-----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, FEqp8qHrBwJJ3z5NDm9OPGBPayloDOVqm9Hn/iTxmuWurlTY2BhD/yq91utxAajr 1gRt/PHLsQFaOnyInj6VIA== 0000912057-97-027233.txt : 19970813 0000912057-97-027233.hdr.sgml : 19970813 ACCESSION NUMBER: 0000912057-97-027233 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970812 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: COASTCAST CORP CENTRAL INDEX KEY: 0000914479 STANDARD INDUSTRIAL CLASSIFICATION: NONFERROUS FOUNDRIES (CASTINGS) [3360] IRS NUMBER: 953454926 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-12676 FILM NUMBER: 97656828 BUSINESS ADDRESS: STREET 1: 3025 E VICTORIA ST CITY: RANCHO DOMINGUEZ STATE: CA ZIP: 90221 BUSINESS PHONE: 3106380595 MAIL ADDRESS: STREET 1: 3025 EAST VICTORIA ST CITY: RANCHO DOMINIQUEZ STATE: CA ZIP: 90221 10-Q 1 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended June 30, 1997 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the transition period from to --------------------------------- Commission file number 1-12676 COASTCAST CORPORATION (Exact name of registrant as specified in its charter) CALIFORNIA 95-3454926 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 3025 EAST VICTORIA STREET, RANCHO DOMINGUEZ, CA 90221 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (310)638-0595 Not Applicable (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- At August 11, 1997 there were outstanding 8,794,334 shares of common stock, no par value. 1 COASTCAST CORPORATION INDEX
Page Number ------ PART I. FINANCIAL INFORMATION: Item 1. Financial Statements Condensed Consolidated Balance Sheets as of June 30, 1997 (Unaudited) and December 31, 1996 3 Condensed Consolidated Statements of Income Three Months Ended June 30, 1997 and 1996 (Unaudited) 4 Six Months Ended June 30, 1997 and 1996 (Unaudited) 5 Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 1997 and 1996 (Unaudited) 6 Notes to Condensed Consolidated Financial Statements (Unaudited) 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9 PART II. OTHER INFORMATION: Item 1. Legal Proceedings 11 Item 4. Submission of Matter to a Vote of Securities Holders 11 Item 5. Other Information 11 Item 6. Exhibits and Reports on Form 8-K 12
2 COASTCAST CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED) JUNE 30, DECEMBER 31, 1997 1996 ------------- -------------- A S S E T S Current assets: Cash and cash equivalents $ 13,913,000 $ 14,060,000 Trade accounts receivable, net of allowance for doubtful accounts of $400,000 at June 30, 1997 and December 31, 1996 17,921,000 11,783,000 Inventories (Note 2) 26,703,000 21,660,000 Prepaid expenses and other current assets 1,372,000 4,800,000 Deferred income taxes 864,000 864,000 Net current assets of discontinued operations (Note 3) 838,000 808,000 ------------- ------------- Total current assets 61,611,000 53,975,000 Property, plant and equipment, net 19,831,000 20,171,000 Other assets 2,016,000 1,954,000 ------------- ------------- $ 83,458,000 $ 76,100,000 ------------- ------------- ------------- ------------- LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 5,690,000 $ 5,043,000 Accrued liabilities 5,860,000 4,132,000 ------------- ------------- Total current liabilities 11,550,000 9,175,000 Deferred compensation 1,067,000 438,000 ------------- ------------- Total liabilities 12,617,000 9,613,000 ------------- ------------- Commitments and contingencies Shareholders' Equity: Preferred stock, no par value, 2,000,000 shares authorized; none issued and outstanding Common stock, no par value, 20,000,000 shares authorized; 8,794,334 and 8,777,890 shares issued and outstanding as of June 30, 1997 and December 31, 1996 respectively 38,545,000 38,205,000 Retained Earnings 32,296,000 28,282,000 ------------- ------------- Total shareholders' equity 70,841,000 66,487,000 ------------- ------------- $ 83,458,000 $ 76,100,000 ------------- ------------- ------------- -------------
See accompanying notes to condensed consolidated financial statements. 3 COASTCAST CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
FOR THE THREE MONTHS ENDED JUNE 30, ----------------------------- 1997 1996 ------------- ------------- Sales $ 39,938,000 $ 42,508,000 Cost of sales 31,956,000 30,933,000 ------------- ------------- Gross profit 7,982,000 11,575,000 Selling, general and administrative expenses 3,278,000 3,188,000 ------------- ------------- Income from operations 4,704,000 8,387,000 Other income, net 203,000 240,000 ------------- ------------- Income before income taxes 4,907,000 8,627,000 Provision for income taxes 2,091,000 3,623,000 ------------- ------------- Net income $ 2,816,000 $ 5,004,000 ------------- ------------- ------------- ------------- NET INCOME PER SHARE Net income (Note 4) $ 0.32 $ 0.55 ------------- ------------- ------------- ------------- WEIGHTED AVERAGE SHARES OUTSTANDING 8,882,380 9,174,891 ------------- ------------- ------------- -------------
See accompanying notes to condensed consolidated financial statements. 4 COASTCAST CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, ----------------------------- 1997 1996 ------------- ------------- Sales $ 68,939,000 $ 71,852,000 Cost of sales 56,932,000 52,496,000 ------------- ------------- Gross profit 12,007,000 19,356,000 Selling, general and administrative expenses 5,462,000 5,374,000 ------------- ------------- Income from operations 6,545,000 13,982,000 Other income, net 375,000 608,000 ------------- ------------- Income before income taxes 6,920,000 14,590,000 Provision for income taxes 2,906,000 6,068,000 ------------- ------------- Net income $ 4,014,000 $ 8,522,000 ------------- ------------- ------------- ------------- NET INCOME PER SHARE Net income (Note 4) $ 0.45 $ 0.94 ------------- ------------- ------------- ------------- WEIGHTED AVERAGE SHARES OUTSTANDING 8,919,098 9,052,352 ------------- ------------- ------------- -------------
See accompanying notes to condensed consolidated financial statements. 5 COASTCAST CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, ----------------------------- 1997 1996 ------------- ------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $ 4,014,000 $ 8,522,000 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 1,411,000 1,113,000 Loss on disposal of machinery and equipment 45,000 55,000 Change in accrual for disposal of aerospace business (52,000) (115,000) Deferred compensation 629,000 -- Deferred income taxes 22,000 50,000 Changes in operating assets and liabilities: Trade accounts receivable (6,138,000) (11,450,000) Inventories (5,043,000) (8,620,000) Prepaid expenses and other current assets 3,428,000 210,000 Income taxes payable 603,000 1,783,000 Accounts payable and accrued liabilities 1,772,000 3,557,000 ------------- ------------- Net cash provided by (used in) operating activities 691,000 (4,895,000) ------------- ------------- CASH FLOWS FROM INVESTING ACTIVITIES Net sales of short-term investments -- 10,088,000 Purchase of property, plant and equipment (1,124,000) (4,775,000) Proceeds from disposal of machinery and equipment 8,000 -- Other assets (62,000) (55,000) ------------- ------------- Net cash (used in) provided by investing activities (1,178,000) 5,258,000 ------------- ------------- CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issuance of common stock upon exercise of options, including related tax benefit 206,000 806,000 Non-employee director stock options 134,000 135,000 Repurchase of common stock -- (7,000) ------------- ------------- Net cash provided by financing activities 340,000 934,000 ------------- ------------- NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (147,000) 1,297,000 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 14,060,000 9,237,000 ------------- ------------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 13,913,000 $ 10,534,000 ------------- ------------- ------------- ------------- See accompanying notes to condensed consolidated financial statements.
6 COASTCAST CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. BASIS OF PRESENTATION The condensed consolidated balance sheet as of June 30, 1997, the related condensed consolidated statements of income for the three and six months and cash flows for the six months ended June 30, 1997 and 1996 have been prepared by Coastcast Corporation (the "Company") without audit. In the opinion of management, all adjustments (consisting only of normal recurring accruals) have been made which are necessary to present fairly the financial position, results of operations and cash flows of the Company at June 30, 1997 and for the periods then ended. Although the Company believes that the disclosure in the condensed consolidated financial statements is adequate for a fair presentation thereof, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. The December 31, 1996 audited statements were included in the Company's annual report on Form 10-K under the Securities Exchange Act of 1934 for the year ended December 31, 1996. These condensed consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto contained in that annual report. The results of operations for the periods ended June 30, 1997 are not necessarily indicative of the results for the full year. 2. INVENTORIES Inventories consisted of the following:
June 30, December 31, 1997 1996 ----------- ----------- Raw materials and supplies $13,048,000 $10,448,000 Tooling 298,000 294,000 Work-in-process 12,797,000 9,792,000 Finished goods 560,000 1,126,000 ----------- ----------- $26,703,000 $21,660,000 ----------- ----------- ----------- -----------
3. DISCONTINUED OPERATIONS The plan adopted in October 1993 to phase out the aerospace business was essentially completed by June 1994. The net current assets of discontinued operations as of June 30, 1997 were $838,000, principally 7 consisting of the estimated net realizable value of the Wallingford, Connecticut property including the related deferred tax asset. In connection with the offering for sale of the Wallingford, Connecticut property, the Company had an environmental assessment performed, which identified the presence of certain chemicals associated with chlorinated solvents in groundwater beneath a portion of the property. The Company is currently conducting further investigation to determine the source and extent of the contamination. The Company has recorded the net assets associated with its discontinued operations at the estimated net realizable value. However, since the precise source and extent of the contamination has not been identified at this time, no assurances can be given that the proceeds to be realized upon the sale of this property less the cost of remediation will equal or exceed the estimated net realizable value. 4. EARNINGS PER SHARE Net income per share is based on the weighted average number of shares of common stock outstanding and dilutive common equivalent shares from stock options, using the treasury stock method. In February, 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 128, EARNINGS PER SHARE, which the Company will adopt in its annual financial statements for the year ended December 31, 1997. The Statement replaces the presentation of primary EPS with a presentation of basic EPS, which excludes dilution and is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding for the period. The Statement also requires the dual presentation of basic and diluted EPS on the face of the income statement for all entities with complex capital structures and requires a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. Diluted EPS is computed similarly to fully diluted EPS pursuant to Accounting Principles Board Opinion No. 15. The Company has determined that the effect of adopting SFAS No. 128 would not have a material effect on the Company's financial statements for the three months and six months ended June 30, 1997. 8 COASTCAST CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Sales decreased 6.1% and 4.2% to $39.9 million and $68.9 million for the three months and six months ended June 30, 1997, respectively, from $42.5 million and $71.9 million for the three months and six months ended June 30, 1996, respectively. The decrease was primarily due to a change in the revenue mix from a preponderance of metal woods to irons and putters, which have lower unit sales prices than metal wood clubheads. Gross profit decreased 31.0% and 38.0% to $8.0 million and $12.0 million for the three months and six months ended June 30, 1997, respectively, from $11.6 million and $19.4 million for the three months and six months ended June 30, 1996. Gross profit margins decreased to 20.0% and 17.4% for the three months and six months ended June 30, 1997 respectively, from 27.2% and 26.9% for the comparable prior year periods, due principally to the shift in production to irons and putters. DISCONTINUED OPERATIONS The plan adopted in October 1993 to phase out the aerospace business was essentially completed by June 1994. The net current assets of discontinued operations as of June 30, 1997 were $838,000, principally consisting of the estimated net realizable value of the Wallingford, Connecticut property including the related deferred tax asset. In connection with the offering for sale of the Wallingford, Connecticut property, the Company had an environmental assessment performed, which identified the presence of certain chemicals associated with chlorinated solvents in groundwater beneath a portion of the property. The Company is currently conducting further investigation to determine the source and extent of the contamination. The Company has recorded the net assets associated with its discontinued operations at the estimated net realizable value. However, since the precise source and extent of the contamination has not been identified at this time, no assurances can be given that the proceeds to be realized upon the sale of this property less the cost of remediation will equal or exceed the estimated net realizable value. LIQUIDITY AND CAPITAL RESOURCES The Company's cash and cash equivalents position at June 30, 1997 was $13.9 million compared to $14.1 million on December 31, 1996, a decrease of $0.2 million. Net cash provided by operating activities was $0.7 million for the six months ended June 30, 1997. The net cash provided by operating activities consisted of net income of $4.0 million, a decrease in prepaid expenses and other current assets of $3.4 million, an increase in accounts payable and accrued liabilities of $1.8 million, depreciation and amortization of $1.4 million, and an increase in deferred compensation of $0.6 million, partially offset by an increase in trade accounts receivable of $6.1 million and an increase in inventories of $5.0 million. Net cash used in investing activities consisted mainly of $1.1 million of net capital expenditures for the six 9 months ended June 30, 1997. Net cash provided by financing activities of $0.3 million consisted mainly of proceeds from exercise of stock options. The Company has no long term debt. The Company believes that its current cash position, working capital generated from future operations and the ability to borrow should be adequate to meet its financing requirements for the foreseeable future. 10 COASTCAST CORPORATION PART II. OTHER INFORMATION Item 1. Legal Proceedings Certain government agencies have asserted claims that for a period of time the Company did not comply with all applicable regulations regarding certain materials they regard as hazardous waste. The Company does not admit to any wrongdoing, but has agreed in principle to a settlement. Management believes that the settlement will not have a material adverse impact on the Company's financial condition or results of operations. Item 4. Submission of Matter to a Vote of Securities Holders The Company held its annual meeting of shareholders on June 11, 1997. The following matters were voted and approved by the shareholders. 1. Election of Directors to hold office until the 1997 Annual Meeting:
Votes For Votes Withheld --------- -------------- Hans H. Buehler 7,734,891 68,776 George L. Graziadio 7,725,713 77,854 Edwin A. Levy 7,731,241 72,426 Vernon R. Loucks, Jr. 7,730,841 72,826 Lee E. Mikles 7,725,337 78,330 Richard W. Mora 7,727,491 76,176 Paul A. Novelly 7,731,241 72,426
2. Ratification of Deloitte & Touche LLP as the Company's independent auditors: holders of 7,759,617 shares voted for such ratification, holders of 32,460 shares voted against such ratification and holders of 11,540 shares abstained from voting on such ratification. Item 5. Other Information The following business risks, as disclosed in Part II, Item 5 "Market for Registrant's Common Equity and Related Stockholder Matters" on Form 10-K for the fiscal year ended December 31, 1996, are hereby incorporated by reference as though set forth fully herein: Customer concentration Competition New products New materials and processes Manufacturing cost variations Dependence on polishing and finishing plant in Mexico 11 Hazardous waste Dependence on discretionary consumer spending Seasonality; fluctuations in operating results Reliance on key personnel Shares eligible for future sale Fluctuations in Callaway Golf Company shares. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits: 3.1.1 Articles of Incorporation of the Company, as amended (1) 3.1.2 Certificate of Amendment of Articles of Incorporation filed with the California Secretary of State on December 6, 1993 (1) 3.2 Bylaws of the Company (1) (1) Incorporated by reference to the exhibits to the Registration Statement on Form S-1 (Registration No. 33-71294) filed on November 17, 1993, Amendment No. 2 filed on December 1, 1993, and Amendment No. 3 filed on December 9, 1993 10.1 Amended and Restated Coastcast Corporation 401(k) Retirement Plan, effective January 1, 1997 11.1 Statement re: computation of per share earnings 99.1 Pages 10-12 of Registrant's Annual Report on Form 10-K for the year ended December 31, 1996 (incorporated by reference to such Form 10-K filed with the Commission) (b) Reports on Form 8-K: None 12 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. COASTCAST CORPORATION August 11, 1997 By /s/ Robert C. Bruning - -------------------- ------------------------ Dated Robert C. Bruning Chief Financial Officer (Duly Authorized and Principal Financial Officer) 13 EX-10.1 2 EXHIBIT 10.1 ADOPTION AGREEMENT FOR REGIS RETIREMENT PLAN SERVICES, INC. NON-STANDARDIZED 401(k) PROFIT SHARING PLAN AND TRUST The undersigned Employer adopts the Regis Retirement Plan Services, Inc. Non-Standardized 401(k) Profit Sharing Plan for those Employees who shall qualify as Participants hereunder, to be known as the A1 COASTCAST CORPORATION 401(k) RETIREMENT PLAN It shall be effective as of the date specified below. The Employer hereby selects the following Plan specifications: CAUTION: The failure to properly fill out this Adoption Agreement may result in disqualification of the Plan. EMPLOYER INFORMATION B1 Name of Employer COASTCAST CORPORATION - B2 Address 3025 EAST VICTORIA STREET RANCHO DOMINGUEZ CA 90221 Telephone (310) 532-2060 B3 Employer Identification Number 95 - 345926 B4 Date Business Commenced 1/28/80 B5 TYPE OF ENTITY a. / / S Corporation b. / / Professional Service Corporation c. /X/ Corporation d. / / Sole Proprietorship e. / / Partnership f. / / Other _ AND, is the Employer is a member of . . . g. a controlled group? / / Yes /X/ No h. an affiliated service group? / / Yes /X/ No Copyright 1992-N Regis Retirement Plan Services, Inc. 1 B6 NAME(S) OF TRUSTEE(S) a. FLEET NATIONAL BANK b. _ c. _ B7 TRUSTEES' ADDRESS a. / / Use Employer Address b. /X/ ONE FEDERAL STREET BOSTON, MA 02211 B8 LOCATION OF EMPLOYER'S PRINCIPAL OFFICE: a. /X/ State b. / / Commonwealth of c. CALIFORNIA and this Plan and Trust shall be governed under the same. B9 EMPLOYER FISCAL YEAR means the 12 consecutive month period: Commencing on a. JANUARY 1 (e.g., January 1st) and ending on b. DECEMBER 31 2 PLAN INFORMATION C1 EFFECTIVE DATE This Adoption Agreement of the Regis Retirement Plan Services, Inc. Non-Standardized 401(k) Profit Sharing Plan and Trust shall: a. / / establish a new Plan and Trust effective as of _ (hereinafter called the "Effective Date"). b. /X/ constitute an amendment and restatement in its entirety of a previously established qualified Plan and Trust of the Employer which was effective 1/1/96 (hereinafter called the "Effective Date"). Except as specifically provided in the Plan, the effective date of this amendment and restatement is 4/1/97(For TRA '86 amendments, enter the first day of the first Plan Year beginning in 1989). C2 PLAN YEAR means the 12 consecutive month period: Commencing on a. JANUARY 1, and ending on b. DECEMBER 31. IS THERE A SHORT PLAN YEAR? c. /X/ No d. / / Yes, beginning _ and ending . C3 ANNIVERSARY DATE of Plan (Annual Valuation Date) a. DECEMBER C4 PLAN NUMBER assigned by the Employer (select one) a. / /001 b. /X/002 c. / /003 d. / /Other_ 3 C5 NAME OF PLAN ADMINISTRATOR (Document provides for the Employer to appoint an Administrator. If none is named, the Employer will become the Administrator.) a. /X/ Employer (Use Employer Address) b. / / Name _ Address _ _, _ _ Telephone _ Administrator's I.D. Number - C6 PLAN'S AGENT FOR SERVICE OF LEGAL PROCESS a. /X/ Employer (Use Employer Address) b. / / Name_ Address _, _ _ 4 ELIGIBILITY, VESTING AND RETIREMENT AGE Dl ELIGIBLE EMPLOYEES (Plan Section 1.15) shall mean: a. / / all Employees who have satisfied the eligibility requirements. b. /X/ all Employees who have satisfied the eligibility requirements except those checked below: 1. / / Employees paid by commissions only. 2. / / Employees hourly paid. 3. / / Employees paid by salary. 4. /X/ Employees whose employment is governed by a collective bargaining agreement between the Employer and "employee representatives" under which retirement benefits were the subject of good faith bargaining. For this purpose, the term "employee representatives" does not include any organization more than half of whose members are employees who are owners, officers, or executives of the Employer. 5. / / Highly Compensated Employees. 6. /X/ Employees who are non-resident aliens who received no earned income (within the meaning of Code Section 911 (d)(2)) from the Employer which constitutes income from sources within the United States (within the meaning of Code Section 861 (a)(3)). 7. / / Other_ NOTE: For purposes of this section, the term Employee shall include all Employees of this Employer and any leased employees deemed to be Employees under Code Section 414 (n) or 414 (o). D2 EMPLOYEES OF AFFILIATED EMPLOYERS (Plan Section 1.16) Employees of Affiliated Employers: a. /X/ will not or N/A b. / / will be treated as Employees of the Employer adopting the Plan. NOTE: If D2b is elected, each Affiliated Employer should execute this Adoption Agreement as a Participating Employer. 5 D3 HOURS OF SERVICE (Plan Section 1.31) will be determined on the basis of the method selected below. Only one method may be selected. The method selected will be applied to all Employees covered under the Plan. a. /X/ On the basis of actual hours for which an Employee is paid or entitled to payment. b. / / On the basis of days worked. An Employee will be credited with ten (10) Hours of Service if under the Plan such Employee would be credited with at least one (1) Hour of Service during the day. c. / / On the basis of weeks worked. An Employee will be credited forty-five (45) Hours of Service if under the Plan such Employee would be credited with at least one (1) Hour of Service during the week. d. / / On the basis of semi-monthly payroll periods. An Employee will be credited with ninety-five (95) Hours of Service if under the Plan such Employee would be credited with at least one (1) Hour of Service during the semi-monthly payroll period. e. / / On the basis of months worked. An Employee will be credited with one hundred ninety (190) Hours of Service if under the Plan such Employee would be credited with at least one (1) Hour of Service during the month. D4 YEARS OF SERVICE a. / / 1,000 Hour Method b. /X/ Elapsed Time Method 6 D5 CONDITIONS OF ELIGIBILITY (Plan Section 3.1) (Check either a OR b and c, and if applicable, d) Any Eligible Employee will be eligible to participate in the Plan if such Eligible Employee has satisfied the service and age requirements, if any, specified below: a. / / NO AGE OR SERVICE REQUIRED. b. /X/ SERVICE REQUIREMENT. (may not exceed 1 year) 1. / / None 2. /X/ 1/2 Year of Service 3. / / 1 Year of Service 4. / / Other NOTE: If the Year(s) of Service selected is or includes a fractional year, an Employee will not be required to complete any specified number of Hours of Service to receive credit for such fractional year. If expressed in Months of Service, an Employee will not be required to complete any specified number of Hours of Service in a particular month. c. /X/ AGE REQUIREMENT (may not exceed 21 ) 1. / / N/A - No Age Requirement. 2. / / 20 1/2 3. /X/ 21 4. / / Other_ d. / / FOR NEW PLANS ONLY - Regardless of any of the above age or service requirements, any Eligible Employee who was employed on the Effective Date of the Plan shall be eligible to participate hereunder and shall enter the Plan as of such date. 7 D6 EFFECTIVE DATE OF PARTICIPATION (Plan Section 3.2) An Eligible Employee shall become a Participant as of: a. / / the first day of the Plan Year in which he met the requirements. b. / / the first day of the Plan Year in which he met the requirements, if he met the requirements in the first 6 months of the Plan Year, or as of the first day of the next succeeding Plan Year if he met the requirements in the last 6 months of the Plan Year. c. / / the earlier of the first day of the seventh month or the first day of the Plan Year coinciding with or next following the date on which he met the requirements. d. / / the first day of the Plan Year next following the date on which he met the requirements. (Eligibility must be 1/2 Year of Service or less and age 20 1/2 or less.) e. / / the first day of the month coinciding with or next following the date on which he met the requirements. f. /X/ Other: THE FIRST DAY OF CALENDAR QUARTER COINCIDING WITH OR NEXT FOLLOWING MEETING THE ELIGIBILITY REQUIREMENTS, provided that an Employee who has satisfied the maximum age and service requirements that are permissible in Section D5 above and who is otherwise entitled to participate, shall commence participation no later than the earlier of (a) 6 months after such requirements are satisfied, or (b) the first day of the first Plan Year after such requirements are satisfied, unless the Employee separates from service before such participation date. 8 D7 VESTING OF PARTICIPANT'S INTEREST (Plan Section 6.4(b)) The vesting schedule, based on number of Years of Service, shall be as follows: a. / / 100% upon entering Plan. b. / / 0-2 years 0% c. / / 0-4 years 0% 3 years 100% 5 years 100% d. / / 0-1 year 0% e. / / 1 year 25% 2 years 20% 2 years 50% 3 years 40% 3 years 75% 4 years 60% 4 years 100% 5 years 80% 6 years 100% f. /X/ 1 year 20% g. / / 0-2 years 0% 2 years 40% 3 years 20% 3 years 60% 4 years 40% 4 years 80% 5 years 60% 5 years 100% 6 years 80% 7 years 100% h. / / Other - Must be at least as liberal as either c or g above. Years of Service Percentage - - - - - - - - - - - - 9 D8 FOR AMENDED PLANS (Plan Section 6.4(f)) If the vesting schedule has been amended to a less favorable schedule, enter the pre-amended schedule below: a. /X/ Vesting schedule has not been amended or amended schedule is more favorable in all years. b. / / Years of Service Percentage - - - - - - - - - - - - 10 D9 TOP HEAVY VESTING (Plan Section 6.4(c)) If this Plan becomes a Top Heavy Plan, the following vesting schedule, based on number of Years of Service, for such Plan Year and each succeeding Plan Year, whether or not the Plan is a Top Heavy Plan, shall apply and shall be treated as a Plan amendment pursuant to this Plan. Once effective, this schedule shall also apply to any contributions made prior to the effective date of Code Section 416 and/or before the Plan became a Top Heavy Plan. a. /X/ N/A (D7a, b, d, e or f was selected) b. / / 0-1 year 0% c. / / 0-2 years 0% 2 years 20% 3 years 100% 3 years 40% 4 years 60% 5 years 80% 6 years 100% NOTE: This section does not apply to the Account balances of any Participant who does not have an Hour of Service after the Plan has initially become top heavy. Such Participant's Account balance attributable to Employer contributions and Forfeitures will be determined without regard to this section. 11 D10 VESTING (Plan Section 6.4(h)) In determining Years of Service for vesting purposes, Years of Service attributable to the following shall be EXCLUDED: a. / / Service prior to the Effective Date of the Plan or a predecessor plan. b. /X/ N/A. c. / / Service prior to the time an Employee attained age 18. d./X/ N/A. D11 PLAN SHALL RECOGNIZE SERVICE WITH PREDECESSOR EMPLOYER a. /X/ No. b. / / Yes: Years of Service with shall be recognized for the purpose of this Plan. NOTE: If the predecessor Employer maintained this qualified Plan, then Years of Service with such predecessor Employer shall be recognized pursuant to Section 1.74 and b. must be marked. D12 NORMAL RETIREMENT AGE ("NRA") (Plan Section 1.42) means: a. /X/ the date a Participant attains his 65 birthday. (not to exceed 65th) b. / / the later of the date a Participant attains his _ birthday (not to exceed 65th) or the c. _ (not to exceed 5th) anniversary of the first day of the Plan Year in which participation in the Plan commenced. D13 NORMAL RETIREMENT DATE (Plan Section 1.43) shall commence: a /X/ as of the Participant's "NRA". OR (must select b. or c. AND 1. or 2.) b. / / as of the first day of the month... c. / / as of the Anniversary Date... 1./ / coinciding with or next following the Participant's "NRA". 2./ / nearest the Participant's "NRA" 12 D14 EARLY RETIREMENT DATE (Plan Section 1.12) means the: a./X/ No Early Retirement provision provided. b./ / date on which a Participant... c./ / first day of the month coinciding with or next following the date on which Participant... d./ / Anniversary Date coinciding with or next following the date on which a Participant... AND, if b, c or d was selected... 1./ /attains his _ birthday and has 2./ /completed at least _ Years of Service. 13 CONTRIBUTIONS, ALLOCATIONS AND DISTRIBUTIONS E1 a. COMPENSATION (Plan Section 1.9) with respect to any Participant means: 1. / / Wages, tips and other Compensation on Form W-2. 2. /X/ Code Section 3401(a) wages. 3. / / 415 safe-harbor compensation. b. COMPENSATION shall be 1. /X/ actually paid (must be selected if Plan is integrated) 2. / / accrued c. HOWEVER, FOR NON-INTEGRATED plans, Compensation shall exclude (select all that apply): 1. / / N/A. No exclusions 2. / / overtime 3. /X/ bonuses 4. / / commissions 5. /X/ other MOVING, EDUCATIONAL EXPENSES, FRINGE BENEFITS, TERMINATION SEPARATION, SEVERANCE ALLOWANCES, EMPLOYER STOCK. d. FOR PURPOSES OF THIS SECTION E1, Compensation shall be based on: 1. /X/ the Plan Year. 2. / / the Fiscal Year coinciding with or ending within the Plan Year. 3. / / the Calendar Year coinciding with or ending within the Plan Year. NOTE: The Limitation Year shall be the same as the year on which Compensation is based. e. HOWEVER, for an Employee's first year of Participation, Compensation shall be recognized as of: 1. / / the first day of the Plan Year. 2. /X/ the date the Participant entered the Plan. f. IN ADDITION, COMPENSATION 1. /X/ shall 2. / / shall not include compensation which is not currently includible in the Participant's gross income by reason of the application of Code Sections 125, 402(a)(8), 402(h)(1)(B) or 403(b). 14 E2 SALARY REDUCTION ARRANGEMENT - ELECTIVE CONTRIBUTION (Plan Section 11.2) Each Employee may elect to have his Compensation reduced by: a. / / _% b. / / up to _% c. /X/ from 1% to 15% d. / / up to the maximum percentage allowable not to exceed the limits of Code Sections 401(k), 404 and 415. AND . . . e. /X/ A Participant may elect to commence salary reductions as of THE FIRST DAY OF THE PAY PERIOD COINCIDING WITH OR NEXT FOLLOWING MEETING ELIGIBILITY REQUIREMENTS. A Participant may modify the amount of salary reductions as of THE FIRST DAY OF EACH CALENDAR QUARTER. AND . . . Shall cash bonuses paid within 2 1/2 months after the end of the Plan Year be subject to the salary reduction election? f. / / Yes g. /X/ No 15 E3 FORMULA FOR DETERMINING EMPLOYER'S MATCHING CONTRIBUTION (Plan Section ll.l (b)) a. / / N/A. There shall be no matching contributions. b. /X/ The Employer shall make matching contributions equal to 25% (e.g. 50%) of the Participant's salary reductions and/or Voluntary Employee Contributions (as elected in E3d of this Section). c. / / The Employer may make matching contributions equal to a discretionary percentage, to be determined by the Employer, of the Participant's salary reductions and/or Voluntary Employee Contributions (as elected in E3f of this Section). d. / / The Employer shall make matching contributions equal to the sum of ___% of the portion of the Participant/s salary reductions and/or Voluntary Employee Contributions (as elected in E3f of this Section) which do not exceed ___% of the Participant's Compensation plus ___% of the portion of the Participant's salary reductions and/or Voluntary Employee Contributions (as elected in E3f of this Section) which exceed ___% of the Participant's Compensation, but do not exceed ___% of the Participant's Compensation. e. / / The Employer shall make matching contributions equal to the percentage determined under the following schedule: Participant's Total Matching Percentage Years of Service - - - - - - 16 FOR PLANS WITH MATCHING CONTRIBUTIONS f. /X/ Matching contributions shall be based on: 1. /X/ Salary Deferrals 2. / / Voluntary Employee Contributions 3. / / Both of the above g. /X/ Matching contributions h. / /shall i./X/shall not be used in satisfying the deferral percentage tests. (If used, full vesting and restrictions on withdrawals will apply and the match will be deemed to be an Elective Contribution). j. /X/ Shall a Year of Service be required in order to share in the matching contributions? With respect to Plan Years beginning after 1989... 1. / /Yes (Could cause Plan to violate minimum participation and coverage requirements under Code Sections 401(a)(26) and 410) 2. /X/No With respect to Plan Years beginning before 1990... 1. /X/N/A New Plan or same as years beginning after 1989. 2. / /Yes 3. / /No k. /X/ In determining matching contributions, salary reductions and Voluntary Employee Contributions (whichever are applicable) shall only be matched to the extent they do not, in the aggregate, exceed 6% of a Participant's Compensation. 1. / /N/A m. /X/ The matching contribution made on behalf of a Participant for any Plan Year shall not exceed $_ . n. /X/N/A o. /X/ Matching contributions shall be made on behalf of 1. /X/all Participants. 2. / /only Non-Highly Compensated Employees. 17 E4 WILL A DISCRETIONARY EMPLOYER CONTRIBUTION BE PROVIDED (OTHER THAN A DISCRETIONARY MATCHING OR QUALIFIED NONELECTIVE CONTRIBUTION) (Plan Section 11.1(c))? a. / / No. b. / / Yes, the Employer may make a discretionary contribution out of its current or accumulated Net Profit. C. /X/ Yes, the Employer may make a discretionary contribution which is not limited to its current or accumulated Net Profit. IF YES (b. or c. is selected above), the Employer's discretionary contribution shall be allocated as follows: d. /X/ FOR A NON-INTEGRATED PLAN The Employer discretionary contribution for the Plan Year shall be allocated in the same ratio as each Participant's Compensation bears to the total of such Compensation of all Participants. e. / / FOR AN INTEGRATED PLAN The Employer discretionary contribution for the Plan Year shall be allocated in accordance with Plan Section 4.3(b)(2) based on a Participant's Compensation in excess of: f. / / The Taxable Wage Base. g. / / The greater of $l0,000 or 20% of the Taxable Wage Base. h. / / _% of the Taxable Wage Base. (See Note below) i. / / $_. (see Note below) NOTE: The integration percentage of 5.7% shall be reduced to: l. 4.3% if h. or i. above is more than 20% and less than or equal to 80% of the Taxable Wage Base. 2. 5.4% if h. or i. above is less than l00% and more than 80% of the Taxable Wage Base. 18 E5 QUALIFIED NON-ELECTIVE CONTRIBUTIONS (Plan Section 11.1 (d)) a. /X/ N/A. There shall be no Qualified Non-Elective Contributions except as provided in Section 11.5 (b) and 11.7 (h). b. / / The Employer shall make a Qualified Non-Elective Contribution equal to / /% of the total Compensation of all Participants eligible to share in the allocations. c. / / The Employer may make a Qualified Non-Elective Contribution in an amount to be determined by the Employer. E6 FORFEITURES (Plan Section 4.3 (e)) a. Forfeitures of contributions other than matching contributions shall be... 1. / / added to the Employer's contribution under the Plan. 2. / / allocated to all Participants eligible to share in the allocations in the same proportion that each Participant's Compensation for the year bears to the Compensation of all Participants for such year. 3. / / used to reduce the Employer's contribution under the Plan. b. Forfeitures of matching contributions shall be... l. / / N/A. No matching contributions or match is fully vested. 2. / / used to reduce the Employer's matching contribution. 3. / / allocated to all Participants eligible to share in the allocations in proportion to each such Participant's Compensation for the year. 4. /X/ added to Employer's contribution under the Plan. 19 E7 ALLOCATIONS TO ACTIVE PARTICIPANTS (Plan Section 4.3) With respect to Plan Years beginning after 1989, a Participant... a. / / shall (Plan may become discriminatory) b. / / shall not be required to complete a Year of Service in order to share in any Non-Elective Contributions (other than matching contributions) or Qualified Non-Elective Contributions. For Plan Years beginning before 1990, the Plan provides that a Participant must complete a Year of Service to share in the allocations. 20 E8 ALLOCATIONS TO TERMINATED PARTICIPANTS (Plan Section 4:3 (k)) Any Participant who terminated employment during the Plan Year (i.e. not actively employed on the last day of the Plan Year) for reasons other than death, Total and Permanent Disability or retirement: a. With respect to Employer Non-Elective Contributions (other than matching), Qualified Non-Elective Contributions, and Forfeitures: 1. For Plan Years beginning after 1989, i. /X/ N/A, Plan does not provide for such contributions. ii. / / shall share in the allocations provided such Participant completed more than 500 Hours of Service. iii. / / shall share in such allocations provided such Participant completed a Year of Service. iv. / / shall not share in such allocations, regardless of Hours of Service. 2. For Plan Years beginning before 1990, i. /X/ N/A, new Plan, or same as for Plan Years beginning after 1989. ii. / / shall share in such allocations provided such Participant completed a Year of Service. iii. / / shall not share in such allocations, regardless of Hours of Service. NOTE: If a.1.iii or iv is selected, the Plan could violate minimum participation and coverage requirements under Code Sections 401(a)(26) and 410. 21 b. With respect to the allocation of Employer Matching contributions, a Participant: 1. For Plan Years beginning after 1989, i. / / N/A, Plan does not provide for matching contributions. ii. /X/ shall share in the allocations, regardless of Hours of Service. iii. / / shall share in the allocations provided such Participant completed more than 500 Hours of Service. iv. / / shall share in such allocations provided such Participant completed a Year of Service. v. / / shall not share in such allocations, regardless of Hours of Service. 2. For Plan Years beginning before 1990, i. /X/ N/A, new Plan, or same as years beginning after 1989. ii. / / shall share in the allocations, regardless of Hours of Service. iii / / shall share in such allocations provided such Participant completed a Year of Service. iv. / / shall not share in such allocations, regardless of Hours of Service. NOTE: If b.1.iv or v is selected, the Plan could violate minimum participation and coverage requirements under Code Section 401 (a)(26) and 410. E9 ALLOCATIONS OF EARNINGS (Plan Section 4.3 (c)) Allocations of earnings with respect to amounts contributed to the Plan after the previous Anniversary Date or other valuation date shall be determined... a. / / by using a weighted average. b. / / by treating one-half of all such contributions as being a part of the Participant's nonsegregated account balance as of the previous Anniversary Date or valuation date. c. / / by using the method specified in Section 4.3 (c). d. /X/ other UNIT VALUES. 22 E10 LIMITATIONS ON ALLOCATIONS (Plan Section 4.4) a. If any Participant is or was covered under another qualified defined contribution plan maintained by the Employer, other than a Master or Prototype Plan, or if the Employer maintains a welfare benefit fund, as defined in Code Section 419(e), or an individual medical account, as defined in Code Section 415(1)(2), under which amounts are treated as Annual Additions with respect to any Participant in this Plan: 1. /X/ N/A. 2. / / The provisions of Section 4.4(b) of the Plan will apply as if the other plan were a Master or Prototype Plan. 3. / / Provide the method under which the Plans will limit total Annual Additions to the Maximum Permissible Amount, and will properly reduce any Excess Amounts, in a manner that precludes Employer discretion. - - - 23 b. If any Participant is or ever has been a Participant in a defined benefit plan maintained by the Employer: 1. /X/ N/A. 2. / / In any Limitation Year, the Annual Additions credited to the Participant under this Plan may not cause the sum of the Defined Benefit Plan Fraction and the Defined Contribution Fraction to exceed 1.0. If the Employer's contribution that would otherwise be made on the Participant's behalf during the limitation year would cause the 1.0 limitation to be exceeded, the rate of contribution under this Plan will be reduced so that the sum of the fractions equals 1.0. If the 1.0 limitation is exceeded because of an Excess Amount, such Excess Amount will be reduced in accordance with Section 4.4(a)(4) of the Plan. 3. / / Provide the method under which the Plans involved will satisfy the 1.0 limitation in a manner that precludes Employer discretion. - - - 24 E11 DISTRIBUTIONS UPON DEATH (Plan Section 6.6(h)) Distributions upon the death of a Participant prior to receiving any benefits shall... a. /X/ be made pursuant to the election of the Participant or beneficiary. b. / / begin within 1 year of death for a designated beneficiary and be payable over the life (or over a period not exceeding the life expectancy) of such beneficiary, except that if the beneficiary is the Participant's spouse, begin within the time the Participant would have attained age 70 1/2. c. / / be made within 5 years of death for all beneficiaries. d. / / other E12 LIFE EXPECTANCIES (Plan Section 6.5 (f)) for minimum distributions required pursuant to Code Section 401(a)(9) shall... a. / / be recalculated at the Participant's election. b. / / be recalculated. c. /X/ not be recalculated. E13 CONDITIONS FOR DISTRIBUTIONS UPON TERMINATION Distributions upon termination of employment pursuant to Section 6.4(a) of the Plan shall not be made unless the following conditions have been satisfied: a. /X/ N/A. Immediate Distributions may be made at Participant's election. b. / / The Participant has incurred / / l-Year Break(s) in Service. c. / / The Participant has reached his or her Early or Normal Retirement Age. d. / / Distributions may be made at the Participant's election on or after the Anniversary Date following termination of employment. e. / / Other 25 E14 FORM OF DISTRIBUTIONS (Plan Sections 6.5 and 6.6) Distributions under the Plan may be made... a. 1. / / in lump sums. 2. /X/ in lump sums or installments.* b. AND, pursuant to Plan Section 6.13, 1. /X/ no annuities are allowed (avoids Joint and Survivor rules). 2. / / annuities are allowed (Plan Section 6.13 shall not apply). NOTE:b.1. above may not be elected if this is an amendment to a plan which permitted annuities as a form of distribution or if this Plan has accepted a plan to plan transfer of assets from a plan which permitted annuities as a form of distribution. c. AND may be made in... 1. /X/ cash only (except for insurance or annuity contracts). 2. / / cash or property. *Installments will be distributed as time certain payments. The plan participant will choose the period of years over which he/she will receive benefit payments. 26 TOP HEAVY REQUIREMENTS Fl TOP HEAVY DUPLICATIONS (Plan Section 4.3 (i) ): When a Non-Key Employee is a Participant in this Plan and a Defined Benefit Plan maintained by the Employer, indicate which method shall be utilized to avoid duplication of top heavy minimum benefits. a. /X/ The Employer does not maintain a Defined Benefit Plan. b. / / A minimum, non-integrated contribution of 5% of each Non-Key Employee's total Compensation shall be provided in this Plan, as specified in Section 4.3(i). (The Defined Benefit and Defined Contribution Fractions will be computed using 100% if this choice is selected.) c. / / A minimum, non-integrated contribution of 7 1/2% of each Non-Key Employee's total Compensation shall be provided in this Plan, as specified in Section 4.3(i). (If this choice is selected, the Defined Benefit and Defined Contribution Fractions will be computed using 125% for all Plan Years in which the Plan is Top Heavy, but not Super Top Heavy.) d. / / Specify the method under which the Plans will provide top heavy minimum benefits for Non-Key Employees that will preclude Employer discretion and avoid inadvertent omissions, including any adjustments required under Code Section 415(e). - - - - 27 F2 PRESENT VALUE OF ACCRUED BENEFIT (Plan Section 2.2) for Top Heavy purposes where the Employer maintains a Defined Benefit Plan in addition to this Plan, shall be based on. a. /X/ N/A. The Employer does not maintain a defined benefit plan. b. / / Interest Rate:_ Mortality Table:_ F3 TOP HEAVY DUPLICATIONS: Employer maintaining two (2) or more Defined Contribution Plans. a. /X/ N/A. b. / / A minimum, non-integrated contribution of 3% of each Non-Key Employee's total Compensation shall be provided in the Money Purchase Plan (or other plan subject to Code Section 412), where the Employer maintains two (2) or more non-paired Defined Contribution Plans. c. / / Specify the method under which the Plans will provide top heavy minimum benefits for Non-Key Employees that will preclude Employer discretion and avoid inadvertent omissions, including any adjustments required under Code Section 415(e). - - - 28 MISCELLANEOUS G1 LOANS TO PARTICIPANTS (Plan Section 7.4) a. /X/ Yes, loans may be made up to $50,000 or 1/2 Vested interest. b. / / No, loans may not be made. If YES, (check all that apply)... c. /X/ loans shall be treated as a Directed Investment. d. /X/ loans shall only be made for hardship or financial necessity. e. /X/ the minimum loan shall be $1,000 f. / / $10,000 de minimis loans may be made regardless of Vested interest. (If selected, plan may need security in addition to Vested interest) NOTE:Department of Labor Regulations require the adoption of a SEPARATE written loan program setting forth the requirements outlined in Plan Section 7.4. G2 DIRECTED INVESTMENT ACCOUNTS (Plan Section 4.8) are permitted for the interest in any one or more accounts. a. /X/ Yes, regardless of the Participant's Vested interest in the Plan. b. / / Yes, but only with respect to the Participant's Vested interest in the Plan. c. / / Yes, but only with respect to those accounts which are 100% Vested. d. / / No directed investments are permitted. G3 TRANSFERS FROM QUALIFIED PLANS (Plan Section 4.6) a. /X/ Yes, transfers from qualified plans (and rollovers) will be allowed. b. / / No, transfers from qualified plans (and rollovers) will not be allowed. AND, transfers shall be permitted... c. / / from any Employee, even if not a Participant. d. /X/ from Participants only. 29 G4 EMPLOYEES' VOLUNTARY CONTRIBUTIONS (Plan Section 4.7) a. / / Yes, Voluntary Contributions are allowed subject to the limits of Section 4. 10. b. /X/ No, Voluntary Contributions will not be allowed. NOTE: TRA '86 subjects voluntary contributions to strict discrimination rules. G5 HARDSHIP DISTRIBUTIONS (Plan Section 6.11 and 11.8) a. / / Yes, from any accounts which are 100% Vested. b. / / Yes, from Participant's Elective Account only. c. / / Yes, but limited to the Participant's Account only. d. /X/ Yes, from any accounts e. / / No NOTE: Distributions from a Participant's Elective Account are limited to the portion of such account attributable to such Participant's Deferred Compensation and earnings attributable thereto up to December 31, 1988. Also hardship distributions are not permitted from a Participant's Qualified Non-Elective Account. G6 PRE-RETIREMENT DISTRIBUTION (Plan Section 6.10) a. / / If a Participant has reached the age of_, distributions may be made, at the Participant's election without requiring the Participant to terminate employment. b. /X/ No pre-retirement distribution may be made. NOTE: Distributions from a Participant's Elective Account and Qualified Non- Elective Account are not permitted Prior to age 59 1/2. 30 The adopting Employer may not rely on an opinion letter issued by the National Office of the Internal Revenue Service as evidence that the plan is qualified under Code Section 401. In order to obtain reliance with respect to plan qualification, the Employer must apply to the appropriate Key District Office for a determination letter. This Adoption Agreement may be used only in conjunction with basic Plan document #01. This Adoption Agreement and the basic Plan document shall together be known as Regis Retirement Plan Services, Inc. Non-Standardized 401(k) Profit Sharing Plan #01-005. The adoption of this Plan, its qualification by the IRS, and the related tax consequences are the responsibility of the Employer and its independent tax and legal advisors. Regis Retirement Plan Services, Inc. will notify the Employer of any amendments made to the Plan or of the discontinuance or abandonment of the Plan provided this Plan has been acknowledged by Regis Retirement Plan Services, Inc. or its authorized representative. Furthermore, in order to be eligible to receive such notification, we agree to notify Regis Retirement Plan Services, Inc. of any change in address. 31 IN WITNESS WHEREOF, the Employer and Trustee hereby cause this Plan to be executed on this 7th day of May, 1997. Furthermore, this Plan may not be used unless acknowledged by Regis Retirement Plan Services, Inc. or its authorized representative. EMPLOYER Coastcast Corporation Fleet National Bank - ------------------------------ ------------------------------ (enter name) TRUSTEE By: /s/ ROBERT C. BRUNING by: /s/ [Illegible] --------------------------- --------------------------- TRUSTEE PARTICIPATING EMPLOYER: PARTICIPATING EMPLOYER: - ------------------------------ ------------------------------ (enter name) (enter name) By: By: --------------------------- --------------------------- This Plan may not be used, and shall not be deemed to be a Prototype Plan, unless an authorized representative of Regis Retirement Plan Services, Inc. has acknowledged the use of the Plan. Such acknowledgment is for administerial purposes only. It acknowledges that the Employer is using the Plan but does not represent that this Plan, including the choices selected on the Adoption Agreement, has been reviewed by a representative of the sponsor or constitutes a qualified retirement plan. Regis Retirement Plan Services, Inc. By: /s/ TERRY MARTIN ------------------------------------- With regard to any questions regarding the provisions of the Plan, adoption of the Plan, or the effect of an opinion letter from the IRS, call or write (this information must be completed by the sponsor of this Plan or its designated representative): Name Roberto Roman, Director Human Resources ------------------------------------------------------- Address Coastcast Corporation/PO Box 9076 ------------------------------------------------------- Rancho Dominguez CA 90224 ------------------------------------------------------- Telephone (310) 638-0595 ------------------------------------------------------- 32 EX-11.1 3 EXHIBIT 11-1
COASTCAST CORPORATION COMPUTATION OF PER SHARE EARNINGS (UNAUDITED) THREE MONTHS SIX MONTHS ENDED JUNE 30, ENDED JUNE 30, ---------------------- ---------------------- 1997 1996 1997 1996 --------- --------- --------- --------- Common stock outstanding at beginning of period 8,794,334 8,760,960 8,777,890 8,734,694 Repurchase of common stock - - - (700) Exercise of options - 27,539 16,444 54,505 --------- --------- --------- --------- Common stock outstanding at end of period 8,794,334 8,788,499 8,794,334 8,788,499 --------- --------- --------- --------- --------- --------- --------- --------- Weighted average shares outstanding 8,794,334 8,779,108 8,789,286 8,762,333 Dilutive effect of stock options after application of treasury stock method 88,046 395,783 129,812 290,019 --------- --------- --------- --------- Total 8,882,380 9,174,891 8,919,098 9,052,352 --------- --------- --------- --------- --------- --------- --------- --------- Net income 2,816,000 5,004,000 4,014,000 8,522,000 --------- --------- --------- --------- --------- --------- --------- --------- Net income per share and common equivalent per share $ .32 $ .55 $ .45 $ .94 --------- --------- --------- --------- --------- --------- --------- ---------
Exhibit 11.1 46 EX-27 4 FDS
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE QUARTERLY PERIOD ENDED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS DEC-31-1997 APR-01-1997 JUN-30-1997 13,913 0 18,321 400 26,703 61,611 35,362 15,531 83,458 11,550 0 0 0 38,545 32,296 83,458 68,939 68,939 56,932 56,932 5,462 0 0 6,920 2,906 4,014 0 0 0 4,014 .45 0
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