UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] Annual Report pursuant to Section 13 or 15(d)of the
Securities Exchange
Act of 1934 for the fiscal year ended March 29, 1998
[ ] 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 1-5109
TODD SHIPYARDS CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 91-1506719
(State or other jurisdiction of (IRS Employer I.D.No.)
incorporation or organization)
1801-16th Avenue SW, Seattle, WA 98134-1089
(Address of principal executive offices) (zip code)
Registrant's telephone number (206) 623-1635
Securities registered pursuant to Section 12(g) of the Act: None
Securities registered pursuant to Section 12(b) of the Act:
Common Stock
Name of each exchange on which registered: New York Stock
Exchange
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. [X] Yes [ ] No
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
The aggregate market value of voting stock held by non affiliates
of the registrant was approximately $44 million as of June 12,
1998.
There were 9,910,180 shares of the corporation's $.01 par value
common stock outstanding at June 12, 1998.
Documents Incorporated by Reference
Portions of the Proxy Statement dated July 15, 1998 to be
delivered to shareholders in connection with the Annual Meeting
of Shareholders to be held September 18, 1998 are incorporated by
reference into Part III.
TABLE OF CONTENTS
PART I
Page
No.
Item 1. Business............................................. *
Item 2. Properties........................................... *
Item 3. Legal Proceedings.................................... *
Item 4. Submission of Matters to a Vote of Security Holders.. *
PART II
Item 5. Market for the Registrant's Common Equity and
Related Shareholder Matters.......................... *
Item 6. Selected Financial Data.............................. *
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.................. *
Item 8. Consolidated Financial Statements and
Supplementary Data................................... *
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.................. *
PART III
Item 10. Directors and Executive Officers of the
Registrant........................................... *
Item 11. Executive Compensation............................... *
Item 12. Security Ownership of Certain Beneficial Owners
and Management....................................... *
Item 13. Certain Relationships and Related Transactions....... *
PART IV
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K ................................ *
* No page numbers are contained in EDGAR version.
ITEM 1. BUSINESS
INTRODUCTION
Todd Shipyards Corporation (the "Company") was organized in 1916
and has operated a shipyard in Seattle, Washington (the
"Shipyard") since incorporation. The Company operates the
Shipyard through its wholly owned subsidiary Todd Pacific
Shipyards Corporation ("Todd Pacific"). Todd Pacific is engaged
in the repair/overhaul, conversion and construction of commercial
and military ships and vessels.
Until the late 1980's, a substantial portion of the Company's
revenues and profits were attributable to long-term United States
Government ("Government") contracts. The significant decline in
the annual shipbuilding budgets of the Department of the Navy
(the "Navy") has greatly reduced the Company's bidding
opportunities for long-term Government contracts. This reduction
in long-term Government contracts has created excess ship
construction and repair capacity in all of the Company's markets.
This excess shipyard capacity, both nationally and locally, has
resulted in intense price competition. The Company has responded
to this competition by carefully reviewing its overhead,
streamlining its operations and implementing advanced shipyard
production techniques.
Recent Shipyard activity has included construction of Jumbo Mark
II Class ferries ("Mark II Ferry") for the Washington State Ferry
System ("Ferry System"), short-term repair, overhaul and phased
maintenance work on Government vessels, as well as commercial
repair, overhaul and conversion work on container vessels,
tankers, fishing industry vessels, cruise ships, barges, tug
supply vessels and ferries.
The Company believes that it will continue to perform a
substantial amount of maintenance and repair work on commercial
and Federal Government vessels engaged in various seagoing trade
activities in the Pacific Northwest. It plans to pursue repair,
maintenance, overhaul and new construction work for the vessel
fleets operating on Puget Sound (near Seattle) and the Pacific
Coast. These include the Washington State Ferry System, the
Alaska Marine Highway System, the U.S. Navy, the U.S. Coast
Guard, passenger cruise ships, American-flagged cargo carriers,
the fishing fleets, tankers, and the tug and barge operators.
The Company has from time to time considered opportunities to
diversify in marine industries and businesses unrelated to the
Shipyard.
OPERATIONS OVERVIEW
Repair and Overhaul Operations
The Company's repair and overhaul work ranges from relatively
minor repair to major overhauls and often involves the drydocking
of the vessel under repair. The level of repair and overhaul
business available to domestic private-sector shipyards has been
impacted by the downsizing of the active Navy fleet. Also
affecting private shipyards is the impact of stationing vessels
at Navy home ports, the location of marine accidents, the
availability and scheduling of maintenance and overhauls, and
conditions within the maritime industry as a whole.
Commercial repair and overhaul contracts are obtained by
competitive bidding, awarded by negotiation or assigned by
customers who have a preference for a specific shipyard. On jobs
that are advertised for competitive bids, owners usually furnish
specifications and plans which become the basis for an agreed
upon contract. Repair and overhaul jobs are usually contracted
on a fixed-price basis with additional work contracted on a
negotiated-price basis.
Government ship repair and overhaul work is usually awarded
through a formal bidding process. The Company also performs
repair/overhaul work for the Navy under flexibly-priced
contracts. These contracts provide for reimbursement of costs, to
the extent allocable and allowable under applicable regulations,
and payment of an incentive or award fee based on the customer's
judgment of the contractor's performance with respect to certain
pre-established criteria. The Government regulates the methods
by which overhead costs are allocated to Government contracts.
The Company's commercial and Government repair and overhaul
contracts contain terms of customer payment determined by mutual
agreement. Typically the Company is periodically reimbursed
through progress payments based on the achievement of certain
agreed to benchmarks subject to a specified level of retention.
Some vessel owners contracting for repair, overhaul and new
construction work require some form and amount of performance and
payment bonding, particularly state agencies.
Construction Operations
The Company has a contract with the Ferry System for the
construction of three Mark II Ferries for $181 million (including
$7 million of optional growth items). The Mark II Ferries are
designed to transport 218 automobiles and 2,500 passengers each
on the waterways of Puget Sound and will be the largest ferries
in the Ferry System fleet. The Mark II Ferry program, awarded in
fiscal year 1995, is approximately 90% complete at March 29,
1998.
Distribution of Work
The approximate distribution of the Company's Shipyard revenues
for each of the last three fiscal years are summarized as
follows:
1998 1997 1996
Federal Government 18% 10% 35%
Commercial 72% 90% 65%
Total 100% 100% 100%
The Mark II Ferry program, which represented 55% of fiscal 1998
revenue, 59% of fiscal 1997 revenues and 40% of fiscal 1996
revenues is expected to be concluded during the current fiscal
year which will have a significant impact both on the volume and
nature of the business being conducted and the relative
contribution of federal government and commercial operations.
Future Operations
The Company plans actively to pursue Government and commercial
repair/overhaul opportunities. International construction and
repair opportunities are limited because shipbuilders in foreign
countries are often subsidized by their governments. These
subsidies allow foreign shipyards to enter into production
contracts at prices below their actual production costs.
Competition for domestic construction and repair opportunities
will continue to be intense as certain of the Company's larger
competitors have more modern shipbuilding facilities, lower labor
cost structures, or access to greater financial resources. The
Company is working to maximize its advantages of geographic
location, its current Mark II Ferry construction activities and
the skills of its experienced workforce.
Employees
The number of persons employed by the Company varies considerably
from time to time depending primarily on the level of Shipyard
activity, averaging approximately 1,120 employees during fiscal
year 1998 and totaling approximately 846 employees on March 29,
1998. With respect to the Mark II Ferry project, the Company
employed an average of approximately 400 persons on the project
during fiscal year 1998 and 250 persons on March 29, 1998.
During fiscal year 1998 an average of approximately 1,000 of the
Company's Shipyard employees were covered by a union contract
that became effective on November 24, 1997. At March 29, 1998
approximately 728 Company employees were covered under this
contract.
During fiscal year 1998, the Company and the Puget Sound Metal
Trades Council (representing the Pacific Coast Metal Trades
District Council and its member unions) submitted their final
collective bargaining contract positions to binding arbitration
in accordance with the provisions set forth in the Mark II Ferry
project agreement in force between the parties. Subsequent to
and in keeping with the arbitrator's ruling, the parties executed
a new labor agreement effective November 24, 1997. Prior to the
arbitration process, the Company had reached unanimous agreement
with the bargaining representatives of the workforce on three
separate occasions. However, on each occasion, the agreement was
rejected by the Todd workforce. The new collective bargaining
agreement will terminate on July 31, 1999 and replaces the
previous contract which expired on July 31, 1996. Among other
things, the new labor agreement provided for a retroactive pay
adjustment of $0.60 per hour for qualifying employees and the
impact of this increase has been reflected in the fiscal 1998
year end financial results.
As a result of the binding arbitration process, on February 17,
1998, the Puget Sound Metal Trades Council (bargaining umbrella
for all unions at Todd Pacific) and Todd Pacific were sued in
Federal District Court for the Western District of Washington by
in excess of 200 employees contending that the collective
bargaining agreement entered into by Todd Pacific and the various
unions representing these employees had not been properly
ratified by the union membership. The lawsuit seeks a
declaratory judgment that the collective bargaining agreement be
found null and void. If plaintiffs were to prevail in this case
Todd Pacific and its unions would have to engage in bargaining
for a new collective bargaining agreement. It is too early in
the case to provide an estimate of the likelihood of a favorable
or unfavorable result in this case.
Over the past two fiscal years, the Company has invested heavily
in its labor relations efforts including the establishment of
labor/management committees and conflict resolution education for
all parties.
Availability of Materials
The principal materials used by the Company in its Shipyard are
steel and aluminum plate and shapes, pipe and fittings, and
electrical cable and fittings. The Company believes that each of
these items can presently be obtained in the domestic market from
a number of different suppliers. In addition, the Company
maintains a small on-site inventory of these items that is deemed
sufficient for emergency ship repairs.
Competition
Competition in the domestic shipyard industry is intense. The
Company competes for commercial and Government work with a number
of other shipyards, some of which have more advantageous cost
structures. The Company's competitors for overhaul/conversion
and repair work include non-union shipyards, shipyards with
excess capacity and government subsidized facilities. The
Company's competitors for new construction work include shipyards
on the gulf coast and east coast with lower wage structures,
substantial financial resources or significant recent investments
in productivity enhancing facilities. The reduced size of the
Government's active duty fleet has resulted in a significant
decline in the total amount of Government business available to
the private sector shipyards, has created excess shipyard
capacity, and has led to acute price competition.
Commercial ship construction and, and to a lesser extent, repair
work performed in certain foreign markets is less costly than
domestic ship construction and repair. Many contracts are
awarded pursuant to competitive bidding and profitability is
dependent upon effective cost controls, production efficiencies
and the ability to meet strict schedules, among other factors.
With respect to repair work, the location, availability and
technical capability of repair facilities are important factors.
Environmental Matters
The Company is subject to federal, state and local environmental
laws and regulations that impose limitations on the discharge of
pollutants into the environment and establish standards for the
treatment, storage and disposal of toxic and hazardous wastes.
Fines and penalties may be imposed for non-compliance with these
laws. Such laws and regulations may expose the Company to
liability for acts of the Company which are or were in compliance
with all applicable laws at the time such acts were performed.
Recurring costs associated with the Company's environmental
compliance program are not material and are expensed as incurred.
Capital expenditures in connection with environmental compliance
are not material to the Company's financial statements. See Item
7, Management's Discussion and Analysis and Note 1 to the
Consolidated Financial Statements for further discussion of these
costs.
The Company has an accrued liability of $16.1 million as of March
29, 1998 for environmental matters. As assessments of
environmental matters and remediation activities progress, these
liabilities are reviewed periodically and adjusted to reflect
additional technical, engineering and legal information that
becomes available. The Company's estimate of its environmental
liabilities is affected by several uncertainties such as, but not
limited to, the method and extent of remediation of contaminated
sites, the percentage of material attributable to the Company at
the sites relative to that attributable to other parties, and the
financial capabilities of the other Potentially Responsible
Parties ("PRP") at most sites. The Company's estimate of its
environmental liabilities is also affected as additional
information becomes known regarding alleged damages from past
exposure to asbestos at Company facilities. The Company is
covered under its various insurance policies for some, but not
all, potential environmental liabilities. See Item 3. Legal
Matters, Item 7. Management's Discussion and Analysis and Note 11
of the Notes to Consolidated Financial Statements for further
information regarding the Company's environmental matters.
Safety Matters
The Company is also subject to the federal Occupational Safety
and Health Act ("OSHA") and similar state statutes. The Company
has an extensive health and safety program and employs a staff of
safety inspectors and industrial hygiene technicians, whose
primary functions are to develop Company policies that meet or
exceed the safety standards set by OSHA, train production
supervisors and make periodic inspections of safety procedures to
insure compliance with Company policies on safety and industrial
hygiene. All employees are required to attend routine periodic
safety training meetings.
Backlog
At March 29, 1998 the Company's backlog consists of approximately
$47 million of construction, repair and overhaul work. This
compares with backlogs of $85 million and $146 million at March
30, 1997 and March 31, 1996 respectively. The reduction in firm
backlog over the past several fiscal years represents the
Company's continued progress toward completion of the Mark II
Ferry project without additional firm long term contracts to
replace this work. The final two Mark II ferries are scheduled
for delivery in fiscal year 1999 which will substantially reduce
the amount of firm backlog work currently reported.
In May 1996, the Company was awarded a cost-type contract for
phased maintenance repairs to four Navy supply ships currently
scheduled over eleven availabilities in five years. The notional
value of the contract is $79 million of which, $22.6 million had
been recorded as revenue, cumulatively, as of March 29, 1998.
The Company can provide no assurance as to the timing or level of
remaining work that may be performed as part of the maintenance
contract. The Company is working to identify and win additional
construction and repair work that would match the Shipyard's
production capacity.
INVESTMENTS AND ACQUISITIONS
The Company has from time to time pursued opportunities to
diversify its business, in areas such as metal fabrication,
marine transportation, other marine industries and businesses
unrelated to the Shipyard.
In fiscal year 1998, the Company completed the sale of its radio
broadcasting stations, operated by Elettra Broadcasting, Inc.
(purchased in fiscal year 1996), for $5.3 million. The Company
reported a gain on this transaction of $1.0 million during fiscal
year 1998.
The Company continues to evaluate suitable investment
opportunities which it believes will appropriately utilize the
Company's resources.
ITEM 2. PROPERTIES
During fiscal year 1998 the Company purchased a fourth drydock
(YFB-23)which is stored at the Company's facility on Harbor
Island. The design capacities of the four drydocks, all of which
are located at the Shipyard, are as follows:
Year Type Max.Displacement Date of
Lease
Name Built Owned Leased Capacity(in tons)
Expiration
Emerald Sea 1970 Steel 40,000
- - - - -
YFD-70 1945 Steel 17,500
4/15/01
YFD-54 1943 Wood 5,700
9/30/99
YFB-23 1945 Wood 10,400
- - - - -
The Company is required to maintain Navy certification on its
drydocks and cranes in order to qualify its facilities to bid on
and perform work under certain Navy and United States Coast Guard
("Coast Guard") contracts. The Company's current certification
for the drydocks (excluding the recently purchased drydock which
is not presently in service) listed above are 30,000 tons, 14,000
tons and 4,205 tons, respectively. While such certification is
less than the maximum design capacity, it is sufficient to allow
the Company to perform work on most Navy and all Coast Guard
vessels. The Company also maintains certification of its cranes.
The Company believes that its owned and leased properties at the
Shipyard are in reasonable operating condition given their age
and usage, although, from time to time, the Company has been
required to incur substantial expenditures to ensure the
continuing serviceability of its owned and leased machinery and
equipment.
ITEM 3. LEGAL PROCEEDINGS
The Company is subject to federal, state and local environmental
laws and regulations that impose limitations on the discharge of
pollutants into the environment and establish standards for the
treatment, storage and disposal of toxic and hazardous wastes.
Fines and penalties may be imposed for non-compliance with these
laws. Such laws and regulations may expose the Company to
liability for acts of the Company which are or were in compliance
with all applicable laws at the time such acts were performed.
The Company faces potential liabilities in connection with the
alleged presence of hazardous waste materials at certain of its
closed shipyards, at its Shipyard and at several sites used by
the Company for disposal of alleged hazardous waste.
The Company is identified as a PRP by the Environmental
Protection Agency ("EPA") under the Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA," commonly
known as the "Superfund") in connection with matters pending at
five Superfund sites. Additionally, the Company has been named
as a PRP for three Superfund cases where the Company has asserted
that its liability was discharged when it emerged from bankruptcy
in 1990.
In addition to the five pending Superfund matters, the Company is
subject to suits, claims and proceedings brought by state
agencies and others seeking contribution towards remediation of
alleged environmental impairments at five additional sites.
Generally these environmental claims relate to sites used by the
Company for disposal of alleged hazardous waste, although one
matter relates to a site in which the allegations are predicated
upon the Company's prior ownership of a shipyard property. The
matters relating to the Harbor Island site, at which the
Company's Shipyard is located, are discussed below. Reference is
made to Note 11 of the Notes to the Consolidated Financial
Statements in Item 8 below for information with respect to all
pending suits, claims and proceedings, including four as to which
the Company believes it has no or only nominal liability.
Harbor Island Site
The Company and several other parties have been named as PRPs by
the EPA pursuant to CERCLA in connection with the documented
release or threatened release of hazardous substances, pollutants
and contaminants at the Harbor Island Superfund Site,(the "Harbor
Island Site"). Included in the Company's $16.1 million total
reserve for environmental matters is a reserve of $11.1 million
to address the Harbor Island Site.
To date, the EPA has separated the Harbor Island Site into three
operable units that affect the Company: the Soil and Groundwater
Unit (the "Soil Unit"), the Shipyard Sediments Operable Unit (the
"SSOU") and the Sediments Operable Unit (the "SOU"). The Company, along
with a number of other Harbor Island PRPs, received a Special
Notice Letter from the EPA on May 4, 1994 pursuant to section 122
(e) of CERCLA. The Company entered into a Consent Decree for the
Soil Unit in September 1994 under which the Company has agreed to
remediate the designated contamination on its property. Soil Unit
remediation is anticipated to begin in fiscal year 1999. The
Company and the EPA are currently negotiating the extent and
methodology of the Soil Unit remediation. The Company estimates
remediation of the Soil Unit will take approximately 12 to 24
months from the clean-up start date.
In the third quarter of the fiscal year 1997, the EPA issued its
Record of Decision ("ROD") for the SSOU. The ROD identifies four
alternative solutions for the SSOU remediation and identifies the
EPA's selected solution. The Company and the EPA are negotiating
the scope and extent of testing and evaluation necessary to
determine the extent of the clean-up of the SSOU. The parties
have not agreed to a remedial design for the SSOU. The Company
believes that the timing and cost of the SSOU clean up will
remain significantly uncertain until a remedial design has been
finalized with the EPA that identifies the scope of remediation
and the method of sediment disposal.
In January 1998, the Company was notified by the EPA that testing
would be required in the West Waterway of the Duwamish River
outside the borders of the SSOU as part of the SOU. The Company
in May 1998 entered into an Order of Consent to perform certain
limited testing as part of the SOU investigation. The testing is
scheduled to take place during Summer 1998. The EPA has further
notified the Company of its intention to issue a ROD on the SOU
at the end of calendar year 1998.
Other
The Company has been named as a defendant in civil actions by
parties alleging damages from past exposure to toxic substances,
generally asbestos, at closed former Company facilities. The
Company has approximately 114 cases involving 275 plaintiffs
pending against it, together with other ship builders and
repairers, ship owners, asbestos manufacturers, distributors and
installers and equipment manufacturers, involving injuries or
illnesses allegedly caused by exposure to asbestos or other toxic
substances. The Company and its insurers are vigorously
defending these actions. Most of these cases have been filed
since 1991 by heirs of retired employees or employees of
subcontractors who allegedly worked at Company sites, and allege
contact with asbestos for varying periods of time and allege that
such exposure caused illness and/or death. The cases are
generally filed with multiple claimants and multiple defendants
and are generally insured matters. Suits of this nature
generally seek amounts in excess of $100,000 on behalf of each
claimant as against all defendants and claims resolved to date
have been settled for immaterial amounts. By their very nature,
civil actions relating to toxic substances vary according to the
cases' fact patterns, jurisdiction and other factors.
Accordingly, the Company cannot predict the eventual number of
such cases or their eventual resolution. The Company has
included an estimate of its potential liability for these issues
in its environmental reserves.
In February 1998, the Puget Sound Metal Trades Council
(bargaining umbrella for all unions at Todd Pacific) and Todd
Pacific were sued in Federal District Court for the Western
District of Washington by in excess of 200 employees contending
that the collective bargaining agreement entered into by Todd
Pacific and the various unions representing these employees had
not been properly ratified by the union membership. The lawsuit
seeks a declaratory judgment that the collective bargaining
agreement be found null and void. If plaintiffs were to prevail
in this case Todd Pacific and its unions would have to engage in
bargaining for a new collective bargaining agreement. It is too
early in the case to provide an estimate of the likelihood of a
favorable or unfavorable result in this case.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders, through
solicitation of proxies or otherwise, during the fourth quarter
of fiscal year 1998.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
SHAREHOLDER MATTERS
The Company's stock is listed on the New York Stock Exchange (the
"NYSE"). The following table sets forth for the fiscal quarters
indicated the high and low composite sales prices of the stock as
reported by the NYSE.
Quarter Ended High Low
June 30, 1996 7.88 7.00
September 29, 1996 7.38 6.00
December 29, 1996 7.38 6.50
March 30, 1997 6.63 5.38
June 29, 1997 5.88 3.75
September 28, 1997 4.88 3.88
December 28, 1997 5.38 3.63
March 29, 1998 6.00 3.88
On June 12, 1998 the high and low prices of the Company's common
stock on the NYSE were $6.63 and $6.63, respectively.
At June 12, 1998 there were approximately 2,016 holders of record
of the outstanding shares of common stock. The Company does not
presently anticipate the declaration of dividends.
ITEM 6. SELECTED FINANCIAL DATA (In thousands of dollars,
except per share data)
March 29, March 30, March 31, April 2, April 3
1998 1997 1996 1995 1994
Revenue $109,537 $114,398 $101,687 $69,096 $68,552
Income (loss)
from operations (2) 3,197 (25,793) 1,017 (393) (6,958)
Income (loss)
before cumulative
effect of change
in accounting
principle (2)(3) 8,103 (21,253) 4,132 3,402 (2,714)
Cumulative effect
of change in
accounting
principle (1) - - - 438 -
Net income(loss) (2)(3) 8,103 (21,253) 4,132 3,840 (2,714)
Per share of common stock
Income (loss)
before cumulative
effect of change
in accounting
principle
Basic EPS 0.82 (2.14) 0.42 0.32 (0.24)
Diluted EPS 0.82 (2.14) 0.41 0.32 (0.24)
Cumulative effect of change
in accounting principle (1) - - - 0.04 -
Basic EPS 0.82 (2.14) 0.42 0.36 (0.24)
Diluted EPS 0.82 (2.14) 0.41 0.36 (0.24)
Financial position:
Working capital 44,400 33,245 48,880 50,704 52,337
Fixed assets 21,565 24,477 26,499 24,552 24,001
Total assets 116,873 115,789 120,571 110,924 111,447
Stockholders'
equity 56,813 47,940 67,380 62,433 63,740
(1) Effective April 4, 1994 the Company changed its method of
accounting for general and administrative costs from
recognizing these expenses as contract costs to recognizing
them as incurred. The change in method reflects the
change, over time, in the Company's business from
predominately longer term Department of Defense contracts to
predominately shorter term commercial and Government
contracts. This change has been applied to general and
administrative costs of prior years and resulted in a
cumulative effect credit of $438 thousand ($0.04 per share)
at the time of adoption.
(2) During fiscal year 1998, the Company reached agreement with an
insurance company regarding that carrier's obligations for property
damage occurring in previous fiscal years. This settlement contributed
$6.1 million to operating and net income. This settlement was offset
partially by an additional $.5 million operating charge to environmental
reserves.
(3) During fiscal year 1998, the Company received a federal income tax refund
of $1.5 million, which contributed a similar amount to net income. In
addition, the Company realized a $1.0 million gain on the sale of its
broadcasting stations, operated by Elettra Broadcasting, Inc.
ITEM 7. MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The Notes to Consolidated Financial Statements are an integral
part of Management's Discussion and Analysis of Financial
Condition and Results of Operations and should be read in
conjunction herewith. The following discussion and analysis of
financial condition and results of operations contains forward-
looking statements which involve risks and uncertainties. The
Company's actual results in future periods may differ
significantly from the results discussed in or anticipated by
such forward looking statements. Certain factors which may
impact results for future periods are discussed below under the
captions "Overview - Mark II Ferry Program," "Overview -
Profitability," and "Environmental Matters." Readers should also
consider the statements and factors discussed under the caption
"Operation Overview" in Item 1 of the Company's Form 10-K Annual
Report filed with the Securities and Exchange Commission for the
fiscal year ended March 29, 1998, and in the Notes to the
Company's Consolidated Financial Statements for the fiscal year
then ended.
Overview
During fiscal year 1998 the Company recorded operating profit of
$3.2 million on sales of $109.5 million. Operating profit for
the year was attributable to a $6.1 million gain related to an
insurance settlement that the Company reached with one of its
carriers during the fourth quarter of fiscal 1998. The
settlement relates to the carrier's obligations for property
damage occurring in previous fiscal years. The Company received
$3.5 million in the fourth quarter of fiscal 1998, with an
additional $1.0 million per year to be received over the next
three fiscal years. Without this non-recurring item the Company
would have posted an operating loss of $2.9 million for the
fiscal year as improved margins in commercial repair operations
were fully offset by additional Mark II Ferry loss reserves of
$6.5 million taken during fiscal year 1998.
In addition to this insurance settlement, the Company received a
federal income tax refund of $1.5 million in the fourth quarter
of fiscal year 1998. This refund resulted from a net operating
loss carryback that the Company elected to take during fiscal
year 1998 when filing fiscal year's 1997 federal income tax
return. This refund contributed an additional $1.5 million to
net income.
The $7.6 million contribution from these non-recurring items
along with $3.2 million of non-operating investment income, which
included a $1.0 million gain from the sale of the Company's radio
stations, resulted in net income for fiscal year 1998 of $8.1
million.
Mark II Ferry Program
The Company's Mark II Ferry program, awarded in fiscal year 1995,
is approximately 90% complete at March 29, 1998. The Company
delivered the first ferry, the MV Tacoma, during the second
quarter of fiscal year 1998; delivered the second ferry, the MV
Wenatchee, on May 27, 1998; and anticipates delivering the third
ferry, the MV Puyallup, by the end of fiscal year 1999.
As construction of the Mark II Ferries progresses, the Company
reviews and revises its estimates of long term contract sales
values and costs at completion. In fiscal year 1997 the Company
reversed a total of $3.6 million of previously recognized Mark II
Ferry program profit and established a program loss reserve of
$11.5 million. During fiscal year 1998, the Company continued to
estimate that it would incur contract costs in excess of the
current contract prices for the three ship program.
Specifically, the Company increased program loss reserves by $3.0
million in the first quarter of fiscal year 1998, $1.5 million in
the third quarter and an additional $2.0 million in the fourth
quarter. The fourth quarter reserve addition was due to
increased program costs partially attributable to customer
directed change orders. The Company is unable to recognize
additional revenue, if any, on these change orders until
negotiations with the Ferry System are completed. Accordingly,
the Company currently estimates that total contract costs will
exceed the current contract price by $18.0 million.
Mark II Ferry contract costs, which include direct and related
labor costs, direct material costs and allocated manufacturing
overhead costs, are expected to exceed contract price due to the
following factors: over 400 individual Ferry System directed
change orders, steel work overruns encountered on the first
vessel, higher than previously forecast program engineering
costs, and increased costs to complete the outfitting of the
vessels. Outfitting costs include installation of the joiner
work, piping and electrical systems, and painting costs.
The Company's construction cost estimates as of March 29, 1998
are based upon improved production techniques and better
utilization of modular shipbuilding practices in the construction
of the third ship compared to the first two ships. The Company
also has benefited from production efficiencies gained in the
experience of constructing the first and second ships (learning
curve efficiencies) and has incorporated these factors in its
construction cost estimates for the remaining work. However,
favorable or unfavorable variances to the estimated production
efficiencies could materially affect the Company's financial
results.
As construction of the ferries is completed, revisions in cost
and profit estimates for the contract will be made. Changes in
these estimates will be made based upon the facts then known to
the Company and may be a result of productivity factors, change
order pricing, overhead costs, material costs, production
schedules and levels of shipyard activity. Changes in these
factors could materially affect the Company's financial results.
The Company's ability to complete this contract within the
Company's current estimates of the costs to complete is not
presently determinable. If the Company is unable to complete
this contract within its current estimate of the costs to
complete, the Company could incur losses on this contract beyond
the $18.0 million recorded herein with a related adverse impact
on cash flow.
The Company believes that a substantial portion of the increased
contract costs relate to high levels of engineering and
production change orders directed by the Ferry System. These
customer-directed change orders, most of which have not been
settled, and have continued throughout the production process and
into the Company's fiscal year 1999, have caused production
rework, delays and disruption. These change orders have resulted
in increased production costs for the entire three ship ferry
construction project. The Company will pursue full recovery from
the Ferry System for both the direct cost and the impact of these
changes to the production schedule. The Company cannot predict
the outcome of any negotiations with the Ferry System.
Accordingly, the Company has not included estimates of such
settlements, if any, in its above mentioned Mark II Ferry program
loss reserve estimates.
Business Volume and Backlog
The Company's backlog at March 29, 1998 was approximately $47
million. This backlog consists primarily of Mark II Ferry work
to be performed. As the Company continues progress towards
completion of the Mark II Ferry project, the Company's firm
backlog position will continue to decline without the addition of
one or more long term contracts to replace this work. In May
1996, the Company was awarded a cost-type contract for phased
maintenance repairs to four Navy supply ships currently scheduled
over eleven availabilities in five-years. The notional value of
the contract is $79 million of which, $22.6 million had been
recorded as revenue, cumulatively, as of March 29, 1998. The
Company can provide no assurance as to the timing or level of
remaining work that may be performed as part of the maintenance
contract. The Company is working to identify and win additional
construction and repair work that would match the Shipyard's
production capacity.
Profitability
The Company's future profitability depends largely on the ability
of the Shipyard to maintain an adequate volume of ship repair,
overhaul and conversion business to augment its longer term
contracts. The variables affecting the Company's business volume
include public support provided to competing Northwest shipyards,
excess west coast and industry-wide shipyard capacity, foreign
competition, governmental legislation and regulatory issues,
activity levels of the U.S. Navy, competitors pricing behavior,
and Company labor efficiencies and work practices.
The Company continues to respond to the increasingly competitive
shipbuilding and repair industry. In addition to management's
focus on the profitability of existing Shipyard operations
through reduced operating costs and improved production
efficiencies and the pursuit of business volume, management
continues to evaluate options for deployment of assets with a
view to improving the Company's return on investment.
Year to year comparisons
1998 Compared with 1997
Net income for 1998 increased by $29.4 million from 1997 levels
as a result of the following components.
Revenues
Revenues for the fiscal year ended March 29, 1998 decreased $4.9
million (4%) compared to the prior fiscal year. The decrease in
fiscal year 1998 sales was primarily attributable to a $6.4
million decrease in Mark II revenue resulting from the completion
of the first vessel, the MV Tacoma.
Cost of Revenues
Cost of revenues for fiscal year 1998 decreased $3.2 million (3%)
from fiscal year 1997. The decrease is primarily attributable to
the reduction in business volume experienced in fiscal year 1998.
Administrative and Manufacturing Overhead
Administrative and manufacturing overhead expenses for the fiscal
year decreased $3.3 million (11%) from the previous fiscal year
as a result of the Company's continued efforts to reduce costs
and improve Shipyard efficiencies, and the sale of the Company's
radio stations, which resulted in a $1.5 million reduction in
administrative expense when compared to fiscal year 1997.
Contract Reserves Activity
In the fourth quarter of fiscal 1997 the Company estimated that
it would incur costs of approximately $11.5 million in excess of
the contract prices of the three Mark II Ferries and accordingly
established a loss reserve for these costs in fiscal 1997. In
fiscal year 1998, the Company increased the Mark II Ferry loss
reserves by $6.5 million, estimating that it would incur costs of
approximately $18.0 million in excess of the current contract
price.
Provision for Environmental Reserves and Other
In fiscal year 1998, the Company added $.5 million to its
environmental reserves for estimated clean-up costs. In fiscal
year 1997 the Company added $4.3 million to its environmental
reserves. The lower level of environmental reserve provisions
for 1998 contributed to the operating and net income increases
reported in fiscal year 1998 when compared to fiscal year 1997
results. In addition, the Company reached an agreement in fiscal
year 1998 with an insurance company regarding that carrier's
obligation for property damage occurring in previous fiscal
years. This settlement contributed $6.1 million to operating
income for fiscal year 1998.
Operating Results
Fiscal year 1998 operating income of $3.2 million represents a
change of $29.0 million when compared to the prior fiscal year
operating income loss of $25.8 million. The major contributors to
this change are the insurance settlement of $6.1 million reported
above for property damage occurring in previous fiscal years, the
$3.7 million reduction in environmental reserve additions, the
$5.0 million reduction in fiscal year 1998 Mark II Ferry loss
reserve additions, the reversal of $3.6 million of Mark II Ferry
profit in fiscal year 1997, as well as fiscal year 1998 improved
margins in commercial ship repair when compared to fiscal year
1997 losses incurred on commercial overhaul activity.
Investment and Other Income
Investment and other income in fiscal 1998 increased $0.4 million
from the previous fiscal year. This increase was primarily due
to the Company's sale of its broadcasting stations, operated by
Elettra Broadcasting, Inc.
Gain on Sale of available for sale security
Gains on sale of available for sale security decreased $1.5
million from the previous fiscal year's gain on sale of available
securities of $1.7 million.
Income Taxes
For fiscal year 1998, the Company recognized no income tax
expense as the expense was offset by a reduction in the deferred
tax valuation reserve and the utilization of net operating loss
carryforwards. In addition, the Company received a federal
income tax refund of $1.5 million in the fourth quarter of fiscal
year 1998, resulting from a net operating loss carryback that the
Company elected to take when filing fiscal year's 1997 federal
income tax return. The Company did not have taxable income for
fiscal year 1997, accordingly the Company recognized no income
tax expense.
1997 Compared with 1996
Net income for 1997 decreased by $25.4 million from 1996 levels
as a result of the following components.
Revenues
Revenues for the fiscal year ended March 30, 1997 increased $12.7
million (13%) compared to the prior fiscal year. The increase in
fiscal year 1997 sales was primarily attributable to the Mark II
Ferry construction program partially offset by lower Government
maintenance work.
Cost of Revenues
Fiscal year 1997 cost of revenues increased $22.3 million (31%)
compared to 1996 results as 1997 included higher Mark II
activity. Cost of revenues in fiscal year 1997 reflected
production and engineering difficulties encountered on the Mark
II Ferry project.
Administrative and Manufacturing Overhead
Administrative and manufacturing overhead expenses for the year
were up $1.5 million (5%) from prior year results due to
increased radio station activity and increased Shipyard volume.
Contract Reserves Activity
As discussed above, during the fourth quarter of fiscal year
1997, the Company estimated that it would incur costs of
approximately $11.5 million in excess of the contract prices of
the three Mark II Ferries and accordingly established a reserve
for these costs in fiscal year 1997. No contract loss reserves
were recognized in fiscal year 1996.
Provision for Environmental Reserves
In fiscal year 1997, the Company added $4.3 million to its
environmental reserves for estimated Sediments Unit clean-up
costs and other environmental matters. In fiscal year 1996, the
Company did not add to its environmental provision.
Operating Results
Fiscal year 1997 operating income decreased $26.8 million
compared to the prior fiscal year income of $ 1.0 million. The
decrease in operating income reflects the establishment of the
Mark II Ferry contract loss reserve, the reversal of $3.6 million
of previously recognized Mark II Ferry program profits, losses on
commercial overhaul activity and lower Government repair volume.
Operating results for fiscal year 1997 also include a $4.3
million environmental reserve established to address sediment
clean up at the Company's Seattle Shipyard.
Investment and Other Income
The Company's fiscal year 1997 investment and other income of
$2.8 million decreased $.3 million compared to fiscal year 1996
as fiscal year 1997's lower investment balances were partly
offset by the effect of higher interest rates.
Gain on sale of available-for-sale security
Fiscal year 1997 results include a $1.7 million gain from the
sale of an available-for-sale security.
Income Taxes
The Company did not have taxable income for fiscal year 1997,
accordingly the Company recognized no income tax expense and
recorded a net operating loss carryforward as described in Note 7
to the Consolidated Financial Statements. For fiscal year 1996,
the Company recognized no income tax expense as the expense was
offset by a reduction in the deferred tax valuation reserve.
Environmental Matters
Ongoing Operations
Recurring costs associated with the Company's environmental
compliance program are not material and are expensed as incurred.
Capital expenditures in connection with environmental compliance
are not material to the Company's financial statements.
Past Activities
The Company faces significant potential liabilities in connection
with the alleged presence of hazardous waste materials at certain
of its closed shipyards, at its Shipyard and at several sites
used by the Company for disposal of alleged hazardous waste. The
Company has been named as a defendant in civil actions by parties
alleging damages from past exposure to toxic substances at
Company facilities.
To date, the EPA has separated the Harbor Island Site into three
operable units that involve the Company: the Soil and Groundwater
Operable Unit (the "Soil Unit"), the Shipyard Sediments Operable
Unit (the "SSOU") and the Sediments Operable Unit (the "SOU").
The Company, along with a number of other Harbor Island Site
PRPs, received a Special Notice Letter from the EPA on May 4,
1994 pursuant to section 122 (e) of CERCLA. The Company entered
into a Consent Decree for the Soil Unit in September 1994 under
which the Company has agreed to remediate the designated
contamination on its property. That remediation is anticipated to
begin in 1999. The Company and EPA currently are negotiating the
extent and methodology of that remediation. The duration of the
Soil Unit remediation is expected to be approximately 12 to 24
months from the start date. The Company has accrued the EPA's
estimate of the cost of the Soil Unit clean-up in its below
stated environmental matters reserves.
During the quarter ended December 29, 1996, the EPA issued its
Record of Decision ("ROD") for the SSOU. The ROD identifies four
alternative clean-up remedies and specifies the EPA's selected
solution (the "Selected Solution"). The Selected Solution
requires sediment dredging, and installation of a clean sediment
cap and various monitoring efforts extending over ten years. The
Selected Solution includes dredging and disposal of approximately
116,000 cubic yards of material currently in the Duwamish River
and Elliott Bay surrounding the Shipyard. The Selected Solution
allows for two sediment disposal options: confined nearshore
disposal ("CND") and confined aquatic disposal. The Company
identified CND as its preferred disposal method if the Selected
Solution is implemented. In that regard, the Company has
initiated independent studies to estimate costs of a CND effort.
The EPA estimates the Company's portion of the remedial cost for
the Selected Solution including long term monitoring and
maintenance between $5.5 million and $7.9 million. The low end
of the EPA's estimated range reflects the Company's independent
cost estimate for CND of sediments on Company-owned property. The
high end of the EPA range reflects the average CND cost of other
Puget Sound CND dredging projects.
The estimated range does not include the cost of any potential
under-pier dredging or capping, should any be required. The
potential scope and costs of under-pier dredging and capping
remedies are currently indeterminable as the necessity and
magnitude of such efforts is strongly dependent on site-specific
conditions. The Company believes that the timing and the
eventual cost of the SSOU clean up will remain significantly
uncertain until a remedial design has been finalized with the EPA
that identifies the scope of remediation and the method of
sediment disposal. The Company has accrued an amount equal to
the high end of the EPA's estimated range, as the reasonably
expected cost of the SSOU clean-up in its below stated
environmental matters reserves. The Company entered into an
Order of Consent with the EPA covering solely the additional
sampling necessary for any remedial design. The proposed Order
of Consent does not include the remedial design itself.
The Company has approximately 109 cases involving 262 plaintiffs
pending against it, together with other ship builders and
repairers, ship owners, asbestos manufacturers, distributors and
installers and equipment manufacturers, involving injuries or
illnesses allegedly caused by exposure to asbestos or other toxic
substances. The Company and its insurers are vigorously
defending these actions. By their very nature, civil actions
relating to toxic substances vary according to the cases' fact
patterns, jurisdiction and other factors. Accordingly, the
Company cannot predict the eventual number of such cases or their
eventual resolution. The Company has included an estimate of its
potential liability for these issues in its environmental
reserves. Potential additional future expenses related to
alleged damages from past exposure to toxic substances is not
quantifiable due to uncertainties of the number of cases, the
extent of alleged damages, the population of claimants and size
of any awards and/or settlements.
The Company spent $.4 million in fiscal year 1998 for site
remediation and other matters. Most of these expenditures were
related to the Shipyard and for judgments and settlements of
civil matters relating to toxic substances. While the Company
expects to spend larger amounts in future years, the timing of
such expenditures is impossible to predict due largely to
uncertainties relating to remediation of the Harbor Island
facility.
During its fiscal year 1998, the Company was required by
Washington state environmental regulations to take action in
order to determine all known, available and reasonable methods of
prevention, control, and treatment ("AKART") for storm water
discharges from its shipyard. In accordance with its National
Pollution Discharge Elimination System permit, the Company
submitted its revised AKART analysis to the Washington State
Department of Ecology in May 1998. Potential future expense when
quantifiable will be recognized in the period incurred.
The Company's policy is to accrue costs for environmental matters
in the accounting period in which the responsibility is
established and the cost is estimable. The Company's estimates
of its liabilities for environmental matters are based on
evaluations of currently available facts with respect to each
individual situation and take into consideration factors such as
existing technology, presently enacted laws and regulations, and
the results of negotiations with regulatory authorities. The
Company does not discount these liabilities.
The Company's financial statements as of March 29, 1998 reflect
reserves of $16.1 million. The Company has recorded a non-
current asset of $3.7 million to reflect a contractual
arrangement with an insurance company to share costs for certain
environmental matters. The Company is negotiating with its
insurance carriers and certain prior landowners and operators for
past and future remediation costs. In addition, the Company
believes that the Government may be obligated to contribute to a
share of clean-up costs for certain sites.
Actual costs to address the Soil Unit, SSOU and SOU and other
environmental sites and matters will depend upon numerous
factors, including the number of parties found liable at each
environmental site, the method of remediation, outcome of
negotiations with regulatory authorities, outcome of litigation,
technological developments and changes in environmental laws and
regulations.
The effect of resolution of environmental matters on results of
operations, liquidity, capital resources or on the consolidated
financial condition of the Company cannot be predicted due to the
uncertainty concerning both the amount and timing of future
expenditures. No assurance can be given that the Company's $16.1
million reserve as of March 29, 1998 is adequate to cover all
potential environmental costs the Company could incur.
Liquidity, Capital Resources and Working Capital
During fiscal year 1998, working capital increased by $11.2
million to $44.4 million at March 29, 1998 which includes
restricted and unrestricted cash, cash equivalents and marketable
securities of $41.9 million. The increase in working capital is
attributable to an $8.3 million increase in costs in excess of
billings, which is primarily associated with the Mark II Ferry
project for customer directed change orders that are expected to
be recoverable, a $2.9 million increase in cash & cash
equivalents and restricted cash, and a $2.1 million decrease in
accounts payable and accruals. Also contributing to the working
capital increase was the utilization of $6.1 million of the
previously recorded Mark II Ferry forward loss reserve.
Expenditures for property, plant and equipment in fiscal year
1998 were $1.2 million compared to $1.8 million for the prior
fiscal year and were attributable to Shipyard equipment
purchases. The decrease in capital expenditures reflects a
continuing trend in capital expenditure reductions which started
in fiscal year 1996 when the Company completed substantial
investments in Shipyard modifications to accommodate the Mark II
Ferry construction project. These expenditures are in addition
to ongoing repair and maintenance expenditures in the Shipyard of
$2.4 million, $3.2 million, and $4.6 million in fiscal years
1998, 1997 and 1996, respectively.
The Company is required on some of its projects to provide
customers with performance, contract and payment bonds. On
December 28, 1994 Todd Pacific entered into an agreement with a
surety pursuant to which the surety provided a contract bond for
the Mark II Ferry contract. The contract bond is secured by Todd
Pacific's machinery, equipment, inventory and trade accounts
receivable on certain bonded jobs. The surety has also issued
bonds totaling $1.4 million for current commercial repair jobs.
Todd Pacific established an annually renewable $3.0 million
revolving credit facility secured by a first lien on certain
trade receivables. Outstanding borrowings under the credit
facility may not exceed certain percentages of Todd Pacific's
trade receivables. Total outstanding borrowings as of March 29,
1998 were $1.1 million.
The Company received $5.4 million of special project revenue
bonds ("Revenue Bonds")from the Board of Trustees of the
Galveston Wharves ("Galveston Wharves") upon the December 1993
sale of its Galveston shipyard facilities. The Revenue Bonds
bear interest at the rate of eight percent payable semiannually
and are secured by a lien on the shipyard property and a
subordinate lien on the revenues of the Galveston Wharves. The
bonds contain provisions for annual principal payments of $216
thousand beginning on January 1, 1995 with a balloon payment of
$3.5 million due on January 1, 2004. As of March 29, 1998, the
Company has received four annual principal payments. The Company
is recognizing the gain on the sale of the facility as payments
are received.
Based upon its cash position described above and anticipated
fiscal year 1999 cash flow, the Company believes it has
sufficient liquidity to fund operations for fiscal year 1999.
Year 2000
The Company's comprehensive Year 2000 initiative is being managed
by a team of internal staff. The team's activities are designed
to ensure that there is no adverse effect on the Company's core
business operations and that transactions with customers,
suppliers, and financial institutions are fully supported.
While the Company believes its planned efforts are adequate to
address its Year 2000 concerns, there can be no guarantee that
the systems of other companies on which the Company's systems and
operations rely will be converted on a timely basis and will not
have a material effect on the Company's operation. The cost of
the Year 2000 initiatives is not expected to be material to the
Company's results of operation or financial position.
The following specific efforts are currently underway:
Information Systems
The Company has determined that it will need to modify or upgrade
portions of its software so that its computer systems will
function properly with respect to dates in the year 2000 and
beyond. Efforts are underway to upgrade non-compliant software
and operating systems. The VAX mini-computer hardware and
operating system are Year 2000 ready as well as the accounting
software. The payroll system upgrades are planned for June 1998
with custom program upgrades and server operating system upgrades
to follow. Discussions with third-party software vendors will
begin in June 1998.
Services
The Company will initiate by the second quarter of fiscal year
1999 discussions with its significant suppliers, large customers,
financial institutions and utilities to insure that those parties
have appropriate plans to remediate Year 2000 issues where their
systems interface with the Company's systems or otherwise impact
operations. The expected completion is late in the 1998 calendar
year. The Company is assessing the extent to which its
operations are vulnerable should those organizations fail to
remediate properly their computer systems.
Equipment
The Company is currently evaluating the Year 2000 readiness of
its equipment with a comprehensive inventory of monitoring and
control devices for the plant which may be at risk. Vendors are
being contacted in regard to Year 2000 compliance and compliance
letters are being collected.
Labor Relations
In February 1998, the Puget Sound Metal Trades Council
(bargaining umbrella for all unions at Todd Pacific) and Todd
Pacific were sued in Federal District Court for the Western
District of Washington by in excess of 200 employees contending
that the collective bargaining agreement entered into by Todd
Pacific and the various unions representing these employees had
not been properly ratified by the union membership. The lawsuit
seeks a declaratory judgment that the collective bargaining
agreement be found null and void. If plaintiffs were to prevail
in this case Todd Pacific and its unions would have to engage in
bargaining for a new collective bargaining agreement. It is too
early in the case to provide an estimate of the likelihood of a
favorable or unfavorable result in this case.
ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See following page.
REPORT OF ERNST & YOUNG LLP INDEPENDENT AUDITORS
The Board of Directors and Stockholders
Todd Shipyards Corporation
We have audited the accompanying consolidated balance sheets of
Todd Shipyards Corporation and subsidiaries (the "Company") as of
March 29, 1998 and March 30, 1997 and the related consolidated
statements of operations, cash flows and stockholders' equity,
for each of the three years in the period ended March 29, 1998.
Our audits also included the financial statement schedule listed
on the index at item 14(a). The financial statements and
schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on the financial
statements and schedule based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statements presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion the consolidated financial statements referred to
above present fairly, in all, material respects, the consolidated
financial position of Todd Shipyards Corporation and subsidiaries
at March 29, 1998 and March 30, 1997 and the consolidated results
of their operations and their cash flows for each of the three
years in the period ended March 29, 1998 in conformity with
generally accepted accounting principles. Also, in our opinion,
the related financial statements schedule, when considered in
relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set
forth therein.
/s/Ernst & Young LLP
Seattle, Washington
May 29, 1998
TODD SHIPYARDS CORPORATION
CONSOLIDATED BALANCE SHEETS
MARCH 29, 1998 and March 30, 1997
(In thousands of dollars)
1998 1997
ASSETS
Cash and cash equivalents $ 5,317 $ 4,233
Restricted cash 7,011 5,210
Securities available-for-sale 29,524 37,878
Accounts receivable, less allowance for
losses of $662 and $861, respectively
U.S. Government 2,930 2,696
Other 4,203 3,701
Costs and estimated profits in excess of
billings on incomplete contracts 16,193 7,865
Inventories 1,308 1,323
Other 292 251
Total current assets 66,778 63,157
Property, plant and equipment, net 21,565 24,477
Deferred pension asset 21,786 19,564
Other 6,744 8,591
Total assets $116,873 $115,789
LIABILITIES AND STOCKHOLDERS' EQUITY:
Accounts payable and accruals $ 7,304 $ 9,453
Payrolls and vacations 4,090 4,535
Accrual for loss on contract 5,444 11,500
Billings in excess of costs and estimated
profits on incomplete contracts 2,351 982
Taxes other than income taxes 1,345 1,436
Income taxes 1,844 2,006
Total current liabilities 22,378 29,912
Environmental reserves 16,065 15,900
Accrued post retirement health benefits 21,617 22,037
Total liabilities 60,060 67,849
Stockholders' equity:
Common stock $.01 par value-authorized
19,500,000 shares, issued 11,956,033
shares at March 29, 1998 and March 30, 1997,
and outstanding 9,910,180 at March 29, 1998
and at March 30, 1997 120 120
Additional paid-in capital 38,181 38,181
Retained earnings 28,129 19,256
Less treasury stock 9,617 9,617
Total stockholders'equity 56,813 47,940
Total liabilities and stockholders'
equity $116,873 $115,789
The accompanying notes are an integral part of this statement.
TODD SHIPYARDS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended March 29, 1998, March 30, 1997, and March 31, 1996
(In thousands of dollars, except per share amounts)
1998 1997 1996
Revenues $109,537 $114,398 $101,687
Operating Expenses:
Cost of revenues 90,818 93,982 71,674
Administrative and
manufacturing overhead 27,168 30,459 28,996
Contract reserve (6,056) 11,500 -
Provision for environmental
reserves 536 4,250 -
Other - Insurance (6,126) - -
Subtotal 106,340 140,191 100,670
Operating Income (Loss) 3,197 (25,793) 1,017
Investment and other income 3,239 2,802 3,139
Gain (Loss) on sale of securities 190 1,738 (24)
Income (Loss)Before
Income Tax 6,626 (21,253) 4,132
Income Tax Benefit (1,477) - -
Net Income (Loss) $ 8,103 $(21,253) $ 4,132
Net Income (Loss) per Common Share:
Basic EPS $ 0.82 $ (2.14) $ 0.42
Diluted EPS $ 0.82 $ (2.14) $ 0.41
Weighted Average Number of Shares
(thousands)
Basic EPS 9,910 9,910 9,925
Diluted EPS 9,919 9,910 9,991
The accompanying notes are an integral part of this statement.
TODD SHIPYARDS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended March 28, 1998, March 30, 1997, and March 31, 1996
(in thousands of dollars)
1998 1997 1996
OPERATING ACTIVITIES:
Net income (loss) $ 8,103 $(21,253) $ 4,132
Adjustments to reconcile net
income (loss) to net cash
provided by (used in)
operating activities:
Depreciation and amortization 3,479 3,589 3,208
Increase (decrease) in contract
loss reserves (6,056) 11,500 -
Decrease (increase) in costs
and estimated profits in
excess of billings on
incomplete contracts (8,328) 7,198 (8,671)
Increase in environmental
reserves 166 4,813 2,664
Decrease (increase) in accounts
receivable (736) 2,633 (2,264)
Increase (decrease) in accounts
payable and accruals (2,149) (2,378) 4,755
Increase in deferred pension
asset (2,222) (2,363) (1,637)
Increase in other assets 1,847 (426) (2,360)
Other 359 629 (428)
Total adjustments (13,640) 25,195 (4,733)
Net cash provided by (used in)
operating activities (5,537) 3,942 (601)
Cash flows from investing
activities:
Purchases of marketable securities (10,742) (14,365) (19,774)
Maturities of marketable
securities 3,117 7,580 22,959
Sales of marketable securities 17,799 3,607 6,721
Capital expenditures (1,198) (1,835) (4,954)
Acquisition - - (3,850)
Other (554) 416 16
Net cash provided by (used in)
investing activities 8,422 (4,597) 1,118
Cash flows from financing
activities:
Increase in cash restricted
to secure bid and performance
bonds (1,801) (3,664) (1,233)
Purchases of treasury stock - - (2,698)
Net cash provided by (used in)
financing activities (1,801) (3,664) (3,931)
Net increase (decrease) in cash
and cash equivalents 1,084 (4,319) (3,414)
Cash and cash equivalents at
beginning of period 4,233 8,552 11,966
Cash and cash equivalents at
end of period $ 5,317 $ 4,233 $ 8,552
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $ 73 $ 27 $ 3
Income taxes 56 291 541
Noncash financing activities:
Treasury stock purchases payable - - -
The accompanying notes are an integral part of this statement.
TODD SHIPYARDS CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Years Ended March 29, 1998, March 30, 1997, and March 31, 1996
(in thousands of dollars)
Additional
Common Paid-in Retained Treasury Total
Stock Capital Earnings Stock Equity
Balance at
April 2, 1995 $ 120 $38,181 $33,576 $(9,444) $62,433
Purchase of common
shares for treasury (173) (173)
Unrealized gains on
marketable securities
available-for-sale,
net of tax 988 988
1996 net income 4,132 4,132
Balance at
March 31, 1996 120 38,181 38,696 (9,617) 67,380
Unrealized gains on
marketable securities
available-for-sale,
net of tax 1,813 1,813
1997 net loss (21,253) (21,253)
Balance at
March 30, 1997 120 38,181 19,256 (9,617) 47,940
Unrealized gains on
marketable securities
available-for-sale,
net of tax 770 770
1998 net income 8,103 8,103
Balance at
March 29, 1998 $ 120 $38,181 $28,129 $(9,617) $56,813
The accompanying notes are an integral part of this statement.
TODD SHIPYARDS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended March 29, 1998, March 30, 1997, and March 31, 1996
1. PRINCIPAL ACCOUNTING POLICIES
(A) Basis of Presentation - The Consolidated Financial
Statements include the accounts of Todd Shipyards Corporation
(the "Company") and its wholly owned subsidiaries Todd Pacific
Shipyards Corporation ("Todd Pacific"), TSI Management, Inc.
("TSI") and Elettra Broadcasting, Inc. ("Elettra") prior to being
sold on October 9, 1997 (see Note 15). All intercompany
transactions have been eliminated. The Company's policy is to
end its fiscal year on the Sunday nearest March 31. Certain
reclassifications of amounts in the Consolidated Financial
Statements have been made to conform to the current year
presentation.
(B) Business - The Company's primary business is shipbuilding,
conversion and repair for the United States Government (the
"Government"), state ferry systems, and domestic and
international commercial customers. Substantially all of the
Company's work is performed at its Seattle, Washington facility
(the "Shipyard") by a unionized production workforce.
(C) Depreciation and Amortization - Depreciation and
amortization are determined on the straight-line method based
upon estimated useful lives or lease periods; however, for income
tax purposes, depreciation is determined on both the straight-
line and accelerated methods, and on shorter periods where
permitted.
(D) Revenues - Revenues consist of the estimated realizable
value of work performed under construction, repair and conversion
contracts. Profits on major contracts, those in excess of $3
million or six months duration, are recorded on the percentage-of-
completion method (determined based on direct labor hours).
Losses on contracts are reported in the period when first
estimated. Revisions to contract estimates are recorded as the
estimating factors are refined. The effect of these revisions is
included in income in the period the revisions are made.
(E) Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from
those estimates.
(F) Income Taxes - Income taxes are determined in accordance
with an asset and liability approach for financial accounting and
reporting of income taxes. A valuation allowance is recorded to
reduce deferred tax assets when realization of the tax benefit is
uncertain.
(G) Inventories - Inventories, consisting of materials and
supplies, are valued at lower of cost (principally average) or
replacement market. The Company has many available sources of
supply for its commonly used materials.
(H) Cash and Cash Equivalents - The Company considers all highly
liquid debt instruments with a maturity of three months or less
to be cash equivalents. Cash equivalents consist primarily of
money market instruments, investment grade commercial paper and
Government securities. The carrying amounts reported in the
balance sheet are stated at cost which approximates fair value.
(I) Securities Available-for-Sale - The Company considers all
debt instruments purchased with a maturity of more than three
months to be securities available-for-sale. Securities available-
for-sale consist primarily of Government securities, investment
grade commercial paper and equities and are valued based upon
market quotes.
Company management determines the appropriate classification of
debt and equity securities at the time of purchase and
reevaluates such designation as of each balance sheet date. All
of the Company's investments are classified as available-for-sale
as of the balance sheet date and are reported at fair value, with
unrealized gains and losses, net of tax, recorded as a component
of stockholders' equity.
(J) Stock Based Compensation - The Company has elected to apply
the disclosure only provisions of Financial Accounting Standards
Board Statement No. 123, "Accounting for Stock-Based
Compensation". Accordingly, the Company accounts for stock-based
compensation using the intrinsic value method prescribed by
Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees" and related interpretations under APB No.
25, whereby compensation cost for stock options is measured as
the excess, if any, of the fair value of the Company's common
stock at the date of grant over the stock option price.
(K) Environmental Accounting - The Company accounts for
environmental liabilities in accordance with Statement of
Position 96-1, "Environmental Remediation Liabilities," which
provides the accounting and reporting standards for the
recognition and disclosure of environmental remediation
liabilities.
For current operating activities, costs of complying with
environmental regulations are immaterial and expensed as
incurred. Environmental costs are capitalized if the costs
extend the life of the property and/or increase its capacity.
For matters associated with past practices and closed operations,
accruals for environmental matters are recorded when it is
probable that a liability has been incurred and the amount of the
liability can be reasonably estimated, based upon the projected
scope of the remediation, current law and existing technologies.
These accruals are adjusted periodically as assessment and
remediation efforts progress or as additional technical or legal
information becomes available. Such accruals are classified in
the balance sheet as long term obligations at undiscounted
amounts. As applicable, accruals include the Company's share of
the following costs: engineering costs to determine the scope of
the work and the remediation plan, testing costs, project
management costs, removal of contaminated material, disposal of
contaminated material, treatment of contaminated material,
capping of affected areas and long term monitoring costs.
Accruals for environmental liabilities exclude legal costs and
claims, if material, for recoveries from insurance or other third
parties. Accruals for environmental liabilities also exclude
legal costs to defend against claims of other parties. Accruals
for insurance or other third party recoveries for environmental
liabilities are recorded separately from the associated liability
in the financial statements when it is probable that a claim will
be realized.
(L) Net Income Per Share - In 1997, the Financial Accounting
Standards Board (FASB) issued Statement No. 128, "Earnings per
Share" (FAS 128). FAS 128 replaced the calculation of primary
and fully diluted earnings per share with basic and diluted
earnings per share. Unlike primary earnings per share, basic
earnings per share excludes any dilutive effects of options,
warrants, and convertible securities. Diluted earnings per share
is very similar to the previously reported earnings per share.
All earnings per share amounts for all periods have been
presented to conform with FAS No. 128. As a result of the
adoption of FAS No. 128, the Company's previously reported net
income per share changed from $0.42 to $0.41 on a diluted basis
for the year ending March 31, 1996.
(M) Recent Accounting Pronouncements - The FASB issued Statement
No. 130, "Reporting Comprehensive Income" (FAS 130) and Statement
No. 131, "Disclosure about Segments of an Enterprise and Related
Information" (FAS 131). FAS 130 established standards for
reporting comprehensive income in annual and interim financial
statements. FAS 131 established standards for the way a public
business enterprise reports information about operating segments
in annual financial statements and requires that those
enterprises report selected information about operating segments
in interim financial reports issued to shareholders. It also
establishes standards for related disclosures about products
services, geographic areas and major customers. FAS 130 and 131
are effective for financial statements having fiscal years
beginning after December 15, 1997. The adoption of FAS 130 and
131 is not expected to have a significant impact on the Company's
consolidated results of operations, financial position or cash
flow.
2. RESTRICTED CASH AND SURETY LINE
On December 28, 1994 Todd Pacific entered into an agreement with
a surety pursuant to which the surety will provide a contract
bond for a contract to build three Jumbo Mark II class ferries
("Mark II Ferries") for the Washington State Ferry System ("Ferry
System"). The contract bond is secured by Todd Pacific's
machinery, equipment, inventory and trade accounts receivable on
certain bonded jobs. The surety has also issued bonds totaling
$1.4 million for current commercial repair jobs. Restricted cash
includes retention relating to Mark II Ferry construction
progress payments pursuant to contract terms.
3. SECURITIES AVAILABLE FOR SALE
The following is a summary of available-for-sale securities:
Amor- Gross Gross Estimated
tized Unrealized Unrealized Fair
(In thousands) Cost Gains Losses Value
March 29, 1998
U.S. Treasury securities
and agency obligations $ 2,002 $ 10 $ - $ 2,012
U.S. corporate
securities 15,860 41 (39) 15,862
Foreign Stock 623 57 - 680
Mortgage-backed
securities 623 - (2) 621
Total debt securities 19,108 108 (41) 19,175
Equity securities 7,532 2,817 - 10,349
$26,640 $2,925 $ (41) $29,524
March 30, 1997
U.S. Treasury securities
and agency obligations $ 7,979 $ - $ (119) $ 7,860
U.S. corporate
securities 15,948 4 (94) 15,858
Mortgage-backed
securities 3,875 - (25) 3,850
Total debt securities 27,802 4 (238) 27,568
Equity securities 7,963 2,347 - 10,310
$35,765 $2,351 $ (238) $37,878
The Company had gross realized gains of $190 thousand on sales of
available-for-sale securities for the fiscal year ending March
29, 1998. The Company had gross realized gains of $1.8 million
on sales of available-for-sale securities for the fiscal year
ending March 30, 1997 and no gross realized gains on sales of
available-for-sale securities for the fiscal year ending March
31, 1996.
The Company had no gross realized losses on sales of available-
for-sale securities for the fiscal year ending March 29, 1998.
The Company had gross realized losses of $48 thousand and $24
thousand on sales of available-for-sale securities during fiscal
years 1997 and 1996, respectively.
The amortized cost and estimated fair value of the Company's
available-for-sale debt, mortgage-backed and equity securities
are shown below:
Estimated
Amortized Fair
(In thousands) Cost Value
March 29, 1998
Due in one year or less $ 7,555 $ 7,526
Due after one year through three years 10,307 10,348
17,862 17,874
Mortgage-backed securities 623 621
Equity securities 8,155 11,029
$26,640 $29,524
March 30, 1997
Due in one year or less $ 3,166 $ 3,165
Due after one year through three years 20,761 20,553
23,927 23,718
Mortgage-backed securities 3,875 3,850
Equity securities 7,963 10,310
$35,765 $37,878
4. CONTRACTS
Mark II Ferry Contract
The Company has a $181 million contract to construct three Jumbo
Mark II Ferries for the Ferry System. The Mark II Ferries are
designed to transport 218 automobiles and 2,500 passengers each
and will be the largest ferries in the Ferry System fleet. The
Mark II Ferry program, awarded in fiscal year 1995, is
approximately 90% complete at March 29, 1998. The Company
delivered the first ferry, the MV Tacoma, during the second
quarter of fiscal year 1998; delivered the second ferry, the MV
Wenatchee, on May 27, 1998; and anticipates delivering the third
ferry, the MV Puyallup, by the end of fiscal year 1999.
As construction of the Mark II Ferries progresses, the Company
reviews and revises its estimates of long term contract sales
values and costs at completion. In fiscal year 1997 the Company
reversed a total of $3.6 million of previously recognized Mark II
Ferry program profit and established a program loss reserve of
$11.5 million. During fiscal year 1998, the Company continued to
estimate that it would incur contract costs in excess of the
contract prices for the three ship program. Specifically, the
Company increased program loss reserves by $3.0 million in the
first quarter of fiscal year 1998, $1.5 million in the third
quarter and an additional $2.0 million in the fourth quarter.
The fourth quarter reserve addition was due to increased program
costs partially attributable to customer directed change orders.
The Company is unable to recognize additional revenue, if any, on
these change orders until negotiations with the Ferry System are
completed. Accordingly, the Company currently estimates that
total contract costs will exceed the current contract price by
$18.0 million.
Mark II Ferry contract costs, which include direct and related
labor costs, direct material costs and allocated manufacturing
overhead costs, are expected to exceed contract price due to the
following factors: over 400 individual Ferry System directed
change orders, steel work overruns encountered on the first
vessel, higher than previously forecast program engineering
costs, and increased costs to complete the outfitting of the
vessels. Outfitting costs include installation of the joiner
work, piping and electrical systems, and painting costs.
The Company's construction cost estimates as of March 29, 1998
are based upon improved production techniques and better
utilization of modular shipbuilding practices in the construction
of the third ship compared to the first two ships. The Company
also has benefited from production efficiencies gained in the
experience of constructing the first and second ships (learning
curve efficiencies) and has incorporated these factors in its
construction cost estimates for the remaining work. However,
favorable or unfavorable variances to the estimated production
efficiencies could materially affect the Company's financial
results.
As construction of the ferries is completed, revisions in cost
and profit estimates for the contract will be made. Changes in
these estimates will be made based upon the facts then known to
the Company and may be a result of productivity factors, change
order pricing, overhead costs, material costs, production
schedules and levels of shipyard activity. Changes in these
factors could materially affect the Company's financial results.
The Company's ability to complete this contract within the
Company's current estimates of the costs to complete is not
presently determinable. If the Company is unable to complete
this contract within its current estimate of the costs to
complete, the Company could incur losses on this contract beyond
the $18.0 million recorded herein with a related adverse impact
on cash flow.
The Company believes that a substantial portion of the increased
contract costs relate to high levels of engineering and
production change orders directed by the Ferry System. These
customer-directed change orders, most of which have not been
settled, and have continued throughout the production process and
into the Company's fiscal year 1999, have caused production
rework, delays and disruption. These change orders have resulted
in increased production costs for the entire three ship ferry
construction project. The Company will pursue full recovery from
the Ferry System for both the direct cost and the impact of these
changes to the production schedule. The Company cannot predict
the outcome of any negotiations with the Ferry System.
Accordingly, the Company has not included any estimates of such
settlements, if any, in its above mentioned Mark II Ferry program
loss reserve estimates.
Unbilled Receivables - Certain unbilled items on completed
contracts included in accounts receivable were approximately $1.3
million at March 28, 1998 and $2.0 million at March 30, 1997.
Retainages - Costs and estimated profits in excess of billings on
incomplete contracts include $4.4 million in retainages at March
29, 1998 and $5.2 million at March 30, 1997. Retainages are
generally due upon completion or acceptance of the contracted
work and completion of related warranty periods. Retainage at
March 29, 1998 is predominantly related to the Mark II Ferry
project. Mark II Ferry retainage will be released as each ship
is accepted by the Ferry System.
Customers - Revenues from the Government were $20.3 million
(18%), $11.0 million (10%) and $35.5 million (35%) in fiscal
years 1998, 1997 and 1996, respectively. Revenues from the Ferry
System were $60.4 million (55%), $66.8 million (59%) and $40.7
million (40%) in fiscal year 1998, 1997 and 1996, respectively.
5. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment, accumulated depreciation and
accumulated amortization at March 29, 1998 and March 30, 1997
consisted of the following:
1998 1997
Land $ 1,151 $ 1,151
Buildings 11,353 11,244
Piers, shipways and drydocks 22,705 22,304
Machinery and equipment 31,909 32,114
Total plant and equipment, at cost $67,118 $66,813
Less accumulated depreciation 45,553 42,336
Plant, property and equipment, net $ 21,565 $24,477
The Company recognized $3.5 million of depreciation expense in
fiscal years 1998 and 1997. The Company recognized no
amortization expense in fiscal 1998 and less than $0.1 million in
fiscal year 1997.
6. EMPLOYEE BENEFIT PLANS
Union Pension Plans - Operating Shipyard - The Company
participates in several multi-employer plans, which provide
defined benefits to the Company's collective bargaining employees
at its Shipyard. The expense for these plans totaled $3.3
million, $3.1 million and $2.5 million, for fiscal years 1998,
1997 and 1996, respectively.
Union Pension Plans - Previously Operated Shipyards - The Company
is a sponsor of several union pension plans due to the prior
operation of other shipyards. The ongoing operation and
management of these plans is the responsibility of boards of
trustees made up of equal numbers of Company and union
representatives.
Nonunion Pension Plans - The Company sponsors the Todd Shipyards
Corporation Retirement System (the "Retirement System"), a
noncontributory defined benefit plan under which substantially
all nonunion employees are covered. The benefits are based on
years of service and the employee's compensation before
retirement. The Company's funding policy is to fund such
retirement costs as required to meet allowable deductibility
limits under current Internal Revenue Service regulations. New
membership in the Retirement System was frozen on July 1, 1993.
The components of net periodic pension benefit for the Retirement
System defined benefit plan in fiscal years 1998, 1997 and 1996
are as follows (in thousands):
1998 1997 1996
Service cost during the time period $ 279 $ 258 $ 195
Interest cost on projected benefit
obligation 2,201 2,077 2,184
Actual return on plan assets (10,036) (3,862) (5,583)
Net amortization and deferral 4,189 (1,913) 342
Net periodic pension benefit before
OBRA '90 (3,367) (3,440) (2,862)
Transfer of assets for payment of
retiree medical benefits
(401(h) Plan) 1,145 1,077 1,225
Net periodic pension benefit $(2,222) $(2,363) $(1,637)
Significant assumptions used in determining pension obligations,
and the related pension expense, include a weighted-average
discount rate of 7.0% at March 29, 1998, 7.5% at March 30, 1997
and 7.25% at March 31, 1996, an assumed rate of increase in
future compensation of 4.5% at March 29, 1998, March 30, 1997 and
March 31, 1996, and an estimate of expected long-term rate of
return on plan assets of 7.5% at March 29, 1998 and 7.0% at March
30, 1997 and March 31, 1996. The decrease in the discount rate
reflects the decrease in long-term interest rates at March 29,
1998.
The following table sets forth the Retirement System plan's
funded status and amounts recognized in the Company's
consolidated balance sheets at March 29, 1998 and March 30, 1997
for the Retirement System defined benefit plan (in thousands):
1998 1997
Actuarial present value of benefit obligation:
Accumulated benefit obligations,
fully vested $28,854 $28,874
Projected benefit obligation $30,746 $30,504
Plan's assets at fair value 59,824 52,983
Plan's assets in excess of projected
benefit obligation 29,078 22,479
Unrecognized net loss (48) 6,743
Unrecognized net transition asset being
recognized over 15 years (7,244) (9,658)
Deferred pension asset $21,786 $19,564
The Retirement System plan assets consist principally of common
stocks and Government and corporate obligations.
Under a provision of the Omnibus Budget Reform Act of 1990 ("OBRA
'90") the Company transferred approximately $1.1 million in
excess pension assets from its Retirement System into a fund to
pay fiscal year 1998 retiree medical benefit expenses. OBRA '90
was modified by the Retirement Protection Act of 1994 to extend
annual excess asset transfers through the fiscal year ending
March 2001.
Savings Investment Plan - The Company sponsors a Savings
Investment Plan (the "Savings Plan"), under Internal Revenue Code
Section 401, covering substantially all non-union employees.
Under the Savings Plan, the Company at its sole discretion can
contribute an amount up to 6% of each participant's annual salary
depending on the participant's Savings Plan contributions, and
the Company's profits and performance. The Company has made no
contributions to the Savings Plan during the last four years.
Post Retirement Group Health Insurance Program - The Company
sponsors a defined benefit retirement health care plan that
provides post retirement medical benefits to former full-time
exempt employees, and their spouses, who met specified criteria.
The Company terminated post retirement health benefits for any
employees retiring subsequent to May 15, 1988. The retirement
health care plan contains cost-sharing features such as
deductibles and coinsurance. These benefits are funded monthly
through the payment of group health insurance premiums.
The actuarially calculated components of net periodic post
retirement health care benefit cost for the defined benefit plan
in fiscal years 1998, 1997 and 1996 are as follows (in
thousands):
1998 1997 1996
Interest cost on projected
benefit obligation $1,219 $1,214 $1,180
Net amortization of gain (305) (336)
(276)
Net period postretirement benefit
cost 914 878 904
Current year plan contributions $1,185 $1,118 $1,274
Because such benefit obligations do not accrue to current
employees of the Company, there is no current year service cost
component of the accumulated post retirement health benefit
obligation.
The weighted average discount rates for fiscal years 1998, 1997
and 1996 were 7.0%, 7.0% and 6.5%, respectively. The weighted
average rate of increase in the per capita cost of covered
benefits (i.e., health care cost trend) used in determining the
actuarial present value of the accumulated health benefit
obligation was 6.0% for fiscal year 1998. The rate of increase
used in fiscal 1997 and 1996 was 8% grading down to 5% over 20
years. Retirement health care plan gains or losses exceeding 10%
of the benefit obligation are amortized over the beneficiaries
average remaining life expectancy. The health care cost trend
rate assumption has a significant effect on the amounts reported.
Increasing the assumed health care cost trend rate by one
percentage point in each year would increase the accumulated post
retirement health benefit obligation as of March 29, 1998 by $1.2
million and the interest cost component of net periodic post
retirement benefit cost for 1998 by $0.1 million.
The following table sets forth the amounts recognized in the
Company's consolidated balance sheet at March 29, 1998 and March
30, 1997 for the post retirement health benefit obligation (in
thousands):
1998 1997
Accumulated post retirement health benefit
obligation $14,580 $18,000
Plan assets - -
Accumulated post retirement health benefit
obligation in excess of plan assets 14,580 18,000
Unrecognized net gain 8,302 5,153
Accrued post retirement health benefits 22,882 23,153
Less estimated current portion of obligations
classified as accrued expenses 1,265 1,116
Long-term portion of accrued post retirement
health benefits $21,617 $22,037
7. INCOME TAXES
The provision for income taxes differs from the amount of tax
determined by applying the federal statutory rate for the
following reasons (in thousands):
1998 1997 1996
Tax provision (benefit) at
federal statutory tax rate $ 2,319 $(7,439) $ 1,446
Increase (decrease) in valuation
allowance (4,224) 7,501 (829)
Expired Business Credits 1,870 - -
Net Operating Loss Carryback (1,477) - -
Tax effect of adjustment of
contingent liabilities (56) (291) (541)
Other - net 91 229 (76)
$(1,477) $ - $ -
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used
for income tax purposes. Significant components of the Company's
deferred income tax assets and liabilities at March 29, 1998,
March 30, 1997 and March 31, 1996 were as follows (in thousands):
1998 1997 1996
Deferred income tax assets:
Business credit carryforwards $5,391 $7,261 $7,269
Net operating loss carryforwards 720 5,878 -
Alternative minimum tax credit
carryforwards 3,319 3,091 2,874
Accrued employee benefits 9,031 9,031 9,214
Environmental reserve 4,344 4,226 2,490
Contract deferrals - 1,062 1,115
Deferred gain on sale of facility 548 575 601
Securities available-for-sale - - -
Reserve for doubtful accounts 231 301 179
Other 873 202 1,087
Total deferred income tax assets 24,457 31,627 24,829
Valuation reserve for deferred
tax assets (11,674) (19,923) (13,872)
Net deferred tax assets 12,783 11,704 10,957
Deferred income tax liabilities:
Deferred pension income 7,625 6,847 6,020
Accelerated depreciation 3,329 4,036 4,739
Securities available-for-sale 1,009 739 124
Contract deferrals 642 - -
Other 178 82 74
Total deferred income tax liabilities 12,783 11,704 10,957
Net deferred taxes $ - $ - $ -
The Company records its deferred tax assets on the balance sheet
net of a valuation reserve due to the lack of reasonable
assurance that they will be realized.
The Company had, for federal income tax purposes, net operating
loss carryforwards of $.7 million at March 29, 1998 and $5.9
million at March 30, 1997. In addition, the Company had tax
credit carryforwards of $5.4 million at March 29, 1998, and $7.3
million at March 30, 1997 and March 31, 1996. If not utilized,
the net operating loss carryforwards will expire in fiscal year
2012 and the tax credit carryforwards will expire in fiscal years
1999 through 2001.
In addition, the Company has paid approximately $3.3 million of
alternative minimum taxes on alternative minimum taxable income
from fiscal years 1988 through 1992, which will be allowed as a
credit carryforward against regular federal income taxes in
future years in the event regular federal income taxes exceed the
alternative minimum tax.
8. LEASES
Operating lease payments charged to expense were $1.1 million,
$1.0 million, and $.9 million for fiscal years 1998, 1997 and
1996, respectively. Certain leases contain renewal options and
escalation clauses. Minimum lease commitments at March 29, 1998
are summarized below (in thousands):
Operating
Leases
1999 $ 190
2000 185
2001 180
2002 73
2003 73
Thereafter 364
Total minimum lease commitments $ 1,065
9. OTHER CONTINGENCIES
The Company is subject to various risks and is involved in
various claims and legal proceedings arising out of the ordinary
course of its business. These include complex matters of contract
performance specifications, employee relations, union
proceedings, environmental protection and Government procurement
regulations. Only a portion of these risks and legal proceedings
involving the Company are covered by insurance, because the
availability and coverage of such insurance generally has
declined or the cost has become prohibitive.
10. FINANCING ARRANGEMENTS
Todd Pacific utilizes an annually renewable $3.0 million
revolving credit facility secured by a first lien on certain
trade receivables. Outstanding borrowings under the credit
facility may not exceed certain percentages of Todd Pacific's
trade receivables. As of March 29, 1998 Todd Pacific had
outstanding borrowings against the line of credit in the amount
of $1.1 million, at an interest rate of 9.1%, and is reported in
Accounts Payable and Accruals on the Balance Sheet. The loan
agreement contains certain restrictive covenants including the
maintenance of certain minimum financial ratios. Todd Pacific
was out of compliance with certain ratio at March 29, 1998.
However, Todd Pacific has obtained a waiver. The Company had no
borrowings outstanding against the line of credit as of March 30,
1997.
11. ENVIRONMENTAL MATTERS
The Company faces potential liabilities in connection with the
alleged presence of hazardous waste materials at certain of its
closed shipyards, at the Shipyard and at several sites used by
the Company for disposal of alleged hazardous waste. The Company
continues to analyze environmental matters and associated
liabilities for which it may be responsible. No assurance can be
given as to the existence or extent of any environmental
liabilities until such analysis has been completed. The eventual
outcome of all environmental matters cannot be determined at this
time, however, the analysis of some matters have progressed
sufficiently to warrant establishment of reserve provisions in
the accompanying consolidated financial statements.
Harbor Island Site
The Company and several other parties have been named as
potentially responsible parties ("PRPs") by the Environmental
Protection Agency (the "EPA") pursuant to the Comprehensive
Environmental Response, Compensation, and Liability Act ("CERCLA"
also known as "Superfund") in connection with the documented
release or threatened release of hazardous substances, pollutants
and contaminants at the Harbor Island Superfund Site (the "Harbor
Island Site"), upon which the Shipyard is located.
To date, the EPA has separated the Harbor Island Site into three
operable units that involve the Company: the Soil and Groundwater
Operable Unit (the "Soil Unit"), the Shipyard Sediments Operable
Unit (the "SSOU") and the Sediments Operable Unit (the "SOU").
The Company, along with a number of other Harbor Island PRPs,
received a Special Notice Letter from the EPA on May 4, 1994
pursuant to section 122 (e) of CERCLA. The Company entered into
a Consent Decree for the Soil Unit in September 1994 under which
the Company has agreed to remediate the designated contamination
on its property. That remediation is anticipated to begin in
1999. The Company and EPA currently are negotiating the extent
and methodology of that remediation. The duration of the Soil
Unit remediation is expected to be approximately 12 to 24 months
from the start date. The Company has accrued the EPA's estimate
of the cost of the Soil Unit clean-up in its below stated
environmental matters reserves.
During the quarter ended December 29, 1996, the EPA issued its
Record of Decision ("ROD") for the SSOU. The ROD identifies four
alternative clean-up remedies and specifies the EPA's selected
solution (the "Selected Solution"). The Selected Solution
requires sediment dredging, and installation of a clean sediment
cap and various monitoring efforts extending over ten years. The
Selected Solution includes dredging and disposal of approximately
116,000 cubic yards of material currently in the Duwamish River
and Elliott Bay surrounding the Shipyard. The Selected Solution
allows for two sediment disposal options: confined nearshore
disposal ("CND") and confined aquatic disposal. The Company
identified CND as its preferred disposal method if the Selected
Solution is implemented. In that regard, the Company has
initiated independent studies to estimate costs of a CND effort.
The EPA estimates the Company's portion of the remedial cost for
the Selected Solution including long term monitoring and
maintenance between $5.5 million and $7.9 million. The low end
of the EPA's estimated range reflects the Company's independent
cost estimate for CND of sediments on Company-owned property. The
high end of the EPA range reflects the average CND cost of other
Puget Sound CND dredging projects.
The estimated range does not include the cost of any potential
under-pier dredging or capping, should any be required. The
potential scope and costs of under-pier dredging and capping
remedies are currently indeterminable as the necessity and
magnitude of such efforts is strongly dependent on site-specific
conditions. The Company believes that the timing and the
eventual cost of the SSOU clean up will remain significantly
uncertain until a remedial design has been finalized with the EPA
that identifies the scope of remediation and the method of
sediment disposal. The Company has accrued an amount equal to
the high end of the EPA's estimated range, as the reasonably
expected cost of the SSOU clean-up in its below stated
environmental matters reserves. The Company entered into an
Order of Consent with the EPA covering solely the additional
sampling necessary for any remedial design. The proposed Order
of Consent does not include the remedial design itself.
In January 1998, the Company was notified by the EPA that testing
would be required in the West Waterway of the Duwamish River
outside the boundaries of the SSOU as part of the SOU. The
Company in May 1998 entered into an Order of Consent to perform
certain limited testing as part of the SOU investigation. The
testing is scheduled to take place during Summer 1998.
In January 1990, the Company was notified that it was a PRP in an
action brought by the National Oceanic and Atmospheric
Administration ("NOAA") for alleged damages caused to the coastal
and marine natural resources in the Duwamish River and Elliott
Bay off the Harbor Island Site. Subsequent to this notification,
NOAA brought suit against the City of Seattle and the
Governmental agency responsible for sewage treatment in the
Seattle area ("Metro") for their contributions of hazardous
materials to the Duwamish River and Elliott Bay. This litigation
was settled between the parties. While NOAA, the City of Seattle
and Metro retain the right to bring suit against all the other
named PRPs, including the Company, the Company has not been
contacted since the January 1990 notification. The Company does
not know the scope of the alleged damages caused to the coastal
and marine natural resources or the methods of measuring these
alleged damages. For these reasons, the Company does not believe
that any estimate of any potential liability relating to these
actions can be made at this time.
Other Environmental Matters
The Company entered into a Consent Decree with the EPA for the
clean up of the Casmalia Resources Hazardous Waste Management
Facility in Santa Barbara County, California under the Resource
Conservation and Recovery Act. The Company has included an
estimate of the potential liability for this site in its below
stated reserves. Payments, expected to be immaterial, began in
fiscal year 1997 and will extend for up to ten years.
In June 1989, the Company was notified by the City of Hoboken,
New Jersey (the "City") that a volume of oil had been discovered
on the surface of the property that had been owned and operated
as the Hoboken Division of the Company. In June 1992, the City
and the Company were named as PRPs by the State of New Jersey
(the "State"). The City has undertaken a clean-up of the
property. The State has issued a Notice of Violation against the
Company pursuant to the New Jersey Spill Act ("Spill Act"). The
City and the State allege that the Company abandoned three
underground storage tanks in 1969 when the property was sold to
the City and that the discovered surface oil spilled from those
tanks. In April 1994 the City of Hoboken initiated a civil
action against the Company entitled City of Hoboken v. Todd et
al. for contribution under the Spill Act seeking reimbursement
for all monies expended for the cleanup of the Hoboken property.
Also named in the suit is the developer who allegedly trespassed
onto the property and caused the oil spill and several insurance
companies who allegedly issued comprehensive general liability
insurance policies in favor of the City of Hoboken covering the
property. The Company is vigorously defending this action. The
Company has included an estimate of the potential liability for
the site in its below stated reserves. The trial date for this
case is anticipated for Spring of calendar year 1999.
Todd Pacific was notified by the California Environmental
Protection Agency that it may be considered a PRP for the cleanup
of the Omega Chemical Corporation site ("Omega Site") in
Whittier, California in September of 1994. It is alleged that
the Los Angeles Division of Todd Pacific caused certain
production wastes and by-products to be transported to this
hazardous waste treatment and storage facility between 1976 and
1991. The California Department of Toxic Substances Control is
pursuing the clean up of the Omega Site pursuant to state and
federal regulations. The Company has included an estimate of the
potential liability for the site in its below stated reserves.
In November 1987, the Company was identified as a PRP by the EPA
in conjunction with the cleanup of the Operating Industries, Inc.
("OII") hazardous materials disposal site at Monterey Park,
California. In September 1995, the Company entered into a
Partial Consent Decree with the EPA to contribute $.6 million as
its partial share of remediation costs at the OII site which
encompasses all costs assessed to date. Payment was made to the
EPA in July 1996. A proposed final consent decree for site
remediation is not expected from the EPA until late calendar year
1998. The cost of the partial settlement and future final
consent decree settlement is included in the below stated
reserve.
During its fiscal year 1998, the Company was required by
Washington state environmental regulations to take action in
order to determine all known, available and reasonable methods of
prevention, control, and treatment ("AKART") for storm water
discharges from its shipyard. In accordance with its National
Pollution Discharge Elimination System permit, the Company
submitted its revised AKART analysis to the Washington State
Department of Ecology in May 1998. Potential future expense when
quantifiable shall be recognized in the period incurred.
The Company has been named as a defendant in civil actions by
parties alleging damages from past exposure to toxic substances,
generally asbestos, at closed former Company facilities. These
cases are generally filed with multiple claimants and multiple
defendants and are generally insured matters. In certain
jurisdictions, the laws are structured to allow the heirs of
former employees to sue for gross negligence and to seek punitive
damages in addition to compensatory awards. The Company is not
fully insured for these matters. Costs to date to administer and
settle these cases have not been material. Estimation of
eventual potential liability, if material, is not possible as the
Company has no means to quantify the number of potential cases,
the timing of such cases, the jurisdiction or what judgments or
settlements, if any, would result. The Company and its insurers
are vigorously defending these actions. The Company has included
its current estimate of the potential liability for known issues
in its below stated reserves.
During fiscal year 1997, the Company recognized a $4.3 million
charge against earnings that includes $7.9 million for
anticipated costs associated with the Company's portion of the
Selected Solution, a decrease to the Soil Unit reserve and
adjustments to other environmental matters. The Company has also
reclassified a previously established $1.0 million siltation
dredging reserve to the Selected Solution reserve as the efforts
will be performed concurrently. These adjustments increase the
Company's environmental reserves for the entire Harbor Island
Site to $11.1 million. The Company has provided total aggregate
reserves of $16.1 million for the above described contingent
environmental liabilities. The Company is negotiating with its
insurance carriers and prior landowners and operators for past
and future remediation costs. The Company has recorded a non-
current asset of $3.7 million to reflect a contractual
arrangement with an insurance company to share costs for certain
environmental matters. In addition, the Company reached an
agreement in fiscal year 1998 with an insurance company regarding
the carrier's obligation for property damage occurring in
previous fiscal years. This settlement contributed $6.1 million
to operating income for fiscal year 1998. No assurance can be
given that the Company's reserves are adequate to cover all
potential environmental costs the Company could incur.
12. COLLECTIVE BARGAINING AGREEMENT
During fiscal year 1998, the Company and the Puget Sound Metal
Trades Council (representing the Pacific Coast Metal Trades
District Council and its member unions) submitted their final
collective bargaining contract positions to binding arbitration
in accordance with the provisions set forth in the Mark II Ferry
project agreement in force between the parties. Subsequent to
and in keeping with the arbitrator's ruling, the parties executed
a new labor agreement effective November 24, 1997. Prior to the
arbitration process, the Company had reached unanimous agreement
with the bargaining representatives of the workforce on three
separate occasions. However, on each occasion, the agreement was
rejected by the Todd workforce. The new collective bargaining
agreement will terminate on July 31, 1999 and replaces the
previous contract which expired on July 31, 1996. Among other
things, the new labor agreement provided for a retroactive pay
adjustment of $0.60 per hour for qualifying employees and the
impact of this increase has been reflected in the fiscal 1998
year end results.
As a result of the binding arbitration process, on February 17,
1998, the Puget Sound Metal Trades Council (bargaining umbrella
for all unions at Todd Pacific) and Todd Pacific were sued in
Federal District Court for the Western District of Washington by
in excess of 200 employees contending that the collective
bargaining agreement entered into by Todd Pacific and the various
unions representing these employees had not been properly
ratified by the union membership. The lawsuit seeks a
declaratory judgment that the collective bargaining agreement be
found null and void. If plaintiffs were to prevail in this case,
Todd Pacific and its unions would have to engage in bargaining
for a new collective bargaining agreement. It is too early in
the case to provide an estimate of the likelihood of a favorable
or unfavorable result in this case.
Over the past two fiscal years, the Company has invested heavily
in its labor relations efforts including the establishment of
labor/management committees and conflict resolution education for
all parties.
13. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
Financial results by quarter for the fiscal years ended March 29,
1998 and March 30, 1997 are as follows. Each quarter is 13 weeks
in length (in thousands):
Net
Income
Operating Net (loss)
income income Per Share
Revenues (loss) (loss) Diluted
1st Qtr 1998 $ 33,462 $ (3,066) $ (2,401) $ (0.24)
2nd Qtr 1998 28,042 559 918 0.09
3rd Qtr 1998 27,177 1,480 3,016 0.30
4th Qtr 1998 20,856 4,224 6,570 0.67
1st Qtr 1997 30,231 (2,528) 31 0.00
2nd Qtr 1997 26,627 (2,240) (1,643) (0.17)
3rd Qtr 1997 27,215 (5,873) (5,067) (0.51)
4th Qtr 1997 $ 30,325 $(15,151) $(14,574) $ (1.47)
The first, third, and fourth quarters of fiscal year 1998 reflect
$3.0 million, $1.5 million, and $2.0 million additions
respectively to the loss reserve established for the Mark II
Ferry project. In addition, the fourth quarter of fiscal year
1998 reflects an insurance settlement of $6.1 million and a
federal income tax refund of $1.5 million.
The third quarter of fiscal year 1997 includes a $4.3 million
environmental provision. The fourth quarter of fiscal year 1997
reflects a $11.5 million loss reserve established for the Mark II
Ferry project and the reversal of $2.4 million of previously
recognized Mark II Ferry profit.
14. Income (loss) per share
The following table sets forth the computation of basic and
diluted income (loss) per share:
March 29, March 30, March 31,
1998 1997 1996
(in thousands, except per share amount)
Numerator:
Numerator for basic and diluted
income (loss ) per share
net income (loss) $ 8,103 $(21,253) $4,132
Denominator:
Denominator for basic income per
share - weighted average
common shares 9,910 9,910 9,925
Effect of dilutive securities:
Stock options based
on the treasury stock method using
average market price 9 - 66
Convertible preferred stock - - -
Denominator for diluted income per share 9,919 9,910 9,991
Basic income (loss) per share $ 0.82 $(2.14) $ 0.42
Diluted income (loss) per share $ 0.82 $(2.14) $ 0.41
15. Sale of Elettra Assets.
The radio stations operated by Elettra Broadcasting, Inc., were
sold on October 9, 1997 for $5.3 million, resulting in a $1.0
million gain in fiscal year 1998.
16. Stock Based Compensation
The Company's Incentive Stock Compensation Plan (the "Plan")
provides for the granting of incentive stock options, non-
qualified stock options, and restricted stock or any combination
of such grants to directors, officers and key employees of the
Company to purchase shares of the Class A Common Stock of the
Company. An aggregate of 500,000 shares of common stock has been
authorized for issuance under the Plan. Options issued under the
Plan vest ratably over three years and expire not more than ten
years from the date of grant and are granted at prices equal to
the fair value on the date of grant. There were 160,000 options
available for future grant under the Plan at March 29, 1998.
A summary of stock option transactions for the years ended March
29, 1998, March 30, 1997, and March 31, 1996 is as follows:
Number Option Price
of Shares Per Share
Outstanding, April 2, 1995 210,000 $4.25 to $4.50
Granted 100,000 6.00
Outstanding, March 31, 1996 310,000 4.25 to 6.00
Forfeited (25,000) 6.00
Outstanding, March 30, 1997 285,000 4.25 to 6.00
Granted 55,000 4.38 to 4.56
Outstanding, March 29, 1998 340,000 4.25 to 6.00
Exercisable, March 29, 1998 266,664 $4.25 to $6.00
As described in Note 1, the Company has elected to account for
stock-based compensation expense in accordance with APB 25.
Accordingly, no compensation expense has been recognized for
stock-based compensation since the grant price equaled the
estimated fair value of the stock on the date of grant. Applying
the fair value methodology of Statement No. 123 to the Company's
stock option plans results in net income which is not materially
different from amounts reported.
Todd Shipyards Corporation
Schedule II - Valuation and Qualifying Reserves
For years ending March 29, 1998, March 30, 1997 and March 31,
1996
(in thousands)
Reserves deducted from assets to which they apply - Allowance for
doubtful accounts:
Year Year Year
ended ended ended
March 29, March 30, March
31,
1998 1997 1996
Balance at beginning of period $ 861 $ 511 $ 548
Charged to costs and expenses - 350 68
Deductions from reserves (1) (199) - (105)
Balance at close of period $ 662 $ 861 $ 511
Notes:
(1) Deductions from reserves represent uncollectible accounts
written off less recoveries
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCED DISCLOSURE
None
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
**
ITEM 11. EXECUTIVE COMPENSATION
**
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
**
ITEM 13. CERTAIN RELATIONSHIPS AND TRANSACTIONS
**
** The information for the above items will be provided in, and
is incorporated by reference to, the 1998 Proxy Statement.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
REPORTS ON FORM 8-K
(a) 1 & 2. Financial Statements
The financial statements and financial statement schedule
listed in the accompanying index to financial statements and
financial statement schedules are filed as part of this annual
report.
3. Exhibits
The exhibits listed on the accompanying Index to Exhibits are
filed as part of this annual report.
(b) Reports on Form 8-K
The Company filed no reports on Form 8-K during the fourth
quarter ended March 29, 1998.
TODD SHIPYARDS CORPORATION
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
COVERED BY REPORT OF INDEPENDENT AUDITORS
Report of Ernst & Young LLP Independent Auditors............... *
Consolidated Balance Sheets at March 29, 1998
and March 30, 1997........................................... *
Consolidated Statements of Operations
For the years ended March 29, 1998,
March 30, 1997 and March 31, 1996............................. *
Consolidated Statements of Cash Flows
For the years ended March 29, 1998,
March 30, 1997 and March 31, 1996............................. *
Consolidated Statements of Stockholders Equity
For the years ended March 29, 1998,
March 30, 1997 and March 31, 1996............................. *
Notes to Consolidated Financial Statements
For the years ended March 29, 1998,
March 30, 1997 and March 31, 1996............................. *
Supplementary Information:
Quarterly Financial Data (unaudited)......................... *
Consolidated Financial Statement Schedule:
II-Valuation and Qualifying Reserves......................... *
* No page numbers are included in EDGAR version.
TODD SHIPYARDS CORPORATION INDEX TO EXHIBITS
Item 14(a)3
Exhibit
Number
3-1 Certificate of Incorporation of the Company *
dated November 29, 1990 filed in the Company's
Form 10-K Report for 1997 as Exhibit 3-1.
3-2 By-Laws of the Company dated November 29, 1990, *
as amended October 1, 1992 filed in the Company's
Form 10-K Report for 1993 as Exhibit 3-2.
10-1 Lease Agreement of floating drydock YFD-70 dated *
April 16, 1996 between the Company and NAVSEA,
filed in the Company's Form 10-K Report for 1996
as Exhibit 10-1.
10-2 Lease Agreement of floating drydock YFD-54 dated *
April 1, 1987 between the Company and NAVSEA and
amendments thereto filed in the Company's Form 10-K
Report for 1995 as Exhibit 10-2.
10-3 Collective Bargaining Agreement between Todd #
Pacific, Seattle Division and the Metal Trades
Dept. of the A.F.L.- C.I.O., the Pacific Coast
Metal Trades District Council, the Seattle Metal
Trades Council and the International Unions
signatory thereto dated November 24, 1997.
10-4 Project Agreement between Todd Pacific, Seattle *
Division and the Metal Trades Dept. of the A.F.L.
- C.I.O., the Pacific Coast Metal Trades District
Council, the Seattle Metal Trades Council and the
International Unions signatory thereto dated August
1994 filed in the Company's Form 10-K Report for
1995 as Exhibit 10-4.
10-5 Unsigned executed copy of Harbor Area Lease *
Agreement No. HA-2202 dated March 21, 1985 between
the Company and the State of Washington Dept. of
Natural Resources filed in the Company's Form 10-K
Report for 1995 as Exhibit 10-5.
10-6 Harbor Area Lease Agreement No. 2590 dated *
December 13, 1982 between the Company and the State
of Washington Dept. of Natural Resources filed in the
Company's Form 10-K Report for 1995 as Exhibit 10-6.
10-7 Harbor Area Lease Agreement No. 22-090038 dated *
September 1, 1986 between the Company and the State
of Washington Dept. of Natural Resources filed in the
Company's Form 10-K Report for 1995 as Exhibit 10-7.
10-8 Harbor Area Lease Agreement No. 22-090039 dated *
September 1, 1986 between the Company and the State
of Washington Dept. of Natural Resources filed in the
Company's Form 10-K Report for 1995 as Exhibit 10-8.
10-9 Savings Investment Plan of the Company effective *
April 1, 1989 filed in the Company's Form 10-K
Report for 1995 as Exhibit 10-9.
10-10 Todd Shipyards Corporation Retirement System Plan *
and Amendments thereto filed in the Company's Form
10-K Report for 1995 as Exhibit 10-10.
10-13 Purchase and Sale Agreement and Deed of Trust *
relating to the sale of the Company's Galveston
facility to the Galveston Wharves dated December
16, 1993 filed in the Company's Form 10-K
Annual Report for 1994 as Exhibit 10-14.
10-14 Employment contract between Todd Pacific and Roland *
H. Webb dated December 27, 1994 filed in the Company's
Form 10-K Report for 1995 as Exhibit 10-14.
10-14(a) Amendment to employment contract between Todd Pacific #
and Roland H. Webb dated December 17, 1997.
10-15 Contract between Todd Pacific and the Washington *
State Ferries, a division of the Washington State
Department of Transportation for the construction of
one Jumbo Mark II Class Ferry dated January 30, 1995
filed in the Company's Form 10-K Report for 1995 as
Exhibit 10-15.
10-15(a) Change Order Estimate from the Washington State *
Ferries, amending Exhibit 10-15 and exercising its
Option for the construction of the second and third
Jumbo Mark II Class Ferries dated June 14, 1995,
filed in the Company's Form 10-K Report for 1996
as Exhibit 10-15(a).
10-16 Contract No. N000024-91-C-8503 between Todd Pacific *
and the Department of the Navy for the maintenance
and repair of supply ships filed in the Company's Form
10-K Report for 1995 as Exhibit 10-16.
10-16(a) Contract No. N000024-96-R-8500 between Todd Pacific *
and the Department of the Navy for the maintenance
and repair of supply ships dated May 20, 1996 filed in
the Company's Form 10-K Report for 1997 as Exhibit 10-
16(a).
10-17 Documents pertaining to the bonding arrangements of *
Todd Pacific relating to the Ferry Contract (Exhibit
10-16): Underwriting and Continuing Indemnity Agreement,
Security Agreement, Pledge Agreement, Intercompany
Credit Agreement, Preferred Mortgage of vessel
EMERALD SEA, UCC-1 Financing Statement, and UCC-2
Fixture Statement filed in the Company's Form 10-K
Report for 1995 as Exhibit 10-17.
10-18 Documents pertaining to revolving line of credit *
agreement between Todd Pacific and U.S. Bank of
Washington, National Association: Security Agreement,
Commercial Guaranties, Corporate Resolution to Borrow,
Corporate Resolutions to Guaranty/Grant Collateral,
Business Loan Agreement, Disbursement Request and
Authorization Agreement, Accounts Receivable Collateral
Parameters Agreement, Promissory Note, and UCC-1
Financing Agreement filed in the Company's Form 10-K
Report for 1995 as Exhibit 10-18.
10-19 Todd Shipyards Corporation Incentive Stock *
Compensation Plan effective October 1, 1993, approved
by the shareholders of the Company at the 1994 Annual
Meeting of Shareholders filed in the Company's Form 10-K
Report for 1995 as Exhibit 10-19.
10-20 Grant of Nonqualified Stock Option dated *
June 24, 1994 to Patrick W.E. Hodgson pursuant
to the Incentive Stock Compensation Plan
(Exhibit 10-19) filed in the Company's Form 10-K
Report for 1995 as Exhibit 10-20.
10-21 Grant of Incentive Stock Option dated June 24, 1994 *
to Roland H. Webb pursuant to the Incentive
Stock Compensation Plan (Exhibit 10-19) filed in the
Company's Form 10-K Report for 1995 as Exhibit 10-21.
10-22 Grant of Incentive Stock Option dated September 29, *
1994 to Stephen G. Welch pursuant to the Incentive
Stock Compensation Plan (Exhibit 10-19) filed in the
Company's Form 10-K Report for 1995 as Exhibit 10-22.
10-23 Grant of Incentive Stock Option dated September 29, *
1994 to Michael G. Marsh pursuant to the Incentive
Stock Compensation Plan (Exhibit 10-19) filed in the
Company's Form 10-K Report for 1995 as Exhibit 10-23.
10-25 Form of Grant of Non-Qualified Stock Options dated *
July 17, 1995 to Patrick W.E. Hodgson pursuant
to the Incentive Stock Compensation Plan
(Exhibit 10-19).
10-26 Form of Grant of Incentive Stock Options dated *
July 17, 1995 to certain key employees pursuant to
the Incentive Stock Compensation Plan (Exhibit 10-19).
10-27 Employment contract between the Company and Stephen G. #
Welch dated September 30, 1997.
18-1 Letter dated 8/17/94 from Ernst & Young, LLP *
regarding changes in accounting principles, filed in
the Company's Form 10-K for 1996 as Exhibit 18-1.
22-1 Subsidiaries of the Company. #
27 Financial Data Schedule. #
Note: All Exhibits are in SEC File Number 1-5109.
* Incorporated herein by reference.
# Filed herewith.
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the
Securities Exchange Act of 1934 the registrant has duly caused
this Annual Report to be signed on its behalf by the undersigned,
thereunto duly authorized.
TODD SHIPYARDS CORPORATION
Registrant
By: /s/ Scott H. Wiscomb
Scott H. Wiscomb
Chief Financial Officer,
Principal Financial Officer,
Principal Accounting Officer,
and Treasurer
June 12, 1998
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons
on behalf of the registrant and in the capacities and on the
dates indicated:
/s/ Brent D. Baird /s/ Steven A. Clifford
Brent D. Baird, Director Steven A. Clifford, Director
June 12, 1998 June 12, 1998
/s/ Patrick W.E. Hodgson /s/ Joseph D. Lehrer
Patrick W.E. Hodgson, Joseph D. Lehrer, Director
Chairman, June 12, 1998
and Director
June 12, 1998
/s/ Philip N. Robinson /s/ John D. Weil
Philip N. Robinson, Director John D. Weil, Director
June 12, 1998 June 12, 1998
/s/ Stephen G. Welch
Stephen G. Welch
Chief Executive Officer
June 12, 1998
TODD PACIFIC SHIPYARDS CORPORATION
MONTANA VALLEY LAND COMPANY
ELETTRA BROADCASTING, INC.
TSI MANAGEMENT, INC.
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT ("Agreement") is made and
entered into as of the ____ day of September, 1997, by and
between TODD SHIPYARDS CORPORATION, a Delaware corporation
("Company") and STEPHEN G. WELCH ("Executive").
RECITALS:
A. The Company desires to engage the services of Executive as
the President of the Company, having been duly elected by the
Board of Directors of the Company.
B. Executive desires to accept such engagement.
C. This Agreement contains other provisions applicable to the
employment of Executive by the Company.
In consideration of the above Recitals and the provisions of
this Agreement, the Company and Executive agree as follows:
I. DUTIES
1.1 Title and Responsibilities. Executive shall serve as
President of the Company and Chairman of Todd Pacific Shipyards
Corporation ("Todd Pac"), a subsidiary of the Company, serving
in the capacity of chief executive officer of the Company and
Todd Pac. Executive's responsibilities and duties shall
include those items inherent in Executive's position with the
Company and shall further include such other managerial
responsibilities and executive duties as may be assigned to him
from time to time by the Chairman of the Board or the Board of
Directors of the Company. Executive shall devote his best
efforts and full business time to the business and interests of
the Company. During the term of his employment with the
Company, Executive shall not engage in or be involved in any
non-Company business activity (including managing personal
investments and finances and charitable activities) which
materially detracts from Executive's ability to fulfill his
responsibilities and duties to the Company.
1.2 Company Policies. All policies published by the Company
or delivered to the Executive prior to or following this
Agreement regarding employment policies, required behavior by
employees and other similar matters (collectively referred to
as "Company Policies") are incorporated within this Agreement
as though fully set forth in this Agreement. The Executive
agrees to be bound by and adhere to all such Company Policies
as presently exist or as may be hereafter issued or modified by
the Company. To the extent any such Company policies are
inconsistent with or contrary to the provisions of this
Agreement, this Agreement shall prevail. Without limiting the
foregoing, the Executive agrees to conduct business on behalf
of the Company in a manner consistent with proper and ethical
business practices and consistent with the best interests of
the Company.
1.3 Board of Directors. The Board of Directors of the Company
shall nominate Executive for membership on the Board of
Directors of the Company for election of next regular annual
meeting of the Shareholders of the Company scheduled to take
place in the summer of 1998.
II. COMPENSATION
2.1 Base Salary. Executive shall be paid a base salary ("Base
Salary") by the Company during the term of Executive's
employment with the Company at the rate of Two Hundred Twenty-
Five Thousand and 00/100 Dollars ($225,000.00) per year.
Executive's Base Salary shall be reviewed annually by the
Compensation Committee of the Company's Board of Directors and
evaluated based on performance and salary levels of other
executives of comparable position within the geographic
location of the Company. Based upon such evaluation and
review, Executive's Base Salary may be increased from time to
time as determined by the Board of Directors of the Company in
its sole discretion.
2.2 Bonus. In addition to Base Salary, Executive may receive
an annual bonus ("Bonus") based upon performance criteria and
financial and operational results of the Company as determined
by the Board of Directors of the Company in its sole
discretion. The amount of such Bonus, if any, for the
preceding fiscal year and the performance criteria under which
a Bonus would be earned for the current fiscal year, shall be
determined by the Compensation Committee and the Company's
Board of Directors, in their sole discretion no later than
their meeting held during the first quarter of the Company's
fiscal year. If the Compensation Committee and Board of
Directors determine that a Bonus was earned, the Bonus, shall
be an amount which is no less than twenty-five percent (25%)
and no more than one hundred percent (100%) of Base Salary.
2.3 Other Benefits.
(i) Executive shall be entitled to such employee benefits
generally available to the full-time salaried employees of the
Company, including without limitation, health insurance, paid
vacation and other similar benefits to the extent generally
available to Company full-time salaried employees.
(ii) The Company shall pay or reimburse Executive for all
travel and entertainment expenses incurred by Executive in
connection with his duties on behalf of the Company, subject to
the reasonable approval of the Company. Executive shall only
be entitled to reimbursement to the extent that the Executive
follows the reasonable procedures established by the Company
for reimbursement of such expenses which will include, but will
not be limited to, providing satisfactory evidence of such
expenditures.
III. TERMINATION OF EMPLOYMENT
3.1 Notice. Either party may terminate Executive's employment
with the Company upon no less than thirty (30) days written
notice to the other party, subject to the following:
(i) If Executive should terminate his employment with the
Company, the Company may terminate Executive's employment
immediately upon such notice by paying an amount equal to
thirty (30) days of Executive's then existing Base Salary as
compensation for the thirty (30) day period following
Executive's notice of termination. If Executive should
terminate his employment with the Company, the Employee shall
not be entitled to any Severance Compensation or any other
remuneration or benefits beyond such termination, except as
otherwise provided in this Agreement or required under
applicable law; provided that Executive shall be paid for any
accrued but unused vacation and comp time.
(ii) If the Company should terminate Executive's employment
with the Company for reasons other than Cause (as defined
below), the Company shall pay Severance Compensation (as
defined below) to Executive. The Company may terminate
Executive's employment immediately upon notice by beginning
payment of the Severance Compensation. "Severance
Compensation" means an amount equal to the lesser of (i) two
times Executive's Base Salary in effect on the date of such
termination, or (ii) the amount of Base Salary to be paid to
Executive during the remaining term of this Agreement. The
Company shall pay the Severance Compensation to Executive in
installments or in a lump sum at Executive's option. In
addition to the severance, Executive shall be paid for any
accrued but unused vacation and comp time. The acceptance of
Severance Compensation shall be deemed to constitute a release
by the Executive of any and all claims, liabilities, causes of
action, or any other assertion of liability by the Executive
against the Company except for the payment of the remainder of
Severance Compensation.
(iii) In the event that the Company terminates Executive's
employment with the Company for reasons that constitute Cause,
the Company may immediately terminate Executive's employment
upon notice, and the Company shall have no obligation to pay
Executive Severance Compensation, and all other benefits,
compensation or remuneration otherwise payable by the Company
to Executive shall terminate (except for accrued vacation and
those obligations under applicable law which must continue
after termination of Executive's employment). As used herein,
"Cause" means: a) a material and advertent breach of the
provisions of this Agreement by the Executive; b) chemical or
alcohol dependency which materially and adversely affects
Executive's performance of his employment duties; c) any act of
disloyalty or breach of responsibilities to the Company by the
Executive which is meant by the Executive to cause harm to the
Company; or d) conduct which constitutes willful, wanton or
grossly negligent misfeasance of Executive's duties.
3.2 Effect of Termination. Notwithstanding the termination of
Executive's employment with the Company, the Restrictive
Covenants contained in Article 4 of this Agreement shall remain
in full force and effect, together with the Company's right to
enforce such Restrictive Covenants and receive damages in the
event of a breach of any such Restrictive Covenants.
3.3 Responsibilities of Executive Upon Termination. Upon the
termination of Executive's employment with the Company,
irrespective of the reasons for such termination, the Executive
shall deliver all property of the Company to the Company,
together with all notes and memorandum, whether in written or
digital computer form. The property of the Company that must
be returned upon termination of Executive's employment shall
include, but should not be limited to, all written data
concerning the financial performance, products, plans,
projections, or products of the Company and all other data
which would constitute Confidential Information pursuant to
Section 4.4 below. The property to be delivered to the Company
shall include the originals and all copies of all such property
and all data contained on computer disks and other means of
storing computer data.
3.4 Termination of Employment after a Change of Control. Upon
the termination of Executive's employment with the Company
following a Change of Control (as hereafter defined) (i) by
action of the Company or any Successor to the Company (as
hereafter defined) for reasons other than Cause (as defined
above) or (ii) by a voluntary termination by the Executive
within 180 days of such Change in Control, Executive shall
receive a lump sum severance payment equal to two times the
Base Salary of Executive in effect at the time of such Change
in Control.
(i) As used herein, a "Change of Control" shall be deemed to
have occurred if: (A) a "person" (meaning an individual, a
partnership, or other group or association as defined in
Sections 13(d) and 14(d) of the Securities Exchange Act of
1934) acquires more than fifty percent (50%) of the combined
voting power of the outstanding securities of the Company
having a right to vote at elections of directors; or (B) the
individuals who at the commencement date of this Agreement
constitute the Board of Directors (the "Incumbent Board") cease
for any reason to constitute a majority thereof; provided,
however, that any person becoming a director subsequent to the
date hereof whose election, or nomination for election by the
Company's shareholders was approved by a vote of at least a
majority of the directors comprising the Incumbent Board shall
be, for purposes of this subparagraph (B), considered as though
he were a member of the Incumbent Board.
(ii) As used herein "Successor" means any successor to the
business of the Company following a Change of Control which is
the assignee or successor to the rights and obligations of the
Company pursuant to this Agreement.
IV. RESTRICTIVE COVENANTS
4.1 Executive's Acknowledgment. Executive agrees and
acknowledges that in order to assure the Company that it will
retain its value and that of the Business (as defined below) as
a going concern, it is necessary that Executive undertake not
to utilize his special knowledge of the Business and his
relationships with customers and suppliers to compete with the
Company. Executive further acknowledges that: (a) the Company
is and will be engaged in the Business; (b) Executive will
occupy a position of trust and confidence with the Company, and
during Executive's employment with the Company, Executive will
become familiar with the Company's trade secrets and with other
proprietary and confidential information concerning the Company
and the Business; (c) the agreements and covenants contained in
this Article 4 are essential to protect the Company and the
goodwill of the Business; and (e) Executive's employment with
the Company has special, unique and extraordinary value to the
Company and the Company would be irreparably damaged if
Executive were to provide services to any person or entity in
violation of the provisions of this Agreement. As used herein,
"Business" means the construction, sale, maintenance and repair
of ocean-going ships and ferries. For the purposes of this
Article 4, "the Company" shall include its subsidiaries,
affiliates and assignees and any successors in interest of its
subsidiaries and/or affiliates.
4.2 Non-Compete. Executive hereby agrees that for a period
commencing on the date hereof and ending two (2) years
following the termination or expiration of his employment with
the Company (the "Restrictive Period"), he shall not, directly
or indirectly, as employee, agent, consultant, member,
stockholder, director, co-partner or in any other individual or
representative capacity, own, operate, manage, control, engage
in, invest in or participate in any manner in, act as a
consultant or advisor to, render services for (alone or in
association with any person, firm, corporation or entity), or
otherwise assist any person or entity (other than the Company)
that engages in or owns, invests in, operates, manages or
controls any venture or enterprise that directly or indirectly
engages or proposes to engage in the Business (other than
through the Company or its subsidiaries or affiliates or with
the assets of the Company or its subsidiaries or affiliates)
anywhere in North America (the "Territory"); provided, however,
that nothing contained herein shall be construed to prevent
Executive from investing in the stock of any competing
corporation listed on a national securities exchange or traded
in the over-the-counter market, but only if Executive is not
involved in the business of said corporation and if Executive
and his associates (as such term is defined in Regulation 14(A)
promulgated under the Securities Exchange Act of 1934, as in
effect on the date hereof), collectively, do not own more than
an aggregate of five (5%) percent of the stock of such
corporation
4.3 Interference with Relationships. During the Restricted
Period, Executive shall not, directly or indirectly, as
employee, agent, consultant, stockholder, member, director, co-
partner or in any other individual or representative capacity
render assistance to any other person or entity who attempts
to: (i) employ or engage, recruit or solicit for employment or
engagement, any person who is or becomes employed or engaged by
the Company during the Restricted Period, or otherwise seek to
influence or alter any such person's relationship with the
Company, or (ii) solicit or encourage any present or future
customer of the Company, to terminate or otherwise alter his,
her or its relationship with the Company.
4.4 Confidential Information. During the Restricted Period
and thereafter, Executive shall keep secret and retain in
strictest confidence, and shall not, without the prior written
consent of the Company, furnish, make available or disclose to
any third party (except in furtherance of the Company's
business activities and for the sole benefit of the Company) or
use for the benefit of himself or any third party, any
Confidential Information. As used in this Agreement,
"Confidential Information" shall mean any information relating
to the business or affairs of the Company or its business,
including but not limited to information relating to financial
statements, customer identities, potential customers,
employees, suppliers, manufacturing and servicing methods,
equipment, programs, strategies and information, analyses,
profit margins, or other proprietary information used by the
Company in connection with the Business; provided, however,
that Confidential Information shall not include any information
which is in the public domain or becomes known in the industry
through no wrongful act on the part of Executive. Executive
acknowledges that the Confidential Information is vital,
sensitive, confidential and proprietary to the Company.
4.5 Effect on Termination. If the Company or Executive should
terminate this Agreement for any reason, then, notwithstanding
such termination, the provisions contained in this Section 4
hereof shall remain in full force and effect for the duration
of the Restricted Period.
4.6 Remedies. Executive acknowledges and agrees that the
covenants set forth in this Article 4 (collectively, the
"Restrictive Covenants") are reasonable and necessary for the
protection of the Company's business interests, that
irreparable injury will result to the Company if Executive
breaches any of the terms of said Restrictive Covenants, and
that in the event of Executive's actual or threatened breach of
any such Restrictive Covenants, the Company will have no
adequate remedy at law. Executive accordingly agrees that in
the event of any actual or threatened breach by him of any of
the Restrictive Covenants, the Company shall be entitled to
immediate temporary injunctive and other equitable relief,
without bond and without the necessity of showing actual
monetary damages, subject to hearing as soon thereafter as
possible. Nothing contained herein shall be construed as
prohibiting the Company from pursuing any other remedies
available to it for such breach or threatened breach, including
the recovery of any damages which it is able to prove.
4.7 Blue-Pencil. If any court of competent jurisdiction shall
at any time deem the term of this Agreement or any particular
Restrictive Covenant (as defined) too lengthy or the Territory
too extensive, the other provisions of this Article 4 shall
nevertheless stand, the Restrictive Period herein shall be
deemed to be the longest period permissible by law under the
circumstances and the Territory herein shall be deemed to
comprise the largest territory permissible by law under the
circumstances. The court in each case shall reduce the time
period and/or Territory to permissible duration or size.
V. GENERAL PROVISIONS
5.1 Arbitration of Disputes. The Executive and the Company
shall resolve any claim, controversy or dispute arising out of
or in connection with this Agreement, or relating to or arising
out of any other relationship or incident between the Executive
and the Company, or alleging the violation of either a
statutory or common law duty, or both, by compulsory
arbitration. Notwithstanding the provisions of this Section,
the Company may seek and obtain appropriate restraining orders
and temporary or permanent injunctions in a court proceeding
without engaging in arbitration with respect to any alleged
violation of the covenants contained in Article 4. The
Executive shall invoke his right to arbitrate any claim,
controversy or dispute with or against the Company only after
first attempting to resolve it through the exhaustion of the
employee problem solving problem mechanism contained in the
Company's Employee Handbook without first obtaining result
satisfactory to the Executive. The rules and procedures for
arbitration pursuant to this Agreement are attached to this
Agreement.
5.2 Modification and Amendment. This Agreement may only be
amended or modified by a written instrument executed by
Executive and the Chairman of the Board of the Company pursuant
to authorization of the Board of Directors.
5.3 Notices. Any notice or other communication required or
permitted under this Agreement shall be in writing and shall be
delivered personally, or sent by certified or registered mail,
postage prepaid, return receipt requested. Any such notice
shall be considered given when delivered personally, or if
mailed, three (3) days after the date of deposit in the United
States mail addressed to the party at the last known address of
the party. Any party may, by notice given to the other
according to the provisions of this Section 5.3, designate an
address or person for the receipt of notices.
5.4 Non-Waiver. Failure to enforce at any time any of the
provisions of this Agreement shall not be interpreted to be a
waiver of such provisions or to affect either the validity of
this Agreement or the right of either party thereafter to
enforce each and every provision of this Agreement.
5.5 Separability. If one or more provisions of this Agreement
is finally determined to be invalid or unenforceable, such
provision will not affect or impair the other provisions of
this Agreement, all of which will continue to be in effect and
will be enforceable, provided however, that any such invalid
provisions shall, to the extent possible, be reformed so as to
implement insofar as practicable the intentions of the parties.
5.6 Assignability. This Agreement and the rights and
obligations of the parties shall not be transferred or assigned
without the written consent of the other party's provided,
however, that the Company may assign its right, pursuant to
this Agreement to any purchaser of a substantial portion of its
business or assets or to any corporation or other entity in
which the Company has a controlling equity interest.
5.7 Term. This Agreement shall have an initial term of three
(3) years from the date hereof, and shall continue thereafter
for successive one (1) year terms unless either party
terminates this Agreement by notice given at least one hundred
eighty (180) days prior to the end of the initial or any
successive term. The term of this Agreement does not create
any term of employment on behalf of Executive and the
termination of this Agreement does not reduce, limit or
terminate Executive's obligations or the Company's rights and
remedies pursuant to this Agreement, including, but not limited
to, all obligations of Executive and the rights and remedies of
the Company contained in Article 4 (Restrictive Covenants) of
this Agreement.
5.8 Law. This Agreement shall be interpreted in accordance
with the laws of the State of Washington.
5.9 Legal Fees. The Company shall bear the legal expenses
incurred by Executive in connection with the negotiations,
preparation and review of this Agreement. In the event either
party breaches this Agreement, the nonbreaching party shall be
entitled to recover from the breaching party any and all
damages, costs and expenses, including without limitation,
attorneys' fees and court costs, incurred by the nonbreaching
party as a result of the breach.
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the day and year first above written.
THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH
MAY BE ENFORCED BY THE PARTIES
TODD SHIPYARDS CORPORATION
By: Stephen G. Welch
Title: Executive
0209549.03
<PAGE>
ARBITRATION RULES AND PROCEDURES
The rules and procedures of the American Arbitration
Association in effect when any arbitration occurs shall govern
the procedures of any arbitration between the Company and
Executives ("Parties"). Any arbitration held in accordance
with Representative's employment shall take place in Seattle,
Washington.
A single neutral arbitrator shall conduct the arbitration
hearing and decide the issues submitted to arbitration. The
Parties shall request a panel of five arbitrators experienced
with employer-employee disputes from the American Arbitration
Association's Seattle, Washington office. The Parties shall
alternatively strike names from the panel until one arbitrator
remains, who shall then act as the single neutral arbitrator.
The Parties may conduct discovery in accordance with the
Washington Rules of Civil Procedure, including but not limited
to interrogatories, depositions and production of documents,
but discovery procedures will be controlled and may be limited
or curtailed by the arbitrator in his/her discretion.
The Parties grant the following authority and jurisdiction to
the single neutral arbitrator. The arbitrator shall determine
the lawfulness under federal, state, and local law, whether
statutory or common law, or both, of acts or omissions, or
both, that produced the complaint, controversy, or dispute
subject to arbitration. In addition, the arbitrator shall
decide the appropriateness of the Parties' acts or omissions
that comprise the complaint, controversy, or dispute submitted
to arbitration, given the rights and duties under this
Agreement. Further, the arbitrator may interpret and determine
the rights of the Parties under the Agreement and any other
agreement to which they are both parties.
The Single neutral arbitrator may fashion either equitable or
legal relief, or both, as limited by this provision. The
arbitrator may award full reimbursement to the prevailing Party
for such out-of-pocket expenses or losses, including, without
limitation, reasonable attorneys' fees, and back pay that the
evidence supports. However, the arbitrator shall lack any
authority to grant exemplary or punitive damages, or liquidated
damages. Finally, the arbitrator may assess interest on any
award at no greater than the prevailing prime rate during the
relevant period reported in the Wall Street Journal, adjusted
at least quarterly on out-of-pocket expenses or losses, back
pay, and attorneys' fees awarded to the prevailing Party.
The arbitrator's decision shall bind the Parties as a final
decision enforceable in a court of competent jurisdiction. The
Company and the Representative shall share equally the costs of
both the arbitrator and a court reporter to transcribe any
hearings before the arbitrator. Each Party shall pay its own
expenses of presenting evidence and arguments to the
arbitrator.
The prevailing Party may confirm the arbitrator's award in a
court of competent jurisdiction. If either Party refuses to
satisfy an arbitration award, then the other Party shall have
the right to receive reimbursement for all of its costs
incurred to confirm that award, including a reasonable
attorneys' fee.
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<PERIOD-END> MAR-29-1998
<CASH> 12328
<SECURITIES> 29524
<RECEIVABLES> 7795
<ALLOWANCES> 662
<INVENTORY> 17501
<CURRENT-ASSETS> 66778
<PP&E> 67118
<DEPRECIATION> 45553
<TOTAL-ASSETS> 116873
<CURRENT-LIABILITIES> 22378
<BONDS> 0
0
0
<COMMON> 120
<OTHER-SE> 66310
<TOTAL-LIABILITY-AND-EQUITY> 116873
<SALES> 109537
<TOTAL-REVENUES> 109537
<CGS> 84762
<TOTAL-COSTS> 106340
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 200
<INTEREST-EXPENSE> 73
<INCOME-PRETAX> 6626
<INCOME-TAX> (1477)
<INCOME-CONTINUING> 8103
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<EPS-PRIMARY> 0.82
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</TABLE>
April 15, 1998
Mr. Roland H. Webb
President and Chief Operation Officer
1801 16th Avenue Southwest
Seattle, WA 98134
Re: Revisions to Employment Agreement
Dear Mr. Webb:
This letter will amend certain terms relating to your employment
by Todd Pacific Shipyards Corporation ("Todd") set forth in the
Employment Agreement dated December 27, 1994 between Todd and you
("Employment Agreement"). Those terms set forth in the
Employment Agreement not modified herein shall remain the same.
1. Commencing December 22, 1997 your base annual salary shall be
$140,000 ("Base Salary"). Your salary will be reviewed annually
by Todd's Board of Directors, commencing December 1998.
2. You are eligible to receive a cash bonus on July 1, 1998 in
an amount equal to a certain percentage of your Base Salary
("Applicable Percentage") which amount shall not be less than
twenty percent (20%) and not more than fifty percent (50%)
determined in accordance with the schedule set forth below:
If the pre-tax profit of Todd Pacific Then the
Applicable Percentage
Shipyards Corporation for the fiscal year of your Base
Salary shall be:
ending March 31, 1998 is between:
$0 - $200,000 20%
200,000 - 400,000 23%
400,000 - 600,000 26%
600,000 - 800,000 29%
800,000 - 1,000,000 32%
1,000,000 - 1,200,000 35%
1,200,000 - 1,400,000 38%
1,400,000 - 1,600,000 41%
1,600,000 - 1,800,000 44%
1,800,000 - 2,000,000 47%
Above 2,000,000 50%
The "pre-tax profit" to be used in calculating the Applicable
Percentage shall include appropriately accrued expenses for cash
bonuses and other incentive compensation. In order to qualify
for the cash bonus, it will be necessary to be a full-time
employee of Todd on the last day of the fiscal year.
3. You will be granted additional stock options, effective as of
December 16, 1997. The options are for the purchase of Fifteen
Thousand (15,000) shares of Todd Stock at an exercise price equal
to 4 3/8 Dollars ($4.375) per share (the average price quoted for
the shares on the date of grant). You will become vested in one-
third of the options on December 16, 1998, an additional one-
third on December 16, 1999 and the balance on December 16, 2000.
The options shall expire on December 16, 2002. Additional
documents will be required to be executed in connection with the
issuance of the options.
If the terms of this amendment to your Employment Agreement are
acceptable to you, please indicate by signing below.
Very truly yours,
TODD PACIFIC SHIPYARDS CORPORATION
By:
Stephen G. Welch
Chief Executive Officer
Accepted and agreed to:
Roland H. Webb
Date:
1997 Collective Bargaining Agreement between Todd
Pacific
Shipyards Corporation and the Metal Trades Department
of the
AFL-CIO, the Pacific Coast Metal Trades District
Council,
the Puget Sound Metal Trades Council, and the
International Unions Signatory Thereto
<PAGE>
ARTICLE 1. SCOPE OF AGREEMENT
1.1 This Agreement shall cover all production, repair and
maintenance employees within the bargaining unit in the employ of
the Employer signatory hereto, and shall apply to all work and
activities of the Employer in connection with the construction,
conversion, repair or scrapping of any vessel on the Pacific
Coast, including but not limited to, dredges, floating drydocks,
offshore drilling vessels, barges, mobile drilling platforms,
platforms and all component parts, plant equipment, and all
auxiliary equipment used in conjunction therewith.
ARTICLE 2. SUBCONTRACTING
2.1 The agreement of the Parties with respect to the subject of
subcontracting shall be that whenever the Employer subcontracts
work covered by ARTICLE 1 of this Agreement to be performed on or
off the Employer's premises, then persons performing such work
shall receive not less than the wage and conditions provided for
in this Agreement. This Article shall not apply to work
subcontracted to be performed away from the Employer's premises
outside of the Port areas of San Francisco, Portland and Seattle.
Navigable inland waters connected with the Port areas shall be
considered as part of the Port areas.
2.2 Upon request by the Puget Sound Metal Trades Council, the
Employer will provide the name, address, and telephone number of
the subcontractor who is either performing or is scheduled to
perform work for the Employer within the Port of Seattle as
defined above. The subcontractor shall provide on request, and
within a reasonable time, documents to validate conformance with
this Article. The Employer will assist with the enforcement of
this Article if any question of intent arises.
ARTICLE 3. NON-DISCRIMINATION, RECOGNITION, UNION SECURITY,
HIRING, SENIORITY
3.1 Nondiscrimination: The Employer and Unions agree that there
will be no discrimination in employment because of race, creed,
color, national origin, age, sex, or handicap, as defined by
Federal and State Laws. Nor shall there be any discrimination of
disabled veterans or veterans of the Vietnam era. In referring
to employees in this Agreement, the masculine gender is used for
convenience only and shall refer both to males and females.
Compliance with State and/or Federal laws shall not be considered
discrimination under this sub-section.
3.2 Recognition: The Employer recognizes the Unions as set
forth in the Preamble and signatory hereto as the sole collective
Bargaining Agents for all of its employees covered by this
Agreement, in all of the classifications contained in Schedule
"A" of this Agreement and employed on work covered by the "Scope
of this Agreement."
3.3 Union Security:
(a) Employees included in the Bargaining Unit covered by this
Agreement who are members of the respective Union as of the
effective date of this Agreement shall, as a condition of employ
ment, maintain their membership in the Union.
(b) Employees included in the Bargaining Unit covered by this
Agreement who are not members of the respective Union as of the
effective date of this Agreement, shall apply for membership in
said Union on the thirty-first (31st) day after such effective
date; and all employees who are accepted into membership into the
Union shall maintain their membership in the Union as a condition
of their employment.
(c) Employees hired after the effective date of this Agreement
shall apply for membership in the respective Union on the thirty-
first (31st) day following the beginning of such employment, and
all employees who are accepted into membership in the Union shall
maintain their membership in the Union as a condition of their
employment.
(d) The Employer, upon written request of the Local Union, shall
discharge any employee within two (2) working days after receipt
of such notice, who fails to tender the periodic dues and
initiation fees uniformly required by the Union as a condition of
acquiring or retaining membership in good standing in the Union.
(e) An employee who desires his regular monthly union dues to be
deducted from his pay by the Employer and remitted to the
Financial Secretary of the Union shall submit a fully executed
authorization card as follows:
Union Dues Deduction:
I hereby authorize Todd Seattle Division to deduct $_______
regular monthly union dues from wages earned by me while in the
bargaining unit represented by the Unions shown below.
I understand that such deductions are to be made on the first
regularly scheduled payday of the month following the month in
which this authorization is received by the Personnel Office of
the Employer. This authorization and assignment shall remain in
effect until canceled by written notice of the Union or the
Employee. The dues deducted are to be sent no later than the end
of the calendar month in which the deduction was made to:
Employee Name: Date:
Signature: Soc. Sec. #:
The Union and the Employee shall hold the Employer harmless
against any claim that might arise out of or by reason of action
taken or not taken by the Employer in a good faith effort in
complying with this provision.
Political Checkoff:
The Employer agrees to deduct and transmit to the Employees Union
Political Fund an amount for each hour worked from the wages of
those employees who have voluntarily authorized such
contributions on the forms provided for that purpose by the
union. These transmittals shall occur monthly and shall be
accompanied by a list of names of those employees for whom such
deduction has been made, and the amount deducted for each such
employee.
Each Union agrees to indemnify and hold harmless the Employer
from any and all claims, actions, and/or proceedings arising out
of said political fund.
3.4 Hiring:
(a) The Employer agrees that when additional employees are
required the appropriate Local Union will be given as much
advance notice as possible, but not less than twenty-four (24)
hours so that the Union may have a reasonable opportunity to
refer applicants for employment. The period of notice will
commence when the appropriate Union receives such notice by tele
phone from the Employer. Such notice, including the number and
qualifications of the employees required, shall be given by the
Personnel Department or other designated representatives of the
Employer. The Unions agree that they will, upon request of the
Employer, refer experienced men, when available, to the Employer
for the classifications covered by this Agreement. If less than
twenty-four hour notice is given, the Unions agree that upon
receipt from the Employer of a request for additional manpower,
they will make every reasonable effort to provide the manpower as
soon as possible. However, this does not eliminate the
requirement of the employer to give advance notice to the
affected union regardless of whether all seniority employees have
been recalled or not.
(b) Selection of applicants for referral to jobs shall not be
based on, or in any way affected by, Union membership, by-laws,
rules, regulations, constitutional provisions or any other aspect
or obligation of Union membership, policies or requirements.
(c) The Employer retains the right to reject any job applicant
referred by the Unions. The Employer will provide, in writing,
within two (2) working days, the reasons for rejection of
applicants referred by the Union. The Employer may discharge any
employee for just and sufficient cause. The Employer agrees to
notify the appropriate Union in writing of the name or names of
any former employee or employees not eligible for rehire. The
"not eligible for rehire" letters sent to the Unions will be
reviewed annually upon request of the Union.
(d) The Unions agree that they will not discriminate against non-
union workmen in referring workmen to the Employer, and the
Employer agrees not to discriminate against Union members in
selecting job applicants referred to him by the Unions.
(e) A copy of this Article of Agreement shall be posted at the
employment office of the Employer and at the place where the
appropriate Local Unions conduct the operation of referring
persons for employment under this Agreement.
(f) The Employer may request any former unemployed employee by
name and the Unions shall refer such person after compliance with
the provisions set forth in this Article. The Employer will
provide proof of former employment of such person if requested by
the Union.
(g) If the Employer hires persons other than those referred by
the Unions, he shall advise the appropriate Local Union within
two (2) working days after such person is hired, as to the name,
address, social security number, date of hire, classification and
rate of pay of such employee. The same information shall be
furnished in writing by the Employer to the appropriate Local
Union within forty-eight (48) hours after the termination of such
employee.
(h) All employees referred to the Employer by the Unions under
this Article shall submit to the making of such records as are or
may be required by the Employer for the purpose of
identification.
(i) The Unions and Employer agree to hold each of the other
Parties signatory hereto harmless from any money damages and
penalties assessed against them by any Government Agency or Court
of Law because of any charge of unfair labor practice or act
where such practice or act was proximately or solely caused by
any one of the individual Unions or Employer.
3.5 Seniority:
(a) For the purpose of layoff and recall, the principle of
seniority is hereby established for employees in the bargaining
unit.
(b) Seniority shall be established after an employee has worked
in an established represented classification a period of "ninety
(90) cumulative working days within a nine (9) month period." Any
employee who acquired seniority prior to this Agreement will
retain the seniority date currently assigned. Any employee hired
or rehired after the date of this Agreement will acquire
seniority in accordance with the paragraph above.
For example: If an employee starts in January, he has until the
end of September to qualify for seniority. If at the end of
September he has not qualified for seniority, then the nine (9)
month period is extended to the month of October, and the month
of January is dropped.
(c) An employee's seniority under this Article shall be
terminated under the following conditions:
1. If the employee is discharged for cause.
2. If the employee quits.
3. If the employee fails to report to work at the time specified
by the Employer or within forty-eight (48) hours (Saturday,
Sunday and holidays excluded).
(a) The Employer will place his recall order with the Union,
naming employees eligible to be recalled for such order by
Seniority List. The Employer shall at the time of placing such
order send the "Official Notice of Recall" to such eligible
employee in the manner covered in Item 3.5 (c) (3) (d) below.
Upon receipt of such "Notice of Official Recall" the employee
must report for work within forty-eight (48) hours or suffer loss
of seniority.
(b) The Union shall make every reasonable effort to notify the
employee by telephone of his recall and time to report to the
Employer.
(c) Employees contacted by the Union shall make every reasonable
attempt to report for work at the time specified by the Employer.
(d) A list of those employees not contacted by the Union, and
those contacted who inform the Union they are not answering the
recall, shall be given to the Employer within twenty-four (24)
hours after the Union receives the recall order.
The Employer shall then notify the employee (unless "Notice of
Recall" is sent under Item 3.5 (c) (3) (a) above) by telegram,
Certified or Registered letter to the employee's last address on
record. The Employer shall notify the Union, in writing, within
two (2) working days, of receipt of an unacknowledged letter. It
is the employee's personal responsibility to maintain a current
address and telephone number with the Employer and the Union.
Upon receipt of such "notice of recall" the employee must report
for work within forty-eight (48) hours or suffer loss of
seniority. Individual problem cases shall be handled on their
merit by the Employer and the Union.
4. Any employee absent for three (3) consecutive work days or
more without notification and furnishing a justifiable reason for
such absence shall be considered to have voluntarily terminated
his employment. Exceptional cases will be handled on their
merit. Employees on Employer-approved leave of absence or
industrial injury shall not be subject to this provision.
5. If the employee is laid off for lack of work from the
Employer's active payroll for a period of one (1) year.
An employee on Employer-approved sick leave or industrial injury
at the time of lay off for lack of work shall be recalled
according to his respective seniority recall eligibility and if
still unable to return to work shall be returned to the
Employer's sick leave or industrial injury status.
(d) Seniority shall not apply to recall for jobs of less than
ten (10) working days duration starting on the first day
following the placing of the order at the Union Hall for an
employee.
1. The Employer has the responsibility under 3.5 (c) (3) a) to
call the Union Hall for employees with seniority for jobs regard
less of duration.
2. The provision under 3.5 (d) is only to give the right to the
employee with seniority to reject a job offer of less than ten
(10) days. Further, there is no guarantee of pay for days not
worked.
3. The Employer can call employees for more than one (1) job in
the ten (10) day period or less.
4. If the job is not completed in the ten (10) working days'
duration and is needed to be extended from one to three (1-3)
working days beyond the ten (10) day duration, the Employer is
not required to call seniority employees who originally rejected
the ten (10) day call back for that period of time.
(e) The Employer shall be entitled to retain Leading men and
classifications above the Leading men paid on an hourly rate
without regard to seniority.
(f) Seniority shall apply to classification of the Craft or
Union as set forth in this Agreement, and by such classifications
as may be agreed upon by the Employer and the appropriate Union.
(g) On layoffs and recalls in any classification or agreed
classification, the following factors shall apply:
1. Length of continuous seniority with the Employer in the
classification or agreed classification.
2. Demonstrated skill and ability to perform the work within the
classification or agreed classification. Where factor (2) is
equal as between employees to be laid off and recalled, then
factor (1) shall prevail.
(h) Employees who are laid off in accordance with Subsection (g)
shall be recalled to work in inverse order of layoff, provided
the employee is qualified to perform the work within the
classification or agreed classification.
(i) Employees promoted to any higher classification or to
Leading men paid on an hourly basis shall continue to accrue
seniority in the classification from which they are promoted
during the time they serve in such capacity. Employees promoted
to jobs outside the bargaining unit shall retain such seniority
as they had in the classification from which they were promoted
as of the day of the promotion. There will be no retroactive
adjustments, but prospectively these employees shall not continue
to accrue seniority while out of the bargaining unit.
(j) The Employer will furnish a current Seniority List on a
monthly basis to each appropriate Union, designating foreman or
the immediate classification above Leading man. Such Seniority
List will be posted in the office of the Unions and the
Employers, and it shall be the responsibility of the employee to
review such list as to his individual seniority status.
ARTICLE 4. LEADING MEN
4.1 Leading men in all departments shall be selected, as far as
practicable, from the crafts they are supervising and with a view
to their mechanical ability and shall be journeymen and/or
mechanics and shall be members of their respective Union. In
addition, the immediate supervisory classification above that of
Leading men when paid on an hourly wage rate basis, shall be
selected, as far as practicable, from the crafts they are
supervising and with a view to their mechanical ability and shall
be journeymen and/or mechanics and shall be members of their
respective Union. Apprentices, trainees, and helpers will not be
promoted directly to lead positions.
While on overtime, leadmen supervising a crew of more than four
journeymen, shall not work with the tools.
Leadmen will immediately be subject to the application of
seniority if they are not leading a crew.
The provisions in this clause shall in no way restrict the
practices provided for in Article 25.
4.2 The Compensation for Leading men shall be in accordance with
established local practice but in no case less than one dollar
and twenty cents ($1.20) per hour over the wage of the craft they
are supervising as set forth in Schedule "A". The compensation
for the immediate supervisory classification above that of
Leading men, when paid on an hourly wage rate basis, shall be in
accordance with established local practice. The activities and
assignments of supervisors mentioned hereinabove shall not be
restricted, nor shall they be extended during overtime periods to
the end that they be used to replace employees in the performance
of overtime work.
4.3 Foremen, or the immediate supervisor above Leading men,
leading men and mechanics from other crews cannot be used to
complete a job or work assignment which continues into or
requires overtime work. The intention of the Parties signatory
to this Agreement is to continue to use foreman or immediate
supervisor above Leading men, Leading men and mechanics already
assigned in the completion of work which extends into overtime
periods, except in emergency situations.
It is the intention of the Employer not to eliminate the
classifications of Leading men or the immediate classifications
above Leadmen paid on an hourly basis and to substitute salaried
personnel for such classification.
4.4 In the interest of safety, it is agreed that the Company and
the Unions shall work together to insure that Leadmen will not
have crews of unmanageable size.
ARTICLE 5. STANDARD DAY SHIFT HOURS
5.1 Forty (40) hours shall constitute a work week, eight (8)
hours a day, five (5) days per week, Monday to Friday, inclusive
between the hours of 7:00 A.M. and 4:30 P.M., except that where
as to any locality or as to any plant of any Employer existing
traffic conditions render it desirable to start the day shift at
an earlier hour. Such starting time may, by agreement between
the Employer and the local Metal Trades Council, be made earlier.
ARTICLE 6. SHIFTS
6.1 Shift work shall be permitted in all classifications on the
following basis, without restrictions.
6.2 The regular starting time of the day shift shall be 7:00
a.m. unless modified as set forth in Article 5.
The normal starting time of the swing shift shall be between 3:30
and 5:00 p.m. unless modified by mutual agreement between the
Employer and the local Metal Trades Council.
The normal starting time of the graveyard shift shall be between
11:30 p.m. and 1:00 a.m. unless modified by mutual agreement
between the employer and the local Metal Trades Council.
In the event operating conditions should require the adaptation
of modified hours apart from regular shifts outlined under
Article 6.2, the affected Union and Company agree to discuss the
situation and if required may modify work hours, providing the
terms are mutually acceptable.
6.3 The regularly established starting time of the day shift
shall be recognized as the beginning of the twenty-four (24) hour
work day period. When irregular or broken shifts are worked,
overtime rates shall apply before the regular starting time and
after the regular quitting time of the shift on which the
employee is regularly employed.
6.4 Employees transferred from one shift to another, unless
relieved from work at least seven and one-half (7 1/2) hours
before starting their new shift, shall be paid the overtime rate
for the first such shift worked.
6.5 No employee shall be transferred from his regular assigned
shift to another shift more than once in a work week; however,
he may be returned to his regular assigned shift. This shall not
apply in an extreme emergency or where there is shortage of
manpower. Any violation to this Section shall entitle the
employee to the overtime rate for the first such shift worked.
6.6 First or Regular Daylight Shift: An eight and one-half (8
1/2) hour period less thirty (30) minutes for meals on the
employee's time. Pay for a full shift period shall be a sum
equivalent to eight (8) times the regular hourly rate with no
premium.
6.7 Second Shift: An eight and one-half (8 1/2) hour period less
thirty (30) minutes for meals on the employee's time. Pay for a
full shift period shall be a sum equivalent to eight (8) times
the regular hourly rate plus seventy-five (75) cents for each
hour worked. Second Shift work will be offered to employees
first on a voluntary basis. When an insufficient number of
employees volunteer, the employer may invoke inverse seniority.
The first qualified employee working, with the least seniority,
shall be the first employee required to work the second shift.
6.8 Third Shift: A seven (7) hour period less thirty (30)
minutes for meals on the employee's time. Pay for a full third
shift period shall be a sum equivalent to eight (8) times the
regular hourly rate plus seventy-five (75) cents for each hour
worked.
ARTICLE 7. WAGE SCALES
7.1 The Employer agrees to pay to its employees and the Unions
agree that their members employed by the Employer will accept the
wage scales for the various classifications set forth and
contained in Schedule "A" of this Agreement.
7.2 The wage rates herein established are minimum rates only,
and shall not prohibit the Employer from paying a premium wage
rate to any of his employees. Where an employee is receiving a
premium wage rate at the time a general increase in wages becomes
effective, such employee shall receive such general increase.
7.3 The granting of a premium wage rate to any employee and the
elimination of such premium wage rate, shall remain the sole
prerogative of the Employer. However, this section shall not be
used to avoid payment of a negotiated wage increase to premium
men.
7.4 Conditions and compensation for launching shall remain the
same as the existing practice.
7.5 All paychecks containing overtime pay shall specify on the
check stub the number of overtime hours worked.
ARTICLE 8. OVERTIME
8.1 Overtime at the rate of one and one-half (1 1/2) times an
employee's established hourly rate as set forth in Schedule "A"
shall be paid for all work performed outside or in excess of
eight (8) hours, but less than twelve (12) hours, on Monday
through Friday and less than twelve (12) hours on Saturday.
Overtime at the rate of two (2) times an employee's established
hourly rate shall be paid for all work performed on Sunday, a
holiday or in excess of twelve (12) hours on Monday through
Saturday. Overtime payment for hours outside of an employee's
established shift hours will be subject to Section 6.3.
8.2 If an employee working on the "first" or regular daylight
shift is required to return to work on the third shift within the
same twenty-four (24) hour work day period, he shall receive one
and one half (1 1/2) times his established rate for the first
such "third" shift worked. The twenty-four (24) hour work day
period mentioned herein shall be the twenty-four (24) hour period
commencing with the starting time of the day shift.
8.3 Work after 1:00 A.M.: Day shift required to work after 1:00
A.M. and laid off before 6:00 A.M. shall be paid to 6:00 A.M. at
overtime rates.
8.4 Employees required to work overtime past the quitting time
of their regular shift, unless relieved from work at least seven
and one-half (7 1/2) hours before starting to work on their next
regular shift, shall be paid the overtime rate for such shift.
8.5 Salvage and Dynamite: All salvage work at site, unless the
site is in Employer's yard or dock, shall be paid for at the
established overtime rate, regardless of the hour or day; also
Powder and Dynamite Boats when anchored at Powder Anchorage. Any
area designated by the U.S. Coast Guard as a powder, dynamite or
explosive site is understood to be a Powder Anchorage referred to
above.
The applicable rate applies to any craft while on the job at the
site.
8.6 Lunch Periods: A lunch period shall be allowed on the
Employer's time at the end of a regular shift if employees are
required to work overtime in excess of two (2) hours. A meal
period shall be allowed on the Employer's time when an employee
is required to work more than two (2) hours before his regular
shift and continues working into his regular shift thereafter.
8.7 Employees working overtime shall receive a lunch period of
thirty (30) minutes on Employer's time every four (4) hours.
8.8 The foregoing shall not apply to the noon day lunch period
on Saturday, Sunday and holidays.
8.9 An employee required to work during his regular lunch period
shall receive the established overtime rate for such lunch period
and shall thereafter be allowed a reasonable opportunity to eat
his lunch on the Employer's time. This provision shall not apply
to drydock crews provided that at least one (1) hour notice is
given prior to the regular lunch period.
8.10 Overtime work should be offered to employees first on a
voluntary basis. When mandatory overtime is necessary and an
insufficient number of employees volunteer, the employer may
invoke inverse seniority. The first qualified employee working,
with the least seniority, shall be the first employee required to
perform the work.
ARTICLE 9. HOLIDAYS
9.1 Holidays shall be recognized as follows and paid for as such
if worked.
9.2 The following shall be paid Holidays:
NEW YEAR'S DAY, DAY AFTER/BEFORE NEW YEAR'S DAY* , WASHINGTON'S
BIRTHDAY, MEMORIAL DAY, INDEPENDENCE DAY, LABOR DAY, THANKSGIVING
DAY, DAY AFTER THANKSGIVING DAY, CHRISTMAS DAY AND DAY
BEFORE/AFTER CHRISTMAS DAY*.
* For the years 1996, 1997 and 1998, New Year's Day, Day
before/Day after New Year's Day, Christmas Day and the Day
before/after Christmas Day shall be observed as a Holiday Week
(consisting of an agreed number of consecutive days off with four
(4) days compensation) for the holidays listed above.
Holiday Week 1996 - Wednesday, December 25, 1996 - Wednesday,
January 1, 1997.
Holiday Week 1997 - Thursday, December 25, 1997 - Friday, January
2, 1998.
Holiday Week 1998 - Friday, December 25, 1998 - Friday, January
1, 1999.
Employees shall have the option to trade the Birthday holiday in
order to receive five (5) days compensation for the above
referenced Holiday Weeks (instead of the contractual (4) four).
This option shall apply to all employees on an individual basis.
The employees shall receive their birthday off with pay. The
employee may take off either the Monday or Friday during the week
his birthday falls with approval of the appropriate Department
Head. In the event that the pre-arranged day off is canceled by
the Employer, the employee will receive the appropriate holiday
rate for all hours worked on the pre-arranged day off.
Qualifying Conditions: An employee shall receive eight (8) times
the hourly rate of pay for each of the above holidays, provided:
(a) He has been in the employ of the Employer for thirty (30)
calendar days, and
(b) He worked all of the hours required by the Employer on both
the regularly scheduled work day prior to and the regularly
scheduled work day following the applicable holiday.
(c) He will receive holiday pay in spite of absence on the work
day prior to or the work day following such holiday, where such
absence was due to:
1. industrial accident.
2. bonafide illness covered by a doctor's certificate.
3. absence approved by the Employer.
4. being laid off for "lack of work" within ten (10) regularly
schedule work days before the holiday, and is recalled to work
within (10) regularly scheduled work days after the holiday.
9.3 Holiday on Saturday and Sunday: If a holiday set forth
above falls on Saturday, the preceding Friday shall be observed
as the holiday. If a holiday set forth above falls on a Sunday
and is observed by the State or Nation on the Monday following,
said holiday will be paid for under the conditions contained in
this Article. Existing holidays whose dates are changed by
Congressional Law shall be changed in this Article.
9.4 When a paid holiday occurs within an employee's approved
vacation period, he shall receive holiday pay as provided in this
Article and is entitled to take another day of vacation at his
discretion if arrangements to do so are made in advance with the
Employer. It is the intention of the parties that earned
vacation days not be forfeited in this situation.
9.5 Work on Holiday: An employee who qualifies for holiday pay
under Paragraph 9.2 of this Article and who works on a holiday
listed in Paragraph 9.2 of this Article, shall be compensated in
accordance with the overtime provisions of this Agreement in
addition to such holiday pay. An employee who does not qualify
for holiday pay but who works on any such holiday shall be
compensated in accordance with the overtime provisions of this
Agreement.
9.7 Failure to Report: If an employee is schedule to work on
any holiday and fails to report for work, except where such
failure to report is due to one of the reasons listed in Section
9.5 (c) above, he shall not be entitled to holiday pay for that
holiday.
CLARIFICATION OF THE MEMORANDUM OF INTERPRETATION OF ARTICLE 9 -
HOLIDAYS
I. EMPLOYEES WITH SENIORITY
Employees with seniority will be paid Holiday Pay if they have
either:
(a) worked the day prior to and the day after the Holiday or;
(b) is laid off for "lack of work" within *ten (10) regularly
scheduled work days before the Holiday, and is recalled to work
within *ten (10) regularly scheduled work days after the Holiday.
* 1980 Negotiation Change.
II. EMPLOYEES WITHOUT SENIORITY
Employees without seniority will be paid Holiday Pay if they
have:
(a) been in the continuous employ of the employer for 30
Calendar* days prior to the Holiday and;
(b) worked the day prior to and the day after the Holiday.
* 1980 Negotiation Change.
III. EXCEPTIONS TO SECTION I & II ABOVE
Employees will receive Holiday Pay in spite of non-compliance
with Sections Ia and IIb above if:
(a) they have been retained on "stand-by-status" or "on the
hook" by the Employer,
(b) they are off due to an industrial accident that occurred
sometime during the five regularly scheduled work days prior to
the Holiday.
(c) they are off due to a bonafide illness covered by a doctor's
certificate, or other evidence of illness which occurred sometime
during the five regularly scheduled work days prior to the
Holiday or
(d) they are off for any other absence excused by the Employer,
providing the excused absence commenced sometime within the five
regularly scheduled work days prior to the Holiday.
NOTE: L/M Meeting of 6/23/81 includes Jury duty in this Section.
IV. TARDINESS AND EARLY LEAVES
Employees' requests for early leaves on the day before the
Holiday or tardiness on either the day before or after the
Holiday shall be considered on the merits of each individual case
and the "rule of reasonableness" will apply.
V. DEFINITIONS
(a) EMPLOYEES WITH SENIORITY means Employees who have
established seniority, prior to the Holiday, in accordance with
and as defined in Article 3.5 of the Pacific Coast Master
Agreement, the Pacific Coast Marine Carpenters Agreement, the
Supplemental Agreement with the I.A.M., and the I.B.E.W. Pacific
Coast Agreement, included in the Pacific Coast Master Agreement
for the purpose of this Article.
(b) LAID-OFF means actual written termination by the Employer.
(c) STAND-BY STATUS OR ON THE HOOK means not on lay-off status,
as defined, but requested to stand-by for recall to work, and
shall be considered to be an Active Employee of the Employer
during this period.
ARTICLE 10. VACATIONS
10.1 All employees covered by this Agreement shall receive
vacations with pay.
10.2 Computation of vacation pay: Vacation pay shall be
computed at the following percentages of the actual hours worked
(except as to second and third shifts) multiplied by the
employee's established straight time hourly wage (exclusive of
shift premiums) being received by the employee calculated on a
daily basis and accumulated until the vacation is paid. Vacation
pay will be treated separate from other types of pay and wages
for the purpose of withholding taxes except in the case of
termination.
(a) First year period: Three (3) percent as computed above.
(b) Second year period: Three and one-half (3 1/2) percent as
computed above.
(c) Third year period: Four (4) percent as computed above.
(d) Fourth year period: Four and one-half (4 1/2) percent as
computed above.
(e) Fifth year period: Five (5) percent as computed above.
(f) Sixth year period through fifteenth year period: Five and
one-half (5-1/2) percent as computed above.
(g) Sixteenth year period through nineteenth year period: Seven
and one-half (7-1/2) percent as computed above.
(h) Twentieth year period and thereafter: Eight (8) percent as
computed above.
10.3 For the third full shift worked, an employee shall be
credited with eight (8) hours in computing his vacation
allowance.
10.4 To advance from one (1) year period percentage to the next
higher, as above provided, an employee is required to accumulate
one thousand (1,000) hours or more in the employ of the Employer
in any vacation year.
Time lost due to an industrial accident in any vacation year not
to exceed six (6) months shall be credited at the rate of forty
(40) hours per week toward the minimum one thousand (1,000) hours
required to advance to the next year's period percentage. Years
of service need not be consecutive regardless of method of
termination.
10.5 The vacation year for vacation pay, time and hours worked
shall start as follows:
(a) New Employees: anniversary date of employment.
(b) Employees on payroll at effective date: existing
anniversary date.
(c) Rehired Employees hired within one (1) year of anniversary
date: anniversary date of first employment.
10.6 Vacation periods or vacation pay are not cumulative from
year to year and the vacation shall be taken at a time mutually
agreeable between the Employer and the employee.
10.7 There shall be no vacation pay in lieu of a vacation.
Vacation pay accruing to an employee within his vacation year as
described above shall be paid to said employee upon completion of
his vacation year; unless said employee is leaving the area or
upon termination, in which event he shall be paid in full such
vacation pay as may have accrued to him under the terms of this
Article.
ARTICLE 11. NO LIMIT OF PRODUCTION
11.1 There shall be no contract, bonus, piece or task work, nor
shall there be a limit on, or curtailment of production or any
self-imposed restrictions placed or imposed by any Union.
ARTICLE 12. DIRTY WORK
12.1 Dirty Work:
Dirty work shall be recognized by the Employer and Union as work
within the shipyard industry as conditions more dirty,
disagreeable, or unpleasant than normal shipyard working
conditions.
It is the intent of the parties to limit dirty work pay to
situations that are exceptionally dirty relative to normal
shipyard work.
The employer shall provide, at no cost to the employee(s),
protective clothing for all employees assigned unusually dirty
work.
The company shall determine, in advance, what areas warrant dirty
work pay. However, if a dispute arises, a craft steward or
committeeman, a company representative, and a safety
representative shall make the determination of dirty work pay
prior to work commencing.
It is not the intent of this provision to discontinue tank
cleaning or other cleaning services.
Employees required to work where unusually dirty conditions exist
relative to normal shipyard conditions in tanks, bilges, sumps,
or under floor plates where oil or water has accumulated, or in
boilers, uptakes, or stacks, or in machinery spaces where
unusually dirty conditions exist, shall be paid at the overtime
rate for the entire period so employed.
12.2 Human Waste:
Employees required to work in tanks, or break into tanks or
related wet or dry systems containing human waste, shall receive
one (1) additional hour of straight-time pay for each hour
worked, and shall continue to receive such penalty pay until they
are allowed to shower or clean up. Clean up shall be on the
Employer's time and shall be paid at the employee's regular rate
of pay for the day. This shall be in accordance with Article
16.6 (b).*
The employer shall make available, at no cost to the employees,
proper preventative care, including, but not limited to gamma
globulin shots, for hepatitis and other diseases caused by
exposure to human waste.
*It is understood by the parties that removal of tank covers
(under normal conditions) will not be covered by this Article.
ARTICLE 13. MAINTENANCE WORK
13.1 The Employer may use its own employees to perform repair,
alteration, new construction, and maintenance construction at its
facilities, and such employees will receive the wages and
conditions contained in this agreement.
This understanding is intended as a means to help in retaining
bargaining unit employees on the active payroll during periods of
low employment.
ARTICLE 14. REPORTING PAY AND MINIMUM PAY
14.1 Employees starting a shift or called and starting to work
after the starting time of a shift shall receive not less than
four (4) hours pay for the first period of the shift; and if
required to continue on second period of the shift, they shall
receive pay for a full shift.
14.2 Employees required to report for work not continuous with
their regular assigned shift hours, or on Saturday, Sunday and
holidays, shall receive not less than four (4) hours straight
time pay.
14.3 Employees required to report for work and not used shall
receive four (4) hours straight time pay.
14.4 The foregoing (14.1, 14.2 and 14.3) shall not apply where
an employee is not put to work because of bad weather or
breakdown on machinery, except that this shall not be construed
to cover failure to have work or vessel available.
14.5 Employees who voluntarily quit, lay off or are discharged
for cause shall be paid only for actual hours worked.
14.6 Employees not at work on the day a shutdown or layoff
occurs shall be considered to have received notification of such
shutdown or layoff that they would have received if they had been
working.
14.7 In the event the foreman requests the employee who has
reported for work at his regular starting time and in unworkable
weather to remain on the premises with the expectancy of starting
work later if the weather clears, such employee shall be paid for
such waiting time, which in no case shall be less than four (4)
hours pay at his regular rate of pay.
ARTICLE 15. JURY DUTY
15.1 An employee having seniority and on the active payroll,
having been regularly employed and required by law to serve as a
juryman shall upon satisfactory proof to the employer of such
service rendered, be reimbursed by the employer for his work time
lost on the basis of the difference between his straight time day
shift hourly job classification rate and his jury pay (excluding
travel allowance), provided, however, such employer reimbursement
shall not be applicable to any period of time during which said
employee-juryman did not perform work for the employer other than
when prevented from doing so solely because of said jury service,
and further provided that such employer reimbursement is, in no
event, to be applicable for a period of more than eight (8) hours
in a standard work day, nor more than five (5) days in a standard
work week.
15.2 In applying the foregoing, it is understood that if an
employee is called for jury service, responds to the call, and
loses time, but is not accepted for service or serves and is
relieved therefrom by the middle of his work shift, the employee
will be reimbursed by the employer for his work time lost on the
basis of the difference between his straight-time day shift
hourly job classification rate and his jury pay (excluding travel
allowance), provided he returns to his job immediately, and
promptly reports these facts to the employer; provided further
that if an employee works his regular shift in addition to
performing jury duty, he shall not be paid by the employer under
the provision of this article.
ARTICLE 16. SAFETY, SANITATION, VENTILATION AND PHYSICAL
EXAMINATION
16.1 The Employer will exert every reasonable effort to provide
and maintain safe working conditions and shall comply with all
federal and state Safety and Health Laws and Regulations. The
Unions will cooperate to that end and encourage their members to
work in a safe manner. To that end, a Safety Committee shall be
established to be composed of a minimum of three (3) and a
maximum of five (5) representatives designated by the Employer,
and a minimum of three (3) and a maximum of five (5)
representatives designated by the Unions, which committee shall
assist, make recommendations to and cooperate with the safety man
of the Employer. The employees designated for this committee
shall be employees who have knowledge of the practices of the
yard and who have worked for the Employer a minimum of one (1)
year. The functions of such committee shall be advisory only.
This committee should meet once a month on Employer's time with
minutes of the meeting prepared by the Employer and a copy
thereof furnished to the Unions. It should be understood, that
while the Union will cooperate and participate with the Company
in providing a safe work environment, it is Management's
exclusive responsibility to carry out the administration of the
Safety Program.
16.2 Safety: All staging, walks, ladders, gangplanks and safety
appliances shall be constructed and removed in a safe and proper
manner by competent shipwrights. On vessels that are moored
alone or abreast where the combined total of persons is 200 or
more, no less than two (2) gangplanks will be provided; any
combined totals of less than 200, at least one gangplank will be
used when practicable.
16.3 The Employer shall provide covered transportation with
sufficient seating accommodations for employees to be transported
to and from jobs away from the yard or shop. No material or
equipment not safely secured shall be transported in the same
compartment of the truck with employees. Trucks shall not be
overloaded.
16.4 The Employer shall furnish suitable guards around welders
for the protection of employees' eyes.
16.5 Prompt ambulance service and first aid to injured employees
shall be provided on all shifts and a safety man shall be
employed and made responsible for the proper enforcement of
safety rules. All First Aid personnel shall be identified and
signs indicating location of First Aid Stations shall be posted.
16.6 (a) An employee suffering an industrial injury who is
advised not to resume work by a Nurse, First Aid attendant or by
a Physician to whom he has been referred, shall be paid on his
usual basis, pursuant to the terms of this Agreement, to the end
of the shift on which the injury occurred. If such employee had
reported such injury immediately following its occurrence to the
Nurse, First Aid attendant or Physician and had completed working
during the shift during which he was so injured, and on the
following day, after reporting for work, is advised by the Nurse,
First Aid attendant or Physician not to continue work because of
said injury, he shall be paid to the end of said shift.
(b) When an employee's clothing or body becomes soaked or
contaminated with human waste, water or oil due to circumstances
beyond his control, and when the incident is properly reported,
the employee shall be given the opportunity on the Employer's
time to clean up and change clothing. When circumstances require
the employee to leave the yard or job site (outside job) he shall
be compensated (not to exceed two (2) hours) at the normal
straight time rate. If the incident occurs less than two (2)
hours before the end of the shift he shall be paid at the
straight time rate until the end of the shift.
16.7 The Employer shall notify the respective Union not later
than the end of the next regular working day of lost time
accidents to any of its members that necessitated confinement in
any hospital or clinic, providing the Employer has knowledge of
such confinement.
16.8 Sanitation:
(a) Suitable individual lockers with locks, washrooms and
drinking water shall be furnished by the Employer.
(b) All toilets and washrooms shall be kept in a clean and
sanitary condition, properly heated and ventilated, and adequate
quarters with heat and hot water shall be provided for employees
to change and dry their clothes. Lunch areas with benches and
tables shall be provided and shall be separate from toilet
facilities.
16.9 Where noxious or poisonous gases may accumulate, the
Employer shall provide proper protection and ventilation. Proper
lighting and ventilation shall be provided for all enclosed
working spaces. No unsafe spray painting shall be performed in
confined or restricted spaces.
16.10 Physical Examination: There shall be no Doctor's physical
examination nor age limit, except as required by law. Unless
required by law, no employee shall be compelled to pay hospital
or examination fees in the course of employment or as a condition
to secure employment. No applicant shall be unlawfully
discriminated against in employment as a result of a physical
exam. Pre-employment physicals shall be paid in full by the
company, but the applicant shall not be paid for his time. Blood
and/or urine tests shall not be part of the pre-employment
physical.
16.11 Where employees are assigned to work in confined spaces as
described by OSHA for shipbuilding, ship repairing and ship
scrapping as published in the Bureau of Labor Standards, frequent
checks for the employee's safety shall be made. If and as
required by OSHA, a blood and urine test will be provided by the
Employer at no cost to the employee.
16.12 Existing practices with respect to providing special
protective devices and equipment in order to protect employees
from injury will continue in effect during the term of this
Agreement. Where conditions of work are such as to require
special protective devices and equipment in order to protect
employees from injury, such devices and equipment will be
supplied by the Employer at its expense. Protective devices and
equipment so furnished shall not be taken from the property of
the Employer except with specific authorization for use while at
work for the Employer.
16.13 When an Occupational Hygienist is used, the Employer will
make available the person's name and address to the Union, upon
their request.
16.14 The Company and the Union agree on the objective of
maintaining a safe working environment, including maintaining a
work place that is alcohol and drug free. It is agreed that the
use, sale, distribution, or possession of illegal drugs or
alcohol on Company premises shall be the grounds for immediate
discharge. It is understood, however, that there shall be no
random testing on employees covered under this Agreement. It is
further understood that the Company will provide, at no cost to
the employees, an Employee Assistance Program, which includes
assistance through counseling for alcohol and drug dependency, as
well as other related personal and family problems that adversely
effect an employee's job performance, and that any disciplinary
action taken would be subject to Article 23, Grievance Procedure.
All drug tests dicussed below shall be accomplished through
urinalysis and alcohol tests through either urinalysis or
breathalyzer.
In order to clarify the language contained in 16.14 above, the
following is agreed to by the parties signatory hereto:
1. It is understood that drug testing may be part of the pre-
hire program. Any applicant that has failed a pre-hire test, who
demonstrates that he/she has been evaluated by a certified
treatment facility and has satisfactorily completed the treatment
that was recommended by the treatment facility, shall become
eligible for hire upon the successful completion of another pre-
hire drug test. The second test shall be at the employee's
expense.
2. Testing employees for drugs and/or alcohol may be
accomplished when the employer has reasonable suspicion to
believe that an employee may be under the influence of drugs
and/or alcohol. Reasonable suspicion must be based on specific
personal observations that an employer representative can
describe concerning the appearance, behavior, speech, or breath
odor of the employee. Reasonable suspicion must be based on
direct, first hand observations by an employer representative who
shall have received training in substance abuse detection. These
observations shall be documented in writing at or near the time
of observation but not more than twenty-four hours from
observation. The employer shall contact the appropriate shop
steward or Business Representative prior to the testing of any
employee. Documentation resulting in an employee being tested
will be provided on demand in a timely manner to the appropriate
Union representative.
3. Post accident drug and alcohol testing may be performed on
all employees involved if said accident resulted in a fatality or
bodily injury to a person which required medical treatment away
from the site. Approval for employee drug testing must be for
good reason and be directed by the Director of Human Resources or
his designated representative from the Human Resources
Department. All positive results must be reviewed by a Medical
Review Officer.
4. Any employee with a positive drug test will be given an
opportunity, based on the circumstances, to enter the Employer's
E.A.P. Any employee who tests positive and who the Employer is
going to discharge will first receive a suspension pending an
investigation by management and the appropriate Union
representative.
5. Any employer drug/alcohol testing policy must conform to the
Drug Free Workplace Act, Subtitle D of Title V of Public Law 100-
690, and the Federal Acquisition Regulation Interim Rule (DOD FAR
Supp 252.223-7500) implemented by the Department of Defense.
6. Testing for drugs on employees or pre-hire drug testing in
accordance with this Article will not be implemented until the
Joint Labor/Management Committee agree on the testing procedures.
7. Any and all costs of testing will be paid by the Employer.
8. Any drug testing program must apply to subcontractors as well
as employees. To this extent the requirements of the Drug Free
Workplace act and the Federal Acquisition Regulation Interim Rule
(DOD FAR Supp 252.223-7500) implemented by the Department of
Defense shall be part of all subcontracts issued at Todd.
9. Individual participation in this program shall be held in the
utmost confidence.
10. The employer will give the Joint Labor/ Management Committee
45 days notice of an intent to change the collection site and
laboratory used in the Drug Testing Program.
ARTICLE 17. UNION REPRESENTATIVES
17.1 The Business Representatives of the various crafts shall
have access to the Employer's shipyard and shipyard shops by
applying for permission through the designated office, provided
they do not interfere or cause employees to neglect their work.
17.2 Shop Stewards: It is recognized by the Employer that Shop
Stewards are desirable for the proper administration of the terms
of this Agreement. The Employer also recognizes that it is
desirable that the person designated as Steward shall receive his
fair share of the work that he is qualified to perform. In no
event shall the Employer discriminate against a Steward in the
matter of overtime, layoffs, or rehires or discharge him on
account of the proper performance of his duties. Twelve (12)
hours advance notice will be given individually to the Steward if
he is to be laid off. Every effort shall be made to deliver such
notice during regular shift hours. However, notice of lay off
may be given during the off shift by telephone or telegram, for
circumstances beyond the control of the employer. There may be
designated by each Union one (1) Chief Shop Steward on each shift
who will be granted super seniority during his respective term of
office. Such Chief Shop Steward shall have at least one (1) year
of seniority and be qualified to perform the work available.
Shop Stewards shall have at least six (6) months of work
experience with the Employer as far as practicable. It is the
intent of the Union that Shop Stewards shall be selected with a
view to their having first-hand knowledge of the Employer's work
and the collective bargaining agreement.
17.3 The Employer will not in any way discriminate against any
shop steward or committee man for presenting any complaint,
dispute or grievance to their foreman or department head or to
the personnel department in the manner provided for in this
Agreement.
17.4 The Union shall advise the Employer of the name or names of
Shop Stewards currently elected or appointed. The full grievance
procedure as set forth herein shall be available to any Union
which feels that its Shop Stewards have been discriminated
against. It shall be the intention of the Employer not to allow
the congregation, by assignment, of several Stewards in one
designated work area, but to keep them, as reasonably as
possible, spread out in a manner to cover all the work areas of
their appropriate Union's jurisdiction.
ARTICLE 18. PAY DAY
18.1 Pay day shall be weekly and in no case shall more than five
(5) days pay be held back. Employees shall be paid prior to the
end of the assigned shift, exclusive of the lunch period.
18.2 (a) It is the intent of the Employer that in case an
Employee is laid off, discharged, or voluntarily terminates his
employment, he shall receive his pay no later than the next
regularly scheduled pay day, or in compliance with state law,
whichever is sooner.
(b) It is the intent of the Employer that any error in an
Employee's paycheck shall be corrected by the Employer within two
(2) working days from the time the error was brought to the
Employer's attention.
(c) The Employer, upon the request of an Employee, shall mail
the Employee's final paycheck to the address stated by the
Employee, provided that the Employee has returned or accounted
for all company-issued property.
18.3 Second shift employees are to be paid on Thursday each week
and third shift employees no later than Friday morning.
If Christmas Day and the day before/after Christmas Day, and New
Year's Day and the day before/after New Year's Day fall on Monday
and Tuesday, pay day shall be on Friday for all shifts.
ARTICLE 19. TRAVEL TIME, OUT OF YARD AND OUT OF TOWN WORK AND
TRIAL TRIPS
19.1 When employees are sent to work away from the yard or
regular place of employment, they shall be paid their regular
shift pay while traveling, except in the case of traveling to or
from the yard or regular place of employment before the regular
starting or after the regular quitting time of their shift; in
such cases they shall receive pay at the established overtime
rate.
19.2 If employees are sent to work out of town, they shall
receive first class board (meals), lodging and transportation.
Coach will be acceptable as first class air transportation.
19.3 If employees are required to travel on overtime days, they
shall be paid travel pay at the established overtime rate.
19.4 Not more than eight (8) hours pay shall be paid for travel
time in any one (1) day of twenty-four (24) hours computed from
the starting time of the employee's regularly assigned shift.
19.5 Out of Yard Work, Trial Trips, Traveling Time and
conditions shall be as presently agreed to by Employer and Local
Lodge of the Union, unless otherwise mutually changed. The
Employer shall notify the Union in advance of any scheduled Trial
Trips. The Union and the Employer will meet as necessary, to
work out (negotiate) an understanding on any current problems
that exist. Any such understandings require mutual agreement.
ARTICLE 20. WELDING
20.1 It is recognized that the autogenous processes of welding,
burning and silver brazing are tools of the trades signatory to
this Agreement, and the rates of pay shall be the same as the
trades affected. Employees required to take a test shall be paid
for the time consumed in the test, if they pass it successfully.
Whenever an employee is required to take a test, the Employer
shall notify the employee's local Union of the results of such
test in writing within thirty (30) days from the date of the
test. The letter will specify the agency and type of test, date
of test, and the name of the inspector or the individual
supervising the test. This letter will be signed by an
authorized company representative. These shall be individual
letters on each employee.
20.2 Where U.S. Certificate is required by the U.S. Coast Guard
or other recognized agency for welding on pressure vessels,
boilers and class 1 piping, as defined in the U.S. Marine
Engineering Regulations and Material Specifications, the rate of
pay shall be an additional thirty-five (35) cents per hour, over
and above the standard mechanic's rate, for all time assigned to
such certified welding jobs.
ARTICLE 21. APPRENTICE AND TRAINEE PROGRAM
21.1 In order that an adequate supply of competent, skilled
craftsmen shall be available at all times, it is agreed between
the Parties hereto that an Apprentice and/or Trainee program
including safety, shall be established by the craft Union and the
Employer. Such an Apprentice and/or Trainee program shall not
conflict with Federal or State Apprenticeship laws. All existing
Apprentice and Training programs shall remain in effect until
changed by mutual agreement of both parties.
ARTICLE 22. STRIKES AND LOCKOUTS BARRED
22.1 There shall be no lockouts on the part of the Employer nor
suspension of work on part of the employees. This Agreement is a
guaranty that for its duration there will be neither strikes nor
lockouts, and that all complaints, grievances or disputes arising
under its provisions will be settled pursuant to its grievance
machinery, Article 23 "Grievances and Complaints" and Article 24
"Arbitration of Disputes."
ARTICLE 23. GRIEVANCE AND COMPLAINTS
23.1 The grievance procedure shall be as follows:
STEP 1. The shop steward or committeeman shall call any
complaint, dispute or grievance to the attention of the foreman
or department head within five (5) working days from the time it
arises. If the complaint, dispute or grievance is not adjusted
within two (2) working days after it is presented to the foreman
or department head, the shop steward or committeeman shall report
such complaint, dispute or grievance in writing over the
signature of the complainant to his respective Business
Representative. Such complaint, dispute or grievance shall be
submitted to the personnel department's representative or other
official designated by the Employer over the signature of the
Business Representative within twelve (12) working days from the
date the complaint, dispute or grievance arose. However, this
does not preclude the Business Representative from reporting such
complaint, dispute or grievance directly to the personnel
department's representative or other official designated by the
Employer. Within five (5) working days after the personnel
department's representative or other official designated by the
Employer receives a communication in writing from the respective
Union alleging violations of this collective bargaining
agreement, the Employer shall reply to the communication, in
writing. Any settlement reached in Step 1 shall be final and
binding.
STEP 2. Within five (5) working days after the Employer replies
to the communication from the respective Union alleging a
violation or violations of this collective bargaining agreement,
a Business Representative of the Union and the Director or
Assistant Director of Personnel and Labor Relations or other
official designated by the Employer shall meet for the purpose of
adjusting such complaint, dispute or grievance. Any final
decisions reached by the Employer Representative and the Union
Business Representative shall be reduced to writing. Any
settlement reached in Step 2 shall be final and binding.
STEP 3. If no agreement is reached in Step 2 within ten (10)
working days, the parties may by mutual agreement, submit the
grievance in writing to a grievance panel composed of two members
from Labor, to be selected by the Union, and two members from
Management to be selected by the Employer, requesting a Grievance
Committee hearing or they may proceed to Step 4 of this Article.
The Committee members shall not be from the Union or Company
involved.
Any complaint, dispute or grievance not submitted in writing
requesting a Grievance Committee hearing, or not referred to the
next step of this grievance procedure within ten (10) working
days, shall be regarded as waived unless the parties otherwise
agree in writing. The Grievance Committee shall meet within ten
(10) working days of receipt of such request. A decision by a
majority of the Grievance Committee shall be final and binding on
both parties. This decision shall be reached by secret ballot.
In the event that the Grievance Committee fails to render a
decision within (10) working days from their first meeting date,
either party may within ten (10) working days give written notice
to the other party of arbitration. The parties may mutually
agree to extend the time limits.
STEP 4. In the event the grievance is not settled as above
provided, either party may submit the grievance within five (5)
working days following the expiration of the time limit provided
in Step 2 to the International President of the Union, or his
duly designated representative and a company representative duly
selected by the Employer, for consideration and possible
settlement. If a settlement is reached, it will be final and
binding upon the Parties and shall be reduced to writing.
STEP 5. If no satisfactory solution eventuates from Step 4
within twenty (20) working days, then either Party may within ten
(10) working days thereafter give written notice of arbitration
to the other Party.
23.2 Any complaint, dispute or grievance not brought up or
carried forward to adjustment or arbitration as provided for in
this Article shall, unless the Parties otherwise agree in
writing, be regarded as waived.
23.3 No employee shall refuse to work or otherwise curtail
production or engage in any slow down or interfere with
Employer's operation because of any complaint, dispute or
grievance which he may have.
23.4 If the Employer has any complaint, dispute or grievance
with any Union or any employee covered by this Agreement, the
Employer shall likewise avail itself of any or all of the
foregoing grievance procedural steps.
ARTICLE 24. ARBITRATION OF DISPUTES
24.1 In the event the Parties shall be unable to adjust any
complaint, grievance or dispute involving the express terms of
this Agreement, such complaint, grievance or dispute shall be
referred to an impartial arbiter selected from a panel, mutually
agreed upon by the Parties, in each respective Port. The panel
shall be utilized only in the Port selecting said panel. The
panel will consist of no more than five (5) and no less than
three (3) impartial arbiters. The panel may be modified from
time to time by mutual agreement of the Parties in each
respective Port. If the Parties are unable to agree on a
specific arbiter from the panel, then the Party desiring to
arbitrate shall send a request by mail to the Director of the
Federal Mediation and Conciliation Service requesting the
Director to furnish a list of five (5) arbiters. Each party
shall have the right to strike a total of two (2) names from the
list, and the right to strike first shall be determined by lot,
or as otherwise agreed by the Parties, and each party shall
alternately strike one (1) name. The name remaining on the list
after each Party has stricken two (2) names shall be the
impartial arbiter.
The Employer and the Union or Unions involved shall equally pay
the arbiter's fee, the cost of any hearing room and the cost of a
court reporter, if requested by the arbiter. All other expenses
shall be paid by the Party incurring such expense.
The decision of the arbiter shall be final and binding upon the
Parties. Such decision shall be limited to interpretation and
application of the express terms of this Agreement and shall not
change or add to any of its terms or conditions. In his
decision, the arbiter shall specify whether or not the decision
is retroactive and the effective date thereof.
24.2 Awards or settlements of grievances may or may not be
retroactive as the equities of each case may demand, but in no
event shall any arbitration award be retroactive beyond thirty
(30) calendar days prior to the date on which the grievance was
first presented to the Employer unless agreed to by both parties;
provided however, that this provision shall not have any
application to grievances pertaining to the payment of either the
fringe benefits provided for in this Agreement or the wage scales
for the various classifications set forth in Schedule "A" of this
Agreement.
ARTICLE 25. JURISDICTIONAL DISPUTES
25.1 The Unions agree that in the event any jurisdictional
dispute shall arise between the Unions signatory to this
Agreement, with respect to the jurisdiction of work on any
classification of employment, whether or not included in the
schedule attached hereto, such dispute shall be settled by the
Unions in accordance with the Jurisdictional Policy of the Metal
Trades Department, AFL-CIO as amended May 10, 1968, which
provides that pending the adjustment of a jurisdictional dispute
there will be no stoppage of work.
25.2 It is agreed that Unions involved in such jurisdictional
disputes shall be primarily responsible for the prevention of a
stoppage of work because of jurisdictional disputes.
25.3 Continuous Improvement Process
The Company and Unions agree to jointly support a proactive
Continuous Improvement Process the goal of which is to improve
all company work practices and methods in order to eliminate
inefficiencies and reduce the cost of performing work; thereby
allowing the company to be more competitive in the regional and
global marketplaces.
Changes in technology applied in the shipyard and/or improved
work practices and methods will be discussed by all concerned
parties prior to introduction.
To fully implement the Continuous Improvement Process the Company
and the Unions agree that the Company must organize, manage and
perform all jobs in the most efficient fashion. To allow this
goal to be attained, the parties agree to the following:
COMPOSITE CREWS
The unions and the employer recognize the need for the company to
organize jobs on a composite crew basis, thereby improving
efficiencies, reducing costs and standby time and increasing the
competitive position of the organization. The parties agree to
the use of Composite Crews where such crews will reduce the
overall cost of doing work. Composite Crews shall be defined as
crews comprised of traditional craft members who, by their craft
jurisdiction, would be called upon to perform the work without
regard to their specific craft jurisdiction to accomplish the
total job.
Situations that lend themselves well to Composite Crews include
such work processes as: shafting removals, blasting and painting,
integrated outfitting, and work situations such as small/short
duration or remote location jobs on a vessel. These examples are
not intended to be all inclusive or an exhaustive list outlining
the intended application.
In the process of evaluation, each job may be assigned a lead
craft for the purpose of supervising and organizing work. It will
be the responsibility of the lead craft to meet budgets,
schedules and direct composite teams in the completion of jobs.
CRAFT ASSIST
The parties agree to a program of craft assistance. It is the
intent of the employer to maintain the traditional craft
functions within the yard; however, it is recognized and
understood that inefficiencies and standby time are detrimental
and are not desired by either party, and are to be eliminated
whenever possible.
Craft assistance shall mean a craft performing or assisting in
the performance of work items not traditionally assigned to
his/her respective craft for limited durations of time.
Reduction of standby time shall mean the minimization of those
periods of time spent waiting for another craft to appear to
perform a task that is incidental to the main task being
performed and those limited periods of time spent waiting to
perform a task that is incidental to the main task being
performed.
Incidental shall be defined as work that is casual, unplanned
and/or less than two (2) hours in duration.
It is the agreement of the parties to minimize standby time by
providing for the concept of craft assistance.
The intent of this proposal is the elimination/reduction of
standby time. Jobs requiring full-time assignment would still be
performed by the traditional craft or by a composite crew made up
of members of traditional crafts.
The parties agree to the principal of one craft assisting another
as indicated in the following non-exclusive list of examples,
many of which are currently being practiced in the shipyard:
1. LIFTING DEVICES AND/OR EQUIPMENT
The Riggers would hang the chainfall and rig the lift. After
this is done, the appropriate craft, working on the job, would
operate the chainfall as required. When the job is completed,
the craft would return the chainfall to its proper location.
2. INTERFERENCES
The craft working on the job would be allowed to remove (and
subsequently re-install when feasible) interferences, such as a
floor plate, insulation, a non-energized panel, incidental piping
or furniture.
3. MOVEMENT OF TEMPORARY LIGHTING
After installation by the Electricians, any craft will be allowed
to move the lighting in the work area as determined by the needs
of the job. Final removal would be accomplished by the
Electricians.
4. FUELING VEHICLES AND EQUIPMENT
The craft driving the fuel vehicle would be allowed to perform
the fueling of equipment when necessary.
5. INSTALLATION OF ZINCS
This work could be accomplished by either Boilermakers or
Machinists.
6. MOVEMENT OF TEMPORARY VENTILATION
This work would be accomplished in the same manner as covered in
paragraph (3) TEMPORARY LIGHTING.
7. TACK WELDING AND BURNING
The parties recognize that tack welding and burning are the
jurisdiction of the Boilermakers. The parties agree to work
together to reduce standby time by providing for craft assistance
in certain situations. It is agreed that tack welding and/or
burning may be accomplished by crafts other than the Boilermakers
when tack welding and/or burning is incidental to the job
assigned to those crafts.
8. WORK AREA CLEAN-UP
Clean-up of an employee's own work area would be permitted by all
crafts.
9. USE OF TORCHES
Permitted by all crafts.
All employees will be expected to accept direction and work in
accordance with the spirit and intent of this agreement. Alleged
abuse of these provisions shall be subject to the grievance
procedure
25.4 The provisions of this section of the General Agreement
shall be equally binding upon the Employer and the Unions.
ARTICLE 26. HEALTH, WELFARE AND PENSIONS
26.1 Effective August 1, 1996, the Employer will pay $4.06 on
actual hours worked to the applicable jointly administered Trusts
as allocated by the individual Unions. The allocation of monies
among the various benefit trusts may be changed at any time by an
individual union through the Pacific Coast Metal Trades District
Council by serving written notice upon the Employer. The change
in allocation for the trust(s) involved will be made effective
upon the next regularly scheduled payment date after receipt of
notice.
26.2 The Employer will pay additional fringe monies with
allocation of these fringe increases to be determined by the
International Unions, to apply to Health and Welfare, Dental,
Pensions or whatever other fringe an International or Local Union
may want the money to apply, with the exception of Holidays and
Vacation which must be applied uniformly to all crafts.
Increased fringe monies are effective as follows: See Schedule
"A"
26.3 Failure to Make Payments. Upon the failure of the Employer
signatory to this Agreement to make any of the payments required
by this Article, the Unions, or any of them, may undertake
economic action against such defaulting Employer to enforce
prompt payment, and such action shall not be deemed to be a
violation of this Agreement or any of the provisions thereof.
26.4 It is the joint responsibility of Management and the
Unions, signatory to this Agreement, to instruct the Trustees of
the applicable Pension Plans to take appropriate action to
eliminate any unfunded liability that currently exists or
unfunded liability that develops during the term of this
Agreement as soon as practical.
ARTICLE 27. TOOLS
27.1 Employees will be furnished tools. They shall use all
reasonable care in the use of tools and return them to the
custody of the Employer when no longer used. Employees shall
have sufficient time prior to the end of each shift to put away
tools on the Employer's time.
Determination of sufficient time shall be at the Employer's
discretion.
27.2 If the Employer fails to furnish tools, then the Employer
shall pay each employee fifteen (15) cents per hour for tools
furnished by employees.
27.3 The Employer has the right to take action against those
employees who misuse property supplied to them by the Employer.
ARTICLE 28. WARRANTY OF AUTHORITY
28.1 The officials executing this Agreement in behalf of the
Employer and the Unions signatory hereto hereby warrant and
guarantee that they have the authority to act for, bind and
collectively bargain in behalf of the organizations which they
represent.
ARTICLE 29. SAVING CLAUSE
29.1 Should any part hereof or any provision herein contained be
rendered or declared invalid by reason of any existing or
subsequently enacted legislation or by any decree of a court of
competent jurisdiction, such invalidation of such part or portion
of this Agreement shall not invalidate the remaining portions
hereof; provided however, upon such invalidation the Parties
agree immediately to meet and negotiate such parts or provisions
affected. The remaining parts or provisions shall remain in full
force and effect.
ARTICLE 30. COST OF LIVING ALLOWANCE (This Article 30 is not in
effect during the life of this 1997 Agreement.)
30.1 For purposes of this Article:
(a) "Consumer Price Index" refers to the Consumer Price Index
for Urban Wage Earners and Clerical Workers (including single
workers) published by the Bureau of Labor Statistics, U.S.
Department of Labor (1967=100) for the U.S. City Average.
(b) "Consumer Price Index Base" refers to the Consumer Price
Index for the month of May, 1993 (The May Consumer Price Index is
customarily published by the Bureau by the last week of June).
(c) "Change in the Consumer Price Index" is defined as the
difference between (i) the Consumer Price Index Base and (ii) the
applicable Consumer Price Index, (MINUS ANY COST OF LIVING
ADJUSTMENT, IF ANY, PREVIOUSLY PAID).
(d) "Cost of Living Adjustment" is calculated as below and will
be made every three months based on the cumulative change in the
Index over the prior three month period, the first adjustment
being effective October 1, 1993, based on the difference between
the May 1993 Index and the August 1993 Index. Applying the same
formula as above the remaining adjustment dates are January 1,
1994, April 1, 1994, July 1, 1994, October 1, 1994, January 1,
1995, April 1, 1995, July 1, 1995, October 1, 1995, January 1,
1996, April 1, 1996 and July 1, 1996.
30.2 Effective on each Adjustment Date, a Cost-of-Living
Adjustment equal to 1 cent per hour for each full .4 of a point
change in the Consumer Price Index shall become payable.
30.3 (a) The continuance of the Cost of Living Adjustment
provided for in this Article is dependent upon the availability
of the Consumer Price Index in its present form. In the event
the Consumer Price Index in its present form becomes unavailable
for any reason, the Parties shall substitute by mutual agreement
any other official formula or publication issued by the United
States Government.
(b) The payment of any Cost of Living Adjustment will be made
within a reasonable time after publication of the applicable
Consumer Price Index and after a decision has been made to its
application in accordance with Section 30.5.
30.4 When the cumulative adjustment amount reaches sixty cents,
it shall be frozen for the life of this agreement.
30.5 The Employer agrees that any Cost of Living Adjustment may
be applied, all or in part, to wages or a new fringe benefit or
to improve an existing fringe benefit, as may be decided by a
majority of the Vice Presidents representing the International
Unions affiliated with the Pacific Coast Metal Trades District
Council. It is understood that the implementation of any such
decision as to any application of a Cost of Living Adjustment, or
part thereof, to wages will be on a uniform basis among all
employees represented by such International unions.
30.6 No adjustment, retroactive or otherwise, shall be made as a
result of any revision which later may be made in the published
figures for the Consumer Price Index for any month on the basis
of which the Cost of Living Adjustment in this Article shall have
been determined.
30.7 As soon as possible after the Consumer Price Index Base
(The Consumer Price Index for the month of May, 1993, which would
customarily be published by the last week of June, 1993) is
available, the parties will prepare and supplement this Agreement
with a schedule setting out the calculation of the foregoing
provisions.
ARTICLE 31. EFFECTIVE DATE AND DURATION OF AGREEMENT
31.1 This agreement shall become effective on November 24, 1997
and shall continue in full force and effect until July 31, 1999,
and from and for year to year thereafter, unless either party
shall, at least sixty (60) days, but not more than ninety (90)
days prior to any anniversary date, notify the other party in
writing of any desire to make changes in or to terminate this
Agreement.
31.2 If either Party gives notice to the other as herein
provided, representatives of the Employer and of the Unions shall
negotiate such proposed changes without unnecessary delay.
31.3 Practices, customs, understandings, agreements of
interpretation or agreements of any nature whatsoever, which have
been previously mutually recognized at Todd's Seattle Division by
the Employer and the Unions, whether expressly covered by this
collective bargaining agreement or otherwise, will continue in
effect unchanged until the expiration of this agreement, except
as specifically modified as provided herein or by mutual
agreement between the parties.
31.4 Yard Closure or Relocation: The Employer will give timely
notification (normally not less than sixty (60) days) to the
Puget Sound Metal Trades Council of any decision to close down
the Seattle Division of Todd Pacific Shipyards Corporation or
relocate its operations, and will negotiate with the Unions to
develop a course of action designed to minimize any adverse
impact on the members of the bargaining unit of such events.
SCHEDULE "A" CLASSIFICATIONS 11/24/97
Carpenter Journeyman $16.45
Sheetmetal Journeyman $16.45
Painter Journeyman $16.45
Gen Machinist Journeyman $16.45
Outside Machinist Journeyman $16.45
Tool Room Journeyman $16.45
Pipefitter Journeyman $16.45
Electrician Journeyman $16.45
Warehousemen $16.45
Truck Drivers $16.45
Fork Lift Operators $16.45
Op. Engineer Journeyman $17.05
Stat. Engineer Journeyman $16.45
Prod. Material Department $16.45
Shipfitter $16.45
Rigger $16.45
Dry Dock Rigger $16.45
Welder $16.45
Burner $16.45
Laborer-On Shipboard Work $15.45
Laborer-Off Shipboard Work $14.45
Firewatch $ 9.00
Sandblaster $16.45
Tank Cleaner $16.45
Wage and Fringe Increase
Effective 8-1-98 $.61/hour Wage/Fringe
This increase will be applied to all Schedule "A" rates listed
above except Firewatch.
Retroactive payments of $.60 for each non-Washington State Ferry
Project attendance hour from August 1, 1996 until the execution
date of the contract (less applicable employee deductions) shall
be made to all non-Washington State Ferry Project employees that
were actively employed on the execution date of the contract or
had seniority rights as of the execution date of the contract.
ALL CRAFTS
Apprentices Per Standards (1)
Helpers
Step I $10.00
Step II $11.00
NEW HIRES
Laborers
Step I $10.00
Step II $11.00
Step III Journeyman
Helpers
Step I $9.00
Step II $10.00
Journeyman
Step I $11.00
Step II $12.00
Step III Journeyman
11/24/97
Quality Control $16.75
Layer-Out $16.70
Loftsman $16.75
Plannerman $16.95
Optical Man $16.80
Leadmen $1.20 above Journeyman
Quartermen $1.65 above Journeyman
No employee will suffer a reduction in pay by virtue of any
change in the new Labor Agreement.
STANDARDS
Journeymen and Apprentices:
1. Apprentices and trainees will convert from existing
percentages of the previous Journeyman's rate to same percentage
of new Journeyman's rate. The wage progression schedules
currently in use will continue until changed by appropriate
means.
2. The listing of or the deletion of classification in Schedule
A neither establishes nor changes jurisdiction as recognized
under the previous collective bargaining agreement's Schedule A.
3. Starting rates for all Journeymen mechanics hired after the
effective date of this Agreement shall be as follows:
Step I $11.00
Step II $12.00
Step III Journeyman
A new hire (Journeyman) may be hired into any of the above Step
rates; however, after working ninety (90) days, the new hire will
be reviewed as to his proper Step placement based on verifiable
skill and ability. The review board shall consist of an
industrial relations representative and the appropriate union
business manager with the foreman of the department acting in
advisory capacity. The Union(s) will be advised of the final
decision and shall have the right to grieve any placement with
which they disagree.
Any former employee requested by name for referral will be placed
immediately in Step III. Any Journeyman new hire who has
completed a state approved Apprentice/Trainee Program will be
placed immediately in Step III.
Journeyman new hires with 6,000 hours experience in related
industry as demonstrated through Union records will be placed
immediately in Step III.
Journeyman new hires shall progress from Step I to Step II after
1,000 hours worked and from Step II to Step III after an
additional 2,000 hours worked. Journeymen may also be moved from
one Step to a higher Step based on a recommendation by the
foreman of the department and subsequent approval by the review
board.
Laborers: Laborers hired after the effective date of this
Agreement will be paid as follows:
Step I $10.00
Step II $11.00
Step III Journeyman
Laborers shall progress from Step I to Step II after 1,000 hours,
and from Step II to Step III after an additional 2,000 hours.
Laborers shall be paid at tank cleaner's and scaler's rate while
cleaning areas defined under Article 12 (Dirty Work).
Laborers shall be paid a premium of $.25 per hour while engaged
in removal clean-up, and disposal of in-place fiberglass,
asbestos and rockwool insulation.
Any laborer engaged in "on shipboard work" and using a tool such
as a grinder, sander or needle gun (note: for purposes of this
provision, brooms, mops and feather dusters will not be
considered tools) shall received an additional twenty-five cents
per hour on a while engaged basis.
Laborers using heavy pneumatic tools (e.g., jackhammers) will
receive the Sandblaster's rate of pay.
Helpers: Helpers hired after the effective date of this
Agreement will be paid as follows:
Step I $ 9.00
Step II $10.00
Helpers shall progress from Step I to Step II after 2,000 hours
All rates listed above under "Standards" shall increase by
$.61/hour on August 1, 1998. Any person working under a rate
listed in this section ("Standards") as of April 29, 1997, shall
receive no less a rate after ratification.
HELPERS
It is the intent of the parties signatory hereto, to utilize
helpers for unskilled/semi-skilled work. Along this line, a
committee shall be formed to review any abuse of the helper's
intended functions. Such committee will be comprised of two
management representatives and two union representatives. It is
further understood that helpers are a separate seniority
classification. Employees hired as helpers may assist journeymen
employees by:
Using simple hand tools (hammer, pliers, etc.)
Performing work of a routine, repetitive nature where tolerances
and precision are not a factor.
Using power tools such as grinders, sanders, washers.
Parts and tool chaser.
Parts cleaner.
This list is intended to be examples of the type of work that the
parties agree is properly performed by helpers, it is not
intended as an exclusive or exhaustive list of acceptable helper
assignments.
It is understood and agreed that helpers shall work under the
direct supervision of a journeyman or leadperson assisting in the
performance of the work of their trade. (This provision does not
apply to helpers assigned to a composite crew.)
There may be a ratio of one (1) helper to every five (5)
mechanics within each craft. No helper shall be upgraded to
journeyman without the mutual consent of management and the Union
effected. Alleged abuse of this provision shall be subject to
the grievance procedure.
Recalled Employees
Any employee on the payroll as of the date of ratification and
any employee with seniority recall rights as of the date of
ratification who is laid off and recalled during the life of this
agreement shall be paid at least the same base rate upon recall
as he was paid upon his layoff.
SCHEDULE "B"
Plannerman
Applies to hourly rated craftsmen only, who do this work when
assigned. It does not apply to technical or administrative
employees.
Layer-Out
The classification of Layer-out as contained in Schedule "A" of
the Master Agreement is a mechanic who must have a thorough
knowledge of blueprints, who can lay out patterns and/or develop
and transpose the work from the print to the metal. He must have
knowledge of parallel and conic development, as well as simple
triangulation. The Layer-Out rate is to apply to those employees
when they are performing work falling within the scope of this
classification on the following basis:
(a) Layer-Out work performed for any period less than four (4)
hours duration, a minimum of four (4) hours pay at the Layer-Out
rate.
(b) Layer-Out work performed for any period over four (4) hours
duration, a minimum of eight (8) hours pay at the Layer-Out rate.
LETTERS OF UNDERSTANDING
Travel Time and Out-of-Yard Work.
Traveling time and conditions shall be as presently agreed to by
Employer and Signatory Unions to this Agreement, unless otherwise
mutually changed.
Conditions as presently agreed to by Employer and Signatory
Unions in the respective ports are as follows:
Out-of-Yard Work and Trial Trips:
Traveling time and conditions shall be as presently agreed to by
Employer and Local Lodge of the Union, unless otherwise mutually
changed.
1. When employees are required to work at sea or are assigned to
vessels on trial trips, or vessels anchored off shore, they shall
receive regular shift pay, meals and room accommodations when
necessary.
2. If employees are required to work or stand by outside of
their regular assigned shift hours, or on Saturday, Sunday or
holidays, they shall receive the established overtime rate as
defined in Article 8.
3. If employees are required to remain on the vessel, not
working or standing by, in excess of their regular shift hours,
they shall receive pay for the actual hours aboard said vessel at
their regular straight time hourly wage, not to exceed eight (8)
hours in any twenty-four (24) hour period.
Out-of-Town Work, Puget Sound Area Only: When employees are sent
on jobs out of town the following conditions shall prevail:
1. They shall receive first class board, lodging and
transportation when required to remain away overnight. "Coach
will be acceptable as First-Class air transportation."
2. They shall receive travel pay at double time before and after
the starting and quitting time of their regular shifts, not to
exceed eight (8) hours at straight time in any one (1) day of
twenty-four (24) hours. On extended trips of more than one (1)
day they shall receive not more than eight (8) hours at straight
time in any one (1) day of twenty-four (24) hours.
3. Employees required to work or travel on Saturday, Sunday or
holidays or required to work overtime before or after the regular
assigned shift for the job shall be paid at the overtime rate as
defined in Article 8 of the Master Agreement.
Trial Trips - Puget Sound Area Only
1. When employees are required to work at sea or are assigned to
vessels on trial trips or vessel anchored off shore, they shall
receive regular shift pay, meals and room accommodations when
necessary.
2. If employees are required to work or stand by outside of
their regular assigned shift hours, or on Saturday, Sunday or
holidays, they shall receive the established overtime rate as
defined in Article 8.
3. On trial trips at sea of one (1) day or less duration,
employees shall receive regular shift pay except that overtime
rates shall be paid before the regular starting time and after
the regular quitting time of the shift on which the employee is
regularly employed until the employee is returned to the shop.
4. When the trial trip extends beyond the limits of one (1)
twenty-four (24) hour period and only one (1) shift is used, the
employee shall be paid at his regular straight time rate for the
first shift worked, and double time for hours worked or standing
by beyond his shift, with a guarantee of a minimum of twelve (12)
hours work (sixteen (16) hours pay) within each twenty-four (24)
hours.
5. Trial trips returning at a time that provided less than a
shift off, the employees required by the Employer to return on
their regular day shift, will be paid the overtime rate. If the
day shift employee is not required to work on his regular shift,
he will be provided work on the regular "second" or swing shift.
6. When two (2) shifts are used, the following conditions shall
prevail: When two (2) shifts are worked, the "first" or day
shift shall start at the regular established starting time
recognized by each yard and shall last twelve (12) hours.
Employees shall receive sixteen (16) hours pay at the established
day shift rate. The "second" or night shift shall start
following the end of the twelve (12) hours period for the "first"
or day shift and shall end at the regular established graveyard
shift quitting time recognized by each yard. Pay for the
"second" or night shift shall be as follows: The first four (4)
hours shall be at double the regular day shift rate. The
following eight (8) hours shall be paid at the regular day shift
rate plus $1.00 per hour.
To the extent possible, night shift employees and ship's crew
will be berthed in separate quarters.
All hands will be paid from the time they are required to report
aboard until the beginning of the next regular shift.
Thereafter, off shift employees will not be paid until the start
of their next regular shift. If the ship returns to dock prior to
the starting time of the normal day shift, workers will work
normal day shift and swing shift hours that day.
If the ships returns to dock after the starting time of the
normal day shift, day shift works (is offered) the twelve (12)
hour shift, and night shift works (is offered) a full twelve (12)
hour shift, hours being the same as while at sea for that day,
and will work normal shifts hours the following day.
7. When three (3) shifts are used, each shift will consist of
eight (8) hours with a minimum of twenty-four (24) hours straight
time pay.
8. First class board and lodging shall be furnished to all
employees at sea on trial trips.
Out of Yard Work - Bremerton, Everett, Tacoma Areas
When employees are required to work in the areas specified above,
they shall be reimbursed for actual daily out-of-pocket expenses
such as parking and travel fees. Mileage or gas cost is not
considered as out-of-pocket expenses. Volunteers will be sought
first, the most senior employee shall have the first right of
refusal. Employees shall report directly to the job site at the
beginning of their respective shift and shall be responsible for
their own transportation to and from the job site.
NEGOTIATED HOURS
In order to remain competitive in the ship repair industry on the
West Coast, the parties hereto agree as follows:
That special hours of work, such as those contained in the 1993
Matson Project Agreement (4 x 10's & 3 x 12's), may be
established by the Company for jobs that will exceed twenty one
work days in length. Such schedules will only be utilized for
those projects wherein the establishment of special hours will
improve and enhance the Company's bid proposal and contribute to
a possible contract award and in no event shall the special hours
be applied to any job less than twenty one working days in
duration.
However, it is also understood that each project is unique and as
such, specifics of the special arrangements must be discussed and
negotiated with the Puget Sound Metal Trades Council.
If in the event the Company and the Unions cannot come to an
agreement on the terms and conditions of the optional work week
the Company may invoke the attached Matson Agreement and will
abide by the terms set out in this agreement.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement this _____ day of ____________,1998.
EMPLOYER: INTERNATIONAL UNIONS:
The Seattle Division of Todd Pacific Shipyards Corporation
By:
Title: President
International Brotherhood of Boilermakers
By:
UNIONS:
Carpenters International
By:
The Metal Trades Department of the AFL-CIO
By:
Electrical Workers International
By:
The Pacific Coast Metal Trades District Council
By:
Laborers International
By:
Puget Sound Metal Trades Council
By:
Machinists International
By:
Operating Engineers International
By:
The Painters International
By:
Sheet Metal Workers International
By:
Teamsters International
By:
United Association of Plumbers International
By:
SUPPLEMENTAL AGREEMENT BETWEEN THE INTERNATIONAL ASSOCIATION OF
MACHINIST AND AEROSPACE WORKERS AND THE PACIFIC COAST
SHIPBUILDING AND SHIP REPAIR FIRMS
This supplemental Agreement effective November 24, 1997 modifies
the Document entitled "Agreement between the Seattle Division of
Todd Pacific Shipyards Corporation" and the Metal Trades
Department of the AFL-CIO, the Pacific Coast Metal Trades
District Council, the Local Metal Trades Councils and the
International Unions signatory thereto" as far as it relates to
members of the International Association of Machinists and
Aerospace Workers, AFL-CIO.
The following Articles and sub-Articles shall apply to Machinists
and to the IAM and AW in lieu of those contained in the Master
Agreement.
ARTICLE 3. NON-DISCRIMINATION, RECOGNITION, UNION SECURITY,
HIRING, SENIORITY
3.5 Seniority:
With a view to maintain the most harmonious relations possible
and the utmost teamwork between employees, work shall be
distributed as evenly as possible among regular employees in
their various classification. In all layoffs and re-employment,
the rules of seniority shall prevail, where seniors are
competent; provided that the employee shall not be considered as
eligible for seniority until he has worked in an established
represented classification for a period of ninety (90) cumulative
working days within a nine (9) month period. Jobs of less than
ten (10) working days' duration shall apply to accrual of
seniority.
As an exception to the above paragraph, seniority shall not apply
to recall or layoff for jobs of less than ten (10) working days
duration starting on the first day following the placing of the
order at the Union Hall for an Employee.
(a) The Employer has the responsibility to call the Union Hall
for Employees with seniority for jobs regardless of duration and
to layoff by seniority as far as is practical under this
exception.
(b) The provisions under this exception are only to give the
right to the Employee with seniority to reject a job offer of
less than ten (10) days. Further, there is no guarantee of pay
for days not worked.
(c) The Employer can call Employees for more than one (1) job in
the ten (10) day period or less.
(d) If a job is not completed in the ten (10) working days
duration and is needed to be extended from one (1) to three (3)
working days beyond the ten (10) day duration, the Employer is
not required to call seniority Employees who were not available
or who originally rejected the ten (10) day call back for that
period of time.
(e) The employee shall retain seniority rights after layoff for
a period of time equivalent to his length of service up to a
period of two (2) years.
(f) The employee shall lose his seniority rights for any one of
the following reasons: voluntary termination; discharge for
cause; failure to report from layoff within three (3) working
days after notification to report, on a seniority recall ten (10)
days duration or longer provided that the three (3) day period
specified in this paragraph shall be extended as necessary in
cases of verifiable sickness.
(g) No employee shall be discriminated against or jeopardized in
seniority standing or suffer any loss of employment on account of
membership or activity in the International Association of
Machinists and Aerospace Workers Union, so long as such
activities are not carried on during working hours so as to
interfere with production at the plant.
(h) Upon request by the Business Representative or the chairman
of the Shop Committee, once in each three (3) months period,
lists of employees in the bargaining unit with their dates of
employment will be furnished by the Employer.
(i) Leading men not working with tools may be retained out of
seniority. Leading men working with tools will be laid off and
recalled to work according to journeyman's seniority. A leading
man who is retained out of seniority, and works with tools, will
immediately be subject to application of seniority.
(j) Shop stewards shall be granted super seniority on the jobs
they are capable of performing during their respective term of
office. The present ratio system of representation shall not be
expanded, except by mutual agreement of the Union and the
Employer.
(k) The Parties agree that generally in layoffs, seniority will
apply. Under special circumstances employees may be retained or
recalled for overtime work on the basis of qualifications or
availability.
(l) The Employer shall not be allowed to use short term layoff
in order to circumvent the seniority provision of the bargaining
agreement.
ARTICLE 14. REPORTING PAY AND MINIMUM PAY
14.3 Employees required to report for work and not put to work,
shall receive four (4) hours straight time pay. After an
employee has been dispatched by the Union to report to the
Employer for work, whether the same or the following day, such
employee shall not have his work order canceled by telephone by
the Employer.
14.5 Employees who voluntarily quit, lay off or are discharged
for cause shall be paid only for actual hours worked and shall be
given written notice of termination if requested by the employee.
ARTICLE 24. JURISDICTIONAL DISPUTES
25.4 The Employer agrees that no reassignment of work will be
made unless in conformance with Section 25.1 above.
SCHEDULE "A"
Inside Machinist Only
Journeyman Base Wage Rate: (Machine Operators Only)
January 1, 1997 $17.85
November 24, 1997 $18.45
August 1, 1998 $.60/hour to Wage/Fringe
For The Employer For The Union
By: By:
Title: Title:
Date: Date:
SUPPLEMENTAL AGREEMENT BETWEEN THE INTERNATIONAL BROTHERHOOD OF
ELECTRICAL WORKERS AND THE PACIFIC COAST SHIPBUILDING AND SHIP
REPAIR FIRMS PREAMBLE
The Agreement made and entered into November 24, 1997 between the
Seattle Division of Todd Pacific Shipyards Corporation" and the
International Brotherhood of Electrical Workers, Pacific Coast
Marine Council, Local 6, 46, 48, 76, 302 and 595, hereinafter
collectively called the "Union."
WITNESSETH:
The following articles and sub-articles shall apply in lieu of
those contained in the Master Agreement.
ARTICLE 1. SCOPE OF AGREEMENT
1.1 This Agreement shall cover all electrical production, repair
and maintenance employees within the bargaining unit (as defined
in NLRB Case 20-RC-2157, dated March 4, 1966) and shall apply to
all work and activities of the Employer in connection with the
construction, conversion, repair or scrapping of any vessel on
the Pacific Coast, including but not limited to dredges, floating
drydocks, offshore drilling vessels, barges, mobile drilling
platforms, plant equipment and all auxiliary equipment used in
conjunction therewith.
ARTICLE 22.2
That in accordance with past practice, it is understood that if a
seafaring union affiliated with the Maritime Trades Department,
AFL-CIO establishes a lawful primary picket line by reason of a
dispute affecting employees represented by the seafaring union
employed on a specific vessel on which work is to be performed by
a Pacific Coast Shipbuilders' Association shipyard no employee of
the shipyard shall be subject to disciplinary action for failure
to perform work on the struck vessel as distinguished from other
shipyard work.
ARTICLE 23. GRIEVANCES AND COMPLAINTS
23.1 Step 4:
Substitute "International Representative of IBEW" for
"International President" of the Master Agreement.
SCHEDULE "B"
Plannerman
Principal Duties: Check all electrical prints. Check and
monitor all revision notices (RNs) and Engineering change notices
(ECNs). Maintain percent progress reports. Coordinate work with
other craft plannermen as necessary. Prepare schedules and work
orders.
Qualifications: Full knowledge of craft work. Able to read and
understand blueprints.
SCHEDULE "C"
Layers-out
The classification of Layers-out as contained in Schedule "A" is
a Mechanic who must have a thorough knowledge of blueprints, who
can lay out patterns and/or develop and transpose the work from
the Print to the metal. He must have a knowledge of parallel and
conic development, as well as simple triangulation.
To qualify for Layers-out pay, the mechanic must be assigned to
do the layout of such compartments as C.I.C. rooms or computer
rooms on shipboard in new construction and conversion work.
Determining normal locations of such items as wireways, lights,
fixtures, junction boxes, and panels do not qualify as Layers-out
work.
(a) Layers-out work performed for any period less than four (4)
hours duration, a minimum of four (4) hours pay at the Layers-out
rate.
(b) Layers-out work performed for any period over four (4) hours
duration, a minimum of eight (8) hours pay at the Layers-out
rate.
SCHEDULE "D"
ELECTRONIC TECHNICIAN CLASSIFICATION
An electronic technician is one who normally through special
study and training has the knowledge and ability to understand,
analyze, test, service, repair and adjust electronic equipment
(this shall include connector work performed by certified
electricians while engaged with navy vessel work). The
electronic technician shall perform trouble-shooting and testing
required on electronic equipment/devices for audio, video,
control circuits, remote and control instrumentation, telephone
switch, and welding machine maintenance, etc. an electronic
technician shall receive .50 (fifty cents) per hour over
journeyman rate. This shall be an in use rate. It shall not
include wiring circuits from the source of supply to the
equipment power terminal or connection, installation, or mounting
of electronic equipment and ancillary components.
ELECTRONIC TECHNICIAN II CLASSIFICATION
The following shall apply only to government contracts that use a
total ship test program. It shall be invoked only when Todd is
required to use test memos for Combat Systems Testing that
require government approval.
All rates shall be "in use rates" and shall be written in on the
timecard for actual time spent doing actual Combat Systems type
work.
These rates shall apply while performing the actual test or any
related aligning/grooming to make the system ready for operation
testing. This does not apply to installation, cabling, hook-up,
wire checking, meggering or "state 2 testing".
Personnel performing the agreed work shall be able to use/operate
all test equipment and tools necessary to align, calibrate, and
operate the required systems.
Combat Systems type work as defined shall apply to radar, sonar,
communication, weapon, guidance, surveillance, and countermeasure
systems as used by the government onboard combatants. The
following are not considered Combat System type systems: Gyro's
and repeaters, frequency converters/M.G. sets, signal lights
(including infrared), wind speed & direction indictors, doppler
speed log/pit sword, alarms, (unless integral to the equipment),
and dial or sound powered telephones.
Electronic Technician II
Electronic Technician II $.95
Electronic Technician II {In accordance with Electronic
Technician II Quarterman} Article 4, Section 2
ELECTRONIC TECHNICIAN II shall be able to:
1. Operate equipment or systems.
2. Perform class "A", "B", "C", or 009-16 overhauls on
equipment.
3. Perform warranty and field service work in/or out of yard.
4. Research studies of equipment operational performances.
5. Research replacement material source.
6. Grooming, alignment, and calibration on equipment.
7. Initial light-off/start up of equipment system.
8. Troubleshoot and casualty repair equipment.
9. Perform test and evaluations in accordance with test
documents.
10. Perform evaluations of test criteria and/or test equipment.
SCHEDULE "E"
MAINTENANCE AND CONSTRUCTION WORK
Maintenance work shall be performed at wage rates and conditions
herein established. Maintenance work shall consist of
maintenance of all yard and plant facilities, and temporary
services to vessel undergoing repairs or in the process of
construction.
The following work, for example, when performed by employees of
parties signatory to this Agreement, shall be paid for at the
prevailing wage rate for Building and Construction Trades in the
area where performed.
The installation of any permanent new load center and branch
circuits therefrom.
Any new permanent addition of a branch circuit extending 25 feet
or more from an existing load center.
The permanent extension or relocation of any existing permanent
branch circuit to an area outside of a 25 foot radius of its
original location.
Any new permanent "under-pier" work requiring eight or more
manhours of labor.
The installation of any new or relocation of existing permanent
major plant equipment such as air compressors, boilers, cranes,
electrical distribution switchboards.
For The Employer For The Union
By: By:
Title: Title:
Date: Date:
SUPPLEMENTAL AGREEMENT BETWEEN THE PACIFIC COAST MARINE
CARPENTERS COUNCIL AND THE PACIFIC COAST SHIPBUILDING SHIP AND
REPAIR FIRMS
This Supplemental Agreement effective November 24, 1997 modifies
the Document entitled "Agreement between the Seattle Division of
Todd Pacific Shipyards Corporation and the Metal Trades
Department of the AFL-CIO, the Pacific Coast Metal Trades
District Council, the Local Metal Trades Councils and the
International Unions signatory thereto" as far as it relates to
members of the Pacific Coast Marine Carpenters' Council.
The following Articles and sub-Articles shall apply to Carpenters
in lieu of those contained in the Master Agreement.
ARTICLE 3.2 RECOGNITION
The Employer, pursuant to the decision of the N.L.R.B. case No.
20-RC-1327, recognizes the Pacific Coast Marine Carpenters'
Council as the sole and exclusive bargaining agent for all
employees who are members of the following Local Unions nos.
1149, 247, 470, 780, 2071, 562, 1184, 1532 and 1597 of the United
Brotherhood of Carpenters and Joiners of America, AFL-CIO.
ARTICLE 4. LEADING MEN
4.3 Add to existing:
(a) Working Leading men shall receive the Leading man rate over
and above the contract rate while engaged in work for which a
contract premium rate is paid. A Leading man on the jobsite
leading a crew composed of journeymen receiving such contract
premium rate also is entitled to Leading man pay over and above
the premium.
(b) It is agreed that when shipwrights are performing service
work for another craft they will be under the direction of the
supervision of that other craft. Shipwright crews performing the
production work of their own craft will be under their own
supervision.
ARTICLE 7. WAGE SCALES
7.5 Existing Wages and Conditions: It is agreed and understood
that this Agreement shall not operate to reduce any existing
wages that might be higher than those contained herein, nor shall
it be used to change any conditions existing prior to the signing
of this Agreement. However, if such conditions are in conflict
with this Agreement, the terms of this Agreement will prevail.
7.6 Job Classification Award: Should any award be rendered
giving a Union signatory to this Agreement the jurisdiction over
a job classification with a lesser wage rate there will be no
change in the wage rate for such classification.
ARTICLE 8. OVERTIME
8.9 Add: A reasonable opportunity to eat their lunch shall be
no later than one (1) hour following the end of their regular
established lunch period.
ARTICLE 10. VACATIONS
10.8 There shall be no vacation pay in lieu of a vacation.
Vacation pay accruing to the employee within his vacation year as
described above shall be paid to said employee upon completion of
his vacation year unless said employee is leaving the area, is
discharged, quits, or the Union makes written requests, in which
event he shall be paid in full such vacation pay as may have
accrued to him under the terms of this Article. When a temporary
employee is laid off, however, if he requests his vacation pay,
the Employer shall mail his pro rata vacation pay the following
work day to the address the employee designates.
ARTICLE 12. DIRTY WORK
12.3 Protective clothing will be made available when conditions
warrant men are assigned to dirty work.
12.4 Work performed for any period less than four (4) hours
duration a minimum of four (4) hours pay as set forth in Schedule
"A."
12.5 Work performed for any period over four (4) hours duration,
a minimum of eight (8) hours pay as set forth in Schedule "A."
12.6 The installation and removal of fiberglass, rockwool and
similar insulating materials shall be paid at the rate set forth
in Exhibit "B."
12.7 Employees required to do Carpenter work with lumber treated
with creosote or other toxic materials as described in the U.S.
Bureau of Labor Safety and Health Regulations for Ship repairing
and/or shipbuilding as published by the Bureau of Labor
Standards, shall receive the premiums set forth in Exhibit "B."
ARTICLE 23. GRIEVANCES AND COMPLAINTS
Step 4.
In the event no satisfactory solution eventuates from Step 2
within five (5) working days, then the Local Union Representative
shall process such complaint, grievance or dispute with the
Employer. A Representative of the Marine Council or
International Union may be present to assist the Local Union.
ARTICLE 25. JURISDICTIONAL DISPUTES
25.2 Void - does not apply.
25.4 The Employer agrees that work assignments will be made to
the employees covered by this Agreement in accordance with the
established practice.
ARTICLE 27. TOOLS
27.4 It is hereby agreed that in respect to the safekeeping of
tools, the Employer will furnish a designated place for the
employee's tools to be placed while the employee is off shift.
In the event any tools or tool boxes are stolen from this
designated place, or lost due to fire, the Employer shall replace
such tools.
27.5 It is further agreed that each employee will furnish an
inventory in duplicate of these tools, and a copy of such
inventory shall be filed with the personnel department and the
employee's superintendent. Any additional tools that may be
purchased by the employee will be added to such list at the time
they are brought into the yard. The inventory shall be used for
the purpose of tool replacement only.
27.6 All tools shall be sharpened on the Employer's time.
EXHIBIT "B"
Carpenters
Carpenters engaged while working with creosoted, toxic materials,
treated lumber or fiberglass, rockwool, Styrofoam or similar
insulation work, greasing and waxing of the ways and the cutting
or grinding by machine of Marinate, asbestos materials and
fiberglass shall be paid in addition to their rate of pay, fifty
(50) cents per hour.
Wood caulking including reefing out and replacing of glue or
rubber in seams shall be paid in addition to their rate of pay,
fifteen (15) cent per hour.
For The Employer For The Union
By: By:
Title: Title:
Date: Date:
SUPPLEMENTAL AGREEMENT BETWEEN THE INTERNATIONAL BROTHERHOOD OF
BOILERMAKERS, IRON SHIPBUILDERS, BLACKSMITHS, FORGERS AND
HELPERS AND THE SEATTLE DIVISION OF TODD PACIFIC SHIPYARDS
CORPORATION
The Employer recognizes the International Brotherhood of
Boilermakers, Iron Ship Builders, Blacksmiths, Forgers and
Helpers as the exclusive Collective Bargaining Representative of
the employees included in the job classifications referenced in
this addendum, separate and apart from the Pacific Coast Metal
Trades Council, Puget Sound Metal Trades Council and the National
Metal Trades Department AFL-CIO.
Further, the parties expressly recognize that by signing this
agreement and addendum, the International Brotherhood of
Boilermakers, Iron Ship Builders, Blacksmiths, Forgers and
Helpers are not waiving their right to negotiate separate and
apart from the Pacific Coast Metal Trades District Council, Puget
Sound Metal Trades Council or the National Metal Trades
Department AFL-CIO.
Further, the parties expressly recognize that separate
notification pursuant to Article 31 of the Collective Bargaining
Agreement must be given to or received from either the
International Brotherhood of Boilermakers, Iron Ship Builders,
Blacksmiths, Forgers and Helpers or their Subordinate Local 104,
Seattle, Washington should Todd Pacific Shipyards Corporation or
the International Brotherhood of Boilermakers, Iron Ship
Builders, Blacksmiths, Forgers and Helpers or their Subordinate
Local 104 wish to modify or amend this agreement.
Job classifications covered by this Agreement shall be:
Shipfitter, Welder, Burner, Rigger and Drydock Rigger.
For The Employer For The Union
By: By:
Title: Title:
Date: Date:
LETTER OF UNDERSTANDING INTRA-UNION CLASSIFICATIONS
The Company and Boilermakers recognize the importance of allowing
employees the ability to acquire and utilize additional skills
within their own union; thereby providing job enrichment and a
better qualified and more efficient workforce. Effective with
the ratification of the 1996 agreement, employees within the
Boilermakers will have training opportunities to acquire skills
from associated classifications within their union.
Classifications as discussed herein include Shipfitters, Welders
and Riggers all of whom will be offered training on a voluntary
basis. A Boilermaker journeyman, while possessing one main area
of expertise (e.g., shipfitting, welding, rigging), shall be able
to accomplish work in any of the three areas.
In order to best accomplish the above process, employees who do
not possess all of the skills of the Boilermaker classification
will be offered training in those areas that are not their
current primary classification. Upon successful completion of
the prescribed number of training hours and passing practical and
theoretical course material, as mutually agreed by the employer
and union, persons shall be deemed qualified within that
additional classification. Training shall be offered to all
volunteers within seniority as of the date of ratification of the
1996 collective bargaining agreement.
After this date, Boilermakers dispatched without seniority shall
either possess the demonstrated skills and abilities to perform
work in all current Boilermaker classifications or, in the
alternative, agree to receive training to obtain said skills.
Recognizing that not all Boilermakers will be interested in
obtaining further training to accomplish a wider variety of work,
it is agreed that all Boilermakers having seniority in any
current Boilermaker classification shall at the time of
ratification be grandfathered as to their current seniority
rights.
For The Employer
By:
Title: Michael G. Marsh, Secretary and General Counsel
Date:
For The Union
By:
Title: Michael Anderson, Business Manager
Date:
Letter of Understanding Between the United Association of
Journeymen and Apprentices of the
Plumbing and Pipefitting Industry of the United States and
Canada, AFL-CIO and the Seattle Division of Todd Pacific
Shipyards Corporation
November 24, 1997 to July 31, 1999
The following Articles and sub-Articles shall apply to
Pipefitters and to the United Association in lieu of those
contained in the Master Agreement.
ARTICLE 10.8
There shall be no vacation pay in lieu of a vacation. Vacation
pay accruing to the employee within his vacation year as
described above shall be paid to said employee upon completion of
his vacation year unless said employee is leaving the area, is
discharged, quits, or the Union makes written request, in which
event he shall be paid in full such vacation pay as may have
accrued to him under the terms of this Article. However, this
written request will not be honored more than once every ninety
days. When a temporary employee is laid off the Employer shall
mail his pro rata vacation pay within two working days to the
address the employee designates.
ARTICLE 12.3
Protective clothing will be made available when conditions
warrant men being assigned to dirty work.
ARTICLE 12.4
The employer shall make available, at no cost to employees,
proper preventive care, including, but not limited to gamma
globulin shots, for hepatitis and other diseases caused by
exposure to human waste.
Premiums
P-1 Piping $.35 hour
High Pressure Silbrazers $.35 hour
Waveguides $.50 hour
Refrigeration $.75 hour
Benders $.35 hour
For The Employer For The Union
By: By:
Title: Title:
Date: Date:
Letter of Understanding Between The International Union of
Operating Engineers Local 302, AFL-CIO and the Seattle Division
of Todd Pacific Shipyards Corporation.
November 24, 1997 to July 31, 1999
The following Articles and sub-Articles shall apply to crane
operators in lieu of those contained in the Master Agreement.
ARTICLE 13 Maintenance Work
The employer shall pay outside scale per AGC/Local 302 master
labor agreement for all work on maintenance projects when the
crane operator(s) are assisting contractors or crafts being paid
outside construction scale.
Schedule "B"
(a) A crane operator can make two (2) moves involving two (2)
pieces of equipment in one shift. For each additional move, the
operator shall receive one (1) hour at the straight-time rate.
(b) A crane operator, while engaged in making a multiple crane
lift where two (2) whirley cranes are lifting simultaneously,
shall receive a premium of seventy-five cents (75) per hour
from hook-on to hook-off.
For The Employer For The Union
By: By:
Title: Title:
Date: Date:
Letter of Understanding Between The International Brotherhood of
Painters Local 300 AFL-CIO and the Seattle Division of Todd
Pacific Shipyards Corporation.
November 24, 1997 to July 31, 1999
The following Articles and sub-Articles shall apply to painters
in lieu of those contained in the Master Agreement.
ARTICLE 21. APPRENTICESHIP AND TRAINEE PROGRAM
The parties agree to establish an apprenticeship program in
accordance with the applicable State standards.
SCHEDULE "A"
The individual painter working as the Hazardous Substance
Technician shall receive an additional $.50 per hour on an as
engaged basis.
SCHEDULE "B"
The Spray Painter rate ($.25 per hour) is to apply to employees
who are classified as Painters in accordance with Schedule "A" of
the Agreement. The Spray Painter rate is to apply to those
Painters when they are performing work falling within the scope
of this classification on the following basis:
(a) Spray painting work performed for any period less than four
(4) hours duration, a minimum of four (4) hours pay at the Spray
Painter rate.
(b) Spray painting work performed for any period over four (4)
hours duration, a minimum of eight (8) hours pay at the Spray
Painter rate.
For The Employer For The Union
By: By:
Title: Title:
Date: Date:
