================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
---------
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________ to ________
--------------
Commission File No. 0-25642
COMMONWEALTH INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 13-3245741
(State of incorporation) (I.R.S. Employer Identification No.)
500 West Jefferson Street
19th Floor
Louisville, Kentucky 40202-2823
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (502) 589-8100
----------
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 proceeding 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 ____
The registrant had 10,207,500 shares of common stock outstanding at May 1, 1997.
================================================================================
<PAGE>
COMMONWEALTH INDUSTRIES, INC.
FORM 10-Q
For the Quarter Ended March 31, 1997
INDEX
Part I - Financial Information
Item 1. Financial Statements (unaudited) Page Number
Condensed Consolidated Balance Sheets as of March 31, 1997
and December 31, 1996 3
Condensed Consolidated Statements of Income for the three
months ended March 31, 1997 and 1996 4
Condensed Consolidated Statements of Cash Flows for the three
months ended March 31, 1997 and 1996 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition 7-8
and Results of Operations
Part II - Other Information
Item 1. Legal Proceedings 9
Item 6. Exhibits and Reports on Form 8-K 9
Signatures 10
<PAGE>
COMMONWEALTH INDUSTRIES, INC.
Condensed Consolidated Balance Sheets
(in thousands except share data)
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
------------- -------------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ - $ 1,944
Accounts receivable, net 190,196 146,091
Inventories 162,546 173,911
Prepayments and other current assets 13,009 10,056
------------- -------------
Total current assets 365,751 332,002
Property, plant and equipment, net 271,012 274,095
Goodwill, net 176,901 175,146
Other noncurrent assets 12,958 13,339
------------- -------------
Total assets $ 826,622 $ 794,582
============= =============
Liabilities
Current liabilities:
Current portion of long-term debt $ 7,500 $ 6,250
Accounts payable 84,505 82,340
Accrued liabilities 32,540 36,351
------------- -------------
Total current liabilities 124,545 124,941
Long-term debt 362,000 336,000
Other long-term liabilities 18,205 14,584
Accrued pension benefits 10,707 10,610
Accrued postretirement benefits 81,922 81,224
------------- -------------
Total liabilities 597,379 567,359
------------- -------------
Commitments and contingencies - -
Stockholders' Equity
Common stock, $.01 par value, 50,000,000 shares authorized,
10,207,500 and 10,197,500 shares outstanding at
March 31, 1997 and December 31, 1996, respectively 102 102
Additional paid-in capital 301,467 301,289
Accumulated deficit (70,530) (72,188)
Unearned compensation (1,796) (1,980)
------------- -------------
Total stockholders' equity 229,243 227,223
------------- -------------
Total liabilities and stockholders' equity $ 826,622 $ 794,582
============= =============
See notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
COMMONWEALTH INDUSTRIES, INC.
Condensed Consolidated Statements of Income
(in thousands except per share amounts)
<TABLE>
<CAPTION>
Three months ended March 31,
----------------------------------------
1997 1996
-------------- --------------
<S> <C> <C>
Net sales $ 272,191 $ 167,544
Cost of goods sold 248,145 157,733
-------------- --------------
Gross profit 24,046 9,811
Selling, general and administrative expenses 11,803 5,976
Amortization of goodwill 1,119 -
-------------- --------------
Operating income 11,124 3,835
Other income (expense), net 179 (238)
Interest expense, net (8,333) (679)
-------------- --------------
Income before income taxes 2,970 2,918
Income tax expense 802 525
-------------- --------------
Net income $ 2,168 $ 2,393
============== ==============
Net income per share $ 0.21 $ 0.23
============== ==============
Weighted average shares outstanding 10,206 10,193
============== ==============
Dividends per share $ 0.05 $ 0.05
============== ==============
See notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
COMMONWEALTH INDUSTRIES, INC.
Condensed Consolidated Statements of Cash Flow
(in thousands)
<TABLE>
<CAPTION>
Three months ended March 31,
-----------------------------------
1997 1996
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 2,168 $ 2,393
Adjustments to reconcile net income to net cash provided by operations:
Depreciation and amortization 9,170 4,317
Issuance of common stock in connection with stock awards 84 -
Changes in assets and liabilities:
(Increase) in accounts receivable, net (44,105) (12,472)
Decrease in inventories 11,365 9,882
(Increase) in prepayments and other current assets (3,361) (906)
Decrease in other noncurrent assets 381 105
Increase in accounts payable 2,165 10,369
(Decrease) in accrued liabilities (3,811) (1,812)
Increase (decrease) in other liabilities 4,416 (386)
------------ ------------
Net cash (used in) provided by operating activities (21,528) 11,490
------------ ------------
Cash flows from investing activities:
Net cash and cash equivalents (outflow) from acquisition (2,874) -
Additions to property, plant and equipment (4,367) (1,877)
Disposals of property, plant and equipment 3 206
------------ ------------
Net cash (used in) investing activities (7,238) (1,671)
------------ ------------
Cash flows from financing activities:
Proceeds from short-term borrowings - 4,000
Repayments of short-term borrowings - (8,000)
Proceeds from long-term debt 28,500 -
Repayments of long-term debt (1,250) (1,875)
Proceeds from issuance of common stock 82 -
Cash dividends paid (510) (510)
------------ ------------
Net cash provided by (used in) financing activities 26,822 (6,385)
------------ ------------
Net (decrease) increase in cash and cash equivalents (1,944) 3,434
Cash and cash equivalents at beginning of period 1,944 2,665
------------ ------------
Cash and cash equivalents at end of period $ - $ 6,099
============ ============
See notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
COMMONWEALTH INDUSTRIES, INC.
Notes to Condensed Consolidated Financial Statements
(unaudited)
1. Basis of Presentation
The accompanying condensed consolidated financial statements are presented in
accordance with the requirements of Form 10-Q and consequently do not include
all the disclosures normally required by generally accepted accounting
principles. The condensed consolidated financial statements have been prepared
in accordance with Commonwealth Industries, Inc.'s (the "Company's") customary
accounting practices and have not been audited. In the opinion of management,
all adjustments necessary to fairly present the results of operations for the
reporting interim periods have been made and were of a normal recurring nature.
2. Acquisition
On September 20, 1996, the Company acquired CasTech Aluminum Group Inc.
("CasTech") for a purchase price of $285 million. The excess of the purchase
price over the acquired net assets of $179 million was recorded as goodwill and
is being amortized over 40 years. The acquisition was recorded under the
purchase method of accounting and accordingly, the results of operations of
CasTech prior to the date of acquisition have not been included in the
accompanying consolidated financial statements.
3. Inventories
The Company uses the first-in, first-out (FIFO) and the last-in, last-out (LIFO)
methods for valuing its inventories.
(in thousands) March 31, 1997 December 31, 1996
- -------------- --------------- -----------------
Raw materials $ 23,515 $ 29,458
Work in process 76,286 82,205
Finished goods 51,302 46,959
Expendable parts and supplies 15,702 15,338
--------- ---------
166,805 173,960
LIFO reserve (4,259) (49)
--------- ---------
$ 162,546 $ 173,911
========= =========
Inventories of approximately $41 million and $38 million, included in the above
totals at March 31, 1997 and December 31, 1996, respectively, are accounted for
under the LIFO method of accounting.
On March 31, 1997, the Company had deferred realized losses of $0.1 million on
closed futures contracts which are recorded as an increase to the carrying value
of inventory. The Company had deferred realized gains of $0.4 million at
December 31, 1996.
4. Provision for Income Taxes
The effective income tax rate for the quarter ended March 31, 1997 is greater
than the rate for the quarter ended March 31, 1996 as a result of the expected
increase in the Company's taxable income for the year 1997 compared to the year
1996.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The following discussion contains statements which are forward-looking rather
than historical fact. These forward-looking statements are made pursuant to the
safe harbor provisions of the Private Securities Litigation Reform Act of 1995
and involve risks and uncertainties that could render them materially different,
including, but not limited to, the effect of global economic conditions, the
impact of competitive products and pricing, product development and
commercialization, availability and cost of critical raw materials, the rate of
technological change, product demand and market acceptance risks, capacity and
supply constraints or difficulties, and other risks detailed in the Company's
various Securities and Exchange Commission filings.
Overview
The Company manufactures non-heat treat coiled aluminum sheet for the
transportation, construction and consumer durables end use markets and
electrical flexible conduit and prewired armored cable for the non-residential
construction and renovation markets. The Company's principal raw materials are
aluminum scrap and primary aluminum. Trends in the demand for aluminum sheet
products in the United States and in the prices of aluminum primary metal and
scrap affect the business of the Company. The Company's operating results also
are affected by factors specific to the Company, such as the margins between
selling prices for its aluminum sheet and its cost of metal ("material margins")
and its unit cost of converting metal into aluminum sheet products ("conversion
cost"). While changes in aluminum prices can cause the Company's net sales to
change significantly from period to period, net income is more directly impacted
by the fluctuation in material margins.
During the first quarter of 1997, shipments of the Company's products, both
aluminum sheet and electrical conduit and cable, continued to increase as demand
for those products remained strong. Increased sales of electrical conduit and
cable were supported by additional production capacity which was brought on line
in the first quarter.
In the aluminum sheet industry, customers remain cautious toward inventory
levels. The Company believes that the aluminum sheet order rate is indicative of
the underlying demand for aluminum products and remains strong. The cash price
of primary aluminum on the London Metal Exchange increased during the quarter
from $0.69 per pound on December 31, 1996 to $0.73 per pound on March 31, 1997.
In response to these increases, the Company announced price increases in
February and March which maintained material margin levels comparable to those
earned in the fourth quarter of 1996.
On September 20, 1996, the Company acquired CasTech Aluminum Group Inc.
("CasTech") in a transaction that was accounted for under the purchase method of
accounting. CasTech was the nation's leading manufacturer of continuous cast
aluminum sheet and a leading manufacturer of electrical flexible conduit and
prewired armored cable. Concurrent with the acquisition, the Company prepaid its
existing indebtedness and that of CasTech. The acquisition and prepayment were
financed with a new $325 million senior secured bank credit facility and the
proceeds from the issue and sale of $125 million principal amount of 10.75%
Senior Subordinated Notes Due 2006.
Results of Operations for the three months ended March 31, 1997 and 1996
Net Sales. Net sales for the quarter ended March 31, 1997, increased 62% to $272
million from $168 million for the same period in 1996. The increase is due to
the CasTech acquisition along with increased sales volumes at all facilities.
Average selling prices for aluminum sheet for the quarter ended March 31, 1997,
were $1.04 per pound, a decrease of 2% from $1.06 per pound for the quarter
ended March 31, 1996. Unit sales volume of aluminum increased 65% to 261.3
million pounds for the first quarter of 1997 from 157.9 million pounds for the
first quarter of 1996.
Gross Profit. Gross profit for the quarter ended March 31, 1997, increased to
$24.0 million from $9.8 million for the same period in 1996. This increase was
attributable to increased unit sales volumes, the CasTech acquisition and lower
manufacturing unit costs. The Company's unit manufacturing costs decreased
compared to the same period in 1996 as a result of the higher unit volumes and
mill optimization practices.
Operating Income. The Company produced operating income of $11.1 million for the
first quarter of 1997 compared with $3.8 million for the first quarter of 1996.
Selling, general and administrative expenses during the first quarter of 1997
were $11.8 million, compared with $6.0 million for the same period in 1996. This
increase along with the amortization of goodwill recorded in the first quarter
of 1997 of $1.1 million is due to the CasTech acquisition. Contributing to the
increase are corporate relocation, severance and other costs related to the
integration of the businesses.
Net Income. Net income was $2.2 million for the quarter ended March 31, 1997,
compared with $2.4 million for the same period in 1996. Interest expense was
$8.3 million for the quarter ended March 31, 1997 and $0.7 million for the
comparable period in 1996. The increase in the Company's interest expense is due
to borrowings associated with the CasTech acquisition. Income tax expense was
$0.8 million in the first quarter of 1997 compared to $0.5 million for the same
period in 1996.
Liquidity and Capital Resources
The Company's sources of liquidity are cash flows from operations and borrowings
under its $225 million revolving credit facility. The Company believes these
sources will be sufficient to fund its working capital requirements, capital
expenditures, debt service and dividend payments at least through 1998.
Capital expenditures were $4.4 million during the quarter ended March 31, 1997.
At March 31, 1997, the Company had commitments of $8.9 million for the purchase
or construction of capital assets. Total capital expenditures for the year 1997
are expected to be approximately $28 million, principally related to upgrading
the Company's manufacturing and other facilities and meeting environmental
requirements .
Risk Management
The Company offers its customers multiple pricing methods, including fixed firm
prices. Purchases of metal for forward delivery as well as hedging with futures
contracts and options are used to reduce the Company's aggregate exposure to the
risk of changes in metal prices. This is accomplished by establishing at the
time of a customer's order a fixed margin between the cost of the metal and the
Company's price of the product to the customer. Gains and losses resulting from
changes in the market value of these futures contracts and options increase or
decrease cost of sales at the time of revenue recognition. At March 31, 1997,
the Company held purchase and sales commitments through 1997 totaling $66
million and $280 million, respectively. The Company held futures contracts,
marked-to-market at March 31, 1997, with a net unrealized loss of $1.4 million.
Before entering into futures contracts and options, the Company reviews the
credit rating of the counterparty and assesses any possible credit risk. While
the Company is exposed to certain losses in the event of non-performance by the
counterparties to these agreements, the Company does not anticipate
non-performance by such counterparties.
The Company has entered into interest rate swap agreements with a notional
amount of $117 million. With respect to these agreements, the Company pays a
fixed rate of interest and receives a LIBOR-based floating rate.
Recently Issued Accounting Pronouncements
During February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, "Earnings Per Share"
("SFAS No. 128"). The Company will adopt SFAS No. 128 during the fourth quarter
of 1997 as required and does not expect the Statement to have a material impact
on the calculation of net income per share.
<PAGE>
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
The Company is a party to non-environmental legal proceedings and administrative
actions all of which are of an ordinary routine nature incidental to the
operations of the Company. Although it is impossible to predict the outcome of
any legal proceeding, in the opinion of management such proceedings and actions
should not, individually or in aggregate, have a material adverse effect on the
Company's financial condition, results of operations or cash flows, although
resolution in any year or quarter could be material to the results of operation
for that period.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
3.1 Restated Certificate of Incorporation, effective April 18, 1997.
10.1 1995 Stock Incentive Plan as amended and restated April 17, 1997.
10.2 1997 Stock Incentive Plan.
11 Computation of Net Income Per Share.
27 Financial Data Schedule.
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during the quarter ended March 31, 1997.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
COMMONWEALTH INDUSTRIES, INC.
By: /s/ Donald L. Marsh, Jr.
-------------------------
Donald L. Marsh, Jr.
Executive Vice President, Chief Financial
Officer and Secretary
Date: May 8, 1997
NY12532: 194680.3
RESTATED CERTIFICATE OF INCORPORATION
OF
COMMONWEALTH INDUSTRIES, INC.
Commonwealth Industries, Inc., a Delaware
corporation, hereby certifies as follows:
FIRST. The name of the corporation is Commonwealth Industries,
Inc. The date of filing of its original certificate of incorporation with the
Secretary of State of the State of Delaware was December 10, 1984 and the name
under which it was originally incorporated was Comalco (U.S.)
Holding, Inc.
SECOND. This restated certificate of incorporation has been
duly adopted in accordance with the provisions of Section 245 of the General
Corporation Law of the State of Delaware. It only restates and integrates and
does not further amend the provisions of the certificate of incorporation of the
corporation as heretofore amended or supplemented and there is no discrepancy
between those provisions and the provisions of this restated certificate.
THIRD. The text of the certificate of incorporation is hereby
restated to read in its entirety as follows:
ARTICLE I
Name
The name of the corporation is Commonwealth Industries, Inc.
ARTICLE II
Registered Office; Registered Agent
The address of the corporation's registered office in the
State of Delaware is Corporation Trust Center, 1209 Orange Street in the City of
Wilmington, County of New Castle. The name of its registered agent at such
address is The Corporation Trust Company.
<PAGE>
ARTICLE III
Purpose
The purpose of the corporation is to engage in any lawful act
or activity for which corporations may be organized under the General
Corporation Law of the State of Delaware.
ARTICLE IV
Shares
The total number of shares of all classes of stock which the
corporation shall have authority to issue is 51,000,000, of which 50,000,000
shares of the par value of $.01 per share shall be designated as Common Stock
and 1,000,000 shares of the par value of $.01 per share shall be designated as
Preferred Stock.
Shares of Preferred Stock may be issued in series from time to
time by the board of directors, and the board of directors is expressly
authorized to fix by resolution or resolutions the designations and the powers,
preferences and rights, and the qualifications, limitations and restrictions
thereof, of the shares of each series of Preferred Stock, including without
limitation the following:
(a) the distinctive serial designation of such series which
shall distinguish it from other series;
(b) the number of shares included in such series, which number
may be increased or decreased from time to time unless otherwise
provided by the board of directors in the resolution or resolutions
providing for the issue of such series;
(c) the dividend rate (or method of determining such rate)
payable to the holders of the shares of such series, any conditions
upon which such dividends shall be paid and the date or dates upon
which such dividends shall be payable;
(d) whether dividends on the shares of such series shall be
cumulative and, in the case of shares of any series having cumulative
dividend rights, the date or dates or method of determining the date or
dates from which dividends on the shares of such series shall be
cumulative;
(e) the amount or amounts which shall be payable out of the
assets of the corporation to the holders of the shares of such series
upon voluntary or involuntary liquidation, dissolution or winding up
the corporation;
(f) the price or prices at which, the period or periods within
which and the terms and conditions upon which the shares of such series
may be redeemed, in whole or in part, at the option of the corporation
or at the option of the holder or holders thereof or upon the happening
of a specified event or events;
(g) the obligation, if any, of the corporation to purchase or
redeem shares of such series pursuant to a sinking fund or otherwise
and the price or prices at which, the period or periods within which
and the terms and conditions upon which the shares of such series shall
be redeemed or purchased, in whole or in part, pursuant to such
obligation;
(h) whether or not the shares of such series shall be
convertible or exchangeable, at any time or times at the option of the
holder or holders thereof or at the option of the corporation or upon
the happening of a specified event or events, into shares of any other
class or classes or any other series of the same or any other class or
classes of stock of the corporation, and the price or prices or rate or
rates of exchange or conversion and any adjustments applicable thereto;
and
(i) the voting rights, if any, of the holders of the shares
of such series.
ARTICLE V
By-Laws
The board of directors of the corporation is expressly
authorized to adopt, amend or repeal by-laws of the corporation.
ARTICLE VI
Directors
Elections of directors need not be by written ballot except
and to the extent provided in the by-laws of the corporation.
The number of directors of the corporation shall be fixed from
time to time pursuant to the by-laws of the corporation. The directors of the
corporation shall be divided into three classes, as nearly equal in number as
reasonably possible, as determined by the board of directors, with the initial
term of office of the first class of such directors to expire at the annual
meeting of stockholders in 1996, the initial term of office of the second class
of such directors to expire at the first annual meeting of stockholders
thereafter and the initial term of office of the third class of such directors
to expire at the second annual meeting of stockholders thereafter, with each
class of directors to hold office until their successors have been duly elected
and qualified. At each annual meeting of stockholders directors elected to
succeed the directors whose terms expire at such annual meeting shall be elected
to hold office for a term expiring at the annual meeting of stockholders in the
third year following the year of their election and until their successors have
been duly elected and qualified. If the number of directors is changed, any
increase or decrease shall be apportioned among the classes so as to maintain or
attain a number of directors in each class as nearly equal as reasonably
possible, but no decrease in the number of directors may shorten the term of any
incumbent director. No director may be removed except for cause. This Article VI
may not be amended, modified or repealed except by the affirmative vote of the
holders of not less than 80% of the voting power of all outstanding shares of
capital stock of the corporation entitled to vote generally in the election of
directors, considered for purposes hereof as a single class.
In the event that the holders of any class or series of stock
of the corporation shall be entitled, voting separately as a class, to elect any
directors of the corporation, then the number of directors that may be elected
by such holders shall be in addition to the number fixed pursuant to the by-laws
and, except as otherwise expressly provided in the terms of such class or
series, the terms of the directors elected by such holders shall expire at the
annual meeting of stockholders next succeeding their election without regard to
the classification of the remaining directors.
ARTICLE VII
Stockholder Action by Written Consent
Any action required or permitted to be taken by the holders of
Common Stock of the corporation, including but not limited to the election of
directors, may be taken by written consent or consents but only if such consent
or consents are signed by all holders of Common Stock entitled to vote on such
action.
ARTICLE VIII
Limitation of Liability of Directors
A director of the corporation shall not be liable to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except to the extent that such exemption from liability or
limitation thereof is not permitted under the General Corporation Law of the
State of Delaware. No amendment, modification or repeal of this Article VIII
shall adversely affect any right or protection of a director that exists at the
time of such amendment, modification or repeal.
IN WITNESS WHEREOF, Commonwealth Industries, Inc. has caused
this certificate to be signed by Mark V. Kaminski, its President, on the 17th
day of April, 1997.
/s/ MARK V. KAMINSKI
Mark V. Kaminski
NY12532: 194672.10
COMMONWEALTH INDUSTRIES, INC.
1995 Stock Incentive Plan
As Amended and Restated on April 17, 1997
1. General. Pursuant to the terms and conditions of the
Commonwealth Industries, Inc. (formerly Commonwealth Aluminum Corporation) 1995
Stock Incentive Plan (the "Plan") hereinafter set forth, the Committee specified
in Section 2 from time to time granted or awarded to eligible employees (a)
options to purchase shares of the Common Stock, par value $.01 per share
("Common Stock"), of Commonwealth Industries, Inc. (the "Corporation") and (b)
restricted Common Stock. Options to purchase Common Stock also were granted to
non-employee directors of the Corporation in accordance with Section 16 of the
Plan. No further grants or awards shall be made under the Plan after April 17,
1997.
The purpose of the Plan is to enhance the ability of the
Corporation and its subsidiaries to attract and retain employees and directors
of outstanding ability and to provide employees and directors with an interest
in the Corporation parallel to that of the Corporation's stockholders.
2. Administration. The Plan shall be administered by the
Management Development and Compensation Committee of the Board of Directors (the
"Board") of the Corporation, or any successor committee appointed by the Board
(the "Committee"); which Committee shall at all times consist of two or more
directors, each of whom is a "Non-Employee Director" within the meaning of Rule
16b-3 under the Securities Exchange Act of 1934 (the "Exchange Act").
The Committee shall have full and final authority, in each
case subject to and consistent with the provisions of the Plan, to determine the
type, number and other terms and conditions of, and all matters relating to,
grants and awards, to prescribe grant and award agreements and rules and
regulations for the administration of the Plan and such agreements, to construe
and interpret the Plan and grant and award agreements and to correct defects,
supply omissions or reconcile inconsistencies therein, and to make all other
decisions and determinations as the Committee may deem necessary or advisable
for the administration of the Plan.
Any action of the Committee shall be final, conclusive and
binding on all persons, including the Corporation and its subsidiaries and
stockholders, employees of the Corporation or its subsidiaries who have received
grants or awards ("Participants") and persons claiming rights from or through a
Participant.
The Committee may delegate to officers or managers of the
Corporation or any subsidiary, or committees thereof, and to service providers,
the authority, subject to such terms as the Committee shall determine, to
perform administrative functions with respect to the Plan and grant and award
agreements.
The Committee and each member thereof shall be entitled to, in
good faith, rely or act upon any report or other information furnished to the
Committee by any officer or employee of the Corporation or a subsidiary, the
Corporation's independent public accountants or any other adviser, consultant or
service provider assisting in the administration of the Plan. Members of the
Committee and any officer or employee of the Corporation or a subsidiary acting
at the direction of, or on behalf of, the Committee shall not be personally
liable for any action or determination taken or made in good faith with respect
to the Plan, and shall, to the extent permitted by law, be fully indemnified by
the Corporation with respect to any such action or determination.
3. Eligibility. Individuals eligible to receive awards under
the Plan were the officers and other key employees of the Corporation and its
subsidiaries selected by the Committee and all non-employee directors. However,
except as provided in Section 16 hereof, no grant or award was made to a
director who was not an employee of the Corporation or its subsidiaries.
4. Shares Subject to the Plan. The total of the number of
shares of Common Stock which may be acquired upon the exercise of options
granted under the Plan and the number of shares of Common Stock awarded as
restricted Common Stock under the Plan shall not exceed 600,000; provided, that
for purposes of this limitation any option which is canceled or expires without
exercise, and any restricted Common Stock which is forfeited to the Corporation
pursuant to the terms of the award thereof, shall thereafter be deemed not to
have been granted or awarded. No employee shall be granted in any calendar year
options to purchase more than 100,000 shares of Common Stock. Shares of Common
Stock available for issue or distribution under the Plan shall be authorized and
unissued shares or shares acquired by the Corporation and held in treasury.
5. Stock Options. The Committee from time to time granted
options under the Plan to eligible employees. None of the options granted were
intended to be incentive stock options within the meaning of Section 422 of the
Internal Revenue Code of 1986.
The Committee established the option price at the time each
option was granted. The option price was not less than the fair market value of
the Common Stock on the date of grant.
Unless otherwise determined by the Committee, the fair market
value of the Common Stock, as used in this Section 5 and elsewhere in the Plan,
as of any given date shall be the mean between the highest and lowest reported
sales prices on that date of the Common Stock on the New York Stock Exchange
Composite Tape or, if not listed on such exchange, on any other national
securities exchange on which the Common Stock is listed or on NASDAQ, or, if no
Common Stock was traded on that date, on the next preceding day on which there
was such a trade.
Except as otherwise provided herein, options granted shall be
exercisable at such time or times and subject to such terms and conditions as
shall be determined by the Committee, but in no event may options be exercisable
for a period of more than 10 years after their date of grant. The Committee may
alter or waive, at any time, any term or condition of an option that is not
mandatory under the Plan.
The option price of each share as to which an option is
exercised shall be paid in full at the time of such exercise. The payment shall
be made (a) in cash, (b) by surrender of shares of Common Stock owned by the
holder of the option for at least six months prior to exercise of the option,
(c) to the extent authorized by the Committee, by surrender of shares of Common
Stock owned by the holder of the option for less than six months prior to the
exercise of the option (including shares of Common Stock otherwise receivable
upon exercise of the option), (d) through simultaneous sale through a broker of
shares acquired upon exercise, as permitted under Regulation T of the Federal
Reserve Board, (e) through additional methods prescribed by the Committee or (f)
by a combination of any such methods. Any shares of Common Stock so delivered in
payment shall be valued at their fair market value on the exercise date, or on
such other date as determined by the Committee for administrative convenience.
Except as otherwise determined by the Committee at or
subsequent to grant, any option granted to an employee and outstanding at the
time of the termination of employment of that employee shall remain exercisable
as follows:
(a) In the event of the termination of employment of the
employee by reason of retirement on or after normal retirement date
pursuant to a retirement plan of the Corporation or any of its
subsidiaries or total and permanent disability, the holder may, at any
time within one year after that termination, but not later than the
date of expiration of the option, exercise the option to the same
extent, if any, as the option was exercisable at the date of
termination under the terms of the option. The option shall expire upon
the termination of employment to the extent it was not then
exercisable, and otherwise upon the earlier of the expiration of the
one-year period or the date of expiration of the option.
(b) In the event of the termination of employment by reason of
death of the employee, any person or persons (including the legal
representatives of the estate of the employee) who is the holder of the
option or to whom the option shall pass by will or by the laws of
descent and distribution may, at any time within one year after the
date of death but not later than the date of expiration of the option,
exercise the option to the same extent, if any, as the option was
exercisable at the date of death under the terms of the option. The
option shall expire on the date of death to the extent it was not then
exercisable, and otherwise upon the expiration of the earlier of the
one-year period or the date of expiration of the option.
(c) In the event of the termination of employment for any
reason other than retirement, disability or death as aforesaid, the
option shall expire upon the termination of employment.
For purposes of the Plan a leave of absence, authorized in
writing by the Corporation or a subsidiary of the Corporation, for military
service or illness, or for any other purpose if the period of such leave does
not exceed 90 days, or for any other purpose if the leave exceeds 90 days but
reemployment is guaranteed by law or contract, shall not be deemed a termination
of employment.
No option may be transferred except by will or the laws of
descent and distribution, provided that the Committee may determine that an
option may be transferred pursuant to a qualified domestic relations order
within the meaning of Section 414(p) of the Code or by a Participant to one or
more members of the Participant's immediate family, or to trusts or partnerships
or limited liability companies established for such family members. For this
purpose, immediate family means, except as otherwise defined by the Committee,
the Participant's children, stepchildren, grandchildren, parents, stepparents,
grandparents, spouse, siblings (including half brothers and sisters), in-laws
and persons related by reason of legal adoption. Such transferees may transfer
an option only by will or the laws of descent or distribution. An option
transferred pursuant to this paragraph shall remain subject to the provisions of
the Plan, including, but not limited to, the provisions of this Section 5
relating to the exercise of the option upon the termination of employment of the
Participant and shall be subject to such other rules as the Committee shall
determine. Except in the case of a holder's incapacity, an option shall be
exercisable only by the holder thereof.
6. Restricted Common Stock. The Committee from time to time
awarded to eligible employees restricted Common Stock. The employment conditions
and the length of the period for vesting of restricted Common Stock were
established by the Committee at the time of award, except that each restriction
period was and shall be not less than 12 months.
Except as restricted under the terms of the Plan and any
agreement related to the restricted Common Stock, a Participant awarded
restricted Common Stock has all the rights of a stockholder including, without
limitation, the right to vote restricted Common Stock.
If a stock certificate is issued in respect of shares of
restricted Common Stock, the certificate shall be registered in the name of the
Participant but shall be held by the Corporation for the account of the employee
until the end of the restriction period.
7. Change in Control. In the event of a Change in Control,
as hereafter defined:
(a) Any option outstanding as of the date such Change in
Control is determined to have occurred and not then exercisable in full shall
become fully exercisable; and
(b) The restrictions applicable to all shares of restricted
Common Stock shall lapse and such shares shall be deemed fully vested.
A "Change in Control" means the occurrence of any of the
following events:
(a) individuals who on April 17, 1997 constitute the Board
together with those individuals who first become directors after that date
(other than as a result of an actual or threatened election contest for
directors or an actual or threatened solicitation of proxies or consents by or
on behalf of any person other than the Board) and whose election or nomination
for election to the Board was approved by a vote of at least two-thirds of the
directors then in office who either were directors on April 17, 1997 or whose
election or nomination for election was previously so approved (the "Continuing
Directors") cease for any reason to constitute a majority of the Board;
(b) any person (as defined in Section 3(a)(9) and used in
Sections 13(d)(3) and 14(d)(2) of the Exchange Act) ("Person"), other than the
Corporation, a subsidiary of the Corporation, an employee benefit plan sponsored
or maintained by the Corporation or a subsidiary of the Corporation or an
underwriter temporarily holding securities pursuant to an offering of such
securities, becomes the beneficial owner (as defined in Rule 13d-3 under the
Exchange Act)("Beneficial Owner") of securities of the Corporation representing
20% or more of the combined voting power of the Corporation's then outstanding
securities eligible to vote for the election of directors (the "Corporation
Voting Securities") unless the Person became such a Beneficial Owner as a result
of a purchase of Corporation Voting Securities directly from the Corporation in
a transaction approved by a majority of the Continuing Directors or pursuant to
a transaction which complies with clauses (i), (ii) and (iii) of paragraph (c)
of this definition;
(c) the approval by the stockholders of the Corporation of a
reorganization, merger, consolidation, exchange of shares or sale or other
disposition of all or substantially all the assets of the Corporation, or the
consummation of any such transaction if stockholder approval is not required or
obtained, other than any such transaction pursuant to which (i) the Beneficial
Owners of the Corporation Voting Securities outstanding immediately prior to the
transaction will be the Beneficial Owners of more than 60% of the outstanding
securities eligible to vote for the election of directors of the corporation
resulting from such transaction or of any corporation of which such corporation
is a wholly-owned subsidiary ("Parent Corporation"), (ii) no Person, other than
the corporation resulting from such transaction or Parent Corporation, a
subsidiary of such corporation or Parent Corporation or an employee benefit plan
sponsored or maintained by such corporation or Parent Corporation or a
subsidiary thereof, will become the Beneficial Owner of securities of such
corporation or Parent Corporation representing 20% or more of the combined
voting power of the then outstanding securities eligible to vote for the
election of directors of such corporation or Parent Corporation except to the
extent that such ownership existed with respect to the Corporation Voting
Securities prior to such transaction and (iii) individuals who are Continuing
Directors will constitute at least a majority of the members of the board of
directors of the corporation resulting from the transaction or Parent
Corporation; or
(d) the approval by stockholders of the Corporation of a
complete liquidation or dissolution of the Corporation.
Notwithstanding the foregoing, a Change in Control shall not
be deemed to occur solely because any Person acquires Beneficial Ownership of
more than 20% of the Corporation Voting Securities as a result of the
acquisition of Corporation Voting Securities by the Corporation which, by
reducing the number of Corporation Voting Securities outstanding, increases the
percentage of shares beneficially owned by such Person, provided that if a
Change in Control would occur as a result of such an acquisition by the
Corporation (if not for the operation of this sentence), and after the
Corporation's acquisition such Person becomes the Beneficial Owner of additional
Corporation Voting Securities that increases the percentage of outstanding
Corporation Voting Securities beneficially owned by such person, then a Change
in Control shall occur.
8. Grant or Award Agreement. Each grant or award under the
Plan shall be evidenced by an agreement setting forth the terms and conditions,
as determined by the Committee, which shall apply to such grant or award, in
addition to the terms and conditions specified in the Plan.
9. Withholding. The Corporation may deduct from any payment to
be made pursuant to the Plan the amount of any taxes required by law to be
withheld therefrom, or require a Participant to pay to the Corporation in cash
such amount required to be withheld prior to the issuance or delivery of any
shares of Common Stock or the payment of cash under the Plan. Such taxes may be
paid in cash, by surrender of shares of Common Stock or with shares of Common
Stock otherwise to be issued or delivered to the Participant, or by a
combination thereof, or in any other manner satisfactory to the Committee. Any
shares of Common Stock so delivered shall be valued at the fair market value
thereof on the day immediately prior to exercise or payment of a grant or award.
10. No Right to Employment. Nothing contained in the Plan or
in any grant of award under the Plan shall confer upon any employee any right
with respect to the continuation of employment with the Corporation or any of
its subsidiaries, or interfere in any way with the right of the Corporation to
terminate his or her employment at any time. Nor shall anything contained in the
Plan confer upon any employee or other person any claim or right to any grant or
award under the Plan.
11. Governmental Compliance. Each grant and award under the
Plan shall be subject to the requirement that if at any time the Committee shall
determine that the listing, registration or qualification of any shares issuable
or deliverable thereunder upon any securities exchange or under any Federal or
state law, or the consent or approval of any governmental regulatory body, is
necessary or desirable as a condition thereof or in connection therewith, such
grant or award may not be exercised and no shares may be delivered upon the
exercise or payment thereof unless such listing, registration, qualification,
consent or approval shall have been effected or obtained free of any conditions
not acceptable to the Committee.
The Committee may require any person acquiring shares pursuant
to a grant or award to represent to and agree with the Corporation that such
person is acquiring the shares for investment and without a view to the
distribution thereof.
All certificates for shares of Common Stock delivered under
the Plan pursuant to a grant or award shall be subject to such stock-transfer
orders and other restrictions as the Committee may deem advisable under any
federal or state law or regulation or the requirements of any stock exchange or
NASDAQ, and the Committee may cause a legend or legends to be endorsed upon any
such certificate to make reference to such restrictions.
It is intended that the Plan satisfy the requirements of Rule
16b-3 under the Exchange Act so that Participants will be entitled to the
benefit of that Rule or any other rule promulgated under Section 16 of the
Exchange Act and will not be subject to short-swing liability under Section 16.
Accordingly, if the operation of any provision of the Plan would conflict with
this intent, such provision to the extent possible shall be interpreted or
deemed amended so as to avoid such conflict.
12. Adjustments. In the event of any change in the outstanding
shares of Common Stock by reason of any stock dividend or split,
recapitalization, merger, consolidation, spinoff, combination or exchange of
shares or other corporate change, or any distribution to holders of Common Stock
other than regular cash dividends, the number or kind of shares available for
options and awards under the Plan (including the calendar year limit on option
grants) may be adjusted by the Committee as it shall in its sole discretion deem
equitable and the number and kind of shares subject to any outstanding options
granted under the Plan and the purchase price thereof may be adjusted by the
Committee as it shall in its sole discretion deem equitable to preserve the
value of such outstanding options.
13. Amendment. The Board may amend, suspend or terminate the
Plan or any portion thereof at any time, provided that (a) no amendment shall be
made without stockholder approval if such approval is necessary to satisfy any
applicable tax or regulatory law or regulation and the Board determines it is
appropriate to seek stockholder approval, and (b) upon or following the
occurrence of a Change in Control no amendment may adversely affect the rights
of any person in connection with a grant or award previously granted.
14. Governing Law. The Plan and any agreement evidencing a
grant or award shall be construed and its provisions enforced and administered
in accordance with the laws of the State of Delaware.
15. Effective Date. The Plan became effective on March 17,
1995. Subject to earlier termination pursuant to Section 13, the Plan shall
have a term of 10 years from its effective date.
16. Director Stock Options. Nonqualified options to purchase
1,000 shares of Common Stock (2,500 shares in the case of a non-employee
Chairman of the Board) were granted automatically to each director of the
Corporation who was a director but was not an employee of the Corporation or its
subsidiaries on the date of grant (a) upon the date such director joined the
Board and (b) on each succeeding January 1. The option price for each option was
the fair market value of the Common Stock on the date of grant of that option.
Each such option shall become exercisable one year from the
date of the grant thereof. Each such option shall terminate 10 years from the
date of grant unless sooner terminated by reason of termination of service as a
director.
An option granted to a non-employee director pursuant to this
Section 16 and outstanding at the time of the termination of service of that
individual as a director for any reason shall be exercisable at any time within
one year following such termination of service, whether or not otherwise
exercisable, but in no event beyond the term of the option, and shall thereafter
terminate.
Except as expressly provided in this Section, any option
granted hereunder shall be subject to the terms and conditions of the Plan as if
the grant were made pursuant to Section 5 hereof.
17. No Rights Until Certificates Delivered. Except as
otherwise provided by the Committee in the applicable grant or award agreement,
no person shall have rights as a stockholder with respect to any shares of
Common Stock as a result of any grant or award until a certificate or
certificates evidencing such shares shall have been delivered to that person
and, subject to Section 12, no adjustment shall be made for dividends or
distributions or other rights in respect of any share for which the record date
is prior to the date on which such person shall become the holder of record
thereof.
NY12532: 197818.1
COMMONWEALTH INDUSTRIES, INC.
1997 Stock Incentive Plan
1. Purpose. Pursuant to the terms and conditions of the
Commonwealth Industries, Inc. 1997 Stock Incentive Plan (the "Plan") hereinafter
set forth, the Committee specified in Section 2 may from time to time award to
eligible employees (a) options ("Options") to purchase shares of the Common
Stock, par value $.01 per share ("Common Stock"), of Commonwealth Industries,
Inc. (the "Company") and (b) restricted Common Stock. In addition, Options and
shares of Common Stock shall be granted to non-employee directors of the Company
as provided in Section 7. All such Options, restricted Common Stock and shares
of Common Stock are referred to herein as "Awards."
The purpose of the Plan is to enhance the ability of the
Company and its subsidiaries to attract and retain employees and directors of
outstanding ability and to provide employees and directors with an interest in
the Company parallel to that of the Company's stockholders.
2. Administration. The Plan shall be administered by the
Management Development and Compensation Committee of the Board of Directors (the
"Board") of the Company, or any successor committee appointed by the Board (the
"Committee"). It is intended that the Committee shall at all times consist of
two or more directors, each of whom is a non-employee director within the
meaning of Rule 16b-3 under the Securities Exchange Act of 1934 (the "Exchange
Act") and an outside director within the meaning of Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code").
The Committee shall have full and final authority, in each
case subject to and consistent with the provisions of the Plan, to select
employees of the Company or its subsidiaries who are to receive Awards, to make
Awards, to determine the type, number and other terms and conditions of, and all
matters relating to, Awards, to prescribe Award agreements and rules and
regulations for the administration of the Plan and such agreements, to construe
and interpret the Plan and Award agreements and to correct defects, supply
omissions or reconcile inconsistencies therein, and to make all other decisions
and determinations as the Committee may deem necessary or advisable for the
administration of the Plan.
Any action of the Committee shall be final, conclusive and
binding upon all persons, including the Company and its subsidiaries and
stockholders, employees and directors who have been granted an Award
("Participants") and persons claiming rights from or through a Participant.
The Committee may delegate to officers or managers of the
Company or a subsidiary of the Company, or committees thereof, and to service
providers, the authority, subject to such terms as the Committee shall
determine, to perform administrative functions with respect to the Plan and to
Award agreements.
The Committee and each member thereof shall be entitled, in
good faith, to rely or act upon any report or other information furnished to the
Committee by any officer or employee of the Company or a subsidiary of the
Company, the Company's independent public accountants or any other adviser,
consultant or service provider assisting in the administration of the Plan.
Members of the Committee and any officer or employee of the
Company or a subsidiary of the Company acting at the direction of, or on behalf
of, the Committee shall not be personally liable for any action or determination
taken or made in good faith with respect to the Plan or any Award agreement, and
shall, to the extent permitted by law, be fully indemnified by the Company with
respect to any such action or determination.
3. Eligibility. Individuals eligible to receive Awards shall
be the officers and other key employees of the Company and its subsidiaries
selected by the Committee and, solely as provided in Section 7, each member of
the Board who is not an employee of the Company or a subsidiary of the Company
("Non-Employee Director").
4. Shares Subject to the Plan. The maximum number of shares of
Common Stock available for the grant of Awards under the Plan shall be 600,000,
subject to adjustment pursuant to Section 13 and to the following provisions. If
an Award granted under the Plan or the Company's 1995 Stock Incentive Plan
("1995 Plan") shall be canceled or expire without exercise of the Award, the
shares subject to such Award shall be added to the shares available for Awards
under the Plan. Any shares surrendered or withheld in payment of the exercise
price of an Option granted under the Plan or the 1995 Plan or in satisfaction of
any tax liabilities resulting from an Award under the Plan or the 1995 Plan,
shall also be added to the number of shares available for Awards under the Plan.
Shares of Common Stock may be made available under the Plan from authorized but
unissued shares or from shares reacquired by the Company.
The number of shares of Common Stock with respect to which
Options may be granted to any Participant during any calendar year shall not
exceed 100,000, subject to adjustment under Section 13.
5. Stock Options. The Committee may from time to time grant
Options under the Plan to eligible employees. Options may be either nonqualified
Options ("Nonqualified Stock Options") or Options which are intended to qualify
under Section 422 of the Code ("Incentive Stock Options").
The price at which shares may be purchased upon exercise of an
Option granted to an employee shall be fixed by the Committee, but shall be not
less than the Fair Market Value of the Common Stock on the day of grant.
Unless otherwise determined by the Committee, the "Fair Market
Value" of the Common Stock, as used in this Section 5 and elsewhere in the Plan,
as of any day, shall be the mean between the highest and lowest reported sales
price for that day of the Common Stock on the New York Stock Exchange Composite
Tape or, if not listed on such exchange, on any other national securities
exchange on which the Common Stock is listed or on NASDAQ, or, if no Common
Stock was traded on that day, on the next preceding day on which there was such
a trade.
Options granted to employees shall be exercisable at such time
or times and subject to such terms and conditions as shall be determined by the
Committee, but no Option shall be exercisable after the expiration of 10 years
from the date of grant. The Committee may alter or waive at any time any term or
condition of an Option that is not mandatory under the Plan.
The Option price of each share as to which an Option is
exercised shall be paid in full at the time of such exercise. The payment shall
be made (a) in cash, (b) by surrender of shares of Common Stock owned by the
holder of the Option for at least six months prior to exercise of the Option,
(c) to the extent authorized by the Committee, by surrender of shares of Common
Stock owned by the holder of the Option for less than six months prior to the
exercise of the Option (including shares of Common Stock otherwise receivable
upon exercise of the Option), (d) through simultaneous sale through a broker of
shares acquired upon exercise, as permitted under Regulation T of the Federal
Reserve Board, (e) through additional methods prescribed by the Committee or (f)
by a combination of any such methods. Any shares of Common Stock so delivered in
payment shall be valued at their Fair Market Value on the exercise date, or on
such other date as determined by the Committee for administrative convenience.
Except as otherwise determined by the Committee at or
subsequent to grant, any Option granted to an employee and outstanding at the
time of the termination of employment of that employee shall remain exercisable
as follows:
(a) In the event of the termination of employment of the
employee by reason of retirement on or after normal retirement date
pursuant to a retirement plan of the Company or any of its subsidiaries
or total and permanent disability, the holder may, at any time within
one year after that termination, but not later than the date of
expiration of the Option, exercise the Option to the same extent, if
any, as the Option was exercisable at the date of termination under the
terms of the Option. The Option shall expire upon the termination of
employment to the extent it was not then exercisable, and otherwise
upon the earlier of the expiration of the one-year period or the date
of expiration of the Option.
(b) In the event of the termination of employment by reason of
death of the employee, any person or persons (including the legal
representatives of the estate of the employee) who is the holder of the
Option or to whom the Option shall pass by will or by the laws of
descent and distribution may, at any time within one year after the
date of death but not later than the date of expiration of the Option,
exercise the Option to the same extent, if any, as the Option was
exercisable at the date of death under the terms of the Option. The
Option shall expire on the date of death to the extent it was not then
exercisable, and otherwise upon the expiration of the earlier of the
one-year period or the date of expiration of the Option.
(c) In the event of the termination of employment for any
reason other than retirement, disability or death as aforesaid, the
Option shall expire upon the termination of employment.
For purposes of the Plan a leave of absence, authorized in
writing by the Company or a subsidiary of the Company, for military service or
illness, or for any other purpose if the period of such leave does not exceed 90
days, or for any other purpose if the leave exceeds 90 days but reemployment is
guaranteed by law or contract, shall not be deemed a termination of employment.
No Option may be transferred except by will or the laws of
descent and distribution, provided that the Committee may determine that an
Option may be transferred pursuant to a qualified domestic relations order
within the meaning of Section 414(p) of the Code or by a Participant to one or
more members of the Participant's immediate family, or to trusts or partnerships
or limited liability companies established for such family members. For this
purpose, immediate family means, except as otherwise defined by the Committee,
the Participant's children, stepchildren, grandchildren, parents, stepparents,
grandparents, spouse, siblings (including half brothers and sisters), in-laws
and persons related by reason of legal adoption. Such transferees may transfer
an Option only by will or the laws of descent or distribution. An Option
transferred pursuant to this paragraph shall remain subject to the provisions of
the Plan, including, but not limited to, the provisions of this Section 5
relating to the exercise of the Option upon the termination of employment of the
Participant and shall be subject to such other rules as the Committee shall
determine. Except in the case of a holder's incapacity, an Option shall be
exercisable only by the holder thereof.
6. Restricted Stock. The Committee may from time to time award
restricted Common Stock under the Plan to eligible employees. Shares of
restricted Common Stock may not be sold, assigned, transferred or otherwise
disposed of, or pledged or hypothecated as collateral for a loan or as security
for the performance of any obligation or for any other purpose, for such period
(the "Restricted Period") as the Committee shall determine, except that the
Restricted Period shall not be less than 12 months. The Committee may define the
Restricted Period in terms of the passage of time or in any other manner it
deems appropriate. The Committee may alter or waive at any time any term or
condition of restricted Common Stock that is not mandatory under the Plan.
Unless otherwise determined by the Committee, upon termination
of a Participant's employment for any reason prior to the end of the Restricted
Period, the restricted Common Stock shall be forfeited and the Participant shall
have no right with respect to the Award.
Except as restricted under the terms of the Plan and any Award
agreement, any employee awarded restricted Common Stock shall have all the
rights of a stockholder including, without limitation, the right to vote
restricted Common Stock.
If a stock certificate is issued in respect of shares of
restricted Common Stock, the certificate shall be registered in the name of the
employee but shall be held by the Company for the account of the employee until
the end of the Restricted Period.
The Committee may also award restricted Common Stock in the
form of restricted Common Stock units having a value equal to an identical
number of shares of Common Stock. Payment of restricted Common Stock units shall
be made in shares of Common Stock or in cash or in a combination thereof (based
upon the Fair Market Value of Common Stock on the day the Restricted Period
expires), all as determined by the Committee in its sole discretion.
7. Non-Employee Director Stock Options and Shares.
Nonqualified Stock Options to purchase 1,000 shares of Common Stock (2,500
shares in the case of a Non-Employee Director who is Chairman of the Board), the
number of shares being in each case subject to adjustment pursuant to Section
13, shall be granted automatically to each Non-Employee Director (a) upon the
date such director joins the Board or becomes a Non-Employee Director (or, in
respect of the Option for the additional 1,500 shares (such number of shares
being subject to adjustment under Section 13) in the case of a Non-Employee
Director who is Chairman of the Board, becomes the Chairman) and (b) on each
succeeding January 1 which is not less than 90 days after the date referred to
in clause (a). In addition, a grant of 1,000 shares of Common Stock shall be
made automatically to each Non-Employee Director (a) upon the date such director
joins the Board or becomes a Non-Employee Director and (b) on each succeeding
January 1 which is not less than 90 days after the date referred to in clause
(a).
The price at which shares may be purchased upon exercise of an
Option granted to a Non-Employee Director shall be the Fair Market Value of the
Common Stock on the day of grant.
Options granted to Non-Employee Directors shall become
exercisable one year from the date of the grant thereof. Each such Option shall
terminate 10 years from the date of grant unless sooner terminated by reason of
termination of service as a director.
Any Option granted to a Non-Employee Director and outstanding
at the time of the termination of service of that individual as a director for
any reason, to the extent exercisable at the date of termination, shall be
exercisable for one year following such termination of service, but in no event
beyond the term of the Option, and shall thereafter terminate.
Except as expressly provided in this Section 7, any Option
granted to a Non-Employee Director under the Plan shall be subject to the
general terms and conditions of the Plan.
8. Change in Control. In the event of a Change in Control, as
hereinafter defined, (a) all Options shall become vested and exercisable in
full, (b) the restrictions applicable to all shares of restricted Common Stock
shall lapse and (c) all restricted Common Stock granted in the form of share
units shall be paid out in shares of Common Stock. The Committee may, in its
discretion, include such further provisions and limitations in any Award
agreement as it may deem equitable, and may, in its sole discretion, make
payments with respect to restricted Common Stock units in cash in an amount
equal to the Fair Market Value of the Award as of the Change in Control.
A "Change in Control" means the occurrence of any of the
following events:
(a) individuals who on the Effective Date of the Plan
constitute the Board together with those individuals who first become directors
after that date (other than as a result of an actual or threatened election
contest for directors or an actual or threatened solicitation of proxies or
consents by or on behalf of any person other than the Board) and whose
election or nomination for election to the Board was approved by a vote of
at least two-thirds of the directors then in office who either were
directors on the Effective Date or whose election or nomination for
election was previously so approved (the "Continuing Directors") cease for
any reason to constitute a majority of the Board;
(b) any person (as defined in Section 3(a)(9) and used in
Sections 13(d)(3) and 14(d)(2) of the Exchange Act) ("Person"), other than the
Company, a subsidiary of the Company, an employee benefit plan sponsored or
maintained by the Company or a subsidiary of the Company or an underwriter
temporarily holding securities pursuant to an offering of such securities,
becomes the beneficial owner (as defined in Rule 13d-3 under the Exchange
Act)("Beneficial Owner") of securities of the Company representing 20% or more
of the combined voting power of the Company's then outstanding securities
eligible to vote for the election of directors (the "Company Voting Securities")
unless the Person became such a Beneficial Owner as a result of a purchase of
Company Voting Securities directly from the Company in a transaction approved by
a majority of the Continuing Directors or pursuant to a transaction which
complies with clauses (i), (ii) and (iii) of paragraph (c) of this definition;
(c) the approval by the stockholders of the Company of a
reorganization, merger, consolidation, exchange of shares or sale or other
disposition of all or substantially all the assets of the Company, or the
consummation of any such transaction if stockholder approval is not required or
obtained, other than any such transaction pursuant to which (i) the Beneficial
Owners of the Company Voting Securities outstanding immediately prior to the
transaction will be the Beneficial Owners of more than 60% of the outstanding
securities eligible to vote for the election of directors of the corporation
resulting from such transaction or of any corporation of which such corporation
is a wholly-owned subsidiary ("Parent Corporation"), (ii) no Person, other than
the corporation resulting from such transaction or Parent Corporation, a
subsidiary of such corporation or Parent Corporation or an employee benefit plan
sponsored or maintained by such corporation or Parent Corporation or a
subsidiary thereof, will become the Beneficial Owner of securities of such
corporation or Parent Corporation representing 20% or more of the combined
voting power of the then outstanding securities eligible to vote for the
election of directors of such corporation or Parent Corporation except to the
extent that such ownership existed with respect to the Company Voting Securities
prior to such transaction and (iii) individuals who are Continuing Directors
will constitute at least a majority of the members of the board of directors of
the corporation resulting from the transaction or Parent Corporation; or
(d) the approval by stockholders of the Company of a complete
liquidation or dissolution of the Company.
Notwithstanding the foregoing, a Change in Control shall not
be deemed to occur solely because any Person acquires Beneficial Ownership of
more than 20% of the Company Voting Securities as a result of the acquisition of
Company Voting Securities by the Company which, by reducing the number of
Company Voting Securities outstanding, increases the percentage of shares
beneficially owned by such Person, provided that if a Change in Control would
occur as a result of such an acquisition by the Company (if not for the
operation of this sentence), and after the Company's acquisition such Person
becomes the Beneficial Owner of additional Company Voting Securities that
increases the percentage of outstanding Company Voting Securities beneficially
owned by such person, then a Change in Control shall occur.
9. Award Agreement. Each Award under the Plan shall be
evidenced by an agreement setting forth the terms and conditions, as determined
by the Committee, in addition to those set forth in the Plan, which shall apply
to such Award.
10. Withholding. The Company may deduct from any payment to be
made pursuant to the Plan the amount of any taxes required by law to be withheld
therefrom, or require a Participant to pay to the Company in cash such amount
required to be withheld prior to the issuance or delivery of any shares of
Common Stock or the payment of cash under the Plan. Such taxes may be paid in
cash, by surrender of shares of Common Stock or with shares of Common Stock
otherwise to be issued or delivered to the Participant, or by a combination
thereof, or in any other manner satisfactory to the Committee. Any shares of
Common Stock so delivered shall be valued at the Fair Market Value thereof on
the day immediately prior to exercise or payment of an Award.
11. No Right of Continued Employment. Nothing contained in the
Plan or in any Award shall confer upon any employee any right with respect to
the continuation of employment with the Company or any of its subsidiaries or
interfere in any way with the right of the Company to terminate his or her
employment at any time. Nor shall anything contained in the Plan confer upon any
employee or other person any claim or right to any Award under the Plan.
12. Governmental Compliance. Each Award granted under the Plan
shall be subject to the requirement that if at any time the Committee shall
determine that the listing, registration or qualification of any shares issuable
or deliverable thereunder upon any securities exchange or under any Federal or
state law, or the consent or approval of any governmental regulatory body, is
necessary or desirable as a condition thereof or in connection therewith, such
Award may not be exercised and no shares may be delivered upon the exercise or
payment thereof unless such listing, registration, qualification, consent or
approval shall have been effected or obtained free of any conditions not
acceptable to the Committee.
The Committee may require any person acquiring shares pursuant
to an Award to represent to and agree with the Company that such person is
acquiring the shares for investment and without a view to the distribution
thereof.
All certificates for shares of Common Stock delivered under
the Plan pursuant to an Award shall be subject to such stock-transfer orders and
other restrictions as the Committee may deem advisable under any federal or
state law or regulation or the requirements of any stock exchange or NASDAQ, and
the Committee may cause a legend or legends to be endorsed upon any such
certificate to make reference to such restrictions.
It is intended that the Plan satisfy the requirements of Rule
16b-3 under the Exchange Act so that Participants will be entitled to the
benefit of that Rule or any other rule promulgated under Section 16 of the
Exchange Act and will not be subject to short-swing liability under Section 16.
Accordingly, if the operation of any provision of the Plan would conflict with
this intent, such provision to the extent possible shall be interpreted or
deemed amended so as to avoid such conflict.
13. Adjustments. In the event of any change in the outstanding
shares of Common Stock (including, but not limited to, the number thereof) by
reason of any stock dividend or split, recapitalization, merger, consolidation,
spinoff, combination or exchange of shares or other corporate change, or of any
distribution to holders of Common Stock other than regular cash dividends, the
number or kind of shares available for Awards under the Plan (including the
calendar year limit on certain Awards) and the number of Options and shares to
be issued to Non-Employee Directors may be adjusted by the Committee as it shall
in its sole discretion deem equitable and the number and kind of shares subject
to any outstanding Awards and the exercise price thereof may be adjusted by the
Committee as it shall in its sole discretion deem equitable to preserve the
value of such Awards.
14. No Segregation of Cash or Shares. The Plan is intended to
be an "unfunded" plan for incentive and deferred compensation. Nothing contained
herein shall give any person any rights greater than those of a general creditor
of the Company. The Committee may, in its sole discretion, authorize the
creation of trusts or other arrangements to meet the obligations created under
the Plan to deliver Common Stock or payments with respect to Awards, provided
that the existence of such trusts or other arrangements is consistent with the
unfunded status of the Plan.
15. No Rights Until Certificates Delivered. Except as
otherwise provided by the Committee in the applicable Award agreement, no person
shall have rights as a stockholder with respect to any shares of Common Stock as
a result of any Award until a certificate or certificates evidencing such shares
shall have been delivered to that person and, subject to Section 13, no
adjustment shall be made for dividends or distributions or other rights in
respect of any share for which the record date is prior to the date on which
such person shall become the holder of record thereof.
16. Amendment. The Board may amend, suspend or terminate the
Plan or any portion thereof at any time, provided that (a) no amendment shall be
made without stockholder approval if such approval is necessary to satisfy any
applicable tax or regulatory law or regulation and the Board determines it is
appropriate to seek stockholder approval, and (b) upon or following the
occurrence of a Change in Control no amendment may adversely affect the rights
of any person in connection with an Award previously granted.
17. Governing Law. The Plan and any Award agreement shall be
construed and its provisions enforced and administered in accordance with the
laws of the State of Delaware.
18. Effective Date. The effective date of the Plan shall be
the date upon which it is approved by the stockholders of the Company
(the "Effective Date").
19. Term of Plan. Subject to earlier termination pursuant to
Section 16, the Plan shall have a term of 10 years from its Effective Date.
Exhibit 11
Commonwealth Industries, Inc.
Calculation of Net Income Per Share
(In thousands except per share data)
Three months ended March 31, 1997 1996
- ---------------------------- ---- ----
Weighted average shares of common stock outstanding (a) 10,206 10,193
====== ======
Net income $2,168 $2,393
====== ======
Net income per share $0.21 $0.23
====== ======
Note: (a) Common equivalent shares relating to stock options are not material.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> Dec-31-1997
<PERIOD-START> Jan-31-1997
<PERIOD-END> Mar-31-1997
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 192,439
<ALLOWANCES> 2,243
<INVENTORY> 162,546
<CURRENT-ASSETS> 365,751
<PP&E> 499,658
<DEPRECIATION> 228,646
<TOTAL-ASSETS> 826,622
<CURRENT-LIABILITIES> 124,545
<BONDS> 362,000
0
0
<COMMON> 102
<OTHER-SE> 229,141
<TOTAL-LIABILITY-AND-EQUITY> 826,622
<SALES> 272,191
<TOTAL-REVENUES> 272,191
<CGS> 248,145
<TOTAL-COSTS> 248,145
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 75
<INTEREST-EXPENSE> 8,333
<INCOME-PRETAX> 2,970
<INCOME-TAX> 802
<INCOME-CONTINUING> 2,168
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,168
<EPS-PRIMARY> 0.21
<EPS-DILUTED> 0.21
</TABLE>
