
<TOTAL-REVENUES> 127,517
<CGS> 108,801
<TOTAL-COSTS> 115,783
<OTHER-EXPENSES> 8,043
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,933
<INCOME-PRETAX> 758
<INCOME-TAX> 265
<INCOME-CONTINUING> 493
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 493
<EPS-PRIMARY> $0.06
<EPS-DILUTED> $0.06
</TABLE>
