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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, 2002 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
Two Pitcairn Place, Suite 200 Identification No.)
165 Township Line Road
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 $0.50 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|
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). YES X NO
-----
The aggregate market value of the voting stock held by non-affiliates of the
registrant at June 30, 2002, was approximately $489,568,000.
The number of shares of registrant's common stock outstanding on March 14,
2003 was 12,556,833.
DOCUMENTS INCORPORATED BY REFERENCE
Exhibit 13, which contains portions of the 2002 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, 2002, 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.
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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 23 manufacturing facilities in the United States, it operates 17
manufacturing facilities in eight different countries: England, Ireland,
Canada, Brazil, Australia, China, Italy and France. Marketing operations are
carried on by subsidiaries in three other countries.
The Company's operating earnings decreased in 2002 compared to 2001,
primarily due to lower revenues in three of the Company's four segments
compared to last year, particularly in those businesses that serve the
aerospace, industrial gas turbine and electronics markets. The Company
initiated plans in 2002 and 2001 to eliminate, consolidate and restructure
certain of its operations. These plans were implemented to provide a
meaningful reduction in the cost structure of the Company in response to
declining market demand in many of the markets served by the Company.
Additional information regarding the general development of business
operations in 2002 is provided in Item 7, "Management's Discussion and
Analysis of Financial Condition and Results of Operations".
The Company is organized into four reportable segments for financial
reporting purposes. The four reportable segments are: Aerospace Fasteners and
Components, Engineered Fasteners and Components, Specialty Materials and
Alloys, and Magnetic Products. The Aerospace Fasteners and Components segment
produces fasteners, fastening systems and structural assemblies for the
aerospace market. Principal aerospace products are SPS(R) aerospace fasteners,
MULTIPHASE(R) alloy fasteners, latches, struts, rods, self locking components,
FLEXLOC(R) all-metal locknuts and GREER STOP NUT locknuts. Principal
structural assemblies products are precision machined components, sheet metal
fabrications and avionics assemblies. The Engineered Fasteners and Components
segment produces fasteners for the automotive and industrial machinery markets
and precision consumable tools used for metal forming and cutting. Principal
engineered fastener products are fasteners and precision components for
gasoline and diesel engines, other critical and non-critical automotive
applications and off-highway equipment, UNBRAKO(R) brand socket screws, hex
keys and dowel pins. 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, superalloys and waxes and provides melting
services 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 permanent magnets, 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 2002.
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 problems with respect to
sources or availability of the raw materials essential to the conduct of its
business.
The Company owns and licenses certain trademarks and patents that it
considers to be of importance to its four segments. The principal trademarks
of the Company include ARNOLD(R), AVIBANK(R), CANNON-MUSKEGON(R), CMSX(R),
FLEXLOC(R), FLEXMAG(R), GREER STOP NUT(R), HI-LIFE(R), HOWELL PENNCRAFT(R),
MP35N(R), MP159(R), MULTIPHASE(R), NSS(R), PLASTIFORM(R), SPS(R), SPS
TECHNOLOGIES(R), U130(R), and UNBRAKO(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 and foreign patents
of the Company expire at various times. Patents covering the CMSX-4(R), CMSX-
10K(R), CMSX-10N(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 2002, the five largest customers accounted for 16% 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):
2002 2001
-------- --------
Aerospace Fasteners and Components ...................... $172,354 $189,320
Engineered Fasteners and Components ..................... 72,371 71,650
Specialty Materials and Alloys .......................... 9,161 15,512
Magnetic Products ....................................... 25,329 22,654
-------- --------
Total ................................................... $279,215 $299,136
======== ========
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 2002, 2001 and 2000 for Company-sponsored research
and development were $6.1 million, $8.4 million and $7.3 million,
respectively. In 2002, approximately 65% of the expenditures were for the
Company's Aerospace Fasteners and Components segment.
Capital expenditures for property, plant and equipment are planned at $30.5
million in 2003, excluding capital spending for any businesses that may be
acquired in 2003.
There were approximately 2,826 persons employed in the Aerospace Fasteners
and Components segment, 1,853 persons employed in the Engineered Fasteners and
Components segment, 363 persons employed in the Specialty Materials and Alloys
segment, and 818 persons employed in the Magnetic Products segment at December
31, 2002.
Additional narrative information and the financial information concerning
industry segments and the foreign and domestic operations are included in Note
23 to the Company's Consolidated Financial Statements on pages 41 through 43
in the 2002 Annual Report to Shareholders. Exhibit 13.1 contains the
information and is incorporated herein by reference.
The Company's Internet Web Site is at www.spstech.com. Investors can obtain
copies of the Company's annual report on Form 10-K, quarterly reports on Form
10-Q, current reports on Form 8-K, and any amendments to those reports filed
or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act
as soon as reasonably practicable after the Company has filed such materials
with, or furnished them to, the Securities and Exchange Commission. The
Company will also furnish a paper copy of such filings free of charge upon
request.
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)
Leicester, England ........................................ 109,000(a)
Salt Lake City, Utah ...................................... 104,000(a)
Mansfield, England ........................................ 55,000(a)
Auxerre, France .......................................... 45,600(a)
Cleveland, Ohio ........................................... 375,000(b)
Sorocaba, Brazil ......................................... 339,000(b)
Waterford, Michigan ....................................... 114,000(b)
Melbourne, Australia ...................................... 44,000(b)
Nuneaton, England ......................................... 9,400(b)
Transfer, Pennsylvania .................................... 252,900(c)
Muskegon, Michigan ........................................ 173,000(c)
Mamaroneck, New York ...................................... 29,400(c)
Marengo, Illinois ......................................... 320,000(d)
Norfolk, Nebraska ......................................... 112,000(d)
Marietta, Ohio ............................................ 86,600(d)
Adelanto, California ...................................... 45,000(d)
Derbyshire, England ....................................... 44,000(d)
Ogallala, Nebraska ........................................ 22,000(d)
3
Leased Lease Expires Square Feet
------ ------------- -----------
Nottinghamshire, England ........................ (e) 142,500(a)
North Hollywood, California ..................... (f) 129,000(a)
Nashville, Tennessee ............................ (g) 99,000(a)
Burbank, California ............................. (h) 91,700(a)
Santa Ana, California ........................... (i) 118,200(a)
Auxerre, France ................................ (j) 39,300(a)
Pointe-Claire, Quebec, Canada ................... (k) 35,000(a)
Leicester, England .............................. (l) 38,000(a)
Shannon, Ireland ................................ (n)(o)(p) 232,000(b)
Shannon, Ireland ............................... (q)(r) 64,000(b)
Gadsden, Alabama ................................ (s) 130,000(b)
Plymouth, Michigan .............................. (t) 115,000(b)
Milan, Italy ................................... (u) 76,200(b)
Coventry, England ............................... (v) 70,000(b)
Valencia, California ............................ (w) 79,000(b)
Canton, Michigan ................................ (x) 50,800(b)
Howell, Michigan ................................ (y) 44,000(b)
Rosemead, CA ................................... (z) 34,100(c)
Rochester, New York ............................. (aa) 70,000(d)
Shenzhen, China ................................ (bb)(cc) 155,000(d)
Rochester, England .............................. (dd) 12,000(d)
- ---------------
(a) Aerospace Fasteners and Components segment.
(b) Engineered Fasteners and Components segment.
(c) Specialty Materials and Alloys segment.
(d) Magnetic Products segment.
(e) Lease for 142,500 square feet expires December 21, 2015.
(f) Lease for 129,000 square feet expires March 31, 2010.
(g) Lease for 99,000 square feet expires August 14, 2012.
(h) Lease for 91,700 square feet expires March 31, 2004.
(i) Leases for 118,200 square feet with various expirations. Primary
lease expires (ii) June 30, 2009.
(j) Lease for 39,300 square feet expires February 28, 2004.
(k) Lease for 35,000 square feet expires October 31, 2007.
(l) Lease for 38,000 square feet expires January 12, 2012.
(n) Lease for 100,000 square feet expires November 13, 2010.
(o) Lease for 75,000 square feet expires November 15, 2010.
(p) Lease for 57,000 square feet expires April 1, 2004.
(q) Lease for 48,000 square feet expires January 1, 2112.
(r) Lease for 16,000 square feet expires December 31, 2023.
(s) Leases for 130,000 square feet expires June 30, 2009.
(t) Leases for 115,000 square feet with various expirations. Primary
lease expires June 30, 2009.
(u) Lease for 76,200 square feet expires December 31, 2005.
(v) Lease for 70,000 square feet expires March 31, 2003.
(w) Leases for 79,000 square feet with various expirations. Primary lease
expires February 28, 2010.
(x) Lease for 50,800 square feet expires June 30, 2009.
(y) Lease for 44,000 square feet expires June 30, 2003.
(z) Leases for 34,100 square feet with various expirations. Primary
lease expires October 31, 2008.
(aa) Lease for 70,000 square feet expires October 31, 2006.
(bb) Lease for 125,000 square feet expires August 31, 2011.
(cc) Lease for 30,000 square feet expires June 30, 2007.
(dd) Lease for 12,000 square feet expires June 24, 2007.
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 14 to the Company's
Consolidated Financial Statements on pages 29 and 30 in the 2002 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 2002, 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 since April 2002. Previously, Chairman and Chief Executive Officer since 63
October 1999. Previously, Chairman, Chief Executive Officer and President since April
1997. Previously, Chairman and Chief Executive Officer since December 1993.
John S. Thompson Chief Executive Officer and President since April 2002. Previously, President and Chief 55
Operating Officer since October 1999. Previously, President and Chief Executive of BTR,
Inc. since 1993.
William M. Shockley Vice President, Chief Financial Officer since October 1998. Previously, Vice President, 41
Chief Financial Officer and Controller since July 1995.
Thomas S. Cross Vice President, Human Resources since June 1999. Previously, Vice President, Human 51
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 1997. 45
Thomas W. McDonnell Controller since February 2000. Previously, Director of Middle Market Advisory Services, 42
PricewaterhouseCoopers LLP since July 1997.
Margaret B. Zminda Treasurer, Assistant Secretary and Director, Investor Relations since February 2000. 44
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 13, 2003 is included
under the caption entitled "Common Stock Information" on page 45 in the 2002
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 45 in the 2002 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 46 through 61 in the 2002 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 46 through 61 in the
2002 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 14
through 45 in the 2002 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,
2002. 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, 2002. 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, 2002. 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
Information regarding certain relationships and related transactions is
incorporated by reference to the Definitive Proxy Statement, Certain
Relationships and Related Transactions, if filed with the SEC within 120 days
after December 31, 2002. To the extent not so filed, such information will be
provided on a Form 10-K/A filed with the SEC.
Item 14. CONTROLS AND PROCEDURES
During the 90-day period prior to the filing date of this report,
management, including the Company's Chief Executive Officer and Chief
Financial Officer, evaluated the effectiveness of the design and operation of
the Company's disclosure controls and procedures. Based upon, and as of the
date of that evaluation, the Chief Executive Officer and Chief Financial
Officer concluded that the disclosure controls and procedures were effective,
in all material respects, to ensure that information required to be disclosed
in the reports the Company files and submits under the Exchange Act is
recorded, processed, summarized and reported as and when required.
There have been no significant changes in the Company's internal controls or
in other factors which could significantly affect internal controls subsequent
to the date the Company carried out its evaluation. There were no significant
deficiencies or material weaknesses identified in the evaluation and,
therefore, no corrective actions were taken.
7
PART IV
Item 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) Documents filed as part of this Report:
1. The Consolidated Financial Statements and related Notes to
Consolidated Financial Statements are set forth on pages 14
through 43 of the 2002 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 13 of this
report.
2. Financial Statement Schedules:
The following supplemental schedule is located in this Report
on the page indicated.
II Valuation and Qualifying Accounts is on page 14
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 December 5, 2002 (submitted
electronically herewith).
4a Amended and Restated Rights Agreement, effective April 6, 2001.
Exhibit 1 to the Company's Registration Statement on Form 8-A/A
filed on April 9, 2001, is hereby incorporated by reference.
Amendment No.1 to the Rights Agreement (submitted
electronically herewith).
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 Technologies, Inc. Restricted Stock Award Plan for
Officers, Directors and Non-Officer Employees, effective
February 10, 2000. Exhibit 10t to the Annual Report on Form
10-k for the year ended December 31, 2000, is hereby
incorporated by reference.
10c Employment Agreement between SPS Technologies, Inc. and John S.
Thompson, President and Chief Operating Officer, effective
October 1, 1999. Exhibit 10c to the Annual Report on Form 10-K
for the year ended December 31, 1999, is hereby incorporated by
reference.
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.
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.
8
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 July 31, 2001. Exhibit 10k to
the Annual Report on Form 10-K for the year ended December 31,
2001, is hereby incorporated by reference.
10l Employment Agreement between SPS Technologies, Inc. and Charles
W. Grigg, Chairman, 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. Amendment 1 to
the Employment Agreement. Exhibit 10l to the Annual Report on
Form 10-K for the year ended December 31, 2001, is hereby
incorporated by reference. Amendment No. 2 to the Employment
Agreement (submitted electronically herewith).
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. Amendment No. 1 and No. 2 to
the Executive Deferred Compensation Plan III (submitted
electronically herewith).
13.1 2002 Consolidated Financial Statements, Notes to
Consolidated Financial Statements, Report of Independent
Accountants and Report of Management.
13.2 Summary of Quarterly Results for 2002 and 2001.
13.3 Selected Financial Data for 1998 through 2002.
13.4 Common Stock Information for 2002 and 2001.
13.5 2002 Management's Discussion and Analysis of Financial
Condition and Results of Operations.
21 Subsidiaries of the Registrant.
23 Consent of Independent Accountants.
(b) Reports on Form 8-K filed during the last quarter of 2002:
None.
9
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
SPS TECHNOLOGIES, INC.
----------------------
(Registrant)
/s/ William M. Shockley
------------------------
William M. Shockley
Vice President,
Chief Financial Officer
Date: March 14, 2003
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 and Director March 14, 2003
- ---------------------------
Charles W. Grigg
/s/ JOHN S. THOMPSON Chief Executive Officer, President and Director March 14, 2003
- --------------------------- (Principal Executive Officer)
John S. Thompson
/s/ WILLIAM M. SHOCKLEY Vice President, Chief Financial Officer March 14, 2003
- -------------------------- (Principal Financial Officer)
William M. Shockley
/s/ RICHARD W. KELSO Director March 14, 2003
- --------------------------
Richard W. Kelso
/s/ JAMES F. O'CONNOR Director March 14, 2003
- --------------------------
James F. O'Connor
/s/ RAYMOND P. SHARPE Director March 14, 2003
- --------------------------
Raymond P. Sharpe
/s/ JAMES W. ZUG Director March 14, 2003
- --------------------------
James W. Zug
10
CERTIFICATION
I, John S. Thompson, certify that:
1. I have reviewed this annual report on Form 10-K of SPS Technologies,
Inc.;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period
covered by this annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this annual
report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date
of this annual report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of the registrant's board of directors (or persons performing
the equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize, and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
Date: March 14, 2003 /s/ John S. Thompson
----------------------------------
John S. Thompson
Chief Executive Officer, President
and Director
11
CERTIFICATION
I, William M. Shockley, certify that:
1. I have reviewed this annual report on Form 10-K of SPS Technologies,
Inc.;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period
covered by this annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this annual
report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date
of this annual report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of the registrant's board of directors (or persons performing
the equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize, and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
Date: March 14, 2003 /s/ William M. Shockley
----------------------------------
William M. Shockley
Vice President and Chief Financial
Officer
12
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 12, 2003 appearing in the 2002 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 15(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.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
February 12, 2003
13
SCHEDULE II
SPS TECHNOLOGIES, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
Years ended December 31, 2002, 2001 and 2000
(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, 2002:
Allowance for doubtful accounts.......................... $4,880 $1,307 114 (b) $(1,158)(a) $ 5,143
====== ====== ======= ======= =======
Deferred income tax valuation
allowance............................................... $8,089 $3,251 $(1,237)(b) $ - $10,103
====== ====== ======= ======= =======
Year ended December 31, 2001:
$ (42)(b)
Allowance for doubtful accounts.......................... $3,815 $1,281 551 (c) $ (725)(a) $ 4,880
====== ====== ======= ======= =======
Deferred income tax valuation
allowance............................................... $8,407 $ (68) $ (250)(b) $ $ 8,089
====== ====== ======= ======= =======
Year ended December 31, 2000:
$ (91)(b)
Allowance for doubtful accounts.......................... $3,363 $ 159 852 (c) $ (468)(a) $ 3,815
====== ====== ======= ======= =======
Deferred income tax valuation
allowance............................................... $8,876 $ (141) $ (328)(b) $ $ 8,407
====== ====== ======= ======= =======
(a) Write off of uncollectible receivables, net of recoveries.
(b) Translation adjustments.
(c) Balance acquired in connection with acquisitions.
14