-----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, Q0+JgIMdfroAz/2Zjip2ymA3OhWrnJF+FU0tdsoxI71W0hxgPRApyJpvP6vyLtRY ZWoC0/NyVckqXFIWBdV09A== 0000950149-95-000927.txt : 19951229 0000950149-95-000927.hdr.sgml : 19951229 ACCESSION NUMBER: 0000950149-95-000927 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951228 SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: GENEVA STEEL CENTRAL INDEX KEY: 0000860192 STANDARD INDUSTRIAL CLASSIFICATION: STEEL WORKS, BLAST FURNACES & ROLLING & FINISHING MILLS [3310] IRS NUMBER: 930942346 STATE OF INCORPORATION: UT FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: 1934 Act SEC FILE NUMBER: 001-10459 FILM NUMBER: 95605377 BUSINESS ADDRESS: STREET 1: 10 S GENEVA RD CITY: VINEYARD STATE: UT ZIP: 84058 BUSINESS PHONE: 8012279000 MAIL ADDRESS: STREET 1: PO BOX 2500 CITY: PROVO STATE: UT ZIP: 84603 10-K405 1 FORM 10-K 1 ================================================================================ 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 September 30, 1995, or / / Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from ___________ to ______________. COMMISSION FILE NO. 1-10459 GENEVA STEEL COMPANY (Exact name of Registrant as specified in its charter)
UTAH 93-0942346 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 10 SOUTH GENEVA ROAD VINEYARD, UTAH 84058 (Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (801) 227-9000 Securities registered pursuant to Section 12(b) of the Act:
NAME OF EACH EXCHANGE TITLE OF EACH CLASS ON WHICH REGISTERED ------------------- ------------------- CLASS A COMMON STOCK, NEW YORK STOCK EXCHANGE NO PAR VALUE PACIFIC STOCK EXCHANGE WARRANTS TO PURCHASE CLASS A COMMON STOCK PACIFIC STOCK EXCHANGE
Securities registered pursuant to Section 12(g) of the Act: None 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 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 the 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 the Class A Common Stock held by non-affiliates of the Registrant, based upon the closing sale price of the Class A Common Stock on the New York Stock Exchange on December 15, 1995, was approximately $92,908,000. Shares of Class A Common Stock held by each officer and director and by each person who may be deemed to be an affiliate have been excluded. As of December 15, 1995, the Registrant had 13,343,871 and 19,151,348 shares of Class A and Class B Common Stock, respectively, outstanding. DOCUMENTS INCORPORATED BY REFERENCE Parts of the following documents are incorporated by reference in Parts II, III and IV of this Report: (1) Registrant's Annual Report to Shareholders for the fiscal year ended September 30, 1995 (Parts II and IV), and (2) Registrant's Proxy Statement for the Annual Meeting of Shareholders to be held on March 26, 1996 (Part III). ================================================================================ 2 PART I ITEM 1. BUSINESS. BACKGROUND Geneva Steel Company (the "Company" or "Geneva") owns and operates the only integrated steel mill operating west of the Mississippi River. The Company's mill manufactures steel slabs and hot-rolled sheet, plate and pipe products for sale primarily in the western and central United States. The steel mill is located 45 miles south of Salt Lake City, Utah on approximately 1,400 acres. The steel mill's facilities include four coke oven batteries, three blast furnaces, two Basic Oxygen Process ("Q-BOP") furnaces, a continuous casting facility, a combination continuous rolling mill and various finishing facilities. The Company's coke ovens produce coke from a blend of various grades of metallurgical coal. Coke is used as the principal fuel for the Company's blast furnaces, which convert iron ore into liquid iron. The liquid iron is then blended with scrap metal and metallic alloys and further refined in the Q-BOP furnaces to produce liquid steel. The liquid steel is then processed through the continuous casting facility. Steel slabs are either direct rolled or allowed to cool and then reheated prior to rolling. Slabs are rolled into hot-rolled steel products (sheet, plate and pipe) in the Company's rolling and finishing mills. The Company also sells a portion of its slabs to other steel processors. The Company acquired the steel mill and related facilities from USX Corporation ("USX") on August 31, 1987 at a price of approximately $44.1 million plus the assumption of certain liabilities. USX had operated the mill from 1944 until 1986, when it placed the mill on hot-idle status. Pursuant to the acquisition agreement between USX and the Company, USX retained liability for retiree life insurance, health care and pension benefits relating to employee service prior to the acquisition. USX also indemnified the Company for costs due to any environmental condition existing on the Company's real property as of the acquisition date that is determined to be in violation of environmental laws or otherwise results in the imposition of environmental liability, subject to the Company's sharing the first $20 million of certain clean-up costs on an equal basis. See "Environmental Matters." Since the Company began operations, its strategy has been to be a low-cost producer of steel products and to optimize its product quality and mix. CAPITAL PROJECTS Overview In February 1990, the Company announced a major modernization program intended to strengthen its competitive position. The modernization program was undertaken to reduce operating costs, broaden the Company's product line, improve product quality and increase throughput capacity. The modernization program provides for improvements principally to the Company's ironmaking, steelmaking, casting, rolling and finishing facilities. Management believes that the modernization program has enabled the Company to produce the widest continuously cast steel slabs in the world and is positioning the Company for additional market penetration, particularly with respect to plate products. The Company has spent approximately $83 million, $165 million and $68 million on capital projects during the fiscal years ended September 30, 1993, 1994 and 1995, respectively. These expenditures were made primarily in connection with the Company's ongoing modernization efforts. Management believes that the modernization projects completed to date have resulted in production efficiencies, increased throughput capacity and improved product quality and yield. The Company's capital projects are under continuous review, and depending on market, operational, liquidity and other factors, the Company may elect to adjust the design, timing and budgeted expenditures of its capital plan. There can be no assurance that the projected benefits of the modernization or other capital projects will be fully achieved, sufficient product demand will exist for the Company's additional throughput capacity, or that the planned capital projects can be completed in a timely manner or for the amounts budgeted. Notwithstanding completion of the modernization program and other current capital projects, management believes that additional, future capital projects will be critical to the Company's long-term ability to compete and will require substantial expenditures. 1 3 Modernization Projects Since announcing the modernization program, the Company has (i) completed a new continuous casting facility and related improvements, (ii) installed two Q-BOP furnaces, (iii) completed a direct rolling and large coil project, including installation of a coilbox and a 42-megawatt induction slab heating furnace, (iv) completed the wide coiled plate project, (v) installed various environmental projects, and (vi) completed various other projects. The following discussion highlights the major projects completed during fiscal year 1995 or which remain to be completed. Wide Plate Coiler and Related Plate Processing Facilities. The wide coiled plate project allows the Company to produce plate in coil form up to 126 inches in width and 1 inch in thickness. The wide coils can either be shipped directly to customers or uncoiled, sheared and leveled on the Company's new cut-to-length line. In connection with completion of this project, the Company also converted its broadside mill to a reversing mill. The Company believes that the capability to produce and process wide plate in coil form is a significant competitive advantage. Induction Slab Heating Furnace. During the fourth fiscal quarter of 1995, the Company increased its production of higher-margin large coils due primarily to the start-up of a new 42-megawatt induction slab heating furnace, which is located in-line with the Company's caster and rolling mill. The new heating facility is designed to increase slab temperature by approximately 300 degrees fahrenheit prior to rolling. The Company is continuing to integrate the induction furnace into the production process. The Company continues to evaluate its slab heating requirements and may elect to install additional heating capacity. Plasma - Fired Cupola. The Company is nearing completion of a plasma-fired cupola ironmaking facility. The cupola functions similar to a blast furnace although it utilizes only a fraction of the coke required by a blast furnace to produce liquid iron. The cupola can melt scrap steel, directly reduced iron or other metallic inputs. The cupola utilizes electric plasma technology as a secondary fuel source to further reduce coke requirements and substantially increase its capacity. The technology represents a means of meeting short-term ironmaking needs while providing a broader flexibility of inputs and decreasing coke requirements. The Company expects the facility to become available for operation in the first calendar quarter of 1996. The cupola will be used to replace or supplement blast furnace iron production, particularly when scrap prices are favorable or during relines and other periods requiring additional ironmaking capacity. Rolling Mill Finishing Stand Improvements. The Company has a six-stand 132-inch combination continuous rolling mill, the widest of its type in the world, which gives the Company the flexibility to alter its mix of sheet and plate products in response to customer demands and changing market conditions. The final phase of the rolling mill modernization includes hydraulic gauge control, roll bending and automatic roll change. These improvements are designed to enhance the shape and gauge of the Company's products and to increase throughput capacity. Substantially all of the equipment for the rolling mill finishing stand improvements will be completed during fiscal year 1996. The Company has elected to defer installation of that equipment until the following fiscal year. The Company anticipates that it may incur significant start-up and transition costs as the finishing stand equipment is installed and implemented. Depending on market, operational, liquidity and other factors, the Company may elect at a later date to proceed with installation of the finishing stand equipment during the 1996 fiscal year. Development Venture The Company, together with Air Products and Chemicals, Inc. and Centerior Energy Corporation, has jointly agreed to pursue a unique project at Geneva intended to demonstrate the commercial viability of an energy efficient, environmentally sound process for producing hot metal and electricity. This project, known as Clean Power from Integrated Coal/Ore Reduction (CPICOR(TM)), was selected under the United States Department of Energy's Clean Coal Technology Demonstration Program. The project includes construction and operation of a 3,000 ton per day COREX(R) cokeless ironmaking unit. Potential advantages of the project for the Company include additional ironmaking capacity, decreased dependence on coke, increased energy production and various environmental benefits. The project, which includes up to $150 million in cost share funding from the Department of Energy, is not anticipated to start-up until 1999 and is still subject to a number of contingencies, including obtaining private financing, continuing availability of the government funding and completion of project definition activities relating to the economic viability of the project. 2 4 PRODUCTS The Company's principal products are steel slabs and hot-rolled sheet, plate and pipe products. The Company also sells non-steel materials that are by-products of its steelmaking operations. The Company has a 132-inch combination continuous rolling mill, the widest of its type in the world, which gives the Company the flexibility to alter its mix of sheet and plate products in response to customer demands and changing market conditions and the opportunity to maximize utilization of the facilities. Generally, the Company manufactures products in response to specific customer orders. During fiscal year 1995, the Company increased its percentage of plate and slab products sold. Consistent with the Company's strategic objectives, plate shipments have increased as various upgrades to plate processing and finishing equipment have been completed and implemented. The Company has, however, also increased slab shipments in response to favorable slab pricing and to maximize production from the continuous caster. The Company intends to continue shifting its product mix toward plate and anticipates that slab sales will continue as a means of maximizing throughput. Product mix shifts are also determined by Geneva's product mix optimization efforts. These efforts generally allow Geneva to focus on products with the highest margin contribution based on throughput efficiency. The Company's product sales mix for fiscal years 1991 through 1995 is shown below:
FISCAL YEAR ENDED SEPTEMBER 30, -------------------------------------------------- 1991 1992 1993 1994 1995 -------- -------- -------- ------- -------- Sheet . . . . . . . . . . . . . . . . . . . 42% 45% 56% 65% 41% Plate . . . . . . . . . . . . . . . . . . . 42 41 31 24 35 Pipe . . . . . . . . . . . . . . . . . . . 12 11 10 7 6 Slab . . . . . . . . . . . . . . . . . . . -- -- -- 1 15 Non-steel. . . . . . . . . . . . . . . . . 4 3 3 3 3 -------- -------- -------- ------- -------- Total . . . . . . . . . . . . . . 100% 100% 100% 100% 100% ======== ======== ======== ======= ========
Sheet. The mill produces hot-rolled sheet steel which is sold in sheet or coil form in thicknesses of .06 to .230 of an inch and widths of 40 to 74 inches. Maximum widths vary according to thickness. Included in the sheet products made by the Company are cut-to-length sheet, hot-rolled bands and tempered coil. Sheet is used in a variety of applications such as storage tanks, light structural components and supports and welded tubing. Plate. The Company's plate products consist of hot rolled carbon and high-strength low alloy steel plate in coil form, cut-to-length from coil and flat rolled in widths varying from 48 to 126 inches and in thicknesses varying from .1875 of an inch to 3 inches. Plate can be used for heavy steel structures such as storage tanks, railroad cars, ships and bridges. Pipe. The Company produces electric resistance welded pipe ("ERW pipe") ranging from approximately 7 to 16 inches in diameter. ERW pipe is manufactured by heating and fusing the edges of the steel coil to form the pipe. The Company's ERW pipe is used primarily in pipelines, including water, natural gas and oil transmission and distribution systems, and in standard and structural pipe applications. Slab and Non-Steel. The Company sells steel slabs when market conditions are favorable and as a means of maximizing production through the continuous caster. The Company also sells products produced by its foundry operation and various by-products resulting from its steelmaking activities. 3 5 MARKETING; PRINCIPAL CUSTOMERS The Company sells its sheet and plate products primarily to steel service centers and distributors, which in recent years have become one of the largest customer groups in the domestic steel industry. Service centers and distributors accounted for approximately 80% of the Company's finished product sales (excluding slabs) in fiscal year 1995. The Company also sells its products to steel processors and various end-users, including manufacturers of welded tubing, highway guardrail, storage tanks, railcars, ships and agricultural and industrial equipment. The Company believes that sales of its products, either directly or through service centers or distributors, to automotive or appliance manufacturers have been immaterial. The Company has developed a broad customer base. In fiscal year 1995, the Company sold its products domestically to approximately 175 customers in 38 states and abroad through exporters to six customers in Canada and Mexico. The Company sells its ERW pipe to end-users and through distributors primarily in the western and central United States, where demand for pipe fluctuates in partial response to oil and gas industry cycles. The Company also occasionally sells products in the export market. Export sales, which generally have lower margins than domestic sales, accounted for approximately 1.9%, 0.3% and 1.3% of the Company's net sales during fiscal years 1993, 1994 and 1995, respectively. The Company's principal direct marketing efforts are in the western and central United States. Five sales representatives are employed in the western market, two of whom are located in the greater Los Angeles area, the largest single market for steel in the western United States. The Company believes that it holds a significant market share of the hot-rolled sheet and plate sales in the eleven western states. In the central United States, the Company currently has a small share of the market. Management believes, however, that there are attractive opportunities for revenue growth in this market. Substantially all of Geneva's sales in the central United States are made through a sales arrangement with Mannesmann Pipe and Steel Corporation ("Mannesmann"), the United States steel marketing subsidiary of Mannesmann A.G., a major German industrial company. The sales arrangement entitles Mannesmann to sell the Company's products in 15 central states and to certain of the Company's customers in the eastern United States, and to receive a variable commission on its sales. Mannesmann has an exclusive right to sell the Company's products in these areas, subject to certain exceptions. The payment terms provide that Mannesmann make a production prepayment of up to $10 million. The Company is currently negotiating with Mannesmann to increase the amount of the production prepayment to $20 million, depending on sales volumes. See "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations." The prepayment is recorded as a production prepayment until the product is shipped, at which time the sale is recorded. The Company is currently negotiating a three year renewal of its agreement with Mannesmann and expects the renewal to be finalized within the next several weeks. Mannesmann accounted for approximately 42% and 36% of the Company's net sales in fiscal years 1994 and 1995, respectively. Any termination or disruption of the Company's arrangements with Mannesmann could have a material adverse effect on the Company's results of operations and financial condition. The Company's strategy is to maintain its core market in the western United States, where its market position is the strongest, and to increase growth in the midwest and eastern regions, while focusing on profit maximization. The Company believes that service centers and distributors account for a substantially larger proportion of its sales than of sales for the industry as a whole. Demand from this customer group historically has experienced wide fluctuations due to substantial changes in the group's inventory levels. In view of these factors, the Company intends to develop a more diverse customer base, including steel processors and various end-users, while retaining strong relationships with service center and distributor customers. The Company expects its modernization efforts to play a critical role in the implementation of these strategies by enabling the Company to provide higher quality products and to gain access to a wider range of customers than previously permitted. In October 1995, the Company and Inland Materials Distribution Group ("IMDG"), a wholly-owned subsidiary of Inland Steel Industries, announced a tentative agreement to form a joint venture that will own and operate a wide coiled plate processing facility in the Chicago area. The facility will be designed to process wide coiled plate into flat plate up to one inch in thickness and up to 96 inches (and potentially 126 inches) in width. The facility will be capable of producing up to 500,000 tons of discrete plate annually and is currently scheduled for completion during the first half of the 1997 calendar year. Flat plate processed on the line will be sold by the Company directly to customers and to IMDG for distribution through its steel service center network. 4 6 The Company generally produces steel in response to specific orders. As of November 30, 1995, the Company had estimated total orders on hand for approximately 274,000 tons compared to approximately 257,000 tons as of November 30, 1994. The Company does not believe that its orders on hand are necessarily indicative of future operating results. EMPLOYEES; LABOR AGREEMENT The Company has a workforce of approximately 2,570 full-time employees, of whom approximately 510 are salaried and approximately 2,060 are hourly. The Company's 179 operating management personnel generally have had considerable experience in the steel industry. Almost half have more than 20 years of industry experience, with most of the remaining managers ranging in experience from 10 to 20 years. The Company's senior operating managers have an average of over 25 years of industry experience. Substantially all of the Company's hourly employees are represented by the United Steelworkers of America under a collective bargaining agreement that expires in March 1998. The Company believes that its labor agreement is an important competitive advantage. Although the Company's wage rates under the agreement are high by local standards and comparable to regional competitors, its total hourly labor costs are substantially below recent industry averages compiled by the American Iron and Steel Institute. Unlike labor agreements negotiated by many other domestic integrated steel producers, the Company's labor agreement does not contain traditional work rules, limits the Company's financial pension obligations to a defined contribution plan and entitles the Company to reduce its profit sharing obligations by an amount equal to a portion of its capital expenditures. The Company did not assume any pension obligations or retiree medical obligations related to workers' service while the plant was owned by USX. The Company's labor agreement also contains a performance dividend plan designed to reward employees for increased shipments of steel products. Compensation under the plan includes a monthly guarantee of $.33 per hour for all union represented workers. The guaranteed payment is based on an annualized shipment rate of 1.5 million tons. As shipments increase above this level, compensation under the plan also increases. The Company has also implemented a performance dividend plan for all non-union employees that provides additional compensation as shipment levels increase. Unlike the union plan, however, there are no guaranteed payments. The Company's profit sharing obligations under the labor agreement are based on earnings before taxes, extraordinary items and profit sharing. Unlike the profit sharing arrangements of many major domestic integrated steel producers, the Company's profit sharing obligations are reduced by an amount equal to a portion of its capital expenditures. The Company is required to contribute each year to the profit sharing pool 10% of earnings before taxes, extraordinary items and profit sharing after deducting 25% of the first $50 million of capital expenditures and 30% of all additional capital expenditures in such year (including, in each case, capital maintenance). All payments made to workers under the union performance dividend plan are deducted from any profit sharing obligations otherwise required. Effective March 1, 1995, the Company established a voluntary employee beneficiary association trust ("VEBA Trust") to fund post retirement medical benefits for future retirees covered by the collective bargaining agreement. Company contributions to the VEBA Trust are limited to ten cents for each hour of work performed by employees covered by the collective bargaining agreement. In addition, union employees provide a contribution to the VEBA Trust based on a reduction from the performance dividend plan payment. No benefits will be paid from the VEBA Trust prior to March 31, 1998. Eligibility requirements and related matters will be determined at a later date. RAW MATERIALS AND RELATED SERVICES The Company is located near major deposits of several of the principal raw materials used to make steel, including iron ore, high volatile coal, limestone and natural gas. The Company believes that, in certain instances, this proximity, together with the Company's importance as a customer to suppliers of these materials, enhances its ability to obtain competitive terms for these raw materials. As the Company evaluates emerging technologies for the production of iron and steel, it intends to focus on those technologies that allow increased utilization of resources available in the western United States. 5 7 Iron Ore. The Company's steelmaking process can use both iron ore and iron ore pellets. In recent years, the Company has used a high percentage of iron ore pellets in an effort to maximize the operating efficiencies of its blast furnaces in response to increased production needs. Iron ore pellets are generally purchased from USX, as discussed below, as well as on the spot market. As the Company increases production levels, it may continue to use a higher percentage of iron ore pellets. The Company obtains its iron ore from deposits at mines in Utah. The ore is mined by an independent contractor under claims owned by the Company and transported by railroad to the steel mill. The Company expects future costs of recovery of this ore to increase gradually as the reserves are depleted. The Company has historically purchased iron ore pellets from USX. Pursuant to a five year agreement entered into as of September 1, 1994, the Company has commitments to purchase at least 2,400,000 and 2,160,000 tons in the second and third years of the agreement, respectively, and 1,890,000 tons in each of the fourth and fifth years of the contract. The agreement also limits the maximum quantity of pellets USX is obligated to supply. Coal and Coke. The coke batteries operated by the Company require a blend of various grades of metallurgical coal. The Company currently obtains high volatile coal from a mine in western Colorado owned by Pacific Basin Resources under a contract that expires in March 1997, which will likely be extended. The Company also purchases various grades of coal under short-term contracts from sources in the eastern United States. Although the Company believes that such coal is available from several alternative eastern suppliers, the Company is subject to price volatility resulting from fluctuations in the spot market. There can be no assurance that the Company's blend of coal will not change or that its overall cost of coal will not increase. The Company is currently purchasing imported coke as a result of its increasing steel production and decreasing capacity to produce its own coke as the Company's coke ovens deteriorate. The ability of other domestic integrated steel mills to produce coke is also decreasing, thereby increasing the demand for purchased coke in the United States. The Company purchases coke from sources in Japan and China. As the Company's consumption of purchased coke increases, the Company's average cost of coke used in the manufacturing process will be higher. Energy. The Company's steel operations consume large amounts of oxygen, electricity and natural gas. The Company purchases oxygen, nitrogen and argon from two facilities located on the Company's premises which were constructed by Air Liquide America Corporation ("Air Liquide") and Praxair, Inc. ("Praxair"), respectively. These facilities are capable of providing approximately 280 and 540 tons of oxygen per day under contracts which expire in 1998 and 2006, respectively. Air Liquide has agreed to construct a new facility to accommodate the Company's increased production levels and to replace the existing Air Liquide facility. Under a new agreement expiring 15 years from the date of first delivery of product (presently estimated at December, 1996), the Company will have the right to receive an average of 800 tons of gaseous oxygen per day from the new facility. Praxair will also continue to supply product to the Company from its facility. The Company pays a monthly charge to Praxair for the right to receive 100% of Praxair's production and will pay a similar charge to Air Liquide to receive contract tonnages of oxygen when the new facility is completed. The Company generates a substantial portion of its electrical requirements using a 50 megawatt rated generator located at the steel mill and currently purchases most of its remaining electrical requirements from Utah Power & Light Company ("UP&L") under a 90 megawatt interruptible power contract expiring in 1999. The contract provides for price increases tied to the cost of energy used by the utility to produce electricity. The Company has also entered into a firm power contract expiring in 1999 with UP&L under which the Company purchases additional electrical needs. The firm contract provides for energy charges and price increases similar to the interruptible contract but also includes a significantly higher capacity charge. Natural gas is purchased at the wellhead in the Rocky Mountain region and is transported to the steel mill by pipeline. The Rocky Mountain region has substantial natural gas reserves. Other. The Company's mill is served by both the Southern Pacific Transportation Company ("SP") and the Union Pacific Railroad Company ("UP"). The Company believes that it is one of the largest western customers of each railroad. The Company's location in the western United States facilitates backhauling, which reduces freight costs. The SP and the UP recently announced the intention to merge, subject to approval by the Interstate Commerce Commission. The Company has expressed concerns regarding the competitive impact of such a merger and, as a result, is in the process of negotiating a long-term transportation contract with the UP intended to maintain a competitive rate structure. The Company also owns 6 8 mining claims in a limestone quarry located approximately 30 miles from the Company's plant. The limestone is mined by the Company and transported by railroad to the mill. The Company uses scrap metal obtained from its own operations and external sources in its steelmaking process. As the Company increases its production volume, improves yield or implements steelmaking technologies that utilize scrap, such as the plasma-fired cupola, management anticipates that increased amounts of scrap will be purchased. The cost of the Company's raw materials, including energy, has been susceptible in the past to fluctuations in price and availability and is expected to increase over time. Worldwide competition in the steel industry has frequently limited the ability of steel producers to raise finished product prices to recover higher raw material costs. The Company's future profitability will be adversely affected to the extent it is unable to pass on higher raw material costs to its customers. COMPETITION AND OTHER MARKET FACTORS The Company competes with domestic and foreign steel producers on the basis of price, quality and service. Many of the Company's competitors are larger companies, have greater capital resources and, in some cases, more modern technology than the Company. Intense worldwide sales competition exists for all the Company's products. Both the industry and the Company face increasing competition from producers of certain materials such as aluminum, composites, plastics and concrete. The Company believes that certain of its raw material arrangements, particularly with respect to energy, and its current labor contract are favorable in relation to those of the domestic steel industry as a whole. The Company currently purchases iron ore pellets and a significant portion of its coal requirements from locations in the midwest and eastern United States, for which it has a transportation cost disadvantage. The Company believes that its geographic location enhances its ability to compete in the western United States, although it has a transportation disadvantage in midwestern and eastern markets. Product quality has improved significantly as a result of the continuous caster and other capital projects. The Company is presently at a competitive disadvantage with respect to certain product quality factors particularly with respect to sheet products. The Company believes, however, that its ongoing modernization efforts have enhanced the competitiveness of its products, particularly with respect to plate products. Standards of quality in the steel industry are, nevertheless, rising as buyers continually expect higher quality products. Foreign and domestic producers continue to invest heavily to achieve increased production efficiencies and product quality. The steel industry is cyclical in nature and highly competitive. Moreover, overall throughput capacity and competition are increasing due primarily to construction of mini-mills and improvements in production efficiencies at existing mills. The Company, like other steel producers, is highly sensitive to price and production volume changes. Consequently, any downward movement could have an adverse effect on the Company's results of operations. Integrated steel producers are facing increasing competitive pressures from mini-mills. Mini-mills are generally smaller volume steel producers which use ferrous scrap metal as their basic raw material and serve regional markets. These operations traditionally produced lower margin, commodity type steel goods such as bars, rods and structural products. A number of mini-mills, however, produce plate, coil and pipe products that compete directly with the Company's products. Three mini-mills have completed or are constructing facilities that will produce wide plate in coil form, thereby competing with products produced by the Company. Of these facilities, one has begun operations and a second will begin operations in the spring of 1996. Recently developed thin slab/direct rolling techniques have also allowed mini-mills to produce some of the types of sheet products that have traditionally been supplied by integrated producers. Several competitors have announced or expressed an intention to construct mini-mill facilities that, if constructed, are expected to significantly increase domestic steel production and thereby further increase competition. Foreign competition is a significant factor in the steel industry and has adversely affected product prices in the United States and tonnage sold by domestic producers. The intensity of foreign competition is substantially affected by fluctuations in the value of the United States dollar against several other currencies as well as the strength of the United States economy relative to foreign economies. In addition, many foreign steel producers are controlled or subsidized by foreign governments whose decisions concerning production and exports may be influenced in part by political and social policy considerations as well as by prevailing market conditions and profit opportunities. Domestic pricing has been 7 9 adversely affected by unfairly traded imports, including most recently from non-traditional sources such as Russia, Ukraine and China. Existing trade laws and regulations may be inadequate to prevent unfair trade practices whereby imports could pose increasing problems for the domestic steel industry and the Company. ENVIRONMENTAL MATTERS Compliance with environmental laws and regulations is a significant factor in the Company's business. The Company is subject to federal, state and local environmental laws and regulations concerning, among other things, air emissions, wastewater discharge, and solid and hazardous waste disposal. The Company believes that it is in compliance in all material respects with all currently applicable environmental regulations. The Company has incurred substantial capital expenditures for environmental control facilities, including the Q-BOP furnaces, the wastewater treatment facility, the benzene mitigation equipment, the coke oven gas desulfurization facility and other projects. The Company has budgeted a total of approximately $1.7 million for environmental capital improvements in fiscal years 1996 and 1997. Such improvements include potential upgrades to the Company's coking emission controls. Environmental legislation and regulations have changed rapidly in recent years and it is likely that the Company will be subject to increasingly stringent environmental standards in the future. Although the Company has budgeted capital expenditures for environmental matters, it is not possible at this time to predict the amount of capital expenditures that may ultimately be required to comply with all environmental laws and regulations. Under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended ("CERCLA"), the U.S. Environmental Protection Agency and the states have authority to impose liability on waste generators, site owners and operators and others regardless of fault or the legality of the original disposal activity. Other environmental laws and regulations may also impose liability on the Company for conditions existing prior to the Company's acquisition of the steel mill. At the time of the Company's acquisition of the steel mill, the Company and USX identified certain hazardous and solid waste sites and other environmental conditions which existed prior to the acquisition. USX has agreed to indemnify the Company (subject to the sharing arrangements described below) for any fines, penalties, costs (including costs of clean-up, required studies, and reasonable attorneys' fees), or other liabilities for which the Company becomes liable due to any environmental condition existing on the Company's real property as of the acquisition date that is determined to be in violation of any environmental law, is otherwise required by applicable judicial or administrative action, or is determined to trigger civil liability (the "Pre-existing Environmental Liabilities"). The Company has provided a similar indemnity (but without any similar sharing arrangement) to USX for conditions that may arise after the acquisition. Although the Company has not completed a comprehensive analysis of the extent of the Pre-existing Environmental Liabilities, such liabilities could be material. Under the acquisition agreement between the two parties, the Company and USX agreed to share on an equal basis the first $20 million of costs incurred by either party to satisfy any government demand for studies, closure, monitoring, or remediation at specified waste sites or facilities or for other claims under CERCLA or the Resource Conservation and Recovery Act. The Company is not obligated to contribute more than $10 million for the clean-up of wastes generated prior to the acquisition. The Company believes that it has paid the full $10 million necessary to satisfy its obligations under the cost-sharing arrangement. USX has advised the Company, however, of its position that a portion of the amount paid by the Company may not be properly credited against Geneva's obligations. Although the Company believes that USX's position is without merit, there can be no assurance that this matter will be resolved without litigation. The Company believes that resolution of this matter will not likely have a material adverse effect. The Company's ability to obtain indemnification from USX in the future will depend on factors which may be beyond the Company's control and may also be subject to dispute. ITEM 2. PROPERTIES. The Company's principal properties consist of the approximately 1,400-acre site on which the steel mill and related facilities are located, the Company's iron ore mines in southern Utah and the limestone quarry near the steel mill. The Company also leases from the State of Utah, under a lease expiring in 2016, a 300-acre site which includes a retention pond. The retention pond is a significant part of the Company's water pollution control facilities. Although the Company's facilities are generally suitable to its needs, the Company believes that such facilities will continue to require future improvements 8 10 and additional modernization projects in order to remain competitive. See Item 1. "Business--Capital Projects" and "--Competition and Other Market Factors." ITEM 3. LEGAL PROCEEDINGS. In addition to the matters described under Item 1. "Business--Environmental Matters," the Company is a party to routine legal proceedings incidental to its business. In the opinion of management, after consultation with its legal counsel, none of the proceedings to which the Company is currently a party to are expected to have a material adverse effect on the Company's business or financial condition. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. No matters were submitted to a vote of security holders during the fourth quarter of the fiscal year covered by this Report. 9 11 PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS. The Company's Class A Common Stock is listed and traded on the New York Stock Exchange ("NYSE") and the Pacific Stock Exchange under the symbol "GNV." The following table sets forth, for the periods indicated, the high and low sales prices for the Class A Common Stock as reported on the NYSE Composite Tape.
Fiscal Year Ended September 30, 1994 HIGH LOW First Quarter ended December 31 $ 18 1/2 $ 11 7/8 Second Quarter ended March 31 21 3/8 13 1/4 Third Quarter ended June 30 20 13 3/8 Fourth Quarter ended September 30 21 1/4 15 1/2 Fiscal Year Ended September 30, 1995 HIGH LOW First Quarter ended December 31 $ 18 $ 12 1/4 Second Quarter ended March 31 16 9 3/4 Third Quarter ended June 30 12 7 1/8 Fourth Quarter ended September 30 9 3/4 7 3/4
As of November 30, 1995, the Company had 13,343,871 shares of Class A Common Stock outstanding, held by 646 stockholders of record, and 19,151,348 shares of Class B Common Stock outstanding, held by five stockholders of record. Shares of Class B Common Stock are convertible into shares of Class A Common Stock at the rate of ten shares of Class B Common Stock for one share of Class A Common Stock. There is no public market for the Class B Common Stock. The Company currently anticipates that it will retain all available funds to finance its capital expenditures and other business activities, and it does not anticipate paying any cash dividends on the Common Stock in the foreseeable future. In addition, the Company's revolving credit facility and senior notes restrict the amount of dividends that the Company may pay. See Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Liquidity and Capital Resources" and Note 2 of Notes to Consolidated Financial Statements included in this Report. ITEM 6. SELECTED FINANCIAL DATA. The information required by this Item is incorporated by reference to page 5 of the Company's Annual Report to Shareholders for the fiscal year ended September 30, 1995. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. The information required by this Item is incorporated by reference to pages 6 through 11 of the Company's Annual Report to Shareholders for the fiscal year ended September 30, 1995. ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. The information required by this Item is incorporated by reference to pages 12 through 27 of the Company's Annual Report to Shareholders for the fiscal year ended September 30, 1995. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. None. 10 12 PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT. The information required by this Item is incorporated by reference to the sections entitled "Election of Directors -- Nominees for Election as Directors" and "Executive Officers" in the Company's definitive Proxy Statement for the Annual Meeting of Shareholders to be held on March 26, 1996. The definitive Proxy Statement will be filed with the Securities and Exchange Commission not later than 120 days after September 30, 1995, pursuant to Regulation 14A of the Securities Exchange Act of 1934, as amended. ITEM 11. EXECUTIVE COMPENSATION. The information required by this Item is incorporated by reference to the sections entitled "Election of Directors -- Director Compensation" and "Executive Compensation" in the Company's definitive Proxy Statement for the Annual Meeting of Shareholders to be held on March 26, 1996. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. The information required by this Item is incorporated by reference to the section entitled "Principal Holders of Voting Securities" in the Company's definitive Proxy Statement for the Annual Meeting of Shareholders to be held on March 26, 1996. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. None. 11 13 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K. (a) Documents Filed: 1. Consolidated Financial Statements. The following Consolidated Financial Statements of the Company and Report of Independent Public Accountants included in the Company's Annual Report to Shareholders for the fiscal year ended September 30, 1995 are incorporated by reference in Item 8 of this Report: - Report of Independent Public Accountants - Consolidated Balance Sheets at September 30, 1995 and 1994 - Consolidated Statements of Operations for the years ended September 30, 1995, 1994 and 1993 - Consolidated Statements of Stockholders' Equity for the years ended September 30, 1995, 1994 and 1993 - Consolidated Statements of Cash Flows for the years ended September 30, 1995, 1994 and 1993 - Notes to Consolidated Financial Statements 2. Financial Statement Schedule. The following Financial Statement Schedule of the Company for the years ended September 30, 1995, 1994 and 1993 is filed as part of this Report and should be read in conjunction with the Company's Consolidated Financial Statements and Notes thereto: Schedule Page -------- ---- II - Valuation and Qualifying Accounts 18 Financial statements and schedules other than those listed are omitted for the reason that they are not required or are not applicable, or the required information is shown in the Consolidated Financial Statements or Notes thereto, or contained in this Report. (b) Reports on Form 8-K None. 12 14 (c) Exhibits
EXHIBIT INCORPORATED FILED NO. EXHIBIT BY REFERENCE HEREWITH ------- --------------------------------------------------------- --------------- ------------ 3.1 Revised Articles of Incorporation of the Registrant (1) 3.2 Articles of Amendment dated February 17, 1993 to the (2) Registrant's Revised Articles of Incorporation 3.3 Articles of Amendment dated March 12, 1993 to the (3) Registrant's Revised Articles of Incorporation 3.4 Restated Bylaws of the Registrant dated March 12, 1993 (2) 4.1 Specimen Certificate of the Registrant's Class A Common (1) Stock, no par value 4.2 Specimen Certificate of the Registrant's Series B Preferred (4) Stock, no par value 10.1 Asset Sales Agreement between USX and the Registrant dated as (1) of June 26, 1987, as Amended and Restated August 31, 1987 10.2 Registration Rights Agreement among the signatories listed on (1) the signature pages thereof and the Registrant dated November 6, 1989 10.3 License Agreement between ENSR Corporation and the Registrant (1) dated December 8, 1988 10.4 Amended and Restated Revolving Credit Agreement among the (5) Registrant, the Lender Parties named therein, Citibank, N.A., and Citicorp U.S.A., Inc., dated as of November 4, 1994 10.5 First Amendment to Amended and Restated Revolving Credit (6) Agreement dated June 30, 1995 10.6 Second Amendment to Amended and Restated Revolving Credit X Agreement dated October 31, 1995 10.7 Receivables Purchase Agreement between the Registrant and (5) Geneva Steel Funding Corporation ("GSFC") dated as of November 4, 1994, including Annex 10.8 Pooling and Servicing Agreement among GSFC, the Registrant (5) and Bankers Trust Company, as trustee, dated as of November 4, 1994, including Annex 10.9 Series 1994-1 Supplement to Pooling and Servicing Agreement (5) among GSFC, the Registrant and Bankers Trust Company, as trustee, dated as of November 4, 1994, including Annex 10.10 Certificate Purchase Agreement among GSFC, the Registrant, (5) Corporate Receivables Corporation, the Liquidity Providers named therein, and Citicorp North America, Inc., dated as of November 4, 1994, including Annex 10.11 Sales Representation Agreement between Mannesmann Pipe & (1) Steel Corporation and the Registrant dated December 8, 1988 10.12 Amendment to Sales Representation Agreement between (7) Mannesmann Pipe & Steel Corporation and the Registrant dated April 18, 1991
13 15
EXHIBIT INCORPORATED FILED NO. EXHIBIT BY REFERENCE HEREWITH ------- --------------------------------------------------------- --------------- ------------ 10.13 Amendment to Sales Representation Agreement between (8) Mannesmann Pipe & Steel Corporation and the Registrant dated April 17, 1992 10.14 Geneva Steel Key Employee Plan* (9) 10.15 Amendment to Geneva Steel Key Employee Plan dated May 12, (7) 1991* 10.16 Form of Non-Statutory Stock Option Agreement* (1) 10.17 Management Employee Savings and Pension Plan, as Amended and X Restated generally effective January 1, 1994, dated as of July 3, 1995* 10.18 Form of revised Executive Split Dollar Insurance Agreement* (10) 10.19 Form of revised Executive Supplemental Retirement Agreement* (10) 10.20 Union Employee Savings and Pension Plan, as Amended and X Restated effective January 1, 1995, dated as of June 22, 1995* 10.21 Collective Bargaining Agreement between United Steelworkers (6) of America and the Registrant ("Collective Bargaining Agreement") dated March 1, 1995* 10.22 Agreement between Union Carbide Industrial Gases, Inc. and (9) the Registrant dated July 12, 1990, as amended August 3, 1990 (the "Union Carbide Agreement") 10.23 Amendment to the Union Carbide Agreement dated December 1, (10) 1992 10.24 Oxygen Supply Agreement between Big Three Industrial Gas, (9) Inc. (successor in interest to Liquid Air Corporation) and the Registrant dated September 27, 1988 and Amendment thereto dated June 8, 1990 10.25 Coilbox License Agreement between Stelco Technical Services (1) Limited and the Registrant dated August 23, 1989 10.26 License Agreement for the K-OBM Process between (1) Klockner Contracting and Technologies GmbH and the Registrant dated November 25, 1989 10.27 Special Use Lease Agreement No. 897 between the State of Utah (10) and the Registrant dated January 13, 1992 and Amendment thereto dated June 19, 1992 10.28 Indenture dated as of January 15, 1994 between the Registrant (11) and Bankers Trust Company, as Trustee, including a form of 9 1/2% Senior Note due 2004 10.29 Indenture dated as of March 15, 1993 between the Registrant (3) and The Bank of New York, as Trustee, including a form of 11 1/8% Senior Note due 2001 10.30 License Agreement relating to the desulfurization process (1) between BS&B Engineering Company, Inc. and the Registrant dated March 1, 1990
14 16
EXHIBIT INCORPORATED FILED NO. EXHIBIT BY REFERENCE HEREWITH ------- --------------------------------------------------------- --------------- ------------ 10.31 Lo-Cat(R) Licensing Agreement between ARI Technologies, Inc. (9) and the Registrant dated April 16, 1990 10.32 Agreement relating to the closure of hazardous waste surface (9) impoundments between USX Corporation, the Registrant and Duncan Lagnese Associates, Incorporated dated October 22, 1990 10.33 Agreement for the Sale and Purchase of Coal among Pacific (7) Basin Resources (a division of Oxbow Carbon and Minerals, Inc.), Somerset Mining Company and the Registrant dated April 11, 1991 10.34 Agreement for the Sale and Purchase of Coke between the (12) Registrant and Mitsubishi International Corporation dated November 9, 1993 (the "Mitsubishi Agreement") 10.35 Amendment to the Mitsubishi Agreement dated as of December (13) 28, 1993 10.36 Agreement for Sale and Purchase of Coke between the (14) Registrant and Pacific Basin Resources (a division of Oxbow Carbon and Minerals, Inc.) dated April 29, 1994 10.37 Warrant Agreement dated as of March 16, 1993 between the (2) Registrant and The Bank of New York, as Warrant Agent 10.38 Form of Indenture between the Registrant and the Trustee (3) thereunder related to the Exchange Debentures, including a form of Exchange Debenture 10.39 Taconite Pellet Sales Agreement between USX Corporation and (6) Geneva Steel dated May 31, 1995 10.40 Industrial Gas Supply Agreement between Air Liquide America (6) Corporation and Geneva Steel dated June 8, 1995. 13 Selected portions of the Registrant's Annual Report to X Shareholders for the year ended September 30, 1995 which are incorporated by reference in Parts II and IV of this Report 23 Consent of Arthur Andersen LLP, independent public X accountants 27 Financial Data Schedule X
-------------------- * Management contract or compensatory plan or arrangement. (1) Incorporated by reference to the Registration Statement on Form S-1 dated March 27, 1990, File No. 33-33319. (2) Incorporated by reference to the Registration Statement on Form S-3 dated June 16, 1993, File No. 33-64548. (3) Incorporated by reference to the Registration Statement on Form S-4 dated April 15, 1993, File No. 33-61072. (4) Incorporated by reference to the Registration Statement on Form S-4 dated August 9, 1993, File No. 33-61072. 15 17 (5) Incorporated by reference to the Annual Report on Form 10-K for the fiscal year ended September 30, 1994. (6) Incorporated by reference to the Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 1995. (7) Incorporated by reference to the Annual Report on Form 10-K for the fiscal year ended September 30, 1991. (8) Incorporated by reference to the Current Report on Form 8-K dated May 22, 1992. (9) Incorporated by reference to the Registration Statement on Form S-1 dated November 5, 1990, File No. 33-37238. (10) Incorporated by reference to the Annual Report on Form 10-K for the fiscal year ended September 30, 1992. (11) Incorporated by reference to the Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 1993. (12) Incorporated by reference to the Current Report on Form 8-K dated December 2, 1993. (13) Incorporated by reference to the Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 1994. (14) Incorporated by reference to the Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 1994. (d) Financial Statement Schedule See page 18 herein. 16 18 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To Geneva Steel Company: We have audited in accordance with generally accepted auditing standards, the consolidated financial statements incorporated by reference in Item 8 of this Form 10-K, and have issued our report thereon dated October 25, 1995 (except with respect to the matter discussed in the last paragraph of Note 7 as to which the date is November 28, 1995). Our audit was made for the purpose of forming an opinion on those statements taken as a whole. The schedule listed in Item 14(a)2 is the responsibility of the Company's management and is presented for purposes of complying with the Securities and Exchange Commission's rules and is not part of the basic financial statements. This schedule has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, fairly states in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole. ARTHUR ANDERSEN LLP Salt Lake City, Utah October 25, 1995 17 19 GENEVA STEEL COMPANY SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS FOR THE YEARS ENDED SEPTEMBER 30, 1995, 1994 AND 1993 (Dollars in Thousands)
Additions Balance at Charged to Deductions, Balance Beginning Costs and Net of at End Description of Year Expenses Recoveries of Year - ----------- ----------- ---------- ---------- --------- Year Ended September 30, 1995 Allowance for doubtful accounts . . . $3,113 $5,138 $(6,239) $2,012 ====== ====== ======= ====== Year Ended September 30, 1994 Allowance for doubtful accounts . . . $2,983 $4,826 $(4,696) $3,113 ====== ====== ======= ====== Year Ended September 30, 1993 Allowance for doubtful accounts . . . $3,413 $5,230 $(5,660) $2,983 ====== ====== ======= ======
18 20 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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, on December 27, 1995. GENEVA STEEL COMPANY By: /s/ Joseph A. Cannon --------------------------- Joseph A. Cannon, Chairman of the Board and Chief Executive Officer 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.
Signature Title Date --------- ----- ---- /s/ Joseph A. Cannon Chairman of the Board and Chief December 27, 1995 - ----------------------------- Executive Officer Joseph A. Cannon (Principal executive officer) /s/ Robert J. Grow President and Chief Operating December 27, 1995 - ----------------------------- Officer and Director Robert J. Grow /s/ Richard D. Clayton Executive Vice President, December 27, 1995 - ----------------------------- Vice President of Environment Richard D. Clayton and Director /s/ Dennis L. Wanlass Vice President, Treasurer and December 27, 1995 - ----------------------------- Chief Financial Officer Dennis L. Wanlass (Principal financial and accounting officer) /s/ A. Blaine Huntsman Director December 27, 1995 - ----------------------------- A. Blaine Huntsman /s/ A. Thurl Jacobson Director December 27, 1995 - ----------------------------- A. Thurl Jacobson /s/ Arch L. Madsen Director December 27, 1995 - ----------------------------- Arch L. Madsen /s/ R. J. Shopf Director December 27, 1995 - ----------------------------- R. J. Shopf
EX-10.6 2 SECOND AMENDMENT TO AMENDED CRDT AGREEMENT 1 SECOND AMENDMENT TO AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT Second Amendment to Amended and Restated Revolving Credit Agreement (this "Amendment"), dated as of October 31, 1995, in respect of and to that certain Amended and Restated Revolving Credit Agreement, dated as of November 4, 1994 (as amended by this Amendment and as the same shall have been heretofore or shall be hereafter amended, modified or supplemented, the "Credit Agreement", and the terms defined therein and not otherwise defined herein being used herein as therein defined), among Geneva Steel Company, a Utah corporation (the "Borrower"), the lenders party thereto (the "Lenders"), Citibank, N.A., as Issuer (the "Issuer") and Citicorp USA, Inc., as Agent for the Lenders (the "Agent"). W I T N E S S E T H : WHEREAS, the Borrower has requested that the Credit Agreement be amended in certain respects; and WHEREAS, the Lenders, the Issuer and the Agent are willing to amend the Credit Agreement but only on the terms and subject to the conditions set forth herein; NOW THEREFORE, in consideration of the premises and the mutual covenants hereinafter contained, the parties hereto agree as follows: SECTION 1. Amendments to Credit Agreement. Subject to and upon the satisfaction of the conditions set forth in Section 2 hereof, the Credit Agreement is hereby amended as follows: (a) Section 5.3 of the Credit Agreement is hereby amended by deleting the Maximum Amount of Cumulative Capital Expenditures set forth therein for the periods ending October 31, 1995, November 30, 1995, December 31, 1995, January 31, 1996 and February 29, 1996 and substituting in lieu thereof $75,000,000, $75,000,000, $75,000,000, $82,000,000 and $82,000,000, respectively. (b) Section 5.4 of the Credit Agreement is hereby amended by deleting the Minimum Cash Flow amounts set forth therein for the periods ending October 31, 1995, November 30, 1995, December 31, 1995, January 31, 1996 and February 29, 1996 and substituting in lieu thereof $45,000,000, $47,500,000, $50,000,000, $50,000,000 and $55,000,000, respectively. 2 SECTION 2. Conditions Precedent. 2.1. This Amendment shall become effective (the "Effective Date") if and when, and only when, the Agent shall have received counterparts of this Amendment executed by the Borrower, the Agent, the Issuer and the Majority Lenders, and the Agent shall have additionally received all of the following documents, each document (unless otherwise indicated) being dated as of the date hereof, in form and substance satisfactory to the Agent and in sufficient original copies for each Lender: (a) Certified copies of the resolutions of the Board of Directors of the Borrower, evidencing authorization of the Borrower to enter into this Amendment and the documents, transactions and matters contemplated hereby; (b) A certificate of the Secretary or an Assistant Secretary of the Borrower, certifying the names and true signatures of the officers of the Borrower authorized to execute and deliver this Amendment on behalf of the Borrower; and (c) A certificate, signed by a Responsible Officer of the Borrower, stating that the conditions specified in Section 2.2 hereof have been satisfied. 2.2. The effectiveness of this Amendment is subject to the further conditions precedent that: (a) The execution and delivery by the Borrower of this Amendment are not enjoined, temporarily, preliminarily or permanently; (b) All costs and accrued and unpaid fees and expenses owing by the Borrower to the Agent or the Lenders, to the extent due and payable on or prior to the Effective Date, shall have been paid; and (c) The following statements shall be true and correct on the Effective Date: (i) The representations and warranties of the Borrower in each Loan Document (after giving effect to this Amendment) and in this Amendment are correct and accurate on and as of the Effective Date, as though made on and as of the Effective Date; and 2 3 (ii) After giving effect to this Amendment, no Default or Event of Default shall have occurred and be continuing. SECTION 3. Representations and Warranties. In order to induce the Lenders, the Issuer and the Agent to enter into this Amendment, the Borrower represents and warrants to the Lenders, the Issuer and the Agent as follows: 3.1. The execution, delivery and performance by the Borrower of this Amendment and each other document and instrument to be delivered hereunder: (a) are within the Borrower's corporate powers; (b) have been duly authorized by all necessary corporate action, including, without limitation, the consent of shareholders where required; (c) do not and will not (i) contravene its Articles of Incorporation, by-laws or other comparable governing documents, (ii) violate any Requirement of Law (including, without limitation, Regulations G, T, U and X of the Board of Governors of the Federal Reserve System), or any order or decree of any court or Governmental Authority, (iii) conflict with or result in the breach of, or constitute a default under, or result in or permit the termination or acceleration of, any Contractual Obligation of the Borrower, or (iv) result in the creation or imposition of any Lien upon any of the property of the Borrower; and (d) do not require the consent, authorization by, or approval of, or notice to, or filing or registration with, any Governmental Authority or any other Person, other than those which have been obtained and copies of which have been delivered to the Agent, each of which is in full force and effect. 3.2. This Amendment has been duly executed and delivered by the Borrower. 3.3. This Amendment is the legal, valid and binding obligation of the Borrower, enforceable against the Borrower in accordance with its terms. SECTION 4. Miscellaneous. 4.1. This Amendment and the rights of the parties hereto shall be governed by, and construed in accordance with, the law of the State of New York. Wherever possible, each provision of this Amendment shall be interpreted in such a manner as 3 4 to be effective and valid under applicable law, but if any provision of this Amendment shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Amendment. 4.2. Any legal action or proceeding with respect to this Amendment or any document related hereto may be brought in the courts of the State of New York or of the United States of America for the Southern District of New York, and, by execution and delivery of this Amendment, the Borrower hereby accepts, and submits to, for itself and in respect of its property, generally and unconditionally, the jurisdiction of the aforesaid courts. The parties hereto hereby irrevocably waive any objection, including, without limitation, any objection to the laying of venue or based on the grounds of forum non conveniens, which any of them may now or hereafter have to the bringing of any such action or proceeding in such respective jurisdictions. The Borrower agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. 4.3. Nothing contained in this Section 4 shall affect the right of the Agent, the Issuer, any Lender or any holder of a Note to serve process in any manner permitted by law or commence legal proceedings or otherwise proceed against the Borrower in any other jurisdiction. 4.4. Each of the parties hereto waives any right it may have to trial by jury in respect of any litigation based on, or arising out of, under or in connection with this Amendment, or any course of conduct, course of dealing, verbal or written statement or action of any party hereto. 4.5. The Section titles contained in this Amendment are and shall be without substantive meaning or content of any kind whatsoever and are not a part of the agreement between the parties hereto. 4.6. This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. 4.7. Except as expressly amended by this Amendment, the Credit Agreement shall remain in full force and effect and is hereby ratified and confirmed. 4 5 IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment to be executed by an officer thereunto duly authorized, as of the date first above written. GENEVA STEEL COMPANY By: /s/ Dennis L. Wanlass --------------------------------- Name: Dennis L. Wanlass Title: Vice President, Treasurer and Chief Financial Officer CITICORP USA, INC., as Agent By: /s/ Keith R. Karako --------------------------------- Name: Keith R. Karako Title: Attorney-in-Fact CITICORP USA, INC., as Lender By: /s/ Keith R. Karako --------------------------------- Name: Keith R. Karako Title: Attorney-in-Fact CITIBANK, N.A., as Issuer By: /s/ Keith R. Karako --------------------------------- Name: Keith R. Karako Title: Attorney-in-Fact 5 6 CORESTATES BANK, N.A., as Lender By: /s/ Myron Landau --------------------------------- Name: Myron Landau Title: Vice President BANK ONE, UTAH, N.A., as Lender By: --------------------------------- Name: Title: Vice President FIRST SECURITY BANK OF UTAH, N.A., as Lender By: /s/ Scott M. Eastwood --------------------------------- Name: Scott M. Eastwood Title: Vice President HELLER FINANCIAL, INC., as Lender By: /s/ Mark Admison --------------------------------- Name: Mark Admison Title: EX. Vice President 6 EX-10.17 3 MANAGEMENT EMPL SAVINGS AND PENSION PLAN 1 THE GENEVA STEEL MANAGEMENT EMPLOYEE SAVINGS AND PENSION PLAN (As Amended and Restated Generally Effective January 1, 1994) 2 TABLE OF CONTENTS
Page ---- ARTICLE 1. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-1 ARTICLE 2. ELIGIBILITY AND ENROLLMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-1 2.1 Eligible Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-1 2.2 Participation Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-2 2.3 Enrollment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-2 2.4 Rehired Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-2 2.5 Transferred Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-2 2.6 Suspension of Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-2 2.7 Termination of Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-3 ARTICLE 3. DISCRETIONARY CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-1 3.1 Amount of Discretionary Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-1 3.2 Allocation of Discretionary Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-1 ARTICLE 4. PENSION CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-1 4.1 Amount of Pension Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-1 4.2 Allocation of Pension Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-1 ARTICLE 5. SALARY DEFERRALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-1 5.1 Amount of Salary Deferrals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-1 5.2 Limitation on Salary Deferrals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-1 5.3 Election to Contribute . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-2 5.4 Amendment of Prior Elections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-3 5.5 Voluntary Suspension of Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-3 5.6 Return of Excess Salary Deferral Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-3 5.7 Investment of Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-4 ARTICLE 6. COMPANY MATCHING CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-1 6.1 Amount of Matching Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-1 6.2 Matching Contributions in Form of Geneva Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . 6-1 ARTICLE 7. CONTRIBUTION LIMITATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-1 7.1 Limitation on Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-1 7.2 Combined Limitation on Benefits and Contributions . . . . . . . . . . . . . . . . . . . . . . . . . 7-1 7.3 Excess Company Contributions and Forfeitures . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-1 7.4 Annual Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-2 7.5 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-3 7.6 Employer Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-3 ARTICLE 8. PLAN INVESTMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-1 8.1 The Trust Fund; No Reversion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-1 8.2 Investment Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-2 8.3 Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-3 8.4 Investment of Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-5 8.5 Transfers Among Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-5 8.6 Allocation of Investment Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-6
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Page ---- 8.7 Account Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-6 8.8 Life Insurance Fund Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-6 ARTICLE 9. VESTING AND FORFEITURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-1 9.1 100 Percent Vesting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-1 9.2 Vesting Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-1 9.3 Vesting After Prior Distributions . . . . . . . . . . . . . . . . . . . . . . . 9-2 9.4 Forfeitures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-2 ARTICLE 10. FORM OF PLAN BENEFIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-1 10.1 Amount of Plan Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-1 10.2 Normal Form of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . 10-1 10.3 Optional Forms of Distribution . . . . . . . . . . . . . . . . . . . . . . . . 10-2 10.4 Time of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-2 10.5 Death of Participant Before Distribution . . . . . . . . . . . . . . . . . . . 10-3 10.6 Small Benefits: Lump Sum . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-4 10.7 Election of Forms of Distribution . . . . . . . . . . . . . . . . . . . . . . 10-4 10.8 Information on Distribution Options . . . . . . . . . . . . . . . . . . . . . 10-6 10.9 Information on Death Benefits . . . . . . . . . . . . . . . . . . . . . . . . 10-6 10.10 Determination of Marital Status . . . . . . . . . . . . . . . . . . . . . . . 10-7 10.11 Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-7 ARTICLE 11. CLAIMS PROCEDURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11-1 11.1 Filing Claims for Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . 11-1 11.2 Denial of Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11-1 ARTICLE 12. REVIEW PROCEDURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12-1 12.1 Appointment of Review Panel . . . . . . . . . . . . . . . . . . . . . . . . . 12-1 12.2 Right to Appeal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12-1 12.3 Form of Request for Review . . . . . . . . . . . . . . . . . . . . . . . . . . 12-1 12.4 Time for Review Panel Action . . . . . . . . . . . . . . . . . . . . . . . . . 12-2 12.5 Review Panel Decisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12-2 12.6 Rules and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12-2 12.7 Exhaustion of Remedies Required . . . . . . . . . . . . . . . . . . . . . . . 12-3 ARTICLE 13. MANAGEMENT OF ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13-1 13.1 Control and Management of Plan Assets . . . . . . . . . . . . . . . . . . . . 13-1 13.2 Trustee Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13-1 13.3 Independent Qualified Public Accountant . . . . . . . . . . . . . . . . . . . 13-2 13.4 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13-2 13.5 Benefit Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13-2 ARTICLE 14. ADMINISTRATION OF THE PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . 14-1 14.1 Plan Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14-1 14.2 Employment of Advisers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14-1 14.3 Service in Several Fiduciary Capacities . . . . . . . . . . . . . . . . . . . 14-2 ARTICLE 15. AMENDMENT AND TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . 15-1 15.1 Right to Amend or Terminate . . . . . . . . . . . . . . . . . . . . . . . . . 15-1 15.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15-1 15.3 Allocation of Assets Upon Termination . . . . . . . . . . . . . . . . . . . . 15-2
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Page ---- ARTICLE 16. GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-1 16.1 No Assignment of Property Rights . . . . . . . . . . . . . . . . . . . . . . . . 16-1 16.2 Incompetence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-1 16.3 Unclaimed Plan Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-2 16.4 No Employment Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-2 16.5 Merger, Consolidation and Transfer of Assets or Liabilities . . . . . . . . . . 16-3 16.6 Tender Offers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-3 16.7 Choice of Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-4 ARTICLE 17. SPECIAL TOP-HEAVINESS RULES . . . . . . . . . . . . . . . . . . . . . . . . . . 17-1 17.1 Determination of Top-Heavy Status . . . . . . . . . . . . . . . . . . . . . . . 17-1 17.2 Minimum Allocations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-1 17.3 Special Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-1 (a) Aggregation Group . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-1 (b) Determination Date . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-1 (c) Key Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-1 (d) Permissive Aggregation Group . . . . . . . . . . . . . . . . . . . . . . 17-2 (e) Required Aggregation Group . . . . . . . . . . . . . . . . . . . . . . . 17-2 (f) Top-Heavy Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-2 ARTICLE 18. ROLLOVERS AND RELATED TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . 18-1 18.1 Rollover From Qualified Plan . . . . . . . . . . . . . . . . . . . . . . . . . . 18-1 18.2 Rollover From IRA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18-1 18.3 Mistaken Rollover . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18-2 18.4 Direct Rollovers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18-2 ARTICLE 19. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-1 19.1 Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-1 19.2 Affiliated Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-1 19.3 Annuity Starting Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-2 19.4 Base Pay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-2 19.5 Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-2 19.6 Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-2 19.7 Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-2 19.8 Company Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-2 19.9 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-2 19.10 Disability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-3 19.11 Discretionary Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . 19-3 19.12 Eligible Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-3 19.13 Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-3 19.14 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-4 19.15 Forfeiture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-4 19.16 Geneva Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-4 19.17 Geneva Stock Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-4 19.18 Investment Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-4 19.19 Investment Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-4 19.20 Matching Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-4 19.21 Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-4 19.22 Participating Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-4 19.23 Pension Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-4
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Page ---- 19.24 Period of Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-4 (a) Period of Employment . . . . . . . . . . . . . . . . . . . . . . . . . 19-4 (b) Period for Which Back Pay Awarded . . . . . . . . . . . . . . . . . . 19-6 (c) Period Following Termination . . . . . . . . . . . . . . . . . . . . . 19-6 (d) Aggregation of Periods of Service . . . . . . . . . . . . . . . . . . 19-6 (i) Fractional Months . . . . . . . . . . . . . . . . . . . . . . . . 19-7 (ii) Permanent Service Break . . . . . . . . . . . . . . . . . . . . . 19-7 19.25 Permanent Service Break . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-7 19.26 Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-7 19.27 Plan Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-7 19.28 Plan Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-7 19.29 Qualified Joint and Survivor Annuity . . . . . . . . . . . . . . . . . . . . . 19-7 19.30 Qualified Non-Elective Contributions . . . . . . . . . . . . . . . . . . . . . 19-8 19.31 Review Panel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-8 19.32 Rollover Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-8 19.33 Salary Deferral Contribution . . . . . . . . . . . . . . . . . . . . . . . . . 19-8 19.34 Trust Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-8 19.35 Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-8 19.36 Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-8 19.37 Valuation Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-8 ARTICLE 20. EXECUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20-1 APPENDIX I LIMITATIONS RELATING TO NONDISCRIMINATION TESTING APPENDIX II PARTICIPANT LOANS
-iv- 6 THE GENEVA STEEL MANAGEMENT EMPLOYEE SAVINGS AND PENSION PLAN (As Amended and Restated Generally Effective January 1, 1994) ARTICLE 1. INTRODUCTION. Basic Manufacturing and Technologies of Utah, Inc., a Utah corporation, whose name is now Geneva Steel, established this Geneva Steel Management Employee Savings and Pension Plan effective September 1, 1987. The Plan was amended and restated effective September 1, 1987 and adopted January 16, 1990, to incorporate amendments that were required by the IRS as a condition of issuing the Plans' initial determination letters and to conform to administrative practice. The Plan was amended and restated in its entirety generally effective July 1, 1991 to add provisions required by the Internal Revenue Service as a condition of issuing a favorable determination letter that the Plan is qualified under the Tax Reform Act of 1986, to add a participant loan provision and to clarify certain provisions. The Plan was amended and restated effective October 1, 1992 to permit Geneva Steel to contribute its matching contributions in the form of Company stock or to invest matching contributions in Company stock. This amendment and restatement of the Plan is designed to comply with the qualified plan provisions of the Omnibus Budget Reconciliation Act of 1993 and to make certain additional changes. The Plan actually constitutes two plans: one component of the Plan is a profit-sharing plan with a cash or deferred 1-1 7 arrangement and matching contributions while the other is a money-purchase pension plan. Both components of the Plan are intended to qualify under section 401(a) of the Code. 1-2 8 ARTICLE 2. ELIGIBILITY AND ENROLLMENT. 2.1 Eligible Employees. The term "Eligible Employee" shall mean any Employee who is employed by a Participating Company, except an Employee who is: (a) A "leased employee" (within the meaning of section 414(n) of the Code) with respect to the Participating Company; (b) Included in the bargaining unit of the Geneva Plant; (c) A nonresident alien with respect to the United States; provided that this Subsection (c) shall not apply to an Employee of a Participating Company whom the Company has designated in writing as an Eligible Employee; or (d) Employed by a Participating Company under the Company's "Part-Time Employment Program;" provided, however, that if such an individual completes 1,000 hours of service (as determined by the Company) during (i) the 12 month period beginning with the date he or she commences employment with a Participating Company, or (ii) any Plan Year, he or she shall be an Eligible Employee on the first day of the 12 month period or Plan Year immediately following completion of 1,000 hours of service. Such a Participant will only be entitled to contributions pursuant to Articles 3, 4 and 6 if he or she completes 2-1 9 1,000 hours of service during the Plan Year for which the contribution is made. An individual's status as an Eligible Employee shall be determined by the Company, and such determination shall be conclusive and binding on all persons. 2.2 Participation Requirements. An Employee shall be entitled to participate in the Plan on the date he or she first becomes an Eligible Employee. 2.3 Enrollment. Participation in the Plan is automatic; Participants are not required to make contributions to the Plan. Upon becoming a Participant, each Eligible Employee shall designate a Beneficiary pursuant to Section 10.11. 2.4 Rehired Employees. A former Participant who is rehired as an Eligible Employee shall resume participation in the Plan on the date of reemployment. Any other former Employee who is rehired and becomes an Eligible Employee shall commence participation in the Plan upon becoming an Eligible Employee. 2.5 Transferred Employees. An Employee who is transferred to the status of an Eligible Employee shall commence participation in the Plan on the date of transfer. 2.6 Suspension of Participation. A Participant's participation in the Plan shall be suspended for any period of time during which the Participant: (a) Neither receives nor is entitled to receive any Compensation, including (without limitation) any leave of absence without pay; or 2-2 10 (b) Does not qualify as an Eligible Employee but remains a Participant. A Participant shall not receive any allocation of Company Contributions or Forfeitures with respect to a period of suspended participation. A suspended Participant's Accounts shall remain invested as a part of the Trust Fund and shall continue to share in the gains, income, losses and investment expenses of the Trust Fund. 2.7 Termination of Participation. A Participant's participation in the Plan shall terminate when his or her entire Plan Benefit has been distributed or on the date of his or her death, whichever occurs first. In the case of a Participant who is not entitled to a Plan Benefit, participation in the Plan shall terminate when the Participant ceases to be an Employee. 2-3 11 ARTICLE 3. DISCRETIONARY CONTRIBUTIONS. 3.1 Amount of Discretionary Contributions. For each Plan Year, the Participating Companies may (but need not) make a Discretionary Contribution to the Plan. The amount of any Discretionary Contribution shall be determined by the Company in its sole discretion. Discretionary Contributions shall not exceed the maximum amount which is deductible for federal income tax purposes. 3.2 Allocation of Discretionary Contributions. Any Discretionary Contribution for a Plan Year shall be paid to the Trustee not later than the last date prescribed by law for filing the Company's federal income tax return for the taxable year in which such Plan Year ends (including extensions of such date). As of the last day of each Plan Year and subject to the contribution limitations prescribed in Article 7, any Discretionary Contributions made for the Plan Year shall be allocated among eligible Participants in the proportion that each such Participant's Compensation bears to all Participants' Compensation. Any Forfeitures which arise during a Plan Year and which are attributable to Discretionary Contributions shall be allocated along with such Contributions. Subject to the contribution limitations prescribed by Article 7, an eligible Participant's allocation of Forfeitures for a Plan Year shall constitute that percentage of his or her Compensation for such year divided by the aggregate annual Compensation of all other eligible Participants. A Participant shall be eligible for an allocation of Discretionary Contributions and Forfeitures for a 3-1 12 Plan Year only if the Participant was an Employee on the last day of such Plan Year. Each Participant's share of Discretionary Contributions and Forfeitures attributable to Discretionary Contributions shall be credited to his or her Discretionary Contribution Account. 3-2 13 ARTICLE 4. PENSION CONTRIBUTIONS. 4.1 Amount of Pension Contributions. For each calendar month in a Plan Year, the Participating Companies shall make a Pension Contribution for each Participant equal to 4% of each Participant's Compensation for the calendar month. Effective March 1, 1995 the Pension Contribution for each Participant shall be equal to 4 1/2% of each Participant's Compensation for the calendar month, and effective March 1, 1996 the Pension Contribution shall be equal to 5% of each Participant's Compensation for the calendar month. 4.2 Allocation of Pension Contributions. Each Pension Contribution for a Plan Year shall be paid to the Trustee not later than the earlier of the last date prescribed by law for filing the Company's federal income tax return for the taxable year in which such Plan Year ends (including extensions of such date) or the date eight and one-half months after the end of such Plan Year. Subject to the contribution limitations described by Article 7, the Pension Contribution for a Plan Year shall be allocated to Participants no later than the last day of the Plan Year, regardless of whether a Participant was an Employee on the last day of the Plan Year. Any Forfeitures which arise during such Plan Year and which are attributable to Pension Contributions shall be allocated to eligible Participants in the manner described in Section 3.2. A Participant shall be eligible for an allocation of a Forfeiture for a Plan Year only if the Participant was an Employee on the last day of such Plan Year. 4-1 14 Each Participant's share of Pension Contributions and Forfeitures attributable to Pension Contributions shall be credited to his or her Pension Contribution Account. 4-2 15 ARTICLE 5. SALARY DEFERRALS. 5.1 Amount of Salary Deferrals. A Participant who is not suspended may elect to contribute Salary Deferrals to the Plan. The amount of such Salary Deferrals for any period of participation may be equal to any whole percentage of the Participant's Base Pay for such period (subject to Section 5.2) but shall not exceed 15% of the Participant's Base Pay for such period. In addition, the amount of a Participant's Salary Deferrals for any calendar year shall not exceed $9,240, or such other amount as may be adopted by the Commissioner of Internal Revenue to reflect a cost-of-living adjustment. Salary Deferrals shall be made through periodic payroll deductions from the Participant's Compensation or through such other method as may be determined by the Company. For federal tax purposes (and, wherever permitted, for state and local tax purposes), Salary Deferrals shall be deemed employer contributions to the Plan, and a Participant's election to make Salary Deferrals shall constitute an election to have the Participant's taxable compensation reduced by the amount of the Salary Deferrals. 5.2 Limitation on Salary Deferrals. At any time, the Company (in its sole discretion) may reduce the maximum rate at which any Participant may make Salary Deferral Contributions to the Plan, or the Company may require that any Participant discontinue all Salary Deferral Contributions, in order to ensure that the actual deferral percentages meet one of the tests described in section 401(k) of the Code. Any reduction or discontinuance of Salary Deferral Contributions may be applied 5-1 16 selectively to individual Participants or to particular classes of Participants, as the Company may determine. Upon such date as the Company may determine, this Section 5.2 shall automatically cease to apply until the Company again determines that a reduction or discontinuance of Salary Deferral Contributions is required for any Participants. In addition to requiring a prospective reduction or discontinuance of Salary Deferral Contributions, the Company may distribute to any Participant such portion of the Salary Deferral Contributions that he or she already contributed for the Plan Year as the Company determines to be necessary to ensure that the actual deferral percentages meet one of the tests described in section 401(k) of the Code, as provided in Appendix I. 5.3 Election to Contribute. A Participant who wishes to make Salary Deferrals pursuant to Section 5.1 shall file with the Company the form prescribed for this purpose. On such form, the Participant shall specify the rate at which he or she wishes to contribute to the Plan. An election to make Salary Deferrals may be made effective as of the first day of a calendar quarter, provided that notice is received by the Company no later than the fifteenth day of the month immediately preceding the first day of the calendar quarter. Newly hired Employees who are eligible to participate in the Plan and who elect to make Salary Deferrals pursuant to Section 5.1, may commence Salary Deferrals no later than the first day of the month following their date of hire. 5-2 17 5.4 Amendment of Prior Elections. By filing the prescribed form with the Company, a Participant who is making Salary Deferrals may change the rate of such contributions to any other amount permitted under Section 5.1. An election to change the rate of Salary Deferrals may be made effective as of the first day of the first month of a calendar quarter by filing such form on or before the fifteenth day of the month immediately preceding the first day of the calendar quarter. 5.5 Voluntary Suspension of Contributions. By filing the prescribed form with the Company, a Participant may elect to suspend all Salary Deferrals. Any such election shall be effective no later than the first day of the month following receipt of the form. A Participant who has suspended all Salary Deferrals may elect to resume such contributions by following the procedure prescribed by Section 5.3. 5.6 Return of Excess Salary Deferral Contributions. In the event that a Participant made Salary Deferral Contributions under this Plan that, when aggregated with deferrals under any other salary reduction arrangement described in section 402(g)(3) of the Code maintained by a member of the Affiliated Group, exceed the $8,728 limit (as adjusted) under Section 5.1 for any calendar year, his or her excess deferrals attributable to this Plan and any income (or losses) allocable to such excess deferrals shall be refunded to him or her not later than the April 15 next following the close of such calendar year. In the event a Participant's elective deferrals for a calendar year (including Salary Deferral Contributions under 5-3 18 this Plan) to any and all plans in which he was a participant exceed $7,000 (or such larger amount as may be adopted by the Commissioner of Internal Revenue under section 402(g) of the Code), then such Participant may designate all or a portion of such excess contributed to this Plan as the amount to be refunded by April 15 of the following calendar year. Such a refund shall be made only if the Participant notifies the Company in the manner prescribed by the Company by the March 1 next following the calendar year in which the excess deferrals were made. The nonvested portion of any Matching Contribution and any income (or losses) allocable thereto shall be forfeited to the extent that it was attributable to Salary Deferral Contributions that have been refunded under this Section 5.6. 5.7 Investment of Contributions. Upon withholding, all Salary Deferrals shall be transferred to the Trustee, for investment in the Trust Fund as provided in Article 8, no later than 45 days after the date the Salary Deferrals were withheld. Salary Deferrals shall be credited to the Participant's Salary Deferral Account. 5-4 19 ARTICLE 6. COMPANY MATCHING CONTRIBUTIONS. 6.1 Amount of Matching Contributions. Each Participating Company may make a Matching Contribution for each Participant equal to a percentage of his or her Salary Deferral Contributions for a Plan Year. The percentage shall be the same for all Participants. The amount or percentage of the Matching Contribution shall be determined each Plan Year by the Company's board of directors in its sole discretion and may be zero for a given Plan Year. Matching Contributions shall be paid to the Trustee on a monthly basis as soon as reasonably practicable following the close of each calendar month. Except as provided in Section 6.2 below, Matching Contributions shall be allocated as of the end of each calendar month to a Participant's Matching Contribution Account. Forfeitures that arise during a Plan Year that are attributable to Matching Contributions shall be allocated to Participant's Matching Contribution Account in the same manner as Matching Contributions. Matching Contributions can be reduced and/or forfeited in accordance with Appendix I. 6.2 Matching Contributions in Form of Geneva Stock. Effective October 1, 1992, the Company may determine that all or a portion of a Matching Contribution be paid in the form of Geneva Stock. For purposes of determining the amount of a Participating Company's deduction under section 404 of the Code, shares of Geneva Stock so contributed shall be valued at the closing price of Geneva Stock as quoted on the New York Stock Exchange on the date on which such shares are paid to the Plan. Participating Company contributions allocated in the form of 6-1 20 shares of Geneva Stock shall be valued for allocation purposes on the basis of the closing price of Geneva Stock as quoted on the New York Stock Exchange as of the end of the calendar month such shares are to be allocated. Matching Contributions made in the form of Geneva Stock shall be allocated as of the end of each calendar month to a Participant's Geneva Stock Account. Forfeitures that arise during a Plan Year that are attributable to such Matching Contributions shall be allocated to Participants' Geneva Stock Accounts in the same manner as Matching Contributions made in the form of Geneva Stock. Matching Contributions can be reduced and/or forfeited in accordance with Appendix I. 6-2 21 ARTICLE 7. CONTRIBUTION LIMITATIONS. 7.1 Limitation on Contributions. The Annual Additions allocated or attributed to a Participant for any Plan Year shall not exceed the lesser of the following: (a) $30,000 (or, if greater, 25% of the dollar limitation in effect under Code section 415(b)(1)(A)); or (b) 25% of the Participant's Compensation for such year. If a Participant's Annual Additions would exceed the foregoing limitation, then such Annual Additions shall be reduced by reducing the components thereof as necessary in the order in which they are listed in Section 7.4. 7.2 Combined Limitation on Benefits and Contributions. The sum of a Participant's defined-benefit plan fraction and his or her defined-contribution plan fraction shall not exceed 1.0 with respect to any Plan Year. For purposes of this Section 7.2, the terms "defined-benefit plan fraction" and "defined-contribution plan fraction" shall have the meaning given to such terms by section 415(e) of the Code and the regulations thereunder. If a Participant would exceed the foregoing limitation, then such benefits under any qualified defined-benefit plan that may be maintained by the Employer Group shall be reduced as necessary to allow his or her Annual Additions to equal the maximum permitted by Section 7.1. 7.3 Excess Company Contributions and Forfeitures. If the amount of the Company Contributions and Forfeitures allocated or 7-1 22 attributed to a Participant for any Plan Year must be reduced to meet the limitation described in Section 7.1, then the amount of the reduction shall be applied to reduce the total amount that the Company otherwise would contribute for such year pursuant to Articles 3, 4 and 6. If the amount that the Company may contribute is thereby reduced to zero and if there are Forfeitures that still cannot be allocated to any Participant because of the limitation described in Section 7.1, then such Forfeitures shall be credited to an excess-forfeiture account established under this Section 7.3. Any gains, income or losses shall also be credited to such account. All amounts credited to such account shall be treated as allocable Forfeitures for successive Plan Years and shall be allocated annually pursuant to Section 3.2 until such account is exhausted. No Company Contributions that would give rise to Annual Additions shall be made as long as any amount remains in such account. 7.4 Annual Additions. For purposes of this Article 7, a Participant's "Annual Additions" for a Plan Year shall be equal to the sum of the following: (a) The amount of Company Contributions allocated to the Participant's Accounts under this Plan as of any date within such year; (b) The amount of Forfeitures allocated to the Participant's Account under this Plan as of any date within such year; 7-2 23 (c) The amount of Salary Deferral Contributions allocated to the Participant's Account under this Plan as of any date within such year; (d) The amount of employer contributions and forfeitures allocated to the Participant under any qualified defined-contribution plan that may be maintained by the Employer Group, other than this Plan, as of any date within such year; and (e) The aggregate employee contributions that the Participant contributes during such year to all qualified retirement plans maintained by the Employer Group. 7.5 Compensation. For purposes of this Article 7, the term "Compensation" shall be determined in accordance with sections 401(a)(17) and 415(c) of the Code. For purposes of this Article 7, the term "Compensation" shall have the same meaning as that term is defined in Section 19.9 of the Plan, but shall not include Salary Deferral Contributions and deferrals made to the Company's cafeteria plan. 7.6 Employer Group. For purposes of this Article 7, the term "Employer Group" shall mean any group of one or more chains of corporations connected through stock ownership with the Company, if: (a) Stock possessing more than 50 percent of the total combined voting power of all classes of stock entitled to vote or more than 50 percent of the total value of shares of all classes of stock of each of the 7-3 24 corporations, except the Company, is owned by one or more of the other corporations; and (b) The Company owns stock possessing more than 50 percent of the total combined voting power of all classes of stock entitled to vote or more than 50 percent of the total value of shares of all classes of stock of at least one of the other corporations excluding, in computing such voting power or value, stock owned directly by such other corporations. 7-4 25 ARTICLE 8. PLAN INVESTMENTS. 8.1 The Trust Fund; No Reversion. The Trust Fund shall be comprised of the Investment Funds described in Section 8.2. Except as provided in Subsections (a) and (b) below, the assets of the Plan shall never inure to the benefit of any Participating Company and shall be held for the exclusive purpose of providing benefits to Participants or their Beneficiaries. (a) In the case of a Company Contribution which was made by virtue of a mistake of fact, this Section 8.1 shall not prohibit the return of such contribution to the appropriate Participating Company within 12 months after the payment of such contribution. (b) All Company Contributions are conditioned upon the deductibility thereof under section 404 of the Code. To the extent that a deduction is disallowed for a Company Contribution, this Section 8.1 shall not prohibit the return of such contribution (to the extent disallowed) to the appropriate Participating Company within 12 months after the disallowance of the deduction. (c) In the event that Company Contributions are returned to the Participating Companies pursuant to sections (a) and (b) above, the earnings attributable to such contributions shall not be returned to the Participating Companies and the losses attributable to 8-1 26 such contributions shall reduce the amount returned to the Participating Companies. 8.2 Investment Funds. The Trust Fund established under the Plan shall consist of the Balanced Fund, the Variable Fund, the Short-Term Income Fund, the Geneva Stock Fund, and the Life Insurance Fund. The Company may change the available Investment Funds at any time in its sole discretion by adding Funds, removing Funds, or changing Funds. Such Investment Funds shall be invested and reinvested as follows: (a) The Balanced Fund shall be invested in those investments selected by the Company that are designed to achieve a balance between capital appreciation and preservation of capital and generation of income. (b) The Variable Fund shall be invested in a mutual fund (or funds) selected by the Company that invests primarily in equity securities or in such other types of equity investments as are authorized by the Trust Agreement. (c) The Short-Term Income Fund shall be invested in a money market fund or funds selected by the Company, or such other short term fixed-income investments as are authorized by the Trust Agreement. (d) Effective October 1, 1992, the Geneva Stock Fund shall be invested primarily in Geneva Stock, except that small amounts in the Stock Fund may be invested in interest-bearing short-term debt obligations, money market instruments, savings 8-2 27 accounts or similar investments. The Geneva Stock Fund shall consist of all Stock Fund investments held by the Trustee and all cash held by the Trustee which is derived from dividends on Geneva Stock, interest and other income from Stock Fund investments, Company Contributions to be invested in the Geneva Stock Fund and proceeds from sales of Geneva Stock and Stock Fund investments. (e) The Life Insurance Fund shall be invested in life insurance policies on the lives of those Participants who elected before September 1, 1989 to have their Accounts invested in life insurance contracts. As of September 1, 1989, Participants whose Accounts were not invested in the Life Insurance Fund could not (and still cannot) elect to invest their Accounts in the Life Insurance Fund. 8.3 Accounts. Any or all of the following Accounts shall be maintained, as necessary, for each Participant: (a) A Participant's Discretionary Contribution Account shall consist of any Discretionary Contributions made on behalf of the Participant pursuant to Section 3.1, any Forfeitures attributable to such Contributions that are allocated to the Participant and the earnings, gains and losses allocable thereto. (b) A Participant's Pension Contribution Account shall consist of the Pension Contributions allocated 8-3 28 to the Participant pursuant to Section 4.2, the Forfeitures attributable to such Pension Contributions that are allocated to the Participant and the earnings, gains and losses allocable thereto. (c) A Participant's Salary Deferral Account shall consist of any Salary Deferral Contributions that the Participant has elected to contribute to the Plan pursuant to Section 5.1, any Qualified Non-Elective Contributions made on behalf of the Participant pursuant to Appendix I and the earnings, gains and losses allocable thereto. (d) A Participant's Matching Contribution Account shall consist of any Matching Contributions made on behalf of the Participant under Section 6.1 that are not made or invested in Geneva Stock, any Forfeitures attributable to such Matching Contributions that are allocated to the Participant and the earnings, gains and losses allocable thereto and any cash dividends on Geneva Stock. (e) A Participant's Geneva Stock Account shall consist of any Matching Contributions made or invested in Geneva Stock, any Forfeitures attributable to such Matching Contributions that are allocated to the Participant and the earnings, gains and losses allocable thereto excluding cash dividends on Geneva Stock. (f) A Participant's Rollover Account shall consist of any Rollover Contributions made by the 8-4 29 Participant pursuant to Article 18 and the earnings, gains and losses allocable thereto. 8.4 Investment of Accounts. Effective October 1, 1992, a Participant's Pension Contribution Account shall be invested solely in the Balanced Fund. A Participant's Geneva Stock Account shall be invested solely in the Geneva Stock Fund. A Participant's Salary Deferral Account, Discretionary Contribution Account, Matching Contribution Account and Rollover Account, if any, shall be apportioned among one or more of the Balanced Fund, the Variable Fund, the Short-Term Income Fund and the Life Insurance Fund in such whole percentages as the Participant may specify on the prescribed election form. If the Company receives no valid investment directions from the Participant, such Accounts shall be invested entirely in the Short-Term Income Fund. As of the first day in any calendar quarter, a Participant may change the investment instructions with respect to future contributions. Any such change shall be made by properly completing and filing the prescribed form with the Company no later than the fifteenth day of the month immediately preceding the first day of the calendar quarter. 8.5 Transfers Among Accounts. Once each calendar quarter, except for his or her Pension Contribution Account, and Geneva Stock Account, a Participant may elect to transfer all or any part of his or her Accounts to one or more of the Investment Funds by properly completing and filing the prescribed form with the Company no later than the fifteenth day of the month immediately preceding the first day of the calendar quarter in which 8-5 30 the transfer is to occur. Any such transfer shall apply as of the first day of the next following calendar quarter. 8.6 Allocation of Investment Income. Each Account shall be revalued at fair market value and adjusted as of the last day of each calendar quarter, adjusted for contributions, distributions and other items for the quarter, to reflect the Participant's proportionate share of any realized or unrealized investment income, gains, losses and investment expenses of the Fund or Funds in which such Account was invested that have accrued during the quarter. 8.7 Account Statements. Within sixty days after the last day of each calendar quarter (and after such other dates as the Company may determine), there shall be prepared and delivered to each Participant a written statement showing the fair market value of his or her Accounts as of the applicable date. The fair market value of a share of Geneva Stock shall be the closing price of such share as quoted on the New York Stock Exchange as of the applicable date. 8.8 Life Insurance Fund Rules. (a) No Participant shall have any right, title, interest or incident of ownership in any life insurance contract purchased by the Trustee, except at the time or times and upon the terms and conditions set forth in this Plan. The Trustee shall be the sole owner of all incidents of ownership in each life insurance contract but the Company may direct the Trustee as to the exercise of all such incidents of ownership. 8-6 31 (b) The aggregate premiums for all ordinary life insurance purchased for each Participant shall at all times be less than 50% of the Company Contributions allocated to the Participant's Accounts, 25% in the case of term insurance. In the event that payment of any life insurance premiums would cause the aggregate premiums to exceed these limitations, then the premium will not be made, and the insurance contract shall be converted to a paid-up contract. Alternatively, the face amount of insurance shall be reduced so that the premium will not exceed the limitations. (c) Upon the death of a Participant, the proceeds of any life insurance contract(s) will be paid to the Trustee and distributed in accordance with the terms of this Plan. Upon a Participant's termination of employment or a change in investment election, the life insurance contract must be surrendered and the cash value of the surrendered contract shall be paid to the Trustee to be disposed of in accordance with the terms of this Plan. 8-7 32 ARTICLE 9. VESTING AND FORFEITURES. 9.1 100 Percent Vesting. A Participant shall always be 100% vested in his or her Salary Deferral Account and Rollover Account. A Participant's interest in his or her Discretionary Contribution Account, Pension Contribution Account, Geneva Stock Account and Matching Contribution Account shall become 100% vested when the earliest of the following events occurs: (a) The Participant ceases to be an Employee by reason of Disability; (b) The Participant, before ceasing to be an Employee, attains the age of 62 years (the normal retirement age under the Plan); (c) The Participant dies while employed as an Employee; (d) The Plan is terminated, or the Plan undergoes a partial termination which affects the Participant (including Participants who, on the date the Plan is terminated, have not yet incurred a Permanent Service Break), before the Participant ceases to be an Employee; (e) Company Contributions are completely discontinued; or (f) The Participant had any service with an Affiliated Group member before January 1, 1988. 9.2 Vesting Schedule. Before a Participant becomes 100% vested under Section 9.1, the Participant shall be vested in a percentage of each of his or her Discretionary Contribution 9-1 33 Account, Pension Contribution Account, Geneva Stock Account and Matching Contribution Account determined from the following schedule:
Period of Service Vested Percentage of Completed by Participant Participant's Accounts - ------------------------ ---------------------- Less than 12 months . . . . . . . . . 0% 12 months to 24 months . . . . . . . . 20% 24 months to 36 months . . . . . . . . 40% 36 months to 48 months . . . . . . . . 60% 48 months to 60 months . . . . . . . . 80% 60 or more months . . . . . . . . . . 100%
9.3 Vesting After Prior Distributions. Section 9.2 shall be applied as set forth in this Section 9.3 in the case of any Participant who received one or more prior distributions from his or her Accounts, who thereafter has not incurred a Permanent Service Break, and who is not yet 100% vested in the Accounts. The vested portion of such Participant's Accounts shall be determined in two steps. First, the Participant's vested percentage under Section 9.2 shall be applied to the sum of (a) the value of the Accounts plus (b) the aggregate amount of the Participant's prior distributions from such Accounts. Then, the aggregate amount of the Participant's prior distributions from such Accounts shall be subtracted. 9.4 Forfeitures. If a Participant ceases to be an Employee at a time when he or she is less than 100% vested, then the nonvested portion of his or her Accounts shall constitute a Forfeiture for the Plan Year during which the earlier of the following occurs: (a) the Participant receives (or is deemed to receive in the case of a nonvested Participant) a distribution from the Plan in a single lump sum; or (b) the Participant 9-2 34 incurs a Permanent Service Break. The Forfeiture shall be treated as stated in Sections 3.2, 4.2, 6.1 and 7.3. If the Participant is rehired as an Employee before incurring a Permanent Service Break, then the principal amount of the Forfeiture shall be reinstated to his or her Accounts as of the close of the Plan Year in which the rehire occurs. The appropriate Participating Company shall make a special contribution in the amount required to reinstate the Forfeiture, to the extent any suspense account and current Forfeitures are not sufficient. In no event shall a Participant's Forfeitures be reinstated if he or she is not rehired as an Employee before incurring a Permanent Service Break. 9-3 35 ARTICLE 10. FORM OF PLAN BENEFIT. 10.1 Amount of Plan Benefit. A Participant's Plan Benefit shall consist of the Participant's entire vested interest in his or her Accounts. The value of a Participant's Plan Benefit (including the number of shares of Geneva Stock) shall be determined as of the Valuation Date immediately preceding the distribution date for such Plan Benefit. 10.2 Normal Form of Distribution. A Participant's Plan Benefit shall be distributed in the form of a nontransferable annuity contract purchased from an insurance company selected by the Company, unless such Participant has elected the optional form of distribution described in Section 10.3. The Participant's entire Plan Benefit shall be distributed in substantially nonincreasing payments over a period not exceeding the greater of (a) the Participant's own lifetime or (b) the lifetimes of the Participant and his or her spouse. The forms of annuity contract available under the Plan are a Qualified Joint and Survivor Annuity and a single-life annuity. In the case of a married Participant who is living when the annuity is scheduled to commence, the annuity contract shall provide for payments in the form of the Qualified Joint and Survivor Annuity. In the case of an unmarried Participant, the annuity contract shall provide for payments in the form of the single-life annuity. Unless the Participant otherwise elects, he or she will begin to receive the Plan Benefit not later than the 60th day after the latest of the of the close of the Plan Year in which the Participant attains age 62, the tenth anniversary 10-1 36 of the Participant's commencement of participation in the Plan occurs or ceases to be an Employee." 10.3 Optional Forms of Distribution. A Participant or surviving spouse may elect to have his or her Plan Benefit distributed in the form of a single lump sum in cash. If Geneva Stock is liquidated for purposes of a cash distribution the cash attributable to the shares will equal the proceeds from the sale. A Participant or surviving spouse may also elect to have that portion of his or her Plan Benefits attributable to the Geneva Stock Fund paid in whole shares of Geneva Stock, plus a check for any fractional shares. The Trustee in its discretion may purchase Geneva Stock that was distributed to a Participant or Beneficiary at the closing price of Geneva Stock as quoted on the New York Stock Exchange for the business day on which the Trustee receives a written offer to sell. No commission shall be paid in connection with any such purchase. 10.4 Time of Distribution. A Participant who is no longer an Employee and is entitled to receive a Plan Benefit shall receive his or her Plan Benefit as soon as reasonably practicable after the distribution date elected by the Participant. The Participant shall elect a distribution date by completing, signing and filing the prescribed distribution election form with the Company. In no event shall a Participant's Plan Benefit be distributed later than the April 1 next following the later of the calendar year in which (a) the Participant attained age 70 1/2, if he or she remains an Employee on or after age 62 or (b) the Participant attained age 62 if the 10-2 37 Participant ceased to be an Employee on or before that date. Unless the Participant otherwise elects, he or she will begin to receive the Plan Benefit not later than the 60th day after the latest of the of the close of the Plan Year in which the Participant attains age 62, the tenth anniversary of the Participant's commencement of participation in the Plan occurs or ceases to be an Employee. 10.5 Death of Participant Before Distribution. If a Participant dies before receiving his or her Plan Benefit, then such Participant's Beneficiary shall be entitled to receive such Plan Benefit pursuant to this Section 10.5. (Section 10.11 provides that the surviving spouse of a married Participant shall be his or her Beneficiary, unless such Participant, with the spouse's consent, has otherwise elected prior to his or her death.) If the Beneficiary is the Participant's surviving spouse, the Plan Benefit shall be distributed in the form of a nontransferable annuity contract purchased from an insurance company selected by the Company, unless such surviving spouse has elected the optional form of distribution described in Section 10.3. Under the annuity contract, the Plan Benefit shall be distributed in substantially nonincreasing payments over a period not exceeding the surviving spouse's lifetime and commencing as soon as reasonably practicable after the date of the Participant's death or, if later, the date the Participant would have attained age 62. At any time prior to the date that the surviving spouse's Plan Benefit is to be distributed 10-3 38 pursuant to the preceding sentence, the surviving spouse may elect, by filing the prescribed form with the Company, (a) to have his or her Plan Benefit distributed in the optional form of distribution described in Section 10.3, (b) to have his or her Plan Benefit distributed at a specified time earlier than that provided in the preceding sentence or (c) both. If the Participant's Beneficiary is not his or her surviving spouse, the Plan Benefit shall be paid in a single lump sum in cash not later than 12 months after the date of the Participant's death. 10.6 Small Benefits: Lump Sum. Any other provision of this Article 10 notwithstanding, if the value of a Participant's entire Plan Benefit equals $3,500 or less, then the Plan Benefit shall be paid as soon as reasonably practicable to such Participant (or, in the case of his or her death, to the Beneficiary), in a single lump sum in cash. If a Participant's entire Plan Benefit exceeds $3,500 and the Participant fails to consent to an immediate distribution, then the Participant's Plan Benefit shall not be paid before the date on which the Participant attains age 62. 10.7 Election of Forms of Distribution. A Participant's election of an optional form of distribution under Section 10.3 shall be made on the prescribed form and filed with the Company. Such election may be made only during an election period consisting of the 90 consecutive days ending on the Participant's Annuity Starting Date. A Participant may revoke any election of an optional form of distribution (without the consent of the Company) at any time prior to the end of such 10-4 39 election period. If the Participant, having revoked a prior election, does not make another election within such election period, then his or her Plan Benefit shall be distributed in the form specified in Section 10.2. Any election involving a waiver of the Qualified Joint and Survivor Annuity shall not take effect unless the Participant's spouse consents in writing to the election during such election period. The spouse's consent shall acknowledge the effect of the Participant's election and shall be witnessed by a notary public or, if permitted by the Company, by a representative of the Plan. A consent, once given by a spouse, shall not be revocable by such spouse. The spouse's consent shall not be required of the Participant if the Participant (a) establishes to the Company's satisfaction that the spouse's consent cannot be obtained because the spouse cannot be located or because of other reasons deemed acceptable under applicable regulations and (b) agrees in writing that if the Company is compelled by a court of competent jurisdiction or other authority to pay all or any portion of the Participant's Plan Benefit to or on behalf of such spouse, the Participant will indemnify the Company by paying to the Company, upon written demand, an amount equal to such payment, together with reasonable attorneys' fees and expenses. The Company may, in its sole discretion, waive the indemnification requirement. A Participant may elect, with his or her spouse's consent, not to take the qualified preretirement survivor annuity described in Section 10.5 from the first day of the first Plan Year in which the Participant attains age 35 until the Participant's death. 10-5 40 10.8 Information on Distribution Options. Within a reasonable period before the Annuity Starting Date, the Company shall make available to each married Participant a written explanation of the following: (a) The terms and conditions of the Qualified Joint and Survivor Annuity; (b) The Participant's right to elect a form of benefit other than a Qualified Joint and Survivor Annuity pursuant to Section 10.7; (c) The rights of the Participant's spouse under Section 10.7; (d) The Participant's right to revoke an election of a form of benefit pursuant to Section 10.7; and (e) The effect of an election or revocation described in Subsection (b) or (d) above. 10.9 Information on Death Benefits. The Company shall provide to each married Participant a written explanation of the death benefit for a surviving spouse described in Section 10.5 comparable to the information on distribution options described in Section 10.8. Such explanation shall be provided within whichever of the following periods ends last: (a) The three-year period beginning with the first day of the Plan Year in which the Participant attains age 32; 10-6 41 (b) The one-year period beginning with the first day of the first Plan Year for which the individual is a Participant; or (c) The one-year period beginning on the date when the Participant ceases to be an Employee, in the case of a Participant who ceases to be an Employee before attaining age 32. 10.10 Determination of Marital Status. Whether a Participant is married shall be determined by the Company as of his or her Annuity Starting Date. 10.11 Beneficiary. A Participant's Beneficiary shall be the person(s) so designated by such Participant. If the Participant has not made an effective designation of a Beneficiary or if the named Beneficiary is not living when a distribution is to be made, then (a) the then living spouse of the deceased Participant shall be the Beneficiary or (b) if none, the then living children of the deceased Participant shall be the Beneficiaries in equal shares or (c) if none, the estate of the Participant shall be the Beneficiary. The Participant may change his or her designation of a Beneficiary from time to time. Any designation of a Beneficiary (or an amendment or revocation thereof) shall be effective only if it is made in writing on the prescribed form and is received by the Company prior to the Participant's death. Any other provision of this Section 10.11 notwithstanding, in the case of a married Participant, any designation of a person other than his or her spouse as Beneficiary shall be effective only if the spouse 10-7 42 consents in writing to the designation. The spouse's consent shall be witnessed by a notary public or, if permitted by the Company, by a representative of the Plan. A consent to a designation of a particular Beneficiary, once given by the spouse, shall not be revocable by such spouse. The spouse's consent shall not be required if the Participant (a) establishes to the Company's satisfaction that the spouse's consent cannot be obtained because the spouse cannot be located or because of other reasons deemed acceptable under applicable regulations and (b) agrees in writing that if the Company is compelled by a court of competent jurisdiction or other authority to pay all or any portion of the Participant's Plan Benefit to or on behalf of such spouse, the Participant will indemnify the Company by paying to the Company, upon written demand, an amount equal to such payment, together with reasonable attorneys' fees and expenses. The Company may, in its sole discretion, waive the indemnification requirement. 10-8 43 ARTICLE 11. CLAIMS PROCEDURE. 11.1 Filing Claims for Benefits. Claims for benefits under the Plan shall be made in writing on the prescribed form and shall be signed by the Participant or by his or her Beneficiary, as the case may be. All claims for or inquiries concerning benefits under the Plan shall be submitted to the Company at its U.S. headquarters. 11.2 Denial of Claims. In the event that any claim for benefits is denied in whole or in part, the Company shall notify the applicant in writing of such denial and shall advise the applicant of the right to a review thereof. Such written notice shall set forth, in a manner calculated to be understood by the applicant, specific reasons for the denial, specific references to the Plan provisions on which the denial is based, a description of any information or material necessary for the applicant to perfect the application, an explanation of why such material is necessary and an explanation of the Plan's review procedure. Such written notice shall be given to the applicant within 90 days after the Company received the claim in proper form, except that such 90-day period may be extended for an additional 90 days if special circumstances exist. The Company shall advise the applicant of such circumstances in writing within the first 90-day period. If the Company does not provide the applicant with written notice of its decision within the applicable time period, the applicant's claim shall be deemed to have been denied as of the last day of the applicable time period. 11-1 44 ARTICLE 12. REVIEW PROCEDURE. 12.1 Appointment of Review Panel. The Company from time to time shall appoint a Review Panel consisting of three or more individuals, who may (but need not) be employees of the Company. The Review Panel shall be the named fiduciary which has the authority to act with respect to appeals from denials of claims under the Plan. 12.2 Right to Appeal. Any applicant whose claim for benefits was denied in whole or in part (or such applicant's authorized representative) may appeal from the denial by submitting to the Review Panel a written request for a review of the claim within three months after receiving written notice of the denial, or within three months after the date when a claim may be deemed to have been denied. The Company shall give the applicant (or the applicant's authorized representative) an opportunity to review pertinent materials, other than legally privileged documents, in preparing such request for review. 12.3 Form of Request for Review. The request for review shall be made in writing and shall be addressed to the Review Panel in care of the Company at its U.S. headquarters. The request for review shall set forth all of the grounds on which it is based, all facts in support thereof and any other matters which the applicant deems pertinent. The Review Panel may require the applicant to submit such additional facts, documents or other material as the Review Panel may deem necessary or appropriate in making its review. 12-1 45 12.4 Time for Review Panel Action. The Review Panel shall act upon each request for review within 60 days after receipt thereof, unless special circumstances require further time for processing and the applicant is advised of the extension. In no event shall the decision on review be rendered more than 120 days after the Review Panel received the request for review in proper form. 12.5 Review Panel Decisions. The Review Panel shall give prompt written notice of its decision to the applicant and to the Company. In the event that the Review Panel confirms the denial of the claim for benefits in whole or in part, such notice shall set forth, in a manner calculated to be understood by the applicant, the specific reasons for such denial and specific references to the Plan provisions on which the decision was based. In the event that the Review Panel determines that the claim for benefits should not have been denied in whole or in part, the Company shall take appropriate remedial action as soon as reasonably practicable after receiving notice of the Review Panel's decision. 12.6 Rules and Procedures. The Review Panel shall establish such rules, procedures and interpretations, consistent with the Plan and ERISA, as it may deem necessary or appropriate in carrying out its responsibilities under this Article 12. The Review Panel may require an applicant who wishes to submit additional information in connection with an appeal from a denial of benefits to do so at his or her own expense. 12-2 46 12.7 Exhaustion of Remedies Required. No legal or equitable action for benefits under the Plan shall be brought unless and until the applicant (a) has submitted a written claim for benefits in accordance with Article 11, (b) has been notified that the claim is denied, (c) has filed a written request for a review of the claim in accordance with this Article 12 and (d) has been notified in writing that the Review Panel has affirmed the denial of the claim; provided, however, that such an action may be brought after the Company or the Review Panel has failed to act on the claim within the time prescribed in Sections 11.2 and 12.4, respectively. 12-3 47 ARTICLE 13. MANAGEMENT OF ASSETS. 13.1 Control and Management of Plan Assets. The Company is a named fiduciary with respect to control over and management of the assets of the Plan, but only to the extent of (a) having the duty to appoint one or more trustees to hold all assets of the Plan in trust, (b) having the authority to remove any trustee so appointed and to appoint one or more successor trustees, (c) having the duty to enter into a trust agreement with each trustee or successor trustee so appointed, (d) having the authority to select investments for the Investment Funds, and (e) having the authority to appoint one or more insurance companies that are qualified to do business in at least one state to hold assets of the Plan and to enter into a contract with each insurance company that it appoints (or to direct the Trustee to enter into such contract). The Trust Agreement is hereby incorporated herein as a part of the Plan. 13.2 Trustee Duties. The Trustee shall have the exclusive authority and discretion to control and manage the assets of the Plan it holds in trust, except to the extent that the Plan prescribes how such assets shall be invested or the Company directs how such assets shall be invested. The Trustee shall be solely responsible for diversifying, in accordance with section 404(a)(1)(C) of ERISA, the investment of the assets of the Plan assigned to it by the Company, except to the extent that the Plan prescribes or the Company directs how such assets shall be invested. 13-1 48 13.3 Independent Qualified Public Accountant. The Company shall engage an independent qualified public accountant to conduct such examinations and to express such opinions as may be required by section 103(a)(3) of ERISA. The Company in its discretion may remove and discharge the person so engaged, in which event it shall appoint a successor independent qualified public accountant to perform such examinations and express such opinions. 13.4 Expenses. Effective January 1, 1992, the Company shall pay all expenses of the Plan, except such expenses as are paid out of the Trust Fund pursuant to the Company's direction or the terms of the Trust Agreement. The Company shall have complete and unfettered discretion to determine whether an expense of the Plan or Trust Fund shall be paid by the Company or out of the Trust Fund, and this Section 13.4 shall not be construed to require the Company to pay any portion of the expenses of the Plan and Trust that the Company has directed be paid from the Trust Fund. The Company's discretion and authority to direct the Trust Fund to pay any reasonable expenses of the Plan and Trust shall not be limited in any way by any prior decision or act, whether repeated or sporadic, by the Company to pay any or all expenses of the Plan and Trust. 13.5 Benefit Payments. All benefits, payable pursuant to the Plan shall be paid by the Trustee out of the Trust Fund pursuant to the directions of the Company and the terms of the Trust Agreement. 13-2 49 ARTICLE 14. ADMINISTRATION OF THE PLAN. 14.1 Plan Administration. The Company is the named fiduciary with respect to the operation and administration of the Plan, and the Company is the "administrator" and "plan sponsor" of the Plan (as such terms are used in ERISA). The Company shall make such rules, interpretations and computations and shall take such other actions to administer the Plan as it may deem appropriate. Such rules, interpretations, computations and actions shall be conclusive and binding on all persons. In administering the Plan, the Company (a) shall act in a nondiscriminatory manner to the extent required by section 401(a) and related sections of the Code and (b) shall at all times discharge its duties in accordance with the standards set forth in section 404(a)(1) of ERISA. 14.2 Employment of Advisers. The Company may retain such attorneys, actuaries, accountants, consultants or other persons to render advice or to perform services with regard to its responsibilities under the Plan as it shall determine to be necessary or desirable. The Company may designate by written instrument (signed by both parties) one or more persons to carry out, where appropriate, fiduciary responsibilities under the Plan. The Company's duties and responsibilities under the Plan which have not been delegated to other fiduciaries pursuant to the preceding sentence shall be carried out by its directors, officers and employees, acting on behalf and in the name of the Company in their capacities as directors, officers and employees, and not as individual fiduciaries. 14-1 50 14.3 Service in Several Fiduciary Capacities. Nothing herein shall prohibit any person or group of persons from serving in more than one fiduciary capacity with respect to the Plan (including service both as the administrator and as a trustee of the Plan). 14-2 51 ARTICLE 15. AMENDMENT AND TERMINATION. 15.1 Right to Amend or Terminate. The Company, in its sole discretion, and by resolution of its board of directors or by resolution of the board's proper delegatee, reserves the right to amend or terminate the Plan or to discontinue Company Contributions at any time and for any reason. No amendment of the Plan, however, shall, except to the extent permitted by ERISA or the Code (a) reduce the benefit of any Participant accrued under the Plan prior to the date when such amendment is adopted or (b) divert any part of the Plan's assets to purposes other than the exclusive purpose of providing benefits to the Participants and Beneficiaries who have an interest in the Plan and of defraying the reasonable expenses of administering the Plan. Furthermore, and to the extent required to comply with Rule 16b-3(c)(2)(ii)(B) of the Securities and Exchange Commission, effective October 1, 1992, the Plan shall not be amended more than once every six months, other than to comport with changes in the Code, ERISA or the regulations thereunder. 15.2 Effect of Termination. Upon termination of the Plan, no assets of the Plan shall revert to the Participating Companies or be used for or diverted to purposes other than the exclusive purpose of providing benefits to Participants and Beneficiaries and of defraying the reasonable expenses of termination (except as otherwise provided in Section 8.1). Upon termination of the Plan, the Trust Fund shall continue in existence until it has been distributed entirely as provided in 15-1 52 Section 15.3. Notwithstanding the foregoing, effective January 1, 1987, distributions from the 401(k) portion of the Plan will be made in accordance with the requirements of Treasury Regulation section 1.401(k)-1(d)(3). 15.3 Allocation of Assets Upon Termination. Upon termination of the Plan, the Trust Fund shall continue in existence until the Accounts of each Participant have been distributed to such Participant (or to such Participant's Beneficiary) as provided in Article 10; provided, however, that the assets of the Plan shall be allocated in accordance with the requirements of section 403(d)(l) of ERISA. 15-2 53 ARTICLE 16. GENERAL PROVISIONS. 16.1 No Assignment of Property Rights. The interest or property rights of any person in the Plan, in any Account or in any payment to be made under the Plan shall not be optioned, anticipated, assigned (either at law or in equity), alienated or made subject to attachment, garnishment, execution, levy, other legal or equitable process, or bankruptcy. Any act in violation of this Section 16.1, whether voluntary or involuntary, shall be void. This Section 16.1 shall not apply with respect to qualified domestic relations orders described in section 414(p) of the Code ("QDRO"). The Company shall establish reasonable procedures to determine the qualified status of domestic relations orders and to administer distributions under QDROs. The Company shall make payment to an "alternate payee" (as defined in Code section 414(p)) pursuant to a QDRO order even if the Participant has not attained the "earliest retirement age" (within the meaning of Code section 414(p)). Any expenses incurred by the Company in connection with recognizing and enforcing a QDRO may be charged against the Account to which the QDRO relates. 16.2 Incompetence. If, in the opinion of the Company, any individual becomes unable to handle properly any amounts payable to such individual under the Plan, then the Company may make such arrangements for payment on such individual's behalf as it determines will be beneficial to such individual, including (without limitation) payment to such individual's guardian, conservator, spouse or dependent. 16-1 54 16.3 Unclaimed Plan Benefits. If any Plan Benefit, or a portion thereof, would be distributable under the Plan but the Company is unable to locate the Participant or Beneficiary to whom the distribution is payable for three consecutive Plan Years, then the Participant's Accounts may be closed after the third consecutive Plan Year during which such distribution is payable but the Participant or Beneficiary cannot be found. The amount of the unpaid Plan Benefit shall be reallocated to eligible Participants in the proportion that each such Participant's Compensation bears to all Participants' Compensation, unless mandatory provisions of applicable escheat laws require another application, in which case such Plan Benefit shall be applied as such laws require. If, however, the Participant or Beneficiary subsequently makes a proper claim to the Company for any Plan Benefit which was reallocated and which was not lost by reason of escheat, then such Plan Benefit (without income, gains or other adjustment) shall be restored to the Participant's Accounts from a special contribution made by the appropriate Participating Company for this purpose. The Plan Benefit shall thereafter be distributable in accordance with the terms of the Plan. 16.4 No Employment Rights. Nothing in the Plan shall be deemed to give any individual any right to remain in the employ of any Participating Company or to affect the right of such Participating Company to terminate such individual's employment at any time and for any reason. 16-2 55 16.5 Merger, Consolidation and Transfer of Assets or Liabilities. The Plan shall not be merged or consolidated with any other plan, and no assets or liabilities of the Plan shall be transferred to any other plan, unless each Participant would receive a Plan Benefit immediately after the merger, consolidation or transfer (if the Plan were then terminated) which is equal to or greater than the Plan Benefit which such Participant would have been entitled to receive immediately before such merger, consolidation or transfer (if the Plan had then been terminated). 16.6 Tender Offers. Effective October 1, 1992, in the event that any person or group of persons makes a tender offer subject to section 14(d) of the Securities Exchange Act of 1934 to acquire all or part of the outstanding shares of Geneva Stock, including the Geneva Stock held in the Trust Fund ("Acquisition Offer"), each Participant shall be entitled to direct the Trustee confidentially to tender all or part of those shares of Geneva Stock that are held in the Participant's Accounts. If the Trustee receives an instruction by the date communicated by the Company to the Participant, the Trustee shall tender such shares in accordance with such instruction. Any Geneva Stock as to which the Trustee does not receive timely instructions shall not be tendered by the Trustee. The Company shall distribute to each Participant all appropriate materials pertaining to the Acquisition Offer, including the statement of the position of the Company with respect to such offer issued pursuant to Rule 14e-2 under the Securities Exchange Act of 16-3 56 1934, as soon as practicable after such materials are issued; provided, however, that if the Company fails to issue such statement within five business days after the commencement of such offer, the Company shall distribute such materials to each Participant without the statement by the Company and shall separately distribute such statement as soon as practicable after it is issued. 16.7 Choice of Law. The Plan and all rights thereunder shall be interpreted and construed in accordance with ERISA and, to the extent that state law is not preempted by ERISA, the law of the State of Utah. 16-4 57 ARTICLE 17. SPECIAL TOP-HEAVINESS RULES. 17.1 Determination of Top-Heavy Status. Any other provision of the Plan notwithstanding, this Article 17 shall apply to any Plan Year in which the Plan is a Top-Heavy Plan. The Plan shall be considered a "Top-Heavy Plan" for a Plan Year if, as of the Determination Date for such Plan Year, the Top-Heavy Ratio for the Aggregation Group exceeds 60%. 17.2 Minimum Allocations. For any Plan Year during which the Plan is a Top-Heavy Plan, the Company Contributions and Forfeitures allocated to each Participant who is not a Key Employee, but who is an Employee on the last day of such Plan Year, shall not be less than the lesser of (a) three percent of his or her Compensation (as defined in Section 7.5) or (b) the greatest allocation of Salary Deferrals, Company Contributions and Forfeitures, expressed as a percentage of Compensation, made to any Participant who is a Key Employee." 17.3 Special Definitions. For purposes of this Article 17 only, the following definitions shall apply: (a) "Aggregation Group" means either the Required Aggregation Group or any Permissive Aggregation Group, as the Company may elect. (b) "Determination Date" means the last day of the Plan Year prior to the applicable Plan Year. The last day of the first Plan Year shall be the Determination Date for that year. (c) "Key Employee" means a key employee, as defined in section 416(i) of the Code. 17-1 58 (d) "Permissive Aggregation Group" means a group of qualified plans which includes (i) the Required Aggregation Group and (ii) one or more plans of a member of the Affiliated Group which are not part of the Required Aggregation Group. A Permissive Aggregation Group, when viewed as a single plan, must satisfy the requirements of sections 401(a)(4) and 410 of the Code. (e) "Required Aggregation Group" means a group of qualified plans which includes (i) each plan of a member of the Affiliated Group in which a Key Employee participates and (ii) each other plan of a member of the Affiliated Group which enables any plan in which a Key Employee participates to meet the requirements of section 401(a)(4) or 410 of the Code. (f) "Top-Heavy Ratio" means a percentage determined pursuant to section 416(g) of the Code. 17-2 59 ARTICLE 18. ROLLOVERS AND RELATED TRANSACTIONS. 18.1 Rollover From Qualified Plan. With the consent of the Company an Eligible Employee may contribute all or any part of an "eligible rollover distribution" within the meaning of Code section 402(c)(4) to the Plan, either through an ordinary rollover or through a direct transfer in accordance with Code section 401(a)(31) and the Regulations thereunder; provided, however, that such eligible rollover distribution may be contributed to the Plan only if (i) the contribution is paid entirely in the form of a cashier's check or money order made payable to or endorsed over to the Plan or such other form acceptable to the Company, (ii) the Eligible Employee establishes to the satisfaction of the Company that such distribution was an eligible rollover distribution from a plan which, at the time of the distribution, met the requirements of section 401 of the Code, and (iii) in the case of a rollover that is not made in accordance with the direct transfer provisions of Code section 401(a)(31), the contribution is made within sixty (60) days after the Eligible Employee's receipt of the eligible rollover distribution. 18.2 Rollover From IRA. With the consent of the Company an Eligible Employee may, within sixty (60) days after the date of receipt of a distribution from an individual retirement account which meets the requirements of section 408 and related sections of the Code, contribute all or any part of such distribution to the Plan; provided, however, that all or any part of such distribution may be contributed to the Plan only if 18-1 60 (i) the distribution represents the entire amount in such individual retirement account; (ii) no part of the distribution is attributable to any source other than a "rollover contribution" from an employees' trust described in section 401(a) of the Code which is exempt from tax under section 501(a) of such Code; (iii) the contribution is paid entirely in the form of a cashier's check or money order made payable to or endorsed over to the Plan or such other form acceptable to the Company; and (iv) the Eligible Employee establishes to the satisfaction of the Company that the conditions set forth in (i), (ii) and (iii) above have been met and such distribution was made from an individual retirement account which, at the time of the distribution, met the requirements of section 408 and related sections of the Code. 18.3 Mistaken Rollover. If it is determined that a Participant's rollover contribution did not qualify under the Code for a tax free rollover, then as soon as reasonably possible the balance in the Participant's Rollover Account shall be segregated from all other Plan assets, treated as a nonqualified trust established by and for the benefit of the Participant and distributed to the Participant. Such a mistaken rollover contribution shall be deemed never to have been a part of the Plan and shall not adversely affect the tax qualification of the Plan under the Code. 18.4 Direct Rollovers. Effective with respect to distributions from the Plan made on or after January 1, 1993, notwithstanding any provision of the Plan to the contrary that would 18-2 61 otherwise limit a distributee's election under this Article, a distributee may elect, at the time and in the manner prescribed by the Company, to have any portion of an eligible rollover distribution paid directly to an eligible retirement plan specified by the distributee in a direct rollover. Notwithstanding the foregoing, the Company may prescribe rules that limit a distributee's right to make the election described in the preceding sentence with respect to certain de minimis distributions or divisions of the eligible rollover distribution. An "eligible rollover distribution" is any distribution of all or any portion of the balance to the credit of the distributee, except that an eligible rollover distribution does not include: any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the distributee or the joint lives (or joint life expectancies) of the distributee and the distributee's designated beneficiary, or for a specified period of 10 years or more; any distribution to the extent such distribution is required under section 401(a)(9) of the Code; and the portion of any distribution that is not includable in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to employer securities). An "eligible retirement plan" is an individual retirement account described in section 408(a) of the Code, an individual retirement annuity described in section 408(b) of the Code, an annuity plan described in section 403(a) of the Code, or a 18-3 62 qualified trust described in section 401(a) of the Code, that accepts the distributee's eligible rollover distribution. However, in the case of an eligible rollover distribution to the surviving spouse, an eligible retirement plan is an individual retirement account or an individual retirement annuity. A "distributee" includes an Employee or former Employee. In addition, the Employee's or former Employee's surviving spouse and the Employee's or former Employee's spouse or former spouse who is the alternate payee under a QDRO, as defined in section 414(p) of the Code and section 206(d) of ERISA, are distributees with regard to the interest of the spouse or former spouse. A "direct rollover" is a payment by the Plan to the eligible retirement plan specified by the distributee. 18-4 63 ARTICLE 19. DEFINITIONS. 19.1 "Accounts" means the separate accounts maintained for each Participant as part of the Trust Fund, which include, as applicable, a Participant's Discretionary Contribution Account, Pension Contribution Account, Salary Deferral Account, Matching Contribution Account, Geneva Stock Account and Rollover Account. 19.2 "Affiliated Group" means a group of one or more chains of corporations connected through stock ownership with the Company, if: (a) Stock possessing at least 80% of the total combined voting power of all classes of stock entitled to vote or at least 80% of the total value of shares of all classes of stock of each of the corporations, except the Company, is owned by one or more of the other corporations; and (b) The Company owns stock possessing at least 80% of the total combined voting power of all classes of stock entitled to vote or at least 80% of the total value of shares of all classes of stock of at least one of the other corporations excluding, in computing such voting power or value, stock owned directly by such other corporations. In addition, the term "Affiliated Group" includes any other entity which the Company has designated in writing as a member of the Affiliated Group for purposes of the Plan. An entity shall be considered a member of the Affiliated Group only with respect to periods for which such designation is in effect or 19-1 64 during which the relationship described in Subsections (a) and (b) above exists. 19.3 "Annuity Starting Date" means: (a) The first day of the first period for which an amount is payable as an annuity; or (b) In the case of a benefit not payable in the form of an annuity, the first day on which all events have occurred that entitle the Participant to such benefit. 19.4 "Base Pay" means the Participant's salary, wages or other regular rate of pay, including Salary Deferral Contributions and salary reductions made pursuant to the Company's cafeteria plan, but exclusive of bonuses, overtime, or other extraordinary compensation. 19.5 "Beneficiary" means one or more persons designated by the Participant (or by the Plan) pursuant to Section 10.11. 19.6 "Code" means the Internal Revenue Code of 1986, as amended from time to time. 19.7 "Company" means Geneva Steel, a Utah corporation. 19.8 "Company Contributions" means a Discretionary Contribution, a Matching Contribution or a Pension Contribution. 19.9 "Compensation" means the total compensation paid to the Participant (within the meaning of Treas. Reg. Section 1.415-2(d)(11)(ii)) by a Participating Company for personal services performed while a Participant for the Plan Year. Compensation includes Salary Deferrals and deferrals made pursuant to the Company's cafeteria plan. "Compensation" does 19-2 65 not include any compensation paid to a Participant in excess of $150,000, adjusted in accordance with section 401(a)(17)(B) of the Code. For purposes of applying the $150,000 limit in the preceding sentence, family members of the Employee shall be combined with the Employee in accordance with the guidelines established in Section 1.8 of Appendix I to the Plan, except that for purposes of this Section 19.9, family members shall only include the Employee who is a 5% owner or one of the ten most highly compensated employees, the Employee's spouse and the Employee's lineal descendants who have not attained age 19 before the close of the Plan Year. 19.10 "Disability" means the condition of a Participant who is permanently unable, by reason of a physical or mental incapacity, to perform the normal duties of his or her occupation for a Participating Company or the duties or such other position or job that the Company makes available to the Participant and for which the Participant is qualified by reason of his training, education and experience, as certified by a physician selected by such Participating Company. 19.11 "Discretionary Contributions" means an account contributed to the Plan by a Participating Company pursuant to Section 3.1. 19.12 "Eligible Employee" is defined in Section 2.1. 19.13 "Employee" means an individual who (a) is a common-law employee of a member of the Affiliated Group or a "leased employee" (within the meaning of section 414(n) of the Code) with respect to a member of the Affiliated Group. 19-3 66 19.14 "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time. 19.15 "Forfeiture" means that part of the Participant's Accounts that has not become vested pursuant to Article 9 when he or she ceases to be an Employee. 19.16 "Geneva Stock" means the common stock of the Company. 19.17 "Geneva Stock Fund" means the Investment Fund described in Section 8.2. 19.18 "Investment Accounts" means those Accounts described in Section 8.4. 19.19 "Investment Funds" means the funds established under the Trust Fund and described in Section 8.2. 19.20 "Matching Contribution" means an amount contributed to the Plan by a Participating Company pursuant to Section 6.1. 19.21 "Participant" means an individual whose participation in the Plan (a) has commenced pursuant to Section 2.3, 2.4 or 2.5 and (b) has not yet terminated pursuant to Section 2.7. 19.22 "Participating Company" means each member of the Affiliated Group which (a) has been designated as a Participating Company by the Company and (b) has accepted such designation by appropriate corporate action. 19.23 "Pension Contribution" means a contribution made by a Participating Company pursuant to Article 4. 19.24 "Period of Service" means all of the following: (a) Period of Employment. An Employee's Period of Service shall include any period during which an 19-4 67 Employee maintains an employment relationship with an Affiliated Group member. An Employee's employment relationship with an Affiliated Group member commences on the first date the Employee performs duties for an Affiliated Group member for which he or she receives or is entitled to receive compensation and ends on the date the Employee quits, dies, is discharged or retires. An Employee shall not be considered to have quit under the following circumstances: (i) When the Employee is absent due to lay-off, leave of absence, disability or sickness for up to 48 months. (ii) When the Employee enters military service with the United States, provided the Employee returns to active employment with the Company within the time the Employee's reemployment rights are protected under applicable law. If the Employee does not so return, he or she shall be deemed to have quit on the date of entry into military service. (iii) When the Employee is on jury duty, approved vacation or holiday. (iv) When an Employee is absent from work for any period up to 24 months because of the Employee's pregnancy, the birth of the Employee's child, the placement of a child with the Employee 19-5 68 for the purpose of adoption, or the care of such child immediately following such birth or placement. An Employee shall be deemed to have been discharged as of the earlier of the date oral or written notice of discharge is actually received or the date a written notice is deposited in the United States mail on a registered or certified basis to the Employee's last known address as reflected in the records of the Company; (b) Period for Which Back Pay Awarded. An Employee's Period of Service includes any period not otherwise counted as part of a Period of Service for which the Employee is awarded, or entitled to, back pay from the Company (regardless of any mitigation of damages); (c) Period Following Termination. An Employee's Period of Service includes any period following termination of his or her employment relationship with the Company (as determined pursuant to (i) above), provided the Employee is rehired within 365 days after such termination; (d) Aggregation of Periods of Service. All Periods of Service determined pursuant to this Section 19.22 shall be aggregated on the basis of whole calendar months whether or not such Periods of Service are consecutive, except: 19-6 69 (i) Fractional Months. If an Employee's Period of Service commences on other than the first day of a calendar month or ends on other than the last day of a calendar month the days in such month or months shall be aggregated and one additional month of Service shall be credited if the number of such days is more than 30 but less than 59 and two additional months shall be credited if the number of such days equals 60. (ii) Permanent Service Break. If an Employee who is not even partially vested incurs a Permanent Service Break, any Period of Service prior to such Permanent Service Break shall not be aggregated with any Period of Service after such break. 19.25 "Permanent Service Break" means a period during which the Employee's employment relationship with an Affiliated Group member terminates and the Employee has not been reemployed as an Employee within 60 months. 19.26 "Plan" means this Geneva Steel Management Employee Savings and Pension Plan, as amended from time to time. 19.27 "Plan Benefit" means the benefit payable to the Participant or to his or her Beneficiary pursuant to Article 10. 19.28 "Plan Year" means the calendar year. 19.29 "Qualified Joint and Survivor Annuity" means a monthly annuity which is actuarially equivalent to the Participant's Plan Benefit and which is payable for the joint 19-7 70 lives of the Participant and his or her spouse, with 50% of such annuity continued for the life of the survivor. 19.30 "Qualified Non-Elective Contributions" means contributions (other than Matching Contributions) made by the Employer pursuant to Section 2.3 of Appendix I to the Plan and allocated to the Participants' Qualified Non-Elective Contributions Accounts that the Participants may not elect to receive in cash until distributed from the Plan, that are nonforfeitable when made, and that are distributable only as specified in Section 10.4. 19.31 "Review Panel" means the fiduciary described in Section 12.1. 19.32 "Rollover Contribution" means a contribution made by the Participant pursuant to Article 18. 19.33 "Salary Deferral Contribution" means a contribution made by a Participating Company on the Participant's behalf pursuant to Section 5.1. 19.34 "Trust Agreement" means the trust agreement(s) between the Company and the Trustee, as amended from time to time. 19.35 "Trustee" means the trustee(s) appointed by the Company pursuant to Section 13.1. 19.36 "Trust Fund" means the trust fund(s) established pursuant to the Trust Agreement. 19.37 "Valuation Date" means the last business day of the Plan Year and such other dates selected by the Company. 19-8 71 ARTICLE 20. EXECUTION. To record the adoption of the Plan to read as set forth herein the Company has caused its authorized officer to execute this document this 3rd day of July, 1995. GENEVA STEEL By /s/ C. E. Ramnitz ------------------------------------- As Its V.P. Human Resources 20-1 72 APPENDIX I TO THE GENEVA STEEL MANAGEMENT EMPLOYEE SAVINGS AND PENSION PLAN LIMITATIONS RELATING TO NONDISCRIMINATION TESTING TABLE OF CONTENTS
Page ---- ARTICLE 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.1 Aggregate 401(m) Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.2 Aggregate 401(m) Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.3 Before-Tax Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.4 Combined limitation Formula . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.5 Combined Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.6 Excess Aggregate 401(m) Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.7 Excess Before-Tax Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.8 Highly Compensated Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.9 Non-Highly Compensated Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 1.10 Qualified Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 1.11 Section 414(s) Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 1.12 Top-Paid Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 ARTICLE 2. BEFORE-TAX CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 2.1 Percentage Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 2.2 Reduction of Salary Deferral Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 2.3 Qualified Non-Elective Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 2.4 Other Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 ARTICLE 3. MATCHING CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 3.1 Percentage Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 3.2 Reduction of Aggregate 401(m) Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 3.3 Other Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 ARTICLE 4. COMBINED LIMITATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 4.1 Combined Limitation Formula . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 4.2 Additional Reductions of Aggregate 401(m) Contributions . . . . . . . . . . . . . . . . . . . . . . 16 ARTICLE 5. DISTRIBUTIONS OF EXCESS BEFORE-TAX CONTRIBUTIONS AND EXCESS AGGREGATE 401(m) CONTRIBUTIONS . . . . . 17 5.1 Time of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 5.2 Income Allocable to Excess Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
-i- 73 APPENDIX I LIMITATIONS RELATING TO NONDISCRIMINATION TESTING UNDER CODE SECTIONS 401(k) and 401(m) ARTICLE 1. DEFINITIONS. 1.1 "Aggregate 401(m) Contributions" means any Matching Contributions allocated to the Participant for the Plan Year. 1.2 "Aggregate 401(m) Percentage" means the average percentage determined under Section 3.1(c) of this Appendix I. 1.3 "Before-Tax Percentage" means the average percentage determined under Section 2.1(c) of this Appendix I. 1.4 "Combined limitation Formula" means the formula computed under Section 4.1 of this Appendix I. 1.5 "Combined Percentage" means the percentage determined under Section 4.1(b) or 4.1(c) of this Appendix I. 1.6 "Excess Aggregate 401(m) Contributions" means the reductions in Matching Contributions described in Section 3.2 of this Appendix I. 1.7 "Excess Before-Tax Contributions" means the reductions in Salary Deferral Contributions described in Section 2.2 of this Appendix I. 1.8 "Highly Compensated Employee" for any Plan Year means any active Employee who, during the look-back year, (a) received Total Compensation of more than $75,000 (or such larger amount as may be provided on account of cost of living adjustments pursuant to sections 414(q) and 415(d) of the Code); (b) received Total Compensation of more than $50,000 (or such -1- 74 larger amount as may be provided on account of cost of living adjustments pursuant to sections 414(q) and 415(d) of the Code) and was a member of the Top-Paid Group; or (c) was an officer of a member of the Affiliated Group and received Total Compensation of more than 50 percent of the dollar limitation in effect under section 415(b)(1)(A) of the Code. The term "Highly Compensated Employee" also includes: (a) an Employee who is both described in the preceding sentence if the term "determination year" is substituted for the term "look-back year" and the Employee is one of the 100 Employees who received the most Total Compensation from the Affiliated Group during the determination year; and (b) an Employee who is a five-percent owner at any time during the look-back year or determination year. If no officer has satisfied the compensation requirement of (c) above during either a determination year or look-back year, the highest paid officer for such year shall be treated as a Highly Compensated Employee. The term "Highly Compensated Employee" shall also include a former Employee who separated from service (or was deemed to have separated) prior to the determination year, performs no service for the Affiliated Group during the determination year, and was a Highly Compensated Employee as an active Employee for either the separation year or any determination year ending on or after the Employee's 55th birthday. If an Employee is, during a determination year or look-back year, a family member of either a five percent owner who is -2- 75 an active or former Employee or a Highly Compensated Employee who is one of the 10 most Highly Compensated Employees ranked on the basis of Total Compensation paid during such year, then the family member and the five-percent owner or top-ten Highly Compensated Employee shall be aggregated. In such case, the family member and the five-percent owner or top-ten Highly Compensated Employee shall be treated as a single Employee receiving Total Compensation and Plan contributions and benefits of the family member and five-percent owner or top-ten Highly Compensated Employee. The compensation and benefits attributable to the family members and the five-percent owner or top-ten Highly Compensated Employee shall be pro rated among the family members and the five-percent owner or top-ten Highly Compensated Employee in the proportion that each such individual's Compensation bears to the total of all such individuals' Compensation. For purposes of this Section 1.8, "family member" includes the spouse, lineal ascendants and descendants of the Employee or former Employee and the spouses of such lineal ascendants and descendants. For purposes of this Section 1.8, the determination year shall be the Plan Year. The look-back year shall be the 12-month period immediately preceding the determination year. However, the Company may elect in accordance with Temp. Treas. Reg. section 1.414(q)-1T Q&A-14(b), to make the look-back year calculation for a determination year on the basis of the calendar year ending with or within the applicable determination year. If such an election is made, the Company shall make the -3- 76 determination year calculation on the basis of the period (if any) by which the applicable determination year extends beyond the calendar year (i.e., the lag period). (If the Plan Year is the calendar year, this election makes the look-back year and the determination year the same calendar year.) The determination of who is a Highly Compensated Employee, including the determinations of the number and identity of Employees in the Top-Paid Group, the top 100 Employees, the number of Employees treated as officers and the Total Compensation that is considered, will be made in accordance with section 414(q) of the Code and regulations thereunder. 1.9 "Non-Highly Compensated Employee" means any Participant who is not a Highly Compensated Employee. 1.10 "Qualified Plan" means a stock bonus, pension or profit sharing plan (other than this Plan) maintained by a member of the Affiliated Group that is intended to qualify under section 401(a) of the Code. 1.11 "Section 414(s) Compensation" means, at the discretion of the Company, any one of the following definitions of compensation received by an Employee from the Company or a member of the Affiliated Group during the portion of the Plan Year that the Employee is a Participant or is eligible to become a Participant in the Plan: (a) Compensation as defined in Treasury Regulation section 1.415-2(d) or any successor thereto; -4- 77 (b) "Wages" as defined in section 3401(a) of the Code for purposes of income tax withholding at the source, but determined without regard to any rules that limit the remuneration included in wages based on the nature or location of the employment or the services performed (such as the exception for agricultural labor in section 3401(a)(23) of the Code); (c) "Wages" as defined in section 3401(a) of the Code for purposes of income tax withholding at the source, plus all other payments of compensation reportable under Code sections 6041(d) and 6051(a)(3) and the regulations thereunder, determined without regard to any rules that limit such Wages or reportable compensation based on the nature or location of the employment or the services performed (such as the exception for agricultural labor in section 3401(a)(23) of the Code), and modified, at the election of the Company, to exclude amounts paid or reimbursed for the Employee's moving expenses, to the extent it is reasonable to believe that these amounts are deductible by the Employee under section 217 of the Code; (d) Any of the definitions of Section 414(s) Compensation set forth in Subsections (a), (b) and (c) above, reduced by all of the following items (even if includable in gross income): reimbursements or other expense allowances, fringe benefits (cash and noncash), moving expenses, deferred compensation and welfare benefits; -5- 78 (e) Any of the definitions of Section 414(s) Compensation set forth in Subsections (a), (b), (c) and (d) above, modified to include any elective 4contributions made by the Company or a member of the Affiliated Group on behalf of the Employee that are not includable in gross income under section 125, 402(a)(8), 402(h) or 403(b) of the Code; or (f) Any reasonable definition of compensation that does not by design favor Highly Compensated Employees and that satisfies the nondiscrimination requirement set forth in Treasury Regulation section 1.414(s)-1(d)(2) or the successor thereto. Any definition of Section 414(s) Compensation shall be used consistently to define the compensation of all Employees taken into account in satisfying the requirements of an applicable provision of this Appendix I for the relevant determination period. For purposes of applying the limitations set forth in Articles 2, 3 and 4 of this Appendix I, Section 414(s) Compensation shall not include compensation paid to an Employee for a Fiscal Year in excess of $150,000 (or such other amount as may be adopted by the Commissioner of Internal Revenue to reflect a cost-of-living adjustment). -6- 79 1.12 "Top-Paid Group" for any Plan Year means the top 20 percent (in terms of Section 414(s) Compensation) of all Employees of the Affiliated Group on a U.S. dollar payroll, excluding the following: (a) Any Employee covered by a collective bargaining agreement who is not an Eligible Employee; (b) Any Employee who has not completed six months of service at the end of the Plan Year; (c) Any Employee who normally works less than 17 1/2 hours per week; (d) Any Employee who normally works no more than six months during any year; and (e) Any Employee who has not attained the age of 21 at the end of the Plan Year. 1.13 "Total Compensation" means "wages," as defined in section 3401(a) of the Code for purposes of income tax withholding at the source, but determined: (a) Without regard to any rules that limit the remuneration included in 'wages' based on the nature or location of the employment or the services performed (such as the exception for agricultural labor in section 3401(a)(2) of the Code); and (b) By including amounts deferred but not refunded under a cafeteria plan, as such term is defined in section 125(c) of the Code and under a plan, including this Plan, qualified under section 401(k) of the Code. -7- 80 The capitalized terms used in this Appendix I, but not defined herein, shall have the same meaning as such terms have when used in the Geneva Steel Management Employee Savings and Pension Plan (the "Plan"), and the terms of the Plan are incorporated by reference into this Appendix I. -8- 81 ARTICLE 2. BEFORE-TAX CONTRIBUTIONS. 2.1 Percentage Limitations. The Salary Deferral Contributions attributable to Highly Compensated Employees for any Plan Year shall not exceed the limits described below: (a) The ratio of the Salary Deferral Contributions for the Plan Year to the Section 414(s) Compensation for the Plan Year shall be computed to the nearest one hundredth of one percent for each individual who at any time during the Plan Year is a Participant of the Plan or is eligible to become a Participant in the Plan; (b) In the case of an individual who is a five-percent owner or who is among the 10 most highly compensated Highly Compensated Employees, the Section 414(s) Compensation and Salary Deferral Contributions allocated to family members (as described in Section 1.8 of this Appendix I) shall be attributed to such Highly Compensated Employees in computing such ratios as prescribed in Treasury Regulation section 1.401(k)-1(f) and (g) or any successor thereto; (c) The average of such ratios (i.e., the Before-Tax Percentage) shall be determined for (i) the Highly Compensated Employees and (ii) the Non-Highly Compensated Employees; and (d) The Salary Deferral Contributions of Highly Compensated Employees shall be reduced to the extent necessary to establish that the Before-Tax Percentage for the Highly Compensated Employees either: (i) does not exceed 125 percent of the Before-Tax Percentage for the Non-Highly Compensated Employees, or (ii) does not exceed the lower of (A) 200 percent -9- 82 of the Before-Tax Percentage for Non-Highly Compensated Employees or (B) the Before-Tax Percentage for Non-Highly Compensated Employees plus two percentage points. 2.2 Reduction of Salary Deferral Contributions. The reduction of the Salary Deferral Contributions of Highly Compensated Employees as required by Section 2.1(d) of this Appendix I shall be made by the Company in the order of the individual ratios of such Highly Compensated Employees, beginning with the highest of such ratios and continuing until the Before-Tax Percentage for the Highly Compensated Employees meets either of the tests set forth in Section 2.1(d) of this Appendix I. Such reductions in Before-Tax Contributions shall be made in accordance with Treasury Regulation section 1.401(k)-1(f)(2) and shall constitute "Excess Before-Tax Contributions." For all affected Highly Compensated Employees, such Excess Before-Tax Contributions shall be eliminated as provided for in Article 5 hereof. Excess Before-Tax Contributions of an individual who is a five-percent owner or who is among the 10 most highly compensated Highly Compensated Employees shall be allocated among such individual's family members (as described in Section 1.8 of this Appendix I) in proportion to the contributions attributable to each family member that have been combined. 2.3 Qualified Non-Elective Contributions. In lieu of reducing "Excess Before-Tax Contributions" as provided in Section 2.2 of this Appendix I or "Excess Aggregate 401(m) Contributions" as provided in Section 3.2 of this Appendix I, the Company may make corrective Qualified Non-Elective -10- 83 Contributions on behalf of Non-Highly Compensated Employee Participants. Such Qualified Non-Elective Contributions shall be allocated to an eligible Participant's Salary Deferral Account in the ratio that such eligible Participant's Base Pay for the Plan Year bears to the total Base Pay of all eligible Participants for such Plan Year. Any Qualified Non-Elective Contributions for a Plan Year shall be paid to the Trustee not later than the last day of the Plan Year next following the close of the Plan Year for which the Qualified Non-Elective Contribution is made. 2.4 Other Plans. If a Highly Compensated Employee for any Plan Year is a participant during such Plan Year of any qualified plan that includes a qualified cash or deferral arrangement under section 401(k) of the Code, this Plan and such Qualified Plan(s) shall be treated as required by Treasury Regulation section 1.401(k)-1(g)(1)(ii)(B) in applying this Article 2. If the Plan is aggregated with any other qualified plan for purposes of Code section 410(b), this Plan and such other qualified plan shall be treated as a single plan in applying this Article 2. ARTICLE 3. MATCHING CONTRIBUTIONS. 3.1 Percentage Limitations. To the extent Matching Contributions are not treated as Salary Deferral Contributions and tested under Article 2 of this Appendix I, the Aggregate 401(m) Contributions of Highly Compensated Employees for any Plan Year shall not exceed the limits described below: -11- 84 (a) The ratio of the Aggregate 401(m) Contributions for the Plan Year to the Section 414(s) Compensation for the Plan Year shall be computed to the nearest one hundredth of one percent for each individual who at any time during the Plan Year is a Participant of the Plan or is eligible to become a Participant in the Plan; (b) In the case of an individual who is a five-percent owner or who is among the 10 most highly compensated Highly Compensated Employees, the Section 414(s) Compensation and the Company Contributions allocated to family members (as described in Section 1.8 of this Appendix I) shall be attributed to such Highly Compensated Employees in computing such ratios as prescribed in Treasury Regulation section 1.401(m)-1(e) and (f) or any successor thereto; (c) The average of such ratios (i.e., the Aggregate 401(m) Percentage) shall be determined for (i) the Highly Compensated Employees and (ii) the Non-Highly Compensated Employees; and (d) The Aggregate 401(m) Contributions of Highly Compensated Employees shall be reduced to the extent necessary to establish that the Aggregate 401(m) Percentage for the Highly Compensated Employees either: (i) does not exceed 125 percent of the Aggregate 401(m) Percentage for the Non-Highly Compensated Employees, or (ii) does not exceed the lower of (A) 200 percent of the Aggregate 401(m) Percentage for Non-Highly Compensated Employees or (B) the Aggregate 401(m) -12- 85 Percentage for Non-Highly Compensated Employees plus two percentage points. 3.2 Reduction of Aggregate 401(m) Contributions. The reduction in the Aggregate 401(m) Contributions of Highly Compensated Employees as required by Section 3.1(d) of this Appendix I shall be made by the Company, in accordance with Treasury Regulation section 1.401(m)-1(e)(2), in the order of the individual ratios of such Highly Compensated Employees, beginning with the highest of such ratios and continuing until the Aggregate 401(m) Percentage for the Highly Compensated Employees meets either of the tests set forth in Section 3.1(d) of this Appendix I. For all affected Highly Compensated Employees, such Excess Aggregate 401(m) Contributions shall be eliminated as provided for in Article 5 hereof. Excess Aggregate 401(m) Contributions of an individual who is a five-percent owner or who is among the 10 most highly compensated Highly Compensated Employees shall be allocated among such individual's family members (as described in Section 1.8 of this Appendix I) in proportion to the contributions attributable to each family member that have been combined. 3.3 Other Plans. If a Highly Compensated Employee for any Plan Year is a participant during such Plan Year of any qualified plan that is a qualified defined contribution plan (within the meaning of Code section 414(i)) and that provides for employee contributions and matching employer contributions (as described in Code section 401(m)(4)(A)), this Plan and such qualified plan(s) shall be treated as required by Treasury -13- 86 Regulation section 1.401(m)-1(f)(1)(ii)(B) in applying this Article 3. If the Plan is aggregated with any other qualified plan for purposes of Code section 410(b), this Plan and such other qualified plan shall be treated as a single plan in applying this Article 3. -14- 87 ARTICLE 4. COMBINED LIMITATIONS. 4.1 Combined Limitation Formula. The Combined Limitation Formula for each Plan Year shall be computed as follows: (a) First, the Before-Tax Percentage and Aggregate 401(m) Percentage for Highly Compensated Employees and Non-Highly Compensated Employees for the Plan Year shall be determined after making any reductions in Salary Deferral Contributions and/or Aggregate 401(m) Contributions of Highly Compensated Employees required by Sections 2.2 and 3.2 of this Appendix I before application of the Combined Limitation Formula. (b) Second, the sum of: (i) 125 percent of the greater of the Before-Tax Percentage or the Aggregate 401(m) Percentage for the Non-Highly Compensated Employees, and (ii) two (2) percentage points plus the lesser of the Before-Tax Percentage or the Aggregate 401(m) Percentage (but not in excess of 200 percent of the lesser of such Before-Tax Percentage and Aggregate 401(m) Percentage) for the Non- Highly Compensated Employees shall be determined. (c) Third, the sum of: (i) 125 percent of the lesser of the Before-Tax Percentage or the Aggregate 401(m) Percentage for the Non-Highly Compensated Employees, and (ii) two (2) percentage points plus the greater of the Before-Tax Percentage or the Aggregate 401(m) Percentage (but not in excess of 200 percent of the lesser of such Before-Tax Percentage and -15- 88 Aggregate 401(m) Percentage) for the Non-Highly Compensated Employees shall be determined. (d) Fourth, the sum of the Before-Tax Percentage and Aggregate 401(m) Percentage for the Highly Compensated Employees shall be determined. 4.2 Additional Reductions of Aggregate 401(m) Contributions. If, in any Plan Year, the amount determined under Section 4.1(d) of this Appendix I exceeds the greater of the amounts determined under Section 4.1(b) or Section 4.1(c) of this Appendix I, then the Aggregate 401(m) Contributions of Highly Compensated Employees shall be reduced, in the manner described in Section 3.2 of this Appendix I, to the extent necessary to ensure that the sum of the Before-Tax Percentage and Aggregate 401(m) Percentage of the Highly Compensated Employees for the Plan Year does not exceed the greater Combined Percentage determined under Section 4.1(b) or Section 4.1(c) of this Appendix I in respect to Non-Highly Compensated Employees. -16- 89 ARTICLE 5. DISTRIBUTIONS OF EXCESS BEFORE-TAX CONTRIBUTIONS AND EXCESS AGGREGATE 401(m) CONTRIBUTIONS. 5.1 Time of Distribution. Excess Before-Tax Contributions may be distributed to the appropriate Highly Compensated Employees by March 15 following the close of the Plan Year, but in no event later then the close of the following Plan Year. Excess Aggregate 401(m) Contributions (other than Excess Aggregate 401(m) Contributions that are first forfeited as attributable to Excess Before-Tax Contributions that are refunded for any Plan Year) shall be distributed to the appropriate Highly Compensated Employees as follows: (a) First, to the extent required, the vested portion of the Matching Contributions attributable to the Participant's Salary Deferral Contributions for such Plan Year, and any income (or losses) allocable to such Matching Contributions, shall be distributed to him or her by the March 15 next following the close of such Plan Year, but in no event later than the last day of the following Plan Year. (b) Second, to the extent required, the nonvested portion of the Matching Contributions allocated to the Participant for such Plan Year, and any income (or losses) allocable thereto, may be forfeited by March 15 next following the close of the Plan Year, but in no event later than the close of the following Plan Year, and reallocated as provided for in Section 9.4 of the Plan. All such distributions, including income allocable thereto, shall be designated by the Company as distributions of Excess Before-Tax Contributions or Excess -17- 90 Aggregate 401(m) Contributions, as the case may be. In accordance with Treasury Regulation section 1.401(k)-1(f)(5)(i), Excess Before-Tax Contributions for a Plan Year to be distributed to a Participant shall be reduced by excess deferrals previously distributed to such Participant for such Participant's taxable year ending with or within such Plan Year, and excess deferrals for a Plan Year to be distributed to a Participant shall be reduced by Excess Before-Tax Contributions previously distributed to such Participant for the Plan Year beginning with or within such taxable year. 5.2 Income Allocable to Excess Contributions. Income allocable to Excess Before-Tax Contributions and Excess Aggregate 401(m) Contributions shall be determined by the Company in accordance with Treasury Regulation sections 1.401(k)-1(f)(4) and 1.401(m)-1(e)(3) or the successors thereto. -18- 91 \ APPENDIX II PARTICIPANT LOANS Amount of Loans. A Participant who is receiving Compensation may obtain a cash loan from the Participant's Salary Deferral, Rollover and vested portion of his or her Matching Contribution Accounts. The minimum amount of a loan shall be one thousand dollars ($1,000). Aggregate Loan Limitations. No loan shall be granted under the Plan if such loan, when aggregated with the balance of all loans the Participant has outstanding under the Plan (and other Company plans similar to the Plan) at the time such loan is to be made, exceeds the smallest of the following: (i) Fifty thousand dollars ($50,000), minus the excess of: (A) the Participant's highest outstanding loan balance under the Plan during the one-year period ending one day prior to the date on which such loan is to be made over (B) the outstanding balance of all of the Participant's Plan loans on the date such loan is to be made; or (ii) Fifty (50%) percent of the vested balance of the Participant's Salary Deferral, Rollover, Geneva Stock and Matching Contribution Accounts. -1- 92 Terms of Loans. A loan to a Participant shall be made on such terms and conditions as the Company may determine, provided that the loan shall: (i) Be evidenced by a promissory note signed by the Participant and secured to the extent necessary by the Accounts of the Participant (regardless of whether a particular Account provided funds for the loan under Source of Loans below); (ii) Bear interest at a fixed rate equal to the prime rate of the Trustee plus one percent, in effect on the first business day of the month in which the Company approves the loan, provided that such rate is reasonable; (iii) Be subject to a substantially level amortization schedule, as determined by the Company; (iv) Provide for loan payments (A) to be withheld through periodic (but not less frequently than quarterly) irrevocable payroll deductions from the Participant's Compensation or (B) to be paid by check or money order whenever payroll withholding is not possible; (v) Provide for repayment in full (including full prepayment) on or before the earlier of (A) the date the Participant's employment as an Employee terminates, or -2- 93 (B) the date five (5) years after the loan is made; and (vi) Provide that a Participant's Accounts may not be applied to the satisfaction of the Participant's loan obligations before the Accounts become distributable under Article 10 of the Plan, unless the Company determines that the loan obligations are in default and treats such default as qualifying as a financial hardship. A distribution on account of a loan default shall be made only if the amount withdrawn, net of applicable federal and state taxes, does not exceed the amount of the need, and the Participant represents to the Company's satisfaction that the need cannot be relieved: (A) Through reimbursement or compensation by insurance, or otherwise, (B) By reasonable liquidation of the Participant's assets, to the extent such liquidation would not itself cause an immediate and heavy financial need, (C) By cessation of Salary Deferral Contributions under the Plan, or (D) By other distributions or nontaxable loans from plans maintained by the Company or by any other employer, or by borrowing from commercial sources on reasonable commercial terms. -3- 94 The Participant's resources shall be deemed to include those assets of his/her spouse and minor children that are reasonably available to the Participant. The Company shall exercise its discretion upon requests for loans in a uniform and nondiscriminatory manner, consistent with the requirements of sections 401(a)(4) and 401(k) of the Code. Restrictions on Loans. No Participant shall have more than one (1) loan from the Plan outstanding at the same time. A new loan may not be obtained earlier than thirty (30) days after the end of the calendar quarter in which the prior Plan loan is repaid. Source of Loans. A Loan Account shall be established for each Participant who takes a loan hereunder. The Loan Account shall be held by the Trustee as part of the Loan Fund. The amount of the loan shall be transferred to the Participant's Loan Account from the Participant's Salary Deferral, Rollover and Matching Contribution Accounts and shall be disbursed from the Loan Account. No portion of a Participant's Life Insurance Fund will be liquidated and transferred to the Participant's Loan Account. Disbursement of Loans. A Participant may request a loan by filing the prescribed loan form with the Company. A loan shall be disbursed as soon as reasonably practicable after the date on which the Company receives the appropriately completed forms. -4- 95 Valuation Date. For purposes of this Appendix II, the balance of a Participant's Accounts shall be determined as of the last completed Valuation Date prior to the date on which the Company receives the appropriately completed forms. Loan Payments and Defaults. Principal and interest payments on a Participant's loan shall be credited initially to the Participant's Loan Account and shall be transferred as soon as reasonably practicable thereafter to the Participant's other Accounts in the percentages specified by the Participant under Section 8.4. Any loss caused by nonpayment or other default on a Participant's loan obligations shall be borne solely by that Participant's Accounts. Loan Fee. Notwithstanding Section 13.4, the Company may charge a reasonable loan set-up and servicing fee for administering a loan under the Plan. Any such fee(s) may be deducted from the loan proceeds and/or the Participant's Accounts. Definitions. (i) "Loan Account" shall mean the account established pursuant to this Appendix II for the purpose of making Participant loans and receiving loan repayments. (ii) "Loan Fund" shall mean the fund invested solely in promissory notes executed by Participants pursuant to this Appendix II. The capitalized terms used in this Appendix II, but not defined herein, shall have the same meaning as such terms have -5- 96 when used in the Geneva Steel Management Employee Savings and Pension Plan (the "Plan"), and the terms of the Plan are incorporated by reference into this Appendix II. Spousal Consent. No loan shall be granted pursuant to this Appendix II to a married Participant unless the spouse of such Participant, in accordance with the requirements of Subsection 10.7 of the Plan, and within the 90 day period before the loan is made, consents to the assignment of the Plan Benefit as security for repayment of the loan, and any actions the Company subsequently may take under this Appendix II to the Plan. -6- EX-10.20 4 UNION EMP. SAVINGS AND PENSION PLAN 1 THE GENEVA STEEL UNION EMPLOYEE SAVINGS AND PENSION PLAN (As Amended and Restated January 1, 1995) 2 TABLE OF CONTENTS
Page ---- ARTICLE 1. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-1 ARTICLE 2. ELIGIBILITY AND ENROLLMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-1 2.1 Eligible Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-1 2.2 Participation Requirements . . . . . . . . . . . . . . . . . . . . . . . . 2-1 2.3 Enrollment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-1 2.4 Rehired Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-1 2.5 Transferred Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-2 2.6 Suspension of Participation . . . . . . . . . . . . . . . . . . . . . . . . 2-2 2.7 Termination of Participation . . . . . . . . . . . . . . . . . . . . . . . 2-2 ARTICLE 3. PENSION CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-1 3.1 Amount of Pension Contributions . . . . . . . . . . . . . . . . . . . . . . 3-1 3.2 Allocation of Pension Contributions . . . . . . . . . . . . . . . . . . . . 3-1 ARTICLE 4. SALARY DEFERRALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-1 4.1 Amount of Salary Deferrals . . . . . . . . . . . . . . . . . . . . . . . . 4-1 4.2 Limitation on Salary Deferrals . . . . . . . . . . . . . . . . . . . . . . 4-1 4.3 Election to Contribute . . . . . . . . . . . . . . . . . . . . . . . . . . 4-2 4.4 Amendment of Prior Elections . . . . . . . . . . . . . . . . . . . . . . . 4-2 4.5 Voluntary Suspension of Contributions . . . . . . . . . . . . . . . . . . . 4-3 4.6 Return of Excess Salary Deferral Contributions . . . . . . . . . . . . . . 4-3 4.7 Investment of Contributions . . . . . . . . . . . . . . . . . . . . . . . . 4-3 ARTICLE 5. COMPANY MATCHING CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-1 5.1 Amount of Matching Contributions . . . . . . . . . . . . . . . . . . . . . 5-1 5.2 Matching Contributions in Form of Geneva Stock . . . . . . . . . . . . . . . 5-1 ARTICLE 6. CONTRIBUTION LIMITATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-1 6.1 Limitation on Contributions . . . . . . . . . . . . . . . . . . . . . . . . 6-1 6.2 Combined Limitation on Benefits and Contributions . . . . . . . . . . . . . 6-1 6.3 Excess Company Contributions and Forfeitures . . . . . . . . . . . . . . . 6-1 6.4 Annual Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-2 6.5 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-3 6.6 Employer Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-3 ARTICLE 7. PLAN INVESTMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-1 7.1 The Trust Fund; No Reversion . . . . . . . . . . . . . . . . . . . . . . . 7-1 7.2 Investment Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-2 7.3 Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-3 7.4 Investment of Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . 7-4 7.5 Transfers Among Accounts . . . . . . . . . . . . . . . . . . . . . . . . . 7-4 7.6 Allocation of Investment Income . . . . . . . . . . . . . . . . . . . . . . 7-5 7.7 Account Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-5 ARTICLE 8. VESTING AND FORFEITURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-1
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Page ---- 8.1 100 Percent Vesting . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-1 8.2 Vesting Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-1 8.3 Vesting After Prior Distributions . . . . . . . . . . . . . . . . . . . . . 8-2 8.4 Forfeitures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-2 ARTICLE 9. FORM OF PLAN BENEFIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-1 9.1 Amount of Plan Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . 9-1 9.2 Normal Form of Distribution . . . . . . . . . . . . . . . . . . . . . . . . 9-1 9.3 Optional Forms of Distribution . . . . . . . . . . . . . . . . . . . . . . 9-2 9.4 Time of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-2 9.5 Death of Participant Before Distribution . . . . . . . . . . . . . . . . . 9-3 9.6 Small Benefits: Lump Sum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-4 9.7 Election of Forms of Distribution . . . . . . . . . . . . . . . . . . . . . 9-4 9.8 Information on Distribution Options . . . . . . . . . . . . . . . . . . . . 9-6 9.9 Information on Death Benefits . . . . . . . . . . . . . . . . . . . . . . . 9-6 9.10 Determination of Marital Status . . . . . . . . . . . . . . . . . . . . . . 9-7 9.11 Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-7 ARTICLE 10. CLAIMS PROCEDURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-1 10.1 Filing Claims for Benefits . . . . . . . . . . . . . . . . . . . . . . . 10-1 10.2 Denial of Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-1 ARTICLE 11. REVIEW PROCEDURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11-1 11.1 Appointment of Review Panel . . . . . . . . . . . . . . . . . . . . . . . 11-1 11.2 Right to Appeal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11-1 11.3 Form of Request for Review . . . . . . . . . . . . . . . . . . . . . . . 11-1 11.4 Time for Review Panel Action . . . . . . . . . . . . . . . . . . . . . . 11-2 11.5 Review Panel Decisions . . . . . . . . . . . . . . . . . . . . . . . . . 11-2 11.6 Rules and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . 11-2 11.7 Exhaustion of Remedies Required . . . . . . . . . . . . . . . . . . . . . 11-3 ARTICLE 12. MANAGEMENT OF ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12-1 12.1 Control and Management of Plan Assets . . . . . . . . . . . . . . . . . . 12-1 12.2 Trustee Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12-1 12.3 Independent Qualified Public Accountant . . . . . . . . . . . . . . . . . 12-2 12.4 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12-2 12.5 Benefit Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12-2 ARTICLE 13. ADMINISTRATION OF THE PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13-1 13.1 Plan Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . 13-1 13.2 Employment of Advisers . . . . . . . . . . . . . . . . . . . . . . . . . 13-1 13.3 Service in Several Fiduciary Capacities . . . . . . . . . . . . . . . . . 13-2 ARTICLE 14. AMENDMENT AND TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14-1 14.1 Right to Amend or Terminate . . . . . . . . . . . . . . . . . . . . . . . 14-1 14.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . 14-1 14.3 Allocation of Assets Upon Termination . . . . . . . . . . . . . . . . . . 14-1 ARTICLE 15. GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15-1 15.1 No Assignment of Property Rights . . . . . . . . . . . . . . . . . . . . 15-1
-ii- 4
Page ---- 15.2 Incompetence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15-1 15.3 Unclaimed Plan Benefits . . . . . . . . . . . . . . . . . . . . . . . . . 15-1 15.4 No Employment Rights . . . . . . . . . . . . . . . . . . . . . . . . . . 15-2 15.5 Merger, Consolidation and Transfer of Assets or Liabilities . . . . . . . 15-2 15.6 Tender Offers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15-3 15.7 Choice of Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15-4 ARTICLE 16. ROLLOVERS AND RELATED TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . 16-1 16.1 Rollover From Qualified Plan . . . . . . . . . . . . . . . . . . . . . . 16-1 16.2 Rollover From IRA . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-1 16.3 Mistaken Rollover . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-2 16.4 Direct Rollovers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-2 16.5 Transfer to Management Plan . . . . . . . . . . . . . . . . . . . . . . . 16-4 ARTICLE 17. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-1 17.1 Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-1 17.2 Affiliated Group, . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-1 17.3 Annuity Starting Date . . . . . . . . . . . . . . . . . . . . . . . . . . 17-2 17.4 Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-2 17.5 Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-2 17.6 Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-2 17.7 Company Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . 17-2 17.8 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-2 17.9 Disability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-3 17.10 Eligible Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-3 17.11 Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-3 17.12 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-3 17.13 Forfeiture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-3 17.14 Geneva Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-3 17.15 Geneva Stock Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-3 17.16 Investment Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-3 17.17 Investment Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-3 17.18 Matching Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . 17-4 17.19 Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-4 17.20 Participating Company . . . . . . . . . . . . . . . . . . . . . . . . . . 17-4 17.21 Pension Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . 17-4 17.22 Period of Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-4 (a) Period of Employment . . . . . . . . . . . . . . . . . . . . . . . . . 17-4 (b) Period for Which Back Pay Awarded . . . . . . . . . . . . . . . . . . 17-5 (c) Period Following Termination . . . . . . . . . . . . . . . . . . . . 17-6 (d) Service with U.S. Steel Corporation . . . . . . . . . . . . . . . . . 17-6 (e) Aggregation of Periods of Service . . . . . . . . . . . . . . . . . . 17-6 (i) Fractional Months . . . . . . . . . . . . . . . . . . . . . . . . 17-7 (ii) Permanent Service Break . . . . . . . . . . . . . . . . . . . . 17-7 17.23 Permanent Service Break . . . . . . . . . . . . . . . . . . . . . . . . . 17-7 17.24 Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-7 17.25 Plan Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-7 17.26 Plan Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-7 17.27 Qualified Joint and Survivor Annuity . . . . . . . . . . . . . . . . . . 17-8 17.29 Rollover Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . 17-8 17.30 Salary Deferral Contribution . . . . . . . . . . . . . . . . . . . . . . 17-8
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Page ---- 17.31 Trust Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-8 17.32 Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-8 17.33 Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-8 17.34 Valuation Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-8 ARTICLE 18. EXECUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18-1 APPENDIX I LIMITATIONS RELATING TO NONDISCRIMINATION TESTING . . . . . . . . . . . . . . . . . . . . 1 ARTICLE 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.1 Aggregate 401(m) Contributions . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.2 Aggregate 401(m) Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.3 Before-Tax Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.4 Combined limitation Formula . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.5 Combined Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.6 Excess Aggregate 401(m) Contributions . . . . . . . . . . . . . . . . . . . . . . 1 1.7 Excess Before-Tax Contributions . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.8 Highly Compensated Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.9 Non-Highly Compensated Employee . . . . . . . . . . . . . . . . . . . . . . . . . 4 1.10 Qualified Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 1.11 Section 414(s) Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 1.12 Top-Paid Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 ARTICLE 2. BEFORE-TAX CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 2.1 Percentage Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 2.2 Reduction of Salary Deferral Contributions . . . . . . . . . . . . . . . . . . 10 2.3 Qualified Non-Elective Contributions . . . . . . . . . . . . . . . . . . . . . 10 2.4 Other Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 ARTICLE 3. MATCHING CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 3.1 Percentage Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 3.2 Reduction of Aggregate 401(m) Contributions . . . . . . . . . . . . . . . . . . 13 3.3 Other Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 ARTICLE 4. COMBINED LIMITATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 4.1 Combined Limitation Formula . . . . . . . . . . . . . . . . . . . . . . . . . . 15 4.2 Additional Reductions of Aggregate 401(m) Contributions . . . . . . . . . . . . 16 ARTICLE 5. DISTRIBUTIONS OF EXCESS BEFORE-TAX CONTRIBUTIONS AND EXCESS AGGREGATE 401(m) CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 5.1 Time of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 5.2 Income Allocable to Excess Contributions . . . . . . . . . . . . . . . . . . . 18 APPENDIX I LIMITATIONS RELATING TO NONDISCRIMINATION TESTING APPENDIX II PARTICIPANT LOANS
-iv- 6 THE GENEVA STEEL UNION EMPLOYEE SAVINGS AND PENSION PLAN (As Amended and Restated January 1, 1995) ARTICLE 1. INTRODUCTION. Geneva Steel established the Geneva Steel Union Pension Plan effective September 1, 1987. A cash or deferred arrangement was added effective January 1, 1990 and the name of the Plan was changed to the Union Employee Savings and Pension Plan. The Plan is now amended and restated in its entirety generally effective January 1, 1995 to incorporate prior outstanding amendments and amendments required by the Internal Revenue Service as a condition of issuing a favorable determination letter that the Plan is qualified under section 401(a) of the Code and to better reflect the administration of the Plan. Effective March 1, 1996 a matching contribution will be included in the Plan. The Plan actually constitutes two plans, one component of the Plan is a profit-sharing plan with a cash or deferred arrangement while the other is a money-purchase pension plan. Both components of the Plan are intended to qualify under section 401(a) of the Code. The Plan is for that unit of employees covered by the terms of the collective bargaining agreement in effect from time to time and between the United Steelworkers of America and the Company. 1-1 7 ARTICLE 2. ELIGIBILITY AND ENROLLMENT. 2.1 Eligible Employees. The term "Eligible Employee" shall mean any Employee who is employed by a Participating Company, except an Employee who is: (a) A "leased employee" (within the meaning of section 414(n) of the Code) with respect to the Participating Company; (b) Not included in the bargaining unit of the Geneva Plant; or (c) A nonresident alien with respect to the United States; provided that this Subsection (c) shall not apply to an Employee of a Participating Company whom the Company has designated in writing as an Eligible Employee. An individual's status as an Eligible Employee shall be determined by the Company, and such determination shall be conclusive and binding on all persons. 2.2 Participation Requirements. An Employee shall be entitled to participate in the Plan on the date he or she first becomes an Eligible Employee. 2.3 Enrollment. Participation in the Plan is automatic; Participants are not required to make contributions to the Plan. Upon becoming a Participant, each Eligible Employee shall designate a Beneficiary pursuant to Section 9.11. 2.4 Rehired Employees. A former Participant who is rehired as an Eligible Employee shall resume participation in the Plan on the date of reemployment. Any other former Employee 2-1 8 who is rehired and becomes an Eligible Employee shall commence participation in the Plan upon becoming an Eligible Employee. 2.5 Transferred Employees. An Employee who is transferred to the status of an Eligible Employee shall commence participation in the Plan on the date of transfer. 2.6 Suspension of Participation. A Participant's participation in the Plan shall be suspended for any period of time during which the Participant: (a) Neither receives nor is entitled to receive any Compensation, including (without limitation) any leave of absence without pay; or (b) Does not qualify as an Eligible Employee but remains a Participant. A Participant shall not receive any allocation of Company Contributions with respect to a period of suspended participation. A suspended Participant's Accounts shall remain invested as a part of the Trust Fund and shall continue to share in the gains, income, losses and investment expenses of the Trust Fund. 2.7 Termination of Participation. A Participant's participation in the Plan shall terminate when his or her entire Plan Benefit has been distributed or on the date of his or her death, whichever occurs first. In the case of a Participant who is not entitled to a Plan Benefit, participation in the Plan shall terminate when the Participant ceases to be an Employee. 2-2 9 ARTICLE 3. PENSION CONTRIBUTIONS. 3.1 Amount of Pension Contributions. For each calendar month in a Plan Year, the Participating Companies shall make a Pension Contribution for each Participant equal to 4% of each Participant's Compensation for the calendar month. Effective March 1, 1995 the Pension Contribution for each Participant shall be equal to 4 1/2% of each Participant's Compensation for the calendar month, and effective March 1, 1996 the Pension Contribution shall be equal to 5% of each Participant's Compensation for the calendar month. 3.2 Allocation of Pension Contributions. Each Pension Contribution for a Plan Year shall be paid to the Trustee not later than the earlier of the last date prescribed by law for filing the Company's federal income tax return for the taxable year in which such Plan Year ends (including extensions of such date) or the date eight and one-half months after the end of such Plan Year. Subject to the contribution limitations described by Article 6, the Pension Contribution for a Plan Year shall be allocated to Participants no later than the last day of the Plan Year, regardless of whether a Participant was an Employee on the last day of the Plan Year. Forfeitures shall be used to reduce Pension Contributions for the Plan Years in which they arise. Each Participant's share of Pension Contributions shall be credited to his or her Pension Contribution Account. 3-1 10 ARTICLE 4. SALARY DEFERRALS. 4.1 Amount of Salary Deferrals. A Participant who is not suspended may elect to contribute Salary Deferrals to the Plan. The amount of such Salary Deferrals for any period of participation may be equal to any whole percentage of the Participant's Compensation for such period (subject to Section 4.2) but shall not exceed 15% of the Participant's Compensation for such period. In addition, the amount of a Participant's Salary Deferrals for any calendar year shall not exceed $7,627, or such other amount as may be adopted by the Commissioner of Internal Revenue to reflect a cost-of-living adjustment. Salary Deferrals shall be made through periodic payroll deductions from the Participant's Compensation or through such other method as may be determined by the Company. For federal tax purposes (and, wherever permitted, for state and local tax purposes), Salary Deferrals shall be deemed employer contributions to the Plan, and a Participant's election to make Salary Deferrals shall constitute an election to have the Participant's taxable compensation reduced by the amount of the Salary Deferrals. 4.2 Limitation on Salary Deferrals. At any time, the Company (in its sole discretion) may reduce the maximum rate at which any Participant may make Salary Deferral Contributions to the Plan, or the Company may require that any Participant discontinue all Salary Deferral Contributions, in order to ensure that the actual deferral percentages meet one of the tests described in section 401(k) of the Code. Any reduction or discontinuance of Salary Deferral Contributions may be applied 4-1 11 selectively to individual Participants or to particular classes of Participants, as the Company may determine. Upon such date as the Company may determine, this Section 4.2 shall automatically cease to apply until the Company again determines that a reduction or discontinuance of Salary Deferral Contributions is required for any Participants. In addition to requiring a prospective reduction or discontinuance of Salary Deferral Contributions, the Company may distribute to any Participant such portion of the Salary Deferral Contributions that he or she already contributed for the Plan Year as the Company determines to be necessary to ensure that the actual deferral percentages meet one of the tests described in section 401(k) of the Code, as provided in Appendix I. 4.3 Election to Contribute. A Participant who wishes to make Salary Deferrals pursuant to Section 4.1 shall file with the Company the form prescribed for this purpose. On such form, the Participant shall specify the rate at which he or she wishes to contribute to the Plan. An election to make Salary Deferrals may be made effective as of the first payday of the first month of a calendar quarter, provided that notice is received by the Company no later than the fifteenth day of the month immediately preceding such payday. 4.4 Amendment of Prior Elections. By filing the prescribed form with the Company, a Participant who is making Salary Deferrals may change the rate of such contributions to any other amount permitted under Section 4.1. An election to change the rate of Salary Deferrals may be made effective as of 4-2 12 the first payday of the first month of a calendar quarter by filing such form on or before the fifteenth day of the month immediately preceding such payday. 4.5 Voluntary Suspension of Contributions. By filing the prescribed form with the Company, a Participant may elect to suspend all Salary Deferrals. Any such election shall be effective no later than the first payday in any month upon receipt of such form on or before the fifteenth day of the month immediately preceding such payday. A Participant who has suspended all Salary Deferrals may elect to resume such contributions by following the procedure prescribed by Section 4.3. 4.6 Return of Excess Salary Deferral Contributions. In the event that a Participant made Salary Deferral Contributions under this Plan that, when aggregated with deferrals under any other salary reduction arrangement described in section 402(g)(3) of the Code, maintained by a member of the Affiliated Group, exceed the $7,000 limit (or such larger amount as may be adopted by the Commissioner of Internal Revenue to reflect a cost-of-living adjustment) under Section 4.1 for any calendar year, his or her excess deferrals attributable to this Plan and any income (or losses) allocable to such excess deferrals shall be refunded to him or her not later than the April 15 next following the close of such calendar year. In the event a Participant's elective deferrals for a calendar year (including Salary Deferral Contributions under this Plan) to any and all plans in which he was a participant exceed $7,000 (or such larger amount as may be adopted by the 4-3 13 Commissioner of Internal Revenue under section 402(g) of the Code), then such Participant may designate all or a portion of such excess contributed to this Plan as the amount to be refunded by April 15 of the following calendar year. Such a refund shall be made only if the Participant notifies the Company in the manner prescribed by the Company by the March 1 next following the calendar year in which the excess deferrals were made. 4.7 Investment of Contributions. Upon withholding, all Salary Deferrals shall be transferred to the Trustee for investment in the Trust Fund within the Short-Term Income Fund pending investment as provided in Article 7 no later than 45 days after the date the Salary Deferrals were withheld. Salary Deferrals shall be credited to the Participant's Salary Deferral Account. 4-4 14 ARTICLE 5. COMPANY MATCHING CONTRIBUTIONS. 5.1 Amount of Matching Contributions. Effective March 1, 1996, each Participating Company may make a Matching Contribution for each Participant equal to 25% of his or her Salary Deferral Contributions up to the first 4% of Compensation for a Plan Year. Matching Contributions shall be paid to the Trustee on a monthly basis as soon as reasonably practicable following the close of each calendar month. Except as provided in Section 5.2 below, Matching Contributions shall be allocated as of the end of each calendar month to a Participant's Matching Contribution Account. Forfeitures that arise during a Plan Year that are attributable to Matching Contributions shall be used to reduce Matching Contributions for the Plan Years in which they arise. Matching Contributions can be reduced and/or forfeited in accordance with Appendix I. 5.2 Matching Contributions in Form of Geneva Stock. Effective March 1, 1996, the Company may determine that all or a portion of a Matching Contribution be paid in the form of Geneva Stock. For purposes of determining the amount of a Participating Company's deduction under section 404 of the Code, shares of Geneva Stock so contributed shall be valued at the closing price of Geneva Stock as quoted on the New York Stock Exchange as of the end of the calendar month such shares are to be allocated. Participating Company contributions allocated in the form of shares of Geneva Stock shall be valued for allocation purposes on the basis of the closing price of Geneva Stock as quoted on the New York Stock Exchange as of the end of 5-1 15 the calendar month such shares are to be allocated. Matching Contributions made in the form of Geneva Stock shall be allocated as of the end of each calendar month to a Participant's Geneva Stock Account. Forfeitures that arise during a Plan Year that are attributable to such Matching Contributions shall be used to reduce Matching Contributions for the Plan Years in which they arise. Matching Contributions can be reduced and/or forfeited in accordance with Appendix I. 5-2 16 ARTICLE 6. CONTRIBUTION LIMITATIONS. 6.1 Limitation on Contributions. The Annual Additions allocated or attributed to a Participant for any Plan Year shall not exceed the lesser of the following: (a) $30,000 (or, if greater, 25% of the dollar limitation in effect under Code section 415(b)(1)(A)); or (b) 25% of the Participant's Compensation for such year. If a Participant's Annual Additions would exceed the foregoing limitation, then such Annual Additions shall be reduced by reducing the components thereof as necessary in the order in which they are listed in Section 6.4. 6.2 Combined Limitation on Benefits and Contributions. The sum of a Participant's defined-benefit plan fraction and his or her defined-contribution plan fraction shall not exceed 1.0 with respect to any Plan Year. For purposes of this Section 6.2, the terms "defined- benefit plan fraction" and "defined-contribution plan fraction" shall have the meaning given to such terms by section 415(e) of the Code and the regulations thereunder. If a Participant would exceed the foregoing limitation, then such benefits under any qualified defined-benefit plan that may be maintained by the Employer Group shall be reduced as necessary to allow his or her Annual Additions to equal the maximum permitted by Section 6.1. 6.3 Excess Company Contributions and Forfeitures. If the amount of the Company Contributions and Forfeitures allocated or attributed to a Participant for any Plan Year must be reduced to 6-1 17 meet the limitation described in Section 6.1, then the amount of the reduction shall be applied to reduce the total amount that the Company otherwise would contribute for such year pursuant to Article 3. If the amount that the Company may contribute is thereby reduced to zero and if there are Forfeitures that still cannot be allocated to any Participant because of the limitation described in Section 6.1, then such Forfeitures shall be credited to an excess-forfeiture account established under this Section 6.3. Any gains, income or losses shall also be credited to such account. All amounts credited to such account shall be treated as allocable Forfeitures for successive Plan Years and shall be allocated annually pursuant to Section 3.2 until such account is exhausted. No Company Contributions that would give rise to Annual Additions shall be made as long as any amount remains in such account. 6.4 Annual Additions. For purposes of this Article 6, a Participant's "Annual Additions" for a Plan Year shall be equal to the sum of the following: (a) The amount of Company Contributions allocated to the Participant's Accounts under this Plan as of any date within such year; (b) The amount of Salary Deferral Contributions allocated to the Participant's Account under this Plan as of any date within such year; (c) The amount of employer contributions and forfeitures allocated to the Participant under any qualified defined-contribution plan that may be 6-2 18 maintained by the Employer Group, other than this Plan, as of any date within such year; and (d) The aggregate employee contributions that the Participant contributes during such year to all qualified retirement plans maintained by the Employer Group. 6.5 Compensation. For purposes of this Article 6, the term "Compensation" shall be determined in accordance with sections 401(a)(17) and 415(c) of the Code. 6.6 Employer Group. For purposes of this Article 6, the term "Employer Group" shall mean any group of one or more chains of corporations connected through stock ownership with the Company, if: (a) Stock possessing more than 50 percent of the total combined voting power of all classes of stock entitled to vote or more than 50 percent of the total value of shares of all classes of stock of each of the corporations, except the Company, is owned by one or more of the other corporations; and (b) The Company owns stock possessing more than 50 percent of the total combined voting power of all classes of stock entitled to vote or more than 50 percent of the total value of shares of all classes of stock of at least one of the other corporations excluding, in computing such voting power or value, stock owned directly by such other corporations. 6-3 19 ARTICLE 7. PLAN INVESTMENTS. 7.1 The Trust Fund; No Reversion. The Trust Fund shall be comprised of the three Investment Funds described in Section 7.2. Except as provided in Subsections (a), (b) and (c) below, the assets of the Plan shall never inure to the benefit of any Participating Company and shall be held for the exclusive purpose of providing benefits to Participants or their Beneficiaries. (a) In the case of a Company Contribution which was made by virtue of a mistake of fact, this Section 7.1 shall not prohibit the return of such contribution to the appropriate Participating Company within 12 months after the payment of such contribution. (b) All Company Contributions are conditioned upon the deductibility thereof under section 404 of the Code. To the extent that a deduction is disallowed for a Company Contribution, this Section 7.1 shall not prohibit the return of such contribution (to the extent disallowed) to the appropriate Participating Company within 12 months after the disallowance of the deduction. (c) In the event that Company Contributions are returned pursuant to sections (a) or (b) above, earnings attributable to such contributions shall not be returned to the appropriate Participating Company but losses attributable to such contributions shall reduce the amount returned to the Participating Company. 7-1 20 7.2 Investment Funds. The Trust Fund established under the Plan shall consist of the Balanced Fund, the Variable Fund and the Short-Term Income Fund. Effective March 1, 1996, the Trust Fund shall include the Geneva Stock Fund. The Company may change the available Investment Funds at any time in its sole discretion by adding Funds, removing Funds, or changing Funds. Such Funds shall be invested and reinvested as follows: (a) The Balanced Fund shall be invested in those investments selected by the Company that are designed to achieve a balance between capital appreciation and preservation of capital and generation of income. (b) The Variable Fund shall be invested in a mutual fund (or funds) selected by the Company that invests primarily in equity securities or in such other types of equity investments as are authorized by the Trust Agreement. (c) The Short-Term Income Fund shall be invested in a money market fund or funds selected by the Company, or such other short term fixed-income investments as are authorized by the Trust Agreement. (d) The Geneva Stock Fund shall be invested primarily in Geneva Stock, except that small amounts in the Stock Fund may be invested in interest-bearing short-term debt obligations, money market instruments, savings accounts or similar investments. The Geneva Stock Fund shall consist of all Stock Fund investments held by the Trustee and all cash held by the Trustee 7-2 21 which is derived from dividends on Geneva Stock, interest and other income from Stock Fund investments, Company Contributions to be invested in the Geneva Stock Fund and proceeds from sales of Geneva Stock and Stock Fund investments. 7.3 Accounts. Any or all of the following Accounts shall be maintained, as necessary, for each Participant: (a) A Participant's Pension Contribution Account shall consist of the Pension Contributions allocated to the Participant pursuant to Section 3.2, and the earnings, gains and losses allocable thereto. (b) A Participant's Salary Deferral Account shall consist of any Salary Deferral Contributions that the Participant has elected to contribute to the Plan pursuant to Section 4.1, and the earnings, gains and losses allocable thereto. (c) A Participant's Matching Contribution Account shall consist of any Matching Contributions made on behalf of the Participant under Section 5.1 that are not made or invested in Geneva Stock, any Forfeitures attributable to such Matching Contributions that are allocated to the Participant as Matching Contributions and the earnings, gains and losses allocable thereto and any cash dividends on Geneva Stock. (d) A Participant's Geneva Stock Account shall consist of any Matching Contributions made or invested 7-3 22 in Geneva Stock, any Forfeitures attributable to such Matching Contributions that are allocated to the Participant as Matching Contributions and the earnings, gains and losses allocable thereto excluding cash dividends on Geneva Stock. (e) A Participant's Rollover Account shall consist of any Rollover Contributions made by the Participant pursuant to Article 16 and the earnings, gains and losses allocable thereto. 7.4 Investment of Accounts. A Participant's Pension Contribution Account shall be invested solely in the Balanced Fund. A Participant's Geneva Stock Account shall be invested solely in the Geneva Stock Fund. A Participant's Salary Deferral Account, Matching Contribution Account and Rollover Account, if any, shall be apportioned among one or more of the Short-Term Income Fund and the Balanced Fund and the Variable Fund in such whole percentages as the Participant may specify on the prescribed election form. If the Company receives no valid investment directions from the Participant, such Accounts shall be invested entirely in the Short-Term Income Fund. As of the first payday in any calendar quarter, a Participant may change the investment instructions with respect to future contributions. Any such change shall be made by properly completing and filing the prescribed form with the Company no later than the fifteenth day of the month immediately preceding the first day of the calendar quarter in which the change is to occur. 7-4 23 7.5 Transfers Among Accounts. Once each calendar quarter, except for his or her Pension Contribution Account and Geneva Stock Account, a Participant may elect to transfer all or any part of his or her Accounts to one or more of the Investment Funds by properly completing and filing the prescribed form with the Company no later than the fifteenth day of the month immediately preceding the first day of the quarter in which the transfer is to occur. Any such transfer shall apply as of the first day of the next following calendar quarter and shall be made as soon as reasonably practicable after such date. 7.6 Allocation of Investment Income. Each Account shall be revalued at fair market value and adjusted as of the last day of each calendar quarter, adjusted for contributions, distributions and other items for the quarter, to reflect the Participant's share of any realized or unrealized investment income, gains, losses and investment expenses of the Fund or Funds in which such Account was invested that have accrued during the quarter. A Participant's share shall be proportionate to the ratio that the adjusted balance in his or her Account bears to the total adjusted balances of all Accounts invested in the Funds determined as of the end of the calendar quarter. 7.7 Account Statements. Within 60 days after the last day of each calendar quarter (and after such other dates as the Company may determine), there shall be prepared and delivered to each Participant a written statement showing the fair market value of his or her Salary Deferral Account as of the applicable date. Pension statements are prepared and delivered annually. 7-5 24 The fair market value of a share of Geneva Stock shall be the closing price of such share as quoted on the New York Stock Exchange as of the applicable date. 7-6 25 ARTICLE 8. VESTING AND FORFEITURES. 8.1 100 Percent Vesting. A Participant shall always be 100% vested in his or her Salary Deferral Account and Rollover Account. A Participant's interest in his or her Pension Contribution Account, Geneva Stock Account and Matching Contribution Account shall become 100% vested when the earliest of the following events occurs: (a) The Participant ceases to be an Employee by reason of Disability; (b) The Participant, before ceasing to be an Employee, attains the age of 62 (the normal retirement age under the Plan); (c) The Participant dies while employed as an Employee; (d) The Plan is terminated, or the Plan undergoes a partial termination which affects the Participant (including Participants who, on the date the Plan is terminated, have not yet incurred a Permanent Service Break), before the Participant ceases to be an Employee; or (e) Company Contributions are completely discontinued. 8.2 Vesting Schedule. Before a Participant becomes 100% vested under Section 8.1, the Participant shall be vested in a percentage of each of his or her Pension Contribution Account, Geneva Stock Account and Matching Contribution Account determined from the following schedule: 8-1 26
Period of Service Vested Percentage of Completed by Participant Participant's Accounts ------------------------ ---------------------- Less than 12 months 0% 12 months to 24 months 20% 24 months to 36 months 40% 36 months to 48 months 60% 48 months to 60 months 80% 60 or more months 100%
8.3 Vesting After Prior Distributions. Section 8.2 shall be applied as set forth in this Section 8.3 in the case of any Participant who received one or more prior distributions from his or her Pension Contribution Account, who thereafter has not incurred a Permanent Service Break, and who is not yet 100% vested in the Account. The vested portion of such Participant's Account shall be determined in two steps. First, the Participant's vested percentage under Section 8.2 shall be applied to the sum of (a) the value of the Account plus (b) the aggregate amount of the Participant's prior distributions from such Account. Then, the aggregate amount of the Participant's prior distributions from such Account shall be subtracted. 8.4 Forfeitures. If a Participant ceases to be an Employee at a time when he or she is less than 100% vested, then the nonvested portion of his or her Accounts shall constitute a Forfeiture for the Plan Year during which the earlier of the following occurs: (a) the Participant receives (or is deemed to receive in the case of a nonvested Participant) a distribution from the Plan in a single lump sum; or (b) the Participant incurs a Permanent Service Break. The Forfeiture shall be treated as stated in Sections 3.2, 5.1 and 5.2. If the Participant is rehired as an Employee before incurring a 8-2 27 Permanent Service Break, then the principal amount of the Forfeiture shall be reinstated to his or her Accounts as of the close of the Plan Year in which the rehire occurs. The appropriate Participating Company shall make a special contribution in the amount required to reinstate the Forfeiture, to the extent any suspense account and current Forfeitures are not sufficient. In no event shall a Participant's Forfeitures be reinstated if he or she is not rehired as an Employee before incurring a Permanent Service Break. 8-3 28 ARTICLE 9. FORM OF PLAN BENEFIT. 9.1 Amount of Plan Benefit. A Participant's Plan Benefit shall consist of the Participant's entire vested interest in his or her Accounts. The value of a Plan Benefit (including the number of shares of Geneva Stock) shall be determined as of the Valuation Date immediately preceding the distribution date for such Plan Benefit. 9.2 Normal Form of Distribution. A Participant's Plan Benefit shall be distributed in the form of a nontransferable annuity contract purchased from an insurance company selected by the Company, unless such Participant has elected the optional form of distribution described in Section 9.3. The Participant's entire Plan Benefit shall be distributed in substantially nonincreasing payments over a period not exceeding the greater of (a) the Participant's own lifetime or (b) the lifetimes of the Participant and his or her spouse. The forms of annuity contract available under the Plan are a Qualified Joint and Survivor Annuity and a single-life annuity. In the case of a married Participant who is living when the annuity is scheduled to commence, the annuity contract shall provide for payments in the form of the Qualified Joint and Survivor Annuity. In the case of an unmarried Participant, the annuity contract shall provide for payments in the form of the single-life annuity. Unless the Participant otherwise elects, he or she will begin to receive the Plan Benefit not later than the 60th day after the latest of the of the close of the Plan Year in which the Participant attains age 62, the tenth anniversary of the 9-1 29 Participant's commencement of participation in the Plan occurs or the Participant ceases to be an employee. 9.3 Optional Forms of Distribution. A Participant or surviving spouse may elect to have his or her Plan Benefit distributed in the form of a single lump sum in cash. If Geneva Stock is liquidated for purposes of a cash distribution the cash attributable to the shares will equal the proceeds from the sale. A Participant or surviving spouse may also elect to have that portion of his or her Plan Benefits attributable to the Geneva Stock Fund paid in whole shares of Geneva Stock, plus a check for any fractional shares. The Trustee in its discretion may purchase Geneva Stock that was distributed to a Participant or Beneficiary at the closing price of Geneva Stock as quoted on the New York Stock Exchange for the business day on which the Trustee receives a written offer to sell. No commission shall be paid in connection with any such purchase. 9.4 Time of Distribution. A Participant who is no longer an Employee and is entitled to receive a Plan Benefit shall receive his or her Plan Benefit as soon as reasonably practicable after the distribution date elected by the Participant. The Participant shall elect a distribution date by completing, signing and filing the prescribed distribution election form with the Company. In no event shall a Participant's Plan Benefit be distributed later than the April 1 next following the later of the calendar year in which (a) the Participant attained age 70 1/2, if he or she remains an Employee on or after age 62 or (b) the Participant attained age 62 if the Participant ceased to 9-2 30 be an Employee on or before that date. Unless the Participant otherwise elects, he or she will begin to receive the Plan Benefit not later than the 60th day after the latest of the close of the Plan year in which the Participant attains age 62, completes 10 years of participation in the Plan, or ceases to be an Employee. 9.5 Death of Participant Before Distribution. If a Participant dies before receiving his or her Plan Benefit, then such Participant's Beneficiary shall be entitled to receive such Plan Benefit pursuant to this Section 9.5. (Section 9.11 provides that the surviving spouse of a married Participant shall be his or her Beneficiary, unless such Participant, with the spouse's consent, has otherwise elected prior to his or her death.) If the Beneficiary is the Participant's surviving spouse, the Plan Benefit shall be distributed in the form of a nontransferable annuity contract purchased from an insurance company selected by the Company, unless such surviving spouse has elected the optional form of distribution described in Section 9.3. Under the annuity contract, the Plan Benefit shall be distributed in substantially nonincreasing payments over a period not exceeding the surviving spouse's lifetime and commencing as soon as reasonably practicable after the date of the Participant's death or, if later, the date the Participant would have attained age 62. At any time prior to the date that the surviving spouse's Plan Benefit is to be distributed pursuant to the preceding sentence, the surviving spouse may elect, by 9-3 31 filing the prescribed form with the Company, (a) to have his or her Plan Benefit distributed in the optional form of distribution described in Section 9.3, (b) to have his or her Plan Benefit distributed at a specified time earlier than that provided in the preceding sentence or (c) both. If the Participant's Beneficiary is not his or her surviving spouse, the Plan Benefit shall be paid in a single lump sum in cash not later than 12 months after the date of the Participant's death. 9.6 Small Benefits: Lump Sum. Any other provision of this Article 9 notwithstanding, if the value of a Participant's entire Plan Benefit equals $3,500 or less, then the Plan Benefit shall be paid as soon as reasonably practicable to such Participant (or, in the case of his or her death, to the Beneficiary), in a single lump sum in cash. If a Participant's entire Plan Benefit exceeds $3,500 and the Participant fails to consent to an immediate distribution, then the Participant's Plan Benefit shall not be paid before the date on which the Participant attains age 62. 9.7 Election of Forms of Distribution. A Participant's election of an optional form of distribution under Section 9.3 shall be made on the prescribed form and filed with the Company. Such election may be made only during an election period consisting of the 90 consecutive days ending on the Participant's Annuity Starting Date. A Participant may revoke any election of an optional form of distribution (without the consent of the Company) at any time prior to the end of such election period. If the Participant, having revoked a prior election, does not 9-4 32 make another election within such election period, then his or her Plan Benefit shall be distributed in the form specified in Section 9.2. Any election involving a waiver of the Qualified Joint and Survivor Annuity shall not take effect unless the Participant's spouse consents in writing to the election during such election period. The spouse's consent shall acknowledge the effect of the Participant's election and shall be witnesses by a notary public or, if permitted by the Company, by a representative of the Plan. A consent, once given by a spouse, shall not be revocable by such spouse. The spouse's consent shall not be required of the Participant if the Participant (a) establishes to the Company's satisfaction that the spouse's consent cannot be obtained because the spouse cannot be located or because of other reasons deemed acceptable under applicable regulations and (b) agrees in writing that if the Company is compelled by a court of competent jurisdiction or other authority to pay all or any portion of the Participant's Plan Benefit to or on behalf of such spouse, the Participant will indemnify the Company by paying to the Company, upon written demand, an amount equal to such payment, together with reasonable attorneys' fees and expenses. The Company may, in its sole discretion, waive the indemnification requirement. A Participant may elect, with his or her spouse's consent, not to take the qualified preretirement survivor annuity described in Section 9.5 from the first day of the first Plan Year in which the Participant attains age 35 until the Participant's death. 9-5 33 9.8 Information on Distribution Options. Within a reasonable period before the Annuity Starting Date, the Company shall make available to each married Participant a written explanation of the following: (a) The terms and conditions of the Qualified Joint and Survivor Annuity; (b) The Participant's right to elect a form of benefit other than a Qualified Joint and Survivor Annuity pursuant to Section 9.7; (c) The rights of the Participant's spouse under Section 9.7; (d) The Participant's right to revoke an election of a form of benefit pursuant to Section 9.7; and (e) The effect of an election or revocation described in Subsection (b) or (d) above. 9.9 Information on Death Benefits. The Company shall provide to each married Participant a written explanation of the death benefit for a surviving spouse described in Section 9.5 comparable to the information on distribution options described in Section 9.8. Such explanation shall be provided within whichever of the following periods ends last: (a) The three-year period beginning with the first day of the Plan Year in which the Participant attains age 32; (b) The three-year period beginning with the first day of the first Plan Year for which the individual is a Participant; or 9-6 34 (c) The one-year period beginning on the date when the Participant ceases to be an Employee, in the case of a Participant who ceases to be an Employee before attaining age 32. 9.10 Determination of Marital Status. Whether a Participant is married shall be determined by the Company as of his or her Annuity Starting Date. 9.11 Beneficiary. A Participant's Beneficiary shall be the person(s) so designated by such Participant. If the Participant has not made an effective designation of a Beneficiary or if the named Beneficiary is not living when a distribution is to be made, then (a) the then living spouse of the deceased Participant shall be the Beneficiary or (b) if none, the then living children of the deceased Participant shall be the Beneficiaries in equal shares or (c) if none, the estate of the Participant shall be the Beneficiary. The Participant may change his or her designation of a Beneficiary from time to time. Any designation of a Beneficiary (or an amendment or revocation thereof) shall be effective only if it is made in writing on the prescribed form and is received by the Company prior to the Participant's death. Any other provision of this Section 9.11 notwithstanding, in the case of a married Participant, any designation of a person other than his or her spouse as Beneficiary shall be effective only if the spouse consents in writing to the designation. The spouse's consent shall be witnessed by a notary public or, if permitted by the Company, by a representative of the Plan. A consent to a designation of a 9-7 35 particular Beneficiary, once given by the spouse, shall not be revocable by such spouse. The spouse's consent shall not be required if the Participant (a) establishes to the Company's satisfaction that the spouse's consent cannot be obtained because the spouse cannot be located or because of other reasons deemed acceptable under applicable regulations and (b) agrees in writing that if the Company is compelled by a court of competent jurisdiction or other authority to pay all or any portion of the Participant's Plan Benefit to or on behalf of such spouse, the Participant will indemnify the Company by paying to the Company, upon written demand, an amount equal to such payment, together with reasonable attorneys' fees and expenses. The Company may, in its sole discretion, waive the indemnification requirement. 9-8 36 ARTICLE 10. CLAIMS PROCEDURE. 10.1 Filing Claims for Benefits. Claims for benefits under the Plan shall be made in writing on the prescribed form and shall be signed by the Participant or by his or her Beneficiary, as the case may be. All claims for or inquiries concerning benefits under the Plan shall be submitted to the Company at its U.S. headquarters. 10.2 Denial of Claims. In the event that any claim for benefits is denied in whole or in part, the Company shall notify the applicant in writing of such denial and shall advise the applicant of the right to a review thereof. Such written notice shall set forth, in a manner calculated to be understood by the applicant, specific reasons for the denial, specific references to the Plan provisions on which the denial is based, a description of any information or material necessary for the applicant to perfect the application, an explanation of why such material is necessary and an explanation of the Plan's review procedure. Such written notice shall be given to the applicant within 90 days after the Company received the claim in proper form, except that such 90-day period may be extended for an additional 90 days if special circumstances exist. The Company shall advise the applicant of such circumstances in writing within the first 90-day period. If the Company does not provide the applicant with written notice of its decision within the applicable time period, the applicant's claim shall be deemed to have been denied as of the last day of the applicable time period. 10-1 37 ARTICLE 11. REVIEW PROCEDURE. 11.1 Appointment of Review Panel. The Company from time to time shall appoint a Review Panel consisting of three or more individuals, who may (but need not) be employees of the Company; provided, however, one member shall be an Eligible Employee. The Review Panel shall be the named fiduciary which has the authority to act with respect to appeals from denials of claims under the Plan. 11.2 Right to Appeal. Any applicant whose claim for benefits was denied in whole or in part (or such applicant's authorized representative) may appeal from the denial by submitting to the Review Panel a written request for a review of the claim within three months after receiving written notice of the denial, or within three months after the date when a claim may be deemed to have been denied. The Company shall give the applicant (or the applicant's authorized representative) an opportunity to review pertinent materials, other than legally privileged documents, in preparing such request for review. 11.3 Form of Request for Review. The request for review shall be made in writing and shall be addressed to the Review Panel in care of the Company at its U.S. headquarters. The request for review shall set forth all of the grounds on which it is based, all facts in support thereof and any other matters which the applicant deems pertinent. The Review Panel may require the applicant to submit such additional facts, documents or other material as the Review Panel may deem necessary or appropriate in making its review. 11-1 38 11.4 Time for Review Panel Action. The Review Panel shall act upon each request for review within 60 days after receipt thereof, unless special circumstances require further time for processing and the applicant is advised of the extension. In no event shall the decision on review be rendered more than 120 days after the Review Panel received the request for review in proper form. 11.5 Review Panel Decisions. The Review Panel shall give prompt written notice of its decision to the applicant and to the Company. In the event that the Review Panel confirms the denial of the claim for benefits in whole or in part, such notice shall set forth, in a manner calculated to be understood by the applicant, the specific reasons for such denial and specific references to the Plan provisions on which the decision was based. In the event that the Review Panel determines that the claim for benefits should not have been denied in whole or in part, the Company shall take appropriate remedial action as soon as reasonably practicable after receiving notice of the Review Panel's decision. 11.6 Rules and Procedures. The Review Panel shall establish such rules, procedures and interpretations, consistent with the Plan and ERISA, as it may deem necessary or appropriate in carrying out its responsibilities under this Article 11. The Review Panel may require an applicant who wishes to submit additional information in connection with an appeal from a denial of benefits to do so at his or her own expense. 11-2 39 11.7 Exhaustion of Remedies Required. No legal or equitable action for benefits under the Plan shall be brought unless and until the applicant (a) has submitted a written claim for benefits in accordance with Article 10, (b) has been notified that the claim is denied, (c) has filed a written request for a review of the claim in accordance with this Article 11 and (d) has been notified in writing that the Review Panel has affirmed the denial of the claim; provided, however, that such an action may be brought after the Company or the Review Panel has failed to act on the claim within the time prescribed in Sections 10.2 and 11.4, respectively. 11-3 40 ARTICLE 12. MANAGEMENT OF ASSETS. 12.1 Control and Management of Plan Assets. The Company is a named fiduciary with respect to control over and management of the assets of the Plan, but only to the extent of (a) having the duty to appoint one or more trustees to hold all assets of the Plan in trust, (b) having the authority to remove any trustee so appointed and to appoint one or more successor trustees, (c) having the duty to enter into a trust agreement with each trustee or successor trustee so appointed, (d) have the authority to select investments for the Investment Funds, and (e) having the authority to appoint one or more insurance companies that are qualified to do business in at least one state to hold assets of the Plan and to enter into a contract with each insurance company that it appoints (or to direct the Trustee to enter into such contract). The Trust Agreement is hereby incorporated herein as a part of the Plan. 12.2 Trustee Duties. The Trustee shall have the exclusive authority and discretion to control and manage the assets of the Plan it holds in trust, except to the extent that the Plan prescribes how such assets shall be invested or the Company directs how such assets shall be invested. The Trustee shall be solely responsible for diversifying, in accordance with section 404(a)(1)(C) of ERISA, the investment of the assets of the Plan assigned to it by the Company, except to the extent that the Plan prescribes or the Company directs how such assets shall be invested. 12-1 41 12.3 Independent Qualified Public Accountant. The Company shall engage an independent qualified public accountant to conduct such examinations and to express such opinions as may be required by section 103(a)(3) of ERISA. The Company in its discretion may remove and discharge the person so engaged, in which event it shall appoint a successor independent qualified public accountant to perform such examinations and express such opinions. 12.4 Expenses. All expenses of the Plan and the Trust Fund (except investment expenses) shall be paid by the Company. 12.5 Benefit Payments. All benefits, payable pursuant to the Plan shall be paid by the Trustee out of the Trust Fund pursuant to the directions of the Company and the terms of the Trust Agreement. 12-2 42 ARTICLE 13. ADMINISTRATION OF THE PLAN. 13.1 Plan Administration. The Company is the named fiduciary with respect to the operation and administration of the Plan, and the Company is the "administrator" and "plan sponsor" of the Plan (as such terms are used in ERISA). The Company shall make such rules, interpretations and computations and shall take such other actions to administer the Plan as it may deem appropriate. Such rules, interpretations, computations and actions shall be conclusive and binding on all persons. In administering the Plan, the Company (a) shall act in a nondiscriminatory manner to the extent required by section 401(a) and related sections of the Code and (b) shall at all times discharge its duties in accordance with the standards set forth in section 404(a)(1) of ERISA. 13.2 Employment of Advisers. The Company may retain such attorneys, actuaries, accountants, consultants or other persons to render advice or to perform services with regard to its responsibilities under the Plan as it shall determine to be necessary or desirable. The Company may designate by written instrument (signed by both parties) one or more persons to carry out, where appropriate, fiduciary responsibilities under the Plan. The Company's duties and responsibilities under the Plan which have not been delegated to other fiduciaries pursuant to the preceding sentence shall be carried out by its directors, officers and employees, acting on behalf and in the name of the Company in their capacities as directors, officers and employees, and not as individual fiduciaries. 13-1 43 13.3 Service in Several Fiduciary Capacities. Nothing herein shall prohibit any person or group of persons from serving in more than one fiduciary capacity with respect to the Plan (including service both as the administrator and as a trustee of the Plan). 13-2 44 ARTICLE 14. AMENDMENT AND TERMINATION. 14.1 Right to Amend or Terminate. The Company reserves the right to amend or terminate the Plan or to discontinue the Company contributions at any time and for any reason by resolution of the Company's board of directors or the board's proper delegatee. No amendment of the Plan, however, shall, except to the extent permitted by ERISA or the Code (a) reduce the benefit of any Participant accrued under the Plan prior to the date when such amendment is adopted or (b) divert any part of the Plan's assets to purposes other than the exclusive purpose of providing benefits to the Participants and Beneficiaries who have an interest in the Plan and of defraying the reasonable expenses of administering the Plan. 14.2 Effect of Termination. Upon termination of the Plan, no assets of the Plan shall revert to the Participating Companies or be used for or diverted to purposes other than the exclusive purpose of providing benefits to Participants and Beneficiaries and of defraying the reasonable expenses of termination (except as otherwise provided in Section 7.1). Upon termination of the Plan, the Trust Fund shall continue in existence until it has been distributed entirely as provided in Section 14.3. Notwithstanding the foregoing, distributions from the 401(k) portion of the Plan will be made in accordance with the requirements of Treasury Regulation section 1.401(k)-1(d)(3). 14.3 Allocation of Assets Upon Termination. Upon termination of the Plan, the Trust Fund shall continue in existence until the Accounts of each Participant have been distributed to 14-1 45 such Participant (or to such Participant's Beneficiary) as provided in Article 9; provided, however, that the assets of the Plan shall be allocated in accordance with the requirements of section 403(d)(l) of ERISA. 14-2 46 ARTICLE 15. GENERAL PROVISIONS. 15.1 No Assignment of Property Rights. The interest or property rights of any person in the Plan, in any Account or in any payment to be made under the Plan shall not be optioned, anticipated, assigned (either at law or in equity), alienated or made subject to attachment, garnishment, execution, levy, other legal or equitable process, or bankruptcy. Any act in violation of this Section 15.1, whether voluntary or involuntary, shall be void. This Section 15.1 shall not apply with respect to qualified domestic relations orders described in section 414(p) of the Code. The Company shall establish reasonable procedures to determine the qualified status of domestic relations orders and to administer distributions under qualified domestic relations orders. The Company shall make payment to an "alternate payee" (as defined in Code section 414(p)) pursuant to a qualified domestic relations order even if the Participant has not attained the "earliest retirement age" (within the meaning of Code section 414(p)). 15.2 Incompetence. If, in the opinion of the Company, any individual becomes unable to handle properly any amounts payable to such individual under the Plan, then the Company may make such arrangements for payment on such individual's behalf as it determines will be beneficial to such individual, including (without limitation) payment to such individual's guardian, conservator, spouse or dependent. 15.3 Unclaimed Plan Benefits. If any Plan Benefit, or a portion thereof, would be distributable under the Plan but the 15-1 47 Company is unable to locate the Participant or Beneficiary to whom the distribution is payable for three consecutive Plan Years, then the Participant's Accounts may be closed after the third consecutive Plan Year during which such distribution is payable but the Participant or Beneficiary cannot be found. The amount of the unpaid Plan Benefit shall be reallocated to eligible Participants in the proportion that each such Participant's Compensation bears to all Participants' Compensation, unless mandatory provisions of applicable escheat laws require another application, in which case such Plan Benefit shall be applied as such laws require. If, however, the Participant or Beneficiary subsequently makes a proper claim to the Company for any Plan Benefit which was reallocated and which was not lost by reason of escheat, then such Plan Benefit (without income, gains or other adjustment) shall be restored to the Participant's Accounts from a special contribution made by the appropriate Participating Company for this purpose. The Plan Benefit shall thereafter be distributable in accordance with the terms of the Plan. 15.4 No Employment Rights. Nothing in the Plan shall be deemed to give any individual any right to remain in the employ of any Participating Company or to affect the right of such Participating Company to terminate such individual's employment at any time and for any reason. 15.5 Merger, Consolidation and Transfer of Assets or Liabilities. The Plan shall not be merged or consolidated with any other plan, and no assets or liabilities of the Plan shall 15-2 48 be transferred to any other plan, unless each Participant would receive a Plan Benefit immediately after the merger, consolidation or transfer (if the Plan were then terminated) which is equal to or greater than the Plan Benefit which such Participant would have been entitled to receive immediately before such merger, consolidation or transfer (if the Plan had then been terminated). 15.6 Tender Offers. Effective March 1, 1996, in the event that any person or group of persons makes a tender offer subject to section 14(d) of the Securities Exchange Act of 1934 to acquire all or part of the outstanding shares of Geneva Stock, including the Geneva Stock held in the Trust Fund ("Acquisition Offer"), each Participant shall be entitled to direct the Trustee confidentially to tender all or part of those shares of Geneva Stock that are held in the Participant's Accounts. If the Trustee receives an instruction by the date communicated by the Company to the Participant, the Trustee shall tender such shares in accordance with such instruction. Any Geneva Stock as to which the Trustee does not receive timely instructions shall not be tendered by the Trustee. The Company shall distribute to each Participant all appropriate materials pertaining to the Acquisition Offer, including the statement of the position of the Company with respect to such offer issued pursuant to Rule 14e-2 under the Securities Exchange Act of 1934, as soon as practicable after such materials are issued; provided, however, that if the Company fails to issue such statement within five business days after the commencement of such offer, the Company 15-3 49 shall distribute such materials to each Participant without the statement by the Company and shall separately distribute such statement as soon as practicable after it is issued. 15.7 Choice of Law. The Plan and all rights thereunder shall be interpreted and construed in accordance with ERISA and, to the extent that state law is not preempted by ERISA, the law of the State of Utah. 15-4 50 ARTICLE 16. ROLLOVERS AND RELATED TRANSACTIONS. 16.1 Rollover From Qualified Plan. With the consent of the Company an Eligible Employee may contribute all or any part of an "eligible rollover distribution" within the meaning of Code section 402(c)(4) to the Plan, either through an ordinary rollover or through a direct transfer in accordance with Code section 401(a)(31) and the Regulations thereunder; provided, however, that such eligible rollover distribution may be contributed to the Plan only if (a) the contribution is paid entirely in the form of a cashier's check or money order made payable to or endorsed over to the Plan or such other form acceptable to the Company, (b) the Eligible Employee establishes to the satisfaction of the Company that such distribution was an eligible rollover distribution from a plan which, at the time of the distribution, met the requirements of section 401 of the Code, and (c) in the case of a rollover that is not made in accordance with the direct transfer provisions of Code section 401(a)(31), the contribution is made within sixty (60) days after the Eligible Employee's receipt of the eligible rollover distribution. 16.2 Rollover From IRA. With the consent of the Company an Eligible Employee may, within sixty (60) days after the date of receipt of a distribution from an individual retirement account which meets the requirements of section 408 and related sections of the Code, contribute all or any part of such distribution to the Plan; provided, however, that all or any part of such distribution may be contributed to the Plan only if 16-1 51 (a) the distribution represents the entire amount in such individual retirement account; (b) no part of the distribution is attributable to any source other than a "rollover contribution" from an employees' trust described in section 401(a) of the Code which is exempt from tax under section 501(a) of such Code; (c) the contribution is paid entirely in the form of a cashier's check or money order made payable to or endorsed over to the Plan or such other form acceptable to the Company; and (d) the Eligible Employee establishes to the satisfaction of the Company that the conditions set forth in (a), (b) and (c) above have been met and such distribution was made from an individual retirement account which, at the time of the distribution, met the requirements of section 408 and related sections of the Code. 16.3 Mistaken Rollover. If it is determined that a Participant's rollover contribution did not qualify under the Code for a tax free rollover, then as soon as reasonably possible the balance in the Participant's Rollover Account shall be segregated from all other Plan assets, treated as a nonqualified trust established by and for the benefit of the Participant and distributed to the Participant. Such a mistaken rollover contribution shall be deemed never to have been a part of the Plan and shall not adversely affect the tax qualification of the Plan under the Code. 16.4 Direct Rollovers. Notwithstanding any provision of the Plan to the contrary that would otherwise limit a distributee's election under this Article, a distributee may 16-2 52 elect, at the time and in the manner prescribed by the Company, to have any portion of an eligible rollover distribution paid directly to an eligible retirement plan specified by the distributee in a direct rollover. Notwithstanding the foregoing, the Company may prescribe rules that limit a distributee's right to make the election described in the preceding sentence with respect to certain de minimis distributions or divisions of the eligible rollover distribution. An "eligible rollover distribution" is any distribution of all or any portion of the balance to the credit of the distributee, except that an eligible rollover distribution does not include: any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the distributee or the joint lives (or joint life expectancies) of the distributee and the distributee's designated beneficiary, or for a specified period of 10 years or more; any distribution to the extent such distribution is required under section 401(a)(9) of the Code; and the portion of any distribution that is not includable in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to employer securities). An "eligible retirement plan" is an individual retirement account described in section 408(a) of the Code, an individual retirement annuity described in section 408(b) of the Code, an annuity plan described in section 403(a) of the Code, or a 16-3 53 qualified trust described in section 401(a) of the Code, that accepts the distributee's eligible rollover distribution. However, in the case of an eligible rollover distribution to the surviving spouse, an eligible retirement plan is an individual retirement account or an individual retirement annuity. A "distributee" includes an Employee or former Employee. In addition, the Employee's or former Employee's surviving spouse and the Employee's or former Employee's spouse or former spouse who is the alternate payee under a QDRO, as defined in section 414(p) of the Code and section 206(d) of ERISA, are distributees with regard to the interest of the spouse or former spouse. A "direct rollover" is a payment by the Plan to the eligible retirement plan specified by the distributee. 16.5 Transfer to Management Plan. If an Employee ceases to be an Eligible Employee and commences participation in the Company's Management Employee Savings and Pension Plan, his or her Accounts may be transferred, at the request of the Participant, to that Plan and he or she shall be subject to that Plan's vesting schedule; provided, however, that the Participant shall suffer no reduction in the vested percentage of his or her Accounts transferred to the Plan. 16-4 54 ARTICLE 17. DEFINITIONS. 17.1 "Accounts" means the separate accounts maintained for each Participant as part of the Trust Fund, which include, as applicable, a Participant's Pension Contribution Account, Salary Deferral Account, Matching Contribution Account, Geneva Stock Account and Rollover Account. 17.2 "Affiliated Group" means a group of one or more chains of corporations connected through stock ownership with the Company, if: (a) Stock possessing at least 80% of the total combined voting power of all classes of stock entitled to vote or at least 80% of the total value of shares of all classes of stock of each of the corporations, except the Company, is owned by one or more of the other corporations; and (b) The Company owns stock possessing at least 80% of the total combined voting power of all classes of stock entitled to vote or at least 80% of the total value of shares of all classes of stock of at least one of the other corporations excluding, in computing such voting power or value, stock owned directly by such other corporations. In addition, the term "Affiliated Group" includes any other entity which the Company has designated in writing as a member of the Affiliated Group for purposes of the Plan. An entity shall be considered a member of the Affiliated Group only with respect to periods for which such designation is in effect or 17-1 55 during which the relationship described in Subsections (a) and (b) above exists. 17.3 "Annuity Starting Date" means: (a) The first day of the first period for which an amount is payable as an annuity; or (b) In the case of a benefit not payable in the form of an annuity, the first day on which all events have occurred that entitle the Participant to such benefit. 17.4 "Beneficiary" means one or more persons designated by the Participant (or by the Plan) pursuant to Section 9.11. 17.5 "Code" means the Internal Revenue Code of 1986, as amended from time to time. 17.6 "Company" means Geneva Steel, a Utah corporation. 17.7 "Company Contributions" means a Pension Contribution. 17.8 "Compensation" means the total compensation paid to the Participant (within the meaning of Treas. Reg. Section 1.415-2(d)(11)(ii)) by a Participating Company for personal services performed while a Participant for the Plan Year. Compensation for each Plan Year shall not exceed $150,000, as adjusted annually by the Secretary of the Treasury to reflect increases in the cost of living. For purposes of applying the 150,000 limitation in the preceding sentence, family members of the Employee shall be combined with the Employee in accordance with the guidelines established in Section 1.8 of Appendix I to the Plan. 17-2 56 17.9 "Disability" means the condition of a Participant who is permanently unable, by reason of a physical or mental incapacity, to perform the normal duties of his or her occupation for a Participating Company or the duties or such other position or job that the Company makes available to the Participant and for which the Participant is qualified by reason of his training, education and experience, as certified by a physician selected by such Participating Company. 17.10 "Eligible Employee" is defined in Section 2.1. 17.11 "Employee" means an individual who (a) is a common-law employee of a member of the Affiliated Group or a "leased employee" (within the meaning of section 414(n) of the Code) with respect to a member of the Affiliated Group. 17.12 "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time. 17.13 "Forfeiture" means that part of the Participant's Accounts that has not become vested pursuant to Article 8 when he or she ceases to be an Employee. 17.14 "Geneva Stock" means the common stock of the Company. 17.15 "Geneva Stock Fund" means the Investment Fund described in Section 7.2. 17.16 "Investment Accounts" means those Accounts described in Section 7.4. 17.17 "Investment Funds" means the funds established under the Trust Fund and described in Section 7.2. 17-3 57 17.18 "Matching Contribution" means an amount contributed to the Plan by a Participating Company pursuant to Section 5.1. 17.19 "Participant" means an individual whose participation in the Plan (a) has commenced pursuant to Section 2.3, 2.4 or 2.5 and (b) has not yet terminated pursuant to Section 2.7. 17.20 "Participating Company" means each member of the Affiliated Group which (a) has been designated as a Participating Company by the Company and (b) has accepted such designation by appropriate corporate action. 17.21 "Pension Contribution" means a contribution made by a Participating Company pursuant to Article 3, including any Forfeitures. 17.22 "Period of Service" means all of the following: (a) Period of Employment. An Employee's Period of Service shall include any period during which an Employee maintains an employment relationship with an Affiliated Group member. An Employee's employment relationship with an Affiliated Group member commences on the first date the Employee performs duties for an Affiliated Group member for which he or she receives or is entitled to receive compensation and ends on the date the Employee quits, dies, is discharged or retires. An Employee shall not be considered to have quit under the following circumstances: (i) When the Employee is absent due to lay-off, disability or sickness for up to 48 months. 17-4 58 (ii) When the Employee enters military service with the United States, provided the Employee returns to active employment with the Company within the time the Employee's reemployment rights are protected under applicable law. If the Employee does not so return, he or she shall be deemed to have quit on the date of entry into military service. (iii) When the Employee is on jury duty, approved vacation or holiday. (iv) When an Employee is absent from work for any period up to 24 months because of the Employee's pregnancy, the birth of the Employee's child, the placement of a child with the Employee for the purpose of adoption, or the care of such child immediately following such birth or placement. An Employee shall be deemed to have been discharged as of the earlier of the date oral or written notice of discharge is actually received or the date a written notice is deposited in the United States mail on a registered or certified basis to the Employee's last known address as reflected in the records of the Company; (b) Period for Which Back Pay Awarded. An Employee's Period of Service includes any period not otherwise counted as part of a Period of Service for which the Employee is awarded, or entitled to, back 17-5 59 pay from the Company (regardless of any mitigation of damages); (c) Period Following Termination. An Employee's Period of Service includes any period following termination of his or her employment relationship with the Company (as determined pursuant to (i) above), provided the Employee is rehired within 365 days after such termination; (d) Service with U.S. Steel Corporation. In computing the Period of Service included in determining a Participant's vested percentage, all of a Participant's years of service in the employ of U.S. Steel Corporation are to be taken into account if such years of service would have been taken into account under the provisions of this Plan if this Plan had then been in existence and if such years of service had been spent in the service of the Company, and if the Participant was identified as an employee on the records of U.S. Steel Corporation at the time the Geneva Steel Works were acquired by the Company, and if the Participant was immediately thereafter transferred to the employ of the Company from U.S. Steel Corporation. (e) Aggregation of Periods of Service. All Periods of Service determined pursuant to this Section 17.22 shall be aggregated on the basis of whole 17-6 60 calendar months whether or not such Periods of Service are consecutive, except: (i) Fractional Months. If an Employee's Period of Service commences on other than the first day of a calendar month or ends on other than the last day of a calendar month the days in such month or months shall be aggregated and one additional month of Service shall be credited if the number of such days is more than 30 but less than 59 and two additional months shall be credited if the number of such days equals 60. (ii) Permanent Service Break. If an Employee who is not even partially vested incurs a Permanent Service Break, any Period of Service prior to such Permanent Service Break shall not be aggregated with any Period of Service after such break. 17.23 "Permanent Service Break" means a period during which the Employee's employment relationship with an Affiliated Group member terminates and the Employee has not been reemployed as an Employee within 60 months. 17.24 "Plan" means this Geneva Steel Union Employee Savings and Pension Plan, as amended from time to time. 17.25 "Plan Benefit" means the benefit payable to the Participant or to his or her Beneficiary pursuant to Article 9. 17.26 "Plan Year" means the calendar year. 17-7 61 17.27 "Qualified Joint and Survivor Annuity" means a monthly annuity which is actuarially equivalent to the Participant's Plan Benefit and which is payable for the joint lives of the Participant and his or her spouse, with 50% of such annuity continued for the life of the survivor. 17.28 "Review Panel" means the fiduciary described in Section 10.1. 17.29 "Rollover Contribution" means a contribution made by the Participant pursuant to Article 16. 17.30 "Salary Deferral Contribution" means a contribution made by a Participating Company on the Participant's behalf pursuant to Section 4.1. 17.31 "Trust Agreement" means the trust agreement(s) between the Company and the Trustee, as amended from time to time. 17.32 "Trustee" means the trustee(s) appointed by the Company pursuant to Section 12.1. 17.33 "Trust Fund" means the trust fund(s) established pursuant to the Trust Agreement. 17.34 "Valuation Date" means the last business day of the Plan Year and such other dates selected by the Company. 17-8 62 ARTICLE 18. EXECUTION. To record the adoption of the Plan to read as set forth herein the Company has caused its authorized officer to execute this document this 22nd day of June, 1995. GENEVA STEEL By /s/ C.E. Ramnitz -------------------------- As its V.P. Human Resources THE UNITED STEELWORKERS OF AMERICA By /s/ Dallas Alexander -------------------------- As its Sub Director Sub 5 District 12 18-1 63 APPENDIX I TO THE GENEVA STEEL UNION EMPLOYEE SAVINGS AND PENSION PLAN LIMITATIONS RELATING TO NONDISCRIMINATION TESTING TABLE OF CONTENTS
Page ---- ARTICLE 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.1 Aggregate 401(m) Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.2 Aggregate 401(m) Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.3 Before-Tax Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.4 Combined limitation Formula . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.5 Combined Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.6 Excess Aggregate 401(m) Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.7 Excess Before-Tax Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.8 Highly Compensated Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.9 Non-Highly Compensated Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 1.10 Qualified Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 1.11 Section 414(s) Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 1.12 Top-Paid Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 ARTICLE 2. BEFORE-TAX CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 2.1 Percentage Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 2.2 Reduction of Salary Deferral Contributions . . . . . . . . . . . . . . . . . . . . . . . . . 10 2.3 Qualified Non-Elective Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 2.4 Other Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 ARTICLE 3. MATCHING CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 3.1 Percentage Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 3.2 Reduction of Aggregate 401(m) Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . 13 3.3 Other Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 ARTICLE 4. COMBINED LIMITATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 4.1 Combined Limitation Formula . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 4.2 Additional Reductions of Aggregate 401(m) Contributions . . . . . . . . . . . . . . . . . . . . 16 ARTICLE 5. DISTRIBUTIONS OF EXCESS BEFORE-TAX CONTRIBUTIONS AND EXCESS AGGREGATE 401(m) CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 5.1 Time of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 5.2 Income Allocable to Excess Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
64 APPENDIX I LIMITATIONS RELATING TO NONDISCRIMINATION TESTING UNDER CODE SECTIONS 401(k) and 401(m) ARTICLE 1. DEFINITIONS. 1.1 "Aggregate 401(m) Contributions" means any Matching Contributions allocated to the Participant for the Plan Year. 1.2 "Aggregate 401(m) Percentage" means the average percentage determined under Section 3.1(c) of this Appendix I. 1.3 "Before-Tax Percentage" means the average percentage determined under Section 2.1(c) of this Appendix I. 1.4 "Combined limitation Formula" means the formula computed under Section 4.1 of this Appendix I. 1.5 "Combined Percentage" means the percentage determined under Section 4.1(b) or 4.1(c) of this Appendix I. 1.6 "Excess Aggregate 401(m) Contributions" means the reductions in Matching Contributions described in Section 3.2 of this Appendix I. 1.7 "Excess Before-Tax Contributions" means the reductions in Salary Deferral Contributions described in Section 2.2 of this Appendix I. 1.8 "Highly Compensated Employee" for any Plan Year means any active Employee who, during the look-back year, (a) received Total Compensation of more than $75,000 (or such larger amount as may be provided on account of cost of living adjustments pursuant to sections 414(q) and 415(d) of the Code); (b) received Total Compensation of more than $50,000 (or such -1- 65 larger amount as may be provided on account of cost of living adjustments pursuant to sections 414(q) and 415(d) of the Code) and was a member of the Top-Paid Group; or (c) was an officer of a member of the Affiliated Group and received Total Compensation of more than 50 percent of the dollar limitation in effect under section 415(b)(1)(A) of the Code. The term "Highly Compensated Employee" also includes: (a) an Employee who is both described in the preceding sentence if the term "determination year" is substituted for the term "look-back year" and the Employee is one of the 100 Employees who received the most Total Compensation from the Affiliated Group during the determination year; and (b) an Employee who is a five-percent owner at any time during the look-back year or determination year. If no officer has satisfied the compensation requirement of (c) above during either a determination year or look-back year, the highest paid officer for such year shall be treated as a Highly Compensated Employee. The term "Highly Compensated Employee" shall also include a former Employee who separated from service (or was deemed to have separated) prior to the determination year, performs no service for the Affiliated Group during the determination year, and was a Highly Compensated Employee as an active Employee for either the separation year or any determination year ending on or after the Employee's 55th birthday. If an Employee is, during a determination year or look-back year, a family member of either a five percent owner -2- 66 who is an active or former Employee or a Highly Compensated Employee who is one of the 10 most Highly Compensated Employees ranked on the basis of Total Compensation paid during such year, then the family member and the five-percent owner or top-ten Highly Compensated Employee shall be aggregated. In such case, the family member and the five-percent owner or top-ten Highly Compensated Employee shall be treated as a single Employee receiving Total Compensation and Plan contributions and benefits of the family member and five-percent owner or top-ten Highly Compensated Employee. The compensation and benefits attributable to the family members and the five-percent owner or top-ten Highly Compensated Employee shall be pro rated among the family members and the five-percent owner or top-ten Highly Compensated Employee in the proportion that each such individual's Compensation bears to the total of all such individuals' Compensation. For purposes of this Section 1.8, "family member" includes the spouse, lineal ascendants and descendants of the Employee or former Employee and the spouses of such lineal ascendants and descendants. For purposes of this Section 1.8, the determination year shall be the Plan Year. The look-back year shall be the 12-month period immediately preceding the determination year. However, the Company may elect in accordance with Temp. Treas. Reg. section 1.414(q)-1T Q&A-14(b), to make the look-back year calculation for a determination year on the basis of the calendar year ending with or within the applicable determination year. If such an election is made, the Company shall make the -3- 67 determination year calculation on the basis of the period (if any) by which the applicable determination year extends beyond the calendar year (i.e., the lag period). (If the Plan Year is the calendar year, this election makes the look-back year and the determination year the same calendar year.) The determination of who is a Highly Compensated Employee, including the determinations of the number and identity of Employees in the Top-Paid Group, the top 100 Employees, the number of Employees treated as officers and the Total Compensation that is considered, will be made in accordance with section 414(q) of the Code and regulations thereunder. 1.9 "Non-Highly Compensated Employee" means any Participant who is not a Highly Compensated Employee. 1.10 "Qualified Plan" means a stock bonus, pension or profit sharing plan (other than this Plan) maintained by a member of the Affiliated Group that is intended to qualify under section 401(a) of the Code. 1.11 "Section 414(s) Compensation" means, at the discretion of the Company, any one of the following definitions of compensation received by an Employee from the Company or a member of the Affiliated Group during the portion of the Plan Year that the Employee is a Participant or is eligible to become a Participant in the Plan: (a) Compensation as defined in Treasury Regulation section 1.415-2(d) or any successor thereto; -4- 68 (b) "Wages" as defined in section 3401(a) of the Code for purposes of income tax withholding at the source, but determined without regard to any rules that limit the remuneration included in wages based on the nature or location of the employment or the services performed (such as the exception for agricultural labor in section 3401(a)(23) of the Code); (c) "Wages" as defined in section 3401(a) of the Code for purposes of income tax withholding at the source, plus all other payments of compensation reportable under Code sections 6041(d) and 6051(a)(3) and the regulations thereunder, determined without regard to any rules that limit such Wages or reportable compensation based on the nature or location of the employment or the services performed (such as the exception for agricultural labor in section 3401(a)(23) of the Code), and modified, at the election of the Company, to exclude amounts paid or reimbursed for the Employee's moving expenses, to the extent it is reasonable to believe that these amounts are deductible by the Employee under section 217 of the Code; (d) Any of the definitions of Section 414(s) Compensation set forth in Subsections (a), (b) and (c) above, reduced by all of the following items (even if includable in gross income): reimbursements or other expense allowances, fringe benefits (cash and noncash), moving expenses, deferred compensation and welfare benefits; -5- 69 (e) Any of the definitions of Section 414(s) Compensation set forth in Subsections (a), (b), (c) and (d) above, modified to include any elective contributions made by the Company or a member of the Affiliated Group on behalf of the Employee that are not includable in gross income under section 125, 402(a)(8), 402(h) or 403(b) of the Code; or (f) Any reasonable definition of compensation that does not by design favor Highly Compensated Employees and that satisfies the nondiscrimination requirement set forth in Treasury Regulation section 1.414(s)-1(d)(2) or the successor thereto. Any definition of Section 414(s) Compensation shall be used consistently to define the compensation of all Employees taken into account in satisfying the requirements of an applicable provision of this Appendix I for the relevant determination period. For purposes of applying the limitations set forth in Articles 2, 3 and 4 of this Appendix I, Section 414(s) Compensation shall not include compensation paid to an Employee for a Fiscal Year in excess of $150,000 (or such other amount as may be adopted by the Commissioner of Internal Revenue to reflect a cost-of-living adjustment). -6- 70 1.12 "Top-Paid Group" for any Plan Year means the top 20 percent (in terms of Section 414(s) Compensation) of all Employees of the Affiliated Group on a U.S. dollar payroll, excluding the following: (a) Any Employee covered by a collective bargaining agreement who is not an Eligible Employee; (b) Any Employee who has not completed six months of service at the end of the Plan Year; (c) Any Employee who normally works less than 17 1/2 hours per week; (d) Any Employee who normally works no more than six months during any year; and (e) Any Employee who has not attained the age of 21 at the end of the Plan Year. 1.13 "Total Compensation" means "wages," as defined in section 3401(a) of the Code for purposes of income tax withholding at the source, but determined: (a) Without regard to any rules that limit the remuneration included in 'wages' based on the nature or location of the employment or the services performed (such as the exception for agricultural labor in section 3401(a)(2) of the Code); and (b) By including amounts deferred but not refunded under a cafeteria plan, as such term is defined in section 125(c) of the Code and under a plan, including this Plan, qualified under section 401(k) of the Code. -7- 71 The capitalized terms used in this Appendix I, but not defined herein, shall have the same meaning as such terms have when used in the Geneva Steel Union Employee Savings and Pension Plan (the "Plan"), and the terms of the Plan are incorporated by reference into this Appendix I. -8- 72 ARTICLE 2. BEFORE-TAX CONTRIBUTIONS. 2.1 Percentage Limitations. The Salary Deferral Contributions attributable to Highly Compensated Employees for any Plan Year shall not exceed the limits described below: (a) The ratio of the Salary Deferral Contributions for the Plan Year to the Section 414(s) Compensation for the Plan Year shall be computed to the nearest one hundredth of one percent for each individual who at any time during the Plan Year is a Participant of the Plan or is eligible to become a Participant in the Plan; (b) In the case of an individual who is a five-percent owner or who is among the 10 most highly compensated Highly Compensated Employees, the Section 414(s) Compensation and Company Contributions allocated to family members (as described in Section 1.8 of this Appendix I) shall be attributed to such Highly Compensated Employees in computing such ratios as prescribed in Treasury Regulation section 1.401(k)-1(f) and (g) or any successor thereto; (c) The average of such ratios (i.e., the Before-Tax Percentage) shall be determined for (i) the Highly Compensated Employees and (ii) the Non-Highly Compensated Employees; and (d) The Salary Deferral Contributions of Highly Compensated Employees shall be reduced to the extent necessary to establish that the Before-Tax Percentage for the Highly Compensated Employees either: (i) does not exceed 125 percent of the Before-Tax Percentage for the Non-Highly Compensated Employees, or (ii) does not exceed the lower of (A) 200 percent -9- 73 of the Before-Tax Percentage for Non-Highly Compensated Employees or (B) the Before-Tax Percentage for Non-Highly Compensated Employees plus two percentage points. 2.2 Reduction of Salary Deferral Contributions. The reduction of the Salary Deferral Contributions of Highly Compensated Employees as required by Section 2.1(d) of this Appendix I shall be made by the Company in the order of the individual ratios of such Highly Compensated Employees, beginning with the highest of such ratios and continuing until the Before-Tax Percentage for the Highly Compensated Employees meets either of the tests set forth in Section 2.1(d) of this Appendix I. Such reductions in Before-Tax Contributions shall be made in accordance with Treasury Regulation section 1.401(k)-1(f)(2) and shall constitute "Excess Before-Tax Contributions." For all affected Highly Compensated Employees, such Excess Before-Tax Contributions shall be eliminated as provided for in Article 5 hereof. Excess Before-Tax Contributions of an individual who is a five-percent owner or who is among the 10 most highly compensated Highly Compensated Employees shall be allocated among such individual's family members (as described in Section 1.8 of this Appendix I) in proportion to the contributions attributable to each family member that have been combined. 2.3 Qualified Non-Elective Contributions. In lieu of reducing "Excess Before-Tax Contributions" as provided in Section 2.2 of this Appendix I or "Excess Aggregate 401(m) Contributions" as provided in Section 3.2 of this Appendix I, the Company may make corrective Qualified Non-Elective -10- 74 Contributions on behalf of Non-Highly Compensated Employee Participants. Such Qualified Non-Elective Contributions shall be allocated to an eligible Participant's Salary Deferral Account in the ratio that such eligible Participant's Compensation for the Plan Year bears to the total Compensation of all eligible Participants for such Plan Year. Any Qualified Non-Elective Contributions for a Plan Year shall be paid to the Trustee not later than the last day of the Plan Year next following the close of the Plan Year for which the Qualified Non-Elective Contribution is made. 2.4 Other Plans. If a Highly Compensated Employee for any Plan Year is a participant during such Plan Year of any qualified plan that includes a qualified cash or deferral arrangement under section 401(k) of the Code, this Plan and such Qualified Plan(s) shall be treated as required by Treasury Regulation section 1.401(k)-1(g)(1)(ii)(B) in applying this Article 2. If the Plan is aggregated with any other qualified plan for purposes of Code section 410(b), this Plan and such other qualified plan shall be treated as a single plan in applying this Article 2. -11- 75 ARTICLE 3. MATCHING CONTRIBUTIONS. 3.1 Percentage Limitations. To the extent Matching Contributions are not treated as Salary Deferral Contributions and tested under Article 2 of this Appendix I, the Aggregate 401(m) Contributions of Highly Compensated Employees for any Plan Year shall not exceed the limits described below: (a) The ratio of the Aggregate 401(m) Contributions for the Plan Year to the Section 414(s) Compensation for the Plan Year shall be computed to the nearest one hundredth of one percent for each individual who at any time during the Plan Year is a Participant of the Plan or is eligible to become a Participant in the Plan; (b) In the case of an individual who is a five-percent owner or who is among the 10 most highly compensated Highly Compensated Employees, the Section 414(s) Compensation and the Company Contributions allocated to family members (as described in Section 1.8 of this Appendix I) shall be attributed to such Highly Compensated Employees in computing such ratios as prescribed in Treasury Regulation section 1.401(m)-1(e) and (f) or any successor thereto; (c) The average of such ratios (i.e., the Aggregate 401(m) Percentage) shall be determined for (i) the Highly Compensated Employees and (ii) the Non-Highly Compensated Employees; and (d) The Aggregate 401(m) Contributions of Highly Compensated Employees shall be reduced to the extent necessary to establish that the Aggregate 401(m) Percentage for the Highly -12- 76 Compensated Employees either: (i) does not exceed 125 percent of the Aggregate 401(m) Percentage for the Non-Highly Compensated Employees, or (ii) does not exceed the lower of (A) 200 percent of the Aggregate 401(m) Percentage for Non-Highly Compensated Employees or (B) the Aggregate 401(m) Percentage for Non-Highly Compensated Employees plus two percentage points. 3.2 Reduction of Aggregate 401(m) Contributions. The reduction in the Aggregate 401(m) Contributions of Highly Compensated Employees as required by Section 3.1(d) of this Appendix I shall be made by the Company, in accordance with Treasury Regulation section 1.401(m)-1(e)(2), in the order of the individual ratios of such Highly Compensated Employees, beginning with the highest of such ratios and continuing until the Aggregate 401(m) Percentage for the Highly Compensated Employees meets either of the tests set forth in Section 3.1(d) of this Appendix I. For all affected Highly Compensated Employees, such Excess Aggregate 401(m) Contributions shall be eliminated as provided for in Article 5 hereof. Excess Aggregate 401(m) Contributions of an individual who is a five-percent owner or who is among the 10 most highly compensated Highly Compensated Employees shall be allocated among such individual's family members (as described in Section 1.8 of this Appendix I) in proportion to the contributions attributable to each family member that have been combined. 3.3 Other Plans. If a Highly Compensated Employee for any Plan Year is a participant during such Plan Year of any -13- 77 qualified plan that is a qualified defined contribution plan (within the meaning of Code section 414(i)) and that provides for employee contributions and matching employer contributions (as described in Code section 401(m)(4)(A)), this Plan and such qualified plan(s) shall be treated as required by Treasury Regulation section 1.401(m)-1(f)(1)(ii)(B) in applying this Article 3. If the Plan is aggregated with any other qualified plan for purposes of Code section 410(b), this Plan and such other qualified plan shall be treated as a single plan in applying this Article 3. -14- 78 ARTICLE 4. COMBINED LIMITATIONS. 4.1 Combined Limitation Formula. The Combined Limitation Formula for each Plan Year shall be computed as follows: (a) First, the Before-Tax Percentage and Aggregate 401(m) Percentage for Highly Compensated Employees and Non-Highly Compensated Employees for the Plan Year shall be determined after making any reductions in Salary Deferral Contributions and/or Aggregate 401(m) Contributions of Highly Compensated Employees required by Sections 2.2 and 3.2 of this Appendix I before application of the Combined Limitation Formula. (b) Second, the sum of: (i) 125 percent of the greater of the Before-Tax Percentage or the Aggregate 401(m) Percentage for the Non-Highly Compensated Employees, and (ii) two (2) percentage points plus the lesser of the Before-Tax Percentage or the Aggregate 401(m) Percentage (but not in excess of 200 percent of the lesser of such Before-Tax Percentage and Aggregate 401(m) Percentage) for the Non- Highly Compensated Employees shall be determined. (c) Third, the sum of: (i) 125 percent of the lesser of the Before-Tax Percentage or the Aggregate 401(m) Percentage for the Non-Highly Compensated Employees, and (ii) two (2) percentage points plus the greater of the Before-Tax Percentage or the Aggregate 401(m) Percentage (but not in excess of 200 percent of the lesser of such Before-Tax Percentage and -15- 79 Aggregate 401(m) Percentage) for the Non-Highly Compensated Employees shall be determined. (d) Fourth, the sum of the Before-Tax Percentage and Aggregate 401(m) Percentage for the Highly Compensated Employees shall be determined. 4.2 Additional Reductions of Aggregate 401(m) Contributions. If, in any Plan Year, the amount determined under Section 4.1(d) of this Appendix I exceeds the greater of the amounts determined under Section 4.1(b) or Section 4.1(c) of this Appendix I, then the Aggregate 401(m) Contributions of Highly Compensated Employees shall be reduced, in the manner described in Section 3.2 of this Appendix I, to the extent necessary to ensure that the sum of the Before-Tax Percentage and Aggregate 401(m) Percentage of the Highly Compensated Employees for the Plan Year does not exceed the greater Combined Percentage determined under Section 4.1(b) or Section 4.1(c) of this Appendix I in respect to Non-Highly Compensated Employees. -16- 80 ARTICLE 5. DISTRIBUTIONS OF EXCESS BEFORE-TAX CONTRIBUTIONS AND EXCESS AGGREGATE 401(m) CONTRIBUTIONS. 5.1 Time of Distribution. Excess Before-Tax Contributions may be distributed to the appropriate Highly Compensated Employees by March 15 following the close of the Plan Year, but in no event later then the close of the following Plan Year. Excess Aggregate 401(m) Contributions (other than Excess Aggregate 401(m) Contributions that are first forfeited as attributable to Excess Before-Tax Contributions that are refunded for any Plan Year) shall be distributed to the appropriate Highly Compensated Employees as follows: (a) First, to the extent required, the vested portion of the Matching Contributions attributable to the Participant's Salary Deferral Contributions for such Plan Year, and any income (or losses) allocable to such Matching Contributions, shall be distributed to him or her by the March 15 next following the close of such Plan Year, but in no event later than the last day of the following Plan Year. (b) Second, to the extent required, the nonvested portion of the Matching Contributions allocated to the Participant for such Plan Year, and any income (or losses) allocable thereto, may be forfeited by March 15 next following the close of the Plan Year, but in no event later than the close of the following Plan Year, and reallocated as provided for in Section 10.4 of the Plan. All such distributions, including income allocable thereto, shall be designated by the Company as distributions of Excess -17- 81 Before-Tax Contributions or Excess Aggregate 401(m) Contributions, as the case may be. In accordance with Treasury Regulation section 1.401(k)-1(f)(5)(i), Excess Before-Tax Contributions for a Plan Year to be distributed to a Participant shall be reduced by excess deferrals previously distributed to such Participant for such Participant's taxable year ending with or within such Plan Year, and excess deferrals for a Plan Year to be distributed to a Participant shall be reduced by Excess Before-Tax Contributions previously distributed to such Participant for the Plan Year beginning with or within such taxable year. 5.2 Income Allocable to Excess Contributions. Income allocable to Excess Before-Tax Contributions and Excess Aggregate 401(m) Contributions shall be determined by the Company in accordance with Treasury Regulation sections 1.401(k)-1(f)(4) and 1.401(m)-1(e)(3) or the successors thereto. -18- 82 APPENDIX II PARTICIPANT LOANS Amount of Loans. A Participant who is receiving Compensation may obtain a cash loan from the Participant's Salary Deferral, Matching and Rollover Accounts. The minimum amount of a loan shall be one thousand dollars ($1,000). Aggregate Loan Limitations. No loan shall be granted under the Plan if such loan, when aggregated with the balance of all loans the Participant has outstanding under the Plan at the time such loan is to be made, exceeds the smallest of the following: (i) Fifty thousand dollars ($50,000), minus the excess of: (A) the Participant's highest outstanding loan balance under the Plan during the one-year period ending one day prior to the date on which such loan is to be made over (B) the outstanding balance of all of the Participant's Plan loans on the date such loan is to be made; or (ii) Fifty (50%) percent of the balance of the Participant's Salary Deferral and Rollover Accounts under the Plan. Terms of Loans. A loan to a Participant shall be made on such terms and conditions as the Company may determine, provided that the loan shall: -1- 83 (i) Be evidenced by a promissory note signed by the Participant and secured to the extent necessary by the Accounts of the Participant (regardless of whether a particular Account provided funds for the loan under Source of Loans below); (ii) Bear interest at a fixed rate equal to the prime rate of the Trustee plus one percent, in effect on the first business day of the month in which the Company approves the loan, provided that such rate is reasonable; (iii) Be subject to a substantially level amortization schedule, as determined by the Company; (iv) Provide for loan payments (A) to be withheld through periodic (but not less frequently than quarterly) irrevocable payroll deductions from the Participant's Compensation or (B) to be paid by check or money order whenever payroll withholding is not possible; (v) Provide for repayment in full (including full prepayment) on or before the earlier of (A) the date the Participant's employment as an Employee terminates, or (B) the date five (5) years after the loan is made; and (vi) Provide that a Participant's Accounts may not be applied to the satisfaction of the Participant's loan -2- 84 obligations before the Accounts become distributable under Article 9 of the Plan, unless the Company determines that the loan obligations are in default and treats such default as qualifying as a financial hardship. A distribution on account of a loan default shall be made only if the amount withdrawn, net of applicable federal and state taxes, does not exceed the amount of the need, and the Participant represents to the Company's satisfaction that the need cannot be relieved: (i) Through reimbursement or compensation by insurance, or otherwise, (ii) By reasonable liquidation of the Participant's assets, to the extent such liquidation would not itself cause an immediate and heavy financial need, (iii) By cessation of Salary Deferrals under the Plan, or (iv) By other distributions or nontaxable loans from plans maintained by the Company or by any other employer, or by borrowing from commercial sources on reasonable commercial terms. The Participant's resources shall be deemed to include those assets of his/her spouse and minor children that are reasonably available to the Participant. The Company shall exercise its discretion upon requests for loans in a uniform and nondiscriminatory -3- 85 manner, consistent with the requirements of sections 401(a)(4) and 401(k) of the Code. Restrictions on Loans. No Participant shall have more than one (1) loan from the Plan outstanding at the same time. A new loan may not be obtained earlier than thirty (30) days after the end of the calendar quarter in which the prior Plan loan is repaid. Source of Loans. A Loan Account shall be established for each Participant who takes a loan hereunder. The Loan Account shall be held by the Trustee as part of the Loan Fund. The amount of the loan shall be transferred to the Participant's Loan Account from the Participant's Salary Deferral and Rollover Accounts (but not from the Geneva Stock Account) and shall be disbursed from the Loan Account. Disbursement of Loans. A Participant may request a loan by filing the prescribed loan form with the Company. A loan shall be disbursed as soon as reasonably practicable after the date on which the Company receives the appropriately completed forms. Valuation Date. For purposes of this Appendix II, the balance of a Participant's Accounts shall be determined as of the last completed Valuation Date prior to the date on which the Company receives the appropriately completed forms. Loan Payments and Defaults. Principal and interest payments on a Participant's loan shall be credited initially to the Participant's Loan Account and shall be transferred as soon as reasonably practicable thereafter to the Participant's other Accounts in the percentages specified by the Participant under -4- 86 Section 6.4. Any loss caused by nonpayment or other default on a Participant's loan obligations shall be borne solely by that Participant's Accounts. Loan Fee. Notwithstanding Section 12.4, the Company may charge a reasonable loan set-up and servicing fee for administering a loan under the Plan. Any such fee(s) may be deducted from the loan proceeds and/or the Participant's Accounts. Definitions. (i) "Loan Account" shall mean the account established pursuant to this Appendix II for the purpose of making loans to Participants. (ii) "Loan Fund" shall mean the fund invested solely in promissory notes executed by Participants pursuant to this Appendix II. The capitalized terms used in this Appendix II, but not defined herein, shall have the same meaning as such terms have when used in the Geneva Steel Union Employee Savings and Pension Plan (the "Plan"), and the terms of the Plan are incorporated by reference into this Appendix II. Spousal Consent. No loan shall be granted pursuant to this Appendix II to a married Participant unless the spouse of such Participant, in accordance with the requirements of Subsection 9.7 of the Plan, and within the 90 day period before the loan is made, consents to the assignment of the Plan Benefit as security for repayment of the loan, and any actions the Company subsequently may take under this Appendix II to the Plan. -5- EX-13 5 SELECTED PORTIONS OF ANNUAL REPORTS 1 SELECTED FINANCIAL DATA (Dollars in thousands, except per share and per ton data)
----------------------------------------------------------------------------------------------------------- OPERATING STATISTICS 1995 1994 1993 1992 1991 ----------------------------------------------------------------------------------------------------------- Net sales $665,699 $486,062 $465,181 $420,026 $445,981 Gross margin 71,508 15,514 21,723 13,735 52,801 Income (loss) from operations 47,713 (6,791) 1,102 (8,587) 30,920 Income (loss) before extraordinary item 11,604 (16,696) (8,606) (13,092) 17,554 Net income (loss) 11,604 (26,230) (8,606) (13,092) 17,554 Net income (loss) applicable to common shares 3,606 (33,276) (12,072) (13,092) 17,554 Net income (loss) per common share before extraordinary item .24 (1.57) (.80) (.87) 1.17 Net income (loss) per common share .24 (2.20) (.80) (.87) 1.17 ----------------------------------------------------------------------------------------------------------- BALANCE SHEET STATISTICS 1995 1994 1993 1992 1991 ----------------------------------------------------------------------------------------------------------- Cash and cash equivalents $ 12,808 $ -- $ 64,267 $ 3,122 $ 45,597 Working capital 33,045 46,797 89,167 75,654 105,926 Current ratio 1.29 1.49 2.04 2.33 2.77 Property, plant and equipment, net 470,390 453,286 314,590 252,797 204,150 Total assets 628,797 606,815 498,384 390,462 375,888 Long-term debt 342,033 357,348 224,991 178,182 160,000 Redeemable preferred stock 51,031 43,032 35,986 -- -- Stockholders' equity 108,074 103,664 135,775 141,832 154,416 Long-term debt as a percentage of stockholders' equity 316% 345% 166% 126% 104% ----------------------------------------------------------------------------------------------------------- ADDITIONAL STATISTICS 1995 1994 1993 1992 1991 ----------------------------------------------------------------------------------------------------------- Operating income (loss) per ton shipped $ 24.99 $ (4.63) $ .73 $ (6.49) $ 24.27 Capital expenditures 68,025 164,918 82,534 66,617 113,410 Depreciation and amortization 39,308 29,870 23,150 21,136 14,728 Cash flows from operating activities 81,985 (27,469) 64,394 8,200 47,782 Raw steel production (net tons in thousands) 2,145 1,890 2,000 1,769 1,708 Steel products shipped (net tons in thousands) 1,909 1,467 1,511 1,323 1,274 -----------------------------------------------------------------------------------------------------------
PRICE RANGE OF COMMON STOCK ---------------------------------------------------------------------------- The following table sets forth, for the periods indicated, the high and low sales prices for the Class A common stock as reported on the NYSE Composite Tape. ----------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------- FISCAL YEAR ENDED SEPTEMBER 30, 1994 HIGH LOW ----------------------------------------------------------------------------------------------------------- First Quarter ended December 31 $ 18 1/2 $ 11 7/8 Second Quarter ended March 31 21 3/8 13 1/4 Third Quarter ended June 30 20 13 3/8 Fourth Quarter ended September 30 21 1/4 15 1/2 ----------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------- FISCAL YEAR ENDED SEPTEMBER 30, 1995 HIGH LOW ----------------------------------------------------------------------------------------------------------- First Quarter ended December 31 $ 18 $ 12 1/4 Second Quarter ended March 31 16 9 3/4 Third Quarter ended June 30 12 7 1/8 Fourth Quarter ended September 30 9 3/4 7 3/4 -----------------------------------------------------------------------------------------------------------
As of November 30, 1995, the Company had 13,343,871 shares of Class A common stock outstanding held by 646 stockholders of record, and 19,151,348 shares of Class B common stock outstanding held by five stockholders of record. 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS The following table sets forth the percentage relationship of certain cost and expense items to net sales for the years indicated:
------------------------------------------------------------------------------------------------- YEAR ENDED SEPTEMBER 30, 1995 1994 1993 ------------------------------------------------------------------------------------------------- Net sales 100.0% 100.0% 100.0% Cost of sales 89.3 96.8 95.3 ---------------------------------- Gross margin 10.7 3.2 4.7 Selling, general and administrative expenses 3.5 4.6 4.4 ---------------------------------- Income (loss) from operations 7.2 (1.4) 0.3 Other income (expense): Interest and other income 0.1 0.3 0.4 Interest expense (4.6) (4.4) (3.7) Other expense (0.4) -- -- ---------------------------------- Income (loss) before provision (benefit) for income taxes and extraordinary item 2.3 (5.5) (3.0) Provision (benefit) for income taxes 0.6 (2.1) (1.2) ---------------------------------- Income (loss) before extraordinary item 1.7% (3.4)% (1.8)% ----------------------------------
The following table sets forth the sales product mix as a percentage of net sales for the years indicated: ----------------------------------------------------------------------------
------------------------------------------------------------------------------------------------- YEAR ENDED SEPTEMBER 30, 1995 1994 1993 ------------------------------------------------------------------------------------------------- Sheet 40.7% 65.3% 56.4% Plate 35.1 23.5 30.8 Pipe 6.4 6.9 9.7 Slab 15.0 1.0 -- Non-steel 2.8 3.3 3.1 ---------------------------------- 100.0% 100.0% 100.0% ---------------------------------- -------------------------------------------------------------------------------------------------
FISCAL YEAR ENDED SEPTEMBER 30, 1995 COMPARED WITH FISCAL YEAR ENDED SEPTEMBER 30, 1994 Net sales increased 37.0% due to increased shipments of approximately 441,700 tons and increased average selling prices for the year ended September 30, 1995 as compared to the previous fiscal year. The weighted average sales price (net of transportation costs) per ton of sheet, plate, pipe and slab products increased by 5.4%, 9.9%, 11.5% and 6.2%, respectively, in the year ended September 30, 1995 compared to the previous fiscal year. The overall average selling price realization per ton also increased between the years as a result of a shift in product mix to higher-priced plate products. This increase was offset, in part, by the Company's increased sales of lower-priced slab products. Consistent with the Company's strategic objectives, plate shipments have increased as various upgrades to plate processing and finishing equipment have been completed and implemented. The Company intends to continue shifting its product mix toward plate. The Company increased slab shipments in response to favorable slab pricing and to maximize production from the continuous caster. Despite weakening slab prices, the Company expects that slab sales will continue as a means of maximizing throughput. Shipped tonnage of plate, pipe and slabs increased approximately 276,400 tons or 86.2%, 12,700 tons or 14.5% and 350,300 tons or 1,762.5%, respectively, while shipped tonnage of sheet decreased approximately 197,700 tons or 19.0% between the two years. Pricing for hot-rolled sheet, plate, pipe and slab products weakened late in the fiscal year as a result of efforts by service centers to reduce high inventory levels, an increase in domestic hot-rolled capacity and other market factors. Pricing has also been adversely affected by unfairly traded imports, including most recently from non-traditional sources such as Russia, Ukraine and China. The Company's bookings in the first fiscal quarter have reflected additional price reductions. 3 Based on recent orders, pricing may be stabilizing. The Company intends to react to price increases or decreases in the market as justified by competitive conditions. The Company sells substantially all of its products in the spot market at prevailing market prices. The Company believes its percentage of such sales is significantly higher than that of most of the other domestic integrated producers. Consequently, the Company may be affected by price increases and decreases more quickly than many of its competitors. During the fourth fiscal quarter, the Company increased its production of higher-margin large coils due primarily to the start-up of a new 42-megawatt induction slab heating furnace, which is located in-line with the Company's caster and rolling mill. The Company is continuing to integrate the induction furnace into the production process. The Company continues to evaluate its slab heating requirements and may elect to install additional heating capacity. Cost of sales includes raw materials, labor costs, energy costs, depreciation and other operating and support costs associated with the production process. The Company's cost of sales, as a percentage of net sales, decreased to 89.3% for the year ended September 30, 1995 from 96.8% for the previous fiscal year as a result of higher average selling prices and lower operating costs. The average cost of sales per ton shipped decreased approximately $9 per ton between the two years. The decreased cost per ton resulted from lower operating costs and from increased sales of lower-cost slab products offset, in part, by a shift in product mix to higher-cost plate products. Costs decreased primarily as a result of increased production efficiencies associated with completed capital projects, increased production throughput and other operating improvements offset, in part, by higher depreciation expense, increased raw materials costs and higher wages and benefits. The Company expects to achieve additional improvements in operating efficiencies in future periods as a result of reduced labor costs per ton, increased production throughout, reduction of start-up and transition costs and improved yields. The Company expects, however, that certain raw materials costs will increase in future periods. The Company anticipates higher iron ore pellet costs. During the year, the Company finalized a five-year iron ore pellet supply agreement with USX Corporation. Pricing under the agreement is generally based upon an index and resulted in an increase in finished product cost of approximately $3 per ton effective in September 1995. Construction is nearing completion on a new plasma-fired cupola ironmaking facility. The Company expects the facility to become available for operation in the first calendar quarter of 1996. The cupola will be used to replace or supplement blast furnace iron production, particularly when scrap prices are favorable or during relines and other periods requiring additional ironmaking capacity. The Company expects the facility lease cost of the cupola to add approximately $2 per ton to finished product cost. The impact of the cupola facility on finished product cost will be dependent on raw materials costs, particularly scrap, and the level of integration of the cupola. Start-up and transition costs associated with implementation of ongoing capital projects have adversely affected the Company's operating results, including finished product throughput and yields. The Company expects that the first fiscal quarter will be similarly affected by integration of projects such as the induction furnace and wide coiled plate project. The Company has, however, completed and implemented several of its capital projects and has deferred completion of additional major projects, particularly with respect to the rolling mill finishing stand improvements. The Company expects that start-up and transition costs will decline significantly as current capital projects are fully implemented and operations are stabilized. Depreciation costs included in cost of sales increased approximately $11.2 million for the year ended September 30, 1995 compared with the previous fiscal year. This increase was due to increases in the asset base resulting from capital expenditures. Depreciation expense will further increase due to implementation of the Company's capital projects. Selling, general and administrative expenses for the year ended September 30, 1995 increased approximately $1.5 million as compared to the previous fiscal year. The higher expenses resulted primarily from increased salaries and wages and outside services. Interest and other income decreased approximately $1.1 million during the year ended September 30, 1995 as compared to the previous fiscal year as a result of a decrease in the amount of invested cash and cash equivalents. Interest expense increased approximately $8.9 million during the year ended September 30, 1995 as compared to the previous fiscal year. Interest expense increased due to higher levels of borrowing and decreased capitalized interest during the year ended September 30, 1995 offset, in part, by a reduction in interest rates as a result of restructuring the Company's debt during fiscal year 1994. 4 Other expense was $2.4 million for the year ended September 30, 1995. Other expense reflects the costs incurred in connection with the Company's receivables securitization facility, which was established by the Company in November 1994. The provision for income taxes for the year ended September 30, 1995 was reduced by utilization of a net operating loss carryforward and a $1.2 million income tax benefit resulting from a reassessment of the Company's deferred income tax liabilities. As a result, the Company's effective tax rate was 24% for the year ended September 30, 1995. The Company expects its effective tax rate in future periods to be near the statutory income tax rate of approximately 38%. FISCAL YEAR ENDED SEPTEMBER 30, 1994 COMPARED WITH FISCAL YEAR ENDED SEPTEMBER, 30, 1993 Net sales increased 4.5% while shipments decreased by approximately 43,300 tons, or 2.9%, for the year ended September 30, 1994 as compared to the previous fiscal year. The increased sales resulted from increased average selling prices on all products. The weighted average sales price (net of transportation costs) per ton of sheet, plate and pipe products increased by 12.2%, 6.1% and 0.6%, respectively, in the year ended September 30, 1994 compared to the previous fiscal year. The overall average selling price realization per ton also increased between the years; however, this increase was offset, in part, by a shift in product mix to lower priced sheet products from higher priced plate and pipe products. The shift in product mix was due primarily to the Company's suspension of certain plate production while upgrades to various processing equipment were being implemented and to favorable pricing associated with sheet products. The decrease in total shipments resulted primarily from lower production due to production inefficiencies and interruptions associated with completion and implementation of various capital projects. Shipped tonnage of sheet increased approximately 74,300 tons or 7.7%, while shipped tonnage of plate and pipe decreased approximately 106,200 tons or 24.9% and 31,200 tons or 26.3%, respectively, between the two years. The Company's cost of sales, as a percentage of net sales, increased to 96.8% for the year ended September 30, 1994 from 95.3% for the previous fiscal year as a result of higher operating costs offset, in part, by higher average selling prices. The average cost of sales per ton shipped increased approximately $27 per ton between the two years. The increased cost per ton was offset, in part, by a shift in product mix to lower cost sheet products. Costs increased primarily as a result of production inefficiencies and transition costs associated with construction and implementation of various modernization and capital projects. Costs also increased due to repair work at the blast furnace operations, increased depreciation expense, increased coke costs as a result of purchasing coke to supplement internal coke production, higher wages and benefits as required by the union labor agreement and increases in certain other operating costs. Depreciation costs included in cost of sales increased approximately $5.4 million for the year ended September 30, 1994 compared with the previous fiscal year. This increase was due to increases in the asset base resulting from capital expenditures. Selling, general and administrative expenses for the year ended September 30, 1994 increased approximately $1.7 million as compared to the previous fiscal year. The higher expenses resulted primarily from increased wages and salaries and increased outside services in fiscal year 1994. Interest and other income decreased approximately $0.3 million during the year ended September 30, 1994 as compared to the previous fiscal year as a result of a decrease in the amount of invested cash and cash equivalents. Interest expense increased approximately $4.6 million during the year ended September 30, 1994 as compared to the previous fiscal year. Increased interest expense due to higher levels of borrowing in fiscal year 1994 was partially offset by an increase in capitalized interest and a reduction in interest rates as a result of restructuring the Company's debt. In February 1994, the Company completed a public offering of $190 million aggregate principal amount of 9 1/2% senior notes (the "9 1/2% Senior Notes"). A portion of the proceeds from the offering was used to repay an aggregate of approximately $90 million principal amount of senior and subordinated term debt bearing a weighted average interest rate of 11.24%, plus contractual prepayment premiums of approximately $12.3 million. In addition, deferred loan costs of approximately $1.6 million were expensed in connection with the early extinguishment of the debt. The prepayment premiums and deferred loan costs have been reflected as an extraordinary item in the Company's fiscal year 1994 statement of operations. 5 LIQUIDITY AND CAPITAL RESOURCES The Company's liquidity requirements arise from capital expenditures and working capital requirements, including interest payments. The Company has met these requirements over the past three years principally from the incurrence of additional long-term indebtedness, including borrowings under the Company's revolving credit facility, fundings under its accounts receivable securitization facility, equipment lease financing and cash provided by operations. In March 1993, the Company issued in a public offering $135 million principal amount of 11 1/8% senior notes (the "11 1/8% Senior Notes" and together with the 9 1/2% Senior Notes, the "Senior Notes"). The 11 1/8% Senior Notes mature in 2001, are unsecured and require interest payments semi-annually on March 15 and September 15. After March 1998, the 11 1/8% Senior Notes are redeemable, in whole or in part, at the option of the Company, subject to certain redemption premiums. A portion of the proceeds from the 11 1/8% Senior Notes offering was used to repurchase, at par value, approximately $70 million aggregate principal amount of term debt. In connection with the offering of the 11 1/8% Senior Notes, the Company issued $40 million of 14% cumulative redeemable exchangeable preferred stock (the "Redeemable Preferred Stock") at a price of $100 per share and warrants to purchase an aggregate of 1,132,000 shares of Class A common stock. The Redeemable Preferred Stock consists of 400,000 shares, no par value, with a liquidation preference of approximately $142 per share as of September 30, 1995. Dividends accrue at a rate equal to 14% per annum of the liquidation preference and, except as provided below, are payable quarterly in cash from funds legally available therefor. For dividend periods ending before April 1996, the Company may, at its option, add dividends to the liquidation preference in lieu of payment in cash. In fiscal years 1995, 1994 and 1993, the Company elected to add the applicable dividends to the liquidation preference. The Company will continue to add the dividends to the liquidation preference through March 1996. The Redeemable Preferred Stock is exchangeable, at the Company's option, into subordinated debentures of the Company due 2003 (the "Exchange Debentures"). However, the financial covenants governing the Company's revolving credit facility currently limit the Company's ability to incur additional indebtedness, including the exchange of the Redeemable Preferred Stock. The Company is obligated to redeem all of the Redeemable Preferred Stock in March 2003 from funds legally available therefor. The Company's ability to pay cash dividends on the Redeemable Preferred Stock is subject to compliance with the covenants and tests contained in the indentures governing the Senior Notes and in the Company's revolving credit facility. After March 1998, both the Redeemable Preferred Stock and/or the Exchange Debentures are redeemable, at the Company's option, subject to certain redemption premiums. While not affecting net income/loss, dividends and the accretion required over time to amortize the original issue discount associated with the Redeemable Preferred Stock will negatively impact quarterly earnings per share, which impact is currently $.14 per share per quarter. The warrants to purchase the Company's Class A common stock are exercisable at $11 per share, subject to adjustment in certain circumstances, and expire in March 2000. In February 1994, the Company completed a public offering of $190 million principal amount of 9 1/2% Senior Notes. The 9 1/2% Senior Notes mature in 2004, are unsecured and require interest payments semi-annually on January 15 and July 15. After January 1999, the 9 1/2% Senior Notes are redeemable, in whole or in part, at the option of the Company, subject to certain redemption premiums. A portion of the proceeds from the 9 1/2% Senior Notes offering was used to repay the Company's remaining outstanding term debt of approximately $90 million aggregate principal amount and to pay contractual prepayment premiums of approximately $12.3 million. In November 1994, the Company amended and restated its revolving credit facility with a syndicate of banks led by Citicorp USA, Inc., as agent (the "Revolving Credit Facility"), which is used primarily for the working capital and capital expenditure needs of the Company. The Revolving Credit Facility, in the amount of up to $45 million, is secured by the Company's inventories, unsold accounts receivable, and general intangibles, and proceeds thereof, and expires on April 30, 1999. The amount available to the Company under the Revolving Credit Facility currently ranges from 50% to 55%, in the aggregate, of eligible inventories. At December 22, 1995, the Company's eligible inventories supported full access to the $45 million Revolving Credit Facility. Interest is payable monthly at the defined base rate (8.75% at 6 November 30, 1995) plus 1.75% or the defined LIBOR rate (5.75% at November 30, 1995) plus 3.0%. The Company's ability to borrow under the Revolving Credit Facility is subject to compliance with various financial covenants and tests contained therein. As of December 22, 1995, the Company had $19.8 million in borrowings and $9.3 million in letters of credit outstanding under the Revolving Credit Facility. The debt instruments governing the Revolving Credit Facility and the Senior Notes contain cross default and other customary provisions. Financial covenants contained in the Revolving Credit Facility and/or the Senior Notes also include, among others, a limitation on dividends and distributions on capital stock of the Company, a tangible net worth maintenance requirement, a current ratio maintenance requirement, a leverage ratio maintenance requirement, an interest coverage requirement, a cumulative cash flow requirement, a cumulative capital expenditure limitation, a limitation on the incurrence of additional indebtedness unless certain financial tests are satisfied, a limitation on mergers, consolidations and dispositions of assets and a limitation on liens. In the event of a change in control, the Company must offer to purchase all Senior Notes then outstanding at a premium. In June and October 1995, the Company entered into amendments modifying the financial covenants and tests contained in the Revolving Credit Facility. The Company will likely be required to seek additional amendments of the Revolving Credit Facility in the future based on actual operating results or capital spending. In November 1994, the Company also executed agreements to create and fund a five-year accounts receivable securitization facility of up to $65 million (the "Receivables Facility"). Under the Receivables Facility, the Company sells substantially all of its accounts receivable to a wholly-owned special purpose subsidiary, Geneva Steel Funding Corporation ("GSFC"). GSFC transfers the accounts receivable purchased from the Company to a trust in exchange for certain trust certificates representing ownership interests in the assets of the trust. One of the trust certificates is then sold to an institutional investor and the related proceeds are used by GSFC to pay the Company for the receivables purchased by GSFC. During the term of the Receivables Facility, the cash generated by collection of the receivables will be used to purchase additional receivables or make payments to the investor. GSFC will purchase substantially all of the Company's receivables on an ongoing basis. Pursuant to the Receivables Facility, the Company acts as servicer for the accounts receivable. The yield on amounts funded by the institutional investor under the Receivables Facility is the applicable commercial paper rate (5.27% at November 30, 1995) plus 0.5%. In addition, GSFC pays a 0.375% fee on unfunded amounts. Funding availability under the Receivables Facility is based on eligible receivables as defined in the applicable agreements. At December 22, 1995, $29.7 million was available under the Receivables Facility, of which $29.7 million had been funded. The Company is not subject to any financial ratio tests under the Receivables Facility, but the agreements governing the Receivables Facility provide for early termination and payment upon certain events, which include the incurrence of losses or delinquencies on the receivables in excess of certain levels or the bankruptcy or insolvency of the Company. The principal benefit of the Receivables Facility is to reduce the Company's cost of funding related to its working capital needs. Besides these and other financing activities, the Company's major source of liquidity has been cash provided by operating activities. Net cash provided by operating activities was $82.0 million for the year ended September 30, 1995 compared with net cash used for operating activities of $27.5 million and net cash provided by operating activities of $64.4 million for the years ended September 30, 1994 and 1993, respectively. The $82.0 million provided by operating activities during the year ended September 30, 1995 was generated primarily as a result of fundings under the Company's Receivables Facility of $34.7 million, depreciation and amortization of $39.3 million, an increase in accounts payable and accrued liabilities of $15.7 million, net income of $11.6 million and an increase in deferred income taxes of $6.4 million. These sources of cash flow were offset, in part, by a $22.0 million increase in accounts receivable primarily associated with higher shipment levels and a $3.9 million increase in inventories. The Company also increased its cash flow during the period through $16.0 million in sale-leaseback transactions of manufacturing equipment. Capital expenditures were approximately $68 million, $165 million and $83 million for fiscal years 1995, 1994 and 1993, respectively. Capital expenditures for fiscal year 1996 are estimated at $38.0 million, which includes $9.0 7 million in capital spending previously scheduled for fiscal year 1995. Capital projects for fiscal year 1996 consist of a blast furnace reline and various other projects designed to reduce costs and increase product quality and throughput. Substantially all of the equipment for the rolling mill finishing stand improvements will be completed during fiscal year 1996. The Company has, however, elected to defer installation of that equipment until the following fiscal year. Depending on market, operational, liquidity and other factors, the Company may elect to adjust the design, timing and budgeted expenditures of its capital plan. In particular, the Company may elect at a later date to proceed with installation of the finishing stand equipment during the 1996 fiscal year, which would result in an increase in capital spending of as much as $11.0 million. The Company anticipates that it may incur significant start-up and transition costs when the equipment is installed and implemented. The Revolving Credit Facility contains certain limitations on capital expenditures that are dependent, in part, on the Company's actual cash flows. If the Company fails to achieve anticipated operating and cash flow results, such limitations could preclude the Company from making capital expenditures in the amounts that are currently anticipated. The Company is required to make substantial interest and dividend payments on the Senior Notes; its Redeemable Preferred Stock or, in the alternative, Exchange Debentures; and outstanding balances under the Revolving Credit Facility, together with interest on any additional funding that may be necessary for capital expenditures and other working capital needs. Currently, the Company's annual cash interest expense is approximately $36.0 million and its annual preferred stock dividends are approximately $8.1 million. As stated earlier, dividends not paid in cash before April 1996 will be added to the liquidation preference of the Redeemable Preferred Stock. In addition, the Company will incur costs based on the yield applicable to funded amounts under the Receivables Facility. As discussed above, the Company's future operations will be impacted by, among others, pricing, product mix, throughput levels and improvements in production efficiencies. The Company has efforts underway to increase production throughput and efficiency and to shift its product mix to higher-margin plate products. Pricing in future periods is a key variable that remains subject to uncertainty. There can be no assurance that the Company can achieve the anticipated product mix improvements, production efficiencies, and throughput levels or that sufficient demand will exist to support the Company's additional throughput capacity. The Company also has several efforts underway to improve its liquidity position, including as discussed below. The Company is currently pursuing a modification to its Receivables Facility that, if completed, would allow access to approximately $10 to $15 million in additional fundings thereunder. The Company previously entered into an agreement with one of its major customers, whereby the customer makes a production prepayment of up to $10 million upon entry of new orders. The Company is currently negotiating an increase in the maximum amount of production prepayments to $20 million, which at current sales levels would increase production prepayments to approximately $15 million. The Company is also attempting to reduce inventories, including through utilization of just-in-time suppliers or consigned inventories of certain raw materials. There can, however, be no assurance that the above efforts will be successful. The short-term and long-term liquidity of the Company is dependent upon several factors, including the Company's ongoing operations, availability of financing, foreign currency fluctuations, competitive and market forces, capital expenditures and general economic conditions. Moreover, the United States steel market is subject to cyclical fluctuations that may affect the amount of cash internally generated by the Company and the ability of the Company to obtain external financing. Although the Company believes that the anticipated cash from future operations, fundings under the Receivables Facility and borrowings under the Revolving Credit Facility will provide sufficient liquidity for the Company to meet its debt service requirements and to fund ongoing operations, including required capital expenditures, there can be no assurance that these or other possible sources will be adequate. Moreover, because of the Company's current leverage situation, its financial flexibility is limited. Inflation can be expected to have an effect on many of the Company's operating costs and expenses. Due to worldwide competition in the steel industry, the Company may not be able to pass through such increased costs to its customers. 8 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS TO GENEVA STEEL COMPANY: We have audited the accompanying consolidated balance sheets of Geneva Steel Company (a Utah corporation) and subsidiary as of September 30, 1995 and 1994, and the related consolidated statements of operations, stockholders' equity and cash flows for each of the three years in the period ended September 30, 1995. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements 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 statement 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 financial position of Geneva Steel Company and subsidiary as of September 30, 1995 and 1994, and the results of their operations and their cash flows for each of the three years in the period ended September 30, 1995 in conformity with generally accepted accounting principles. /s/ ARTHUR ANDERSEN LLP - ------------------------ Salt Lake City, Utah October 25, 1995 (except with respect to the matter discussed in the last paragraph of Note 7 as to which the date is November 28, 1995) 9 CONSOLIDATED BALANCE SHEETS (Dollars in thousands)
------------------------------------------------------------------------------------------------------------ ASSETS SEPTEMBER 30, 1995 1994 ------------------------------------------------------------------------------------------------------------ Current Assets: Cash and cash equivalents $ 12,808 $ -- Accounts receivable, less allowance for doubtful accounts of $2,012 and $3,113, respectively 35,178 47,907 Inventories 89,909 86,009 Deferred income taxes 6,885 6,407 Prepaid expenses and other 2,661 2,838 --------------------------- Total current assets 147,441 143,161 --------------------------- Property, Plant and Equipment: Land 1,941 1,931 Buildings 16,092 16,092 Machinery and equipment 576,066 521,729 Mineral property and development costs 8,425 8,425 --------------------------- 602,524 548,177 Less accumulated depreciation (132,134) (94,891) --------------------------- Net property, plant and equipment 470,390 453,286 --------------------------- Other Assets 10,966 10,368 --------------------------- $628,797 $ 606,815 --------------------------- ------------------------------------------------------------------------------------------------------------ LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------------------------------------------------------------------------------ Current Liabilities: Accounts payable $ 67,939 $ 57,021 Accrued liabilities 19,045 14,471 Accrued payroll and related taxes 10,667 9,178 Production prepayments 10,000 10,000 Accrued interest payable 4,610 4,580 Accrued pension and profit sharing costs 2,135 1,114 --------------------------- Total current liabilities 114,396 96,364 --------------------------- Long-Term Debt 342,033 357,348 --------------------------- Deferred Income Tax Liabilities 13,263 6,407 --------------------------- Commitments and Contingencies (Note 5) Redeemable Preferred Stock, Series B, no par value; 400,000 shares authorized, issued and outstanding, with a liquidation value of $56,753 and $49,457, respectively 51,031 43,032 --------------------------- Stockholders' Equity: Preferred stock, no par value; 3,600,000 shares authorized for all series, excluding Series B, none issued -- -- Common stock- Class A, no par value; 60,000,000 shares authorized, 14,695,265 and 14,556,431 shares issued, respectively 87,926 87,193 Class B, no par value; 50,000,000 shares authorized, 19,251,348 and 20,639,688 shares issued and outstanding, respectively 10,163 10,896 Warrants to purchase Class A common stock 5,360 5,360 Retained earnings 22,754 19,266 Less 1,379,863 and 1,450,049 Class A common stock treasury shares, respectively, at cost (18,129) (19,051) --------------------------- Total stockholders' equity 108,074 103,664 --------------------------- $628,797 $ 606,815 ---------------------------
The accompanying notes to consolidated financial statements are an integral part of these balance sheets. ---------------------------------------------------------------------------- 10 CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts)
------------------------------------------------------------------------------------------------------------ YEAR ENDED SEPTEMBER 30, 1995 1994 1993 ------------------------------------------------------------------------------------------------------------ Net sales $ 665,699 $ 486,062 $ 465,181 Cost of sales 594,191 470,548 443,458 -------------------------------------------- Gross margin 71,508 15,514 21,723 Selling, general and administrative expenses 23,795 22,305 20,621 -------------------------------------------- Income (loss) from operations 47,713 (6,791) 1,102 -------------------------------------------- Other income (expense): Interest and other income 520 1,583 1,885 Interest expense (30,579) (21,722) (17,096) Other expense (2,386) -- -- -------------------------------------------- (32,445) (20,139) (15,211) -------------------------------------------- Income (loss) before provision (benefit) for income taxes and extraordinary item 15,268 (26,930) (14,109) Provision (benefit) for income taxes 3,664 (10,234) (5,503) -------------------------------------------- Income (loss) before extraordinary item 11,604 (16,696) (8,606) Loss on early extinguishment of debt (net of benefit for income taxes of $4,429) -- (9,534) -- -------------------------------------------- Net income (loss) 11,604 (26,230) (8,606) Less redeemable preferred stock dividends and accretion for original issue discount 7,998 7,046 3,466 -------------------------------------------- Net income (loss) applicable to common shares $ 3,606 $ (33,276) $ (12,072) -------------------------------------------- Income (loss) per common share before extraordinary item $ .24 $ (1.57) $ (.80) Extraordinary item per common share -- (.63) -- -------------------------------------------- Net income (loss) per common share $ .24 $ (2.20) $ (.80) -------------------------------------------- Weighted average common shares outstanding 15,330 15,129 15,059 --------------------------------------------
The accompanying notes to consolidated financial statements are an integral part of these statements. ---------------------------------------------------------------------------- 11 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Dollars in thousands)
-------------------------------------------------------------------------------------------------------------------------------- SHARES ISSUED AMOUNT WARRANTS ------------------- ------------------- TO PURCHASE COMMON COMMON COMMON COMMON COMMON RETAINED TREASURY CLASS A CLASS B CLASS A CLASS B CLASS A EARNINGS STOCK TOTAL -------------------------------------------------------------------------------------------------------------------------------- Balance at September 30, 1992 14,189,871 24,305,288 $ 85,180 $ 12,830 $ -- $ 64,676 $ (20,854) $ 141,832 Capitalization to common stock of S Corporation stockholders distributions for income taxes returned to Company -- -- 9 2 -- -- -- 11 Conversion of Class B common stock into Class A common stock 171,015 (1,710,150) 903 (903) -- -- -- -- Issuance of Class A common stock to employee savings plan -- -- 2 -- -- (62) 704 644 Redeemable preferred stock dividends -- -- -- -- -- (3,099) -- (3,099) Redeemable preferred stock accretion for original issue discount -- -- -- -- -- (367) -- (367) Issuance of 1,132,000 warrants to purchase Class A common stock in connection with issuance of redeemable preferred stock -- -- -- -- 5,360 -- -- 5,360 Net loss -- -- -- -- -- (8,606) -- (8,606) --------------------------------------------------------------------------------------------- Balance at September 30, 1993 14,360,886 22,595,138 86,094 11,929 5,360 52,542 (20,150) 135,775 Exercise of options to purchase Class A common stock -- -- (76) -- -- -- 449 373 Conversion of Class B common stock into Class A common stock 195,545 (1,955,450) 1,033 (1,033) -- -- -- -- Issuance of Class A common stock to employee savings plan -- -- 142 -- -- -- 650 792 Redeemable preferred stock dividends -- -- -- -- -- (6,358) -- (6,358) Redeemable preferred stock accretion for original issue discount -- -- -- -- -- (688) -- (688) Net loss -- -- -- -- -- (26,230) -- (26,230) --------------------------------------------------------------------------------------------- Balance at September 30, 1994 14,556,431 20,639,688 87,193 10,896 5,360 19,266 (19,051) 103,664 Conversion of Class B common stock into Class A common stock 138,834 (1,388,340) 733 (733) -- -- -- -- Issuance of Class A common stock to employee savings plan -- -- -- -- -- (118) 922 804 Redeemable preferred stock dividends -- -- -- -- -- (7,296) -- (7,296) Redeemable preferred stock accretion for original issue discount -- -- -- -- -- (702) -- (702) Net income -- -- -- -- -- 11,604 -- 11,604 --------------------------------------------------------------------------------------------- Balance at September 30, 1995 14,695,265 19,251,348 $ 87,926 $ 10,163 $ 5,360 $ 22,754 $ (18,129) $ 108,074 ---------------------------------------------------------------------------------------------
The accompanying notes to consolidated financial statements are an integral part of these statements. ---------------------------------------------------------------------------- 12 CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands)
------------------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS YEAR ENDED SEPTEMBER 30, 1995 1994 1993 ------------------------------------------------------------------------------------------------------- Cash Flows From Operating Activities: Net income (loss) $ 11,604 $ (26,230) $ (8,606) Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities: Depreciation and amortization 39,308 29,870 23,150 Deferred income tax provision (benefit) 6,378 (15,619) 2,218 (Increase) decrease in current assets - Accounts receivable, net 12,729 (1,650) 4,148 Inventories (3,900) (22,779) (3,958) Income taxes receivable -- -- 15,239 Prepaid expenses and other 177 (1,412) 3,237 Increase (decrease) in current liabilities - Accounts payable 10,918 4,039 19,104 Accrued liabilities 2,231 2,661 4,743 Accrued payroll and related taxes 1,489 600 654 Production prepayments -- -- 4,001 Accrued interest payable 30 3,047 29 Accrued pension and profit sharing costs 1,021 4 435 -------------------------------------------- Net cash provided by (used for) operating activities 81,985 (27,469) 64,394 Cash Flows From Investing Activities: Purchase of property, plant and equipment (68,025) (164,918) (82,534) Proceeds from sale of property, plant and equipment 15,966 -- -- Change in other assets (889) -- -- -------------------------------------------- Net cash used for investing activities $(52,948) $(164,918) $(82,534) --------------------------------------------
The accompanying notes to consolidated financial statements are an integral part of these statements. ---------------------------------------------------------------------------- 13 CONSOLIDATED STATEMENTS OF CASH FLOWS (continued) (Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------- YEAR ENDED SEPTEMBER 30, 1995 1994 1993 --------------------------------------------------------------------------------------------------------------------------- Cash Flows From Financing Activities: Proceeds from issuance of long-term debt $ -- $222,348 $135,000 Payments on long-term debt (15,315) (89,991) (88,191) Proceeds from issuance of redeemable preferred stock, net of offering costs -- -- 32,521 Proceeds from issuance of warrants to purchase Class A common stock, net of offering costs -- -- 5,360 Payments for deferred loan costs and other assets (1,724) (5,513) (6,062) Proceeds from exercise of options to purchase Class A common stock -- 373 -- Issuance of Class A common stock to employee savings plan 804 792 644 Other 6 111 13 ----------------------------------- Net cash provided by (used for) financing activities (16,229) 128,120 79,285 ----------------------------------- Net increase (decrease) in cash and cash equivalents 12,808 (64,267) 61,145 Cash and cash equivalents at beginning of year -- 64,267 3,122 ----------------------------------- Cash and cash equivalents at end of year $ 12,808 $ -- $ 64,267 ----------------------------------- Supplemental disclosures of cash flow information: Cash paid during the year for: Interest (net of amount capitalized) $ 34,357 $ 16,559 $ 14,655 Income taxes 250 512 --
Supplemental schedule of noncash financing activities: For the years ended September 30, 1995, 1994 and 1993, the Company increased the redeemable preferred stock liquidation preference by $7,296, $6,358 and $3,099, respectively, in lieu of paying a cash dividend. In addition, for the same years, redeemable preferred stock was increased by $702, $688 and $367, respectively, for the accretion required over time to amortize the original issue discount on the redeemable preferred stock incurred at the time of issuance. The accompanying notes to consolidated financial statements are an integral part of these statements. ---------------------------------------------------------------------------- 14 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share data) 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of Geneva Steel Company and its wholly-owned subsidiary (collectively, the "Company"). Intercompany balances and transactions have been eliminated in consolidation. NATURE OF OPERATIONS The Company's steel mill manufactures steel slabs and hot-rolled sheet, plate and pipe products for sale to various distributors, steel processors and end-users primarily in the western and central United States. CASH AND CASH EQUIVALENTS For purposes of the consolidated statements of cash flows, the Company considers all highly liquid income-earning securities with an initial maturity of ninety days or less to be cash equivalents. Cash equivalents are stated at cost plus accrued interest, which approximates fair market value. The Company's cash management system utilizes a revolving credit facility with a syndicate of banks and an accounts receivable securitization facility (see notes 2 and 9). INVENTORIES Inventories include costs of material, labor and manufacturing overhead. Inventories are stated at the lower of cost (using a weighted-average method) or market value. The composition of inventories as of September 30, 1995 and 1994 was as follows:
------------------------------------------------------------------ 1995 1994 ------------------------------------------------------------------ Raw materials $27,784 $31,608 Semi-finished and finished goods 54,191 46,302 Operating materials 7,934 8,099 ------------------------- $89,909 $86,009 ------------------------- ------------------------------------------------------------------
Operating materials consist primarily of production molds, platforms for the production molds and furnace lining refractories. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment are stated at cost and depreciated using the straight-line method over their estimated useful lives as follows: Buildings 31.5 years Machinery and Equipment 2-30 years Interest related to the construction or major rebuild of facilities is capitalized and amortized over the estimated life of the related asset. Capitalization of interest ceases when the asset is placed in service. The Company capitalized approximately $5,674, $12,053 and $7,696 of interest during the years ended September 30, 1995, 1994 and 1993, respectively. Maintenance and repairs are charged to expense as incurred and costs of improvements and betterments are capitalized. Upon disposal, related costs and accumulated depreciation are removed from the accounts and resulting gains or losses are reflected in income. Major spare parts for machinery and equipment are capitalized and included in machinery and equipment in the accompanying consolidated financial statements. Major spare parts are depreciated using the straight-line method over the useful lives of the related machinery and equipment. Costs incurred in connection with the construction or major rebuild of facilities are capitalized as construction in progress. No depreciation is recognized on these assets until placed in service. As of September 30, 1995 and 1994, approximately $80,876 and $63,889 respectively, of construction in progress was included in machinery and equipment in the accompanying consolidated financial statements. Mineral property and development costs are depleted using the units of production method based upon estimated recoverable reserves. Accumulated depletion is included in accumulated depreciation in the accompanying consolidated financial statements. 15 OTHER ASSETS Other assets consist primarily of deferred loan costs incurred in connection with obtaining long-term financing. These costs are being amortized on a straight-line basis over the term of the applicable financing agreement. Accumulated amortization totaled $3,023 and $3,659 at September 30, 1995 and 1994, respectively. PRODUCTION PREPAYMENTS The Company has production prepayment terms with a major customer. The prepayment is recorded as a production prepayment liability until the product is shipped, at which time the sale is recorded. As of September 30, 1995 and 1994, production prepayments of $10,000 are included in the accompanying consolidated financial statements. REVENUE RECOGNITION Sales are recognized when the product is shipped to the customer. Sales are reduced by the amount of customer claims. As of September 30, 1995 and 1994, reserves for estimated customer claims of $1,202 and $1,811, respectively, were included in the allowance for doubtful accounts in the accompanying consolidated financial statements. INCOME TAXES The Company recognizes a liability or asset for the deferred tax consequences of temporary differences between the tax basis of assets or liabilities and their reported amounts in the consolidated financial statements that will result in taxable or deductible amounts in future years when the reported amounts of the assets or liabilities are recovered or settled. RECENT ACCOUNTING PRONOUNCEMENTS In March 1995, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 121, "Accounting for the Impairment of Long-Lived Assets." In October 1995, the Financial Accounting Standards Board issued SFAS No. 123, "Accounting for Stock-Based Compensation." The Company is required to adopt SFAS No. 121 and SFAS No. 123 in fiscal year 1997. These new accounting standards are not expected to have a significant impact on the Company's consolidated financial statements when implemented. NET INCOME (LOSS) PER COMMON SHARE Net income (loss) per common share is based upon the weighted average number of common and common equivalent shares outstanding during the periods presented. Common equivalent shares consist of warrants and options to purchase Class A common stock which have a dilutive effect when applying the treasury stock method. Class B common stock is included in the weighted average number of common shares outstanding at one share for every ten shares outstanding as the Class B common stock can be converted into Class A common stock at this same rate. Also, the Class B common stock is entitled to one-tenth of the dividends and other distributions paid to Class A common stockholders. The holders of both classes of common stock are entitled to one vote per share. The net income (loss) for the years ended September 30, 1995, 1994 and 1993 was adjusted for redeemable preferred stock dividends and accretion required over time to amortize the original issue discount on the redeemable preferred stock incurred at the time of issuance. 2 LONG-TERM DEBT Long-term debt as of September 30, 1995 and 1994 consisted of the following: --------------------------------------------------------------------------- 1995 1994 --------------------------------------------------------------------------- [S] [C] [C] Senior term notes issued publicly, interest payable semi-annually at 9.5%, principal due January 15, 2004, unsecured $190,000 $190,000 Senior term notes issued publicly, interest payable semi-annually at 11.125%, principal due March 15, 2001, unsecured 135,000 135,000 Revolving credit facility from a syndicate of banks, interest is payable monthly at the defined base rate (8.75% at September 30, 1995) plus 1.75%, due April 30, 1999 (see discussion below), secured by inventories and unsold accounts receivable 17,033 32,348 --------------------- $342,033 $357,348 --------------------- --------------------------------------------------------------------------- 16 The aggregate amounts of principal maturities of long-term debt as of September 30, 1995 were as follows:
--------------------------------------------------------------------------- YEAR ENDING SEPTEMBER 30, --------------------------------------------------------------------------- 1996 $ -- 1997 -- 1998 -- 1999 17,033 2000 -- Thereafter 325,000 -------- $342,033 -------- ---------------------------------------------------------------------------
In November 1994, the Company amended and restated its revolving credit facility with a syndicate of banks led by Citicorp USA, Inc., as agent (the "Revolving Credit Facility"), which is used primarily for the working capital and capital expenditure needs of the Company. The Revolving Credit Facility, in the amount of up to $45,000, is secured by the Company's inventories, unsold accounts receivable, and general intangibles, and proceeds thereof, and expires on April 30, 1999. The amount available to the Company under the Revolving Credit Facility generally ranges from 50% to 55%, in the aggregate, of eligible inventories. Interest is payable monthly at the defined base rate (8.75% at September 30, 1995) plus 1.75% or the defined LIBOR rate (5.75% at September 30, 1995) plus 3.0%. The Company pays a monthly commitment fee based on an annual rate of .50% of the average unused portion of the borrowing limit under the Revolving Credit Facility. During the years ended September 30, 1995, 1994 and 1993, the Company retired certain term loans and revolving credit facilities. Deferred loan costs applicable to debt retired were expensed by the Company and are included in the accompanying consolidated financial statements. The debt instruments governing the Revolving Credit Facility, the $190,000 9 1/2% Senior Notes (the "9 1/2% Senior Notes") and the $135,000 11 1/8% Senior Notes (the "11 1/8% Senior Notes" and together with the 9 1/2% Senior Notes, the "Senior Notes") contain cross default and other customary provisions. Financial covenants contained in the Revolving Credit Facility and/or the Senior Notes also include, among others, a limitation on dividends and distributions on capital stock of the Company, a tangible net worth maintenance requirement, a leverage ratio maintenance requirement, an interest coverage requirement, a cumulative cash flow requirement, a cumulative capital expenditure limitation, a limitation on the incurrence of additional indebtedness unless certain financial tests are satisfied, a limitation on mergers, consolidations and dispositions of assets and a limitation on liens. Based on such covenants, as of September 30, 1995, $9,837 of the Company's retained earnings balance was restricted from payment of cash dividends. In the event of a change in control, the Company must offer to purchase all Senior Notes then outstanding at a premium. The Company is in compliance with the covenants and tests contained in the Revolving Credit Facility and the Senior Notes. The Company estimates that the aggregate fair market value of its debt and related obligations was approximately $271,308 as of September 30, 1995. These estimates were based on quoted market prices or current rates offered for debt with similar terms and maturities. 3 MAJOR CUSTOMER (DISTRIBUTOR) AND INTERNATIONAL SALES During the years ended September 30, 1995, 1994 and 1993, the Company derived approximately 36%, 42% and 41%, respectively, of its net sales through one customer, who is a distributor to other companies. International sales during the years ended September 30, 1995, 1994 and 1993 did not exceed 10%. 17 4 INCOME TAXES The provision (benefit) for income taxes for the years ended September 30, 1995, 1994 and 1993 consisted of the following:
-------------------------------------------------------------------------------------------------------- 1995 1994 1993 -------------------------------------------------------------------------------------------------------- Current income tax provision (benefit): Federal $ (2,375) $ 1,163 $ (6,201) State (339) (207) (1,520) ------------------------------------------- (2,714) 956 (7,721) ------------------------------------------- Deferred income tax provision (benefit): Federal 4,543 (9,080) 1,424 State 649 (924) 794 Change in valuation allowance 1,186 (1,186) -- ------------------------------------------- 6,378 (11,190) 2,218 ------------------------------------------- Provision (benefit) for income taxes $ 3,664 $(10,234) $ (5,503) -------------------------------------------
The provision (benefit) for income taxes as a percentage of income (loss) for the years ended September 30, 1995, 1994 and 1993 differs from the statutory federal income tax rate due to the following:
-------------------------------------------------------------------------------------------------------- 1995 1994 1993 -------------------------------------------------------------------------------------------------------- Statutory federal income tax rate 35.0% (35.0)% (34.8)% State income taxes, net of federal income taxes 3.3 (3.3) (3.3) Change in valuation allowance (7.8) 4.4 -- Reassessment of deferred income tax liabilities (8.0) -- -- Other 1.5 (4.1) (0.9) ------------------------------------------- Effective income tax rate 24.0% (38.0)% (39.0)% -------------------------------------------
The components of the net deferred income tax assets and liabilities as of September 30, 1995 and 1994 were as follows:
-------------------------------------------------------------------------------------------------------- 1995 1994 -------------------------------------------------------------------------------------------------------- Deferred income tax assets: Net operating loss carryforward $ 16,346 $ 24,986 Inventory costs capitalized 3,949 4,178 Alternative minimum tax credit carryforward 6,748 6,748 Accrued vacation 1,802 1,696 Allowance for doubtful accounts 956 684 General business credits 2,911 2,271 Other 306 343 --------------------------- Total deferred income tax assets 33,018 40,906 Valuation allowance -- (1,186) --------------------------- 33,018 39,720 --------------------------- Deferred income tax liabilities: Accelerated depreciation (34,022) (34,977) Mineral property development costs (2,335) (2,141) Operating materials (3,039) (2,559) Other -- (43) --------------------------- Total deferred income tax liabilities (39,396) (39,720) --------------------------- Net deferred income tax liabilities $ (6,378) $ -- ---------------------------
As of September 30, 1995, the Company had a net operating loss carryforward and an alternative minimum tax credit carryforward for tax reporting purposes of approximately $42,678 and $6,748, respectively. The net operating loss carryforward expires in 2009. ---------------------------------------------------------------------------- 18 5 COMMITMENTS AND CONTINGENCIES CAPITAL PROJECTS The Company has initiated substantial capital expenditures to modernize its steelmaking, casting, rolling and finishing facilities, thereby reducing overall operating costs, broadening the Company's product line, improving product quality and increasing throughput capacity. The Company has spent approximately $68,000 and $165,000 on capital projects during the fiscal years ended September 30, 1995 and 1994, respectively. These expenditures were made primarily in connection with the Company's ongoing modernization efforts. For fiscal year 1996, the Company has identified approximately $38,000 in potential capital expenditures. These expenditures include a blast furnace reline and various other projects designed to reduce costs and increase product quality and throughput. Depending on market, operational, liquidity and other factors, the Company may elect to adjust the design, timing and budgeted expenditures of its capital plan. In particular, the Company may elect at a later date to proceed with installation of the finishing stand equipment during the 1996 fiscal year, which would result in an increase in capital spending of as much as $11,000. LEGAL MATTERS The Company is subject to various legal matters, which it considers normal for its business activities. Management, after consultation with the Company's legal counsel, believes that these matters will not have a material impact on the financial condition of the Company. ENVIRONMENTAL MATTERS Compliance with environmental laws and regulations is a significant factor in the Company's business. The Company is subject to federal, state and local environmental laws and regulations concerning, among other things, air emissions, wastewater discharge, and solid and hazardous waste disposal. The Company believes that it is in compliance in all material respects with all currently applicable environmental regulations. The Company has incurred substantial capital expenditures for environmental control facilities, including the Q-BOP furnaces, the wastewater treatment facility, the benzene mitigation equipment, the coke oven gas desulfurization facility and other projects. The Company has budgeted a total of approximately $1,700 for environmental capital improvements in fiscal years 1996 and 1997. Such improvements include potential upgrades to the Company's coking emission controls. Environmental legislation and regulations have changed rapidly in recent years and it is likely that the Company will be subject to increasingly stringent environmental standards in the future. Although the Company has budgeted for capital expenditures for environmental matters, it is not possible at this time to predict the amount of capital expenditures that may ultimately be required to comply with all environmental laws and regulations. Under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended ("CERCLA"), EPA and the states have authority to impose liability on waste generators, site owners and operators and others regardless of fault or the legality of the original disposal activity. Other environmental laws and regulations may also impose liability on the Company for conditions existing prior to the Company's acquisition of the steel mill. At the time of the Company's acquisition of the steel mill, the Company and USX Corporation ("USX") identified certain hazardous and solid waste sites and other environmental conditions which existed prior to the acquisition. USX has agreed to indemnify the Company (subject to the sharing arrangements described below) for any fines, penalties, costs (including costs of clean-up, required studies and reasonable attorneys' fees), or other liabilities for which the Company becomes liable due to any environmental condition existing on the Company's real property as of the acquisition date that is determined to be in violation of any environmental law, is otherwise required by applicable judicial or administrative action, or is determined to trigger civil liability (the "Pre-existing Environmental Liabilities"). The Company has provided a similar indemnity (but without any similar sharing arrangement) to USX for conditions that may arise after the acquisition. Although the Company has not completed a comprehensive analysis of the extent of the Pre-existing Environmental Liabilities, such liabilities could be material. 19 Under the acquisition agreement between the two parties, the Company and USX agreed to share on an equal basis the first $20,000 of costs incurred by either party to satisfy any government demand for studies, closure, monitoring, or remediation at specified waste sites or facilities or for other claims under CERCLA or the Resource Conservation and Recovery Act. The Company is not obligated to contribute more than $10,000 for the clean-up of wastes generated prior to the acquisition. The Company believes that it has paid the full $10,000 necessary to satisfy its obligations under the cost-sharing arrangement. USX has advised the Company, however, of its position that a portion of the amount paid by the Company may not be properly credited against the Company's obligations. Although the Company believes that USX's position is without merit, there can be no assurance that this matter will be resolved without litigation. The Company believes that resolution of this matter will not likely have a material adverse effect. The Company's ability to obtain indemnification from USX in the future will depend on factors which may be beyond the Company's control and may also be subject to dispute. PURCHASE COMMITMENTS Effective September 27, 1988, the Company entered into an agreement, which was subsequently amended on June 8, 1990, to purchase a minimum of approximately 207 million standard cubic feet of oxygen each month. The contract expires on April 1, 1998. The contract price is adjusted semi-annually based on the change in the Producer Price Index for Industrial Commodities ("PPI"). The Company has agreed to pay all sales and excise taxes levied against the supplier. Effective September 1, 1989, the Company entered into an agreement to purchase interruptible and firm back-up power through January 31, 1999. For interruptible power, the Company pays an energy charge adjusted annually to reflect changes in the supplier's average energy costs and facilities charge, based on 90,000 kilowatts, adjusted annually to reflect changes in the supplier's per megawatt fixed transmission investment. For firm back-up power, the Company pays a monthly facilities charge based on 20,000 kilowatts that remains constant, and demand and energy charges based on actual usage. On November 3, 1993, the Company executed a firm power contract with the same supplier for additional power needs. Under this contract, the Company will pay the same energy price as under the interruptible contract and a power charge based on the supplier's filed industrial tariff. Effective April 1, 1991, the Company entered into a six-year agreement to purchase high-volatile metallurgical-grade coking coal. The Company has commitments to purchase a minimum of 180,000 tons of high-volatile metallurgical-grade coking coal in each remaining contract year. The purchase price is adjusted in each contract year based on the change in the PPI. Effective July 12, 1990, the Company entered into an agreement, which was subsequently amended in December 1992, to purchase 100% of the oxygen, nitrogen and argon produced at a facility located at the Company's steel mill which is owned and operated by an independent party. The contract expires in September 2006 and specifies that the Company will pay a base monthly charge that is adjusted semi-annually each January 1 and July 1 based upon a percentage of the change in the PPI. Effective January 1, 1994, the Company entered into a nine-year agreement to purchase metallurgical coke. The Company has commitments to purchase a minimum of 274,000 tons of coke at a specified price in the second and third contract years. The quantity and price for subsequent years will be as agreed by the parties. Effective September 1, 1994, the Company entered into a five year agreement to purchase taconite pellets. The Company has commitments to purchase 2,400,000 and 2,160,000 tons in the second and third years of the contract, respectively, and 1,890,000 tons in each of the fourth and fifth years of the contract. Prices are adjusted each year based on an index related to the "Cartier Pellets Price". Effective June 6, 1995, the Company entered into an agreement to purchase 800 tons a day of oxygen from a new plant being constructed at the Company's steel mill which will be owned and operated by an independent party. Upon completion of the new oxygen plant, the Company will pay a monthly facility charge which will be adjusted semi-annually each January 1 and July 1 based on an index. The contract continues for fifteen years after the completion of the plant. 20 LEASE OBLIGATIONS The Company leases certain facilities and equipment used in its operations. Management expects that, in the normal course of business, leases that expire will be renewed or replaced by other leases. The aggregate commitments under non-cancelable operating leases at September 30, 1995, were as follows:
---------------------------------------------------------------------------- YEAR ENDING SEPTEMBER 30, ---------------------------------------------------------------------------- 1996 $ 7,943 1997 7,822 1998 7,128 1999 7,079 2000 7,067 Thereafter 35,283 -------- $ 72,322 -------- ----------------------------------------------------------------------------
Total rental expense for non-cancelable operating leases was approximately $3,931 and $1,505 for the years ended September 30, 1995 and 1994, respectively. LETTERS OF CREDIT As of September 30, 1995, the Company had outstanding letters of credit totaling approximately $7,950. 6 REDEEMABLE PREFERRED STOCK In March 1993, the Company issued $40,000 of 14% cumulative redeemable exchangeable preferred stock (the "Redeemable Preferred Stock") and related warrants to purchase an aggregate of 1,132,000 shares of Class A common stock. The Redeemable Preferred Stock consists of 400,000 shares, no par value, with a liquidation preference of approximately $142 per share as of September 30, 1995. Dividends accrue at a rate equal to 14% per annum of the liquidation preference and, except as provided below, are payable quarterly in cash from funds legally available therefor. For dividend periods ending before April 1996, the Company may, at its option, add dividends to the liquidation preference in lieu of payment in cash. During the years ended September 30, 1995 and 1994, the Company increased the liquidation value of the Redeemable Preferred Stock to $56,753 and $49,457, respectively, by adding dividends to the liquidation preference. The Company will continue to add the dividends to the liquidation preference through March 1996. The Redeemable Preferred Stock is exchangeable, at the Company's option, into subordinated debentures of the Company due 2003 (the "Exchange Debentures"). However, the financial covenants governing the Company's Revolving Credit Facility currently limit the Company's ability to incur additional indebtedness. The Company is obligated to redeem all of the Redeemable Preferred Stock in March 2003 from funds legally available therefor. The Company's ability to pay cash dividends on the Redeemable Preferred Stock is subject to compliance with the covenants and tests contained in the indentures governing the Senior Notes and in the Revolving Credit Facility. After March 1998, both the Redeemable Preferred Stock and/or the Exchange Debentures are redeemable, at the Company's option, subject to certain redemption premiums. The warrants to purchase Class A common stock are exercisable at $11 per share, subject to adjustment in certain circumstances, and expire in March 2000. The Company estimates that the aggregate fair market value of its Redeemable Preferred Stock was approximately $42,565 at September 30, 1995. The Company estimates that the aggregate fair market value of its warrants to purchase Class A common stock was approximately $3,113 at September 30, 1995. The Company's estimates for the Redeemable Preferred Stock and warrants to purchase Class A common stock were based on quoted market prices. 21 7 STOCK OPTIONS Effective January 2, 1990, the Company granted options to purchase 330,000 shares of Class A common stock to key employees at an exercise price of $10.91 per share. The stock options became fully exercisable on January 2, 1995. The stock options remain exercisable until the earlier of 90 days after the employee's termination of employment or ten years from the date such stock options were granted. Effective July 20, 1990, the Company's Board of Directors adopted a Key Employee Plan (the "Employee Plan") which was approved by the Company's stockholders in January 1991. The Employee Plan provides that incentive and nonstatutory stock options to purchase Class A common stock and corresponding stock appreciation rights may be granted. The Employee Plan provides for issuance of up to 1,000,000 shares of Class A common stock, with no more than 750,000 shares of Class A common stock cumulatively available upon exercise of incentive stock options. The Employee Plan Committee (the "Committee"), consisting of outside directors, shall determine the time or times when each incentive or nonstatutory stock option vests and becomes exercisable; provided no stock option shall be exercisable within six months of the date of grant (except in the event of death or disability) and no incentive stock option shall be exercisable after the expiration of ten years from the date of grant. The exercise price of incentive stock options to purchase Class A common stock shall be at least the fair market value of the Class A common stock on the date of grant. The exercise price of nonstatutory options to purchase Class A common stock is determined by the Committee. Stock option activity for the years ended September 30, 1995, 1994 and 1993 consisted of the following:
--------------------------------------------------------------------------------------------- NUMBER OF PRICE PER SHARES SHARE RANGE --------------------------------------------------------------------------------------------- Outstanding at September 30, 1992 376,800 $ 7.88-10.91 Granted 155,900 11.75-12.93 Cancelled (1,700) 7.88-11.75 ----------------------------- Outstanding at September 30, 1993 531,000 7.88-12.93 Granted 128,700 15.00-16.50 Exercised (34,200) 10.91 Cancelled (4,100) 7.88-11.75 ----------------------------- Outstanding at September 30, 1994 621,400 7.88-16.50 Granted 131,100 10.88-11.96 Cancelled (1,200) 7.88-11.75 ----------------------------- Outstanding at September 30, 1995 751,300 $ 7.88-16.50 ----------------------------- ---------------------------------------------------------------------------------------------
Options to purchase 356,920, 237,600 and 177,600 shares of Class A common stock were exercisable on September 30, 1995, 1994 and 1993, respectively. Effective November 28, 1995, the Company's Board of Directors repriced all stock options granted in fiscal years 1995, 1994 and 1993 at $7.75 per share (market price at November 28, 1995 was $7.00 per share). 8 EMPLOYEE BENEFIT PLANS UNION SAVINGSAND PENSION PLAN The Company has a savings and pension plan which provides benefits for all eligible employees covered by the collective bargaining agreement. This plan is comprised of two qualified plans: (1) a union employee savings 401(K) plan with a cash or deferred compensation arrangement and (2) a noncontributory defined contribution pension plan. Participants may direct the investment of funds related to their deferred compensation in this plan. Beginning March 1, 1996, the Company will match participants' contribution to the savings plan at 25% up to 4% of their compensation. For the pension plan, the Company contributed 4 1/2% of each participant's compensation 22 to this plan from March 1, 1995 through September 30, 1995. For the period from October 1, 1994 through February 28, 1995 and for the years ended September 30, 1994 and 1993, the Company contributed 4% of each participant's compensation to this plan. Total contributions by the Company for the years ended September 30, 1995, 1994 and 1993 were $3,485, $3,086 and $2,675, respectively. The participants vest in these contributions at 20% for each year of service and become fully vested after five years. MANAGEMENT EMPLOYEE SAVINGS AND PENSION PLAN The Company has a savings and pension plan which provides benefits for all eligible employees not covered by the collective bargaining agreement. This plan is comprised of two qualified plans: (1) a management employee savings 401(k) plan with a cash or deferred compensation arrangement and discretionary matching contributions and (2) a noncontributory defined contribution pension plan. Participants may direct the investment of funds related to their deferred compensation in this plan. The employee savings plan provides for discretionary matching contributions as determined each plan year by the Company's Board of Directors. The Board of Directors elected to match participants' contribution to the employee savings plan up to 4% of their compensation for fiscal years 1995, 1994 and 1993. For the pension plan, the Company contributed 4 1/2% of each participant's compensation to this plan from March 1, 1995 through September 30, 1995. For the period from October 1, 1994 through February 28, 1995 and for the years ended September 30, 1994 and 1993, the Company contributed 4% of each participant's compensation to this plan. During the years ended September 30, 1995, 1994 and 1993, total contributions by the Company were $1,981, $1,780 and $1,567, respectively. The participants vest in the Company's contributions at 20% for each year of service and become fully vested after five years. VOLUNTARY EMPLOYEE BENEFICIARY ASSOCIATION TRUST Effective March 1, 1995, the Company established a voluntary employee beneficiary association trust ("VEBA Trust") to fund post-retirement medical benefits for future retirees covered by the collective bargaining agreement. Company contributions to the VEBATrust are limited to ten cents for each hour of work performed by employees covered by the collective bargaining agreement. In addition, union employees provide a contribution to the VEBA Trust based on a reduction from their performance dividend plan payment. No benefits will be paid from the VEBA Trust prior to March 31, 1998. Eligibility requirements and related matters will be determined at a later date. PROFIT SHARING AND BONUS PROGRAMS The Company has a profit sharing program for full-time union eligible employees. Participants receive payments based upon operating income reduced by an amount equal to a portion of the Company's capital expenditures. No profit sharing and bonus payments were accrued in the years ended September 30, 1995, 1994 and 1993. During the year ended September 30, 1993, the Company implemented a performance dividend plan designed to reward employees for increased shipments. As shipments increase above an annualized rate of 1.5 million tons, compensation under this plan increases. Payments made under the performance dividend plan are deducted from any profit sharing obligations to the extent such obligations exceed the performance plan payments in any given fiscal year. During the years ended September 30, 1995, 1994 and 1993, performance dividend plan expenses were $6,391, $1,885 and $484, respectively. SUPPLEMENTAL EXECUTIVE PLANS The Company maintains insurance and retirement agreements with certain of the management employees and executive officers. Pursuant to the insurance agreements, the Company pays the annual premiums and receives certain policy proceeds upon the death of the retired management employee or executive officer. Pursuant to the retirement agreements, the Company provides for the payment of supplemental benefits to certain management employees and executive officers upon retirement. 9 ACCOUNTS RECEIVABLE SECURITIZATION FACILITY In November 1994, the Company executed agreements to create and fund a five year accounts receivable securitization facility of up to $65,000 (the "Receivables Facility"). Under the Receivables Facility the Company sells substantially all of its accounts receivable to a wholly-owned special purpose subsidiary, Geneva Steel Funding Corporation ("GSFC"). GSFC 23 transfers the accounts receivable purchased from the Company to a trust in exchange for certain trust certificates representing ownership interests in the assets of the trust. One of the trust certificates is then sold to an institutional investor and the related proceeds are used by GSFC to pay the Company for the receivables purchased by GSFC. During the term of the Receivables Facility, the cash generated by collection of the receivables will be used to purchase additional receivables or make payments to the investor. GSFC will purchase substantially all of the Company's receivables on an ongoing basis. Pursuant to the Receivables Facility, the Company acts as servicer for the accounts receivable. The yield on amounts funded by the institutional investor under the Receivables Facility is the applicable commercial paper rate (5.26% at September 30, 1995) plus 0.5%. In addition, GSFC pays a 0.375% fee on unfunded amounts. Funding availability under the Receivables Facility is based on eligible receivables as defined in the applicable agreements. The Company is not subject to any financial ratio tests under the Receivables Facility, but the agreements governing the Receivables Facility provide for early termination and payment upon certain events, which include the incurrence of losses or delinquencies on the receivables in excess of certain levels or the bankruptcy or insolvency of the Company. The trust certificates received by GSFC from the trust are solely the asset of GSFC. In the event of a liquidation of GSFC, such creditors would be entitled to satisfy their claims from GSFC based on their fixed payment allocation percentage representing their pro rata share of funding to total trust assets. 10 SUBSEQUENT EVENT In October 1995, the Company and Inland Materials Distribution Group ("IMDG"), a wholly-owned subsidiary of Inland Steel Industries, announced a tentative agreement to form a joint venture that will own and operate a wide coiled plate processing facility in the Chicago area. The facility will be designed to process wide coiled plate into flat plate up to one inch in thickness and up to 96 inches (and potentially 126 inches) in width. The facility will be capable of producing up to 500,000 tons of discrete plate annually and is currently scheduled for completion during the first half of the 1997 calendar year. Flat plate processed on the line will be sold by the Company directly to customers and to IMDG for distribution through its steel service center network. 11 SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) A summary of quarterly financial information for the years ended September 30, 1995 and 1994 is as follows:
------------------------------------------------------------------------------------------------------------------------ 1995 QUARTERS FIRST SECOND THIRD FOURTH ------------------------------------------------------------------------------------------------------------------------ Net sales $164,424 $157,213 $175,196 $168,866 Gross margin 15,944 15,812 23,059 16,693 Net income 1,008 1,131 5,696 3,769 Net income (loss) applicable to common shares (898) (837) 3,667 1,674 Net income (loss) per common share (.06) (.06) .24 .11 ------------------------------------------------------------------------------------------------------------------------ 1994 QUARTERS FIRST SECOND THIRD FOURTH ------------------------------------------------------------------------------------------------------------------------ Net sales $127,099 $121,115 $113,195 $124,653 Gross margin 11,473 1,899 (855) 2,997 Income (loss) before extraordinary item (a) 1,710 (4,680) (7,074) (6,652) Net income (loss) 1,710 (13,938) (7,074) (6,928) Net income (loss) applicable to common shares 31 (15,671) (8,862) (8,774) Net income (loss) per common share before extraordinary item .002 (.43) (.59) (.56) Net income (loss) per common share .002 (1.04) (.59) (.58)
(a) The extraordinary item is a loss on early extinguishment of debt in the second quarter of fiscal year 1994 with an adjustment in the fourth quarter of fiscal year 1994. ---------------------------------------------------------------------------- EX-23 6 CONSENT OF ACCOUNTANTS 1 EXHIBIT 23 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation of our report incorporated by reference in this Form 10-K, into the Company's previously filed Registration Statement on Form S-8, File No. 33-40867 and the Company's previously filed Registration Statement on Form S-3, File No. 33-64548. ARTHUR ANDERSEN LLP Salt Lake City, Utah December 27, 1995 EX-27 7 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE REGISTRANTS CONSOLIDATED BALANCE SHEET AND CONSOLIDATED STATEMENT OF OPERATIONS AS OF AND FOR THE YEAR ENDED SEPTEMBER 30, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH CONSOLIDATED FINANCIAL STATEMENTS, INCLUDING THE NOTES THERETO. 1 U.S. DOLLARS YEAR SEP-30-1995 OCT-01-1994 SEP-30-1995 1 12,808,000 0 35,178,000 2,012,000 89,909,000 147,441,000 602,524,000 132,134,000 628,797,000 114,396,000 342,033,000 51,031,000 0 79,960,000 28,114,000 628,797,000 665,699,000 665,699,000 594,191,000 594,191,000 23,795,000 5,138,000 32,445,000 15,268,000 3,664,000 11,604,000 0 0 0 11,604,000 .24 .24
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