SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 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 April 2, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____ to____
Commission file number 0-20686
UNIROYAL TECHNOLOGY CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 65-0341868
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2 N. Tamiami Trail, Suite 900
Sarasota, FL 34236
(Address of principal executive offices) (Zip Code)
(941) 361-2100
(Registrant's telephone number, including area code)
Not applicable
(Former name, former address and former fiscal year,
if changed since last report)
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 .
APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares
outstanding of each of the issuer's classes of common stock as of the
latest practicable date.
Total number of shares of outstanding stock as of April 30, 2000
Common stock 24,710,352
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. Consolidated Financial Statements
<TABLE>
<CAPTION>
UNIROYAL TECHNOLOGY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
ASSETS
April 2, September 26,
2000 1999
----------- -------------
Current assets:
<S> <C> <C>
Cash and cash equivalents $ 99,478 $ 4,145
Trade accounts receivable (less estimated reserve for
doubtful accounts of $82 and $88, respectively) 5,045 4,808
Inventories (Note 2) 10,298 8,599
Deferred income taxes 4,981 2,779
Prepaid expenses and current assets 1,405 1,413
---------- ----------
Total current assets 121,207 21,744
Property, plant and equipment - net 47,915 43,804
Property, plant and equipment held for sale (Note 3) 1,871 4,217
Investment in preferred stock (Note 4) - 5,383
Note receivable (Note 5) - 5,000
Goodwill - net 1,282 1,310
Deferred income taxes - net 9,478 15,350
Other assets - net 11,948 10,148
---------- ----------
TOTAL ASSETS $ 193,701 $ 106,956
========== ==========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
UNIROYAL TECHNOLOGY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (Continued)
(Unaudited)
(In thousands, except share data)
LIABILITIES AND STOCKHOLDERS' EQUITY
April 2, September 26,
2000 1999
---------- -------------
Current liabilities:
<S> <C> <C>
Current portion of long-term debt $ 4,904 $ 5,282
Trade accounts payable 8,810 9,688
Net liabilities of discontinued operations (Note 6) 6,472 8,380
Accrued expenses:
Compensation and benefits 8,687 7,326
Interest 74 222
Taxes, other than income 408 388
Income taxes payable 15,116 -
Other 4,830 1,055
---------- ----------
Total current liabilities 49,301 32,341
Long-term debt, net of current portion 23,412 24,369
Other liabilities 22,634 15,288
---------- ----------
Total liabilities 95,347 71,998
---------- ----------
Commitments and contingencies (Note 8)
Minority interest 4,812 3,825
Stockholders' equity (Note 7):
Preferred stock:
Series C - 0 shares issued and outstanding; par value $0.01;
450 shares authorized - -
Common stock:
30,573,566 and 29,362,838 shares issued or to be issued,
respectively; par value $0.01; 35,000,000 shares authorized 306 294
Additional paid-in capital 60,053 57,524
Unrealized gain on securities available for sale - net - 100
Retained earnings (deficit) 56,533 (6,112)
---------- ----------
116,892 51,806
Less treasury stock at cost - 5,728,780 and 5,343,974 shares,
respectively (23,350) (20,673)
---------- ----------
Total stockholders' equity 93,542 31,133
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 193,701 $ 106,956
========== ==========
See notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
UNIROYAL TECHNOLOGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
Three Months Ended Six Months Ended
--------------------------- ----------------------------
April 2, March 28, April 2, March 28,
2000 1999 2000 1999
----------- ---------- ------------ ------------
<S> <C> <C> <C> <C>
Net sales $ 16,103 $ 16,965 $ 31,298 $ 35,091
Costs, expenses and (other income):
Costs of goods sold 13,028 13,153 24,586 27,664
Selling and administrative (Note 9) 13,092 4,054 20,328 7,434
Depreciation and other amortization 1,114 812 2,118 1,622
Provision for uncollectible note receivable (Note 5) 5,387 - 5,387 -
Loss on assets to be disposed of (Note 3) 2,223 - 2,223 -
Gain on sale of preferred stock investment (Note 4) - - (2,905) -
----------- ----------- ----------- -----------
Loss before interest, income taxes, minority
interest and discontinued operations (18,741) (1,054) (20,439) (1,629)
Interest income (expense) - net 11 (141) (303) (254)
----------- ----------- ----------- -----------
Loss before income taxes, minority interest
and discontinued operations (18,730) (1,195) (20,742) (1,883)
Income tax benefit (Note 10) 20,184 279 21,677 484
----------- ----------- ----------- -----------
Income (loss) before minority interest and discon-
tinued operations 1,454 (916) 935 (1,399)
Minority interest in losses of consolidated
joint venture 1,653 351 3,067 580
----------- ----------- ----------- -----------
Income (loss) from continuing operations 3,107 (565) 4,002 (819)
Income from discontinued operations (net of
income taxes) (Note 6) - 1,624 1,525 1,897
Gain on disposition of discontinued operations
(net of income taxes) (Note 6) 57,118 - 57,118 -
----------- ----------- ----------- -----------
Net income $ 60,225 $ 1,059 $ 62,645 $ 1,078
=========== =========== =========== ===========
Net income per share - basic (Note 11)
- --------------------------------------
Income (loss) from continuing operations $ 0.13 $ (0.02) $ 0.16 $ (0.03)
Income from discontinued operations 2.31 0.06 2.42 0.07
----------- ----------- ----------- -----------
Net income $ 2.44 $ 0.04 $ 2.58 $ 0.04
=========== =========== =========== ===========
Net income per share - diluted (Note 11)
- ----------------------------------------
Income (loss) from continuing operations $ 0.11 $ (0.02) $ 0.14 $ (0.03)
Income from discontinued operations 1.97 0.06 2.07 0.07
----------- ----------- ----------- -----------
Net income $ 2.08 $ 0.04 $ 2.21 $ 0.04
=========== =========== =========== ===========
See notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
UNIROYAL TECHNOLOGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(In thousands)
Three Months Ended Six Months Ended
---------------------------- ---------------------------
April 2, March 28, April 2, March 28,
2000 1999 2000 1999
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net income $ 60,225 $ 1,059 $ 62,645 $ 1,078
Unrealized (loss) gain on securities
available for sale, net of income taxes - (576) - 992
Reclassification adjustment for gains
realized in net income - - (100) -
----------- ----------- ----------- -----------
Comprehensive income (Note 12) $ 60,225 $ 483 $ 62,545 $ 2,070
=========== =========== =========== ===========
See notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
UNIROYAL TECHNOLOGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
Six Months Ended
------------------------------------
April 2, March 28,
2000 1999
----------- -----------
OPERATING ACTIVITIES:
<S> <C> <C>
Net income $ 62,645 $ 1,078
Deduct income from discontinued operations (58,643) (1,897)
----------- -----------
Income (loss) from continuing operations 4,002 (819)
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 2,118 1,622
Deferred tax provision 3,607 487
Provision for uncollectible note receivable 5,387 -
Loss on assets to be disposed of 2,223 -
Gain on sale of preferred stock investment (2,905) -
Minority interest in losses of consolidated joint venture (3,067) (580)
Other 181 45
Changes in assets and liabilities:
(Increase) decrease in trade accounts receivable (204) 4,162
(Increase) decrease in inventories (1,699) 3,001
(Increase) decrease in prepaid expenses and other assets (1,431) 1,126
Increase in trade accounts payable 974 423
Increase (decrease) in other accrued expenses 20,352 (2,167)
Increase in other liabilities 626 373
----------- -----------
Net cash provided by continuing operations 30,164 7,673
Net cash (used in) provided by discontinued operations (42,328) 7,584
----------- -----------
Net cash (used in) provided by operating activities (12,164) 15,257
----------- -----------
INVESTING ACTIVITIES:
Purchases of property, plant and equipment (Note 13) (14,681) (6,150)
Purchase of investments (714) (9,143)
Proceeds from sale of discontinued operations 208,976 -
Proceeds from sale of preferred stock investment 8,125 -
----------- -----------
Net cash provided by (used in) investing activities 201,706 (15,293)
----------- -----------
FINANCING ACTIVITIES (Note 13):
(Decrease) increase in revolving loan balance (7,881) 2,832
Repayment of term loans (89,013) (3,386)
Proceeds from term loan - 785
Proceeds from termination of interest rate swaps 950 -
Investment by joint venture partner 2,202 5,000
Purchase of treasury stock (1,520) (6,196)
Stock options exercised 311 276
Warrants exercised 742 -
Purchase of warrants - (61)
----------- -----------
Net cash used in financing activities (94,209) (750)
----------- -----------
Net increase (decrease) in cash 95,333 (786)
Cash and cash equivalents at beginning of period 4,145 4,099
----------- -----------
Cash and cash equivalents at end of period $ 99,478 $ 3,313
=========== ===========
See notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
UNIROYAL TECHNOLOGY CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
For the Three Months and Six Months Ended
April 2, 2000 and March 28, 1999
1. BASIS OF PRESENTATION
The interim Condensed Consolidated Financial Statements relate to
Uniroyal Technology Corporation and its wholly-owned subsidiaries
Uniroyal HPP Holdings, Inc., Uniroyal Engineered Products, Inc.,
Uniroyal Optoelectronics, Inc., Unitech NJ, Inc., BayPlas3, Inc. and
its majority owned subsidiary, Uniroyal Liability Management Company
(the "Company"). Uniroyal HPP Holdings, Inc. includes its wholly-owned
subsidiary, High Performance Plastics, Inc. ("HPPI"). Uniroyal
Optoelectronics, Inc. includes its majority-owned joint venture,
Uniroyal Optoelectronics, LLC. Uniroyal Liability Management Company
includes its wholly-owned subsidiary, BayPlas2, Inc. The interim
Condensed Consolidated Financial Statements of the Company are
unaudited and should be read in conjunction with the Company's audited
financial statements and notes thereto for the fiscal years ended
September 26, 1999, September 27, 1998 and September 28, 1997. See Note
6 for information concerning the sale of HPPI's business.
The Company's fiscal year ends on the Sunday following the last Friday
in September. As a result, Fiscal 2000 will end on October 1, 2000 and
encompass a 53-week period as compared to Fiscal 1999 which ended on
September 26, 1999 and encompassed a 52-week period. The additional
week in Fiscal 2000 occurred in the first quarter ended January 2,
2000. Therefore, the six-month period ended April 2, 2000 encompassed
27 weeks of operations compared to 26 weeks of operations for the
six-month period ended March 28, 1999.
Certain reclassifications were made to the prior year financial
statements to conform to current period presentations. In the opinion
of the Company, all adjustments necessary for a fair presentation of
such interim Condensed Consolidated Financial Statements have been
included. Such adjustments consist only of normal recurring items.
Interim results are not necessarily indicative of results for a full
year. The interim Condensed Consolidated Financial Statements and notes
thereto are presented as permitted by the Securities and Exchange
Commission and do not contain certain information included in the
Company's annual Financial Statements and notes thereto.
2. INVENTORIES
<TABLE>
<CAPTION>
April 2, September 26,
2000 1999
----------- -------------
<S> <C> <C>
Raw materials, work in process
and supplies $ 5,009 $ 4,275
Finished goods 5,289 4,324
----------- -----------
Total $ 10,298 $ 8,599
=========== ===========
</TABLE>
3. PROPERTY, PLANT AND EQUIPMENT HELD FOR SALE
During the three month period ended April 2, 2000, the Company further
reserved against its Port Clinton, Ohio ("Port Clinton") property,
plant and equipment held for sale in the amount of $2,223,000. An
additional impairment loss was recorded based upon recent negotiations
to sell the property with a new buyer. The current fair value less
costs to sell the property approximates $851,000 at April 2, 2000. The
Company expects to dispose of the remaining Port Clinton assets during
the current year.
4. INVESTMENT IN PREFERRED STOCK
During the six months ended April 2, 2000, the Company converted the
remaining 372,857 shares of its Emcore Corporation ("Emcore") preferred
stock into 372,857 shares of Emcore common stock. The common stock was
then sold in the open market for approximately $8,125,000. This
resulted in a gain of approximately $2,905,000, net of certain
transaction costs.
5. NOTE RECEIVABLE
In March of 2000, the Company fully reserved its note receivable and
related accrued interest from RBX Group, Inc. ("RBX") in the amount of
$5,387,000. This was a result of a determination that due to recent
events at RBX, which include the effects of a prolonged strike at its
major facility, the financial condition of RBX has deteriorated such
that collectibility of the note receivable and related accrued interest
is in doubt.
6. DISCONTINUED OPERATIONS
On December 24, 1999, the Company entered into a definitive agreement
to sell certain net assets of its High Performance Plastics segment for
$217,500,000 in cash to Spartech Corporation. The transaction closed on
February 28, 2000 and resulted in cash proceeds of approximately
$208,976,000, net of certain transaction costs and working capital
adjustments and a gain on the sale of approximately $58,193,000 (net of
taxes of approximately $39,046,000). The purchase price will ultimately
be adjusted by changes in working capital and costs to complete the
modernization at the Stamford, Connecticut facility. These adjustments
have been provided for as of April 2, 2000, to the extent estimable by
the Company. Further revisions to the purchase price are not expected
to be significant. The consolidated financial statements reflect the
discontinued operations of HPPI in accordance with Accounting
Principles Board Opinion No. 30, "Reporting Results of Operations."
Net liabilities of the discontinued operations of the High Performance
Plastics Segment have been segregated on the April 2, 2000 and
September 26, 1999 balance sheets, the components of which are as
follows:
<TABLE>
<CAPTION>
April 2, September 26,
2000 1999
----------- -------------
Net Liabilities of Discontinued Operations
------------------------------------------
<S> <C> <C>
Assets:
Cash $ 102 $ 37
Receivables 154 18,261
Inventories 63 30,028
Deferred income taxes 1,916 2,030
Prepaid and other assets 3,822 1,712
Property, plant and equipment - net 277 45,099
Intangibles and other assets - 15,400
----------- -----------
Total assets 6,334 112,567
----------- -----------
Liabilities:
Current portion of long-term debt 158 8,805
Trade payables 534 13,323
Accrued income taxes 2,930 -
Other accrued expenses 7,134 7,429
Long-term debt, net of current portion 158 84,552
Deferred income taxes 1,858 6,322
Other liabilities 34 516
----------- -----------
Total liabilities 12,806 120,947
----------- -----------
Net liabilities of discontinued operations $ 6,472 $ 8,380
=========== ===========
</TABLE>
The results of operations for all periods presented have been restated
for discontinued operations. The operating results of discontinued
operations are as follows:
<TABLE>
<CAPTION>
For the Three Months Ended
----------------------------------
April 2, March 28,
2000 1999
----------- -----------
Income from Discontinued Operations
-----------------------------------
<S> <C> <C>
Net sales $ 21,211 $ 32,308
Costs of goods sold 19,346 22,098
Selling and administrative 1,182 4,007
Depreciation and other amortization 999 1,420
Gain on sale of HPPI (97,239) -
----------- -----------
Income before interest expense and income taxes 96,923 4,783
Interest expense (1,447) (2,116)
----------- -----------
Income before income taxes 95,476 2,667
Income tax expense (38,358) (1,043)
----------- -----------
Net income from discontinued operations $ 57,118 $ 1,624
=========== ===========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
For the Six Months Ended
----------------------------------
April 2, March 28,
2000 1999
----------- -----------
Income from Discontinued Operations
-----------------------------------
<S> <C> <C>
Net sales $ 54,954 $ 63,271
Costs of goods sold 44,133 45,044
Selling and administrative 3,927 7,882
Depreciation and other amortization 2,475 2,827
Gain on sale of HPPI (97,239) -
----------- -----------
Income before interest expense and income taxes 101,658 7,518
Interest expense (3,619) (4,279)
----------- -----------
Income before income taxes 98,039 3,239
Income tax expense (39,396) (1,342)
----------- -----------
Net income from discontinued operations $ 58,643 $ 1,897
=========== ===========
</TABLE>
7. STOCKHOLDERS' EQUITY
On March 10, 2000, the Company declared a two-for-one stock split in
the form of a 100% stock dividend to its common shareholders of record
on March 20, 2000. The consolidated financial statements presented
herein retroactively reflect the effect of the split.
During the six months ended April 2, 2000, the Company repurchased
254,292 shares of its common stock in the open market for approximately
$1,218,000.
During the six months ended April 2, 2000, the Company repurchased
47,984 shares of its common stock from its benefit plans for
approximately $302,000.
During the six months ended April 2, 2000, the Company received 99,736
shares of its common stock in lieu of cash for the exercise of stock
options from officers and employees of the Company. These shares were
valued at approximately $1,194,000 (which was calculated based upon the
closing market value of the stock on the day prior to the exercise
dates) and are included as treasury shares as of April 2, 2000.
8. COMMITMENTS AND CONTINGENCIES
Litigation
The Company is engaged in litigation arising from the ordinary course
of business. Management believes the ultimate outcome of such
litigation will not have a material adverse effect upon the Company's
results of operations, cash flows or financial position.
Environmental Factors
The Company is subject to a wide range of federal, state and local laws
and regulations designed to protect the environment and worker health
and safety. The Company's management emphasizes compliance with these
laws and regulations. The Company has instituted programs to provide
guidance and training and to audit compliance with environmental laws
and regulations at Company owned or leased facilities. The Company's
policy is to accrue environmental and cleanup-related costs of a
non-capital nature when it is probable both that a liability has been
incurred and that the amount can be reasonably estimated.
In connection with the sale of substantially all of the net assets of
HPPI to Spartech on February 28, 2000, the Company conducted
environmental assessments of two of the plants of HPPI in compliance
with the laws of the states of Connecticut and New Jersey relating to
transfers of industrial real property. The environmental assessment of
the Connecticut property indicated that a separate parcel purchased by
the Company in 1995 was contaminated with total petroleum hydrocarbons
(TPHS), DDT and related pesticide chemicals. The Company has removed
approximately one-half of the soil on the property at a cost of
approximately $1.4 million (through April 30, 2000). The Company has
retained environmental consultants to review its options with regard to
the remaining soil on the premises. Testing at the Hackensack, New
Jersey, facility is still underway. In total the Company has estimated
the cost of its environmental liabilities to approximate $3.8 million.
At April 2, 2000, approximately $3.3 million is accrued for
environmental clean-up costs and is included in net liabilities of
discontinued operations.
Based on information available as of April 2, 2000, the Company
believes that the costs of known environmental matters either have been
adequately provided for or are unlikely to have a material adverse
effect on the Company's operations, cash flows or financial position.
9. JOINT VENTURE
During the three months and six months ended April 2, 2000, the
Optoelectronics segment recorded sales of approximately $902,000 and
$1,516,000, respectively. The sales were primarily a result of product
supplied by the joint venture partner, Emcore Corporation. There were
sales by the Optoelectronics segment during the three months and six
months ended March 28, 1999 of $85,000.
During the three months ended April 2, 2000 and March 28, 1999,
approximately $2,884,000, and $758,000, respectively, of joint venture
start-up costs are included in selling and administrative costs.
During the six months ended April 2, 2000 and March 28, 1999,
approximately $5,510,000 and $1,207,000, respectively, of joint venture
start-up costs are included in selling and administrative costs.
10. INCOME TAXES
The provisions for income tax benefit for the three month and six month
periods ended April 2, 2000 and March 28, 1999 were calculated through
the use of the estimated annual income tax rates based on projected
annualized income. During the three and six month periods ended April
2, 2000, the Company reduced the deferred tax valuation allowance
relating to capital loss carryforwards and recognized a tax benefit of
$12,409,000 and $13,702,000, respectively. The capital losses were used
to offset capital gains which resulted from the sale of the Emcore
stock (Note 4) and the High Performance Plastics Segment (Note 6).
11. INCOME PER COMMON SHARE
The reconciliation of the numerators and denominators of the basic and
diluted earnings per share computation for the three months and six
months ended April 2, 2000 is as follows:
<TABLE>
<CAPTION>
Three Months Ended
April 2, 2000
--------------------------------------------------------------
Income Shares Per Share
(Numerator) (Denominator) Amount
------------ ------------- ---------
<S> <C> <C> <C>
Income from continuing
operations before dis-
continued operations $ 3,107
Basic EPS
---------
Income available to
common stockholders $ 3,107 24,729,221 $ 0.13
=======
Effect of Dilutive Securities
-----------------------------
Stock options 3,506,472
Warrants 705,297
----------
Diluted EPS
-----------
Income available to
common stockholders $ 3,107 28,940,990 $ 0.11
========= ========== =======
</TABLE>
For the three months ended March 28, 1999, the weighted average number
of common shares outstanding for the calculation of basic and diluted
earnings per share was 24,233,436. Inclusion of warrants to purchase
1,146,300 shares of common stock at $2.1875 per share and additional
stock options to purchase 3,614,726 shares of common stock at various
prices in the calculation of diluted earning per share would have been
antidilutive.
<PAGE>
<TABLE>
<CAPTION>
Six Months Ended
April 2, 2000
-----------------------------------------------------------
Income Shares Per Share
(Numerator) (Denominator) Amount
----------- ------------- ---------
<S> <C> <C> <C>
Income from continuing
operations before dis-
continued operations $ 4,002
Basic EPS
----------
Income available to
common stockholders $ 4,002 24,277,802 $ 0.16
=======
Effect of Dilutive Securities
-----------------------------
Stock options 3,329,091
Warrants 793,834
----------
Diluted EPS
-----------
Income available to
common stockholders $ 4,002 28,400,727 $ 0.14
========= ========== =======
</TABLE>
For the six months ended March 28, 1999, the weighted average number of
common shares outstanding for the calculation of basic and diluted
earnings per share was 24,628,460. Inclusion of warrants to purchase
1,146,300 shares of common stock at $2.1875 per share and additional
stock options to purchase 3,614,726 shares of common stock at various
prices in the calculation of diluted earnings per share would have been
antidilutive.
12. COMPREHENSIVE INCOME
Comprehensive income is defined as the change in the equity of a
business during a period from transactions and other events and
circumstances from non-owner sources. It includes all changes in equity
during a period except those resulting from investments by owners and
distributions to owners. The changes in unrealized gains and losses on
equity securities available for sale are included in comprehensive
income. The unrealized (loss) gain on securities available for sale is
shown net of a tax benefit of $368,000 for the three months ended March
28, 1999 and net of tax expense of $634,000 for the six months ended
March 28, 1999. There were no unrealized gains or losses on securities
available for sale for the three months and six months ended April 2,
2000.
13. STATEMENTS OF CASH FLOWS
Supplemental disclosures of cash flow information are as follows:
Payments for income taxes and interest expense were (in thousands):
<TABLE>
<CAPTION>
Six Months Ended
--------------------------------------
April 2, March 28,
2000 1999
--------- ----------
<S> <C> <C>
Interest payments (net of capitalized
interest) - continuing operations $ 1,064 $ 175
Interest payments (net of capitalized
interest ) - discontinued operations 4,667 2,681
Income tax payments - continuing operations 23 409
Income tax payments - discontinued
operations 225 331
</TABLE>
The purchases of property, plant and equipment and net cash used in
financing activities for the six months ended April 2, 2000 and March
28, 1999 do not include $2,600,000 and $6,937,000, respectively,
related to property held under capital leases. The new leases relate to
property, plant and equipment purchased for Uniroyal Optoelectronics,
LLC.
During the six months ended April 2, 2000 and March 28, 1999, the
Company made matching contributions to its 401(k) Savings Plan of
$219,000 and $199,000, respectively, through the re-issuance of 17,206
and 19,672 common shares from treasury, respectively.
<PAGE>
14. SEGMENT INFORMATION
Segment information for the three and six month periods ended April 2,
2000 and March 28, 1999 is as follows:
<TABLE>
<CAPTION>
For the Three Months Ended For the Six Months Ended
------------------------------------ ----------------------------------
April 2, March 28, April 2, March 28,
2000 1999 2000 1999
----------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
Net Sales:
Coated Fabrics $ 8,588 $ 10,408 $ 17,293 $ 23,205
Specialty Adhesives 6,613 6,472 12,489 11,801
Optoelectronics 902 85 1,516 85
----------- ----------- ----------- -----------
Total $ 16,103 $ 16,965 $ 31,298 $ 35,091
=========== =========== =========== ===========
Operating Income (Loss):
Coated Fabrics $ (950) $ 858 $ (375) $ 1,636
Specialty Adhesives 380 193 721 370
Optoelectronics (3,158) (889) (6,087) (1,482)
Corporate (15,013) (1,216) (14,698) (2,153)
----------- ----------- ----------- -----------
Total $ (18,741) $ (1,054) $ (20,439) $ (1,629)
=========== =========== =========== ===========
</TABLE>
Segment information as of April 2, 2000 and September 26, 1999 is as
follows:
April 2, September 26,
2000 1999
--------- -------------
Identifiable Assets:
Coated Fabrics $ 23,336 $ 23,547
Specialty Adhesives 15,355 15,972
Optoelectronics 30,988 22,474
Corporate 124,022 44,963
----------- -----------
Total $ 193,701 $ 106,956
=========== ===========
15. SUBSEQUENT EVENT
On April 10, 2000, the Company signed a merger agreement with Sterling
Semiconductor, Inc. ("Sterling"). The merger agreement provides for the
exchange of the Company's common stock for Sterling's issued and
outstanding preferred and common stocks. The resulting merged entity
will become a wholly-owned subsidiary of the Company called Sterling
Semiconductor, Inc. The transaction is subject to the approval of
Sterling's stockholders and is expected to close in May of 2000. It is
estimated that approximately 1,469,000 shares of the Company's common
stock having a value of approximately $34,335,000 will be exchanged in
the transaction and approximately 492,000 stock options of the Company
having a value of approximately $8,236,000 will be issued to Sterling's
employees in exchange for the cancellation of existing employee stock
options under Sterling's stock option plans.
<PAGE>
ITEM 2. Management's Discussion and Analysis Of Financial Condition and
Results Of Operations
Second Quarter Fiscal 2000 Compared with
the Second Quarter Fiscal 1999
Net Sales. The Company's net sales from continuing operations decreased in the
second quarter of Fiscal 2000 by approximately 5% to $16,103,000 from
$16,965,000 in the second quarter of Fiscal 1999. The decrease is primarily
attributable to the Fiscal 1998 sale of the Coated Fabrics Segment's automotive
operations and the gradual phase-out of those operations. Excluding automotive
sales from both periods, sales from continuing operations increased 10% in the
second quarter of Fiscal 2000 compared to the second quarter of Fiscal 1999.
Net sales by the Coated Fabrics Segment decreased in the second quarter of
Fiscal 2000 by approximately 17% to $8,588,000 from $10,408,000 in the second
quarter of Fiscal 1999. The decrease was principally due to the sale in Fiscal
1998 of the Coated Fabrics Segment's automotive operations and the gradual
phase-out of the automotive operations. Automotive sales approximated $133,000
in the second quarter of Fiscal 2000 compared to $2,505,000 in the second
quarter of Fiscal 1999. Excluding the automotive sales from both periods, net
sales by the Coated Fabrics Segment increased approximately 7% as a result of an
overall increase in volume and selling prices for Naugahyde(R) vinyl coated
fabrics.
Net sales by the Specialty Adhesives Segment increased in the second quarter of
Fiscal 2000 by approximately 2% to $6,613,000 from $6,472,000 in the second
quarter of Fiscal 1999. This increase is attributable to an increase in
industrial adhesives sales which offset a decline in roofing adhesives.
Net sales by the Optoelectronics Segment were $902,000 in the second quarter of
Fiscal 2000. The Optoelectronics Segment is in the development stage. The
Optoelectronics Segment had sales of $85,000 during the second quarter of Fiscal
1999 from inventories provided to the Optoelectronics Segment under a supply
agreement with its joint venture partner.
Loss Before Interest, Income Taxes, Minority Interest and Discontinued
Operations. Loss before interest, income taxes, minority interest and
discontinued operations for the second quarter of Fiscal 2000 was $18,741,000,
compared to a loss of $1,054,000 for the second quarter of Fiscal 1999. The
increase in the loss is attributable to a number of non-recurring and unusual
items including the write-off of a note receivable (and related accrued
interest) related to the sale of the Ensolite closed cell foam division sold in
1996, due to the deterioration of the financial condition of the buyer (RBX
Group, Inc.) as a result of a prolonged strike at its major facility
($5,387,000); a reduction in the fair value of certain property, plant and
equipment related to the Company's Port Clinton, Ohio facility which is expected
to be disposed of this year ($2,223,000); incentive payments and benefit costs
to and for officers and directors related to the achievement of certain
strategic initiatives ($5,449,000); and start-up losses for the Optoelectronics
Segment. Also during the second quarter of Fiscal 2000, there were no corporate
allocations to the discontinued operations of the High Performance Plastics
Segment. Prior year second quarter corporate allocations were $1,143,000.
The Coated Fabrics Segment had a loss before interest, income taxes, minority
interest and discontinued operations in the second quarter of Fiscal 2000 of
$950,000 versus income of $858,000 in the second quarter of Fiscal 1999. The
decrease was primarily due to a reduction in the fair value of assets to be
disposed of, the phase-out of the sales of the automotive business and certain
incremental costs related to the closure of the Port Clinton, Ohio facility
previously used to produce automotive products.
The Specialty Adhesives Segment had income before interest, income taxes,
minority interest and discontinued operations in the second quarter of Fiscal
2000 of $380,000 compared to income of $193,000 in the second quarter of Fiscal
1999. The increase is attributable to an increase in sales of higher margin
industrial products.
The Optoelectronics Segment incurred a loss before interest, income taxes,
minority interest and discontinued operations of $3,158,000 in the second
quarter of Fiscal 2000 compared to a loss of $889,000 in the second quarter of
Fiscal 1999. The losses related to start-up costs of the Optoelectronics Segment
which have increased as the Optoelectronics Segment commences commercial
production.
Approximately $15,013,000 of costs, non-recurring and unusual items recorded in
the second quarter of Fiscal 2000 were not allocated to any business segment
compared to $1,216,000 in the second quarter of Fiscal 1999. Included in the
Fiscal 2000 non-allocated items are the write-off of a note receivable (and
related accrued interest) related to the sale of the Ensolite closed cell foam
division sold in 1996, due to the deterioration of the financial condition of
the buyer (RBX Group, Inc.) as a result of a prolonged strike at its major
facility ($5,387,000); a reduction in the fair value of certain property, plant
and equipment related to the Company's Port Clinton, Ohio facility which is
expected to be disposed of this year ($1,566,000); and incentive payments and
benefit costs to and for officers and directors related to the achievement of
certain strategic initiatives ($5,449,000). Also during the second quarter of
Fiscal 2000, there were no corporate allocations to the discontinued operations
of the High Performance Plastics Segment. Prior year second quarter corporate
allocations were $1,143,000.
Net income from discontinued operations of the High Performance Plastics Segment
increased to $57,118,000 in the second quarter of Fiscal 2000 from $1,624,000 in
the second quarter of Fiscal 1999. The increase is attributable to the net
effect of the gain recognized on the February 28, 2000 sale of the High
Performance Plastics Segment of $58,193,000 (net of taxes of $39,046,000) and
partially offset by operating losses of $1,075,000 (net of taxes of $688,000)
for the period January 3, 2000 to February 28, 2000. The decline in operations
is primarily a result of production inefficiencies at the Polycast Stamford,
Connecticut facility due to a major plant modernization and only two months of
operations in the second quarter of Fiscal 2000 versus three months of
operations in the second quarter of Fiscal 1999. The decline in operations was
partially offset by the suspension of a corporate allocation to this Segment in
the second quarter of Fiscal 2000.
Interest Income (Expense). Interest income in the second quarter of Fiscal 2000
was $11,000 as compared to interest (expense) of $141,000 in the second quarter
of Fiscal 1999. Income from the investment of the proceeds received for the sale
of the Company's High Performance Plastics Segment on February 28, 2000, offset
an increase in debt relating to capitalized lease obligations incurred to
finance the construction of the facility and the purchase of machinery and
equipment at the Optoelectronics Segment.
Income Tax Benefit. Income tax benefit in the second quarter of Fiscal 2000 was
$20,184,000 compared to a $279,000 benefit in the second quarter of Fiscal 1999.
The provisions for income tax benefit were calculated through the use of the
estimated income tax rates based on annualized income. The second quarter of
Fiscal 2000 benefited from the reversal of $12,409,000 of deferred tax valuation
allowance related to capital loss carryforwards. The reversal was due to the use
of the capital losses to offset the capital gains resulting from the sale of the
High Performance Plastics Segment.
First Two Fiscal Quarters 2000 Compared with
the First Two Fiscal Quarters 1999
Net Sales. The Company's net sales decreased in the first two quarters of Fiscal
2000 by approximately 11% ($3,793,000) to $31,298,000 from $35,091,000 in the
first two quarters of Fiscal 1999, primarily due to the sale of the automotive
operations of the Coated Fabrics Segment in Fiscal 1998 and the gradual
phase-out of those operations. Excluding automotive sales from both periods,
sales increased 17% in the first two quarters of Fiscal 2000 compared to the
first two quarters of Fiscal 1999. The 17% increase, excluding automotive sales
from both periods, was due to an increase in sales from the Optoelectronics
Segment and the inclusion of twenty-seven weeks in the first two quarters of
Fiscal 2000 versus twenty-six weeks in the first two quarters of Fiscal 1999.
Net sales by the Coated Fabrics Segment decreased in the first two quarters of
Fiscal 2000 by approximately 25% ($5,912,000) to $17,293,000 from $23,205,000 in
the first two quarters of Fiscal 1999 due to the gradual phase-out of its
automotive business. Automotive sales approximated $631,000 in the first two
quarters of Fiscal 2000 compared to $8,783,000 in the first two quarters of
Fiscal 1999. Excluding automotive sales from both periods, sales of Naugahyde(R)
vinyl-coated fabrics increased by approximately 16%, due to strong growth in the
transportation division and the inclusion of twenty-seven weeks in the first two
quarters of Fiscal 2000 versus twenty-six weeks in the first two quarters of
Fiscal 1999.
Net sales by the Specialty Adhesives Segment increased in the first two quarters
of Fiscal 2000 by approximately 6% ($688,000) to $12,489,000 from $11,801,000 in
the first two quarters of Fiscal 1999, primarily due to increased sales of its
industrial adhesives and sealant products and the inclusion of twenty-seven
weeks in the first two quarters of Fiscal 2000 versus twenty-six weeks in the
first two quarters of Fiscal 1999.
Net sales by the Optoelectronics Segment for the first two quarters of Fiscal
2000 were $1,516,000 compared to $85,000 in the first two quarters of Fiscal
1999. The Optoelectronics Segment began commercial sales and production in the
first six months of Fiscal 2000 but is still in a start-up mode.
Loss Before Interest, Income Taxes, Minority Interest and Discontinued
Operations. Loss before interest, income taxes, minority interest and
discontinued operations for the first two quarters of Fiscal 2000 was
$20,439,000, compared to a loss of $1,629,000 for the first two quarters of
Fiscal 1999. The greater loss is due to a number of non-recurring and unusual
items including the gain realized on the sale of the investment in the preferred
stock of Emcore Corporation ($2,905,000); the write-off of a note receivable
(and related accrued interest) related to the sale of the Ensolite closed cell
foam division, due to the deterioration of the financial condition of the buyer
(RBX Group, Inc.) as a result of a prolonged strike at its major facility
($5,387,000); a reduction in the fair value of certain property, plant and
equipment related to the Company's Port Clinton, Ohio facility which is expected
to be disposed of this year ($2,223,000); incentive payments and benefit costs
to and for officers and directors related to the achievement of certain
strategic initiatives ($5,449,000); a loss of revenues associated with the
gradual phase-out of the automotive operations of the Coated Fabrics Segment and
start-up losses for the Optoelectronics Segment. Also during the first two
quarters of Fiscal 2000, there were no corporate allocations to the discontinued
operations of the High Performance Plastics Segment. Prior year corporate
allocations for the first two quarters of Fiscal 1999 were $2,241,000.
The Coated Fabrics Segment's loss before interest, income taxes, minority
interest and discontinued operations in the first two quarters of Fiscal 2000
was $375,000 compared to income of $1,636,000 in the first two quarters of
Fiscal 1999. The decrease is attributable to the write-down to fair value of
certain assets to be disposed of, the loss of revenues from the gradual
phase-out of its automotive operations, as well as certain incremental costs
related to the closure of the Port Clinton, Ohio facility previously used to
produce automotive products.
The Specialty Adhesives Segment's income before interest, income taxes, minority
interest and discontinued operations in the first two quarters of Fiscal 2000
was $721,000 versus $370,000 in the first two quarters of Fiscal 1999. The
increase is due to the increase in sales volume of industrial products and the
inclusion of twenty-seven weeks in the first two quarters of Fiscal 2000 versus
twenty-six weeks in the first two quarters of Fiscal 1999.
The Optoelectronics Segment's loss before interest, income taxes, minority
interest and discontinued operations in the first two quarters of Fiscal 2000
was $6,087,000 compared to a loss of $1,482,000 in the first two quarters of
Fiscal 1999. The losses relate to the start-up and training costs of the
Optoelectronics Segment.
Approximately $14,698,000 of costs, non-recurring and unusual items recorded in
the first two quarters of Fiscal 2000 were not allocated to any business segment
compared to $2,153,000 of unallocated costs for the first two quarters of Fiscal
1999. Included in the non-allocated items in Fiscal 2000 are the gain realized
on the sale of the investment in the preferred stock of Emcore Corporation
($2,905,000); the write-off of the RBX Group, Inc. note (and related accrued
interest) ($5,387,000); a reduction in the fair value of certain property, plant
and equipment related to the Company's Port Clinton, Ohio facility which is
expected to be disposed of this year ($1,566,000); and incentive payments and
benefit costs to and for officers and directors related to the achievement of
certain strategic initiatives ($5,449,000). Also during the first two quarters
of Fiscal 2000, there were no corporate allocations to the discontinued
operations of the High Performance Plastics Segment. Prior year corporate
allocations for the first two quarters of Fiscal 1999 were $2,241,000.
Net income from discontinued operations of the High Performance Plastics Segment
increased to $58,643,000 in the first two quarters of Fiscal 2000 compared to
$1,897,000 in the first two quarters of Fiscal 1999. The increase is
attributable to the net effect of the gain recognized on the February 28, 2000
sale of the High Performance Plastics Segment of $58,193,000 (net of taxes of
$39,046,000) and operating income of $450,000 (net of taxes of $350,000) for the
period September 27, 1999 to February 28, 2000. The decline in operations is
primarily a result of production inefficiencies at the Stamford, Connecticut
facility due to a major plant modernization and only five months of operations
in the first two quarters of Fiscal 2000 versus six months of operations in the
first two quarters of Fiscal 1999. The decline in operations was partially
offset by the suspension of a corporate allocation to this Segment in the first
two quarters of Fiscal 2000.
Interest Expense. Interest expense for the first two quarters of Fiscal 2000
increased to $303,000 from $254,000 in the first two quarters of Fiscal 1999. An
increase in the debt relating to capitalized lease obligations incurred to
finance the construction of the facility and the purchase of machinery and
equipment at the Optoelectronics Segment was partially offset by the interest
income earned on the investment of the proceeds received from the sale of the
Company's High Performance Plastics Segment on February 28, 2000.
Income Tax Benefit. Income tax benefit in the first two quarters of Fiscal 2000
was $21,677,000 as compared to $484,000 in the first two quarters of Fiscal
1999. The provisions for income tax benefit were calculated through the use of
the estimated income tax rates based upon annualized income. The first two
quarters of Fiscal 2000 benefited from the reversal of $13,702,000 of deferred
tax valuation allowance related to capital loss carryforwards. The reversal was
due to the use of the capital losses to offset capital gains resulting from the
sale of the preferred stock of Emcore Corporation and the sale of the High
Performance Plastics Segment.
Liquidity and Capital Resources
For the first two quarters of Fiscal 2000, continuing operations provided
$30,164,000 of cash as compared to $7,673,000 provided by continuing operations
during the first two quarters of Fiscal 1999. The increase in cash provided by
continuing operations for the first two quarters of Fiscal 2000 resulted
primarily from an increase in income taxes payable as a result of the High
Performance Plastics Segment sale and an increase in accrued and other expenses
in connection with special incentive costs awarded to officers and directors
related to the achievement of certain strategic initiatives.
Net cash provided by investing activities for the first two quarters of Fiscal
2000 was $201,706,000 as compared to $15,293,000 used in investing activities
during the first two quarters of Fiscal 1999. During the first two quarters of
Fiscal 2000, the purchase of machinery and equipment primarily related to the
new Optoelectronics production facility in Tampa, Florida and the modernization
of the Polycast production facility in Stamford, Connecticut. Significant cash
provided by investing activities during the first two quarters of Fiscal 2000
included net cash proceeds from the sale of the High Performance Plastics
Segment of $208,976,000 and the sale of the remaining Emcore Corporation
preferred stock for $8,125,000, net of certain transaction costs.
Net cash used in financing activities during the first two quarters of Fiscal
2000 was $94,209,000 as compared to $750,000 of cash used during the first two
quarters of Fiscal 1999. The primary use of cash in financing activities during
the first two quarters of Fiscal 2000 was to repay the outstanding borrowings at
Fleet Bank as a result of the sale of the High Performance Plastics Segment.
On April 2, 2000, the Company had approximately $99,478,000 in cash and cash
equivalents as compared to approximately $4,145,000 at September 26, 1999.
Working capital at April 2, 2000 was $71,906,000 compared to a working capital
deficit of $10,597,000 at September 26, 1999. On April 2, 2000, the Company had
outstanding borrowings of $6,547,000 under its $10,000,000 revolving credit
facility with the CIT Group/Business Credit, Inc. (subject to a borrowing base
limitation of approximately $9,479,000 at April 2, 2000). The principal uses of
cash during the first two quarters of Fiscal 2000 were to repay debt and to fund
capital expenditures and operating losses at the new Optoelectronics facility in
Tampa, Florida. The Company plans to spend an additional $20.0 - $25.0 million
on capital expenditures for the Optoelectronics Segment. The Company plans to
fund these expenditures with the proceeds from the sale of the High Performance
Plastics Segment. The Company believes that cash from its operations, its
ability to borrow under the revolving credit facility mentioned above and
proceeds from the sale of the High Performance Plastics Segment will provide
sufficient liquidity to finance its existing level of operations and meet its
debt service obligations. However, there can be no assurance that the Company's
operations together with amounts available under the revolving credit facilities
will continue to be sufficient to finance its existing level of operations and
meet its debt service obligations. The Company's ability to meet its debt
service and other obligations depends on its future performance, which in turn,
is subject to general economic conditions and to financial, business and other
factors, including factors beyond the Company's control. If the Company is
unable to generate sufficient cash flow from operations, it may be required to
refinance all or a portion of its existing debt or obtain additional financing
including equity financing. There can be no assurance that the Company will be
able to obtain such refinancing or additional financing.
Effects of Inflation
The markets in which the Company sells products are competitive. Thus, in an
inflationary environment the Company may not in all instances be able to pass
through to consumers general price increases; certain of the Company's
operations may be materially impacted if such conditions were to occur. The
Company has not in the past been adversely impacted by general price inflation.
Year 2000
Many software applications and operational programs written in the past were not
designed to recognize calendar dates beginning in the Year 2000. The failure of
such applications or systems to properly recognize the dates beginning in the
Year 2000 could result in miscalculations or system failures which could result
in an adverse impact on the Company's operations.
The Company instituted a Year 2000 task force that reports to the Audit
Committee of the Board of Directors. The Company also initiated a comprehensive
project, overseen by the task force, to prepare its computer systems,
communication systems and manufacturing/testing equipment for the Year 2000. The
project primarily included three phases: 1) identification and assessment of all
software, hardware and equipment that could potentially be affected by the Year
2000 issue, 2) remedial action necessary to bring such systems into compliance
and 3) further testing, if necessary. The Company completed all phases of its
project. The Company primarily used internal resources in its Year 2000 project
and incurred costs of less than $800,000.
The Company also contacted critical suppliers of products and services and
customers to determine the extent to which the Company might be vulnerable to
such parties' failure to resolve their own Year 2000 issues. The Company does
not have a concentration of dependence on these parties. The effect, if any, on
the Company's results of operations from the failure of such parties to be Year
2000 ready is not reasonably estimable.
The Company formulated contingency plans with respect to its reasonably likely
worst case scenario which is the unavailability of critical raw materials. The
contingency plans for critical raw materials include alternate materials or
sources and advance inventory purchases of certain raw materials.
As of the date of this report, the Company did not experience any significant
disruptions in any of its systems on January 1, 2000, nor has any supplier or
customer of the Company made us aware of any significant disruptions. The
Company will continue to monitor this issue through the remainder of the
calendar year.
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
Market Risks
The Company is exposed to various market risks, including changes in interest
rates. The Company's earnings and cash flows are subject to fluctuations due to
changes in interest rates on its floating rate revolving credit advances. The
Company's risk management policy includes the use of derivative financial
instruments (interest rate swaps) to manage its interest rate exposure. The
counter parties are major financial institutions. The Company does not enter
into derivatives or other financial instruments for trading or speculative
purposes. During the second quarter of Fiscal 2000, the Company liquidated all
of its interest rate swap instruments for cash proceeds and a gain of $950,000.
At April 2, 2000, approximately $6.5 million of the Company's floating rate
revolving credit advances was not covered under an interest swap agreement. For
floating rate debt, interest changes generally do not affect the fair market
value but do impact future earnings and cash flows assuming other factors are
held constant. Based upon this balance, a change of one percent in the interest
rate would cause a change in interest expense of approximately $65,000 on an
annual basis.
Forward Looking Information
The information provided herein may include forward-looking statements relating
to future events, such as the development of processes, the commencement of
production, or the future financial performance of the Company. Actual operating
results may differ from such projections and are subject to certain risks,
including, without limitation, risks arising from: increased competition, delays
in developing and commercializing new products and labor actions against the
Company or the Company's customers or vendors.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
(a) The Company knows of no pending legal proceedings to which the
Company or any of its subsidiaries is a party or of which any of
their property is the subject other than routine litigation
incidental to the Company's business or legal proceedings in
which an adverse outcome would not be expected to have a material
impact on the Company.
(b) No legal proceedings were terminated during the six months ended
April 2, 2000, other than routine litigation incidental to the
Company's business.
Item 2. Changes in Securities
On March 10, 2000, the Company declared a two-for-one stock split
in the form of a 100% stock dividend to its common stockholders
of record on March 20, 2000.
Item 3. Default upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
On March 10, 2000, the Company held its annual meeting of
stockholders in New York, NY. A total of 22,148,308 shares of
capital stock of the Company were entitled to vote at the
meeting. Of this amount, 20,607,830 shares were represented by
proxy. The number of shares that were present at the meeting
constituted a quorum for the transaction of all business that was
to be considered at the meeting. At that time, certain proposals
were submitted to a vote of the stockholders. All voted shares
reflect the two-for-one stock dividend.
The first proposal was to elect the eight incumbent directors for
a term of one year to be elected by the holders of common stock.
The following directors were elected:
Name Voted For Withheld
---------- --------
Peter C. B. Bynoe 20,589,766 18,064
Thomas E. Constance 20,587,406 20,424
Howard R. Curd 20,587,766 20,064
Richard D. Kimbel 20,394,660 213,170
Curtis L. Mack 20,587,406 20,424
Roland H. Meyer 20,589,406 18,424
John A. Porter 20,589,766 18,064
Robert L. Soran 20,587,766 20,064
Proposal Number 2 was to consider and take action upon the
ratification of the selection of Deloitte & Touche, LLP to serve
as the independent public accountants for the Company for the
fiscal year ending October 1, 2000. The following summarizes the
results of the vote:
Voted For Voted Against Abstained
---------- ------------- ---------
20,468,920 36,596 102,314
Proposal Number 3 was to approve the Company's 2000 Stock Plan.
The following summarizes the results of the vote:
Voted For Voted Against Abstained
---------- ------------- ---------
15,800,218 434,648 135,130
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.51 Memorandum of Understanding and Confidentiality Agreement
dated February 23, 1995, between the Company and Firestone
Building Products Division of Bridgestone/ Firestone, Inc.
and amendments thereto. (1)
(1)Confidential treatment of portions of this document is
being requested pursuant to Rule 24b-2 of the Securities
and Exchange Commission. The full document has been filed
with the Commission on a confidential basis.
10.52 Amended and Restated Uniroyal Technology Corporation
Deferred Compensation Plan Effective August 1, 1995, as
Amended April 3, 2000.
(b) Reports on Form 8-K
Report on Form 8-K dated March 14, 2000, related to the sale of
the High Performance Plastics Segment to Spartech Corporation.
Report on Form 8-K dated April 27, 2000, related to the
restatement of the Uniroyal Technology Corporation Consolidated
Financial Statements as of September 26, 1999, and September 27,
1998, and for the fiscal years ended September 26, 1999,
September 27, 1998 and September 28, 1997, for the effect of
discontinued operations and the retroactive effect of a
two-for-one stock split.
Report on Form 8-K/A dated April 27, 2000, related to restated
unaudited Pro Forma Financial Information in connection with the
sale of the High Performance Plastics Segment to Spartech
Corporation.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DATE: May 17, 2000 By: /s/ George J. Zulanas, Jr.
------------ --------------------------
George J. Zulanas, Jr., Executive
Vice President, Treasurer and Chief
Financial Officer
EXHIBIT 10.51
CONFIDENTIAL TREATMENT REQUESTED
MEMORANDUM OF UNDERSTANDING
AND CONFIDENTIALITY AGREEMENT
BETWEEN
FIRESTONE BUILDING PRODUCTS COMPANY
DIVISION OF BRIDGESTONE/FIRESTONE, INC.
525 CONGRESSIONAL BOULEVARD
CARMEL, INDIANA
AND
UNIROYAL ADHESIVES & SEALANTS DIVISION
OF UNIROYAL TECHNOLOGY CORPORATION
312 N. HILL STREET
MISHAWAKA, INDIANA
1) EFFECTIVE DATE AND TERM OF AGREEMENT:
The effective date of this Agreement between Firestone Building
Products Company, hereafter referred to as "Firestone", and Uniroyal
Adhesives and Sealants, hereafter referred to as "UAS", is February 23,
1995 (the "Effective Date"). The term of this Agreement shall be in
effect for five (5) years expiring on February 20, 2000.
2) PURPOSE:
This Agreement is entered into to provide Firestone with an exclusive
supply of adhesives and sealants at conversion pricing with materials
purchased by Firestone.
3) MINIMUM REQUIREMENT:
For a period of five (5) years from the Effective Date, Firestone will
buy from UAS and UAS will sell to Firestone a minimum of eighty percent
(80%) of
Firestone's annual volume requirements of all UAS adhesives and
sealants qualified by Firestone, including adhesive formulations
previously developed by or purchased by Firestone and those purchased
or developed during the term of this Agreement, all such products being
hereinafter referred to as "Products". Products manufactured by UAS not
meeting Firestone's specifications and roofing tapes and tape laminates
will not be included in the calculation of Firestone's total
requirements.
4) FORECAST REQUIREMENTS:
Upon signing of this Agreement and by the fifteenth day of each
calendar month thereafter, Firestone will furnish UAS with an itemized
estimate of Firestone's purchases from UAS by type and quantity for the
following three months. In addition, Firestone will provide UAS with an
annual forecast by October 1 of each twelve-month period beginning
November 1 and ending the following October 31. Uniroyal will be
responsible for all factory scheduling and raw material order releasing
as required to meet Firestone's forecasted production requirements. In
the event of an increase in premium labor cost to Uniroyal resulting
from a change in Firestone's projected 30-day requirements, Firestone
will reimburse Uniroyal for such documented premium cost increases that
have been pre-approved by Firestone.
5) RAW MATERIALS / INVENTORY MINIMUM:
Quality requirements will be mutually agreed upon and communicated to
raw material suppliers. Firestone and Uniroyal will ensure that raw
material suppliers comply with quality assurance standards and will
provide technical assistance for testing and specifications. Both
parties will use their best efforts to ensure the lowest raw material
prices for the Products. Firestone will have the primary responsibility
for negotiation of raw material purchases but may request assistance
from Uniroyal. UAS will keep in inventory fresh (within UAS' specified
shelf life) adhesives and sealants sufficient to meet Firestone's
requirements for 30 days as indicated by Firestone's forecasts and will
provide for sufficient capacity to meet Firestone's annual forecasts.
UAS will furnish to Firestone a weekly inventory summary which may be
used to adjust production requirements as necessary by Firestone.
6) TECHNICAL ASSISTANCE:
Firestone will direct all technical support, if and as required, and
will compensate Uniroyal for trials run based upon cost per hour mix
time. UAS will provide Firestone with technical assistance relating to
adhesives and sealants.
7) NEW PRODUCT DEVELOPMENT:
Should Firestone develop or cause to be developed an adhesive, primer
or sealant that it wishes to use, it will disclose such product to UAS
and will provide UAS the opportunity to manufacture the product(s),
provided that such product(s) can be produced at competitive prices.
UAS will in good faith consider production of such product(s) under
this Agreement but shall not be obligated to enter into such
production. If the parties agree upon production of such products,
Uniroyal shall qualify and begin production of such production within
one (1) year after such agreement and such products shall be Products
subject to this Agreement. If the parties do not agree upon production
of such product(s), such product(s) shall not be considered as part of
Firestone's requirements under this Agreement to the extent that
Firestone purchases such new product(s) elsewhere or manufactures them,
and Firestone will not be restricted by this Agreement from purchasing
such product(s) from any other supplier.
8) EXCLUSIVITY:
Effective upon the completion of UAS's existing obligations to other
roofing customers, which UAS estimates will occur in or about October
1995, and as long as Firestone is not in default under this Agreement,
UAS will produce all roofing Products for the exclusive use of
Firestone. Such Products will in each calendar year during the term of
this Agreement, comprise eighty percent (80%) of the volume of Products
purchased by Firestone. Such Products will include adhesive
formulations previously developed by or purchased by Firestone, as well
as Products purchased or developed during the term of this Agreement.
The parties will coordinate the public announcement of the exclusivity
provided for in this Paragraph 8 at a mutually acceptable time, but not
later than December 31, 1995.
9) PRICE / BILLING:
The price of the Products will be the sum of the costs of the raw
materials used in the production of the Products and the conversion
charges set forth in Exhibit A, such conversion charges being
hereinafter referred to as "Conversion Charges". UAS will supply
Firestone with the cost of raw materials for each formulation of
Products. It is intended that Firestone will enjoy the benefit of lower
raw material costs resulting from formulation changes developed by
Firestone. UAS will invoice Firestone for raw materials and packaging
based on minimum purchase requirements on the fifteenth (15th) day of
each month for the next month's forecasted requirements (or the minimum
required purchase quantities) based upon the then current negotiated
raw material prices. Uniroyal will bill Firestone for the Conversion
Charges on a per gallon basis once the Products have been canned or
packaged. Such Conversion Charges will be subject to change upon
notification of contractual increases in labor costs and/or increases
in utility costs of Uniroyal to perform its obligations under this
Agreement or other increases in costs resulting from formulation
changes made by Firestone. Uniroyal shall include documentation of the
cost increases with such notification. Processing efficiencies will not
affect the Conversion Charges.
10) TERMS OF SALE:
The following terms will apply to all sales:
Packaged In: Metal containers or foil-lined cartridges identifying the
manufacturer as UAS (if requested by Firestone) and meeting all U.N.
and D.O.T. regulations.
Freight Classifications: Adhesives; Flammable Liquid; Class 3; UN1133
and UN1256; Packing Group III/Isocyanates; Liquid; Class 6.1; UN2207;
Packing Group III. NMFC Item No. 170060-Roofing; Weight Class 55.
Red diamond (Flammable); Flammable Liquid, Class 3 White Diamond
(Non-flammable); harmful; stow away from foodstuffs, Class 6.1.
Payment and Price Changes: Terms shall be net ** days - Prices are
F.O.B. UAS's plant in Mishawaka, Indiana.
Standard Package:
*********************
*********************
*********************
*********************
*********************
*********************
*********************
Confidential Information omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
Minimum Orders:
MINIMUM
PACKAGE QUANTITY
11 Oz. Tubes (Lap Sealant) ********
11 Oz. Tubes (Fastener Sealer) ********
1 Qt. Tubes ********
Gallon Cans ********
5 Gallon Pails ********
55 Gallon Drums ********
DC11620 ********
Confidential Information omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
Returns:
Return of merchandise (for any reason) must be pre-authorized. Please
contact Uniroyal Adhesives & Sealants Customer Service 1-800-336-1973
or 1-219-256-8655 for assistance.
11) WARRANTY:
The Products are hereby warranted to Firestone to meet the
specifications furnished by Firestone to Uniroyal, if any, for such
Products. Such warranty may not be assigned or otherwise transferred by
Firestone. UAS also makes the warranty set forth in Paragraph 16
hereof. NO OTHER WARRANTY, EXPRESSED OR IMPLIED, OF FITNESS FOR A
PARTICULAR PURPOSE OR ANY OTHER THING IS MADE. Firestone's exclusive
remedy for breach of the foregoing warranties shall be a refund of the
net price paid by Firestone for the Product in question, replacement
with a similar quantity or some other mutually agreed upon settlement.
Except as stated above, UAS shall not be liable for any defect in, or
breach of obligation relating to the quality of defects in the Products
sold pursuant to this Agreement, regardless of the theory that may be
asserted, including, without limitation, negligence, contract, absolute
liability in tort or misrepresentation.
12) COMPETITION:
On and after February 21, 1996, if Firestone obtains a bona fide offer
from a qualified toll supplier for competitive products at prices *%
lower (after all discounts) than the Conversion Cost and all other
terms are identical to the terms of this Agreement, Firestone may
provide UAS written evidence of such offer and UAS shall have the right
to:
a) meet the competitive price offer to retain its share of
Firestone's business for the said product to the extent of the
quantity contained in and period of time specified in such
offer ("Option A") or
b) decline to meet the competitive price offer and release
Firestone from its obligation to purchase its requirements of
said Product from UAS, pursuant to the terms of this
Agreement, during the period of time set forth in the
competitive offer ("Option B"). UAS's exercise of Option B in
no way shall preclude UAS from exercising Option A after a
period of twelve (12) months has elapsed from the exercise of
Option B.
In the event that UAS shall exercise Option B, Firestone shall purchase
from UAS existing work-in-process, finished goods, packaging inventory
and raw materials held by UAS in connection with such products.
Reimbursement of work-in-process and finished goods will be at
conversion costs as specified in Exhibit A. Reimbursement of raw
material and packaging costs will be at actual costs to Uniroyal not
previously paid by Firestone.
13) TOLL LICENSING OF PRODUCTS:
During the term of this Agreement and provided that Firestone is not in
default, Uniroyal will license a supplier specified by Firestone to
produce up to 20% of Firestone's annual requirements of each Product.
At the end of the term of this Agreement, Firestone will acquire the
exclusive rights and ownership of the splice adhesive patent and of all
other Products for no additional consideration. In the event that
Uniroyal shall cease to produce roofing adhesives as a result of its
election of Option B under Paragraph 12 of this Agreement for
substantially the remainder of the term of this Agreement, Uniroyal
will license splice adhesive patent number 4,603,164 to Firestone for a
royalty fee of $50,000 per year for the remainder of the term of this
Agreement; such fee will be prorated for periods of less than a year.
In the event that UAS shall cease to produce Products for reasons other
than election of Option B under Paragraph 12 of this Agreement,
Uniroyal shall release the aforesaid splice adhesive patent and
Uniroyal's rights to the other Products to Firestone for no further
consideration.
14) FORCE MAJEURE:
UAS will make a good faith effort at all times and under all conditions
to perform hereunder. UAS, however, shall not be liable for delay in
the performance or for failure to render any performance under this
Agreement, and without in any way limiting the generality of the
foregoing, any such delay or failure shall be excused, when such delay
or failure is caused by governmental regulations (whether or not
valid), fire, strike, differences with workmen, war, flood, accident,
epidemic, embargo, shortage or raw materials with which goods sold
hereunder are made, shortage of railroad cars or steamers, delays or
failures of vendors to UAS, appropriation of plant or product in whole
or in part by federal or state authority, or any other cause or causes,
whether of like or different nature, beyond the reasonable control of
UAS. UAS may make partial delivery hereunder, and to other customers,
in proportions which are reasonable under all circumstances considering
its ability reasonably to procure materials and supplies, for making
the goods herein described and other goods, its ability to produce and
deliver goods to fulfill its contracts and fill its orders and its
whole business in the usual expected course thereof.
15) RIGHT OF TERMINATION:
Firestone reserves the right to terminate this agreement upon 90 days'
written notice upon the filing of a petition for bankruptcy under the
U. S. Bankruptcy Code by Uniroyal Technology Corporation.
16) HAZARDOUS SUBSTANCES:
UAS represents and warrants that the materials provided to Firestone
contain no substances other than those disclosed to Firestone on the
material safety data sheets issued from time to time which would
necessitate either the treatment of the material as a hazardous
substance pursuant to the Federal Resource Conservation and Recovery
Act or similar legislation of which Firestone notifies UAS or which
would require safety warnings or special handling of the material due
to risk of occupational disease or personal injury. UAS agrees to
notify Firestone about basic changes in product formulation or method
of manufacture which are significant enough to impact the performance
of the product(s) and performance as it relates to FM and UL code
approvals.
17) CHANGE OF OWNERSHIP OF EITHER PARTY:
Each of UAS and Firestone agrees to cause any entity that shall acquire
ownership of such party to assume this Agreement and all of such
party's obligations hereunder.
18) CONTINGENCY:
The effectiveness of this Agreement is contingent upon Firestone's
notification of Uniroyal within 30 days from the execution of this
Agreement that Firestone has removed any provisions inconsistent with
this Agreement from any other contract to which Firestone is a party
for the purchase of liquid adhesives.
19) NOTICES:
Any forecast, notice or other communication required or permitted to be
given under this Agreement shall be deemed to have been duly given if
delivered personally or if mailed, postage prepaid, in a depository
maintained by the United States Postal Service addressed as follows:
a) if to UAS, to:
Uniroyal Adhesives & Sealants Division
Uniroyal Technology Corporation
312 North Hill Street
Mishawaka, Indiana 46544
with a copy (except forecasts) to:
General Counsel
Uniroyal Technology Corporation
Two North Tamiami Trail, Suite 900
Sarasota, Florida 34236
b) if to Firestone, to:
The Firestone Building Products Company
Division of Bridgestone/Firestone, Inc.
525 Congressional Boulevard
Carmel, Indiana 46032-5607
20) MISCELLANEOUS:
This Agreement constitutes the entire agreement between the parties,
supersedes all prior or contemporaneous written or oral understandings
and agreements and may not be modified, added to or waived, in whole or
in part, except by a writing specifically amending this Agreement
signed by the party against whom such modification, addition or waiver
is asserted. No document or form used to order or acknowledge receipt
of an order for goods purchased under this Agreement shall in any way
alter the terms of this Agreement. This Agreement shall be governed by
and construed in accordance with the laws of the State of Indiana,
without giving effect to the conflict of laws principles thereof.
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed
by their duly authorized officials as of February 23, 1995.
FIRESTONE BUILDING PRODUCTS COMPANY
Division of Bridgestone/Firestone, Inc.
By: /s/ Paul Mineart
Paul Mineart
President
UNIROYAL ADHESIVES & SEALANTS
Division of Uniroyal Technology Corporation
By: /s/ Robert L. Soran
Robert L. Soran
President
<PAGE>
RIDER
TO
MEMORANDUM OF UNDERSTANDING
AND CONFIDENTIALITY AGREEMENT
BETWEEN
FIRESTONE BUILDING PRODUCTS COMPANY
AND
UNIROYAL ADHESIVES & SEALANTS DIVISION
The following provisions are incorporated in the Memorandum of
Understanding and Confidentiality Agreement dated as of February 23, 1995,
between Firestone Building Products Company Division of Bridgestone/Firestone,
Inc. and Uniroyal Adhesives & Sealants Division of Uniroyal Technology
Corporation (the "Agreement") and made a part thereof:
1) The license specified by the first sentence of paragraph 13 of
the Agreement shall be made without charge to Firestone or the
supplier.
2) The following new paragraph 21 is hereby added to the Agreement:
21. In the event that UAS shall desire to make
any changes to the formulation of any
Product, manufacturing process or quality
control standards from those in effect on
the Effective Date or as agreed to by the
parties thereafter, UAS shall consult with
Firestone and shall not implement any such
changes without Firestone's prior written
consent.
IN WITNESS WHEREOF, the parties have caused this Rider to be signed by
their duly authorized officers as of February 23, 1995.
FIRESTONE BUILDING PRODUCTS COMPANY
Division of Bridgestone/Firestone, Inc.
By: /S/ Paul Mineart
Paul Mineart
President
UNIROYAL ADHESIVES & SEALANTS
Division of Uniroyal Technology Corporation
By: /S/ Robert L. Soran
Robert L. Soran
President
<PAGE>
AMENDMENT TO
MEMORANDUM OF UNDERSTANDING
AND CONFIDENTIALITY AGREEMENT
BETWEEN
FIRESTONE BUILDING PRODUCTS COMPANY
DIVISION OF FIRESTONE, INC.
525 CONGRESSIONAL BOULEVARD
CARMEL, INDIANA
AND
UNIROYAL ADHESIVES & SEALANTS DIVISION
OF UNIROYAL TECHNOLOGY CORPORATION
2001 WEST WASHINGTON STREET
SOUTH BEND, INDIANA 46628
WHEREAS, Firestone Building Products Company ("Firestone") and Uniroyal
Adhesives & Sealants Division of Uniroyal Technology Corporation ("Uniroyal")
entered into a Memorandum of Understanding and Confidentiality Agreement dated
February 23, 1995, which agreement as modified by a Rider dated February 23,
1995 and an amendment dated May 10, 1998 is hereinafter referred to as the
"Agreement"; and
WHEREAS, Firestone and Uniroyal desire to extend the term of the
Agreement and to amend certain other provisions of the Agreement;
NOW THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency whereof are hereby
acknowledged, the parties hereby agree as follows (terms defined in the
Agreement being used as so defined except as otherwise provided herein):
1. The term of the Agreement is hereby extended to December 31,
2002.
2. The first clause of Section 3 of the Agreement is hereby
revised to read as follows: "For the term of this Agreement,".
3. The fifth sentence of Section 5 of the Agreement is hereby
revised to read as follows: "UAS will keep in inventory fresh
(within UAS' specified shelf life) adhesives and sealants
sufficient to meet Firestone's requirements for 30 days
(except that for Splice and Quick Prime the period shall be 45
days of approved inventory) as indicated by Firestone's
forecasts and will provide for sufficient capacity to meet
Firestones' annual forecasts."
4. Exhibit A attached hereto shall replace Exhibit A to the
Agreement.
5. The following portions of Section 10 of the Agreement are
hereby revised to read as follows:
Payment and Price Changes: Terms shall be net 10 days - Prices
are F.O.B. UAS's plant in South Bend, Indiana.
Minimum Orders:
PACKAGE MINIMUM QUANTITY
10.1 Oz. Tubes (Fastener Sealer) *************
Gallon Cans *************
5 Gallon Pails *************
55 Gallon Drums *************
M6391 Pourable Sealer *************
3 Gallon Low VOC *************
Confidential Information omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote omissions.
Returns:
Return of merchandise (for any reason) must be pre-authorized.
Please contact Uniroyal Adhesives & Sealants Customer Service
1-800-999-4583 or 1-219-246-5321 for assistance.
6. Upon execution of this Amendment, Uniroyal shall deliver to
Firestone copies of all formulas used in producing the
Products.
7. The second sentence of Section 13 of the Agreement is hereby
revised to read as follows: "On February 22, 2000, Uniroyal
shall transfer to Firestone the exclusive rights and ownership
of the splice adhesive patent and of all the other Products
for no additional consideration, and Firestone hereby grants a
license to Uniroyal to use such patent and other intellectual
property for the production of Products covered by this
agreement.
8. The address for UAS in Section 19 of the Agreement is hereby
revised to read as follows:
Uniroyal Adhesives & Sealants Division
Uniroyal Technology Corporation
2001 West Washington Street
South Bend, Indiana 46628
Except as otherwise modified by this Amendment, all of the terms and
conditions of the Agreement shall continue in full force and effect.
IN WITNESS WHEREOF, the parties have caused this Amendment to
Memorandum of Understanding and Confidentiality Agreement to be executed by
their duly authorized officers this 9 day of June, 1998.
FIRESTONE BUILDING PRODUCTS COMPANY
Division of Bridgestone/Firestone, Inc.
By: /s/ David Grass
David Grass
President
UNIROYAL ADHESIVES & SEALANTS
Division of Uniroyal Technology Corporation
By: /s/ Robert L. Soran
Robert L. Soran
President
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT A
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
06/01/1998 THRU 05/31/1999 06/01/1999 THRU 05/31/2000 06/01/2000 THRU 12/31/2002
MAT'L CONV. TOTAL MAT'L CONV. TOTAL MAT'L CONV. TOTAL
PRICE PRICE PRICE
BONDING (M6504)
SPLICE 1 GALLON
SPLICE 5 GALLON
QUICK PRIME 1 GALLON
QUICK PRIME 5 GALLON
SPLICE WASH
POURABLE SEALER
BONDING (DC12147)
ON-PRODUCTION TRIAL BATCH
* JUNE 1998 RAW MATERIAL COSTS ARE FOR REFERENCE ONLY
</TABLE>
Confidential Information omitted and filed separately with the Securities and
Exchange Commission. All figures deleted.
EXHIBIT 10.52
UNIROYAL TECHNOLOGY CORPORATION
DEFERRED COMPENSATION PLAN
Effective August 1, 1995, as amended April 3, 2000
ARTICLE I - INTRODUCTION
This Plan is adopted by Uniroyal Technology Corporation, a Delaware
Corporation (the "Company"), effective August 1, 1995, for the benefit of
certain key employees.
1.1 Purpose of Plan. The purpose of this Plan is to provide certain
management employees of the Company with the opportunity to defer a portion of
their salaries and bonuses otherwise payable to them as employees of the Company
that they are unable to contribute to the Company's 401(k) Savings Plan because
of statutory maximums applicable to that plan. Participation in this Plan is
intended to be limited to those persons described in Section 201(2) of the
Employee Retirement Income Security Act of 1974 ("ERISA"). The Plan is not
intended to be a qualified plan under Section 401(a) of the Internal Revenue
Code of 1986, as amended.
ARTICLE II - DEFINITIONS
2.1 "Administrator" means the Employee Benefits Committee of the
Company appointed by the Board or such other person or committee as may be
appointed from time to time by the Board or by the Compensation Committee to
supervise the administration of the Plan.
2.2 "Board" means the Board of Directors of the Company.
2.3 "Code" means the Internal Revenue Code of 1986, as amended from
time to time. Reference to any section or subsection of the Code includes
reference to any comparable or succeeding provisions of any legislation which
amends, supplements or replaces such section or subsection.
2.4 "Company" means Uniroyal Technology Corporation, a Delaware
corporation.
2.5 "Compensation Committee" means the Compensation Committee of the
Board.
2.6 "Effective Date" means August 1, 1995.
2.7 "Employee" means a person employed by the Company.
2.8 "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time.
2.9 "Named Fiduciary" means the Administrator.
2.10 "Participant" means any Employee who participates in the Plan in
accordance with Article III.
2.11 "Plan" means the Uniroyal Technology Corporation Deferred
Compensation Plan set forth herein, together with any and all amendments and
supplements which may be adopted from time to time in connection with the Plan.
2.12 "Plan Year" means the period beginning on August 1, 1995, and
ending on the following December 31, and the twelve-month period beginning on
each January 1 thereafter.
2.13 "President" means the President of the Company. "Chief Executive
Officer" means the Chief Executive Officer of the Company.
ARTICLE III - PARTICIPATION
3.1 Commencement of Participation. Any management Employee who is
designated as eligible to be a Participant in the Plan will become a Participant
on the later of August 1, 1995, or the date he or she satisfies these
eligibility requirements. The initial Participants in the Plan as of August 1,
1995 shall be designated by the Board. New Participants after that date may be
designated either by the Board, by the Compensation Committee or by the
Administrator. To become a Participant in the Plan, an eligible employee must
submit an election to participate in the form prescribed by the Administrator in
writing on or before the day on which participation is to begin. The Company
will establish for each Participant an unfunded deferred compensation
recordkeeping account, as specified in Section 4.3.
3.2 Cessation of Participation. A Participant will cease to be a
Participant as of the earlier of (a) the date on which the Plan terminates and
(b) the date on which there are no benefits held by the Plan on his or her
behalf.
ARTICLE IV - BENEFITS
4.1 Election of Deferral
(a) Each Participant shall be entitled to make an irrevocable
election to defer receipt of up to $55,000 of the salary or any
annual Management Incentive Plan compensation or other bonus
payments or a combination thereof to be earned by the Participant
pursuant to his or her employment with the Company in each Plan
Year. A Participant may not defer less than one percent (1%) of
either such salary or annual bonus payments in any Plan Year. A
Participant's deferral election will apply only to salary or annual
bonus payments earned after execution of the election and delivery
of it to the Administrator. Amounts deferred under the Plan will be
accounted for in the manner described in Section 4.3 hereof.
(b) Each deferral election is an irrevocable election. A Participant
may not withdraw an amount credited to his or her account until he
or she is eligible to receive a distribution under the plan's
distribution rules set forth in Section 4.4.
(c) A Participant's initial election to participate in the Plan must
be delivered to the Administrator within 30 days of the first date
on which the Participant is eligible to participate in the Plan. An
Employee who is eligible but does not file a participation election
will be deemed to have elected a zero deferral election under the
Plan. A Participant may change his or her election to defer future
salary or annual bonus payments by submitting a supplemental
election form to the Administrator on or before the first day of any
Plan Year as of which the change is to become effective.
(d) A Participant may terminate his or her election to defer at any
time by giving written notice thereof to the Company. No termination
of deferral shall be given retroactive effect, and any such election
shall make the terminating Participant ineligible for participation
until the first day of the next Plan Year.
(e) The Company shall be responsible for payment of any amounts
deferred hereunder. By electing to participate herein, each
Participant agrees to look solely to the Company for payment of such
amounts.
4.2 Interest. In addition to the deferral amounts described in Section
4.1, the Company will pay interest on a Participant's account ("Interest"). Such
interest will be credited to the Participant's account as of the date of each
deferral and will be posted to the Participant's account on the earliest of the
last day of each Plan Year, the date of termination of the Plan and the date on
which the Participant shall cease to be employed by the Company. In the case of
a distribution, interest will be credited through the day prior to the date of
distribution. Any Interest shall be credited only to the Participant's account
in the Plan and is not payable to the Participant in cash. The Participant has
no right to such amounts other than through the provisions of the Plan relating
to the distribution of Plan benefits. Interest will be credited by the Company
within the limits described in this section to all Participants who defer
earnings to the Plan during a Plan Year. For purposes of this section, the
provisions of the Qualified Savings Plan limiting the ability of highly
compensated employees from contributing to and sharing in contributions under
the Qualified Savings Plan shall not apply.
(a) Rate of Interest. Interest under the Plan will be paid at the
rate of seven and 84/100 percent (7.84%) per annum on each deferral
by the Participant for the respective pay period or annual bonus and
on the amounts in the Participant's account during a Plan Year that
were contributed during previous Plan Year.
(b) Vesting. A Participant is always fully vested in his or her
account under the Plan.
4.3 Deferred Compensation Accounts. A separate account shall be
established and maintained for each Participant reflecting the salary and annual
bonus amounts deferred pursuant to this Plan by the Participant as well as any
Interest credited to the Participant's account.
4.4 Distributions
(a) Distributions on Disability, Retirement or Termination of
Employment. A Participant will be entitled to a distribution from
this Plan when the Participant's employment as an Employee with the
Company is terminated by reason of disability, retirement on or
after age sixty-five or for any other reason. A Participant may also
withdraw all or a portion of the balance of his account under the
Plan as of the last day of any fiscal quarter, provided that the
Participant has given the Company written notice of such withdrawal
not less than thirty (30) days prior to the end of such quarter. At
that time the Participant shall be eligible to receive all or a
portion his or her account balance as designated in the notice of
withdrawal. Any withdrawal other than under the first sentence of
this Section 4.4(a) will be subject to forfeiture of ten percent
(10%) of the amount being so withdrawn.
(b) Termination of Plan. If the Plan is terminated, all Plan
Participants shall be entitled to receive immediate distributions of
the entire balances of their accounts under the Plan.
(c) Change of Control. In the event of a change of control of the
Company followed by a material diminution of the duties,
compensation or employment benefits of the Participant prior to the
termination of the Plan or the Participant's agreement under the
Plan, the Participant shall become entitled to an immediate
distribution of all benefits under this Plan as of the calendar
month in which such diminution became effective. For purposes of
this Subsection, a "change in control" shall be deemed to have
occurred if the conditions set forth in any one of the following
situations shall have occurred:
(1) Any Person is or becomes the "beneficial owner" within the
meaning of Rule 13d-3 under the Securities Exchange Act of 1934
(the "Exchange Act"), directly or indirectly, of securities of the
Company representing 30% or more of the combined voting power of
the Company's then outstanding securities; or
(2) During any period of two consecutive years, individuals who at
the beginning of such period constitute the Board and any new
director (other than a director designated by a Person who has
entered into an agreement with the Company to effect a transaction
described in paragraphs (a), (c) or (d) of this subsection) whose
election by the Board or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds (2/3)
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 (other than approval given in
connection with an actual or threatened proxy or election contest)
cease for any reason to constitute a majority thereof; or
(3) The stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other
than (i) a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining or
outstanding or by being converted into voting securities of the
surviving entity or parent entity), in combination with the
ownership of any trustee or other fiduciary holding securities
under an employee benefit plan of the Company, at least 50% of the
combined voting power of the voting securities of the Company or
such surviving entity (or parent entity) outstanding immediately
after such merger or consolidation, or (ii) a merger or
consolidation effected to implement a recapitalization of the
Company (or similar transaction) in which no Person acquires more
than 30% of the combined voting power of the Company's then
outstanding securities; or
(4) The shareholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the
Company's assets (or any transaction having a similar effect).
For the purpose of this Subsection, "Persons" shall have the
meaning given in Section 3(a)(9) of the Exchange Act, as modified
and used in Sections 13(d) and 14(d) thereof; however, a Person
shall not include (i) the Company or any of its subsidiaries, (ii)
a trustee or other fiduciary holding securities under an employee
benefit plan of the Company or any of its subsidiaries, (iii) an
underwriter temporarily holding securities pursuant to an offering
of such securities, or (iv) a corporation owned, directly or
indirectly, by the stockholders of the Company in substantially
the same proportions as their ownership of stock of the Company.
(d) Form of Distribution. The amount due the Participant under this
Plan shall be paid to the Participant or, in the event of the
Participant's death, to the Participant's beneficiary in a cash lump
sum within 60 days of the date on which the Participant becomes
entitled to a distribution. A Participant's distribution shall be
used first to satisfy any debit balance or other indebtedness
Participant may have to the Company. Further, if in the opinion of
the Company's management an immediate cash distribution would have a
material adverse effect upon the Company, the Company may elect to
pay the Participant in up to five equal annual installments,
including Interest on the unpaid balance at the rate set forth in
Section 4.2(a) above.
4.5 Funding. It is the intent of the Company that this plan be an
unfunded plan for tax purposes and for purposes of Title I of ERISA.
Notwithstanding that intention, the Company shall have the option of setting
aside funds to satisfy its liabilities by funding this Plan through the purchase
of insurance or through the establishment of a rabbi trust or the Company may
choose not to set aside funds to satisfy its liabilities under this plan at all.
If the Company chooses to set aside funds into a rabbi trust, the terms of the
rabbi trust shall conform at all time to the terms of the model trust
promulgated by the Internal Revenue Service in Revenue Procedure 92-64. In any
event, however, the rights of the Participant or any Beneficiary of the
Participant shall be those of an unsecured creditor of the Company. Any
insurance policy or other asset acquired by the Company shall be deemed not to
be held in trust for the benefit of the Participant and not to be collateral
security for the performance of the obligations of the Company, but shall remain
a general, unpledged, and unrestricted asset of the Company.
4.6 Other Benefit Plans. The amount of each Participant's salary and
bonuses which he or she elects to defer under the Plan shall not be deemed to be
compensation for the purpose of calculating the amount of a Participant's
benefits or contributions under a pension plan or retirement plan qualified
under Section 401(a) of the Code, the amount of life insurance payable under any
life insurance plan established or maintained by the Company, or the amount of
any disability benefit payments payable under any disability plan established or
maintained by the Company, except to the extent specifically provided in any
such plan.
ARTICLE V - ADMINISTRATION OF PLAN
5.1 Plan Administrator. The administration of the Plan shall be under
the supervision of the Administrator. It shall be a principal duty of the
Administrator to see that the Plan is carried out in accordance with its terms
for the exclusive benefit of Participants without discrimination among them. The
Administrator will have full power to administer the Plan in all of its details,
subject to applicable requirements of law. For this purpose, the Administrator's
powers will include, but will not be limited to, the following authority, in
addition to all other powers provided by this Plan:
(a) to make and enforce such rules and regulations as it deems
necessary or proper for the efficient administration of the Plan,
including the establishment of any claims procedures that may be
required by applicable provisions of law;
(b) to exercise discretion in interpreting the Plan;
(c) to exercise discretion in deciding all questions concerning the
Plan and the eligibility of any person to participate in the Plan;
(d) to appoint such agents, counsel, accountants, consultants, and
other persons as may be required to assist in administering the
Plan; and
(e) to allocate and delegate its responsibilities under the Plan and
to designate other persons to carry out any of its responsibilities
under the Plan, any such allocation, delegation, or designation to
be in writing.
The decisions made by and the actions taken by the Administrator in the
administration of the Plan shall be final and conclusive on all persons. The
Administrator shall not be liable for any actions taken in good faith.
5.2 Examination of Records. The Administrator will make available to
each Participant for examination at reasonable times during normal business
hours such of the records under the Plan that pertain to the Participant,
5.3 Reliance on Tables. In administering the Plan, the Administrator
will be entitled to the extent permitted by law to rely conclusively on all
tables, valuations, certificates, opinions, and reports which are furnished by,
or in accordance with the instructions of accountants, counsel, or other experts
employed or engaged by the Administrator.
5.4 Nondiscriminatory Exercise of Authority. Whenever in the
administration of the Plan any discretionary action by the Administrator is
required, the Administrator shall exercise its authority in a non-discriminatory
manner so that all persons similarly situated will receive substantially the
same treatment and so that no discretionary acts are taken that would be
discriminatory under the Code.
5.5 Indemnification of Administrator. The Company agrees to indemnify
and to defend to the fullest extent permitted by law any Employee serving as the
Administrator or as a member of a committee designated as Administrator
(including any Employee or former Employee who formerly served as Administrator
or as a member of such committee) against all liabilities, damages, costs and
expenses (including attorneys' fees and amounts paid in settlement of any claims
approved by the Company) occasioned by any act or omission to act in connection
with the Plan, if such act or omission is in good faith.
ARTICLE VI - AMENDMENT AND TERMINATION OF PLAN
6.1 Amendment and Termination. The Plan may be amended or terminated
when in the sole opinion of the Company such amendment or termination is
advisable. The plan can be amended retroactively at any time, except that it
cannot be amended so that it materially adversely affects the rights of a
Participant who has vested benefits under the Plan. Any amendment or termination
shall be made by a written instrument signed by the Chief Executive Officer or
President and consented to by the Board or the Compensation Committee.
ARTICLE VII - CLAIMS FOR BENEFITS
7.1 Submission of Claim. Any claim for specific benefits under this
Plan shall be submitted to the Administrator.
7.2 Notice of Denial of Claim. If a claim for benefits under this Plan
is denied, the Administrator shall provide notice to the claimant in writing of
the denial within 90 days after its submission. The notice shall be written in a
manner calculated to be understood by the claimant and shall include:
(a) the specific reason or reasons for the denial;
(b) specific reference to the pertinent Plan provisions on which the
denial is based;
(c) a description of any additional material or information
necessary for the claimant to perfect the claim and an explanation
of why such material or information is necessary; and
(d) an explanation of the Plan's claims review procedures.
7.3 Extension of Time. If special circumstances require an extension of
time for processing the initial claim, a written notice of the extension and the
reason therefor shall be furnished to the claimant before the end of the initial
90-day period. In no event shall such extension exceed 90 days.
7.4 Review of Denial of Claim. The decision on review shall be made
within 60 days of receipt of the request for review, unless special
circumstances require an extension of time for processing, in which case a
decision shall be rendered as soon as possible, but not later than 120 days
after receipt of the request for review. If such an extension of time is
required, written notice of the extension shall be furnished to the claimant
before the end of the original 60-day period. The decision on review shall be
made in writing, shall be written in a manner calculated to be understood by the
claimant, and shall include specific references to the provisions of the Plan on
which the denial is based. If the decision on review is not furnished within the
time specified above, the claim shall be deemed denied on review.
ARTICLE VIII - MISCELLANEOUS PROVISIONS
8.1 Information to Be Furnished. Participants shall provide the Company
and the Administrator with such information and evidence, and shall sign and
deliver such documents, as may reasonably be requested from time to time for the
purpose of administration of the Plan.
8.2 Limitation of Rights. Neither the establishment of the Plan, nor
any amendment thereof, nor the payment of any benefits will be construed as
giving to any Participant or any other person any legal or equitable right
against the Company or Administrator, except as provided herein.
8.3 Spendthrift Clause. No Participant or Beneficiary shall have the
right to transfer, assign, alienate, anticipate, pledge, or encumber any part of
the benefits provided by this Plan, nor shall such benefits be subject to
seizure by legal process by any creditor of such Participant or Beneficiary. Any
attempt to effect such a diversion or seizure shall be deemed null and void for
all purposes hereunder to the extent permitted by ERISA and the Code. However,
the prohibitions contained in this Section shall not restrict the rights of
setoff set forth in Section 4.4.
8.4 Plan Not Contract. The Plan shall not be deemed to be a contract
between the Company and any Employee or to be consideration or an inducement for
the employment of any employee. No Participant in the Plan shall acquire any
right to be retained in the Company's employ by virtue of the Plan, nor, upon
his or her dismissal or upon his or her voluntary termination of employment,
shall he or she have any right or interest in the Plan other than as
specifically provided herein.
8.5 Governing Law. This Plan shall be construed, administered, and
enforced according to the laws of Florida.
8.6 Construction. A pronoun or adjective in the masculine gender
includes the feminine gender, and the singular includes the plural, unless the
context clearly indicates otherwise.
8.7 Successors. This Plan shall not be terminated by a transfer or sale
of the assets of the Company or by the merger or consolidation of the Company
into or with any other or entity, but the Plan shall be continued after such
sale, merger, or consolidation, and the transferee, purchaser, or successor
entity shall be required as part of the sale, merger, or consolidation to assume
the obligations to the Employer under this Plan and to continue this Plan.
8.8 Facility of Payment. Any amounts payable hereunder to any person
who is under legal disability or who, in the judgment of the Administrator, is
unable to properly manage his or her financial affairs may be paid to the legal
representative of such person or may be applied for the benefit of such person
in any manner which the Administrator may select, and any such payment shall be
deemed to be payment for such person's account and shall be a complete discharge
of all liability of the Company with respect to the amount so paid.
8.9 Withholding Payroll Taxes. To the extent required by the laws in
effect at the time compensation or deferred compensation payments are made, the
Company shall withhold from such compensation, or from deferred compensation
payments made hereunder, any taxes required to be withheld for federal, state or
local government purposes.
8.10 Administrative Expenses. All expenses of administering the Plan
shall be borne by the Plan and may be charged against the Participants' accounts
or any amounts distributable hereunder in the manner deemed appropriate by the
Administrator unless such amounts are paid by the Company.
8.11 Prohibition of Law. Any provision of this Plan prohibited by the
law of any jurisdiction shall, as to such jurisdiction, be ineffective to the
extent of such prohibition without invalidating the remaining provisions hereof.
8.12 Liability of Company. Except as otherwise expressly provided
herein, no member of the Board and no officer, employee, or agent of the
Company, shall have any liability to any person based on or arising out of the
Plan except in the case of gross negligence or fraud.
8.13 Resolution of Disputes. Any dispute arising between any
Participant and the Company pertaining to the Plan shall be resolved by a
committee which shall consist of one or more appointees of each of the Company
and the Participant. Any expense of legal fees incurred by any party to any such
dispute shall be borne by the party incurring the expense.
IN WITNESS WHEREOF, this Plan is executed on July _____, 1995.
UNIROYAL TECHNOLOGY CORPORATION
By:/s/Martin J. Gutfreund
Vice President - Human Resources
and Administration
<PAGE>
UNIROYAL TECHNOLOGY CORPORATION
DEFERRED COMPENSATION PLAN
EXHIBIT A
LISTING OF PARTICIPATING EMPLOYEES
Name of Participating Employee Date of Participation
- ------------------------------ ---------------------
Howard R. Curd August 15, 1995
Robert L. Soran August 15, 1995
George J. Zulanas, Jr. August 15, 1995
Oliver J. Janney August 15, 1995
Martin J. Gutfreund August 15, 1995
<PAGE>
UNIROYAL TECHNOLOGY CORPORATION
DEFERRED COMPENSATION PLAN
DEFERRAL ELECTION FORM
Name (Please Print)_____________________________ Social Security #_____________
(Last) (First) (MI)
In accordance with the provisions of the Uniroyal Technology
Corporation - Deferred Compensation Plan, I hereby elect to defer the portion of
the salary and annual bonuses specified below that would otherwise be payable to
me for services as an employee, for the period beginning _____, 19__, and ending
___, 19__.
Deferral Amount for Salary:
Amount of Salary Deferred $__________
Deferral Amount for Bonuses:
Amount of Annual Bonus Deferred $________
Beneficiary Designation: In the event of my death, all benefits payable on my
behalf from the Plan shall be paid to my beneficiary designated below or the
last person that I previously designated for this Plan if I have not completed
this section of this form. Any designation of beneficiary that I make below
revokes all prior designation that I have made under this Plan. If I make no
designation on this or any prior form filed with the Administrator under this
Plan, my benefits will be paid to the beneficiary entitled to my benefits under
the Uniroyal Technology Corporation 401(k) Savings Plan or any successor plan
thereto.
Name of Beneficiary_________________________ Relationship__________________
Attach an additional sheet describing your designation if you need additional
space.
I understand that my deferred amounts and interest thereon will not be paid to
me until I terminate employment with Uniroyal Technology Corporation or its
successor and will then be paid to me (or to my beneficiary) in a lump sum. I
acknowledge that I have received a copy of the Plan and that I understand its
terms and conditions. I acknowledge that this election is irrevocable. By making
this election, I hereby consent to be bound by all of the terms of the Plan.
Date:_______________ ____________________
Employee
Received and accepted on the ________ day of _________, 19__.
By: __________________________, On Behalf of the Administrator
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary information extracted from the
Condensed Consolidated Balance Sheet as of April 2, 2000 and the
Condensed Consolidated Statements of Operations for the six
months ended April 2, 2000 and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<CIK> 890096
<NAME> Uniroyal Technology Corporation
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> Oct-01-2000
<PERIOD-START> Sep-27-1999
<PERIOD-END> Apr-02-2000
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<SECURITIES> 0
<RECEIVABLES> 5,127
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<INVENTORY> 10,298
<CURRENT-ASSETS> 121,207
<PP&E> 67,069
<DEPRECIATION> 17,283
<TOTAL-ASSETS> 193,701
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<BONDS> 23,412
0
0
<COMMON> 306
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<TOTAL-LIABILITY-AND-EQUITY> 193,701
<SALES> 31,298
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<CGS> 24,586
<TOTAL-COSTS> 24,586
<OTHER-EXPENSES> 24,669
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<EPS-DILUTED> 2.21
</TABLE>
