-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KOeaAEE4AhFi09LGcUaIQgxvBwBzzpYorbExwHXRles7H9lmrWHp5IMvV7jPNeo/ LGIz71Zi1GYBK77vprVHUg== 0000950135-00-001389.txt : 20000315 0000950135-00-001389.hdr.sgml : 20000315 ACCESSION NUMBER: 0000950135-00-001389 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20000129 FILED AS OF DATE: 20000314 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HADCO CORP CENTRAL INDEX KEY: 0000729533 STANDARD INDUSTRIAL CLASSIFICATION: PRINTED CIRCUIT BOARDS [3672] IRS NUMBER: 042393279 STATE OF INCORPORATION: MA FISCAL YEAR END: 1030 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-15335 FILM NUMBER: 569008 BUSINESS ADDRESS: STREET 1: 12A MANOR PKWY CITY: SALEM STATE: NH ZIP: 03079 BUSINESS PHONE: 6038988000 MAIL ADDRESS: STREET 1: 12A MONOR PARKWAY CITY: SALEM STATE: NH ZIP: 03079 10-Q 1 HADCO CORPORATION 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended JANUARY 29, 2000 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED) FOR THE TRANSITION PERIOD FROM TO ------- ------- COMMISSION FILE NUMBER 0-12102 HADCO CORPORATION ----------------- (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) MASSACHUSETTS 04-2393279 - ------------- ---------- (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 12A MANOR PARKWAY, SALEM, NEW HAMPSHIRE 03079 - --------------------------------------- ----- (Address of principal executive offices) (Zip Code) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (603) 898-8000 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Registrant has 13,801,568 shares of Common Stock, $0.05 Par Value, ---------- outstanding at March 10, 2000. -- 2 HADCO CORPORATION AND SUBSIDIARIES INDEX PART I - FINANCIAL INFORMATION PAGE Item 1. Financial Statements Consolidated Condensed Balance Sheets as of January 29, 2000 (unaudited) and October 30, 1999.................. 3 Consolidated Condensed Statements of Operations for the Three Months ended January 29, 2000 and January 30, 1999 (unaudited)....................................... 4 Consolidated Condensed Statements of Cash Flows for the Three Months ended January 29, 2000 and January 30, 1999 (unaudited)....................................... 5 Notes to Consolidated Condensed Financial Statements......................................................... 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations............................. 15 Item 3. Quantitative and Qualitative Disclosures about Market Risk...... 18 PART II - OTHER INFORMATION Item 1. Legal Proceedings.............................................. 19 Item 2. Changes in Securities........................................... 19 Item 6. Exhibits and Reports on Form 8-K................................ 19 SIGNATURE ................................................................... 20 2 3 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS HADCO CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (in thousands, except per share data)
January 29, October 30, 2000 1999 ----------- ----------- (unaudited) ASSETS Current Assets: Cash and cash equivalents ...................................................... $ 885 $ 9,078 Accounts receivable, net of allowance of $1,472 in 2000 and $1,478 in 1999 ....................................................... 123,684 116,580 Inventories .................................................................... 60,392 63,926 Deferred tax asset ............................................................. 18,671 11,480 Prepaid expenses and other current assets ...................................... 8,299 7,688 --------- --------- Total current assets ..................................................... 211,931 208,752 Property, Plant and Equipment, net .................................................... 319,560 328,181 Acquired Intangible Assets, net ....................................................... 176,268 179,319 Other Assets .......................................................................... 8,205 8,571 --------- --------- $ 715,964 $ 724,823 ========= ========= LIABILITIES AND STOCKHOLDERS' INVESTMENT Current Liabilities: Current portion of long-term debt .............................................. $ 2,362 $ 2,515 Accounts payable ............................................................... 79,669 100,100 Accrued payroll and other employee benefits .................................... 26,449 36,419 Other accrued expenses ......................................................... 16,648 21,937 --------- --------- Total current liabilities ................................................ 125,128 160,971 --------- --------- Long-Term Debt, net of current portion ................................................ 287,910 278,309 --------- --------- Deferred Tax Liability ................................................................ 64,496 57,342 --------- --------- Other Long-Term Liabilities ........................................................... 9,192 9,192 --------- --------- Commitments and Contingencies Stockholders' Investment: Common stock, $.05 par value; Authorized - 50,000 shares Issued and outstanding - 13,749 in 2000 and 13,631 in 1999 ............... 689 683 Paid-in capital ................................................................ 183,529 179,528 Deferred compensation .......................................................... (1,029) (184) Retained earnings .............................................................. 46,049 38,982 --------- --------- Total stockholders' investment ........................................... 229,238 219,009 --------- --------- $ 715,964 $ 724,823 ========= =========
The accompanying notes are an integral part of these consolidated condensed financial statements. 3 4 HADCO CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (in thousands, except per share data) (unaudited)
Three Months Ended ------------------------- January 29, January 30, 2000 1999 ----------- ----------- Net Sales ...................................................... $ 244,743 $ 235,979 Cost of Sales .................................................. 203,802 203,546 --------- --------- Gross Profit ............................................. 40,941 32,433 Operating Expenses ............................................. 20,726 17,918 Amortization of Goodwill and Acquired Intangible Assets ........ 3,052 3,077 --------- --------- Income from Operations ................................... 17,163 11,438 Interest and Other Income, net ................................. 920 601 Interest Expense ............................................... (6,684) (8,696) --------- --------- Income Before Provision for Income Taxes .............. 11,399 3,343 Provision for Income Taxes ..................................... 4,332 1,329 --------- --------- Net Income ............................................... $ 7,067 $ 2,014 ========= ========= Net Income per Share: Basic ......................................... $ 0.52 $ 0.15 ========= ========= Diluted ....................................... $ 0.51 $ 0.15 ========= ========= Weighted Average Shares Outstanding: Basic ......................................... 13,671 13,422 ========= ========= Diluted ....................................... 13,940 13,651 ========= =========
The accompanying notes are an integral part of these consolidated condensed financial statements. 4 5 HADCO CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (in thousands) (unaudited)
Three Months Ended ----------------------- January 29, January 30, 2000 2000 ----------- ----------- Cash Flows from Operating Activities: Net income .......................................................... $ 7,067 $ 2,014 Adjustments to reconcile net income to net cash provided by (used in) operating activities - Depreciation and amortization ................................. 20,489 19,406 Deferred compensation and deferred taxes ...................... 80 (339) Director and executive officer stock grants ................... -- 390 Loss (Gain) on disposal of fixed assets ....................... (30) 29 Changes in assets and liabilities - Increase in accounts receivable ............................... (7,104) (3,860) Decrease (Increase) in inventories ............................ 3,534 (3,877) Increase in prepaid expenses and other current assets ......... (611) (507) Decrease in refundable taxes .................................. -- 9,644 Decrease (Increase) in other assets ........................... 366 (1,564) Decrease in accounts payable and accrued expenses ............. (35,690) (3,513) -------- -------- Net Cash Provided by (Used in) Operating Activities ...... (11,899) 17,823 -------- -------- Cash Flows from Investing Activities: Purchases of property, plant and equipment .......................... (8,817) (16,645) Proceeds from sale of property, plant and equipment ................. 30 -- -------- -------- Net Cash Used in Investing Activities .................... (8,787) (16,645) -------- -------- Cash Flows from Financing Activities: Principal payments of long-term debt ................................ (15,552) (20,836) Net proceeds from issuance of long-term debt ........................ 25,000 20,000 Proceeds from exercise of stock options ............................. 650 207 Proceeds from employee stock purchase plan .......................... 1,843 1,574 Tax benefit from exercise of nonqualified stock options ............. 552 334 -------- -------- Net Cash Provided by Financing Activities ................ 12,493 1,279 -------- -------- Net Increase (Decrease) in Cash and Cash Equivalents ...................... (8,193) 2,457 Cash and Cash Equivalents, Beginning of Period ............................ 9,078 7,169 -------- -------- Cash and Cash Equivalents, End of Period .................................. $ 885 $ 9,626 ======== ======== Supplemental disclosure of cash flow information: Cash paid during the period for: Interest ...................................................... $ 11,201 $ 13,509 ======== ======== Income taxes (net of refunds) ................................. $ 2,928 $ 61 ======== ========
The accompanying notes are an integral part of these consolidated condensed financial statements. 5 6 HADCO CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (unaudited) 1. OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES --------------------------------------------------------- Hadco Corporation (the "Company" or "Hadco") was incorporated in Massachusetts in 1966. Principal products and services of the Company include: PRINTED CIRCUITS: Printed circuits are the basic platform used to interconnect microprocessors, integrated circuits and other components essential to the functioning of electronic systems. The Company provides customers with printed circuit designs and fabricates the printed circuit for the customer. The design and fabricated printed circuits are sold either separately or as a complete package. The majority of printed circuits fabricated by the Company are based on designs provided by the customer. VALUE ADDED MANUFACTURING: Value Added Manufacturing (VAM) primarily consists of backplane and system assemblies. Backplane assemblies are generally larger and thicker printed circuits on which connectors are mounted to receive and interconnect printed circuits, integrated circuits and other electronic components. System assemblies include the backplane, power supply, fan card, cabling and system chassis. The consolidated condensed financial statements reflect the application of certain accounting policies as described in this note and elsewhere in the accompanying notes to the consolidated condensed financial statements, as well as the Company's Annual Report on Form 10-K for the fiscal year ended October 30, 1999. These financial statements should be read in conjunction with the financial statements and related disclosures included in the above-referenced SEC filings. INTERIM FINANCIAL STATEMENTS ---------------------------- The accompanying consolidated condensed balance sheet as of January 29, 2000, and the consolidated condensed statements of operations for the three months ended January 29, 2000 and January 30, 1999 and the consolidated condensed statements of cash flows for the three month periods ended January 29, 2000 and January 30, 1999 are unaudited, but in the opinion of management, include all adjustments (consisting only of normal, recurring adjustments) necessary for a fair presentation of results for these interim periods. Results of operations for the interim periods are not necessarily indicative of results to be expected for the entire year or any future period. NET INCOME PER SHARE -------------------- A reconciliation of basic and diluted weighted average shares outstanding is as follows:
Three Months Ended ------------------------- January 29, January 30, 2000 1999 ----------- ---------- (in thousands) Basic weighted average shares outstanding .... 13,671 13,422 Weighted average common equivalent shares .... 269 229 ------ ------ Diluted weighted average shares outstanding .. 13,940 13,651 ====== ======
Diluted weighted average shares outstanding for the three month periods ended January 29, 2000 and January 30, 1999 do not include 595,130 and 698,224 common equivalent shares, respectively, as their effect would be anti-dilutive. 6 7 HADCO CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (unaudited) 2. INVENTORIES ----------- Inventories are stated at the lower of cost or market on a first-in, first-out (FIFO) basis, and consist of the following (in thousands):
January 29, October 30, 2000 1999 ----------- ----------- Raw Materials ....... $22,424 $18,679 Work-in-process ..... 37,968 45,247 ------- ------- $60,392 $63,926 ======= =======
3. LONG-TERM DEBT -------------- Long-term debt consists of the following (in thousands):
January 29, October 30, 2000 1999 ----------- ----------- Variable rate mortgages .................................. $ 617 $ 640 Revolving credit facility ................................ 85,000 75,000 9 1/2% Senior Subordinated Notes due 2008 ................ 199,439 199,422 Obligations under capital leases with interest rates ranging from 7% to 7.75% ................................. 5,216 5,762 --------- --------- 290,272 280,824 Less - Current portion ................................... (2,362) (2,515) --------- --------- $ 287,910 $ 278,309 ========= =========
Based on the amount outstanding on the Company's credit facility as of January 29, 2000, the Company has approximately $113.75 million of borrowings available. 4. BUSINESS SEGMENTS AND GEOGRAPHIC AREAS -------------------------------------- During the fourth quarter of fiscal 1999, the Company adopted Statement of Financial Accounting Standards ("SFAS") NO. 131, Disclosure about Segments of an Enterprise and Related Information. The Company's businesses are internally reported as two segments. These segments, which are based on differences in products, technologies, and services, are Printed Circuits and Value Added Manufacturing (VAM). Hadco evaluates performance of these segments based on profit or loss from operations, not including non-recurring charges. Transactions between segments are recorded at fair market value. Costs of centralized sales, marketing and administration are allocated to the segments receiving benefits of the centralized functions. Unallocated general corporate expenses include the elimination of inter-segment profits, the costs of executive management for the Company, plus the amortization of acquired intangibles and goodwill relating to acquisitions. Management does not represent that these segments, if operated separately, would report the operating income and other financial information shown. 7 8 HADCO CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (unaudited) 4. BUSINESS SEGMENTS AND GEOGRAPHIC AREAS (CONTINUED) --------------------------------------------------
Three Months Ended ------------------------------ January 29, January 30, 2000 1999 --------- --------- Net Sales: Printed Circuits .................................................. $ 219,145 $ 196,371 VAM ............................................................... 32,923 45,292 Elimination ....................................................... (7,325) (5,684) --------- --------- $ 244,743 $ 235,979 ========= =========
Three Months Ended ------------------------------ January 29, January 30, 2000 1999 --------- --------- Operating Income: Printed Circuits .................................................. $ 22,469 $ 12,864 VAM ............................................................... 46 1,309 Unallocated general corporate ..................................... (5,352) (2,735) --------- --------- $ 17,163 $ 11,438 ========= ========= Depreciation and Amortization: Printed Circuits .................................................. $ 16,119 $ 14,962 VAM ............................................................... 880 791 Unallocated general corporate ..................................... 3,490 3,653 --------- --------- $ 20,489 $ 19,406 ========= ========= Capital Expenditures: Printed Circuits .................................................. $ 7,198 $ 15,907 VAM ............................................................... 1,100 200 Unallocated general corporate ..................................... 519 538 --------- --------- $ 8,817 $ 16,645 ========= =========
As of ------------------------------ January 29, October 30, Identifiable Assets: 2000 1999 --------- --------- Printed Circuits .................................................. $ 459,087 $ 462,211 VAM ............................................................... 45,852 48,608 Unallocated general corporate ..................................... 211,025 214,004 --------- --------- $ 715,964 $ 724,823 ========= =========
8 9 HADCO CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (unaudited) 4. BUSINESS SEGMENTS AND GEOGRAPHIC AREAS (CONTINUED) -------------------------------------------------- The following is a reconciliation of segment operating income to consolidated income before provision for income taxes:
Three Months Ended ------------------------------ January 29, January 30, 2000 1999 ----------- ----------- Total operating income for reportable segments ................... $ 17,163 $ 11,438 Unallocated amounts: Interest and other income, net ............................ 920 601 Interest expense .......................................... (6,684) (8,696) --------- --------- Income before provision for income taxes ......................... $ 11,399 $ 3,343 ========= =========
The following summarizes financial information by geographic areas:
Three Months Ended ------------------------------ January 29, January 30, 2000 1999 ----------- ----------- Net Sales: United States ........................................ $ 173,042 $ 181,735 Canada ............................................... 34,826 23,975 Europe ............................................... 17,819 13,715 Asia ................................................. 18,206 14,048 Other ................................................ 850 2,506 --------- --------- $ 244,743 $ 235,979 ========= =========
As of ------------------------------ January 29, October 30, 2000 1999 ----------- ----------- Long-lived assets: United States ........................................ $ 455,064 $ 466,434 Asia ................................................. 48,762 49,420 Europe ............................................... 207 217 --------- --------- $ 504,033 $ 516,071 ========= =========
5. SUPPLEMENTAL GUARANTOR CONSOLIDATING CONDENSED FINANCIAL STATEMENTS ------------------------------------------------------------------- Basis of presentation. The Company sold on May 18, 1998, $200 million aggregate principal amount of 9 1/2% Senior Subordinated Notes due in 2008 (the "Notes"). The Notes are fully and unconditionally guaranteed on a senior subordinated basis, jointly and severally, by certain of the Company's wholly-owned domestic subsidiaries (the "Guarantors"). The Guarantors are Hadco Santa Clara, Inc., Hadco Phoenix, Inc., CCIR of Texas Corp., and CCIR of California Corp. The consolidating condensed financial statements of the Guarantors are presented below and should be read in connection with the Consolidated Condensed Financial Statements of the Company. Separate financial statements of the Guarantors are not presented because (i) the Guarantors are wholly-owned and have fully and unconditionally guaranteed the Notes on a joint and several basis and (ii) the Company's management has determined such separate financial statements are not material to investors and believes the consolidating condensed financial statements presented are more meaningful in understanding the financial position of the Guarantors. There are no significant restrictions on the ability of the Guarantors to make distributions to the Company. 9 10 HADCO CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS 5. SUPPLEMENTAL GUARANTOR CONSOLIDATING CONDENSED FINANCIAL STATEMENTS ------------------------------------------------------------------- (Continued) CONSOLIDATING CONDENSED BALANCE SHEET (unaudited)
As of January 29, 2000 ---------------------------------------------------------------- Guarantor Non-Guarantor Parent Elimination Consolidated Subsidiaries Subsidiaries Corporation Entries Total --------- --------- --------- --------- -------- (in thousands) ASSETS Current Assets: Cash and cash equivalents $ (1,743) $ 912 $ 1,716 $ -- $ 885 Accounts receivable, net 51,745 8,351 63,588 -- 123,684 Inventories 27,206 6,464 26,722 -- 60,392 Deferred tax asset -- -- 18,671 -- 18,671 Prepaid and other current assets 1,283 234 6,782 -- 8,299 --------- --------- --------- --------- -------- Total current assets 78,491 15,961 117,479 -- 211,931 Property, Plant and Equipment, net 137,863 48,968 132,729 -- 319,560 Intercompany Receivable 24,890 4,582 44,280 (73,752) -- Investments in Subsidiaries 11,288 -- 282,904 (294,192) -- Acquired Intangible Assets, net 176,268 -- -- -- 176,268 Other Assets 22 -- 8,183 -- 8,205 --------- --------- --------- --------- -------- $ 428,822 $ 69,511 $ 585,575 $(367,944) $715,964 ========= ========= ========= ========= ======== LIABILITIES AND STOCKHOLDERS' INVESTMENT Current Liabilities: Current portion of long-term debt $ 2,134 $ 73 $ 155 $ -- $ 2,362 Accounts payable 31,135 5,833 42,701 -- 79,669 Intercompany payable 27,516 46,236 -- (73,752) -- Accrued payroll and other employee benefits 2,312 354 23,783 -- 26,449 Other accrued expenses 40,751 274 (24,350) -- 16,648 --------- --------- --------- --------- -------- Total current liabilities 103,848 52,743 42,289 (73,752) 125,128 --------- --------- --------- --------- -------- Long-Term Debt, net of current portion 2,849 25 285,036 -- 287,910 --------- --------- --------- --------- -------- Deferred Tax Liability 44,676 -- 19,820 -- 64,496 --------- --------- --------- --------- -------- Other Long-Term Liabilities -- -- 9,192 -- 9,192 --------- --------- --------- --------- -------- Stockholders' Investment: Common stock, $0.05 par value; Authorized - 50,000 shares Issued and outstanding - 13,749 11 29,655 689 (29,666) 689 Paid-in capital 400,616 130 183,529 (400,746) 183,529 Deferred compensation -- -- (1,029) -- (1,029) Retained earnings (123,178) (13,042) 46,049 136,220 46,049 --------- --------- --------- --------- -------- Total stockholders' investment 277,449 16,743 229,238 (294,192) 229,238 --------- --------- --------- --------- -------- $ 428,822 $ 69,511 $ 585,575 $(367,944) $715,964 ========= ========= ========= ========= ========
10 11 HADCO CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS 5. SUPPLEMENTAL GUARANTOR CONSOLIDATING CONDENSED FINANCIAL STATEMENTS ------------------------------------------------------------------- (Continued) CONSOLIDATING CONDENSED BALANCE SHEET
As of October 30, 1999 --------------------------------------------------------------------- Guarantor Non-Guarantor Parent Elimination Consolidated Subsidiaries Subsidiaries Corporation Entries Total ------------ ------------ ----------- ------- ----- (in thousands) ASSETS Current Assets: Cash and cash equivalents $ (2,679) $ 1,378 $ 10,379 $ -- $ 9,078 Accounts receivable, net 49,926 7,566 59,088 -- 116,580 Inventories 28,085 6,590 29,251 -- 63,926 Deferred tax asset -- -- 11,480 -- 11,480 Prepaid and other current assets 2,221 244 5,223 -- 7,688 --------- --------- -------- --------- -------- Total current assets 77,553 15,778 115,421 -- 208,752 Property, Plant and Equipment, net 141,510 49,638 137,033 -- 328,181 Intercompany Receivable 24,783 3,122 46,365 (74,270) -- Investments in Subsidiaries 12,162 -- 280,444 (292,606) -- Acquired Intangible Assets, net 179,319 -- -- -- 179,319 Other Assets 29 -- 8,542 -- 8,571 --------- --------- -------- --------- -------- $ 435,356 $ 68,538 $ 587,805 $(366,876) $724,823 ========= ========= ======== ========= ======== LIABILITIES AND STOCKHOLDERS' INVESTMENT Current Liabilities: Current portion of long-term debt $ 2,114 $ 73 $ 328 $ -- $ 2,515 Accounts payable 41,842 5,583 52,675 -- 100,100 Intercompany payable 28,089 46,181 -- (74,270) -- Accrued payroll and other employee benefits 1,628 300 34,491 -- 36,419 Other accrued expenses 37,355 97 (15,515) -- 21,937 --------- --------- -------- --------- -------- Total current liabilities 111,028 52,234 71,979 (74,270) 160,971 --------- --------- -------- --------- -------- Long-Term Debt, net of current portion 3,307 43 274,959 -- 278,309 --------- --------- -------- --------- -------- Deferred Tax Liability 44,676 -- 12,666 -- 57,342 --------- --------- -------- --------- -------- Other Long-Term Liabilities -- -- 9,192 -- 9,192 --------- --------- -------- --------- -------- Stockholders' Investment: Common stock, $0.05 par value; Authorized - 50,000 shares Issued and outstanding - 13,631 11 29,655 683 (29,666) 683 Paid-in capital 400,616 -- 179,528 (400,616) 179,528 Deferred compensation -- -- (184) -- (184) Retained earnings (124,282) (13,394) 38,982 137,676 38,982 --------- --------- -------- --------- -------- Total stockholders' investment 276,345 16,261 219,009 (292,606) 219,009 --------- --------- -------- --------- -------- $ 435,356 $ 68,538 $ 587,805 $(366,876) $ 724,823 ========= ========= ======== ========= ========
11 12 HADCO CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS 5. SUPPLEMENTAL GUARANTOR CONSOLIDATING CONDENSED FINANCIAL STATEMENTS ------------------------------------------------------------------- (Continued) CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS (unaudited)
For the Three Months Ended January 29, 2000 ----------------------------------------------------------------------- Guarantor Non-Guarantor Parent Elimination Consolidated Subsidiaries Subsidiaries Corporation Entries Total ------------ ------------ ----------- ------- ----- (in thousands) Net Sales $ 103,661 $ 15,061 $ 126,021 $ -- $ 244,743 Cost of Sales 93,472 14,061 96,269 -- 203,802 --------- -------- --------- -------- --------- Gross Profit 10,189 1,000 29,752 -- 40,941 Operating Expenses 2,271 910 17,545 -- 20,726 Amortization of Goodwill and Acquired Intangible Assets 3,052 -- -- -- 3,052 --------- -------- --------- -------- --------- Income From Operations 4,866 90 12,207 -- 17,163 Interest and Other Income, net 499 428 (1,233) 1,226 920 Interest Expense (68) (5) (6,611) -- (6,684) --------- -------- --------- -------- --------- Income Before Provision for Income Taxes 5,297 513 4,363 1,226 11,399 Provision for Income Taxes 3,319 161 852 -- 4,332 Equity in Income (Loss) of Subsidiary (874) -- -- (1,456) -- --------- -------- --------- -------- --------- Net Income $ 1,104 $ 352 $ 5,841 $ (230) $ 7,067 ========= ======== ========= ======== =========
For the Three Months Ended January 30, 1999 ----------------------------------------------------------------------- Guarantor Non-Guarantor Parent Elimination Consolidated Subsidiaries Subsidiaries Corporation Entries Total ------------ ------------ ----------- ------- ----- (in thousands) Net Sales $ 114,955 $ 10,507 $ 110,517 $ -- $ 235,979 Cost of Sales 105,210 10,859 87,477 -- 203,546 --------- -------- --------- -------- --------- Gross Profit 9,745 (352) 23,040 -- 32,433 Operating Expenses 2,170 678 15,070 -- 17,918 Amortization of Goodwill and Acquired Intangible Expenses 3,077 -- -- -- 3,077 --------- -------- --------- -------- --------- Income (Loss) From Operations 4,498 (1,030) 7,970 -- 11,438 Interest and Other Income, net (150) (626) 1,371 6 601 Interest Expense (198) (6) (8,492) -- (8,696) --------- -------- --------- -------- --------- Income (Loss) Before Provision for 4,150 (1,662) 849 6 3,343 Income Taxes Provision for Income Taxes 2,873 -- (1,544) -- 1,329 Equity in Income (Loss) of Subsidiary (1,668) -- (385) 2,053 -- --------- -------- --------- -------- --------- Net Income (Loss) $ (391) $ (1,662) $ 2,008 $ 2,059 $ 2,014 ========= ======== ========= ======== =========
12 13 HADCO CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS 5. SUPPLEMENTAL GUARANTOR CONSOLIDATING CONDENSED FINANCIAL STATEMENTS ------------------------------------------------------------------- (Continued) CONSOLIDATING CONDENSED STATEMENT OF CASH FLOWS (unaudited)
For the Three Months Ended January 29, 2000 ---------------------------------------------------------------------- Guarantor Non-Guarantor Parent Elimination Consolidated Subsidiaries Subsidiaries Corporation Entries Total ------------ ------------ ----------- ------- ----- (in thousands) Net cash provided by (used in) operating activities $ 4,556 $ 635 $ (18,316) $ 1,226 $ (11,899) -------- -------- --------- -------- --------- Cash Flows from Investing Activities: Foreign Sales Corp. dividend -- (1,226) 1,226 -- -- Purchase of property, plant and equipment (3,207) (1,083) (4,527) -- (8,817) Proceeds from sale of property, plant and equipment 25 -- 5 -- 30 Investments in subsidiaries -- 1,226 -- (1,226) -- -------- -------- --------- -------- --------- Net cash used in investing activities (3,182) (1,083) (3,296) (1,226) (8,787) -------- -------- --------- -------- --------- Cash Flows from Financing Activities: Principal payments of long-term debt (438) (18) (15,096) -- (15,552) Proceeds from issuance of long-term debt -- -- 25,000 -- 25,000 Proceeds from exercise of stock options -- -- 650 -- 650 Proceeds from the employee stock purchase plan -- -- 1,843 -- 1,843 Tax benefit from exercise of stock options -- -- 552 -- 552 -------- -------- --------- -------- --------- Net cash provided by (used in) financing activities (438) (18) 12,949 -- 12,493 -------- -------- --------- -------- --------- Net Increase (Decrease) in Cash and Cash Equivalents 936 (466) (8,663) -- (8,193) Cash and Cash Equivalents, Beginning of Period (2,679) 1,378 10,379 -- 9,078 -------- -------- --------- -------- --------- Cash and Cash Equivalents, End of Period $ (1,743) $ 912 $ 1,716 $ -- $ 885 ======== ======== ========= ======== =========
13 14 HADCO CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS 5. SUPPLEMENTAL GUARANTOR CONSOLIDATING CONDENSED FINANCIAL STATEMENTS ------------------------------------------------------------------- (Continued) CONSOLIDATING CONDENSED STATEMENT OF CASH FLOWS (UNAUDITED)
For the Three Months Ended January 30, 1999 -------------------------------------------------------------------------------- Guarantor Non-Guarantor Parent Elimination Consolidated Subsidiaries Subsidiaries Corporation Entries Total ------------ ------------ ----------- ------- ----- (in thousands) Net cash provided by operating activities $ 4,937 $ 4,190 $ 8,690 $ 6 $ 17,823 ------- ------- -------- ---- -------- Cash Flows from Investing Activities: Foreign Sales Corp. dividend -- (6) 6 -- -- Purchase of property, plant and equipment (5,254) (3,119) (8,272) -- (16,645) Investments in subsidiaries -- 6 -- (6) -- ------- ------- -------- ---- -------- Net cash used in investing activities (5,254) (3,119) (8,266) (6) (16,645) ------- ------- -------- ---- -------- Cash Flows from Financing Activities: Principal payments of long-term debt (436) (206) (20,194) -- (20,836) Proceeds from issuance of long-term debt -- -- 20,000 -- 20,000 Proceeds from exercise of stock options -- -- 207 -- 207 Proceeds from the employee stock purchase plan -- -- 1,574 -- 1,574 Tax benefit from exercise of stock options -- -- 334 -- 334 ------- ------- -------- ---- -------- Net cash provided by (used in) financing activities (436) (206) 1,921 -- 1,279 ------- ------- -------- ---- -------- Net Increase (Decrease) in Cash and Cash Equivalents (753) 865 2,345 -- 2,457 Cash and Cash Equivalents, Beginning of Period 836 2 6,331 -- 7,169 ------- ------- -------- ---- -------- Cash and Cash Equivalents, End of Period $ 83 $ 867 $ 8,676 $ -- $ 9,626 ======= ======= ======== ==== ========
14 15 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Except for the historical information contained in this Quarterly Report on Form 10-Q, the matters discussed below or elsewhere in this Quarterly Report on Form 10-Q are forward-looking statements that involve risks and uncertainties. Hadco Corporation makes such forward-looking statements under the provisions of the "Safe Harbor" section of the Private Securities Litigation Reform Act of 1995. Any forward-looking statements should be considered in light of the factors described below in this Item 2 and under "Year 2000 Readiness Disclosure Statement" and "Factors That May Affect Future Results" below. Actual results may vary materially from those projected, anticipated or indicated in any forward-looking statements. In this Quarterly Report on Form 10-Q, the words "anticipates," "believes," "expects," "intends," "future," "could," "may," and similar words or expressions (as well as other words or expressions referencing future events, conditions or circumstances) identify forward-looking statements. As used herein, the terms "Company" and "Hadco," unless otherwise indicated or the context otherwise requires, refer to Hadco Corporation and its subsidiaries. RESULTS OF OPERATIONS - FIRST QUARTER - ------------------------------------- Net sales for the first quarter of fiscal 2000 increased 3.7%, or $8.8 million, over net sales for the same period in fiscal 1999. Printed circuit net sales increased 11.1%, or $21.1 million, in the first quarter of fiscal 2000 from the comparable period in fiscal 1999 due to higher unit shipments and a shift in mix towards higher priced printed circuits with more layers and greater densities. This increase was partially offset by a 2.6 percentage point decline in average pricing for printed circuits. VAM net sales decreased 27.3%, or $12.3 million, in the first quarter of fiscal 2000 from $45.3 million in the comparable period in fiscal 1999. VAM net sales decreased due to reduced production of low margin assembly products. The gross profit margin increased to 16.7% of net sales for the quarter ended January 29, 2000 from 13.7% in the comparable quarter in fiscal 1999. Better capacity utilization of printed circuit operations caused gross margins to increase 5.6 percentage points, and the production of higher-margin assembly products in the VAM segment increased gross margins by 0.5 percentage point. These increases in gross margin were offset by lower pricing on printed circuits, which decreased gross margins by 2.2 percentage points, and by lower capacity utilization of VAM operations, which caused gross margins to decrease by 0.9 percentage point. The changes in the VAM segment were a result of management's decision to cease production of low margin assembly products. Operating expenses increased by $2.8 million for the first quarter of fiscal 2000 over the first quarter of fiscal 1999. Operating expenses as a percent of net sales increased to 8.5% in the first quarter of fiscal 2000 versus 7.6% in the comparable period of fiscal 1999. The increase is due to an increase of $1.8 million in selling expenses from expanded sales coverage, an increase of $0.8 million in general and administrative expenses and slightly higher research and development expenses. The Company includes in operating expenses charges for actual expenditures and accruals, based on estimates, for environmental matters. To the extent and in amounts Hadco believes circumstances warrant, it will continue to accrue and charge to operating expenses cost estimates relating to known environmental matters. Interest and other income increased slightly for the quarter ended January 29, 2000 as compared to the comparable quarter in the prior fiscal year due to higher average cash balances available for investing. Interest expense decreased in the first quarter of fiscal 2000 as compared to the first quarter of fiscal 1999 due to lower average outstanding debt balances during the first quarter of fiscal 2000 as compared to the first quarter of fiscal 1999. 15 16 INCOME TAXES - ------------ The Company provides for income taxes on an interim basis using its anticipated effective annual income tax rate. The Company anticipates an effective annual income tax rate for fiscal 2000 of 38%, which is slightly less than the combined federal and state statutory rates. The anticipated effective rate was increased by amortization of goodwill (which is not tax deductible), offset by the benefit of the Company's foreign sales corporation, research and development tax credits and various state investment tax credits. The effective tax rate for fiscal 2000 is based on current tax laws. LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- Net cash used in operating activities for the first quarter of fiscal 2000 was $11.9 million, as compared to net cash provided by operations in the first quarter of fiscal 1999 of $17.8 million, a difference of $29.7 million. This decrease resulted primarily from a reduction of $35.7 million in accounts payable and accrued expenses. This decrease was offset by an increase of $6.1 million in earnings before non-cash items in the first quarter of fiscal 2000 versus the first quarter of fiscal 1999. The decrease in accounts payable and accrued expenses is a result of higher incentive compensation accrued in fiscal 1999 and paid during the first quarter of fiscal 2000; in addition, the Company incurred a significant amount of capital expenditures during the fourth quarter of fiscal 1999, which were paid during the first quarter of fiscal 2000. Net cash used in investing activities in the first quarter of fiscal 2000 was $8.8 million, a decrease of $7.9 million from the first quarter of fiscal 1999, due to lower capital expenditures. Net cash provided by financing activities was $12.5 million in the first quarter of fiscal 2000 as compared to $1.3 million in the comparable period in the prior year. The increase was primarily due to borrowings on the Company's credit facility to fund operating activities during the first quarter of fiscal 2000, as described above. At January 29, 2000, the Company had working capital of $86.8 million and a current ratio of 1.69, as compared to working capital of $47.8 million and a current ratio of 1.30 at October 30, 1999. The increase in working capital resulted primarily from an increase in accounts receivable, as customer order and shipment rates increased late in the quarter, combined with the reductions in accounts payable noted above. The Company believes its current borrowing capacity, coupled with the funds generated from the Company's operations will be sufficient to fund its anticipated working capital, capital expenditure and debt payment requirements through fiscal year 2000. Because the Company's capital requirements cannot be predicted with certainty, however, there is no assurance that the Company will not require additional financing during this period. There is no assurance that any additional financing will be available on terms satisfactory to the Company or not disadvantageous to the Company's security holders, including the holders of the Notes. The Company believes the ultimate disposition of known environmental matters will not have a material adverse effect upon the liquidity, capital resources, business or consolidated financial position of the Company. However, one or more of such environmental matters could have a significant negative impact on the Company's consolidated financial results for a particular reporting period. YEAR 2000 READINESS DISCLOSURE STATEMENT - ---------------------------------------- As part of the Year 2000 project, the Company completed an internal assessment of its operations to determine the extent to which the Company could be adversely affected by Year 2000 issues. This internal assessment included both Information Technology (IT) systems and non-IT systems. The critical software systems used by the Company to run its business include MFG/PRO, PeopleSoft, Oracle, and Corsair. The Company conducted testing of its various IT systems, running programs with dates including and after the Year 2000. During these tests the Company did not experience problems processing data or effecting transactions. 16 17 YEAR 2000 READINESS DISCLOSURE STATEMENT (CONTINUED) - ---------------------------------------------------- The Company's internal assessment of its manufacturing equipment for Year 2000 compliance was done on a plant-by-plant basis and was completed in May 1999. Thereafter, software upgrades were installed in certain manufacturing systems. The Company tested the new software and did not encounter date-related processing issues. There can be no assurance, however, that the Company's testing of its various IT systems and manufacturing equipment and software was sufficient to discover all Year 2000 issues. Year 2000 issues not discovered by the Company could have a material adverse effect on the Company's business, results of operations and financial condition. In fiscal 1999, the Company developed business continuity/contingency plans for all its facilities. Such plans cover Year 2000 issues and potential disruptions. There can be no assurance that the implementation of business continuity/contingency plans developed by the Company will result in alleviation or remediation of any business interruption or disruption that the Company may experience. As part of the Year 2000 project, the Company surveyed all of its active suppliers to determine their Year 2000 compliance status. The Company worked with its key suppliers to obtain more detailed information about their compliance status, and performed on-site assessment of certain critical suppliers. The Company also completed contingency plans for addressing potential supply disruptions. There can be no assurance that the Company will not experience disruption in its supply chain, or that its contingency plans will alleviate or remedy any disruption experienced. The Company has not to date encountered any date-related processing issues or any business interruption in connection with the Year 2000 roll-over to January 1, 2000. The Company did, however, experience a greater than seasonal reduction of customer orders due to Year 2000 concerns, particularly in the computer server market, during the first two months of its first fiscal quarter, November and December 1999. Customer order rates in January 2000 were 33% higher than in the November/December 1999 period, across all end markets of the Company's customer base. To date, approximately 30,500 hours of employee time have been devoted to Year 2000 issues and approximately $5.9 million has been expended in systems upgrades directly relating to Year 2000. The source of these funds has been the working capital of the Company. A software or system Year 2000 compliance failure, with respect to the Company's internal systems, software and equipment or that of third party service providers, major customers or suppliers, could prevent the Company from fulfilling customer orders. Any such failure, if not quickly remedied, would have a material adverse effect on the Company's business, results of operations, and financial condition. The lost revenues that would result from the Company's inability to operate even one of its major volume manufacturing plants for any significant period of time would have a material adverse effect on the Company. The Company could face an even greater risk of significant damages if the Company were to be found responsible for the shutdown of one of its customers' facilities. This could occur if the Company was unable to supply parts integral to the end products manufactured by the Company's customers. In such circumstances, the legal liability of the Company could have a material adverse effect on the Company's business, results of operations, and financial condition. FACTORS THAT MAY AFFECT FUTURE RESULTS - -------------------------------------- This Quarterly Report on Form 10-Q contains various "forward-looking" statements within the meaning of the Securities Litigation Reform Act of 1995, including, but not limited to, those concerning gross and operating margins, Year 2000 readiness and compliance, the sufficiency of the Company's working capital, and environmental matters. In this Form 10-Q, the words "anticipates," "believes," "expects," "intends," "future," "could," "may," and similar words and expressions (as well as other words or expressions referencing future events, conditions or circumstances) identify forward-looking statements. Such forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those projected, 17 18 FACTORS THAT MAY AFFECT FUTURE RESULTS (CONTINUED) - -------------------------------------------------- anticipated or indicated in the forward-looking statements. Potential risks and uncertainties include, but are not limited to, such factors as: the Company's dependence on the electronics industry; fluctuations in quarterly operating results; the variability of customer orders; significant portions of released backlog may be subject to cancellation or postponement without penalty; the effect of unforeseen problems in the Company's computer systems and those of third parties with which the Company deals; the effect of acquisitions on the Company; the ability of the Company to compete successfully in the future; the rapid technological change and continuing process development that characterizes the Company's markets; manufacturing process disruptions; the operation of the Company's Malaysia facility; the Company's significant customer concentration; the Company's ability to obtain, integrate, manage and utilize manufacturing capacity; the Company's ability to manage its growth; environmental matters; the availability of raw materials, production services and components, and price fluctuations in such materials, services and components; the Company's dependence on key personnel; the Company's ability to protect its intellectual property; and certain anti-takeover provisions applicable to the Company. Further information on factors that could cause actual results to differ from those anticipated is detailed in various publicly available documents filed by the Company from time to time with the Securities and Exchange Commission. Such information includes, but is not limited to, those factors appearing under the caption "Factors That May Affect Future Results" and elsewhere in the Company's Annual Report on Form 10-K for the year ended October 30, 1999. Any forward-looking statement should be considered in light of these factors. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK DERIVATIVE FINANCIAL INSTRUMENTS, OTHER FINANCIAL INSTRUMENTS, AND DERIVATIVE COMMODITY INSTRUMENTS SFAS No. 107 requires disclosure about fair value of financial instruments. Financial instruments consist of cash equivalents, accounts receivable, accounts payable and long-term debt obligations. The fair value of these financial instruments approximates their carrying amount, except for the 9 1/2% Senior Subordinated Notes (the "Notes"), at January 29, 2000. The fair market value of the Notes was $191 million with a carrying amount of $199.4 million at January 29, 2000. Although the fair market value of the Notes is less than the carrying amount, settlement at the reported fair value is not possible due to cost-prohibitive redemption premiums. PRIMARY MARKET RISK EXPOSURES The Company's primary market risk exposures are in the areas of interest rate risk and foreign currency exchange rate risk. The Company incurs interest expense on loans made under the Company's credit facility at interest rates which are fixed for a maximum of six months. At January 29, 2000, the Company's outstanding borrowings under the credit facility were $85.0 million, at a weighted average interest rate of 6.75%. This interest rate is a combination of two Eurodollar loans, one for $50.0 million maturing February 25, 2000 and one for $20.0 million maturing February 18, 2000, both at a rate of 6.625%. The balance was comprised of a $10.0 million overnight swing-line loan at 6.75% and a $5.0 million overnight base rate loan at 8.5%. The Company has the option to fix the interest rates on the Eurodollar rate loans for periods of one, two, three or six months. The Eurodollar Rate is subject to market risks and will fluctuate. Substantially all of the Company's business outside the United States is conducted in U.S. dollar denominated transactions. The Company does operate a volume manufacturing facility in Malaysia. Some of the expenses of this facility are denominated in Malaysian ringgits. Expenses denominated in ringgits include local salaries and wages, utilities and some operating supplies. The Company also funds a small sales offices in Ireland and Great Britain, where expenses are paid in British Pounds, Irish Punts and Eurodollars. However, the Company believes that these operating expenses will not have a material adverse effect on the Company's business, results of operations or financial condition. 18 19 PART II - OTHER INFORMATION ITEM 1. - LEGAL PROCEEDINGS In February 2000, the federal government moved for entry of the Consent Decree in the Auburn Road environmental litigation. The Court must still approve the Consent Decree. Under the terms of the Consent Decree, the Company is a cash-out party and does not have responsibility for performance of ongoing remedial or monitoring work at the site. ITEM 2. - CHANGES IN SECURITIES Pursuant to the Company's Executive Incentive Compensation Deferred Bonus Plan, as Amended and Restated December 9, 1999 (the "Executive Bonus Plan"), certain executives of the Company received payment of a portion of their incentive compensation for fiscal 1999 in the form of restricted Common Stock of the Company issued under the 1998 Stock Plan. On December 9, 1999, the executives received an aggregate of 19,805 shares of restricted Common Stock pursuant to the Executive Bonus Plan. The aggregate value of all such shares issued on December 9, 1999 to executives was $962,325 (based on a fair market value on that date of $48.59 per share). ITEM 6. - EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits *10.1 Hadco Corporation Executive Incentive Compensation Deferred Bonus Plan, as Amended and Restated December 9, 1999 *10.2 Form of Agreement, as amended, pursuant to Hadco Corporation Executive Incentive Compensation Deferred Bonus Plan, as Amended and Restated December 9, 1999 *10.3 Hadco Corporation Retirement Plan Amendment Exhibit "A", as amended December 9, 1999 27. Financial Data Schedule * Indicates a management contract or any compensatory plan, contract or arrangement required to be filed as an exhibit pursuant to Item 6(a). (b) Reports on Form 8-K None 19 20 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Hadco Corporation Date: March 10, 2000 By: /s/ F. GORDON BITTER ------------------------------ F. Gordon Bitter Senior Vice President and Chief Financial Officer (principal financial officer and principal accounting officer) 20 EX-10.1 2 EXECUTIVE DEFERRED BONUS PLAN 1 Exhibit 10.1 HADCO CORPORATION EXECUTIVE INCENTIVE COMPENSATION DEFERRED BONUS PLAN AS AMENDED AND RESTATED DECEMBER 9, 1999 This Executive Incentive Compensation Deferred Bonus Plan (the "Plan") is established by HADCO Corporation to provide incentive to key executives who contribute to the profits of the corporation by their ability, industry, loyalty or exceptional service, through making them participants in its success. SECTION 1: ELIGIBILITY TO PARTICIPATE. Participants in this Plan shall be active employees of HADCO Corporation (the "Corporation") or its subsidiaries or affiliates who are employed in an executive or managerial capacity and who are designated to receive incentive compensation awards under the Corporation's executive incentive compensation program, as determined by the Compensation Committee of the Board of Directors of the Corporation (the "Committee"). SECTION 2: DETERMINATION AND PARTIAL DEFERRAL OF INCENTIVE COMPENSATION. The Committee shall determine for each fiscal year of the Corporation the amount of incentive compensation to be awarded to each of the Corporation's designated key executives, in accordance with criteria established by the Committee and approved by the Board of Directors as part of the Corporation's executive incentive compensation program. Payment of sixty percent (60%) of the amount of incentive compensation awarded to each designated key executive for each year shall be made in a lump sum in cash (subject to applicable tax withholdings and deductions) as soon as practicable after the date the award is declared. Payment of the remaining forty percent (40%) of such incentive compensation award (referred to herein as the "deferred bonus amount") shall be made (a) in the case of awards made through calendar year 1997, in cash (subject to applicable tax withholdings and deductions) in three equal installments over a period of three years commencing on the one year anniversary date of the award, subject to and in accordance with the provisions of this Plan, and (b) in the case of awards made in calendar year 1998 or thereafter, in shares of restricted stock (as further described in Section 6 hereof) of the Corporation valued in accordance with and subject to all the terms and conditions of the Hadco Corporation 1998 Stock Plan, as Amended and Restated March 3, 1999 and as amended from time to time (the "1998 Plan"). SECTION 3: NOTIFICATION AND DESIGNATION OF BENEFICIARIES. Each designated key executive who is awarded incentive compensation under HADCO Corporation's executive incentive compensation program for any year shall be notified by the Corporation of such award and of his participation in this Plan for such year. Each participant shall file with the Corporation a written designation of beneficiary or beneficiaries to receive any amounts payable with respect to the participant in the event of his death, which designation may be changed from time to time by the filing of a written designation naming a new beneficiary or beneficiaries. If a participant 2 dies without designating a beneficiary, or if the designated beneficiary is not then in existence, any amounts payable with respect to the participant shall be paid to the participant's estate. SECTION 4: ACCOUNTS FOR DEFERRED BONUSES TO BE PAID IN CASH. 4.1 For all deferred bonuses which are to be paid to the participant in cash, as provided in Section 2 hereof, the Corporation shall maintain an account (the "Cash Account") for each participant in this Plan, which shall be credited with the participant's cash deferred bonus amount and the amount of any deemed interest pursuant to subsection 4.2 and debited for any distributions to the participant pursuant to Section 5. No money shall actually be allocated to any account, as such accounts shall be of a memorandum nature maintained by the Corporation for accounting purposes and shall not be representative of any identifiable assets. 4.2 The undistributed portion of each Cash Account shall be deemed to earn interest in arrears annually at in interest rate one point above the prime rate as published in the Wall Street Journal for the last business day of the previous fiscal year. Interest shall be determined from the last day of the fiscal year for which the incentive compensation award was made to the close of the next fiscal year of the Corporation or, if earlier, to the close of the fiscal year immediately preceding the date of distribution of all or part of a participant's Cash Account (except as provided in subsection 5.3 in the event of a distribution on account of involuntary termination of employment or retirement or in the event of distribution in connection with a Change of Control as provided in subsection 5.4 hereof). Interest shall be credited to each participant's Cash Account annually. 4.3 The Corporation shall furnish to each participant a statement of amounts credited to or debited from his Cash Account during each fiscal year, within ninety (90) days after the end of the calendar year in which such fiscal year ends. SECTION 5: DISTRIBUTIONS FROM CASH ACCOUNTS. 5.1 Each installment of a cash deferred bonus amount to be paid to a participant shall be made on or about the anniversary date of the original declaration of the award, commencing on the first such anniversary; provided, however, that the participant remains employed by the Corporation or any subsidiary or affiliate as of the date payment is due. Each installment payment shall include interest on that portion of the bonus to be then distributed, calculated in accordance with subsection 4.2. 5.2 If a participant voluntarily terminates his employment with the Corporation without the prior consent of the chief executive officer of the Corporation, other than by reason of his retirement at or after the normal retirement date as described in the HADCO Corporation Retirement Plan or if a participant's employment is terminated by the Corporation for cause as defined herein, he shall forfeit any remaining unpaid installments of his deferred bonus amount and all deemed interest, if any, credited to his account. If the participant is the chief executive officer of the Corporation, such forfeiture shall occur if he voluntarily terminates his employment with the Corporation without the prior consent of the Board of Directors of the Corporation, other than by reason of his retirement at or after the normal retirement date as described in the 2 3 HADCO Corporation Retirement Plan. For purposes of this Plan, employment shall not be deemed terminated if the participant remains employed by the Corporation or any subsidiary or affiliate thereof. For purposes of this Agreement, the Corporation shall have "cause" to terminate the Executive in the event of: (a) the willful and continued failure by the Executive to substantially perform his/her duties, after demand for substantial performance is delivered by the Corporation to the Executive identifying with specificity the grounds for the Corporation's belief that the Executive has not substantially performed his/her duties; (b) the permanent physical or mental incapacity of the Executive; (c) the commission by the Executive of any act of fraud or embezzlement relating to the property of the Corporation and/or the services to be provided by the Executive; or (d) the Executive's unauthorized disclosure of proprietary confidential information of the Corporation or the Executive's engaging in competition with the Corporation. 5.3 If a participant is involuntarily terminated from employment without cause, including by reason of his death or disability or if termination of employment of a participant is due to retirement at or after the normal retirement date as described in the HADCO Corporation Retirement Plan, the balance of the participant's cash deferred bonus amount plus interest determined to the date of such involuntary termination or retirement, as the case may be, shall be paid to the participant or his designated beneficiary or beneficiaries as soon as practicable after the event giving rise to the termination. For purposes hereof, the definition of "disability" as set forth in the HADCO Corporation Retirement Plan shall apply. 5.4 Upon any sale of all or substantially all of the assets of the Corporation, or upon a merger, consolidation or tender offer in respect of which the stockholders holding all of the Corporation's outstanding voting securities immediately prior to the consummation thereof hold less than 50% of all of the Corporation's outstanding voting securities immediately after such consummation (each of the foregoing sale, merger, consolidation or tender offer hereinafter called an "Acquisition"), then the date upon which the full balance of the participant's cash deferred bonus amount under this Plan will be fully vested and due and payable shall be automatically accelerated to occur immediately prior to the consummation of such Acquisition. SECTION 6: RESTRICTED STOCK 6.1 To the extent that the deferred bonus amount is to be paid to a participant in restricted stock ("Restricted Stock"), as provided in Section 2 hereof, the number of shares of stock to be awarded to the participant shall be determined by dividing the dollar equivalent of the deferred bonus amount by the fair market value of the Corporation's common stock, as determined in accordance with the 1998 Plan, on the day the incentive compensation award is declared. If any fractional share of stock is calculated to be due a participant, then the number of shares of Restricted Stock shall be rounded up to the nearest whole share and the participant's incentive compensation award shall be deemed adjusted accordingly. 6.2 All Restricted Stock to be issued to a participant under this Plan shall be issued under all the terms and conditions of the 1998 Plan. 3 4 6.3 If, for any reason, including without limitation restrictions imposed by the securities laws or any stock exchange, the Corporation deems it impractical or imprudent, in its sole judgment, to issue shares of Restricted Stock to a participant, then the deferred bonus amount due the participant in Restricted Stock shall be replaced by a cash deferred bonus amount with all of the attributes of, and the same distribution schedule as, the cash deferred bonus amount described elsewhere in this Plan. SECTION 7: MISCELLANEOUS PROVISIONS RELATING TO PAYMENTS. 7.1 No participant shall have any option or right to choose the amounts or dates of payment of distributions payable to him under this Plan. 7.2 All payments under this Plan shall be made from the general assets of the Corporation and no assets shall be segregated or placed in trust for the purpose of funding such payments. Participants under this plan shall have the status of general unsecured creditors of the Corporation. 7.3 No participant or beneficiary shall have the right to alienate, anticipate, pledge, encumber or assign any of the payments which he may expect to receive, contingently or otherwise, under this Plan, and no payments or rights of any participant or beneficiary shall be subject to attachment, garnishment or their legal or equitable process available to any creditor. 7.4 The Corporation shall have the right to accelerate the payment of any cash distribution payable under this Plan. 7.5 The Corporation shall have the right to withhold from any distribution under this Plan the amount of any federal, state or local withholding taxes due with respect to such distribution, as well as the employee's share of any payroll taxes relating thereto. Without limiting the generality of the foregoing, the Corporation may condition the release of cash deferred bonus amounts upon the participant's making arrangements satisfactory to the Corporation for payment of withholding taxes due in connection with the payment of the cash deferred bonus amount. SECTION 8: ADMINISTRATION OF PLAN. All determinations, decisions and directions made or given by the Board of Directors or the Committee under or with respect to this Plan shall be final and conclusive. The determination of the Board of Directors or the Committee on any question concerning or involving the interpretation and administration of this Plan shall be final and conclusive, and nothing in the Plan shall be deemed to give any officer or employee of the Corporation, his legal representatives or assigns, any right to participate in the Corporation's executive incentive compensation program or this Plan except to the extent, if any, that the Committee may have determined or approved. The Board of Directors, in passing on the matters which it is required to approve, may in its discretion rely upon the recommendations made by the Committee with respect thereto. 4 5 SECTION 9: AMENDMENT OR TERMINATION. The Board of Directors may, from time to time, amend, suspend, or terminate, in whole or in part, any or all of the provisions of the Plan; provided, however, that no amendment, suspension or termination shall reduce the right of any participant to receive distributions of amounts awarded to him prior to the effective date of such amendment, suspension or termination. Notice of any amendment, suspension or termination of the Plan shall be given to each participant who is affected thereby. This Plan may also be terminated in the event of the bankruptcy, insolvency, reorganization or winding up of the affairs of the Corporation. SECTION 10: GENERAL. 10.1 This Plan shall be governed by and interpreted under the laws of the Commonwealth of Massachusetts. 10.2 This Plan shall not be interpreted to constitute a contract of employment and nothing herein shall give any participant or employee the right to remain in the employ of the Corporation or its subsidiaries or affiliates, or interfere with the Corporation's right to terminate his employment at any time. 10.3 The Committee shall have the authority to interpret this Plan and to prescribe and rescind rules and regulations relating to it. The interpretation and construction by the Committee of any provisions of this Plan or of any right related to an incentive compensation award granted under this Plan shall be final unless otherwise determined by the Board of Directors of the Corporation. No member of the Board of Directors or of the Committee shall be liable, in respect to this Plan, for any act, whether of commission or omission, taken by any other member or by any officer, agent or employee of the Corporation or its subsidiaries or affiliates nor, except in circumstances involving his own bad faith, for anything done or omitted to be done by him. 10.4 It is intended that cash distributions under this Plan will be taxable income to the participants in the calendar year in which they are made. However, neither the Corporation, the Committee nor any employee, officer or agent thereof guarantees that any particular federal, state or local tax consequences will occur as a result of participation in this Plan and each participant shall be responsible for the tax consequences to him of participating in this Plan. Notwithstanding the preceding sentence, if the Internal Revenue Service shall at any time interpret this Plan to be ineffective with regard to the deferral of a participant's income, and that interpretation becomes final and unappealable, then the Corporation shall distribute to the participant from the unpaid portion of his cash deferred bonus amount an amount equal to such income tax liability (but not more than the remaining unpaid portion of his cash deferred bonus amount). Any remaining portion of the cash deferred bonus amount shall continue to be subject to the remaining provisions of this Plan. SECTION 11: EFFECTIVE DATE. This Plan shall be effective commencing with incentive compensation awards made with respect to the Corporation's fiscal year ending October 26, 1996 and shall continue for each fiscal year thereafter until terminated as provided herein. 5 6 IN WITNESS WHEREOF, this Plan was adopted by the Board of Directors of HADCO Corporation the 17th day of May 1996, and has been amended and restated this 9th day of December, 1999. ATTEST: HADCO CORPORATION, A MASSACHUSETTS CORPORATION /s/ James C. Hamilton By: /s/ Andrew E. Lietz James C. Hamilton, Clerk ITS DULY AUTHORIZED PRESIDENT 6 EX-10.2 3 FORM OF AGREEMENT 1 Exhibit 10.2 AGREEMENT AGREEMENT made as of the ____ day of ____________, [1999/2000], by and between Hadco Corporation, a Massachusetts corporation with a usual place of business in Salem, New Hampshire (hereinafter the "Company"), and _____________, of _______________ (hereinafter the "Executive"). This Agreement and the incentive compensation award hereunder are made pursuant and subject to, and are governed by, the terms and conditions of the Hadco Corporation 1998 Stock Plan, as Amended and Restated March 3, 1999 and as it may be amended from time to time (the "1998 Stock Plan"), and the terms and conditions of the 1998 Stock Plan are incorporated herein by reference, made a part hereof and shall control in the event of any conflict between the terms of the 1998 Stock Plan and any terms of this Agreement. A copy of the 1998 Stock Plan has been delivered to the Executive. Section 1. Grant of Restricted Stock. The Company grants to the Executive as an incentive compensation award, on the terms and conditions hereinafter set forth,_(_) shares of the Company's Common Stock, $0.05 par value (the "Restricted Stock"), at the current fair market value of _________________ ($ _____) Dollars per share. Section 2. Representations and Agreements of Executive; Restrictions on Restricted Stock. A. The Executive understands and acknowledges that the Restricted Stock will be lettered or restricted stock, that the Restricted Stock has not been registered under the Securities Act or any state securities laws and is being granted under the exemption to registration provided in Section 3(b) of the Securities Act and Regulation D promulgated thereunder and/or Section 4(2) of the Securities Act, and that this transaction has not been reviewed or passed upon by any federal or state agency. The Executive further understands and acknowledges that each certificate for the Restricted Stock issued in connection with this Agreement shall contain the following restrictive legends: "The shares represented by this certificate have not been registered under the Securities Act of 1933. These shares have been acquired for investment and not with a view to distribution or resale, and may not be sold, mortgaged, pledged, hypothecated or otherwise transferred without an effective registration statement of such shares under the Securities Act of 1933, or an opinion of counsel for Hadco Corporation that registration is not required under such Act. The shares represented by this certificate are subject to risks of forfeiture as described in a certain Agreement dated as of [___________, 2000], a copy of which the Company will furnish to the holder of this certificate upon request and without charge." 2 B. The Executive represents and warrants that he is acquiring the Restricted Stock for purposes of long-term investment, for the personal account of the Executive, and with no present intention of reselling, distributing or otherwise transferring the Restricted Stock or any portion of the Restricted Stock, and that the Executive has no contract, undertaking or arrangement with any person or entity to sell or transfer all or any portion of the Restricted Stock to that person or entity, or to have that person or entity sell for him all or any portion of the Restricted Stock, or to afford or allow any participation in the Restricted Stock by any other person or entity. C. The Executive realizes that (i) the acquisition of the Restricted Stock is a long-term investment; (ii) the Executive must bear the economic risk of investment for an indefinite period of time because the Restricted Stock has not been registered under applicable state and federal securities laws and, therefore, cannot be sold or otherwise transferred unless it is subsequently registered or exemptions from registration are available; and (iii) the transferability of the Restricted Stock is restricted, and (a) requires conformity with the restrictions contained in paragraphs 2.A, 2.D and 3.A of this Agreement, (b) will be further restricted by legends placed on the certificate representing the Restricted Stock referring to the applicable restrictions on transferability, and (c) may be subject to a stop transfer order until such time as transfer of the Restricted Stock may be effected without violation of all applicable state and federal securities laws. D. The Executive agrees and understands that the Restricted Stock is subject to forfeiture by the Executive in the event of termination of his employment with the Company within three years of the date of declaration of the incentive compensation award of which the Restricted Stock constitutes a deferred bonus amount, all as more fully set forth in this Agreement. The Executive further agrees and understands that the Restricted Stock may not be sold, mortgaged, pledged, hypothecated or otherwise transferred by the Executive until on or after the three year anniversary of the date of declaration of the incentive compensation award of which the Restricted Stock constitutes a deferred bonus amount. Notwithstanding the foregoing, the Restricted Stock may be relieved of these risks of forfeiture and restrictions on transfer described above pursuant to the provisions of Sections 3.B or 3.C of this Agreement. Moreover, the Company shall have the right to accelerate the lapse of these risks of forfeiture and restrictions on transfer on the Restricted Stock at any time. E. The Executive understands and agrees that the Restricted Stock is to be issued from the pool of shares of Common Stock reserved for the 1998 Stock Plan. F. The Executive understands and agrees that neither the Company, the Board of Directors, any committee of the Board of Directors nor any employee, officer or agent thereof guarantees that any particular federal, state or local tax consequences will occur as a result of this Agreement and/or the issuance of the Restricted Stock. The Executive hereby agrees that he alone shall be responsible for the tax consequences of this Agreement and the issuance of the Restricted Stock. 2 3 Section 3. Termination. A. If the Executive voluntarily terminates his employment with the Company other than by reason of his retirement at or after the normal retirement date as described in the Hadco Corporation Retirement Plan or if the Executive's employment is terminated by the Company for cause as defined herein, he shall forfeit the Restricted Stock if the Restricted Stock has not been held for at least three years after the date of declaration of the incentive compensation award of which the Restricted Stock was a part. For purposes hereof, employment shall not be deemed terminated if the Executive remains employed by the Company or any subsidiary or affiliate thereof. For purposes of this Agreement, the Company shall have "cause" to terminate the Executive in the event of: (a) the willful and continued failure by the Executive to substantially perform his duties, after demand for substantial performance is delivered by the Company to the Executive identifying with specificity the grounds for the Company's belief that the Executive has not substantially performed his duties; (b) the permanent physical or mental incapacity of the Executive; (c) the commission by the Executive of any act of fraud or embezzlement relating to the property of the Company and/or the services to be provided by the Executive; or (d) the Executive's unauthorized disclosure of proprietary confidential information of the Company or the Executive's engaging in competition with the Company. B. If the Executive is involuntarily terminated from employment without cause as defined herein, including by reason of his death or disability or if termination of employment of the Executive is due to retirement at or after the normal retirement date as described in the Hadco Corporation Retirement Plan, the Restricted Stock held by the Executive at the time of termination shall be relieved of the restrictions contained in Sections 2.D and 3.A of this Agreement (but not of any securities law restrictions which may apply to the Restricted Stock or its disposition). For purposes hereof, the definition of "disability" as set forth in the Hadco Corporation Retirement Plan shall apply. C. Upon any sale of all or substantially all of the assets of the Company, or upon a merger, consolidation or tender offer in respect of which the stockholders holding all of the Company's outstanding voting securities immediately prior to the consummation thereof hold less than 50% of all of the Company's outstanding voting securities immediately after such consummation (each of the foregoing sale, merger, consolidation or tender offer hereinafter called an "Acquisition"), then the date upon which the Restricted Stock shall be relieved of the restrictions contained in Sections 2.D and 3.A of this Agreement (but not of any securities law restrictions which may apply to the Restricted Stock or its disposition) shall be automatically accelerated to occur immediately prior to the consummation of such Acquisition. Section 4. Effect Upon Employment. Neither the 1998 Stock Plan nor this Agreement or the grant of the Restricted Stock, nor any other plan of the Company, confers any right upon the Executive with respect to the continuation of his employment or business relationship with the Company or any of its 3 4 subsidiaries or affiliates. Nothing contained herein shall be construed as interfering with or restricting the right of the Company or any of its subsidiaries or affiliates to terminate the Executive's employment or business relationship at any time free from any liability or claim under the 1998 Stock Plan, this Agreement or any other plan of the Company. Section 5. Status as a Stockholder. Prior to the three (3) year anniversary of the date of declaration of the incentive compensation award of which the Restricted Stock was a part and after issuance of a certificate representing the Restricted Stock, the Executive shall have all rights as a stockholder except as specifically set forth herein. Section 6. Notices. Any notice permitted or required under this Agreement shall be sufficient if made in writing and mailed, postage prepaid, or delivered in hand to the parties as follows: (a) as to the Company, to its Treasurer at the principal office of the Company; and (b) as to the Executive, at the address listed for the Executive on the books of the Company or the books of the Stock Transfer Agent, or (c) as to either party, at such other address as shall be designated by the addressee in a written notice to the other complying as to delivery with the terms of this Section 6. Section 7. Governing Law. This Agreement shall be governed by, and construed and enforced in accordance with, the substantive laws of the Commonwealth of Massachusetts without giving effect to the principles of the conflicts of laws thereof. Section 8. Entire Agreement. This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior or contemporaneous agreements and understandings, written or oral, relating to the subject matter hereof. No modification or addition to this Agreement shall be valid unless in writing, specifically referring to this Agreement and signed by both parties hereto. No waiver of any rights under this Agreement shall be valid unless in writing and signed by the party to be charged with such waiver. No waiver of any term or condition contained in this Agreement shall be deemed or construed as a further or continuing waiver of such term or condition, unless the waiver specifically provides otherwise. Section 9. Binding Effect. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, executors, administrators, representatives, successors and assigns, subject to the limitations set forth herein; provided, however, that as respects the Executive, this Agreement and his rights thereunder are deemed to be personal in nature and may not be assigned or transferred. Section 10. Interpretation and Construction. Any interpretation or construction of this Agreement by the Company's Board of Directors, or a duly authorized committee appointed by the Board, shall be final, conclusive and binding on all interested parties. The section headings are for convenience of reference only and shall not be deemed germane to the interpretation or construction of this Agreement. Section 11. Survival. All representations, warranties and acknowledgments made in this Agreement shall survive the issuance and delivery of the certificate or certificates 4 5 representing the Restricted Stock. Section 12. Withholding Taxes. If the Company or any of its subsidiaries or affiliates in its discretion determines that it is obligated to withhold any tax in connection with the grant of the Restricted Stock, or in connection with the transfer of, or the lapse of restrictions on, any Restricted Stock or other property acquired pursuant hereto, the Executive hereby agrees that he will pay any such withholding taxes and if the Executive does not pay such withholding taxes, the Company or any of its subsidiaries or affiliates may withhold from the Executive's wages or other remuneration the appropriate amount of tax. At the discretion of the Company or any of its subsidiaries or affiliates, the amount required to be withheld may be withheld in cash from such wages or other remuneration or in kind from the Restricted Stock or other property otherwise deliverable to the Executive. Section 13. Severability. The invalidity, illegality or unenforceability of any provision of this Agreement shall in no way affect the validity, legality or enforceability of any other provision. Section 14. Provision of Documentation to Executive. By signing this Agreement the Executive acknowledges receipt of a copy of this Agreement and a copy of the 1998 Stock Plan. Section 15. Tax Treatment. It is intended that the Restricted Stock distribution hereunder shall be taxable income to the Executive in the calendar year in which the substantial risk of forfeiture with respect to the stock lapses (or in such earlier calendar year during which the Executive files an effective election under Section 83(b) of the Internal Revenue Code). However, neither the Company, the Committee nor any employee, officer or agent thereof guarantees that any particular federal, state or local tax consequences will occur as a result of participation in the 1998 Stock Plan or as a result of this Agreement and the issuance of the Restricted Stock, and the Executive is responsible for the tax consequences to him of participating in the 1998 Stock Plan, of this Agreement and of the issuance of the Restricted Stock. Notwithstanding the preceding sentence, if the Internal Revenue Service shall at any time interpret this Agreement and the terms hereunder to be ineffective with regard to the deferral of the Executive's income, and that interpretation becomes final and unappealable, then the Company shall distribute to the Executive, free of the forfeiture provisions thereof (but not of any securities law restrictions which may apply to the shares or their disposition), a portion of the Restricted Stock equal in value to such income tax liability (but not more than the remaining portion of the Restricted Stock). Any remaining portion of the Restricted Stock shall continue to be subject to the remaining provisions of this Agreement. 5 6 IN WITNESS WHEREOF, the parties have executed this Agreement on the date first above written. HADCO CORPORATION By: ----------------------------- -------------------------------- Executive 6 EX-10.3 4 RETIREMENT PLAN 1 Exhibit 10.3 HADCO CORPORATION CLERK'S CERTIFICATE The undersigned, JAMES C. HAMILTON, hereby certifies that he is the duly elected Clerk of HADCO CORPORATION, a Massachusetts corporation, that the following resolution was duly adopted by the Board of Directors of the Corporation at a meeting held on December 9 and 10, 1999, and that Exhibit A attached hereto is a true and complete copy of the amendments referred to in said resolution: VOTED: To amend the Hadco Corporation Retirement Plan in accordance with Exhibit "A" hereto. IN WITNESS WHEREOF, I have set my hand and the seal of the Corporation this 29h day of February 2000. Attest: /s/ James C. Hamilton ----------------------------------- JAMES C. HAMILTON, Clerk 2 HADCO CORPORATION RETIREMENT PLAN AMENDMENT EXHIBIT "A" 1. The definition of "Entry Date" in Section 1.17 is amended to read as follows, effective for Plan Years beginning on or after January 1, 2000 (new language is in BOLD): "1.17 ENTRY DATE SHALL MEAN, FOR PLAN YEARS BEGINNING ON OR AFTER JANUARY 1, 2000, THE FIRST DAY OF ANY CALENDAR MONTH FOLLOWING THE DATE A PARTICIPANT MEETS THE ELIGIBILITY REQUIREMENTS OF SECTION 2.01 OF THE PLAN. FOR PLAN YEARS ENDING ON OR BEFORE DECEMBER 31, 1999, ENTRY DATE shall mean any January 1, April 1, July 1 or October 1 following the date a Participant meets the eligibility requirements of Section 2.01 of the Plan." 2. The first paragraph of Section 2.01, relating to eligibility to participate in the Plan, is amended to read as follows, effective for Plan Years beginning on or after January 1, 2000 (new language is in BOLD): "2.01 INITIAL PARTICIPATION For Plan Years ending on or before December 31, 1987, each Employee, other than an Employee who is covered by a collective bargaining agreement under which retirement benefits were the subject of good faith bargaining, shall commence participation hereunder on the first day of the month next following his completion of a Participation Computation Period during which he completed one thousand (1,000) Hours of Service, but in no event earlier than the Effective Date. For Plan Years beginning on or after January 1, 1988, each Employee, other than an Employee who is covered by a collective bargaining agreement under which retirement benefits were the subject of good faith bargaining, shall commence participation hereunder on the Entry Date next following the completion of a six month period of service with the Employer without regard to the number of Hours of Service completed. FOR PLAN YEARS BEGINNING ON OR AFTER JANUARY 1, 2000, EACH EMPLOYEE, OTHER THAN AN EMPLOYEE WHO IS COVERED BY A COLLECTIVE BARGAINING AGREEMENT UNDER WHICH RETIREMENT BENEFITS WERE THE SUBJECT OF GOOD FAITH BARGAINING, SHALL COMMENCE PARTICIPATION HEREUNDER ON THE ENTRY DATE NEXT FOLLOWING THE COMPLETION OF A ONE-MONTH PERIOD OF SERVICE WITH THE EMPLOYER WITHOUT REGARD TO THE NUMBER OF HOURS COMPLETED, BUT IN NO EVENT PRIOR TO FEBRUARY 1, 2000." EX-27 5 FINANCIAL DATA SCHEDULE
5 1,000 USD 3-MOS OCT-28-2000 OCT-31-1999 JAN-29-2000 1 885 0 125,156 1,472 60,392 211,931 712,071 352,511 715,964 125,128 287,910 0 0 689 228,549 715,964 244,743 245,663 203,802 244,528 0 0 6,684 11,399 4,332 7,067 0 0 0 7,067 0.52 0.51
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