Back to GetFilings.com
================================================================================
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999 Commission file number 1-4416
- --------------------------------------------------------------------------------
SPS TECHNOLOGIES, INC.
(Exact name of registrant as specified in its Charter)
PENNSYLVANIA 23-1116110
(State of Incorporation) (I.R.S. Employer Identification No.)
101 Greenwood Avenue, Suite 470
Jenkintown, Pennsylvania 19046
(Address of principal executive offices) (Zip Code)
(215) 517-2000
(Registrant's telephone number, including area code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE
SECURITIES EXCHANGE ACT OF 1934:
Title of Each Class Name of Each Exchange
Common Stock, Par Value $.50 on Which Registered
Per Share New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. 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 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 voting stock held by non-affiliates of
the registrant at March 9, 2000, was approximately $391,114,000.
The number of shares of registrant's common stock outstanding on March 9,
2000 was 12,584,126.
DOCUMENTS INCORPORATED BY REFERENCE
Exhibit 13, which contains portions of the 1999 Annual Report to
Shareholders of the registrant is incorporated by reference in Parts I, II and
IV of this Report. Portions of the Definitive Proxy Statement of registrant, if
filed with the Securities and Exchange Commission within 120 days after
December 31, 1999, are incorporated by reference in Part III of this report. To
the extent not so filed, such information will be provided on a Form 10-K/A
filed with the Securities and Exchange Commission.
================================================================================
SPS TECHNOLOGIES, INC. AND SUBSIDIARIES
PART I
Item 1. BUSINESS
SPS Technologies, Inc. and subsidiaries (the "Company") was incorporated
in Pennsylvania in 1903. The Company is engaged in the design, manufacture and
marketing of fasteners, specialty metals, magnetic products, aerospace
structures and precision tools. The Company is multinational in operation. In
addition to 21 manufacturing plants in the United States, it operates 15
manufacturing facilities in five different countries: England, Ireland, Canada,
Brazil and Australia. The Company also has a 55% interest in a manufacturing
operation in China and a minority interest in a manufacturing operation in
India. Marketing operations are carried on by subsidiaries in four other
countries.
Due primarily to the operating results of recently acquired businesses,
sales and net earnings continued to increase in 1999. Despite lower demand for
the Company's products in certain geographic areas and served markets, the
Company's overall sales volume has remained at a level that has generated
reasonable profits and significant free cash flow. The Company has consistently
reinvested operating cash flows into "bolt on" acquisitions that complement
existing product offerings and into new capital to improve manufacturing
efficiencies. In 1999, the Company made one acquisition in the Precision
Fasteners and Components segment and completed a new long-term Note Purchase
Agreement. Additional information regarding the general development of business
operations in 1999 is provided in Item 7, "Management's Discussion and Analysis
of Financial Condition and Results of Operations".
The Company is organized as seven business groups that have been
aggregated into three reportable segments for financial reporting purposes. The
three reportable segments are: Precision Fasteners and Components, Specialty
Materials and Alloys and Magnetic Products. The Precision Fasteners and
Components segment consists of five business groups which produce fasteners for
the aerospace, automotive and industrial machinery markets, structural
assemblies for the aerospace market and precision consumable tools used for
metal forming and cutting. Principal fastener products are SPS(R) aerospace
fasteners, MULTIPHASE(R) alloy fasteners and other aerospace fasteners;
UNBRAKO(R) brand socket screws, hex keys, dowel pins, FLEXLOC(R) all-metal
locknuts, GREER STOP NUTS(TM), SPS micro screws and SPS Non-Ferrous nuts and
bolts; engineered fasteners and precision components for gasoline and diesel
engines, other critical and non-critical automotive applications and
off-highway equipment. Principal structural assemblies products are precision
machined components, sheetmetal fabrications and avionics assemblies. Principal
tooling products are HI-LIFE(R) thread roll dies and other metalworking tools.
The Specialty Materials and Alloys (SM&A) segment produces specialty metals,
melting services, superalloys and ceramic cores for the manufacture of
components for aerospace, industrial gas turbine, medical and general
engineering applications. Principal SM&A products are air and vacuum-melted
iron, cobalt, and nickel-based superalloys, including CMSX(R) single-crystal
alloys. The Magnetic Products segment produces magnetic materials and products
for the automotive, aerospace, reprographic, computer, security and advertising
specialty markets. Principal magnetic products are metallic and ceramic
permanent magnets, wound and pressed powder magnetic components, bonded
magnets, magnetic components and assemblies and magnetic ultra-thin foil and
strip products.
The Company sells directly to original equipment manufacturers and
industrial, commercial and governmental users, and also sells through
independent stocking distributors and dealers. There were no changes in the
methods of distribution during 1999.
The principal sources of raw materials include major and specialty steel
producers, and non-ferrous metal producers, converters and distributors. The
Company anticipates it will have no significant problem with respect to sources
or availability of the raw materials essential to the conduct of its business.
The Company owns certain trademarks and patents that it considers to be of
importance to its three segments. The principal trademarks of the Company
include SPS(R), ARNOLD(R), FLEXLOC(R), MULTIPHASE(R), MP-35N(R), MP159(R),
UNBRAKO(R), U130(R), CMSX(R) , PLASTIFORM(R) and HI-LIFE(R). The trademarks
have been registered in the United States and certain foreign countries.
Generally, trademark registrations are valid so long as the trademarks
registered are used and renewal of the registration is timely made. United
States patents of the Company expire at various times over the next 17 years.
Patents covering the CMSX-4(R), CMSX-10(R), CM 186 LC(R) and CM 247 LC(R)
superalloys are of particular importance in protecting the proprietary
superalloy technology of the Company's subsidiary, Cannon-Muskegon Corporation.
However, the Company does not believe that its business as a whole is dependent
on any one or more patents or trademarks or on patent or trademark protection
generally.
2
No material portion of the Company's business in any segment is seasonal.
No material part of the Company's business is dependent upon a single
customer. In 1999, the five largest customers accounted for 21% of the
Company's reported consolidated sales.
The backlog of orders by segment at December 31, which represents firm
orders with scheduled delivery within the next twelve months, was as follows
(in thousands of dollars):
1999 1998
-------- --------
Precision Fasteners and Components .......... $207,350 $238,414
Specialty Materials and Alloys .............. 21,301 28,444
Magnetic Products ........................... 27,209 29,259
-------- --------
Total ....................................... $255,860 $296,117
======== ========
The Company's business is highly competitive. Competition is based
primarily on technology, price, service, product quality and performance. The
Company believes that its favorable competitive position is based upon its
high-quality product performance and service to its customers, supported by its
commitment to research and development.
Total expenditures during 1999, 1998 and 1997 for Company-sponsored
research and development were $6.3 million, $5.3 million and $5.3 million,
respectively. In 1999, approximately 55% of the expenditures were for the
Company's Precision Fasteners and Components segment.
Capital expenditures for property, plant and equipment are planned at
$34.5 million in 2000, excluding capital spending for any businesses that may
be acquired in 2000.
There were approximately 4,837 persons employed in the Precision Fasteners
and Components segment, 461 persons employed in the Specialty Materials and
Alloys segment, and 970 persons employed in the Magnetic Products segment at
December 31, 1999.
Additional narrative information and the financial information concerning
industry segments and the foreign and domestic operations are included in Note
18 to the Company's Consolidated Financial Statements on pages 33 through 35 in
the 1999 Annual Report to Shareholders. Exhibit 13.1 contains the information
and is incorporated herein by reference.
Item 2. PROPERTIES
The Company owns or leases the manufacturing properties described below.
All properties are in good condition.
Location
Owned Square Feet
----- -----------
Jenkintown, Pennsylvania .......... 663,000(a)
Cleveland, Ohio ................... 365,000(a)
Sorocaba, Brazil .................. 339,000(a)
Coventry, England ................. 224,000(a)(d)
Smethwick, England ................ 137,000(a)
Leicester, England ................ 109,000(a)
Salt Lake City, Utah .............. 104,000(a)
Waterford, Michigan ............... 114,000(a)
Melbourne, Australia .............. 44,000(a)
Mansfield, England ................ 35,300(a)
Nuneaton, England ................. 9,400(a)
Transfer, Pennsylvania ............ 245,000(b)
Muskegon, Michigan ................ 135,000(b)
Marengo, Illinois ................. 356,000(c)
Norfolk, Nebraska ................. 112,000(c)
Marietta, Ohio .................... 78,000(c)
Sevierville, Tennessee ............ 65,000(c)
Derbyshire, England ............... 44,000(c)
Ogallala, Nebraska ................ 22,000(c)
3
Leased Lease Expires Square Feet
------ ------------- -----------
Shannon, Ireland ...................... (f)(g)(h)(r) (s) 296,000(a)
Nashville, Tennessee .................. (i) 99,000(a)
Las Vegas, Nevada ..................... (j) 64,000(a)
Leicester, England .................... (k) 38,000(a)
Pointe-Claire, Quebec, Canada ......... (l) 39,150(a)
Essex, England ........................ (t) 80,000(a)
Howell, Michigan ...................... (u) 44,000(a)
Nottingham, England ................... (v) 71,600(a)
Nuneaton, England ..................... (aa) 16,000(a)
Santa Ana, California ................. (e) 76,000(a)
Plymouth, Michigan .................... (w) 108,490(a)
Canton, Michigan ...................... (x) 50,840(a)
Gadsden, Alabama ...................... (x) 64,782(a)
Tyler, Texas .......................... (y) 9,000(a)
Melbourne, Australia .................. (z) 34,000(a)
Wickliffe, Ohio ....................... (m)(n) 76,000(b)
Rochester, New York ................... (o) 70,000(c)
Adelanto, California .................. (p) 45,000(c)
Rochester, England .................... (q) 12,000(c)
- -----------
(a) Precision Fasteners and Components segment.
(b) Specialty Materials and Alloys segment.
(c) Magnetic Products segment.
(d) Approximately 180,000 square feet used for manufacturing purposes, with remaining 44,000 square feet
sub-leased.
(e) Lease for 76,000 square feet expires June 30, 2009.
(f) Lease for 15,702 square feet expires December 31, 2023.
(g) Lease for 100,000 square feet expires November 13, 2010.
(h) Lease for 57,000 square feet expires April 1, 2004.
(i) Lease for 99,000 square feet expires August 14, 2002.
(j) Lease for 60,000 square feet expires February 28, 2000.
(k) Lease for 38,000 square feet expires January 12, 2002.
(l) Lease for 35,000 square feet expires October 31, 2002.
(m) Lease for 38,000 square feet expires May 1, 2009.
(n) Lease for 38,000 square feet expires July 1, 2010.
(o) Lease for 70,000 square feet expires October 31, 2006.
(p) Lease for 45,000 square feet expires January 1, 2005.
(q) Lease for 12,000 square feet expires June 24, 2007.
(r) Lease for 75,000 square feet expires November 15, 2010.
(s) Lease for 48,000 square feet expires January 1, 2112.
(t) Lease for 80,000 square feet expires July 8, 2012.
(u) Lease for 44,000 square feet expires June 30, 2003.
(v) Leases for 42,000 square feet with various expirations. Primary lease expires December 24, 2001.
(w) Leases for 108,490 square feet with various expirations. Primary lease expires June 30, 2009.
(x) Leases for 50,840 square feet and 64,782 square feet each expire June 30, 2009.
(y) Lease for 9,000 square feet expires March 10, 2001.
(z) Leases for 34,000 square feet with various expirations. Primary lease expires December 31, 2003.
(aa) Property is leased on a month-to-month basis. The Company must give six months notice before
terminating.
Industrial Development Revenue Bonds were issued to finance the
acquisition and improvement of the Salt Lake City, Utah manufacturing facility.
These bonds are collateralized by a first mortgage on the facility and a bank
letter of credit.
4
Item 3. LEGAL PROCEEDINGS
A discussion of legal proceedings is included in Note 10 to the Company's
Consolidated Financial Statements on pages 23 and 24 in the 1999 Annual Report
to Shareholders. Exhibit 13.1 contains the information and is incorporated
herein by reference.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of security holders during the fourth
quarter of 1999, through the solicitations of proxies or otherwise.
EXECUTIVE OFFICERS OF THE REGISTRANT
All executive officers of the Company are named below and are appointed by
the Board of Directors. The date that each officer was first appointed to their
present position is indicated. No officer listed was appointed as a result of
any arrangement between them and any other person as that phrase is understood
under the Securities Exchange Act regulations. No family relationship exists
among the executive officers of the Company.
Name Experience and Position Held Age
- ---- ---------------------------- ---
Charles W. Grigg Chairman and Chief Executive Officer since October 1999. 60
Previously, Chairman, Chief Executive Officer and President
since April 1997. Previously, Chairman and Chief Executive
Officer since December 1993.
John S. Thompson President and Chief Operating Officer since October 1999. 52
Previously, President and Chief Executive of BTR, Inc.
since 1993.
William M. Shockley Vice President, Chief Financial Officer since October 1998. 38
Previously, Vice President, Chief Financial Officer and
Controller since July 1995. Previously, Corporate Controller
since September 1992.
Thomas S. Cross Vice President, Human Resources since June 1999. 48
Previously, Vice President, Human Resources, North
American Aerospace Fasteners since January 1998.
Previously, Human Resource Manager, North American
Aerospace Fasteners since January 1994.
James D. Dee Vice President, General Counsel and Secretary since April 42
1997. Previously, Vice President, Environmental and Legal
Affairs since February 1996. Previously, Assistant Counsel
and Patent Counsel since 1988.
Thomas W. McDonnell Controller since February 2000. Previously, Director of 39
Middle Market Advisory Services, PricewaterhouseCoopers
LLP since July 1997. Previously, Audit Manager,
PricewaterhouseCoopers LLP since July 1988.
Margaret B. Zminda Treasurer, Assistant Secretary and Director, Investor 41
Relations since February 2000. Previously, Controller since
October 1998. Previously, Aerospace Fasteners Controller
since September 1993.
5
PART II
Item 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SHAREHOLDER
MATTERS
Information regarding the principal markets on which SPS Technologies'
common stock is traded, the high and low sales price for the stock on the New
York Stock Exchange for each quarterly period during the past 2 years, and the
approximate number of holders of common stock at March 3, 2000 is included
under the caption entitled "Common Stock Information" on page 37 in the 1999
Annual Report to Shareholders. Exhibit 13.4 contains this information and is
incorporated herein by reference.
Item 6. SELECTED FINANCIAL DATA
A summary of selected financial data for SPS Technologies for the years
and year-ends specified is included under the caption entitled "Selected
Financial Data" on page 37 in the 1999 Annual Report to Shareholders. Exhibit
13.3 contains this information and is incorporated herein by reference.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Information regarding SPS Technologies' financial condition, changes in
financial condition and results of operations is included under the caption
entitled "Management's Discussion and Analysis of Financial Condition and
Results of Operations" on pages 38 through 45 in the 1999 Annual Report to
Shareholders. Exhibit 13.5 contains this information and is incorporated herein
by reference.
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's quantitative and qualitative information about market risk
is included in the section entitled "Management's Discussion and Analysis of
Financial Condition and Results of Operations" on pages 38 through 45 in the
1999 Annual Report to Shareholders. Exhibit 13.5 contains this information and
is incorporated herein by reference.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Consolidated Financial Statements for SPS Technologies and the
required supplementary data "Summary of Quarterly Results" are included on
pages 13 through 37 in the 1999 Annual Report to Shareholders. Exhibits 13.1
and 13.2 contain this information and are incorporated herein by reference.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
6
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
(a) Identification of directors:
Information regarding directors is incorporated by reference to the
Definitive Proxy Statement, Election of Directors, if filed with the
Securities and Exchange Commission (SEC) within 120 days after December 31,
1999. To the extent not so filed, such information will be provided on a
Form 10-K/A filed with the SEC.
(b) Identification of executive officers:
Information regarding executive officers is contained in Part I of this
report (page 5).
Item 11. EXECUTIVE COMPENSATION
Information regarding executive compensation is incorporated by reference
to the Definitive Proxy Statement, Executive Compensation and Board Meetings,
Committees and Compensation of Directors, if filed with the SEC within 120 days
after December 31, 1999. To the extent not so filed, such information will be
provided on a Form 10-K/A filed with the SEC.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information regarding security ownership of certain beneficial owners and
management is incorporated by reference to the Definitive Proxy Statement,
Ownership of Voting Securities, if filed with the SEC within 120 days after
December 31, 1999. To the extent not so filed, such information will be
provided on a Form 10-K/A filed with the SEC.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
7
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) Documents filed as part of this Report:
1. The Consolidated Financial Statements, Notes to Consolidated
Financial Statements and Report of Independent Accountants are set
forth on pages 13 through 36 of the 1999 Annual Report to
Shareholders. Exhibit 13.1 contains this information and is
incorporated by reference. The Report of Independent Accountants,
which covers the financial statement schedule, appears on page 11 of
this report.
2. Financial Statement Schedules:
The following supplemental schedule is located in this Report on the
page indicated.
Page
----
II Valuation and Qualifying Accounts 12
Schedules other than those listed above are omitted for the reason that they are
either not applicable or not required or because the information required is
contained in the financial statements or notes thereto.
3. Exhibits:
3a Articles of Incorporation as amended. Exhibit 3a to the Annual Report on Form 10-K for the year
ended December 31, 1997, is hereby incorporated by reference.
3b By-Laws as amended, effective April 29, 1998. Exhibit 3 to the Quarterly Report on Form 10-Q for the
quarter ended September 30, 1998, is hereby incorporated by reference.
4a Rights Agreement, effective November 21, 1998. Exhibit 1 to the Form 8-A filed November 18, 1998,
is hereby incorporated by reference.
4b Form of Registration Rights Agreement between the Company, the Purchasers and the Investors dated
November 16, 1994. Exhibit 4.5 to the Form S-3 filed August 26, 1994, is hereby incorporated by
reference.
10a SPS 1988 Long Term Incentive Stock Plan as amended, effective February 2, 1989. Exhibit 10a to
the Annual Report on Form 10-K for the year ended December 31, 1988, is hereby incorporated by
reference.
10b SPS Employees Savings and Investment Plan as Amended and Restated, effective January 1, 1999.
10c Employment Agreement between SPS Technologies, Inc. and John S. Thompson, President and Chief
Operating Officer, effective October 1, 1999.
10d SPS Technologies, Inc. Management Incentive Plan as Amended and Restated, effective April 26,
1994, Exhibit 10d to the Annual Report on Form 10-K for the year ended December 31, 1995, is
hereby incorporated by reference.
10e Form of standby Purchase Agreement dated November 16, 1994. Exhibit 10.1 to the Form S-3/A filed
November 17, 1994, is hereby incorporated by reference.
10f Retirement Benefit Agreement, dated February 28, 1979. Exhibit 10f to the Annual Report on Form
10-K for the year ended December 31, 1991, is hereby incorporated by reference.
1Og Fee Arrangement with Former Directors, effective November 29, 1984. Exhibit 10g to the Annual
Report on Form 10-K for the year ended December 31, 1990, is hereby incorporated by reference.
10h Form of Employment Agreements between SPS Technologies, Inc. and certain employees, as amended
and restated effective December 14, 1992. Exhibit 10h to the Annual Report on Form 10-K for the
year ended December 31, 1992, is hereby incorporated by reference.
10i SPS Technologies, Inc. Executive Deferred Compensation Plan, as amended and restated, effective
December 14, 1992. Exhibit 10i to the Annual Report on Form 10-K for the year ended December 31,
1992, is hereby incorporated by reference.
8
10j SPS Technologies, Inc. Executive Deferred Compensation Plan II, as amended and restated effective
December 1, 1993. Exhibit 10j to the Annual Report on Form 10-K for the year ended December 31,
1993, is hereby incorporated by reference.
10k SPS Technologies, Inc. Supplemental Executive Retirement Plan, as amended and restated effective
December 14, 1992, Exhibit 10k to the Annual Report on Form 10-K for the year ended December
31, 1992, is hereby incorporated by reference.
10l Employment Agreement between SPS Technologies, Inc. and Charles W. Grigg, Chairman and Chief
Executive Officer, effective December 1, 1993. Exhibit 10l to the Annual Report on Form 10-K for the
period ended December 31, 1993, is hereby incorporated by reference.
10m Form of Indemnification Agreements between SPS Technologies, Inc. and officers and directors dated
February 2, 1987. Exhibit 10m to the Annual Report on Form 10-K for the period ended December
31, 1992, is hereby incorporated by reference.
1On Split Dollar Insurance Agreements regarding certain officers and directors effective April 2, 1990, and
November 27, 1991. Exhibit 10n to the Annual Report on Form 10-K for the year ended December
31, 1991, is hereby incorporated by reference.
10o SPS Technologies, Inc. Senior Executive Severance Plan, effective, December 14, 1992. Exhibit 10o
to the Annual Report on Form 10-K for the year ended December 31, 1992, is hereby incorporated by
reference.
lOp Agreement with Retiring Executive, approved December 14, 1992. Exhibit 10p to the Annual Report
on Form 10-K for the year ended December 31, 1992, is hereby incorporated by reference.
10q SPS Technologies, Inc, Benefit Equalization Plan, as amended and restated effective December 14,
1992. Exhibit 10 to the Quarterly Report on Form 1O-Q for the quarter ended March 31, 1993, is
hereby incorporated by reference.
1Or SPS Technologies, Inc. Long Range Incentive Plan, effective January 1, 1995. Exhibit 10r to the
Annual Report on Form 10-K for the year ended December 31, 1995, is hereby incorporated by
reference.
10s SPS Technologies, Inc. Executive Deferred Compensation Plan III, effective January 1, 1998. Exhibit
10s to the Annual Report on Form 10-K for the year ended December 31, 1998, is hereby
incorporated by reference.
13.1 1999 Consolidated Financial Statements, Notes to Consolidated Financial Statements and Report of
Independent Accountants.
13.2 Summary of Quarterly Results, for 1999 and 1998.
13.3 Selected Financial Data for 1995 through 1999.
13.4 Common Stock Information for 1999 and 1998.
13.5 1999 Management's Discussion and Analysis of Financial Condition and Results of Operations.
21 Subsidiaries of the Registrant.
23 Consent of Independent Accountants.
27 Financial Data Schedule.
(b) Reports on Form 8-K filed during the last quarter of 1999:
None.
9
SIGNATURE
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.
SPS TECHNOLOGIES, INC.
-----------------------------------
(Registrant)
/s/ William M. Shockley
-----------------------------------
William M. Shockley
Vice President,
Chief Financial Officer
Date: March 10, 2000
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/ CHARLES W. GRIGG Chairman, Chief Executive Officer and March 10, 2000
-------------------- Director (Principal Executive
Charles W. Grigg Officer)
/s/ JOHN S. THOMPSON President, Chief Operating Officer and March 10, 2000
-------------------- Director
John S. Thompson
/s/ WILLIAM M. SHOCKLEY Vice President, Chief Financial Officer March 10, 2000
----------------------- (Principal Financial Officer)
William M. Shockley
/s/ HOWARD T. HALLOWELL, III Director March 10, 2000
- ----------------------------
Howard T. Hallowell, III
/s/ JAMES F. O'CONNOR Director March 10, 2000
---------------------
James F. O'Connor
/s/ ERIC M. RUTTENBERG Director March 10, 2000
----------------------
Eric M. Ruttenberg
/s/ HARRY J. WILKINSON Director March 10, 2000
----------------------
Harry J. Wilkinson
10
REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULE
To the Board of Directors
of SPS Technologies, Inc.:
Our audits of the consolidated financial statements referred to in our report
dated February 8, 2000, except for Note 20, as to which the date is March 14,
2000, appearing in the 1999 Annual Report to Shareholders of SPS Technologies,
Inc. (which report and consolidated financial statements are incorporated by
reference in this Annual Report on Form 10-K) also included an audit of the
financial statement schedule listed in Item 14(a)(2) of this Form 10-K. In our
opinion, this financial statement schedule presents fairly, in all material
respects, the information set forth therein when read in conjunction with the
related consolidated financial statements.
PRICEWATERHOUSECOOPERS LLP
Philadelphia, Pennsylvania
February 8, 2000
11
SCHEDULE II
SPS TECHNOLOGIES, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
Years ended December 31, 1999, 1998 and 1997
(Thousands of dollars)
Additions Additions
charged charged
(deductions (deductions
Balance at credited) credited) Balance at
beginning to costs and to other end of
Description of year expenses accounts Deductions year
- ----------- ------- -------- -------- ---------- ----
Year ended December 31, 1999:
$ (84)(b)
Allowance for doubtful accounts ......... $ 2,960 $ 459 517 (c) $ (489)(a) $ 3,363
========= ======== ========= ======= =========
Deferred income tax valuation (1,202)(b)
allowance .............................. $ 11,782(e) $ (1,449) $ (255)(d) $ $ 8,876
========= ======== ========= ======= =========
Year ended December 31, 1998:
(9)(b)
Allowance for doubtful accounts ......... $ 2,027 $ 990 $ 324(c) $ (372)(a) $ 2,960
========= ======== ========= ======= =========
Deferred income tax valuation
allowance ............................. $ 11,030(e) $ 752 $ $ $ 11,782(e)
========= ======== ========= ======= =========
Year ended December 31, 1997:
$ (28)(b)
Allowance for doubtful accounts ......... $ 1,668 $ 407 263 (c) $ (283)(a) $ 2,027
========= ======== ========= ======= =========
Deferred income tax valuation
allowance ............................. $ 12,596(e) $ 150 $ (1,716)(d) $ 11,030(e)
========= ======== ========= =========
(a) Write off of uncollectible receivables, net of recoveries.
(b) Translation adjustments.
(c) Balance acquired in connection with acquisitions.
(d) Release of valuation allowances related to prior year business acquisitions
and credited to goodwill, the 1997 amount is net of balances acquired with
business acquisitions.
(e) The prior year components of the net deferred income tax asset were
reclassified to conform to the current year presentation.
12
EXHIBIT INDEX
3a Articles of Incorporation as amended. Exhibit 3a to the Annual Report
on Form 10-K for the year ended December 31, 1997, is hereby
incorporated by reference.
3b By-Laws as amended, effective April 29, 1993. Exhibit 3 to the
Quarterly Report on Form 10-Q for the quarter ended September 30, 1998,
is hereby incorporated by reference.
4a Rights Agreement, effective November 21, 1998. Exhibit 1 to the Form
8-A filed November 18, 1998, is hereby incorporated by reference.
4b Form of Registration Rights Agreement between the Company, the
Purchasers and the Investors dated November 16, 1994. Exhibit 4.5 to
the Form S-3 filed August 26, 1994, is hereby incorporated by
reference.
10a SPS 1988 Long Term Incentive Stock Plan as amended, effective February
2, 1989. Exhibit 10a to the Annual Report on Form 10-K for the year
ended December 31, 1988, is hereby incorporated by reference.
10b SPS Employees Savings and Investment Plan as Amended and Restated,
effective January 1, 1999.
10c Employment Agreement between SPS Technologies, Inc. and John S.
Thompson, President and Chief Operating Officer, effective October 1,
1999.
10d SPS Technologies, Inc. Management Incentive Plan as Amended and
Restated, effective April 26, 1994. Exhibit 10d to the Annual Report on
Form 10-K for the year ended December 31, 1995, is hereby incorporated
by reference.
10e Form of standby Purchase Agreement dated November 16, 1994. Exhibit
10.1 to the Form S-3/A file November 17, 1994, is hereby incorporated
by reference.
10f Retirement Benefit Agreement, dated February 28, 1979. Exhibit 10f to
the Annual Report on Form 10-K for the year ended December 31, 1991, is
hereby incorporated by reference.
10g Fee Arrangement with Former Directors, effective November 29, 1984.
Exhibit 10g to the Annual Report on Form 10-K for the year ended
December 31, 1990, is hereby incorporated by reference.
10h Form of Employment Agreements between SPS Technologies, Inc. and
certain employees, as amended and restated effective December 14, 1992.
Exhibit 10h to the Annual Report on Form 10-K for the year ended
December 31, 1992, is hereby incorporated by reference.
10i SPS Technologies, Inc. Executive Deferred Compensation Plan, as amended
and restated, effective December 14, 1992. Exhibit 10i to the Annual
Report on Form 10-K for the year ended December 31, 1992, is hereby
incorporated by reference.
10j SPS Technologies, Inc. Executive Deferred Compensation Plan II, as
amended and restated effective December 1, 1993. Exhibit 10j to the
Annual Report on Form 10-K for the year ended December 31, 1993, is
hereby incorporated by reference.
10k SPS Technologies, Inc. Supplemental Executive Retirement Plan, as
amended and restated effective December 14, 1992. Exhibit 10k to the
Annual Report on Form 10-K for the year ended December 31, 1992, is
hereby incorporated by reference.
10l Employment Agreement between SPS Technologies, Inc. and Charles W.
Grigg, Chairman and Chief Executive Officer, effective December 1,
1993. Exhibit 10l to the Annual Report on Form 10-K for the period
ended December 31, 1993, is hereby incorporated by reference.
10m Form of Indemnification Agreements between SPS Technologies, Inc. and
officers and directors dated February 2, 1987. Exhibit 10m to the
Annual Report on Form 10-K for the period ended December 31, 1992, is
hereby incorporated by reference.
10n Split Dollar Insurance Agreements regarding certain officers and
directors effective April 2, 1990, and November 27, 1991. Exhibit 10n
to the Annual Report on Form 10-K for the year ended December 31, 1991,
is hereby incorporated by reference.
10o SPS Technologies, Inc. Senior Executive Severance Plan, effective
December 14, 1992. Exhibit 10o to the Annual Report on Form 10-K for
the year ended December 31, 1992, is hereby incorporated by reference.
10p Agreement with Retiring Executive, approved December 14, 1992. Exhibit
10p to the Annual Report on Form 10-K for the year ended December 31,
1992, is hereby incorporated by reference.
10q SPS Technologies, Inc. Benefit Equalization Plan, as amended and
restated effective December 14, 1992. Exhibit 10 to the Quarterly
Report on Form 10-Q for the quarter ended March 31, 1993, is hereby
incorporated by reference.
10r SPS Technologies, Inc. Long Range Incentive Plan, effective January 1,
1995. Exhibit 10r to the Annual Report on Form 10-K for the year ended
December 31, 1995, is hereby incorporated by reference.
10s SPS Technologies, Inc. Executive Deferred Compensation Plan III,
effective January 1, 1998. Exhibit 10s to the Annual Report on Form
10-K for the year ended December 31, 1998, is hereby incorporated by
reference.
13.1 1999 Consolidated Financial Statements, Notes to Consolidated Financial
Statements and Report of Independent Accountants.
13.2 Summary of Quarterly Results for 1999 and 1998.
13.3 Selected Financial Data for 1995 through 1999.
13.4 Common Stock Information for 1999 and 1998.
13.5 1999 Management's Discussion and Analysis of Financial Condition and
Results of Operations.
21 Subsidiaries of the Registrant.
23 Consent of Independent Accountants.
27 Financial Data Schedule.