☒
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
For the transition period from to
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
Common Stock, $0.01 par value
|
RYAM
|
The New York Stock Exchange
|
Large accelerated filer
|
x
|
|
Accelerated filer
|
☐
|
Non-accelerated filer
|
o
|
|
Smaller reporting company
|
☐
|
|
|
|
Emerging growth company
|
☐
|
Item
|
|
|
Page
|
|
|
Part I — Financial Information
|
|
1.
|
|
|
|
|
|
||
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||
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||
|
|
||
2.
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|
||
3.
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|
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4.
|
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||
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Part II — Other Information
|
|
1.
|
|
||
1A.
|
|
||
2.
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|
||
6.
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||
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Part I.
|
Financial Information
|
Item 1.
|
Financial Statements
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 28, 2019
|
|
September 29, 2018
|
|
September 28, 2019
|
|
September 29, 2018
|
||||||||
Net Sales
|
$
|
416,129
|
|
|
$
|
501,298
|
|
|
$
|
1,307,422
|
|
|
$
|
1,475,649
|
|
Cost of Sales
|
(399,510
|
)
|
|
(419,001
|
)
|
|
(1,265,217
|
)
|
|
(1,236,761
|
)
|
||||
Gross Margin
|
16,619
|
|
|
82,297
|
|
|
42,205
|
|
|
238,888
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Selling, general and administrative expenses
|
(23,416
|
)
|
|
(30,596
|
)
|
|
(72,026
|
)
|
|
(77,669
|
)
|
||||
Duties
|
(4,542
|
)
|
|
(816
|
)
|
|
(16,062
|
)
|
|
(20,680
|
)
|
||||
Other operating income (expense), net
|
2,775
|
|
|
(7,945
|
)
|
|
(5,600
|
)
|
|
(9,507
|
)
|
||||
Operating Income (Loss)
|
(8,564
|
)
|
|
42,940
|
|
|
(51,483
|
)
|
|
131,032
|
|
||||
Interest expense
|
(14,580
|
)
|
|
(13,831
|
)
|
|
(42,598
|
)
|
|
(41,839
|
)
|
||||
Interest income and other, net
|
3,439
|
|
|
(394
|
)
|
|
3,341
|
|
|
5,013
|
|
||||
Other components of pension and OPEB, excluding service costs
|
846
|
|
|
2,066
|
|
|
3,313
|
|
|
6,270
|
|
||||
Adjustment to gain on bargain purchase
|
—
|
|
|
6,175
|
|
|
—
|
|
|
20,836
|
|
||||
Income (Loss) From Continuing Operations Before Income Taxes
|
(18,859
|
)
|
|
36,956
|
|
|
(87,427
|
)
|
|
121,312
|
|
||||
Income tax (expense) benefit (Note 16)
|
4,506
|
|
|
(6,989
|
)
|
|
25,813
|
|
|
(28,960
|
)
|
||||
Income (Loss) from Continuing Operations
|
(14,353
|
)
|
|
29,967
|
|
|
(61,614
|
)
|
|
92,352
|
|
||||
Income (loss) from discontinued operations, net of taxes (Note 2)
|
137
|
|
|
7,969
|
|
|
10,431
|
|
|
23,429
|
|
||||
Net Income (Loss) Attributable to the Company
|
(14,216
|
)
|
|
37,936
|
|
|
(51,183
|
)
|
|
115,781
|
|
||||
Mandatory convertible stock dividends
|
(1,777
|
)
|
|
(3,441
|
)
|
|
(8,582
|
)
|
|
(10,284
|
)
|
||||
Net Income (Loss) Available to Common Stockholders
|
$
|
(15,993
|
)
|
|
$
|
34,495
|
|
|
$
|
(59,765
|
)
|
|
$
|
105,497
|
|
|
|
|
|
|
|
|
|
||||||||
Basic Earnings Per Common Share (Note 13)
|
|
|
|
|
|
|
|
||||||||
Income (loss) from continuing operations
|
$
|
(0.29
|
)
|
|
$
|
0.52
|
|
|
$
|
(1.36
|
)
|
|
$
|
1.61
|
|
Income from discontinued operations
|
—
|
|
|
0.16
|
|
|
0.20
|
|
|
0.46
|
|
||||
Net income per common share-basic
|
$
|
(0.29
|
)
|
|
$
|
0.68
|
|
|
$
|
(1.16
|
)
|
|
$
|
2.07
|
|
Diluted Earnings Per Common Share (Note 13)
|
|
|
|
|
|
|
|
||||||||
Income (loss) from continuing operations
|
$
|
(0.29
|
)
|
|
$
|
0.47
|
|
|
$
|
(1.36
|
)
|
|
$
|
1.45
|
|
Income from discontinued operations
|
—
|
|
|
0.13
|
|
|
0.20
|
|
|
0.37
|
|
||||
Net income per common share-diluted
|
$
|
(0.29
|
)
|
|
$
|
0.60
|
|
|
$
|
(1.16
|
)
|
|
$
|
1.82
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 28, 2019
|
|
September 29, 2018
|
|
September 28, 2019
|
|
September 29, 2018
|
||||||||
Net Income (Loss)
|
$
|
(14,216
|
)
|
|
$
|
37,936
|
|
|
$
|
(51,183
|
)
|
|
$
|
115,781
|
|
Other Comprehensive Income (Loss),
net of tax (Note 11):
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustments
|
(11,210
|
)
|
|
(2,014
|
)
|
|
(12,905
|
)
|
|
(10,265
|
)
|
||||
Unrealized gain (loss) on derivative instruments
|
(3,283
|
)
|
|
6,126
|
|
|
7,982
|
|
|
(936
|
)
|
||||
Net gain from pension and postretirement plans
|
2,365
|
|
|
2,398
|
|
|
6,122
|
|
|
7,193
|
|
||||
Total other comprehensive income
|
(12,128
|
)
|
|
6,510
|
|
|
1,199
|
|
|
(4,008
|
)
|
||||
Comprehensive Income (Loss)
|
$
|
(26,344
|
)
|
|
$
|
44,446
|
|
|
$
|
(49,984
|
)
|
|
$
|
111,773
|
|
|
September 28, 2019
|
|
December 31, 2018
|
||||
Assets
|
|||||||
Current Assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
62,762
|
|
|
$
|
108,966
|
|
Accounts receivable, net (Note 3)
|
162,107
|
|
|
199,284
|
|
||
Inventory (Note 4)
|
291,425
|
|
|
304,028
|
|
||
Prepaid and other current assets
|
71,828
|
|
|
61,314
|
|
||
Assets of discontinued operations-held for sale (Note 2)
|
84,298
|
|
|
42,500
|
|
||
Total current assets
|
672,420
|
|
|
716,092
|
|
||
|
|
|
|
||||
Property, Plant and Equipment (net of accumulated depreciation of $1,470,506 at September 28, 2019 and $1,385,837 at December 31, 2018)
|
1,327,052
|
|
|
1,363,557
|
|
||
Deferred Tax Assets
|
393,224
|
|
|
375,471
|
|
||
Intangible Assets, net
|
47,203
|
|
|
52,460
|
|
||
Other Assets
|
156,795
|
|
|
120,299
|
|
||
Assets of discontinued operations-held for sale (Note 2)
|
—
|
|
|
51,207
|
|
||
Total Assets
|
$
|
2,596,694
|
|
|
$
|
2,679,086
|
|
|
|
|
|
||||
Liabilities and Stockholders’ Equity
|
|||||||
Current Liabilities
|
|
|
|
||||
Accounts payable
|
$
|
144,677
|
|
|
$
|
181,705
|
|
Accrued and other current liabilities (Note 6)
|
116,718
|
|
|
146,155
|
|
||
Current maturities of long-term debt (Note 7)
|
21,357
|
|
|
15,012
|
|
||
Current environmental liabilities (Note 8)
|
11,445
|
|
|
11,310
|
|
||
Liabilities of discontinued operations-held for sale (Note 2)
|
18,774
|
|
|
16,236
|
|
||
Total current liabilities
|
312,971
|
|
|
370,418
|
|
||
|
|
|
|
||||
Long-Term Debt (Note 7)
|
1,212,432
|
|
|
1,173,157
|
|
||
Long-Term Environmental Liabilities (Note 8)
|
148,054
|
|
|
149,344
|
|
||
Pension and Other Postretirement Benefits
|
231,388
|
|
|
233,658
|
|
||
Deferred Tax Liabilities
|
23,842
|
|
|
28,016
|
|
||
Other Long-Term Liabilities
|
28,999
|
|
|
12,074
|
|
||
Liabilities of discontinued operations-held for sale (Note 2)
|
—
|
|
|
5,548
|
|
||
Commitments and Contingencies
|
|
|
|
||||
|
|
|
|
||||
Stockholders’ Equity
|
|
|
|
||||
Preferred stock, 0 and 10,000,000 shares authorized at $0.00 and $0.01 par value, 0 and 1,725,000 issued and outstanding as of September 28, 2019 and December 31, 2018, respectively, aggregate liquidation preference $0 and $172,500
|
—
|
|
|
17
|
|
||
Common stock, 140,000,000 shares authorized at $0.01 par value, 63,210,811 and 49,291,130 issued and outstanding, as of September 28, 2019 and December 31, 2018, respectively
|
632
|
|
|
493
|
|
||
Additional paid-in capital
|
399,234
|
|
|
399,490
|
|
||
Retained earnings
|
393,640
|
|
|
462,568
|
|
||
Accumulated other comprehensive income (loss) (Note 11)
|
(154,498
|
)
|
|
(155,697
|
)
|
||
Total Stockholders’ Equity
|
639,008
|
|
|
706,871
|
|
||
Total Liabilities and Stockholders’ Equity
|
$
|
2,596,694
|
|
|
$
|
2,679,086
|
|
|
Nine Months Ended
|
||||||
|
September 28, 2019
|
|
September 29, 2018
|
||||
Operating Activities
|
|
|
|
||||
Net income (loss)
|
$
|
(51,183
|
)
|
|
$
|
115,781
|
|
Loss (income) from discontinued operations
|
(10,431
|
)
|
|
(23,429
|
)
|
||
Adjustments to reconcile income (loss) from continuing operations to cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
111,695
|
|
|
105,703
|
|
||
Stock-based incentive compensation expense
|
5,696
|
|
|
10,146
|
|
||
Amortization of capitalized debt costs, discount and premium
|
429
|
|
|
942
|
|
||
Deferred income tax
|
(22,847
|
)
|
|
30,748
|
|
||
Gain on bargain purchase
|
—
|
|
|
(19,458
|
)
|
||
Net periodic benefit cost of pension and postretirement plans
|
5,412
|
|
|
4,313
|
|
||
Loss (gain) from foreign currency
|
4,180
|
|
|
(6,341
|
)
|
||
Other
|
(31
|
)
|
|
5,318
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Receivables
|
35,232
|
|
|
(9,921
|
)
|
||
Inventories
|
11,308
|
|
|
(34,189
|
)
|
||
Accounts payable
|
(35,217
|
)
|
|
(4,887
|
)
|
||
Accrued liabilities
|
(8,612
|
)
|
|
5,582
|
|
||
All other operating activities
|
(32,459
|
)
|
|
(25,730
|
)
|
||
Contributions to pension and other postretirement benefit plans
|
(6,004
|
)
|
|
(8,000
|
)
|
||
Expenditures for environmental liabilities
|
(2,547
|
)
|
|
(5,549
|
)
|
||
Cash provided by operating activities-continuing operations
|
4,621
|
|
|
141,029
|
|
||
Cash provided by operating activities-discontinued operations
|
19,437
|
|
|
19,333
|
|
||
Cash Provided by Operating Activities
|
24,058
|
|
|
160,362
|
|
||
|
|
|
|
||||
Investing Activities
|
|
|
|
||||
Proceeds from sale of resin operations
|
—
|
|
|
16,143
|
|
||
Capital expenditures
|
(80,806
|
)
|
|
(90,094
|
)
|
||
Cash used for investing activities-continuing operations
|
(80,806
|
)
|
|
(73,951
|
)
|
||
Cash used for investing activities-discontinued operations
|
(2,606
|
)
|
|
(2,492
|
)
|
||
Cash Used for Investing Activities
|
(83,412
|
)
|
|
(76,443
|
)
|
||
|
|
|
|
||||
Financing Activities
|
|
|
|
||||
Revolving credit facility and other borrowings
|
88,627
|
|
|
—
|
|
||
Repayments of revolving credit facility
|
(36,000
|
)
|
|
—
|
|
||
Repayment of debt
|
(9,929
|
)
|
|
(34,141
|
)
|
||
Dividends paid on common stock
|
(8,569
|
)
|
|
(11,030
|
)
|
||
Dividends paid on preferred stock
|
(10,350
|
)
|
|
(10,350
|
)
|
||
Proceeds from the issuance of common stock
|
—
|
|
|
452
|
|
||
Common stock repurchased
|
(5,830
|
)
|
|
(17,784
|
)
|
||
Cash provided by (used for) financing activities-continuing operations
|
17,949
|
|
|
(72,853
|
)
|
||
Cash provided by (used for) financing activities-discontinued operations
|
—
|
|
|
—
|
|
||
Cash Provided by (Used for) Financing Activities
|
17,949
|
|
|
(72,853
|
)
|
||
|
|
|
|
||||
Cash and Cash Equivalents
|
|
|
|
||||
Change in cash and cash equivalents
|
(41,405
|
)
|
|
11,066
|
|
||
Net effect of foreign exchange on cash and cash equivalents
|
(4,799
|
)
|
|
(1,325
|
)
|
||
Balance, beginning of year
|
108,966
|
|
|
96,235
|
|
||
Balance, end of period
|
$
|
62,762
|
|
|
$
|
105,976
|
|
|
September 28, 2019
|
|
December 31, 2018
|
||||
Accounts receivable, net
|
$
|
15,355
|
|
|
$
|
23,093
|
|
Inventory
|
15,770
|
|
|
17,349
|
|
||
Prepaid and other current assets
|
811
|
|
|
2,058
|
|
||
Total current assets
|
31,936
|
|
|
42,500
|
|
||
Property, plant and equipment, net
|
18,437
|
|
|
17,482
|
|
||
Deferred tax assets
|
31,486
|
|
|
31,486
|
|
||
Other assets
|
2,439
|
|
|
2,239
|
|
||
Total assets
|
$
|
84,298
|
|
|
$
|
93,707
|
|
|
|
|
|
||||
Accounts payable
|
$
|
6,415
|
|
|
$
|
11,035
|
|
Accrued and other current liabilities
|
5,946
|
|
|
3,786
|
|
||
Other current liabilities
|
752
|
|
|
1,415
|
|
||
Total current liabilities
|
13,113
|
|
|
16,236
|
|
||
Other long-term liabilities
|
5,661
|
|
|
5,548
|
|
||
Total liabilities
|
$
|
18,774
|
|
|
$
|
21,784
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 28, 2019
|
|
September 29, 2018
|
|
September 28, 2019
|
|
September 29, 2018
|
||||||||
Revenues
|
$
|
34,781
|
|
|
$
|
43,041
|
|
|
$
|
114,085
|
|
|
$
|
132,401
|
|
Cost of sales
|
(31,271
|
)
|
|
(29,425
|
)
|
|
(93,567
|
)
|
|
(93,546
|
)
|
||||
Gross margin
|
3,510
|
|
|
13,616
|
|
|
20,518
|
|
|
38,855
|
|
||||
Selling, general and administrative expenses and other
|
(2,001
|
)
|
|
(406
|
)
|
|
(2,855
|
)
|
|
(1,258
|
)
|
||||
Operating income (loss)
|
1,509
|
|
|
13,210
|
|
|
17,663
|
|
|
37,597
|
|
||||
Interest expense (a)
|
(1,160
|
)
|
|
(1,142
|
)
|
|
(3,516
|
)
|
|
(3,298
|
)
|
||||
Other non-operating income
|
87
|
|
|
93
|
|
|
262
|
|
|
284
|
|
||||
Income (Loss) Before Income Taxes
|
436
|
|
|
12,161
|
|
|
14,409
|
|
|
34,583
|
|
||||
Income tax benefit (expense)
|
(299
|
)
|
|
(4,192
|
)
|
|
(3,978
|
)
|
|
(11,154
|
)
|
||||
Net Income (loss)
|
$
|
137
|
|
|
$
|
7,969
|
|
|
$
|
10,431
|
|
|
$
|
23,429
|
|
(a)
|
The Company is required to pay $100 million of debt from proceeds received from the sale of Matane. Interest expense has been allocated to discontinued operations using the weighted-average interest rates in effect for each period presented based on the proportionate amounts required to be repaid.
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 28, 2019
|
|
September 29, 2018
|
|
September 28, 2019
|
|
September 29, 2018
|
||||||||
Depreciation and amortization
|
$
|
230
|
|
|
$
|
630
|
|
|
$
|
1,590
|
|
|
$
|
1,818
|
|
Capital expenditures
|
$
|
1,531
|
|
|
$
|
712
|
|
|
$
|
2,606
|
|
|
$
|
2,492
|
|
|
September 28, 2019
|
|
December 31, 2018
|
||||
Accounts receivable, trade
|
$
|
124,958
|
|
|
$
|
146,056
|
|
Accounts receivable, other (a)
|
37,796
|
|
|
53,787
|
|
||
Allowance for doubtful accounts
|
(647
|
)
|
|
(559
|
)
|
||
Total accounts receivable, net
|
$
|
162,107
|
|
|
$
|
199,284
|
|
(a)
|
Accounts receivable, other consists primarily of value added/consumption taxes, grants receivable and accrued billings due from government agencies.
|
|
September 28, 2019
|
|
December 31, 2018
|
||||
Finished goods
|
$
|
184,771
|
|
|
$
|
203,350
|
|
Work-in-progress
|
19,837
|
|
|
21,478
|
|
||
Raw materials
|
77,057
|
|
|
68,656
|
|
||
Manufacturing and maintenance supplies
|
9,760
|
|
|
10,544
|
|
||
Total inventory
|
$
|
291,425
|
|
|
$
|
304,028
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||
|
|
September 28, 2019
|
|
September 28, 2019
|
||||
Operating Leases
|
|
|
|
|
||||
Operating lease expense
|
|
$
|
1,715
|
|
|
$
|
4,322
|
|
Finance Leases
|
|
|
|
|
||||
Amortization of ROU assets
|
|
77
|
|
|
228
|
|
||
Interest
|
|
52
|
|
|
159
|
|
||
Total
|
|
$
|
1,844
|
|
|
$
|
4,709
|
|
|
Balance Sheet Classification
|
|
September 28, 2019
|
||
Right-of-use assets
|
Other assets
|
|
$
|
22,516
|
|
Lease liabilities, current
|
Accrued and other current liabilities
|
|
$
|
5,276
|
|
Lease liabilities, non-current
|
Other non-current liabilities
|
|
$
|
17,935
|
|
|
September 28, 2019
|
|
December 31, 2018
|
||||
Accrued customer incentives and prepayments
|
$
|
34,556
|
|
|
$
|
41,734
|
|
Accrued payroll and benefits
|
24,461
|
|
|
29,567
|
|
||
Accrued interest
|
9,775
|
|
|
3,170
|
|
||
Derivative instruments
|
2,930
|
|
|
16,767
|
|
||
Accrued property and other taxes
|
14,814
|
|
|
10,663
|
|
||
Other current liabilities
|
30,182
|
|
|
44,254
|
|
||
Total accrued and other current liabilities
|
$
|
116,718
|
|
|
$
|
146,155
|
|
|
|
September 28, 2019
|
|
December 31, 2018
|
||||
U.S. Revolver of $100 million maturing in November 2022, $41 available, bearing interest at LIBOR plus 2.25%, interest of 4.30% at September 28, 2019
|
|
$
|
50,000
|
|
|
$
|
—
|
|
Multi-currency Revolver of $150 million maturing in November 2022, $126 available, bearing interest at LIBOR plus 2.00% at September 28, 2019
|
|
—
|
|
|
—
|
|
||
Term A-1 Loan Facility borrowings maturing through November 2022 bearing interest at LIBOR plus 2.25%, interest rate of 4.30% at September 28, 2019
|
|
160,000
|
|
|
160,000
|
|
||
Term A-2 Loan Facility borrowings maturing through November 2024 bearing interest at LIBOR plus 2.50% (after consideration of 0.60% patronage benefit), interest rate of 4.55% at September 28, 2019
|
|
438,875
|
|
|
438,875
|
|
||
Senior Notes due 2024 at a fixed interest rate of 5.50%
|
|
495,647
|
|
|
495,647
|
|
||
Canadian dollar, fixed interest rate term loans with rates ranging from 5.50% to 6.86% and maturity dates ranging from March 2020 through April 2028, secured by certain assets of the Temiscaming plant
|
|
85,501
|
|
|
91,304
|
|
||
Other loans
|
|
4,891
|
|
|
3,777
|
|
||
Finance lease obligation
|
|
2,896
|
|
|
3,124
|
|
||
Total debt principal payments due
|
|
1,237,810
|
|
|
1,192,727
|
|
||
Less: Debt premium, original issue discount and issuance costs, net
|
|
(4,021
|
)
|
|
(4,558
|
)
|
||
Total debt
|
|
1,233,789
|
|
|
1,188,169
|
|
||
Less: Current maturities of long-term debt
|
|
(21,357
|
)
|
|
(15,012
|
)
|
||
Long-term debt
|
|
$
|
1,212,432
|
|
|
$
|
1,173,157
|
|
|
Finance Lease Payments
|
|
|
Debt Principal Payments
|
||||
Remaining 2019
|
$
|
129
|
|
|
|
$
|
3,342
|
|
2020
|
515
|
|
|
|
23,124
|
|
||
2021
|
515
|
|
|
|
12,568
|
|
||
2022
|
515
|
|
|
|
239,779
|
|
||
2023
|
515
|
|
|
|
10,674
|
|
||
Thereafter
|
1,502
|
|
|
|
945,427
|
|
||
Total principal payments
|
$
|
3,691
|
|
|
|
$
|
1,234,914
|
|
Less: Imputed interest
|
(795
|
)
|
|
|
|
|||
Present value minimum finance lease payments
|
$
|
2,896
|
|
|
|
|
Balance, December 31, 2018
|
$
|
160,654
|
|
Increase in liabilities
|
928
|
|
|
Payments
|
(2,547
|
)
|
|
Foreign currency adjustments
|
464
|
|
|
Balance, September 28, 2019
|
159,499
|
|
|
Less: Current portion
|
(11,445
|
)
|
|
Long-term environmental liabilities
|
$
|
148,054
|
|
|
|
September 28, 2019
|
|
December 31, 2018
|
||||
Interest rate swaps (a)
|
|
$
|
200,000
|
|
|
$
|
200,000
|
|
Foreign exchange forward contracts (b)
|
|
$
|
359,648
|
|
|
$
|
388,930
|
|
Foreign exchange forward contracts (c)
|
|
$
|
95,051
|
|
|
$
|
125,979
|
|
|
|
Balance Sheet Location
|
|
September 28, 2019
|
|
December 31, 2018
|
||||
Assets
|
|
|
|
|
|
|
||||
Derivatives designated as hedging instruments:
|
|
|
|
|
|
|
||||
Interest rate swaps
|
|
Other current assets
|
|
$
|
—
|
|
|
$
|
1,194
|
|
Interest rate swaps
|
|
Other assets
|
|
—
|
|
|
937
|
|
||
Foreign exchange forward contracts
|
|
Other current assets
|
|
914
|
|
|
—
|
|
||
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
||||
Foreign exchange forward contracts
|
|
Other current assets
|
|
35
|
|
|
7
|
|
||
|
|
|
|
|
|
|
||||
Liabilities
|
|
|
|
|
|
|
||||
Derivatives designated as hedging instruments:
|
|
|
|
|
|
|
||||
Interest rate swaps
|
|
Other current liabilities
|
|
(557
|
)
|
|
—
|
|
||
Interest rate swaps
|
|
Other non-current liabilities
|
|
(277
|
)
|
|
—
|
|
||
Foreign exchange forward contracts
|
|
Other current liabilities
|
|
(2,373
|
)
|
|
(16,408
|
)
|
||
Foreign exchange forward contracts
|
|
Other non-current liabilities
|
|
(2,044
|
)
|
|
(3,105
|
)
|
||
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
||||
Foreign exchange forward contracts
|
|
Other current liabilities
|
|
—
|
|
|
(360
|
)
|
||
Total derivatives
|
|
|
|
$
|
(4,302
|
)
|
|
$
|
(17,735
|
)
|
|
|
Three Months Ended September 28, 2019
|
|
|
||||||
Derivatives Designated as Hedging Instruments
|
|
Gain (Loss) Recognized in OCI on Derivative
|
|
Gain (Loss) Reclassified from AOCI into Income
|
|
Location on Statement of Income
|
||||
Interest rate swaps
|
|
$
|
(64
|
)
|
|
$
|
172
|
|
|
Interest expense
|
Foreign exchange forward contracts
|
|
$
|
(5,940
|
)
|
|
$
|
(76
|
)
|
|
Other operating expense, net
|
Foreign exchange forward contracts
|
|
$
|
1,256
|
|
|
$
|
(1,256
|
)
|
|
Cost of sales
|
Foreign exchange forward contracts
|
|
$
|
(2,000
|
)
|
|
$
|
(1,290
|
)
|
|
Interest income and other, net
|
|
|
|
|
|
|
|
||||
|
|
Three Months Ended September 29, 2018
|
|
|
||||||
|
|
Gain (Loss) Recognized in OCI on Derivative
|
|
Gain (Loss) Reclassified from AOCI into Income
|
|
Location on Statement of Income
|
||||
Interest rate swaps
|
|
$
|
530
|
|
|
$
|
74
|
|
|
Interest expense
|
Foreign exchange forward contracts
|
|
$
|
5,002
|
|
|
$
|
60
|
|
|
Other operating expense, net
|
Foreign exchange forward contracts
|
|
$
|
1,399
|
|
|
$
|
(1,399
|
)
|
|
Cost of sales
|
Foreign exchange forward contracts
|
|
$
|
1,570
|
|
|
$
|
1,529
|
|
|
Interest income and other, net
|
|
|
|
|
|
|
|
||||
|
|
Nine Months Ended September 28, 2019
|
|
|
||||||
Derivatives Designated as Hedging Instruments
|
|
Gain (Loss) Recognized in OCI on Derivative
|
|
Gain (Loss) Reclassified from AOCI into Income
|
|
Location on Statement of Income
|
||||
Interest rate swaps
|
|
$
|
(2,237
|
)
|
|
$
|
728
|
|
|
Interest expense
|
Foreign exchange forward contracts
|
|
$
|
(1,903
|
)
|
|
$
|
600
|
|
|
Other operating expense, net
|
Foreign exchange forward contracts
|
|
$
|
8,822
|
|
|
$
|
(8,822
|
)
|
|
Cost of sales
|
Foreign exchange forward contracts
|
|
$
|
1,031
|
|
|
$
|
2,077
|
|
|
Interest income and other, net
|
|
|
|
|
|
|
|
||||
|
|
Nine Months Ended September 29, 2018
|
|
|
||||||
Derivatives Designated as Hedging Instruments
|
|
Gain (Loss) Recognized in OCI on Derivative
|
|
Gain (Loss) Reclassified from AOCI into Income
|
|
Location on Statement of Income
|
||||
Interest rate swaps
|
|
$
|
3,095
|
|
|
$
|
(112
|
)
|
|
Interest expense
|
Foreign exchange forward contracts
|
|
$
|
(5,406
|
)
|
|
$
|
1,188
|
|
|
Other operating expense, net
|
Foreign exchange forward contracts
|
|
$
|
1,466
|
|
|
$
|
(1,466
|
)
|
|
Cost of sales
|
Foreign exchange forward contracts
|
|
$
|
181
|
|
|
$
|
973
|
|
|
Interest income and other, net
|
|
|
|
|
|
||||||||||||||
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
Derivatives Not Designated as Hedging Instruments
|
|
Location of Gain (Loss) Recognized in Income on Derivative
|
|
September 28, 2019
|
|
September 29, 2018
|
|
September 28, 2019
|
|
September 29, 2018
|
||||||||
Foreign exchange forward contracts
|
|
Other operating income (expense), net
|
|
$
|
(137
|
)
|
|
$
|
(250
|
)
|
|
$
|
193
|
|
|
$
|
(3,791
|
)
|
|
|
September 28, 2019
|
|
December 31, 2018
|
||||
Interest rate cash flow hedges
|
|
$
|
(650
|
)
|
|
$
|
1,663
|
|
Foreign exchange cash flow hedges
|
|
$
|
(2,990
|
)
|
|
$
|
(13,285
|
)
|
|
September 28, 2019
|
|
December 31, 2018
|
||||||||||||||||||||
|
Carrying
Amount
|
|
Fair Value
|
|
Carrying
Amount
|
|
Fair Value
|
||||||||||||||||
Assets:
|
|
Level 1
|
|
Level 2
|
|
|
Level 1
|
|
Level 2
|
||||||||||||||
Cash and cash equivalents
|
$
|
62,762
|
|
|
$
|
62,762
|
|
|
$
|
—
|
|
|
$
|
108,966
|
|
|
$
|
108,966
|
|
|
$
|
—
|
|
Interest rate swaps (a)
|
—
|
|
|
—
|
|
|
—
|
|
|
2,131
|
|
|
—
|
|
|
2,131
|
|
||||||
Foreign currency forward contracts (a)
|
949
|
|
|
—
|
|
|
949
|
|
|
7
|
|
|
—
|
|
|
7
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Liabilities (b):
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest rate swaps (a)
|
834
|
|
|
—
|
|
|
834
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Foreign currency forward contracts (a)
|
4,417
|
|
|
—
|
|
|
4,417
|
|
|
19,873
|
|
|
—
|
|
|
19,873
|
|
||||||
Fixed-rate long-term debt
|
580,068
|
|
|
—
|
|
|
448,325
|
|
|
585,824
|
|
|
—
|
|
|
541,267
|
|
||||||
Variable-rate long-term debt
|
650,824
|
|
|
—
|
|
|
653,766
|
|
|
599,221
|
|
|
—
|
|
|
602,652
|
|
|
Nine Months Ended
|
||||||
|
September 28, 2019
|
|
September 29, 2018
|
||||
Unrecognized components of employee benefit plans, net of tax:
|
|
|
|
|
|||
Balance, beginning of year
|
$
|
(135,590
|
)
|
|
$
|
(81,638
|
)
|
Reclassifications to earnings: (a)
|
|
|
|
||||
Amortization of losses
|
7,829
|
|
|
8,907
|
|
||
Amortization of prior service costs
|
311
|
|
|
429
|
|
||
Amortization of negative plan amendment
|
—
|
|
|
(115
|
)
|
||
Income tax on reclassifications
|
(1,804
|
)
|
|
(2,028
|
)
|
||
Foreign currency adjustments, net of tax of $75
|
(214
|
)
|
|
—
|
|
||
Net comprehensive gain (loss) on employee benefit plans, net of tax
|
6,122
|
|
|
7,193
|
|
||
Balance, end of quarter
|
(129,468
|
)
|
|
(74,445
|
)
|
||
|
|
|
|
||||
Unrealized gain (loss) on derivative instruments, net of tax:
|
|
|
|
||||
Balance, beginning of year
|
(11,622
|
)
|
|
619
|
|
||
Other comprehensive income before reclassifications
|
5,713
|
|
|
(664
|
)
|
||
Income tax on other comprehensive income
|
(1,446
|
)
|
|
281
|
|
||
Reclassifications to earnings: (b)
|
|
|
|
||||
Interest rate contracts
|
(728
|
)
|
|
112
|
|
||
Foreign exchange contracts
|
6,145
|
|
|
(695
|
)
|
||
Income tax on reclassifications
|
(1,702
|
)
|
|
30
|
|
||
Net comprehensive gain (loss) on derivative instruments, net of tax
|
7,982
|
|
|
(936
|
)
|
||
Balance, end of quarter
|
(3,640
|
)
|
|
(317
|
)
|
||
|
|
|
|
||||
Foreign currency translation adjustments:
|
|
|
|
||||
Balance, beginning of year
|
(8,485
|
)
|
|
4,868
|
|
||
Foreign currency translation adjustment, net of tax of $0 and $0
|
(12,905
|
)
|
|
(10,265
|
)
|
||
Balance, end of quarter
|
(21,390
|
)
|
|
(5,397
|
)
|
||
|
|
|
|
||||
Accumulated other comprehensive income (loss), end of quarter
|
$
|
(154,498
|
)
|
|
$
|
(80,159
|
)
|
(a)
|
The AOCI components for defined benefit pension and post-retirement plans are included in the computation of net periodic benefit cost. See Note 15— Employee Benefit Plans for additional information.
|
(b)
|
Reclassifications of interest rate contracts are recorded in interest expense. Reclassifications of foreign currency exchange contracts are recorded in cost of sales, other operating income or non-operating income as appropriate. See Note 9 —Derivative Instruments for additional information.
|
|
Common Stock
|
|
Preferred Stock
|
|
Additional Paid in Capital
|
|
Retained
Earnings
|
|
Accumulated Other Comprehensive Loss
|
|
Total Stockholders’
Equity
|
||||||||||||||||||
|
Shares
|
|
Par Value
|
|
Shares
|
|
Par Value
|
|
|
||||||||||||||||||||
For the nine months ended September 28, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Balance, December 31, 2018
|
49,291,130
|
|
|
$
|
493
|
|
|
1,725,000
|
|
|
$
|
17
|
|
|
$
|
399,490
|
|
|
$
|
462,568
|
|
|
$
|
(155,697
|
)
|
|
$
|
706,871
|
|
Net income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(51,183
|
)
|
|
—
|
|
|
(51,183
|
)
|
||||||
Other comprehensive income (loss), net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,199
|
|
|
1,199
|
|
||||||
Preferred stock converted to common stock
|
13,361,678
|
|
|
133
|
|
|
(1,725,000
|
)
|
|
(17
|
)
|
|
(116
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Issuance of common stock under incentive stock plans
|
980,968
|
|
|
10
|
|
|
—
|
|
|
—
|
|
|
(10
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,696
|
|
|
—
|
|
|
—
|
|
|
5,696
|
|
||||||
Repurchase of common stock
|
(422,965
|
)
|
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
(5,826
|
)
|
|
—
|
|
|
—
|
|
|
(5,830
|
)
|
||||||
Common stock dividends
($0.14 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,395
|
)
|
|
—
|
|
|
(7,395
|
)
|
||||||
Preferred stock dividends
($6.00 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10,350
|
)
|
|
—
|
|
|
(10,350
|
)
|
||||||
Balance, September 28, 2019
|
63,210,811
|
|
|
$
|
632
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
399,234
|
|
|
$
|
393,640
|
|
|
$
|
(154,498
|
)
|
|
$
|
639,008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
For the three months ended September 28, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Balance, June 29, 2019
|
49,848,087
|
|
|
$
|
498
|
|
|
1,725,000
|
|
|
$
|
17
|
|
|
$
|
397,115
|
|
|
$
|
411,306
|
|
|
$
|
(142,370
|
)
|
|
$
|
666,566
|
|
Net income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(14,216
|
)
|
|
—
|
|
|
(14,216
|
)
|
||||||
Other comprehensive income (loss), net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(12,128
|
)
|
|
(12,128
|
)
|
||||||
Preferred stock converted to common stock
|
13,361,678
|
|
|
133
|
|
|
(1,725,000
|
)
|
|
(17
|
)
|
|
(116
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Issuance of common stock under incentive stock plans
|
953
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,240
|
|
|
—
|
|
|
—
|
|
|
2,240
|
|
||||||
Repurchase of common shares
|
93
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
||||||
Common stock dividends
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Preferred stock dividends
($2.00 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,450
|
)
|
|
—
|
|
|
(3,450
|
)
|
||||||
Balance, September 28, 2019
|
63,210,811
|
|
|
$
|
632
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
399,234
|
|
|
$
|
393,640
|
|
|
$
|
(154,498
|
)
|
|
$
|
639,008
|
|
|
Common Stock
|
|
Preferred Stock
|
|
Additional Paid in Capital
|
|
Retained
Earnings
|
|
Accumulated Other Comprehensive Loss
|
|
Total Stockholders’
Equity
|
||||||||||||||||||
|
Shares
|
|
Par Value
|
|
Shares
|
|
Par Value
|
|
|
||||||||||||||||||||
For the nine months ended September 29, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balance, December 31, 2017
|
51,717,142
|
|
|
$
|
517
|
|
|
1,725,000
|
|
|
$
|
17
|
|
|
$
|
392,353
|
|
|
$
|
377,020
|
|
|
$
|
(76,151
|
)
|
|
$
|
693,756
|
|
Net income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
115,781
|
|
|
—
|
|
|
115,781
|
|
||||||
Other comprehensive income (loss), net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,008
|
)
|
|
(4,008
|
)
|
||||||
Issuance of common stock under incentive stock plans
|
302,976
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
449
|
|
|
—
|
|
|
—
|
|
|
452
|
|
||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,146
|
|
|
—
|
|
|
—
|
|
|
10,146
|
|
||||||
Repurchase of common stock
|
(959,163
|
)
|
|
(9
|
)
|
|
—
|
|
|
—
|
|
|
(4,089
|
)
|
|
(13,686
|
)
|
|
—
|
|
|
(17,784
|
)
|
||||||
Common stock dividends
($0.21 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(11,137
|
)
|
|
—
|
|
|
(11,137
|
)
|
||||||
Preferred stock dividends
($6.00 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10,350
|
)
|
|
—
|
|
|
(10,350
|
)
|
||||||
Balance, September 29, 2018
|
51,060,955
|
|
|
$
|
511
|
|
|
1,725,000
|
|
|
$
|
17
|
|
|
$
|
398,859
|
|
|
$
|
457,628
|
|
|
$
|
(80,159
|
)
|
|
$
|
776,856
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
For the three months ended September 29, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Balance, June 30, 2018
|
51,217,595
|
|
|
$
|
512
|
|
|
1,725,000
|
|
|
$
|
17
|
|
|
$
|
395,326
|
|
|
$
|
429,753
|
|
|
$
|
(86,669
|
)
|
|
$
|
738,939
|
|
Net income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
37,936
|
|
|
—
|
|
|
37,936
|
|
||||||
Other comprehensive income (loss), net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,510
|
|
|
6,510
|
|
||||||
Issuance of common stock under incentive stock plans
|
414
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
109
|
|
|
—
|
|
|
—
|
|
|
109
|
|
||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,647
|
|
|
—
|
|
|
—
|
|
|
3,647
|
|
||||||
Repurchase of common shares
|
(157,054
|
)
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
(223
|
)
|
|
(3,031
|
)
|
|
—
|
|
|
(3,255
|
)
|
||||||
Common stock dividends
($0.07 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,580
|
)
|
|
—
|
|
|
(3,580
|
)
|
||||||
Preferred stock dividends
($2.00 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,450
|
)
|
|
—
|
|
|
(3,450
|
)
|
||||||
Balance, September 29, 2018
|
51,060,955
|
|
|
$
|
511
|
|
|
1,725,000
|
|
|
$
|
17
|
|
|
$
|
398,859
|
|
|
$
|
457,628
|
|
|
$
|
(80,159
|
)
|
|
$
|
776,856
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 28, 2019
|
|
September 29, 2018
|
|
September 28, 2019
|
|
September 29, 2018
|
||||||||
Income (loss) from continuing operations
|
$
|
(14,353
|
)
|
|
$
|
29,967
|
|
|
$
|
(61,614
|
)
|
|
$
|
92,352
|
|
Preferred Stock dividends
|
(1,777
|
)
|
|
(3,441
|
)
|
|
(8,582
|
)
|
|
(10,284
|
)
|
||||
Income (loss) from continuing operations attributable to common stockholders
|
(16,130
|
)
|
|
26,526
|
|
|
(70,196
|
)
|
|
82,068
|
|
||||
Income (loss) from discontinued operations
|
137
|
|
|
7,969
|
|
|
10,431
|
|
|
23,429
|
|
||||
Net income (loss) available for common stockholders
|
$
|
(15,993
|
)
|
|
$
|
34,495
|
|
|
$
|
(59,765
|
)
|
|
$
|
105,497
|
|
|
|
|
|
|
|
|
|
||||||||
Shares used for determining basic earnings per share of common stock
|
56,089,839
|
|
|
50,603,498
|
|
|
51,576,123
|
|
|
51,005,206
|
|
||||
Dilutive effect of:
|
|
|
|
|
|
|
|
||||||||
Stock options
|
—
|
|
|
3,620
|
|
|
—
|
|
|
4,127
|
|
||||
Performance and restricted stock
|
—
|
|
|
1,266,588
|
|
|
—
|
|
|
1,297,024
|
|
||||
Preferred stock
|
—
|
|
|
11,371,718
|
|
|
—
|
|
|
11,371,718
|
|
||||
Shares used for determining diluted earnings per share of common stock
|
56,089,839
|
|
|
63,245,424
|
|
|
51,576,123
|
|
|
63,678,075
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Basic per share amounts
|
|
|
|
|
|
|
|
||||||||
Income (loss) from continuing operations
|
$
|
(0.29
|
)
|
|
$
|
0.52
|
|
|
$
|
(1.36
|
)
|
|
$
|
1.61
|
|
Income (loss) from discontinued operations
|
—
|
|
|
0.16
|
|
|
0.20
|
|
|
0.46
|
|
||||
Net income (loss)
|
$
|
(0.29
|
)
|
|
$
|
0.68
|
|
|
$
|
(1.16
|
)
|
|
$
|
2.07
|
|
Diluted per share amounts
|
|
|
|
|
|
|
|
||||||||
Income (loss) from continuing operations
|
$
|
(0.29
|
)
|
|
$
|
0.47
|
|
|
$
|
(1.36
|
)
|
|
$
|
1.45
|
|
Income (loss) from discontinued operations
|
—
|
|
|
0.13
|
|
|
0.20
|
|
|
0.37
|
|
||||
Net income (loss)
|
$
|
(0.29
|
)
|
|
$
|
0.60
|
|
|
$
|
(1.16
|
)
|
|
$
|
1.82
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||
|
September 28, 2019
|
|
September 29, 2018
|
|
September 28, 2019
|
|
September 29, 2018
|
||||
Stock options
|
225,934
|
|
|
263,184
|
|
|
225,934
|
|
|
263,184
|
|
Performance and restricted stock
|
688,029
|
|
|
11,687
|
|
|
502,888
|
|
|
398,576
|
|
Total anti-dilutive instruments
|
913,963
|
|
|
274,871
|
|
|
728,822
|
|
|
661,760
|
|
|
Stock Options
|
|
Restricted Stock and Stock Units
|
|
Performance-Based Stock Units
|
|||||||||||||||
|
Options
|
|
Weighted Average Exercise Price
|
|
Awards
|
|
Weighted Average Grant Date Fair Value
|
|
Awards
|
|
Weighted Average Grant Date Fair Value
|
|||||||||
Outstanding at January 1, 2019
|
286,613
|
|
|
$
|
34.23
|
|
|
917,098
|
|
|
$
|
13.71
|
|
|
1,325,894
|
|
|
$
|
14.69
|
|
Granted
|
—
|
|
|
—
|
|
|
395,777
|
|
|
11.99
|
|
|
400,921
|
|
|
14.98
|
|
|||
Forfeited
|
—
|
|
|
—
|
|
|
(9,533
|
)
|
|
15.22
|
|
|
(7,501
|
)
|
|
16.92
|
|
|||
Exercised or settled
|
—
|
|
|
—
|
|
|
(458,748
|
)
|
|
10.64
|
|
|
(520,167
|
)
|
|
7.80
|
|
|||
Expired or cancelled
|
(60,679
|
)
|
|
26.82
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Outstanding at September 28, 2019
|
225,934
|
|
|
$
|
36.22
|
|
|
844,594
|
|
|
$
|
14.56
|
|
|
1,199,147
|
|
|
$
|
17.76
|
|
|
Pension
|
Postretirement
|
|||||||||||||
|
Three Months Ended
|
|
Three Months Ended
|
||||||||||||
Components of Net Periodic Benefit Cost
|
September 28, 2019
|
|
September 29, 2018
|
|
September 28, 2019
|
|
September 29, 2018
|
||||||||
Service cost
|
$
|
2,411
|
|
|
$
|
2,845
|
|
|
$
|
456
|
|
|
$
|
521
|
|
Interest cost
|
9,199
|
|
|
7,907
|
|
|
352
|
|
|
217
|
|
||||
Expected return on plan assets
|
(13,110
|
)
|
|
(13,302
|
)
|
|
—
|
|
|
—
|
|
||||
Amortization of prior service cost
|
142
|
|
|
143
|
|
|
(38
|
)
|
|
—
|
|
||||
Amortization of losses
|
2,590
|
|
|
2,912
|
|
|
20
|
|
|
57
|
|
||||
Amortization of negative plan amendment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total net periodic benefit cost
|
$
|
1,232
|
|
|
$
|
505
|
|
|
$
|
790
|
|
|
$
|
795
|
|
|
|
|
|
|
|
|
|
||||||||
|
Pension
|
Postretirement
|
|||||||||||||
|
Nine Months Ended
|
|
Nine Months Ended
|
||||||||||||
Components of Net Periodic Benefit Cost
|
September 28, 2019
|
|
September 29, 2018
|
|
September 28, 2019
|
|
September 29, 2018
|
||||||||
Service cost
|
$
|
7,339
|
|
|
$
|
8,605
|
|
|
$
|
1,387
|
|
|
$
|
1,978
|
|
Interest cost
|
27,949
|
|
|
23,885
|
|
|
1,072
|
|
|
675
|
|
||||
Expected return on plan assets
|
(40,475
|
)
|
|
(40,166
|
)
|
|
—
|
|
|
—
|
|
||||
Amortization of prior service cost
|
426
|
|
|
429
|
|
|
(115
|
)
|
|
—
|
|
||||
Amortization of losses
|
7,768
|
|
|
8,735
|
|
|
61
|
|
|
172
|
|
||||
Amortization of negative plan amendment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total net periodic benefit cost
|
$
|
3,007
|
|
|
$
|
1,488
|
|
|
$
|
2,405
|
|
|
$
|
2,825
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 28, 2019
|
|
September 29, 2018
|
|
September 28, 2019
|
|
September 29, 2018
|
||||||||
High Purity Cellulose
|
$
|
6,745
|
|
|
$
|
33,922
|
|
|
$
|
10,665
|
|
|
$
|
83,288
|
|
Forest Products
|
(5,076
|
)
|
|
7,986
|
|
|
(26,664
|
)
|
|
35,158
|
|
||||
Pulp
|
(2,061
|
)
|
|
12,825
|
|
|
2,700
|
|
|
37,373
|
|
||||
Paper
|
165
|
|
|
13,648
|
|
|
1,136
|
|
|
23,465
|
|
||||
Corporate
|
(8,337
|
)
|
|
(25,441
|
)
|
|
(39,320
|
)
|
|
(48,252
|
)
|
||||
Total operating income (loss)
|
$
|
(8,564
|
)
|
|
$
|
42,940
|
|
|
$
|
(51,483
|
)
|
|
$
|
131,032
|
|
|
September 28, 2019
|
|
December 31, 2018
|
||||
High Purity Cellulose
|
$
|
1,585,594
|
|
|
$
|
1,643,092
|
|
Forest Products
|
169,365
|
|
|
166,801
|
|
||
Pulp
|
33,284
|
|
|
41,087
|
|
||
Paper
|
223,302
|
|
|
240,427
|
|
||
Corporate
|
500,851
|
|
|
493,972
|
|
||
Assets Held for Sale
|
84,298
|
|
|
93,707
|
|
||
Total identifiable assets
|
$
|
2,596,694
|
|
|
$
|
2,679,086
|
|
|
Purchase Obligations
|
||
Remainder of 2019
|
$
|
2,818
|
|
2020
|
17,342
|
|
|
2021
|
11,399
|
|
|
2022
|
7,606
|
|
|
2023
|
2,524
|
|
|
Thereafter
|
5,225
|
|
|
Total
|
$
|
46,914
|
|
|
September 28, 2019
|
|
September 29, 2018
|
||||
Cash paid (received) during the period:
|
|
|
|
||||
Interest
|
$
|
37,126
|
|
|
$
|
35,000
|
|
Income taxes
|
$
|
1,858
|
|
|
$
|
12,834
|
|
Non-cash investing and financing activities:
|
|
|
|
||||
Capital assets purchased on account
|
$
|
15,732
|
|
|
$
|
8,221
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
•
|
The businesses we operate are highly competitive and many of them are cyclical, which may result in fluctuations in pricing and volume that can adversely impact our business, financial condition and results of operations.
|
•
|
Our ten largest customers represent approximately 35 percent of our 2018 sales, and the loss of all or a substantial portion of our revenue from these large customers could have a material adverse effect on our business.
|
•
|
A material disruption at one of our major manufacturing facilities could prevent us from meeting customer demand, reduce our sales and profitability, increase our cost of production and capital needs, or otherwise adversely affect our business, financial condition and results of operation.
|
•
|
Changes in raw material and energy availability and prices could affect our business, financial condition and results of operations.
|
•
|
The availability of, and prices for, wood fiber could materially impact our business, results of operations and financial condition.
|
•
|
We are subject to risks associated with doing business outside of the United States.
|
•
|
Our operations require substantial capital.
|
•
|
Currency fluctuations may have a negative impact on our business, financial condition and results of operations.
|
•
|
Restrictions on trade through tariffs, countervailing and anti-dumping duties, quotas and other trade barriers, in the United States and internationally, especially with respect to China, Canada and as a result of “Brexit”, could adversely affect our ability to access certain markets and otherwise impact our results of operations.
|
•
|
We depend on third parties for transportation services and increases in costs and the availability of transportation could adversely affect our business.
|
•
|
Our business is subject to extensive environmental laws, regulations and permits that may restrict or adversely affect our financial results and how we conduct business.
|
•
|
The potential impacts of climate change and climate-related initiatives, remain uncertain at this time.
|
•
|
Our failure to maintain satisfactory labor relations could have a material adverse effect on our business.
|
•
|
We are dependent upon attracting and retaining key personnel, the loss of whom could adversely affect our business.
|
•
|
Failure to develop new products or discover new applications for our existing products, or our inability to protect the intellectual property underlying such new products or applications, could have a negative impact on our business.
|
•
|
The risk of loss of the Company’s intellectual property and sensitive business information, or disruption of its manufacturing operations, in each case due to cyberattacks or cybersecurity breaches, could adversely impact the Company.
|
•
|
We may need to make significant additional cash contributions to our retirement benefit plans if investment returns on pension assets are lower than expected or interest rates decline, and/or due to changes to regulatory, accounting and actuarial requirements.
|
•
|
We have significant debt obligations that could adversely affect our business and our ability to meet our obligations.
|
•
|
The phase-out of the London Inter Bank Office Rate (“LIBOR”) as an interest rate benchmark could result in an increase to our borrowing costs.
|
•
|
Challenges in the commercial and credit environments may materially adversely affect our future access to capital.
|
•
|
We may need additional financing in the future to meet our capital needs or to make acquisitions, and such financing may not be available on favorable terms, if at all, and may be dilutive to existing stockholders.
|
•
|
The inability to effectively integrate the Tembec Inc. (“Tembec”) acquisition and meet our financial objectives therefrom, and any future acquisitions we may make, may affect our results.
|
•
|
While the Company has entered into an amendment (the “Amendment”) to its Senior Secured Credit Facilities (as amended by the Amendment, the “Credit Agreement”) to address the risk of potential non-compliance with certain covenants at the end of the third quarter of 2019, there can be no assurances that the Company will continue in full compliance with the amended covenants provided in the Credit Amendment through December 31, 2021, which is the date covenant relief granted under the Amendment expires.
|
•
|
Go-to-Market Strategy - designed to improve cellulose specialties price and margin and align assets to market needs and sales mix to drive long term High Purity Cellulose segment EBITDA growth
|
•
|
Improve our competitive positioning through the following Four Strategic Pillars
|
•
|
New Products - expanding our business by developing next generation cellulose fibers and other value-added products utilizing our cellulose processing technology, expertise and co-products. We have made significant progress in developing and applying proprietary technologies to new products in many of the end-market segments we serve.
|
•
|
Market Optimization - maximizing the profitability of our existing products and assets by optimizing the intersection of our customers’ needs, our manufacturing capabilities and transportation costs to drive higher value for our customers and our Company.
|
•
|
Investments - delivering a capital allocation strategy that maximizes our risk adjusted returns. We intend to de-lever our balance sheet through EBITDA growth and repayment of indebtedness with a target net leverage ratio of 2.5 times EBITDA.
|
Financial Information
|
Three Months Ended
|
|
%
|
|
Nine Months Ended
|
|
%
|
||||||||||||
(in millions, except percentages)
|
September 28, 2019
|
|
September 29, 2018
|
|
Change
|
|
September 28, 2019
|
|
September 29, 2018
|
|
Change
|
||||||||
Net Sales
|
$
|
416
|
|
|
$
|
501
|
|
|
(17)%
|
|
$
|
1,307
|
|
|
$
|
1,476
|
|
|
(11)%
|
Cost of Sales
|
(399
|
)
|
|
(419
|
)
|
|
|
|
(1,265
|
)
|
|
(1,237
|
)
|
|
|
||||
Gross Margin
|
17
|
|
|
82
|
|
|
(79)%
|
|
42
|
|
|
239
|
|
|
(82)%
|
||||
Selling, general and administrative expenses
|
(23
|
)
|
|
(30
|
)
|
|
|
|
(72
|
)
|
|
(78
|
)
|
|
|
||||
Duties
|
(5
|
)
|
|
(1
|
)
|
|
|
|
(16
|
)
|
|
(21
|
)
|
|
|
||||
Other operating income (expense), net
|
3
|
|
|
(8
|
)
|
|
|
|
(5
|
)
|
|
(9
|
)
|
|
|
||||
Operating Income (Loss)
|
(8
|
)
|
|
43
|
|
|
(119)%
|
|
(51
|
)
|
|
131
|
|
|
(139)%
|
||||
Interest expense
|
(15
|
)
|
|
(14
|
)
|
|
|
|
(43
|
)
|
|
(42
|
)
|
|
|
||||
Interest income and other, net
|
3
|
|
|
—
|
|
|
|
|
3
|
|
|
5
|
|
|
|
||||
Adjustment to gain on bargain purchase
|
—
|
|
|
6
|
|
|
|
|
—
|
|
|
21
|
|
|
|
||||
Net periodic pension and OPEB income (expense), excluding service costs
|
1
|
|
|
2
|
|
|
|
|
3
|
|
|
6
|
|
|
|
||||
Income (Loss) From Continuing Operations Before Income Taxes
|
(19
|
)
|
|
37
|
|
|
(151)%
|
|
(88
|
)
|
|
122
|
|
|
(172)%
|
||||
Income tax benefit (expense)
|
5
|
|
|
(7
|
)
|
|
|
|
26
|
|
|
(29
|
)
|
|
|
||||
Income (Loss) from Continuing Operations
|
$
|
(14
|
)
|
|
$
|
30
|
|
|
(147)%
|
|
$
|
(62
|
)
|
|
$
|
93
|
|
|
(167)%
|
Income (loss) from discontinued operations, net of taxes
|
—
|
|
|
8
|
|
|
|
|
10
|
|
|
23
|
|
|
|
||||
Net Income (Loss)
|
$
|
(14
|
)
|
|
$
|
38
|
|
|
|
|
$
|
(52
|
)
|
|
$
|
116
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Gross Margin %
|
4
|
%
|
|
16
|
%
|
|
|
|
3
|
%
|
|
16
|
%
|
|
|
||||
Operating Margin %
|
(2
|
)%
|
|
9
|
%
|
|
|
|
(4
|
)%
|
|
9
|
%
|
|
|
||||
Effective Tax Rate %
|
24
|
%
|
|
19
|
%
|
|
|
|
30
|
%
|
|
24
|
%
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
Net sales (in millions)
|
September 28, 2019
|
|
September 29, 2018
|
|
September 28, 2019
|
|
September 29, 2018
|
||||||||
High Purity Cellulose
|
$
|
268
|
|
|
$
|
308
|
|
|
$
|
822
|
|
|
$
|
876
|
|
Forest Products
|
65
|
|
|
86
|
|
|
222
|
|
|
282
|
|
||||
Pulp
|
26
|
|
|
46
|
|
|
95
|
|
|
133
|
|
||||
Paper
|
74
|
|
|
78
|
|
|
218
|
|
|
238
|
|
||||
Eliminations
|
(17
|
)
|
|
(17
|
)
|
|
(50
|
)
|
|
(53
|
)
|
||||
Total net sales
|
$
|
416
|
|
|
$
|
501
|
|
|
$
|
1,307
|
|
|
$
|
1,476
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
Operating income (loss) (in millions)
|
September 28, 2019
|
|
September 29, 2018
|
|
September 28, 2019
|
|
September 29, 2018
|
||||||||
High Purity Cellulose
|
$
|
7
|
|
|
$
|
34
|
|
|
$
|
11
|
|
|
$
|
83
|
|
Forest Products
|
(5
|
)
|
|
8
|
|
|
(27
|
)
|
|
35
|
|
||||
Pulp
|
(2
|
)
|
|
13
|
|
|
3
|
|
|
37
|
|
||||
Paper
|
—
|
|
|
13
|
|
|
1
|
|
|
24
|
|
||||
Corporate
|
(8
|
)
|
|
(25
|
)
|
|
(39
|
)
|
|
(48
|
)
|
||||
Total operating income (loss)
|
$
|
(8
|
)
|
|
$
|
43
|
|
|
$
|
(51
|
)
|
|
$
|
131
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
(in millions)
|
September 28, 2019
|
|
September 29, 2018
|
|
September 28, 2019
|
|
September 29, 2018
|
||||||||
Net Sales
|
$
|
268
|
|
|
$
|
308
|
|
|
$
|
822
|
|
|
$
|
876
|
|
Operating income (loss)
|
$
|
7
|
|
|
$
|
34
|
|
|
$
|
11
|
|
|
$
|
83
|
|
Average Sales Prices ($ per metric ton):
|
|
|
|
|
|
|
|
||||||||
Cellulose Specialties
|
$
|
1,317
|
|
|
$
|
1,333
|
|
|
$
|
1,303
|
|
|
$
|
1,344
|
|
Commodity Products
|
$
|
768
|
|
|
$
|
807
|
|
|
$
|
803
|
|
|
$
|
813
|
|
Sales Volumes (thousands of metric tons):
|
|
|
|
|
|
|
|
||||||||
Cellulose Specialties
|
137
|
|
|
163
|
|
|
432
|
|
|
466
|
|
||||
Commodity Products
|
88
|
|
|
70
|
|
|
246
|
|
|
188
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
(in millions)
|
September 28, 2019
|
|
September 29, 2018
|
|
September 28, 2019
|
|
September 29, 2018
|
||||||||
Net Sales
|
$
|
65
|
|
|
$
|
86
|
|
|
$
|
222
|
|
|
$
|
282
|
|
Operating income (loss)
|
(5
|
)
|
|
8
|
|
|
$
|
(27
|
)
|
|
$
|
35
|
|
||
Average Sales Prices ($ per thousand board feet):
|
|
|
|
|
|
|
|
||||||||
Lumber
|
$
|
366
|
|
|
$
|
487
|
|
|
$
|
370
|
|
|
$
|
500
|
|
Sales Volumes (millions of board feet):
|
|
|
|
|
|
|
|
||||||||
Lumber
|
134
|
|
|
141
|
|
|
462
|
|
|
457
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
(in millions)
|
September 28, 2019
|
|
September 29, 2018
|
|
September 28, 2019
|
|
September 29, 2018
|
||||||||
Net Sales
|
$
|
26
|
|
|
$
|
46
|
|
|
$
|
95
|
|
|
$
|
133
|
|
Operating income
|
$
|
(2
|
)
|
|
$
|
13
|
|
|
$
|
3
|
|
|
$
|
37
|
|
Average Sales Prices ($ per metric tons) (a):
|
|
|
|
|
|
|
|
||||||||
High-yield pulp
|
$
|
455
|
|
|
$
|
673
|
|
|
$
|
524
|
|
|
$
|
671
|
|
Sales Volumes (in thousands of metric tons) (a):
|
|
|
|
|
|
|
|
||||||||
High-yield pulp
|
45
|
|
|
59
|
|
|
145
|
|
|
168
|
|
||||
(a) Average sales prices and volumes for external sales only. For the three month period ended September 28, 2019 and September 29, 2018, the Pulp segment sold approximately 16,000 MT and 17,000 MT of high-yield pulp for $6 million and $7 million, respectively, to the Paper segment for the production of paperboard. For the nine months ended September 28, 2019 and September 29, 2018, 48,000 MT and 50,000 MT of high-yield pulp was sold to the Paper segment for $19 million and $20 million, respectively.
|
Three Months Ended
|
September 29, 2018
|
|
Changes Attributable to:
|
|
September 28, 2019
|
||||||||||
Net Sales
(in millions)
|
Price
|
|
Volume/Mix
|
|
|||||||||||
High-yield pulp
|
$
|
46
|
|
|
$
|
(10
|
)
|
|
$
|
(10
|
)
|
|
$
|
26
|
|
Nine Months Ended
|
September 29, 2018
|
|
Changes Attributable to:
|
|
September 28, 2019
|
||||||||||
Net Sales
(in millions)
|
Price
|
|
Volume/Mix
|
|
|||||||||||
High-yield pulp
|
$
|
133
|
|
|
$
|
(22
|
)
|
|
$
|
(16
|
)
|
|
$
|
95
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
(in millions)
|
September 28, 2019
|
|
September 29, 2018
|
|
September 28, 2019
|
|
September 29, 2018
|
||||||||
Net Sales
|
$
|
74
|
|
|
$
|
78
|
|
|
$
|
218
|
|
|
$
|
238
|
|
Operating income (loss)
|
$
|
—
|
|
|
$
|
13
|
|
|
$
|
1
|
|
|
$
|
24
|
|
Average Sales Prices ($ per metric ton):
|
|
|
|
|
|
|
|
||||||||
Paperboard
|
$
|
1,097
|
|
|
$
|
1,120
|
|
|
$
|
1,105
|
|
|
$
|
1,136
|
|
Newsprint
|
$
|
532
|
|
|
$
|
633
|
|
|
$
|
542
|
|
|
$
|
590
|
|
Sales Volumes (in metric tons):
|
|
|
|
|
|
|
|
||||||||
Paperboard
|
49
|
|
|
45
|
|
|
137
|
|
|
131
|
|
||||
Newsprint
|
38
|
|
|
44
|
|
|
123
|
|
|
151
|
|
Three Months Ended
|
September 29, 2018
|
|
Changes Attributable to:
|
|
September 28, 2019
|
||||||||||
Net Sales
(in millions)
|
Price
|
|
Volume/Mix
|
|
|||||||||||
Paperboard
|
$
|
51
|
|
|
$
|
(1
|
)
|
|
$
|
4
|
|
|
$
|
54
|
|
Newsprint
|
28
|
|
|
(4
|
)
|
|
(4
|
)
|
|
20
|
|
||||
Total Net Sales
|
$
|
79
|
|
|
$
|
(5
|
)
|
|
$
|
—
|
|
|
$
|
74
|
|
Nine Months Ended
|
September 29, 2018
|
|
Changes Attributable to:
|
|
September 28, 2019
|
||||||||||
Net Sales
(in millions)
|
Price
|
|
Volume/Mix
|
|
|||||||||||
Paperboard
|
$
|
149
|
|
|
$
|
(4
|
)
|
|
$
|
6
|
|
|
$
|
151
|
|
Newsprint
|
89
|
|
|
(6
|
)
|
|
(16
|
)
|
|
67
|
|
||||
Total Net Sales
|
$
|
238
|
|
|
$
|
(10
|
)
|
|
$
|
(10
|
)
|
|
$
|
218
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
Operating Income (Loss)
(in millions)
|
September 28, 2019
|
|
September 29, 2018
|
|
September 28, 2019
|
|
September 29, 2018
|
||||||||
Operating loss
|
$
|
(8
|
)
|
|
$
|
(25
|
)
|
|
$
|
(39
|
)
|
|
$
|
(48
|
)
|
|
September 28, 2019
|
|
December 31, 2018
|
||||
Cash and cash equivalents (a)
|
$
|
63
|
|
|
$
|
109
|
|
Availability under the Revolving Credit Facility (b)
|
167
|
|
|
217
|
|
||
Total debt (c)
|
1,234
|
|
|
1,188
|
|
||
Stockholders’ equity
|
639
|
|
|
707
|
|
||
Total capitalization (total debt plus equity)
|
$
|
1,873
|
|
|
$
|
1,895
|
|
Debt to capital ratio
|
66
|
%
|
|
63
|
%
|
(a)
|
Cash and cash equivalents consisted of cash, money market deposits and time deposits with original maturities of 90 days or less.
|
(b)
|
Availability under the revolving credit facility is reduced by standby letters of credit of approximately $33 million at September 28, 2019 and December 31, 2018.
|
(c)
|
See Note 7 — Debt and Finance Leases of our financial statements for additional information.
|
Cash Provided by (Used for):
|
September 28, 2019
|
|
September 29, 2018
|
||||
Operating activities
|
$
|
24
|
|
|
$
|
160
|
|
Investing activities
|
$
|
(83
|
)
|
|
$
|
(76
|
)
|
Financing activities
|
$
|
18
|
|
|
$
|
(73
|
)
|
Three Months Ended:
|
Forest Products
|
|
Pulp
|
|
Paper
|
|
High Purity Cellulose
|
|
Corporate & Other
|
|
Total
|
||||||||||||
September 28, 2019
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Income (loss) from continuing operations
|
$
|
(5
|
)
|
|
$
|
(2
|
)
|
|
$
|
3
|
|
|
$
|
8
|
|
|
$
|
(18
|
)
|
|
$
|
(14
|
)
|
Depreciation and amortization
|
2
|
|
|
1
|
|
|
4
|
|
|
33
|
|
|
—
|
|
|
40
|
|
||||||
Interest expense, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15
|
|
|
15
|
|
||||||
Income tax expense (benefit)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
(5
|
)
|
||||||
EBITDA
|
$
|
(3
|
)
|
|
$
|
(1
|
)
|
|
$
|
7
|
|
|
$
|
41
|
|
|
$
|
(8
|
)
|
|
$
|
36
|
|
Loan Amendment Costs
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
3
|
|
||||||
Insurance Recovery
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
(4
|
)
|
||||||
Adjusted EBITDA
|
$
|
(3
|
)
|
|
$
|
(1
|
)
|
|
$
|
7
|
|
|
$
|
41
|
|
|
$
|
(9
|
)
|
|
$
|
35
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
September 29, 2018
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Income (loss) from continuing operations
|
$
|
8
|
|
|
$
|
13
|
|
|
$
|
16
|
|
|
$
|
40
|
|
|
$
|
(47
|
)
|
|
$
|
30
|
|
Depreciation and amortization
|
2
|
|
|
1
|
|
|
4
|
|
|
30
|
|
|
—
|
|
|
37
|
|
||||||
Interest expense, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14
|
|
|
14
|
|
||||||
Income tax expense (benefit)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|
7
|
|
||||||
EBITDA
|
$
|
10
|
|
|
$
|
14
|
|
|
$
|
20
|
|
|
$
|
70
|
|
|
$
|
(26
|
)
|
|
$
|
88
|
|
Gain on bargain purchase
|
—
|
|
|
—
|
|
|
—
|
|
|
(7
|
)
|
|
1
|
|
|
(6
|
)
|
||||||
Severance expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
4
|
|
||||||
Adjusted EBITDA
|
$
|
10
|
|
|
$
|
14
|
|
|
$
|
20
|
|
|
$
|
63
|
|
|
$
|
(21
|
)
|
|
$
|
86
|
|
Nine Months Ended:
|
Forest Products
|
|
Pulp
|
|
Paper
|
|
High Purity Cellulose
|
|
Corporate & Other
|
|
Total
|
||||||||||||
September 28, 2019
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Income (loss) from continuing operations
|
$
|
(27
|
)
|
|
$
|
3
|
|
|
$
|
8
|
|
|
$
|
10
|
|
|
$
|
(56
|
)
|
|
$
|
(62
|
)
|
Depreciation and amortization
|
7
|
|
|
2
|
|
|
13
|
|
|
90
|
|
|
—
|
|
|
112
|
|
||||||
Interest expense, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
43
|
|
|
43
|
|
||||||
Income tax expense (benefit)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(26
|
)
|
|
(26
|
)
|
||||||
EBITDA
|
$
|
(20
|
)
|
|
$
|
5
|
|
|
$
|
21
|
|
|
$
|
100
|
|
|
$
|
(39
|
)
|
|
$
|
67
|
|
Insurance recovery
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
(4
|
)
|
||||||
Loan amendment costs
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
3
|
|
||||||
Non-recurring expense (a)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
||||||
Adjusted EBITDA
|
$
|
(20
|
)
|
|
$
|
5
|
|
|
$
|
21
|
|
|
$
|
100
|
|
|
$
|
(39
|
)
|
|
$
|
67
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
September 29, 2018
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Income (loss) from continuing operations
|
$
|
35
|
|
|
$
|
37
|
|
|
$
|
31
|
|
|
$
|
97
|
|
|
$
|
(107
|
)
|
|
$
|
93
|
|
Depreciation and amortization
|
5
|
|
|
2
|
|
|
13
|
|
|
86
|
|
|
—
|
|
|
106
|
|
||||||
Interest expense, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
41
|
|
|
41
|
|
||||||
Income tax expense (benefit)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
28
|
|
|
28
|
|
||||||
EBITDA
|
$
|
40
|
|
|
$
|
39
|
|
|
$
|
44
|
|
|
$
|
183
|
|
|
$
|
(38
|
)
|
|
$
|
268
|
|
Severance expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
$
|
4
|
|
|||||
Gain on bargain purchase
|
—
|
|
|
—
|
|
|
—
|
|
|
(10
|
)
|
|
(11
|
)
|
|
$
|
(21
|
)
|
|||||
Adjusted EBITDA
|
$
|
40
|
|
|
$
|
39
|
|
|
$
|
44
|
|
|
$
|
173
|
|
|
$
|
(45
|
)
|
|
$
|
251
|
|
(a)
|
Capital expenditures exclude strategic capital expenditures which are deemed discretionary by management. Strategic expenditures for the first nine months of 2019 were approximately $18 million. Strategic capital expenditures for the same period of 2018 were approximately $29 million.
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
Item 4.
|
Controls and Procedures
|
Part II.
|
Other Information
|
Item 1.
|
Legal Proceedings
|
Item 1A.
|
Risk Factors
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
Period
|
Total Number of Shares Purchased (b)
|
|
Average Price Paid per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
|
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (a)
|
||||||
June 30 to August 3
|
727
|
|
|
$
|
5.97
|
|
|
—
|
|
|
$
|
60,294,000
|
|
August 3 to August 31
|
250
|
|
|
2.53
|
|
|
—
|
|
|
$
|
60,294,000
|
|
|
September 1 to September 28
|
50
|
|
|
3.51
|
|
|
—
|
|
|
$
|
60,294,000
|
|
|
Total
|
1,027
|
|
|
|
|
—
|
|
|
|
(a)
|
As of September 28, 2019, approximately $60 million of share repurchase authorization remains under the authorization declared by the Board of Directors on January 29, 2018.
|
(b)
|
Repurchased to satisfy the tax withholding requirements related to the issuance of stock under the Rayonier Advanced Materials Incentive Stock Plan.
|
Item 6.
|
Exhibits
|
First Amendment to Amended and Restated Credit Agreement, dated as of September 30, 2019, among Rayonier Advanced Materials Inc., as Holdings, Rayonier A.M. Products Inc. and Rayonier Performance Fibers, LLC, as Borrowers, certain subsidiaries of Rayonier Advanced Materials Inc. party thereto, the lenders and L/C issuers party thereto and Bank of America, N.A., as Administrative Agent
|
|
Incorporated herein by reference to Exhibit 10.1 to the Registrant’s 8-K filed on October 2, 2019
|
|
First Amendment to the Rayonier Advanced Materials Inc. 2017 Incentive Stock Plan, effective May 22, 2017*
|
|
Filed herewith
|
|
Rayonier Advanced Materials Inc. Amended and Restated Executive Severance Pay Plan, effective October 21, 2019*
|
|
Filed herewith
|
|
First Amendment to the Rayonier Advanced Materials Inc. Non Change In Control Executive Severance Plan*
|
|
Filed herewith
|
|
Rayonier Advanced Materials Inc. Retirement Plan, Amended and Restated October 21, 2019*
|
|
Filed herewith
|
|
Chief Executive Officer’s Certification Pursuant to Rule 13a-14(a)/15d-14(a) and pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
Filed herewith
|
|
Chief Financial Officer’s Certification Pursuant to Rule 13a-14(a)/15d-14(a) and pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
Filed herewith
|
|
Certification of Periodic Financial Reports Under Section 906 of the Sarbanes-Oxley Act of 2002
|
|
Furnished herewith
|
|
101
|
The following financial information from our Quarterly Report on Form 10-Q for the three and nine months ended September 28, 2019 formatted in Extensible Business Reporting Language (“XBRL”), includes: (i) the Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) for the Three and Nine Months Ended September 28, 2019 and September 29, 2018; (ii) the Consolidated Balance Sheets as of September 28, 2019 and December 31, 2018; (iii) the Consolidated Statements of Cash Flows for the Nine Months Ended September 28, 2019 and September 29, 2018; and (iv) the Notes to Consolidated Financial Statements
|
|
Filed herewith
|
104
|
Cover Page Interactive Data File - formatted as Inline XBRL and contained in Exhibit 101
|
|
|
|
|
Rayonier Advanced Materials Inc.
|
|
|
(Registrant)
|
|
|
|
|
By:
|
/s/ MARCUS J. MOELTNER
|
|
|
Marcus J. Moeltner
Chief Financial Officer and
Senior Vice President, Finance
(Duly Authorized Officer and Principal Financial Officer)
|
1.
|
Purpose
|
2.
|
Covered Employees
|
3.
|
Upon a Qualifying Termination
|
•
|
is terminated for Cause;
|
•
|
voluntarily resigns (including normal retirement), other than for Good Reason;
|
•
|
terminates employment as a result of the Executive’s death or Disability.
|
4.
|
Plan Benefits
|
5.
|
Dispute Resolution
|
6.
|
Covenants of Executive
|
7.
|
Section 280G Cutback
|
8.
|
Definitions
|
9.
|
Release
|
10.
|
Successor to Company
|
11.
|
Administration of Plan/Coordination with Severance Trust
|
12.
|
Claims Procedure
|
13.
|
Termination or Amendment
|
14.
|
Plan Supersedes Prior Plans
|
15.
|
Unfunded Plan Status
|
16.
|
Miscellaneous
|
1.
|
Your signing of this Agreement shall constitute acknowledgment by you of your separation from employment with the Company on the Separation Date.
|
2.
|
Contingent upon your execution and non-revocation of this Agreement, the Company will provide you with the severance benefits contemplated by the Company’s Amended and Restated Executive Severance Pay Plan (the “Plan”). You would not be entitled to payment of the foregoing amount absent this Agreement between you and the Company.
|
3.
|
This Agreement is entered into in accordance with and subject to the Plan, the terms of which are incorporated herein. Please review the Plan to understand all of the terms of your severance.
|
4.
|
The Company is providing you with the benefits set forth in the Plan in consideration for your signing this Agreement. By signing, you acknowledge your acceptance of this consideration and its sufficiency. You warrant and represent that your decision to accept this Agreement is (i) entirely voluntary on your part; (ii) not made in reliance on any inducement, promise or representation whether express or implied, other than the inducements, representations and promises expressly set forth in this Agreement; and (iii) not the result of any threats or other coercive action to induce acceptance of this Agreement.
|
5.
|
You agree that you will continue to be bound by the restrictive covenants set forth in the Plan, as well as in any other applicable agreement you may have entered into with the Company prior to or during the course of your employment with the Company.
|
6.
|
Regardless of whether you sign this Agreement, the Company will pay you the compensation that you have earned through the date of your separation. Similarly, even if you do not sign this Agreement, you will be offered benefits to which you are entitled under the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA"), and you will retain all vested benefits under the Rayonier Inc. Investment and Savings Plan for Salaried Employees. You will also retain any rights to vested benefits earned under the Retirement Plan for Salaried Employees of Rayonier Inc., if applicable.
|
7.
|
In consideration of the additional payments and benefits outlined in this Agreement, you agree irrevocably and unconditionally to release, acquit and forever discharge the Company (including its predecessors, successors, parent company, and any subsidiaries or affiliates and their respective employees, directors, officers, shareholders, agents, representatives, subsidiaries, parents, affiliates, predecessors, successors or assigns) on behalf of yourself, your spouse, your heirs and legal representatives, and all persons claiming through you, from all claims, suits, liabilities, demands or causes of action of any nature whatsoever (whether known or unknown) which you ever had, may have, or now have arising from or related to your employment with the Company, the termination of your employment or other events occurring prior to the execution of this Agreement, including but not limited to:
|
(A)
|
violations of Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Civil Rights Act of 1991, the Americans With Disabilities Act, the Equal Pay Act, the Civil Rights Act of 1866, 42 U.S.C. § 1981, the Family and Medical Leave Act, the Labor Management Relations Act, the National Labor Relations Act, Executive Order 11246, the Rehabilitation Act, the Vietnam Era Veterans’ Readjustment Assistance Act of 1974, the Employee Retirement Income Security Act, the Pregnancy Discrimination Act; the National Labor Relations Act; the Uniformed Services Employment and Reemployment Act; the Sarbanes-Oxley Act of 2002; the Genetic Information Nondiscrimination Act of 2008; the Lily Ledbetter Fair Pay Act of 2009;
|
(B)
|
violations of any other federal or state statute or regulation or local ordinance;
|
(C)
|
claims for lost or unpaid wages, compensation, or other benefits claims under state law, defamation, intentional infliction of emotional distress, negligent infliction of emotional distress, bad faith action, slander, assault, battery, wrongful or constructive discharge, negligent hiring, retention and/or supervision, fraud, misrepresentation, conversion, tortious interference with property, negligent investigation, breach of contract, or breach of fiduciary duty;
|
(D)
|
any claims to benefits under any and all bonus, severance, workforce reduction, early retirement, outplacement, or any other similar plan sponsored by the Company which you ever had or now have or may in the future have; or
|
(E)
|
any other claims under state law arising in tort or contract.
|
8.
|
By signing this Agreement, you acknowledge that you have been informed pursuant to the Federal Older Workers Benefit Protection Act of 1990 that you do not herein waive rights or claims under the Federal Age Discrimination in Employment Act that may arise after the date this Agreement is executed.
|
9.
|
This Agreement waives rights to which you may be legally entitled. Accordingly, you should consult with an attorney prior to signing this Agreement.
|
10.
|
You have twenty-one (21) days from the date you receive this Agreement within which to consider whether to sign this Agreement and accept the Company's offer. You should not, however, in any event execute this Agreement prior to your last day of active employment with the Company.
|
11.
|
After you sign this Agreement, you will have seven (7) days in which to revoke this Agreement by delivering a written notice of revocation to me not later than 5:00 p.m. on the seventh (7th) day after you sign this Agreement at the address contained herein, and this Agreement shall not become effective or enforceable until the seven (7) day period has expired (the “Revocation Period”).
|
12.
|
To the extent not otherwise governed by federal law, this Agreement shall be interpreted by the governing law and choice of forum provisions of the Plan.
|
13.
|
This Agreement shall not in any way be construed as an admission by the Company that it has acted wrongfully with respect to you or any other person, or that the Company is liable to you in any way. You agree not to assert otherwise.
|
14.
|
The provisions of this Agreement are severable. If any provision is held to be invalid or unenforceable, it shall not affect the validity or enforceability of any other provision.
|
15.
|
This Agreement constitutes the entire Agreement between the Company and you with respect to the subject matters governed herein, and it supersedes any and all other agreements, whether written or oral, between the Company and you with respect to your separation and the events leading thereto, excluding those agreements referenced within this Agreement.
|
16.
|
You acknowledge that you have carefully reviewed and understand this Agreement and that you have had sufficient time to consult with an attorney regarding this Agreement. Your signature will indicate that you accept and agree to its terms voluntarily and knowingly and with full understanding of its consequences.
|
|
|
Page
|
FOREWORD
|
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|
|
ARTICLE 1 – DEFINITIONS
|
||
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|
|
ARTICLE 2 – SERVICE
|
||
|
|
|
2.01
|
Eligibility Service
|
|
2.02
|
Benefit Service
|
|
2.03
|
Questions Relating to Service Under the Plan
|
|
|
|
|
ARTICLE 3 – MEMBERSHIP
|
||
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|
|
3.01
|
Persons Employed on or after June 27, 2014
|
|
3.02
|
Membership Requirements Under the Prior Salaried Plan
|
|
3.03
|
Reemployment After January 1, 2006, of Rayonier Inc. Salaried Employees
|
|
3.04
|
Reemployment of Former Employees, Former Members and Retired Members
|
|
3.05
|
Termination of Membership
|
|
3.06
|
Merged Plans
|
|
3.07
|
Questions Relating to Membership in the Plan
|
|
3.08
|
Change in Hourly Employee’s Classification
|
|
3.09
|
Merger of Tembec Plan into the Plan
|
|
|
|
|
ARTICLE 4 – BENEFITS
|
||
|
|
|
4.01
|
Normal Retirement Allowance
|
|
4.02
|
Postponed Retirement Allowance
|
|
4.03
|
Standard Early Retirement Allowance
|
|
4.04
|
Special Early Retirement Allowance
|
|
4.05
|
Vested Benefit
|
|
4.06
|
Forms of Benefit Payment After Retirement
|
|
4.07
|
Survivor’s Benefit Applicable Before Retirement
|
|
4.08
|
Maximum Benefits Under Code Section 415
|
|
4.09
|
No Duplication
|
|
4.10
|
Payment of Benefits
|
|
4.11
|
Reemployment of Former Member or Retired Member
|
|
4.12
|
Top-heavy Provisions
|
|
4.13
|
Payment of Medical Benefits for Benefits for Certain Members Who Retire Under the Plan
|
4.14
|
Transfers From Hourly Plans Maintained by the Company or an Associated Company
|
|
4.15
|
Direct Rollover of Certain Distributions
|
|
4.16
|
Mandatory Distributions
|
|
4.17
|
Benefit Restrictions Under Code Section 436
|
|
|
|
|
ARTICLE 5 – ADMINISTRATION OF PLAN
|
||
|
|
|
5.01
|
Appointment of Plan Administration Committee
|
|
5.02
|
Pension and Savings Plan Committee
|
|
5.03
|
Named Fiduciaries
|
|
5.04
|
Meetings and Action of Majority
|
|
5.05
|
Duties of Committees
|
|
5.06
|
Management of Plan Assets
|
|
5.07
|
Establishment of Rules and Rights of Plan Administration Committee
|
|
5.08
|
Prudent Conduct and Limitation of Liability
|
|
5.09
|
Claims and Review Procedure
|
|
|
|
|
ARTICLE 6 – CONTRIBUTIONS
|
||
|
|
|
6.01
|
Company Contributions
|
|
6.02
|
Return of Contributions
|
|
|
|
|
ARTICLE 7 – MANAGEMENT OF FUNDS
|
||
|
|
|
7.01
|
Trustee
|
|
7.02
|
Exclusive Benefit Rule
|
|
7.03
|
Investment in Company Securities or Real Property
|
|
7.04
|
Appointment of Investment Managers
|
|
|
|
|
ARTICLE 8 – CERTAIN RIGHTS AND LIMITATIONS
|
||
|
|
|
8.01
|
Termination of the Plan
|
|
8.02
|
Limitation Concerning Highly Compensated Employees or Highly Compensated Former Employees
|
|
8.03
|
Conditions of Employment Not Affected by Plan
|
|
8.04
|
Offsets
|
|
8.05
|
Denial of Benefits
|
|
8.06
|
Change in Control
|
|
8.07
|
Prevention of Escheat
|
|
|
|
|
ARTICLE 9 – NONALIENATION OF BENEFITS
|
||
|
|
|
ARTICLE 10 – AMENDMENTS
|
1.01
|
Accrued Benefit shall mean, as of any date of determination, the retirement allowance computed under Section 4.01(b) on the basis of the Member’s Benefit Service and applicable components of the Plan formula as of the determination date and, with respect to the amount determined under Section 4.01(b)(i)(4), the applicable components of the Prior Salaried Plan as of the determination date.
|
1.02
|
Annuity Starting Date shall mean the first day of the first period for which an amount is due on behalf of a Member or former Member as an annuity or any other form of payment under the Plan.
|
1.03
|
Appendix shall mean one, some or all of the appendices attached to this restated Plan document (as the context may indicate) and any additional appendix which may be added to the Plan from time to time. The Appendices are used to record (i) the tables of factors which are used in determining the amount of the various forms of benefits payable under the Plan, and (ii) the benefits, rights, features, terms and conditions applicable to Members who participated in plans that have been merged into this Plan. Each Appendix is incorporated into the Plan by reference and shall be considered part of the Plan. As of the date of this restatement, the Plan includes Appendices A through G, as identified in the table of contents hereto. Notwithstanding the other provisions of the Plan, the terms of an Appendix shall apply to the affected participants.
|
1.04
|
Associated Company shall mean any subsidiary or affiliated company of Rayonier Advanced Materials Inc. not participating in the Plan which is (i) a component member of a controlled group of corporations (as defined in Code Section 414(b)), which controlled group of corporations includes as a component member Rayonier Advanced Materials Inc., (ii) any trade or business under common control (as defined in Code Section 414(c)) with Rayonier Advanced Materials Inc., (iii) any organization (whether or not incorporated) which is a member of an affiliated service group (as defined in Code Section 414(m)) which includes Rayonier Advanced Materials Inc. or (iv) any other entity required to be aggregated with Rayonier Advanced Materials Inc. pursuant to regulations under Code Section 414(o), during the period such entity is described in clause (i), (ii), (iii), or (iv). Notwithstanding the foregoing, for purposes of the preceding sentence and Section 4.08 of the Plan, the definitions of Code Section 414(b) and (c) shall be modified as provided in Code Section 415(h).
|
1.05
|
Beneficiary shall mean any person or entity named by a Member by written designation to receive certain benefits payable in the event of his or her death as provided under Section 4.07.
|
1.06
|
Benefit Service shall mean employment recognized as such for the purposes of computing a benefit under the Plan as provided under Article 2.
|
1.07
|
Board of Directors shall mean the Board of Directors of Rayonier Advanced Materials Inc. or of any successor to Rayonier Advanced Materials Inc. by merger, purchase or otherwise.
|
1.08
|
Change in Control means the occurrence of any of the following, with references to the Company in this Section 1.08 to refer specifically to Rayonier Advanced Materials Inc:
|
(a)
|
Any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”) becomes the beneficial owner (within the meaning of Rule 13d 3 promulgated under the Exchange Act) of 30% or more of either (i) the then-outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (ii) the combined voting power of the then-outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that, for purposes of this paragraph, the following acquisitions shall not constitute a Change in Control: (1) any acquisition directly from the Company, (2) any acquisition by the Company, (3) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any affiliated Company or (4) any acquisition pursuant to a transaction that complies with paragraphs (c)(i), (c)(ii) and (c)(iii) of this definition;
|
(b)
|
Individuals who, as of the date hereof, constitute the Board of Directors (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board of Directors; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual was a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board of Directors;
|
(c)
|
Consummation of a reorganization, merger, statutory share exchange or consolidation or similar transaction involving the Company or any of its subsidiaries, a sale or other disposition of all or substantially all of the assets of the Company, or the acquisition of assets or securities of another entity by the Company or any of its subsidiaries (each, a “Business Combination”), in each case unless, following such Business Combination, (i) all or substantially all of the individuals and entities that were the beneficial owners of the Outstanding Company Common Stock and the Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of the then-outstanding shares of common stock (or, for a non-corporate entity, equivalent securities) and the combined voting power of the then-outstanding voting securities entitled to vote generally in the election of directors (or, for a non-corporate entity, equivalent governing body), as the case may be, of the entity resulting from such Business Combination (including, without limitation, an entity that, as a result of such transaction, owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership immediately prior to such Business Combination of the Outstanding Company Common Stock and the Outstanding Company Voting Securities, as the case may be, (ii) no Person (excluding any entity resulting from such Business Combination or any employee benefit plan (or related trust) of the Company or such entity resulting from such Business Combination) beneficially owns, directly or indirectly, 30% or more of, respectively, the then-outstanding shares of common stock (or, for a non-corporate entity, equivalent securities) of the entity resulting from such Business Combination or the combined voting
|
(d)
|
Approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.
|
1.09
|
Code shall mean the Internal Revenue Code of 1986, as amended from time to time.
|
1.10
|
Company shall mean Rayonier Advanced Materials Inc., and any Participating Unit with respect to its Employees. Unless otherwise noted, when used herein, the term Company shall collectively include Rayonier Advanced Materials Inc. and any Participating Unit.
|
1.11
|
Compensation shall mean, except as provided otherwise in Article 3,
|
(a)
|
the total remuneration paid to a Member (whether before or after membership in the Plan) for services rendered on and after the March 1, 1994, but prior to June 27, 2014 (or such later date as determined by the Company in its sole discretion for any Member whose Accrued Benefits under the Prior Salaried Plan transfer to this Plan after June 27, 2014), for Rayonier Inc., including annual base salary, overtime, leadman’s pay, shift differential, and bonuses paid under the Rayonier Inc. local bonus and gain share plans (determined prior to any pre-tax contributions under a “qualified cash or deferred arrangement,” as defined under Code Section 401(k) and its applicable regulations, under a “cafeteria plan,” as defined under Code Section 125 and its applicable regulations, or under a “qualified transportation fringe,” as defined under Code Section 132(f) and its applicable regulations), and for Members who receive no other source of remuneration from Rayonier Inc. during said period, commissions; but excluding, except to the extent specifically included above, foreign service pay, automobile allowance, separation pay, incentive pay or other special pay or allowances of similar nature, commissions for any Member who received during said period any other form of remuneration from Rayonier Inc., bonuses, and the cost of any public or private employee benefit plans, including the Prior Salaried Plan; and
|
(b)
|
the total remuneration paid to a Member (whether before or after membership in the Plan) for services rendered to the Company on and after June 27, 2014, including annual base salary, overtime, leadman’s pay, shift differential, and bonuses paid under the Company’s local bonus and gain share plans (determined prior to any pre-tax contributions under a “qualified cash or deferred arrangement,” as defined under Code Section 401(k) and its applicable regulations, under a “cafeteria plan,” as defined under Code Section 125 and its applicable regulations, or under a “qualified transportation fringe,” as defined under Code Section 132(f) and its applicable regulations), and for Members who receive no other source of remuneration from the Company, commissions; but excluding, except to the extent specifically included above, foreign service pay, automobile allowance, separation pay, incentive pay or other special pay or allowances of similar nature, commissions for any Member who receives any other form of remuneration from the Company, bonuses, and the cost of any public or private employee benefit plans, including the Plan.
|
1.12
|
Early Retirement Date shall mean the date as determined in the manner set forth in Section 4.03.
|
1.13
|
Effective Date shall mean December 31, 2014, which is the effective date of this amended and restated plan document. The initial effective date of the Plan was June 27, 2014, which was the date the Plan was established as a spinoff of the Prior Salaried Plan. The initial effective date of the Prior Salaried Plan was March 1, 1994. Prior to June 27, 2014, the terms of the Prior Salaried Plan apply to this Plan.
|
1.14
|
Eligibility Service shall mean any employment recognized as such for the purposes of meeting the eligibility requirements for membership in the Plan and for eligibility for benefits under the Plan as provided under Article 2.
|
1.15
|
Employee shall mean any person regularly employed by the Company who is paid from a payroll maintained in the continental United States, Hawaii, Puerto Rico or the U.S. Virgin Islands and who receives regular and stated compensation other than a pension or retainer; provided, however, that except as the Board of Directors or the Plan Administration Committee, pursuant to the authority delegated to it by the Board of Directors, may otherwise provide on a basis uniformly applicable to all persons similarly situated, no person shall be an Employee for purposes of the Plan who is (i) engaged as a consultant, (ii) a non-resident alien, (iii) paid on an hourly basis and who, under the Company’s employment classification practices, is considered as an hourly-rated employee for purposes of the Company’s employee benefit plans, (iv) accruing benefits in respect of current service under any other pension, retirement, qualified profit-sharing or other similar plan of the Company (other than the Rayonier Advanced Materials Inc. Investment and Savings Plan for Salaried Employees,) or of any Associated Company, (v) a Leased Employee, or (vi) a Non‑Benefits Worker. Except as otherwise provided under an Appendix, no person shall be an Employee for purposes of the Plan whose terms and conditions of employment are determined by a collective bargaining agreement with the Company which does not make this Plan applicable to such person. Any person considered to be an independent contractor by the Company shall not be considered an Employee even if he is reclassified as an
|
1.16
|
Equivalent Actuarial Value shall mean equivalent value of a benefit under the Plan determined on the basis of the applicable factors set forth in Appendix A, except as otherwise specified in the Plan. In any other event, Equivalent Actuarial Value shall be determined on the same actuarial basis utilized to compute the factors set forth in Appendix A.
|
1.17
|
ERISA shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time.
|
1.18
|
Final Average Compensation shall mean the sum of:
|
(a)
|
The average of a Member’s annual base salary recognized as Compensation received in any five calendar years of Eligibility Service in which such annual base salary was highest, plus
|
(b)
|
The average of a Member’s annual Compensation in excess of annual base salary received in any five calendar years of Eligibility Service in which such Compensation was highest; provided, however, that the calendar years on which such averages are based shall be any five calendar years during the last 120 calendar months of a Member’s Eligibility Service, or if the Member has less than five calendar years of Eligibility Service, all of his or her calendar years of Eligibility Service; provided, further, however, that (i) the annual base salary earned in any calendar year and taken into account for purposes of “Final Average Compensation,” and (ii) the amount in excess of base annual salary earned in any calendar year and taken into account for purposes of “Final Average Compensation,” and (iii) the sum of (i) and (ii) taken into account for any calendar year, each shall be subject to the provisions of Code Section 401(a)(17). If the Member terminates employment before the last day of the calendar year or otherwise experiences an interruption in Eligibility Service, the Plan Administration Committee shall, in accordance with rules uniformly applicable to all persons similarly situated, determine the amount of the Member’s Final Average Compensation. The limitation of Code Section 401(a)(17) shall be applied to the sum of (i) and (ii) before determining the years in which base salary and amounts in excess of base salary are highest. If the Member terminates employment before the last day of the calendar year or otherwise experiences an interruption in Eligibility Service, the limitation under Code Section 401(a)(17) shall be applied to base salary, amounts in excess of base salary, and the sum of the two amounts that are taken into account for Final Average Compensation for the year of termination or other interruption on a month-by-month basis whether or not consecutive. The term Eligibility Service as used in this Section shall include all service recognized as Eligibility Service for purposes of eligibility requirements under Article 2.
|
1.19
|
Hour of Service shall mean hours of employment as defined pursuant to the provisions of Section 2.01(b).
|
1.20
|
IRS Interest Rate shall mean the applicable interest rate described in Code Section 417(e) after its amendment by PPA. Specifically, the applicable interest rate shall be the adjusted first, second, and third segment rates applied under the rules similar to the rules of Code Section 430(h)(2)(C) for second full calendar month (known as the lookback month) preceding the Stability Period. For this purpose, the first, second, and third segment rates are the first, second, and third segment rates which would be determined under Code Section 430(h)(2)(C) if:
|
(a)
|
Code Section 430(h)(2)(D) were applied by substituting the average yields for the month described in the preceding paragraph for the average yields for the 24-month period described in such section, and
|
(b)
|
Code Section 430(h)(2)(G)(i)(II) were applied by substituting “Section 417(e)(3)(A)(ii)(II)” for “Section 412(b)(5)(B)(ii)(II).”
|
1.21
|
IRS Mortality Table shall mean the applicable annual mortality table within the meaning of Code Section 417(e)(3)(B), as initially described in Revenue Ruling 2007-67 as in effect on the first day of the applicable Stability Period.
|
1.22
|
Leased Employee shall mean any person as so defined in Code Section 414(n) by virtue of his or her performance of services for the Company or an Associated Company.
|
1.23
|
Member shall mean any person included in the membership of the Plan as provided in Article 3 and any former employee of Rayonier Inc. or an Associated Company who was a Member of the Prior Salaried Plan associated with any Performance Fibers business, or a Beneficiary or Alternate Payee with respect to such former employee, whose Accrued Benefit was transferred to this Plan effective as of June 27, 2014, in connection with the spinoff of the Company. Notwithstanding the foregoing, a Member shall also include any former employee of Rayonier Inc. or an Associated Company who was a Member of the Prior Salaried Plan associated with any Performance Fibers business whose transfer of employment to the Company is directly related to the spinoff from Rayonier, Inc., but whose Accrued Benefit is transferred to this Plan after June 27, 2014, solely because such Member was working for Rayonier Inc. in the United States pursuant to a visa, the conditions of which would not permit such Member’s employment to transfer to the Company until after June 27, 2014.
|
1.24
|
Non‑Benefits Worker shall mean any individual designated by the Company as ineligible to participate in any Company-sponsored employee benefit program and any individual who the Company considers to be an independent contractor. The designation of an individual as a Non‑Benefits Worker by the Company shall be final and not subject to any redetermination of employment classification by any taxing authority such as the Internal Revenue Service or any other governmental authority or agency.
|
1.25
|
Normal Retirement Date shall mean the first day of the calendar month coincident with or next following the date the Employee attains age 65, which is his or her Normal Retirement Age.
|
1.26
|
Parental Leave shall mean a period in which a person is absent from work because of the person’s pregnancy, the birth of a person’s child, the adoption by a person of a child, or for purposes of caring for that child, for a period beginning immediately following such birth or adoption.
|
1.27
|
Participating Unit shall mean, in addition to Rayonier Advanced Materials Inc., any subsidiary or affiliated company of Rayonier Advanced Materials Inc., any designated location(s) only of such subsidiary or affiliated company or any designated unit(s) only of such subsidiary, or affiliated company which has by appropriate action of the Board of Directors been designated as a Participating Unit and the board of directors of any such subsidiary or affiliated company shall have taken appropriate action to adopt the Plan. The Board of Directors shall take action (i) to designate such entity as a Participating Unit, (ii) to determine that such persons are Employees,
|
1.28
|
Pension and Savings Plan Committee shall mean the committee established by Rayonier Advanced Materials Inc. for the purposes of managing the assets of the Plan as provided in Article 5.
|
1.29
|
Plan shall mean the Rayonier Advanced Materials Inc. Retirement Plan as set forth herein or as hereafter amended.
|
1.30
|
Plan Administration Committee shall mean the committee established for the purposes of administering the Plan as provided in Article 5.
|
1.31
|
Plan Year shall mean the calendar year.
|
1.32
|
Postponed Retirement Date shall mean, with respect to an Employee who does not retire at Normal Retirement Date but who works after such date, the first day of the calendar month coincident with or next following the date on which such Employee retires from active service. No retirement allowance shall be paid to the Employee until his or her Postponed Retirement Date, except as otherwise provided in Article 4.
|
1.33
|
Prior Salaried Plan shall mean the Retirement Plan for Salaried Employees of Rayonier Inc., as in effect on June 27, 2014.
|
1.34
|
Qualified Joint and Survivor Annuity shall mean an annuity described in Section 4.06(a)(i).
|
1.35
|
Regulation shall mean the regulations promulgated pursuant to and under the Code, by the Secretary of the Treasury or a delegate of the Secretary of the Treasury, and as amended from time to time.
|
1.36
|
Severance Date shall mean the date an Employee is considered to have severed his or her employment as defined pursuant to the provisions of Section 2.01(a).
|
1.37
|
Social Security Benefit shall mean the amount of annual old age or disability insurance benefit under Title II of the Federal Social Security Act as determined by the Plan Administration Committee under reasonable rules uniformly applied, on the basis of such Act as in effect at the
|
1.38
|
Special Early Retirement Date shall mean the date as determined in the manner set forth in Section 4.04.
|
1.39
|
Spousal Consent shall mean written consent given by a Member’s or former Member’s spouse to an election made by the Member or former Member which specifies the form of retirement allowance, vested benefit, Beneficiary, or contingent annuitant designated by the Member or former Member. The specified form or specified Beneficiary or contingent annuitant shall not be changed unless further Spousal Consent is given. Spousal Consent shall be duly witnessed by a notary public, or in accordance with uniform rules of the Plan Administration Committee, by a Plan representative and shall acknowledge the effect on the spouse of the Member’s or former Member’s election. The requirement for Spousal Consent may be waived by the Plan Administration Committee in accordance with applicable law. Spousal Consent shall be applicable only to the particular spouse who provides such consent.
|
1.40
|
Stability Period shall mean the Plan Year in which occurs the Annuity Starting Date for the distribution.
|
1.41
|
Trustee shall mean the trustee or trustees by which the funds of the Plan are held as provided in Article 7.
|
(a)
|
Plan Closed to New Participants. Notwithstanding any provision of the Plan to the contrary, the following Employees are not eligible to participate in the Plan and shall not be credited with Eligibility Service:
|
(i)
|
any Employee who is first hired by the Company on or after June 27, 2014, except as otherwise described in Section 3.01(a) of this Plan; and
|
(ii)
|
any employee (as defined in the Prior Salaried Plan) who was first hired by Rayonier Inc. on or after January 1, 2006, except as may otherwise be provided in an Appendix for a merged plan.
|
(b)
|
Certain Absences to be Recognized as Eligibility Service. Except as otherwise indicated in this Article 2, the following periods of approved absence rendered on and after the Effective Date shall be recognized as Eligibility Service under the Plan and shall not be considered as breaks in Eligibility Service:
|
(c)
|
Breaks in Service. All absences from the Company or from an Associated Company, other than the absences specified in Paragraph (b) above, shall be considered as breaks in Eligibility Service; provided, however, that in no event shall there be a break in Eligibility Service if an Employee (i) is continuously absent from service with the Company or with an Associated Company and returns to the employ of the Company or an Associated Company before the first anniversary of his or her Severance Date or (ii) is absent from work because of a Parental Leave and returns to the employ of the Company or an Associated Company within two years of his or her Severance Date. If the provisions of clause (ii) above are applicable, the first year of such absence for Parental Leave, measured from an Employee’s Severance Date, shall not be considered in determining the Employee’s period of break in service for purposes of Section 2.01(d) below.
|
(d)
|
Bridging Breaks in Service.
|
(e)
|
Eligibility Service Prior to June 27, 2014.
|
(a)
|
Benefit Service On and After the Effective Date. Except as hereinafter otherwise provided, all uninterrupted employment with the Company rendered by a Member as an Employee on and after the Effective Date and prior to his or her Severance Date shall be recognized as Benefit Service under the Plan. Benefit Service for any period of employment rendered prior to the Effective Date shall be determined as set forth in Section 2.02(f).
|
(b)
|
Employment with an Associated Company. Except as otherwise provided in an Appendix to the Plan, no employment with an Associated Company rendered by a Member shall be recognized as Benefit Service under the Plan; except if a Member completes 36 months of Eligibility Service as an Employee, any employment rendered on and after the Member’s date of hire with an Associated Company before classification as an Employee shall be recognized as Benefit Service subject to any limitations for the Associated Company at which the Member was employed set forth in writing by the Plan Administration Committee. If a Member ceases to be an Employee and is again employed at an Associated
|
(c)
|
Employment with the Company but not as an Employee. With respect to (i) any person who on or after the Effective Date and immediately prior to the date on which he or she becomes an Employee, is in the employ of the Company but not as an Employee and (ii) any Member who completes an Hour of Service on and after the Effective Date, and who thereafter ceases to be an Employee but remains in the employ of the Company, and on or after the Effective Date again becomes an Employee, uninterrupted employment with the Company otherwise than as an Employee rendered on and after the Effective Date shall be recognized as Benefit Service in accordance with the terms of this Section 2.02, provided such person is a Member of the Plan, upon completion of 36 months of Eligibility Service as an Employee, subject to the limitations set forth in writing by the Board of Directors or the Plan Administration Committee for the Participating Unit at which such person was first employed.
|
•
|
be considered an Employee for purposes of the Plan and shall not be eligible to become a Member in the Plan, unless otherwise permitted pursuant to Section 4.14.
|
•
|
under any circumstances, be credited with Benefit Service for service rendered while an hourly employee with Rayonier, Inc., its predecessor or affiliates, or the Company.
|
(d)
|
Certain Absences to be Recognized as Benefit Service. Except as otherwise indicated below, the following periods of approved absence rendered on and after the Effective Date shall be recognized as Benefit Service and shall not be considered as breaks in Benefit Service:
|
(e)
|
All Other Absences for Employees.
|
(f)
|
Benefit Service Under the Prior Salaried Plan. Notwithstanding any foregoing provisions of the Plan to the contrary, Benefit Service shall include, with respect to any person who became a Member of the Plan on June 27, 2014, or such later date, pursuant to the provisions of Section 3.01(a) or (b), any benefit service credited to the Member under the Prior Salaried Plan.
|
(g)
|
Members of Merged Plans. A Member entitled to benefits from a merged plan pursuant to an Appendix to this Plan document, as provided by Section 3.06, shall not be credited with
|
(a)
|
Except as otherwise provided in Section 3.06, any person who was an Employee as defined in Section 1.15 on June 27, 2014, who was a Member of the Prior Salaried Plan associated with any Performance Fibers business as of June 27, 2014, whose Accrued Benefit was transferred to this Plan effective as of June 27, 2014, in connection with the spinoff of the Company, shall become a Member of the Plan on June 27, 2014. In addition, any person who becomes an Employee after June 27, 2014, whose Accrued Benefit under the Prior Salaried Plan was transferred to this Plan in connection with the spinoff of the Company after June 27, 2014, but solely because such person was working for Rayonier Inc. in the United States pursuant to a visa, the conditions of which would not permit such Member’s employment to transfer to the Company until after June 27, 2014, shall become a Member of the Plan on such transfer date.
|
(b)
|
Except as otherwise provided in Section 3.06, any person who was classified as an Employee as defined in Section 1.15 on June 27, 2014, but was absent from work at the Company by reason of layoff, leave of absence, short term disability or long term disability, who was a Member of the Prior Salaried Plan associated with any Performance Fibers business as of June 27, 2014, whose Accrued Benefit was transferred to this Plan effective as of June 27, 2014, in connection with the spinoff of the Company, shall become a Member of the Plan on June 27, 2014.
|
(a)
|
the date on which he or she attained the 21st anniversary of his or her birth, or
|
(b)
|
the date on which he or she completed one year of eligibility service as defined in the Prior Salaried Plan.
|
(a)
|
All assets and liabilities of the Tembec Plan are transferred to and made a part of the Plan.
|
(b)
|
Each individual who was a participant in the Tembec Plan as of December 31, 2018 shall become a Participant in the Plan on and after January 1, 2019.
|
(c)
|
Except as otherwise specifically provided in this Section 3.09 the terms of the Tembec Plan as in effect immediately prior to the merger and as subsequently amended (the “prior Tembec Plan documentation”), rather than the terms of the Plan, shall continue to apply on and after January 1, 2019 to former Employees who were covered by the terms of the Tembec Plan and to current Employees of any Employer that participated in the Tembec Plan. The prior Tembec Plan documentation shall continue in effect until such time as the Plan is amended and restated to reflect the benefits, rights, and features applicable to such Employees.
|
(d)
|
Notwithstanding the provisions of paragraph (c), the administrative provisions of the Plan shall control to the extent there is any conflict between the Plan provisions and the prior Tembec Plan documentation.
|
(e)
|
In no event shall the accrued benefit of any Employee be reduced as a result of the merger. In addition, no Employee who was a participant in the Tembec Plan on December 31, 2018 shall incur a break in crediting of service or earnings as a result of the merger.
|
(a)
|
The right of a Member to his or her normal retirement allowance shall be nonforfeitable as of his or her Normal Retirement Age. A Member may retire from active service on a normal retirement allowance upon reaching his or her Normal Retirement Date. If a Member postpones his or her retirement and continues in active service after his or her Normal Retirement Date or returns to service after his or her Normal Retirement Date, the provisions of Section 4.02 shall be applicable.
|
(b)
|
Benefit. Prior to adjustment in accordance with Sections 4.06(a) and 4.07(c), the annual normal retirement allowance payable on a lifetime basis upon retirement at a Member’s Normal Retirement Date shall be equal to the sum of (i), (ii) and (iii) where:
|
(1)
|
2% of the Member’s Final Average Compensation multiplied by the portion of the first 25 years of his or her Benefit Service rendered prior to March 1, 1994;
|
(2)
|
plus 1½% of the Member’s Final Average Compensation multiplied by the next 15 years of his or her Benefit Service rendered prior to March 1, 1994, to a combined maximum of 40 years of Benefit Service;
|
(3)
|
reduced by 1¼% of the Social Security Benefit multiplied by the portion of his or her years of Benefit Service rendered prior to March 1, 1994, and not in excess of 40 years;
|
(4)
|
reduced, but not below zero, by the annual normal retirement allowance determined under the provisions of Section 4.01(b) of the Retirement Plan for Salaried Employees of ITT Incorporated (the “ITT Salaried Plan”) prior to the imposition of any limitations under Code Section 415 and the application of any offset provisions of the ITT Salaried Plan, with respect to the Member’s period of employment rendered prior to March 1, 1994, which has been credited as Benefit Service pursuant to the provisions of Section 2.02(f); and
|
(1)
|
2% of the Member’s Final Average Compensation multiplied by the portion of the first 25 years of his or her Benefit Service rendered on and after March 1, 1994, but not later than December 31, 2003;
|
(2)
|
plus 1½% of the Member’s Final Average Compensation multiplied by the portion of the next 15 years of his or her Benefit Service rendered on or after March 1, 1994, but not later than December 31, 2003, to a combined maximum of 40 years of Benefit Service minus the total number of years of Benefit Service rendered prior to March 1, 1994;
|
(3)
|
reduced by 1¼% of the Social Security Benefit multiplied by the portion of the number of years of his or her Benefit Service rendered on or after March 1, 1994, but no later than December 31, 2003, not in excess of 40 years minus the total number of years of Benefit Service rendered prior to March 1, 1994; and
|
(1)
|
1½% of the Member’s Final Average Compensation multiplied by his or her Benefit Service rendered on and after January 1, 2004, to a combined maximum of 40 years of Benefit Service minus the total number of years of Benefit Service rendered prior to January 1, 2004;
|
(2)
|
reduced by 1¼% of the Social Security Benefit multiplied by the portion of the number of years of his or her Benefit Service rendered on or after January 1, 2004, not in excess of 40 years minus the total number of years of Benefit Service rendered prior to January 1, 2004.
|
(c)
|
Members of Merged Plans. Notwithstanding any provisions of this Section 4.01 or this Article 4 to the contrary, a Member whose benefits are set forth in an Appendix to this Plan document as provided by Section 3.06, shall receive the benefit(s) set forth in the applicable Appendix, at such time and in such manner as provided in the Appendix.
|
(a)
|
A Member who continues in active service after his or her Normal Retirement Date or returns to active service on or after his or her Normal Retirement Date shall be retired from active service on a postponed retirement allowance on the first day of the month following his or her termination of employment, which date shall be the Member’s Postponed Retirement Date.
|
(b)
|
Benefit. Except as hereinafter provided and prior to adjustment in accordance with Sections 4.06(a) and 4.07(c), the annual postponed retirement allowance payable on a lifetime basis upon retirement at a Member’s Postponed Retirement Date shall be equal to the greater of:
|
(c)
|
Benefit for Member in Active Service After He or She Attains Age 70½. In the event a Member’s retirement allowance is required to begin under Section 4.10 while the Member is in active service, the January 1 immediately following the calendar year in which the Member attained age 70½ shall be the Member’s Annuity Starting Date for purposes of this Article 4 and the Member shall receive a postponed retirement allowance commencing on that January 1 in an amount determined as if he or she had retired on such date. As of each succeeding January 1 prior to the Member’s actual Postponed Retirement Date and as of his or her actual Postponed Retirement Date, the Member’s retirement allowance shall be:
|
(a)
|
Voluntary Termination Eligibility. A Member who has not reached his or her Normal Retirement Date but has reached, prior to his or her voluntary termination of employment, the 55th anniversary of his or her birth and completed 10 years of Eligibility Service, is eligible to retire on a standard early retirement allowance on the first day of the calendar month coincident with or next following termination of employment, which date shall be the Member’s Early Retirement Date.
|
(b)
|
Benefit. Except as hereinafter provided and prior to adjustment in accordance with Sections 4.06(a) and 4.07(c) the standard early retirement allowance shall be an allowance deferred to commence on the Member’s Normal Retirement Date and shall be equal to the Member’s Accrued Benefit earned up to his or her Early Retirement Date, computed on the basis of his or her Benefit Service, Final Average Compensation, Social Security Benefit and any applicable components of the Prior Salaried Plan as of his or her Early Retirement Date, with the Social Security Benefit determined on the assumption that the Member had no earnings after his or her Early Retirement Date.
|
(a)
|
Voluntary Termination Eligibility. A Member who has not reached his or her Normal Retirement Date but who prior to his or her voluntary termination of employment (i) has reached the 55th anniversary of his or her birth and completed 15 years of Eligibility Service, or (ii) has reached the 50th anniversary of his or her birth but not the 55th anniversary of his or her birth and whose age plus years of Eligibility Service equals 80 or more, is eligible, in either case, to retire on a special early retirement allowance on the first day of the calendar month coincident with or next following termination of employment, which date shall be the Member’s Special Early Retirement Date.
|
(b)
|
Benefit. Except as hereinafter otherwise provided and prior to adjustment in accordance with Sections 4.06(a) and 4.07(c) the special early retirement allowance shall be an allowance deferred to commence on the Member’s Normal Retirement Date and shall be equal to his or her Accrued Benefit earned up to the Member’s Special Early Retirement Date, computed on the basis of his or her Benefit Service, Final Average Compensation, Social Security Benefit and any applicable components of the Prior Salaried Plan as of his or her Special Early Retirement Date, with the Social Security Benefit determined on the assumption that the Member had no earnings after his or her Special Early Retirement Date.
|
(a)
|
Eligibility, Except as provided in the second paragraph of this Subsection 4.05(a), a Member shall be vested in, and have a nonforfeitable right to his or her Accrued Benefit upon
|
(b)
|
Benefit. Prior to adjustment in accordance with Sections 4.06(a) and 4.07(a), the vested benefit payable to a Member shall be a benefit deferred to commence on the former Member’s Normal Retirement Date and shall be equal to his or her Accrued Benefit earned up to the date the Member’s employment is terminated, computed on the basis of his or her Benefit Service, Final Average Compensation, Social Security Benefit and any applicable component of the Prior Salaried Plan as of his or her date of termination, with the Social Security Benefit determined on the assumption that the Member continued in service to his or her Normal Retirement Date at his or her rate of Compensation in effect as of his or her date of termination. On or after the date on which the former Member shall have reached the 55th anniversary of his or her birth he or she may elect to receive a benefit commencing on the first day of any calendar month coincident with or next following the 55th anniversary of his or her birth and prior to his or her Normal Retirement Date as specified in his or her request therefor, after receipt by the Plan Administration Committee of written application therefor made by the former Member and filed with the Plan Administration Committee. Upon such earlier payment, the vested benefit otherwise payable at the former Member’s Normal Retirement Date will be reduced by 1/180th for each month up to 60 months by which the commencement date of such payments precedes his or her Normal Retirement Date and further reduced by 1/360th for each such month in excess of 60 months.
|
(a)
|
Automatic Forms of Payment
|
(i)
|
Automatic Joint and Survivor Annuity. If a Member or former Member who is married on his or her Annuity Starting Date has not made an election of an optional form of payment as provided in Section 4.06(b), the retirement allowance or vested benefit payable to such Member or former Member shall automatically be adjusted as follows in order to provide that, after his or her death, a lifetime benefit as described below shall be payable to the spouse to whom he or she is married on his or her Annuity Starting Date:
|
(1)
|
90/50 Spouse’s Annuity. If such Member retires from active service under Section 4.01, Section 4.02, Section 4.03 or Section 4.04, the automatic joint and survivor annuity payable to the Member shall provide (A) a reduced retirement allowance payable to the Member during his or her life equal to 90% of the retirement allowance otherwise payable without optional modification to the Member under Section 4.01, 4.02, 4.03 or 4.04, as the case may be, further adjusted, if necessary, as provided in the following sentence and (B) a benefit payable after his or her death to his or her surviving spouse equal to 50% of the retirement allowance otherwise payable without optional modification to the
|
(2)
|
Vested Spouse’s Annuity. If such Member terminates service and is entitled to a vested benefit under Section 4.05, the joint and survivor annuity payable to the former Member shall provide (A) a reduced vested benefit payable to the former Member during his or her life equal to his or her vested benefit computed in accordance with Section 4.05 multiplied by the appropriate factor contained in Table 1 of Appendix A and (B) a benefit payable after his or her death to his or her surviving spouse equal to 50% of the reduced vested benefit payable to the former Member.
|
(ii)
|
Automatic Life Annuity. If a Member or former Member is not married on his or her Annuity Starting Date, the retirement allowance or vested benefit computed in accordance with Section 4.01, 4.02, 4.03, 4.04 or 4.05, as the case may be, shall be paid to the Member or former Member in the form of a lifetime benefit payable during his or her own lifetime with no further benefit payable to anyone after his or her death, unless the Member or former Member is eligible for and makes an election of an optional form of payment under Section 4.06(b).
|
(b)
|
Optional Forms of Payment
|
(i)
|
Life Annuity Option. Any Member or former Member who retires or terminates employment with the right to a retirement allowance or vested benefit may elect, in accordance with the provisions of Section 4.06(d), to provide that the retirement allowance payable to him or her under Section 4.01, 4.02, 4.03 or 4.04 or the vested benefit payable to him or her under Section 4.05 shall be in the form of a lifetime benefit payable during his or her own lifetime with no further benefit payable to anyone after his or her death.
|
(ii)
|
80/80 Spouse’s Annuity Option. Any Member who retires from active service under Section 4.01, 4.02, 4.03 or 4.04, who is married on his or her Annuity Starting Date, may elect, in accordance with the provisions of Section 4.06(d), to convert the retirement allowance otherwise payable to him or her without optional modification under Section 4.01, 4.02, 4.03 or 4.04, as the case may be, into the following
|
(iii)
|
Contingent Annuity Option. Any Member who retires from active service under Section 4.01, 4.02, 4.03 or 4.04 may elect, in accordance with the provisions of Section 4.06(d), to convert the retirement allowance otherwise payable to him or her without optional modification under Section 4.01, 4.02, 4.03 or 4.04, as the case may be, into Option 1 or Option 2 below in order to provide that after his or her death, a lifetime benefit shall be payable to the person who, when the option became effective, was designated by him or her to be his or her contingent annuitant. The optional benefit elected shall be the Equivalent Actuarial Value of the retirement allowance otherwise payable without optional modification under Section 4.01, 4.02, 4.03 or 4.04.
|
(c)
|
Required Notice. No less than 30 days and no more than 180 days before his or her Annuity Starting Date, the Plan Administration Committee shall furnish to each Member or former Member a written explanation in non-technical language of the terms and conditions of the Automatic Joint and Survivor Annuity and the Automatic Life Annuity as described in Section 4.06(a) and the optional forms of benefits described in Section 4.06(b). Such explanation shall include (i) a general description of the eligibility conditions for the material features of and the relative values of the optional forms of payment under the Plan, (ii) any rights the Member or former Member may have to defer commencement of his or her retirement allowance or vested benefit, which will include a description of how much larger benefits will be if the commencement of benefits is deferred, (iii) the requirement for Spousal Consent as provided in Section 4.06(d), and (iv) the right of the Member or former Member, prior to his or her Annuity Starting Date, to make and to revoke elections under Section 4.06. Such notification shall satisfy the notice requirements of Code Section 417(a)(3) and Regulation 1.417(a)(3)-1.
|
(d)
|
Election of Options. Subject to the provisions of this Section 4.06(d) and in lieu of the automatic forms of payment described in Section 4.06(a):
|
(i)
|
a Member may elect to receive his or her retirement allowance or vested benefit in the optional form of payment described in Section 4.06(b)(i);
|
(ii)
|
a Member who retires under the provisions of Section 4.01, 4.02, 4.03 or 4.04 may elect to receive his or her retirement allowance in one of the optional forms of payment described in Section 4.06(b)(ii) or in the form of Option 1, Option 2 or Option 3 under 4.06(b)(iii); and
|
(iii)
|
a Member who terminates service and is entitled to vested benefit under Section 4.05 may elect to receive his or her retirement allowance or vested benefit in the form of Option 3 under Section 4.06(b)(iii), provided his or her spouse is the only contingent annuitant.
|
(A)
|
the Member’s benefit must satisfy the provisions of Code Sections 415 and 417(e)(3), both at the retroactive Annuity Starting Date and at the actual commencement date;
|
(B)
|
a payment equal in amount to the payments that would have been received by the Member had his or her benefit actually commenced on his retroactive Annuity
|
(C)
|
the Member elects within the 120 day period following the Member’s termination of employment with the Company and all Associated Companies to receive benefits as of a retroactive Annuity Starting Date.
|
(D)
|
Spousal Consent to the retroactive Annuity Starting Date is required for such election to be effective unless:
|
(I)
|
the amount of the survivor annuity payable to the spouse determined as of the retroactive Annuity Starting Date under the form elected by the Member is no less than the amount the spouse would have received under the Qualified Joint and Survivor Annuity if the date payments commence were substituted for the retroactive Annuity Starting Date; or
|
(II)
|
the Member is not married on the actual commencement date and the Member’s spouse is not treated as his spouse under a qualified domestic relations order on the Retroactive Annuity Starting Date.
|
(e)
|
Delayed Commencement of Normal Retirement Allowance
|
(A)
|
a lump sum payment equal to the sum of the monthly payments the Member would have received from his Normal Retirement Date to his Annuity Starting Date, together with interest at the annual rate of interest on 30-year Treasury Securities published by the Commissioner of Internal Revenue in the calendar month preceding the applicable Stability Period applicable for each Plan Year in which interest is paid, compounded annually. The amount of the monthly payments shall be determined on the basis of the form of payment in which the Member’s retirement allowance is payable under Section 4.06(a), as applicable; and
|
(B)
|
a retirement allowance in the amount that would have been payable to the Member if payments had commenced on the Member’s Normal Retirement Date in the form elected by the Member.
|
(f)
|
With respect to a Member who retires under the provisions of Section 4.03 or Section 4.04, the reduction on account of the Social Security Benefit to be made to the benefit, if any, payable in accordance with Section 4.06(a) or Section 4.06(b) to his or her designated spouse or to his or her contingent annuitant shall not be made until such time as the Member would have, had he or she survived, upon proper application first been entitled to receive said Social Security Benefit.
|
(a)
|
Automatic Vested Spouse’s Benefit
|
(b)
|
Automatic Pre‑Retirement Survivor’s Benefit
|
(c)
|
Optional Supplemental Pre‑Retirement Survivor’s Benefit
|
(A)
|
A Member may no longer elect optional Supplemental Pre-Retirement Survivor’s Benefit coverage. If as of December 31, 2017, a Member had a valid election of optional Supplemental Pre-Retirement Survivor’s Benefit coverage in effect, such election shall continue in effect after December 31, 2017. However, no changes or revisions may be made to such coverage after that date. Members whose elections are preserved after December 31, 2017 are: Don Ray; Mark G. Morash; Jimmy P. Harris; Bob Edwards; Melanie J. Williams; Ray E. Snedaker; Ray Smith; Greg Young; Peyton J. Bradley, Jr.; Brad Henslin; Mitch Walters; and Ron Krzywanski.
|
(B)
|
No further reduction shall apply to the retirement allowance of a Member who elects optional Supplemental Pre-Retirement Survivor’s Benefit coverage under this Section 4.07(c) or, if applicable, to the benefit payable to his or her Beneficiary upon the Member’s death. If a Member’s or Beneficiary’s Annuity Starting Date is on or after January 1, 2018, any prior reduction for months in which coverage was in effect shall be cancelled and the Member’s or spouse’s benefit will be determined without regard to any reduction for optional Supplemental Pre-Retirement Survivor’s Benefit coverage.
|
(d)
|
Notwithstanding any provision of Section 4.07(b) or Section 4.07(c) to the contrary, in no event shall the sum of the Automatic Pre‑Retirement Survivor’s Benefit payable under the provisions of Section 4.07(b) and the optional Supplemental Pre‑Retirement Survivor’s Benefit payable under the provisions of Section 4.07(c) to a Beneficiary be less than the amount of benefit the spouse would have received if the retirement allowance to which the Member was entitled at his or her date of death (i) had commenced on the date the spouse elects to have such Pre‑Retirement Survivor’s Benefit payments commence, (ii) in the form of an Automatic Joint and Survivor Annuity under Section 4.06(a)(i), and (iii) the Member had died immediately thereafter. However, if within the 180-day period prior to his or her Annuity Staring Date a Member has elected an optional form of payment which provides for monthly payments to his or her spouse for life in an amount equal to more than 50% but not more than 100% of the monthly amount payable under the option for the life of the Member and such option is of Equivalent Actuarial Value to the Automatic Joint and Survivor Annuity referred to in the preceding sentence, such optional form of payment shall be used to compute the amount payable to the spouse.
|
(e)
|
Benefits Payable to an Estate or Trust. If a Member’s Beneficiary under this Section 4.07 is his or her estate or a trust, the benefits otherwise payable under Section 4.07(b), and if elected, under Section 4.07(c) shall be commuted into a single lump sum amount, which amount shall be determined by multiplying the benefits otherwise payable by the appropriate factor in Tables 4 or 5 of Appendix A and calculated by assuming the Beneficiary had been a person of the same age as the Member at the Member’s date of death. In no event shall the amount of the lump sum be less than the amount required by applicable law. The payment of such single lump sum amount shall represent the full and total payment of all benefits due under the Plan. The Plan Administration Committee shall resolve any questions arising hereunder on a basis uniformly applicable to all Members similarly situated.
|
(f)
|
If the Member’s Beneficiary dies during the period coverage is effective under Sections 4.07(b) and Section 4.07(c), the Beneficiary designation shall thereby be canceled. However, coverage under Section 4.07(b), and if elected, under Section 4.07(c) shall nevertheless continue in full effect. The Member’s Beneficiary thereafter shall be in accordance with his or her subsequent designation of a new Beneficiary or in accordance with the term “Beneficiary” as defined herein.
|
(g)
|
The Plan Administration Committee shall furnish to each Member a written explanation in non-technical language which describes (i) the terms and conditions of the Automatic Pre‑Retirement Survivor’s Benefit and the Optional Supplemental Pre‑Retirement Survivor’s Benefit, (ii) the Member’s right to make an election to designate a Beneficiary other than his or her spouse and the effect of such election, (iii) the right to revoke, prior to the Annuity Starting Date, such designation and the effect of such revocation, and (iv) the rights of the Member’s spouse, if any. The Plan Administration Committee shall furnish this written explanation to each Member during the period beginning one year prior to the earlier of (i) the date the Member retires pursuant to the provision of Section 4.04(a)(ii), (ii) the date the Member reaches the 55th anniversary of his or her birth and completes ten years of Eligibility Service, or (iii) the Member’s Normal Retirement Date, and ending within one year after such date.
|
(h)
|
A Member may revoke an election made under Section 4.07(c) at any time prior to his or her Annuity Starting Date. There shall be no further reduction to the Member’s retirement allowance for any period during which an election under Section 4.07(c) is not in effect. The Member may make a new election at any time thereafter and any subsequent election shall become effective one year after the first day of the calendar month coincident with or next following the (i) date the notice is received by the Plan Administration Committee or (ii) the date specified in such notice, if later.
|
(i)
|
HEART Act Military Service Death Benefits
|
(a)
|
For benefit accrual purposes, the Company will treat an Employee who dies while performing qualified military service as if the individual has resumed employment in accordance with the individual’s reemployment rights under Chapter 43 of Title 38, United States Code, on the day preceding death or disability (as the case may be) and terminated employment on the actual date or death.
|
(b)
|
If a Member dies while performing qualified military service (as defined in Code Section 414(u)), the Beneficiaries of the Member are entitled to any additional benefits (other than benefit accruals relating to the period of qualified military service) provided under the Plan as if the Member had resumed employment on the day immediately preceding the date of death and then terminated employment on the date of death. Moreover, the Plan will credit the Member’s qualified military service as service for vesting purposes, as though the Member had resumed employment under the Uniformed Services Employment and Reemployment Rights Act of 1994, as amended, immediately prior to the Member’s death.
|
(a)
|
Annual Benefit
|
(1)
|
Annual Benefit. For purposes of this Section, “annual benefit” means a benefit that is payable annually in the form of a straight life annuity. Except as provided below, where a benefit is payable in a form other than a straight life annuity, the benefit shall be adjusted to an actuarially equivalent straight life annuity that begins at the same time as such other form of benefit and is payable on the first day of each month, before applying the limitations of this Section. For a Member who has or will have distributions commencing at more than one Annuity Starting Date, the “annual benefit” shall be determined as of each such Annuity Starting Date (and shall satisfy the limitations of this Section as of each such date), actuarially adjusting for past and future distributions of benefits commencing at the other Annuity Starting Dates. For this purpose, the determination of whether a new Annuity Starting Date has occurred shall be made without regard to Regulation 1.401(a)-20, Q&A 10(d), and with regard to Regulation 1.415(b)1(b)(1)(iii)(B) and (C). No actuarial adjustment to the benefit shall be made for (i) survivor benefits payable to a surviving spouse under a qualified joint and survivor annuity to the extent such benefits would not be payable if the Member’s benefit were paid in another form; (ii) benefits that are not directly related to retirement benefits (such as a qualified disability benefit, preretirement incidental death benefits, and postretirement medical benefits); or (iii) the inclusion in the form of benefit of an automatic benefit increase feature, provided the form of benefit is not subject to Code Section 417(e)(3) and would otherwise satisfy the limitations of this Section, and the Plan provides that the amount payable under the form of benefit in any “limitation year” shall not exceed the limits of this Section applicable at the Annuity Starting Date, as increased in subsequent years pursuant to Code Section
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(2)
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Grandfather Provision. The application of the provisions of this Section shall not cause the “maximum permissible benefit’ for any Member to be less than the Member’s accrued benefit under all the defined benefit plans of an “employer” or a “predecessor employer” as of the end of the last “limitation year” beginning before July 1, 2007, under provisions of the plans that were both adopted and in effect before April 5, 2007. The preceding sentence applies only if the provisions of such defined benefit plans that were both adopted and in effect before April 5, 2007, satisfied the applicable requirements of statutory provisions, Regulations, and other published guidance relating to Code Section 415 in effect as of the end of the last “limitation year” beginning before July 1, 2007, as described in Regulation 1.415(a)‑1(g)(4).
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(3)
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High Three‑Year Average Compensation. For purposes of the Plan’s provisions reflecting Code Section 415(b)(3) (i.e., limiting the “annual benefit” payable to no more than 100% of the Member’s average annual compensation), a Member’s average compensation shall be the average compensation for the three consecutive years of service with the “employer” that produces the highest average, except that a Member’s compensation for a year of service shall not include compensation in excess of the limitation under Code Section 401(a)(17) that is in effect for the calendar year in which such year of service begins. If the Member has less than three consecutive years of service, compensation shall be averaged over the Member’s longest consecutive period of service, including fractions of years, but not less than one year. In the case of a Member who is rehired by the “employer” after a severance of employment, the Member’s high three‑year average compensation shall be calculated by excluding all years for which the Member performs no services for and receives no compensation from the “employer” (the “break period”), and by treating the years immediately preceding and following the “break period” as consecutive.
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(b)
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Maximum Permissible Benefit
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(1)
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Maximum Benefit. Notwithstanding the foregoing and subject to the exceptions and adjustments below, the “maximum permissible benefit” payable to a Member under this Plan in any “limitation year” shall equal the lesser of (A) and (B) below:
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(A)
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Defined Benefit Dollar Limitation. $160,000, as adjusted, effective January 1 of each year, under Code Section 415(d) in such manner as the Secretary of the Treasury shall prescribe, and payable in the form of a straight life annuity. Such dollar limitation as adjusted under Code Section 415(d) will apply to “limitation years” ending with or within the calendar year for which the adjustment applies.
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(B)
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Defined Benefit Compensation Limitation. One hundred percent of the Member’s “415 compensation” averaged over the three consecutive “limitation years” (or actual number of “limitation years” for Employees who have been employed for less than three consecutive “limitation years”) during which the Employee had the greatest aggregate “415 compensation” from the “employer.”
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(2)
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Limitation Year. For purposes of this Section and for applying the limitations of Code Section 415, the “limitation year” shall be the Plan Year. All qualified plans maintained by the “employer” must use the same “limitation year.” If the “limitation year” is amended to a different 12-consecutive month period, the new “limitation year” must begin on a date within the “limitation year” in which the amendment is made.
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(c)
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Adjustments to Annual Benefit and Limitations
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(1)
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Adjustment for Early Payment (Limitation Years beginning on or after July 1, 2007).
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(A)
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If the Annuity Starting Date for the Member’s benefit is prior to age 62 and occurs in a “limitation year” beginning on or after July 1, 2007, and the Plan does not have an immediately commencing straight life annuity payable at both age 62 and the age of benefit commencement, the “defined benefit dollar limitation” for the Member’s Annuity Starting Date is the annual amount of a benefit payable in the form of a straight life annuity commencing at the Member’s Annuity Starting Date that is the actuarial equivalent of the “defined benefit dollar limitation” (adjusted under Section 4.08(c)(6) for years of participation less than 10, if required) with actuarial equivalence computed using a 5% interest rate assumption and the “applicable mortality table” for the Annuity Starting Date (and expressing the Member’s age based on completed calendar months as of the Annuity Starting Date).
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(B)
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If the Annuity Starting Date for the Member’s benefit is prior to age 62 and occurs in a “limitation year” beginning on or after July 1, 2007, and the Plan has an immediately commencing straight life annuity payable at both age 62 and the age of benefit commencement, the “defined benefit dollar limitation” for the Member’s Annuity Starting Date is the lesser of the limitation determined under the preceding sentence and the “defined benefit dollar limitation” (adjusted under Section 4.08(c)(6) for years of participation less than 10, if required) multiplied by the ratio of the annual amount of the immediately commencing straight life annuity under the Plan at the Member’s Annuity Starting Date to the annual amount of the immediately commencing straight life annuity under the Plan at age 62, both determined without applying the limitations of this Section and without applying the provisions of Section 4.08(c)(5).
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(C)
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Notwithstanding any other provisions of this Subsection (1) or Subsection (2) below, the age-adjusted dollar limit applicable to a Member shall not decrease on account of an increase in age or the performance of addition service.
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(2)
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Adjustment for Early Payment (Limitation Years beginning prior to July 1, 2007). If the “annual benefit” of a Member begins prior to age 62, and occurs in a “limitation year” beginning before July 1, 2007, the “defined benefit dollar limitation” of Section 4.08(b)(1)(A) applicable to the Member at the earlier age (adjusted under Section 4.08(c)(6) for years of participation less than 10, if required) is the actuarial equivalent of the dollar limitation under Code Section 415(b)(1)(A) (as adjusted under Code Section 415(d)), with actuarial equivalence computed using whichever of the following produces the smaller annual amount: (i) the interest rate and mortality table or other tabular factor specified in the Plan for determining Actuarial Equivalence for early retirement purposes, or (ii) a 5% interest rate assumption and the “applicable mortality table.” Notwithstanding any other provisions of this Subsection (2) or Subsection (1) above, the age-adjusted dollar limit applicable to a Member shall not decrease on account of an increase in age or the performance of addition service.
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(3)
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Adjustment for Late Payment (Limitation Years beginning on or after July 1, 2007).
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(A)
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If the Annuity Starting Date for the Member’s benefit is after age 65 and occurs in a “limitation year” beginning on or after July 1, 2007, and the Plan does not have an immediately commencing straight life annuity payable at both age 65 and the age of benefit commencement, the “defined benefit dollar limitation” at the Member’s Annuity Starting Date is the annual amount of a benefit payable in the form of a straight life annuity commencing at the Member’s Annuity Starting Date that is the actuarial equivalent of the “defined benefit dollar limitation” (adjusted under Plan Section 4.08(c)(6) for years of participation less than 10, if required), with actuarial equivalence computed using a 5% interest rate assumption and the applicable mortality table for that Annuity Starting Date as defined in Section 1.20 of the Plan (and expressing the Member’s age based on completed calendar months as of the Annuity Starting Date).
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(B)
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If the Annuity Starting Date for the Member’s benefit is after age 65 and occurs in a “limitation year” beginning on or after July 1, 2007, and the Plan has an immediately commencing straight life annuity payable at both age 65 and the age
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(4)
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Adjustment for Late Payment (Limitation Years beginning before July 1, 2007). If the “annual benefit” of a Member begins after age 65, and occurs in a “limitation year” beginning before July 1, 2007, the “defined benefit dollar limitation” of Section 4.08(b)(1)(A) applicable to the Member at the later age (adjusted under Section 4.08(c)(6) for years of participation less than 10, if required) is the actuarial equivalent of the dollar limitation under Code Section 415(b)(1)(A) (as adjusted under Code Section 415(d)), with actuarial equivalence computed using whichever of the following produces the smaller annual amount: (i) the interest rate an mortality table or other tabular factor specified in the Plan for determining Actuarial Equivalence for early retirement purposes, or (ii) a 5% interest rate assumption and the “applicable mortality table.”
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(5)
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No Mortality Adjustment for Certain Payments. Notwithstanding the other requirements of Paragraphs (1), (2), (3) and (4) of this Subsection (c), in adjusting the “defined benefit dollar limitation” for the Member’s Annuity Starting Date under Paragraphs (1)(A), (2), (3)(A) and (4) of this Subsection (c), no adjustment shall be made to reflect the probability of a Member’s death between the Annuity Starting Date and age 62, or between age 65 and the Annuity Starting Date, as applicable, if benefits are not forfeited upon the death of the Member prior to the Annuity Starting Date. To the extent benefits are forfeited upon death before the Annuity Starting Date, such an adjustment shall be made. For this purpose, no forfeiture shall be treated as occurring upon the Member’s death if the Plan does not charge Members for providing a qualified preretirement survivor annuity, as defined in Code Section 417(c) upon the Member’s death.
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(6)
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Adjustment for Less Than 10 Years of Participation or Service. If a Member has fewer than 10 years of participation in the Plan, then the “defined benefit dollar limitation” of Section 4.08(b)(1)(A) shall be multiplied by a fraction, the numerator of which is the number of years (or part thereof) of participation in the Plan, and the denominator of which is 10. However, in no event shall such fraction be less than 1/10th.
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(7)
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Actuarial Equivalence. For purposes of adjusting the “annual benefit” to a straight life annuity, the equivalent “annual benefit” shall be (A) for “limitation years” beginning on or after July 1, 2007, the greater of the annual amount of the straight life annuity commencing at the same Annuity Starting Date, and the annual amount of a straight life annuity commencing at the same Annuity starting date that has the same actuarial present value as the Member’s form of benefit computed using a 5% interest rate assumption and the “applicable mortality table,” and (B) for “limitation years” beginning before July 1, 2007, the annual amount of a straight life annuity commencing at the same Annuity Starting Date that has the same actuarial present value as the Member’s form of benefit computed using whichever of the following produces the greater annual amount: (i) the interest rate and mortality table or other tabular factor specified in the Plan for adjusting benefits in the same form; and (ii) a 5% interest rate assumption and the “applicable mortality table.” If the “annual benefit” is paid in a form other than a nondecreasing life annuity payable for a period not less than the life of a Member or, in the case of a Pre‑Retirement Survivor Annuity, the life of the surviving spouse, the “applicable interest rate” shall be substituted for “5% interest rate” in the preceding sentence.
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(8)
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Time of Adjustment. For purposes of Sections 4.08(a), 4.08(c)(1) and 4.08(c)(3), no adjustments under Code Section 415(d) shall be taken into account before the “limitation year” for which such adjustment first takes effect.
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(9)
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Benefits Not Subject to Adjustment. For purposes of Section 4.08(a), no actuarial adjustment to the benefit is required for (i) the value of a qualified joint and survivor annuity, (ii) benefits that are not directly related to retirement benefits (such as a qualified disability benefit, pre‑retirement death benefits, and post‑retirement medical benefits), and (C) the value of post‑retirement cost‑of‑living increases made in accordance with Code Section 415(d) and Regulation 1.415‑3(c)(2)(iii). The “annual benefit” does not include any benefits attributable to after-tax voluntary Employee contributions or rollover contributions, or the assets transferred from a qualified plan that was not maintained by the “employer.”
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(d)
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Annual Benefit Not in Excess of $10,000
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(e)
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Other Rules
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(1)
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Benefits Under Terminated Plans. If a defined benefit plan maintained by the “employer” has terminated with sufficient assets for the payment of benefit liabilities of all terminated plan participants and a Member in the plan has not yet commenced benefits under the plan, the benefits provided pursuant to the annuities purchased to provide the Member’s benefits under the terminated plan at each possible Annuity Starting Date shall be taken into account in applying the limitations of this Section. If there are not sufficient assets for the payment of all Members’ benefit liabilities, the benefits taken into account shall be the benefits that are actually provided to the Member under the terminated plan.
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(2)
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Benefits Transferred From the Plan. If a Member’s benefits under a defined benefit plan maintained by the “employer” are transferred to another defined benefit plan maintained by the “employer” and the transfer is not a transfer of distributable benefits pursuant to Regulation 1.411(d)-4, Q&A-3(c), the transferred benefits are not treated as being provided under the transferor plan (but are taken into account as benefits provided under the transferee plan). If a Member’s benefits under a defined benefit plan maintained by the “employer” are transferred to another defined benefit plan that is not maintained by the “employer” and the transfer is not a transfer of distributable benefits pursuant to Regulation 1.411(d)-4, Q&A-3(c), then the transferred benefits are treated by the “employer’s” plan as if such benefits were provided under annuities purchased to provide benefits under a plan maintained by the “employer” that terminated immediately prior to the transfer with sufficient assets to pay all Members’ benefit liabilities under the plan. If a Member’s benefits under a defined benefit plan maintained by the “employer” are transferred to another defined benefit plan in a transfer of distributable benefits pursuant to Regulation 1.411(d)-4, Q&A-3(c), the amount transferred is treated as a benefit paid from the transferor plan.
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(3)
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Formerly Affiliated Plans of the Employer. A “formerly affiliated plan of an employer” shall be treated as a plan maintained by the “employer,” but the formerly affiliated plan shall be treated as if it had terminated immediately prior to the cessation of affiliation with sufficient assets to pay Members’ benefit liabilities under the Plan and had purchased annuities to provide benefits. A “formerly affiliated plan of the employer” means a plan that, immediately prior to the cessation of affiliation, was actually maintained by the “employer” and, immediately after the cessation of affiliation, is not actually maintained by the “employer.” For this purpose, cessation of
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(4)
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Plans of a “Predecessor Employer”. If the “employer” maintains a defined benefit plan that provides benefits accrued by a Member while performing services for a “predecessor employer,” then the Member’s benefits under a plan maintained by the “predecessor employer” shall be treated as provided under a plan maintained by the “employer.” However, for this purpose, the plan of the “predecessor employer” shall be treated as if it had terminated immediately prior to the event giving rise to the “predecessor employer” relationship with sufficient assets to pay participants’ benefit liabilities under the plan, and had purchased annuities to provide benefits; the “employer” and the “predecessor employer” shall be treated as if they were a single employer immediately prior to such event and as unrelated employers immediately after the event; and if the event giving rise to the predecessor relationship is a benefit transfer, the transferred benefits shall be excluded in determining the benefits provided under the plan of the “predecessor employer”. A former entity that antedates the “employer” is also a “predecessor employer” with respect to a Member if, under the facts and circumstances, the “employer” constitutes a continuation of all or a portion of the trade or business of the former entity.
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(5)
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Employer. For purposes of this Section, “employer” means any employer that adopts the Plan, and all members of a controlled group of corporations of such employer, as defined in Code Section 414(b), as modified by Code Section 415(h)), all commonly controlled trades or businesses or such employer (as defined in Code Section 414(c), as modified, except in the case of a brother-sister group of trades or businesses under common control, by Code Section 415(h)), or affiliated service groups (as defined in Code Section 414(m)) of which the adopting employer is a part, and any other entity required to be aggregated with the employer pursuant to Code Section 414(o).
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(6)
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Adjustment if in Two Defined Benefit Plans. If the Member is, or has ever been, a participant in another qualified defined benefit plan (without regard to whether the plan has been terminated) maintained by the “employer” or a “predecessor employer”, the sum of the Member’s “annual benefits” from all such plans may not exceed the “maximum permissible benefit.” Where the Member’s employer-provided benefits under all such defined benefit plans (determined as of the same age) would exceed the “maximum permissible benefit” applicable at that age, the rate of accrual in this Plan will be reduced to the extent necessary so that the total “annual benefits” payable at any time under all such plans will not exceed the “maximum permissible benefit.”
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(7)
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Special Rules. The limitations of this Section shall be determined and applied taking into account the rules in Regulation 1.415(f)-1(d), (e) and (h).
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(8)
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Compensation. For purposes of this Section 4.08, “compensation” and “415 compensation” shall mean, with respect to any Member, the wages, salaries, and other amounts paid in respect of such Member by the Company or an Associated Company for personal services actually rendered and including any elective amounts that are not
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(a)
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absent a severance from employment, such payments would have been paid to the Employee while the Employee continued in employment with the Company and was for regular compensation for services rendered during the Employee’s regular working hours; or
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(b)
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compensation was paid for services outside the Employee’s regular working hours (such as overtime or shift differential), commissions, bonuses or other similar compensation.
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(a)
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Unless otherwise provided under an optional benefit elected pursuant to Section 4.06, the survivor’s benefits available under Section 4.07, or the provisions of Section 4.10(e)(ii), all retirement allowances, vested benefits or other benefits payable under the Plan will be paid in monthly installments as of the end of each month beginning with (i) the month in which a Member has reached his or her Normal Retirement Date and has retired from active service, (ii) the month in which a Member has reached his or her Postponed Retirement Date and has retired from active service, (iii) the month in which a Member, upon proper application, has requested commencement of his or her vested benefit or early retirement allowance, or (iv) the month in which benefits under an optional benefit under Section 4.06 or the survivor’s benefits under Section 4.07 become payable, whichever is applicable. Such monthly installments shall cease with the payment for the month in which the recipient dies. In no event shall a retirement allowance or vested benefit be payable to a Member who continues in or resumes active service with the Company or an Associated Company for any period between his or her Normal Retirement Date and Postponed Retirement Date, except as provided in Sections 4.02(d), and 4.10(e).
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(b)
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Effective January 1, 1998, through March 27, 2005, in any case, a lump sum payment equal to the vested benefit payable under Section 4.05 or the vested spouse’s benefit payable under Section 4.07(a) multiplied by the appropriate factor contained in Table 4, 5, or 6 of
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(c)
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In the event that the Plan Administration Committee shall find that a person to whom benefits are payable is unable to care for his or her affairs because of illness or accident or is a minor or has died, then, unless claim shall have been made therefor by a legal representative, duly appointed by a court of competent jurisdiction, the Plan Administration Committee may direct that any benefit payment due him or her be paid to his or her spouse, a child, a parent or other blood relative, or to a person with whom he or she resides, and any such payment made shall be a complete discharge of the liabilities of the Plan therefor.
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(d)
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Before any benefit shall be payable to a Member, a former Member, or other person who is or may become entitled to a benefit hereunder, such Member, former Member, or other person shall file with the Plan Administration Committee such information as it shall require to establish his or her rights and benefits under the Plan.
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(e)
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(i) Except as otherwise provided in this Article 4, payment of a Member’s retirement allowance or a former Member’s vested benefit shall begin as soon as administratively practicable following the latest of (1) the Member’s Normal Retirement Age or (2) the date he or she terminates service with the Company and all Associated Companies (but not more than 60 days after the close of the Plan Year in which the latest of (1) or (2) occurs).
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(a)
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Cessation of Benefit Payments. If a former Member or a retired Member entitled to or in receipt of a vested benefit or retirement allowance is reemployed by the Company or by an Associated Company in a capacity other than as a Non‑Benefits Worker, any benefit payments he or she is receiving shall cease, except as otherwise provided in Section 4.02(c) and Section 4.10(e). If a former Member or a retired Member returns to the Company or an Associated Company as a Non‑Benefits Worker, benefit payments shall continue and Paragraphs (b) and (c) shall not apply.
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(b)
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Optional Forms of Pension Benefits
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(c)
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Benefit Payments at Subsequent Termination or Retirement
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(d)
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Questions Relating to Reemployment of Former Members or Retired Members. If, at subsequent termination of employment or retirement, any question shall arise under this Section 4.11 as to the calculation or recalculation of a reemployed former Member’s or retired Member’s vested benefit or retirement allowance or election of an optional form of benefit under the Plan, such question shall be resolved by the Plan Administration Committee on a basis uniformly applicable to all Members similarly situated.
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(a)
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The following definitions apply to the terms used in this Section:
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(b)
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For purposes of this Section, the Plan shall be “top-heavy” with respect to any Plan Year if as of the applicable determination date the top-heavy ratio exceeds 60%. The top-heavy ratio shall be determined as of the applicable valuation date in accordance with Code Sections 416(g)(3) and (4)(B) on the basis of the same mortality and interest rate assumptions used to value the Plan. For purposes of determining whether the Plan is top-heavy, the present value of Accrued Benefits under the Plan will be combined with the present value of accrued benefits or account balances under each other plan in the required aggregation group, and, in the Company’s discretion, may be combined with the present value of accrued benefits or account balances under any other qualified plan(s) in the permissive aggregation group. The accrued benefit of a non-key employee under the Plan or any other defined benefit plan in the aggregation group shall be determined (i) under the method, if any, that uniformly applies for accrual purposes under all plans maintained by the Company or an Associated Company, or (ii) if there is no such method, as if such benefit accrued not more rapidly than the slowest accrual rate permitted under the fractional rule described in Code Section 411(b)(1)(C).
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(c)
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The following provisions shall be applicable to Members for any Plan Year with respect to which the Plan is top-heavy:
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(d)
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If the Plan is top-heavy with respect to a Plan Year and ceases to be top-heavy for a subsequent Plan Year, the following provisions shall be applicable:
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(a)
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In order to be eligible for the benefits provided hereunder, a person must be a Plan Member who retired under the Plan provisions during the period designated by the Plan Administration Committee and be currently eligible for post-retirement medical benefits under a plan maintained by the Company and hereinafter referred to as the “Medical Plan” or be an eligible dependent of such a Member. To the extent they are not otherwise reimbursed from Company assets, covered medical expenses incurred during the applicable period shown below by such a Member or his or her eligible dependents shall be reimbursed hereunder.
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(b)
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The level of medical benefits covered under the provisions of this Section 4.13 shall be the medical coverage in effect under the terms of the Medical Plan. Except as provided in Article 10, such medical coverage or benefit plan may be withdrawn or amended from time to time as the Company shall determine.
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(c)
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Except as provided in Section 4.13(e), all contributions made to the trust to provide medical benefits under this Section 4.13 shall be maintained in a separate account and such assets may not be used for or diverted to any purpose other than to provide said medical benefits; provided, however, none of the assets so set aside may be used to provide medical benefits for a Member, former Member or their dependents if the Member or former Member is a “key employee” as determined in accordance with the provisions of Code Sections 416(i)(1) and (5). Similarly, none of the assets accumulated to provide the retirement allowances or vested benefits set forth in the foregoing provisions of this Article 4 may, prior to the termination of the Plan and satisfaction of all the liabilities for such retirement allowances or vested benefits, be used or diverted to provide medical benefits under this Section 4.13. The assets, if any, accumulated to provide medical benefits under this Section 4.13 may be invested pursuant to the provisions of Article 7.
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(d)
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It is the intention of the Company to continue providing medical benefits under this Section 4.13 and to make contributions to the Trustee to fund such medical benefits in such
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(e)
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Except as provided in Article 10, the Board of Directors may discontinue providing medical benefits under this Section 4.13 for any reason at any time, in which event the assets allocated to provide medical benefits hereunder, if any remain, shall, to the extent they are not otherwise reimbursed from Company assets, be used to continue medical benefits to Members who are eligible for them prior to the discontinuance date as long as any assets remain. However, if, after the satisfaction of all medical benefits provided hereunder, there remain any assets, the program shall be deemed to be terminated and such remainder shall be returned to the Company, in accordance with Code Section 401(h)(5).
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(a)
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A “distributee” means a Member or former Member. In addition, the Member’s or former Member’s surviving spouse and the Member’s or former Member’s spouse or former spouse who is the alternate payee under a qualified domestic relations order as defined in Code Section 414(p), are distributees with regard to the interest of the spouse or former spouse. With regard to eligible rollover distributions paid directly to an eligible retirement plan described in Code Sections 408(a) or 408(b), effective for Plan Years beginning on or after
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(b)
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An “eligible rollover distribution” is any distribution of all or any portion of the retirement allowance or vested benefit owing to the credit of a distributee, except that the following distributions shall not be eligible rollover distributions: (i) any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life or life expectancy of the distributee or the joint lives or joint life expectancies of the distributee and the distributee’s designated beneficiary, or for a specified period of ten years or more, (ii) any distribution to the extent such distribution is required under Code Section 401(a)(9), (iii) the portion of a distribution not includible in gross income, and (iv) any distribution where all otherwise eligible distributions are expected to total less than $200 during a year.
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(c)
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An “eligible retirement plan” is an eligible plan under Code Section 457(b) which is maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state and which agrees to separately account for amounts transferred into such plan from this Plan, a traditional IRA, a Roth IRA, an annuity plan described in Code Section 403(a), an annuity contract described in Code Section 403(b), or a qualified defined benefit or defined contribution plan described in Code Section 401(a), that accepts the distributee’s eligible rollover distribution. The foregoing definition of an eligible retirement plan also applies in the case of a distribution to a surviving spouse, or to a spouse or former spouse who is the alternate payee under a qualified domestic relations order, as defined in Code section 414(p).
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(d)
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A “direct rollover” is a payment by the Plan directly to the eligible retirement plan specified by the distributee.
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(a)
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General Rules.
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(1)
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Effective Date. The provisions of this Section are effective January 1, 2004; however, except as otherwise provided herein, the provisions of this Section will first apply for
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(2)
|
Requirements of Treasury Regulations Incorporated. All distributions required under this Section shall be determined and made in accordance with Code Section 401(a)(9), including the incidental death benefit requirement in Code Section 401(a)(9)(G), and the Regulations thereunder.
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(3)
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Precedence. Subject to the joint and survivor annuity requirements of the Plan, the requirements of this Section shall take precedence over any inconsistent provisions of the Plan.
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(4)
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TEFRA Section 242(b)(2) Elections.
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(A)
|
The distribution by the Plan is one which would not have disqualified such plan under Code Section 401(a)(9) as in effect prior to amendment by the Deficit Reduction Act of 1984.
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(B)
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The distribution is in accordance with a method of distribution designated by the Member whose interest in the plan is being distributed or, if the Member is deceased, by a Beneficiary of such Member.
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(C)
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Such designation was in writing, was signed by the Member or Beneficiary, and was made before January 1, 1984.
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(D)
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The Member had accrued a benefit under the Plan as of December 31, 1983.
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(E)
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The method of distribution designated by the Member or the Beneficiary specifies the time at which distribution will commence, the period over which distributions will be made, and in the case of any distribution upon the Member’s death, the Beneficiaries of the Member listed in order of priority.
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(b)
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Time and Manner of Distribution.
|
(1)
|
Required Beginning Date. The Member’s entire interest will be distributed, or begin to be distributed, to the Member no later than the Member’s “Required Beginning Date.”
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(2)
|
Death of Member Before Distributions Begin. If the Member dies before distributions begin, the Member’s entire interest will be distributed, or begin to be distributed, no later than as follows:
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(3)
|
Form of Distribution. Unless the Member’s interest is distributed in the form of an annuity purchased from an insurance company or in a single sum on or before the “Required Beginning Date,” as of the first “Distribution Calendar Year” distributions will be made in accordance with Sections 4.16(c), 4.16(d), and 4.16(e). If the Member’s interest is distributed in the form of an annuity purchased from an insurance company, distributions thereunder will be made in accordance with the requirements of Code Section 401(a)(9) and the Regulations thereunder. Any part of the Member’s
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(c)
|
Determination of Amount to be Distributed Each Year.
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(1)
|
General Annuity Requirements. A Member who is required to begin payments as a result of attaining his or her “Required Beginning Date,” whose interest has not been distributed in the form of an annuity purchased from an insurance company or in a single sum before such date, may receive such payments in the form of annuity payments under the Plan. Payments under such annuity must satisfy the following requirements:
|
(A)
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If, in a stream of annuity payments that otherwise satisfies Code Section 401(a)(9), a Member elects to change the annuity payment period and the annuity payments are modified in association with that change, this modification will not cause the distributions to fail to satisfy Code Section 401(a)(9) provided the conditions set forth in Subsection (B) below are satisfied, and one of the following applies:
|
(1)
|
The modification occurs at the time that the Member retires or in connection with a Plan termination;
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(2)
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The annuity payments prior to modification are annuity payments paid over a period certain without life contingencies; or
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(3)
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The annuity payments after modification are paid under a qualified joint and survivor annuity over the joint lives of the Member and a “Designated Beneficiary,” the Member’s spouse is the sole “Designated Beneficiary,” and the modification occurs in connection with the Member becoming married to such spouse.
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(B)
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In order to modify a stream of annuity payments in accordance with this Subsection, all of the following conditions must be satisfied:
|
(1)
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The future payments under the modified stream satisfy Code Section 401(a)(9) and this Section (determined by treating the date of the change as a new Annuity Starting Date and the actuarial present value of the remaining payments prior to modification as the entire interest of the Member);
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(2)
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For purposes of Code Sections 415 and 417, the modification is treated as a new Annuity Starting Date;
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(3)
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After taking into account the modification, the annuity stream satisfies Code Section 415 (determined at the original Annuity Starting Date, using the interest rates and mortality tables applicable to such date); and
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(4)
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The end point of the period certain, if any, for any modified payment period is not later than the end point available under Code Section 401(a)(9) to the Member at the original Annuity Starting Date.
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(A)
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By an annual percentage increase that does not exceed the annual percentage increase in a cost-of-living index that for a 12-month period ending in the year during which the increase occurs or the prior year;
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(B)
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By a percentage increase that occurs at specified times (e.g., at specified ages) and does not exceed the cumulative total of annual percentage increases in an “Eligible Cost-of-Living Index” since the Annuity Starting Date, or if later, the date of the most recent percentage increase. In cases providing such a cumulative increase, an actuarial increase may not be provided to reflect the fact that increases were not provided in the interim years;
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(C)
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To the extent of the reduction in the amount of the Member’s payments to provide for a survivor benefit upon death, but only if the Beneficiary whose life was being used to determine the distribution period described in Section 4.16(d) dies or is no longer the Member’s Beneficiary pursuant to a qualified domestic relations order within the meaning of Section 414(p);
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(D)
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To allow a Beneficiary to convert the survivor portion of a joint and survivor annuity into a single sum distribution upon the Member’s death;
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(E)
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To pay increased benefits that result from a Plan amendment or other increase in the Member’s Accrued Benefit under the Plan;
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(F)
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By a constant percentage, applied not less frequently than annually, at a rate that is less than 5% per year;
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(G)
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To provide a final payment upon the death of the Member that does not exceed the excess of the actuarial present value of the Member’s accrued benefit (within the meaning of Code Section 411(a)(7)) calculated as of the Annuity Starting Date using the applicable interest rate and the applicable mortality table under Code Section 417(e) over the total of payments before the death of the Member; or
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(H)
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As a result of dividend or other payments that result from “Actuarial Gains,” provided:
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(2)
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Amount Required to be Distributed by Required Beginning Date.
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(3)
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Additional Accruals After First Distribution Calendar Year. Any additional benefits accruing to the Member in a calendar year after the first “Distribution Calendar Year” will be distributed beginning with the first payment interval ending in the calendar year immediately following the calendar year in which such amount accrues. Notwithstanding the preceding, the Plan will not fail to satisfy the requirements of this paragraph and Code Section 401(a)(9) merely because there is an administrative delay in the commencement of the distribution of the additional benefits accrued in a calendar year, provided that the actual payment of such amount commences as soon as practicable. However, payment must commence no later than the end of the first calendar year following the calendar year in which the additional benefit accrues, and the total amount paid during such first calendar year must be no less than the total amount that was required to be paid during that year under this paragraph.
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(4)
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Death after distributions begin. If a Member dies after distribution of the Member’s interest begins in the form of an annuity meeting the requirements of this Section, then the remaining portion of the Member’s interest will continue to be distributed over the remaining period over which distributions commenced.
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(d)
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Requirements For Annuity Distributions That Commence During Member’s Lifetime.
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(1)
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Joint Life Annuities Where the Beneficiary Is Not the Member’s Spouse. If distributions commence under a distribution option that is in the form of a joint and survivor annuity for the joint lives of the Member and the Member’s spouse, the minimum distribution incidental benefit requirement will not be satisfied as of the date distributions commence unless, under the distribution option, the periodic annuity payment payable to the survivor does not at any time on and after the Member’s “Required Beginning Date” exceed the annuity payable to the Member. In the case of an annuity that provides for increasing payments, the requirement of this paragraph will not be violated merely because benefit payments to the Beneficiary increase, provided the increase is determined in the same manner for the Member and the Beneficiary. If the form of distribution combines a joint and survivor annuity for the joint lives of the Member and the Member’s spouse and a period certain annuity, the preceding requirements will apply to annuity payments to be made to the “Designated Beneficiary” after the expiration of the period certain.
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(2)
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Joint Life Annuities Where the Beneficiary Is Not the Member’s Spouse. If the Member’s interest is being distributed in the form of a joint and survivor annuity for the joint lives of the Member and a Beneficiary other than the Member’s spouse, the minimum distribution incidental benefit requirement will not be satisfied as of the date distributions commence unless under the distribution option, the annuity payments to be made on and after the Member’s “Required Beginning Date” will satisfy the conditions of this paragraph. The periodic annuity payment payable to the survivor must not at any time on and after the Member’s “Required Beginning Date” exceed the applicable percentage of the annuity payment payable to the Member using the table set forth in Regulations Section 1.401(a)(9)‑6 Q&A-2. The applicable percentage is based on the adjusted Member/Beneficiary age difference. The adjusted Member/Beneficiary age difference is determined by first calculating the excess of the age of the Member over the age of the Beneficiary based on their ages on their birthdays in a calendar year. If the Member is younger than age 70, the age difference determined in
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(3)
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Period Certain Annuities. Unless the Member’s spouse is the sole “Designated Beneficiary” and the form of distribution is a period certain and no life annuity, the period certain for an annuity distribution commencing during the Member’s lifetime may not exceed the applicable distribution period for the Member under the Uniform Lifetime Table set forth in Regulation 1.401(a)(9)-9 for the calendar year that contains the Annuity Starting Date. If the Annuity Starting Date precedes the year in which the Member reaches age 70, the applicable distribution period for the Member is the distribution period for age 70 under the Uniform Lifetime Table set forth in Regulation 1.401(a)(9)-9 plus the excess of 70 over the age of the Member as of the Member’s birthday in the year that contains the Annuity Starting Date. If the Member’s spouse is the Member’s sole “Designated Beneficiary” and the form of distribution is a period certain and no life annuity, the period certain may not exceed the longer of the Member’s applicable distribution period, as determined under this Section 4.16(d)(3), or the joint life and last survivor expectancy of the Member and the Member’s spouse as determined under the Joint and Last Survivor Table set forth in Regulation 1.401(a)(9)-9, using the Member’s and spouse’s attained ages as of the Member’s and spouse’s birthdays in the calendar year that contains the Annuity Starting Date.
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(e)
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Requirements For Minimum Distributions Where Member Dies Before Date Distributions Begin.
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(1)
|
Member Survived by Designated Beneficiary and Life Expectancy Rule. If the Member dies before the date distribution of his or her interest begins and there is a “Designated Beneficiary,” the Member’s entire interest will be distributed, beginning no later than the time described in Section 4.16(b)(2)(i), over the life of the “Designated Beneficiary” or over a period certain not exceeding:
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(f)
|
Definitions.
|
(1)
|
Actuarial Gain. “Actuarial Gain” means the difference between an amount determined using the actuarial assumptions (i.e., investment return, mortality, expense, and other similar assumptions) used to calculate the initial payments before adjustment for any increases and the amount determined under the actual experience with respect to those factors. Actuarial Gain also includes differences between the amount determined using actuarial assumptions when an annuity was purchased or commenced and such amount determined using actuarial assumptions used in calculating payments at the time the Actuarial Gain is determined.
|
(2)
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Designated Beneficiary. “Designated Beneficiary” means the individual who is designated as the Beneficiary under Section 5.5 of the Plan and is the designated beneficiary under Code Section 401(a)(9) and Regulation 1.401(a)(9)-4.
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(3)
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Distribution Calendar Year. “Distribution Calendar Year” means a calendar year for which a minimum distribution is required. For distributions beginning before the Member’s death, the first Distribution Calendar Year is the calendar year immediately preceding the calendar year which contains the Member’s “Required Beginning Date.” For distributions beginning after the Member’s death, the first Distribution Calendar Year is the calendar year in which distributions are required to begin pursuant to Section 4.16(b).
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(4)
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Eligible Cost-of-Living Index. An “Eligible Cost-of-Living Index” means an index described below:
|
(A)
|
The cost-of-living index for that year, and
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(B)
|
The accumulated excess of the annual cost-of-living index from each prior year over the fixed annual percentage used in that year (reduced by any amount previously utilized under this Subsection (ii)).
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(5)
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Life Expectancy. “Life Expectancy” means the life expectancy as computed by use of the Single Life Table in Regulation 1.401(a)(9)-9.
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(6)
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Required Beginning Date. “Required Beginning Date” means the April 1st of the calendar year following the later of:
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(g)
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Effective Date of Application of Regulations and Transitional Rules.
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(1)
|
The provisions of this Section will apply with respect to distributions under the Plan made for calendar years beginning on or after January 1, 2006.
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(2)
|
With respect to distributions under the Plan for calendar years beginning on or after January 1, 2002, and prior to January 1, 2006, the Plan will use the provisions of the 1987 proposed Regulations except that the parallel provisions of the 2002 temporary and proposed regulations are effective for “Distribution Calendar Years” that are on or after January 1, 2003, and prior to January 1, 2006.
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(h)
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Applicability Across the Plan.
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(a)
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Effective Date and Application of Section.
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(1)
|
The provisions of this Section 4.17 apply to Plan Years beginning after December 31, 2007. However, the effective date of the provisions relating to Regulation 1.436-1 are applicable to the Plan Years beginning on or after January 1, 2010.
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(2)
|
Notwithstanding anything in this Section to the contrary, the provision of Code Section 436 and the Regulations thereunder are incorporated herein by reference.
|
(3)
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For Plans that have a valuation date other than the first day of the Plan Year, the provisions of Code Section 436 and this Article will applied in accordance with Regulations.
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(b)
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Funding-Based Limitation on Shutdown Benefits and Other Unpredictable Contingent Event Benefits
|
(1)
|
In general. If a Member is entitled to an “unpredictable contingent event benefit” payable with respect to any event occurring during any Plan Year, then such benefit shall not be paid if the “adjusted funding target attainment percentage” for such Plan Year (A) is less than 60%, or (B) is 60% or more, but would be less than 60% if the “adjusted funding target attainment percentage” were redetermined applying an
|
(2)
|
Exemption. Paragraph (1) shall cease to apply with respect to any Plan Year, effective as of the first day of the Plan Year, upon payment by the Company of the contribution described in Regulation 1.436-1(f)2)(iii).
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(c)
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Limitations on Plan Amendments Increasing Liability for Benefits
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(1)
|
In general. No amendment which has the effect of increasing liabilities of the Plan by reason of increases in benefits, establishment of new benefits, changing the rate of benefit accrual, or changing the rate at which benefits become nonforfeitable shall take in a Plan Year if the “adjusted funding target attainment percentage” for such Plan Year is:
|
(A)
|
less than 80%, or
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(B)
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80% or more, but would be less than 80% if the benefits attributable to the amendment were taken into account in determining the “adjusted funding target attainment percentage.”
|
(2)
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Exemption if contribution made. Paragraph (c)(1) above shall cease to apply with respect to a Plan amendment upon payment by the Employer of a contribution described in Regulation 1.436-1(f)(2)(iv).
|
(3)
|
Exception for certain benefit increases. The limitation set forth in Paragraph (c)(1) does not apply to any amendment to the Plan that provides for a benefit increase under a plan formula which is not based on a Compensation, provided that the rate of such increase is not in excess of the contemporaneous rate of increase in average wages of Members covered by the amendment. Paragraph (c)(1) shall not apply to any other amendment permitted under Regulation 1.436‑1(c)(4).
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(d)
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Limitations on Accelerated Benefit Distributions
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(1)
|
Funding percentage less than 60%. Notwithstanding any other provisions of the Plan, if the Plan’s “adjusted funding target attainment percentage” for a Plan Year is less than 60%, then a Member or Beneficiary is not permitted to elect, and the Plan shall not pay, a single sum payment or other optional form of benefit that includes a “prohibited payment” with an Annuity Starting Date on or after applicable “Section 436 measurement date,” and the Plan shall not make any payment for the purchase of an irrevocable commitment from an insurer to pay benefits or any other payment or transfer that is a “prohibited payment.” The limitation set forth in this Paragraph (d)(1) does not apply to any payment of a benefit which under Code Section 411(a)(11) may be immediately distributed without the consent of the Member.
|
(2)
|
Bankruptcy. Notwithstanding any other provisions of the Plan, a Member or Beneficiary is not permitted to elect, and the Plan shall not pay, a single sum payment or other optional form of benefit that includes a “prohibited payment” with an Annuity Starting Date that occurs during any period in which the Company is a debtor in a case under Title 11, United States Code, or similar federal or state law. The preceding
|
(3)
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Limited payment if percentage at least 60% but less than 80%.
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(A)
|
In general. Notwithstanding any other provision of the Plan, if the Plan’s “adjusted funding target attainment percentage” for a Plan Year is 60% or greater but less than 80%, then a Member or Beneficiary is not permitted to elect, and the Plan shall not pay any “prohibited payment” with an Annuity Starting Date on or after the Applicable “Section 436 measurement date,” and the Plan shall not make any payment for the purchase of an irrevocable commitment from an insurer to pay benefits or any other payment or transfer that is a “prohibited payment.” The preceding sentence shall not apply if the present value (determined in accordance with Code Section 417(e)(3)) of the portion of the benefit that is being paid in a “prohibited payment” (which portion is determined under Paragraph (B)(ii) below) does not exceed the lesser of:
|
(i)
|
50% of the present value (determined in accordance with Code Section 417(e)(3)) of the benefit payable in the optional form of benefit that includes the prohibited payment; or
|
(ii)
|
100% of the PBGC maximum benefit guarantee amount (as defined in Regulation 1.436‑1(d)(3)(iii)(C)).
|
(B)
|
Bifurcation if optional form unavailable.
|
(i)
|
Requirement to offer bifurcation. If an optional form of benefit that is otherwise available under the terms of the Plan is not available as of the Annuity Starting Date because of the application of Regulation 1.436‑1(d)(3)(i), then the Member or Beneficiary may elect to:
|
(1)
|
Receive the unrestricted portion of that optional form of benefit (determined under the rules of Regulation 1.436-1(d)(3)(iii)(D)) at that Annuity Starting Date, determined by treating the unrestricted portion of the benefit as if it were the Member’s or Beneficiary’s entire benefit under the Plan;
|
(2)
|
Commence benefits with respect to the Member or Beneficiary’s entire benefit under the Plan in any other optional form of benefit available under the Plan at the same Annuity Starting Date that satisfies Subsection (A)(i) or (ii) above; or
|
(3)
|
Defer commencement of the payments in accordance with any general right to defer commencement of benefits under the Plan.
|
(ii)
|
Rules relating to bifurcation. If the Member or Beneficiary elects payment of the unrestricted portion of the benefit as described in Regulation 1.436‑1(d)(3)(ii)(A)(1), then the Member or Beneficiary may elect payment of the remainder of the Member’s or Beneficiary’s benefits under the Plan in any optional form of benefit at that Annuity Starting Date otherwise available under the Plan that would not have included a “prohibited payment” if that optional form applied to the entire benefit of the Member or Beneficiary. The rules of Regulation 1.417(e)-1 are applied separately to the separate optional forms for the “unrestricted portion of the benefit” and the remainder of the benefit (the “restricted portion”).
|
(iii)
|
Plan alternative that anticipates election of payment that includes a prohibited payment. With respect to every optional form of benefit that includes a “prohibited payment” and that is not permitted to be paid under Regulation 1.436-1(d)(3)(i), for which no additional information from the Member or Beneficiary (such as information regarding a Social Security leveling optional form of benefit) is needed to make that determination, rather than wait for the Member or Beneficiary to elect such optional form of benefit, the Plan will provide for separate elections with respect to the restricted and unrestricted portions of that optional form of benefit.
|
(C)
|
Other Rules.
|
(i)
|
One time application. Only one “prohibited payment” meeting the requirements of Subsection (3)(a) above may be made with respect to any Member during any period of consecutive Plan Years to which the limitations under Regulation 1.436-1(d) apply.
|
(ii)
|
Treatment of Beneficiaries. For purposes of this Section 4.17(d)(3), benefits provided with respect to a Member and any Beneficiary of the Member (including an alternate payee, as defined in Code Section 414(p)(8)) are aggregated. If the only benefits paid under the Plan with respect to the Member are death benefits payable to the Beneficiary, then the determination of the “prohibited payment” is applied by substituting the lifetime of the Beneficiary for the lifetime of the Member. If the Accrued Benefit of a Member is allocated to such an alternate payee and one or more other persons, then the “unrestricted amount” is allocated among such persons in the same manner as the accrued benefit is allocated, unless a qualified domestic relations order (as defined in Code Section 414(p)(1)(A)) with respect to the Member or the alternate payee provides otherwise.
|
(iii)
|
Treatment of annuity purchases and plan transfers. This Paragraph (iii) applies for purposes of applying Subsection (d)(3)(A) above and determining the unrestricted portion of a payment. In the case of a prohibited payment described in Regulation 1.436‑1(j)(6)(i)(B) (relating to purchase from an insurer), the present value of the portion of the benefit that is being paid in a prohibited payment is the cost to the plan of the irrevocable commitment and, in the case of a prohibited payment described in Regulation 1.436-1(j)(6)(i)(C) (relating to certain plan transfers), the present value of the portion of the benefit that is being paid in a prohibited payment is the present value of the liabilities transferred (determined in accordance with Code Section 414(l)). In addition, the present value of the accrued benefit is substituted for the present value of the benefit payable in the optional form of benefit that includes the prohibited payment in Regulation 1.436-1(d)(3)(i)(A).
|
(4)
|
Exception. This Subsection (d) shall not apply for any Plan Year if the terms of the Plan (as in effect for the period beginning on September 1, 2005, and ending with such Plan Year) provide for no benefit accruals with respect to any Member during such period.
|
(5)
|
Right to delay commencement. If a Member or Beneficiary requests a distribution in an optional form of benefit that includes a “prohibited payment” that is not permitted to be paid under Section 4.17(d)(1), (2) or (3), then the Member retains the right to delay commencement of benefits in accordance with the terms of the Plan and applicable qualification requirements (such as Code Sections 411(a)(11) and 401(a)(9)).
|
(e)
|
Limitation on Benefit Accruals for Plans with Severe Funding Shortfalls
|
(1)
|
In general. If the Plan’s “adjusted funding target attainment percentage” for a Plan Year is less than 60%, benefit accruals under the Plan shall cease as of the “Section 436 measurement date.” In addition, if the Plan is required to cease benefit accruals under this Section 4.17(e), then the Plan is not permitted to be amended in a manner that would increase the liabilities of the Plan by reason of an increase in benefits or establishment of new benefits.
|
(2)
|
Exemption. Paragraph (1) above shall cease to apply with respect to any Plan Year, effective as of the first day of the Plan Year, upon payment by the Company of a contribution described in Regulation 1.436-1(f)(2)(v).
|
(3)
|
Temporary modification of limitation. In the case of the first Plan Year beginning during the period beginning on October 1, 2008, and ending on September 30, 2009, the provisions of Paragraph (e)(1) above shall be applied by substituting the Plan’s “adjusted funding target attainment percentage” for the preceding Plan Year for such percentage for such Plan Year, but only if the “adjusted funding target attainment percentage” for the preceding year is greater.
|
(f)
|
Methods to Avoid or Terminate Benefit Limitations
|
(g)
|
Special Rules
|
(1)
|
Rules of operation for periods prior to and after certification of Plan’s “adjusted funding target attainment percentage.”
|
(A)
|
In general. Code Section 436(h) and Regulation 1.436 1(h) set forth a series of presumptions that apply (i) before the Plan’s enrolled actuary issues a certification of the Plan’s “adjusted funding target attainment percentage” for the Plan Year and (ii) if the Plan’s enrolled actuary does not issue a certification of the Plan’s “adjusted funding target attainment percentage” for the Plan Year before the first day of the 10th month of the Plan Year (or if the Plan’s enrolled actuary issues a range certification for the Plan Year pursuant to Regulation 1.436 1(h)(4)(ii) but does not issue a certification of the specific “adjusted funding target attainment percentage” for the Plan by the last day of the Plan Year). For any period during which a presumption under Code Section 436(h) and Regulation 1.436 1(h) applies to the Plan, the limitations under Sections 4.17(b), (c), (d) and (e) are applied to the Plan as if the “adjusted funding target attainment percentage” for the Plan Year were the presumed “adjusted funding target attainment percentage” determined under the rules of Code Section 436(h) and Regulation 1.436 1(h)(1), (2), or (3). These presumptions are set forth in the following subsections.
|
(B)
|
Presumption of continued underfunding beginning first day of Plan Year. If a limitation under Subsection (b), (c), (d), or (e) of this Section 4.17 applied to the Plan on the last day of the preceding Plan Year, then commencing on the first day of the current Plan Year and continuing until the Plan’s enrolled actuary issues a certification of the “adjusted funding target attainment percentage” for the Plan for the current Plan Year, or, if earlier, the date Subsections (C) and (D) below applies to the Plan:
|
(i)
|
The “adjusted funding target attainment percentage” of the Plan for the current Plan Year is presumed to be the “adjusted funding target attainment percentage” in effect on the last day of the preceding Plan Year; and
|
(ii)
|
The first day of the current Plan Year is a “Section 436 measurement date.”
|
(C)
|
Presumption of underfunding beginning first day of fourth month. If the Plan’s enrolled actuary has not issued a certification of the “adjusted funding target attainment percentage” for the Plan Year before the first day of the fourth month of the Plan Year and the Plan’s “adjusted funding target attainment percentage”
|
(i)
|
The “adjusted funding target attainment percentage” of the Plan for the current Plan Year is presumed to be the Plan’s ‘adjusted funding target attainment percentage” for the preceding Plan Year reduced by 10 percentage points; and
|
(ii)
|
The first day of the fourth month of the current Plan Year is a “Section 436 measurement date.”
|
(D)
|
Presumption of Underfunding On and After First Day of 10th Month. If the Plan’s enrolled actuary has not issued a certification of the “adjusted funding target attainment percentage” for the Plan Year before the first day of the 10th month of the Plan Year (or if the Plan’s enrolled actuary has issued a range certification for the Plan Year pursuant to Regulation 1.436‑1(h)(4)(ii) but has not issued a certification of the specific “adjusted funding target attainment percentage” for the Plan by the last day of the Plan Year), then, commencing on the first day of the 10th month of the current Plan Year and continuing through the end of the Plan Year:
|
(i)
|
The “adjusted funding target attainment percentage” of the Plan for the current Plan Year is presumed to be less than 60%; and
|
(ii)
|
The first day of the 10th month of the current Plan Year is a “Section 436 measurement date.”
|
(2)
|
New plans, plan termination, certain frozen plans, and other special rules.
|
(A)
|
New plan exception. The limitations in Subsections (b), (c) and (e) of this Section 4.17 do not apply to a new Plan for the first five Plan Years of the Plan, determined under the rules of Code Section 436(i) and Regulation 1.436‑1(a)(3)(i).
|
(B)
|
Plan termination exception. The limitations on “prohibited payments” in Subsections (b) and (d) of this Section 4.17 do not apply to prohibited payments that are made to carry out the termination of the Plan in accordance with applicable law. Any other limitations under this Section 4.17 do not cease to apply as a result of termination of the Plan.
|
(C)
|
Exception to limitations on prohibited payments under certain frozen plans. The limitations on prohibited payments set forth in Subsections (b) and (d) of this Section 4.17 do not apply for a Plan Year if the terms of the Plan, as in effect for the period beginning on September 1, 2005, and continuing through the end of the Plan Year, provide for no benefit accruals with respect to any Members. This
|
(4)
|
Special rules relating to unpredictable contingent event benefits and plan amendments increasing benefit liability. During any period in which none of the presumptions under this Section 4.17(g) apply to the Plan and the Plan’s enrolled actuary has not yet issued a certification of the Plan’s “adjusted funding target attainment percentage” for the Plan Year, the limitations under Subsection (b) and (c) of this Section 4.17 shall be based on the inclusive presumed “adjusted funding target attainment percentage” for the Plan, calculated in accordance Regulation 1.436‑1(g)(2)(iii).
|
(3)
|
Special rules under PRA 2010.
|
(A)
|
Payments under Social Security leveling options. For purposes of determining whether the limitations under Subsection (d) of this Section 4.17 apply to payments under a Social Security leveling option, within the meaning of Code Section 436(j)(3)(C)(i), the “adjusted funding target attainment percentage” for a Plan Year shall be determined in accordance with the “Special Rule for Certain Years” under Code Section 436(j)(3) and any Regulation or other published guidance thereunder issued by the Internal Revenue Service.
|
(B)
|
Limitation on benefit accruals. For purposes of determining whether the accrual limitation under Subsection (e) of this Section 4.17 applies to the Plan, the “adjusted funding target attainment percentage” for a Plan Year shall be determined in accordance with the “Special Rule for Certain Years” under Code Section 436(j)(3) (except as provided under Section 203(b) of the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010 (PRA 2010), if applicable).
|
(4)
|
Special rules under MAP‑21. The Plan may use the special rules relating to pension funding stabilization as set forth in the provisions of the Moving Ahead for Progress in the 21st Century Act (MAP‑21) and as provided by guidance issued in Regulations or other guidance from the Internal Revenue Service, such as Notice 2012‑61.
|
(5)
|
Notice requirement. See ERISA Section 101(j) for rules requiring the plan administrator of a single employer defined benefit pension plan to provide a written notice to Members and Beneficiaries within 30 days after certain specified dates if the Plan has become subject to a limitation described in Section 4.17(b)(1), (d)(1), (d)(2) or (d)(3).
|
(h)
|
Treatment of Plan as of Close of Prohibited or Cessation Period.
|
(1)
|
Application to prohibited payments and accruals.
|
(A)
|
Resumption of prohibited payments. If a limitation on prohibited payments under Subsection (d) of this Section 4.17 applied to a Plan as of a “Section 436 measurement date,” but that limit no longer applies to the Plan as of a later “Section 436 measurement date,” then the limitation does not apply to benefits
|
(B)
|
Resumption of benefit accruals. If a limitation on benefit accruals under Subsection (e) of this Section 4.17 applied to a Plan as of a “Section 436 measurement date,” but that limit no longer applies to the Plan as of a later “Section 436 measurement date,” then benefit accruals shall resume prospectively and that limitation does not apply to benefit accruals that are based on service on or after that later “Section 436 measurement date,” except to the extent that the Plan provides that benefit accruals will not resume when the limitation ceases to apply. The Plan will comply with the rules relating to partial years of participation and the prohibition on double proration under Department of Labor Regulation 29 CFR Section 2530.204-2(c) and (d).
|
(2)
|
Shutdown and other “unpredictable contingent event benefits.” If an “unpredictable contingent event benefits” with respect to an unpredictable contingent event that occurs during the Plan Year are not permitted to be paid after the occurrence of the event because of the limitations of Subsection (b) of this Section 4.17, but are permitted to be paid later in the same Plan Year (as a result of additional contributions or pursuant to the enrolled actuary’s certification of the “adjusted funding target attainment percentage” for the Plan Year that meets the requirements of Regulation 1.436-1(g)(5)(ii)(B)), then that unpredictable contingent event benefits shall be paid, retroactive to the period that benefit would have been payable under the terms of the Plan (determined without regard to Subsection (b) of this Section 4.17). If the “unpredictable contingent event benefit” does not become payable during the same Plan Year in accordance with the preceding sentence, then the Plan is treated as if it does not provide that benefit.
|
(3)
|
Treatment of Plan amendments that do not take effect. If a Plan amendment does not take effect as of the effective date of the amendment because of the limitations of Subsection (c) or (e) of this Section 4.17, but is permitted to take effect later in the Plan Year (as a result of additional contributions or pursuant to the enrolled actuary’s certification of the “adjusted funding target attainment percentage” for the Plan Year that meets the requirements of Regulation 1.436-1(g)(5)(ii)(C)), then the Plan
|
(i)
|
Definitions
|
(a)
|
Adjusted funding target attainment percentage. The term “adjusted funding target attainment percentage” means the adjusted funding target attainment percentage as defined in Regulation 1.436-1(j)(1).
|
(b)
|
Prohibited payment. The term “prohibited payment” means a prohibited payment as defined in Regulation 1.436‑1(j)(6).
|
(c)
|
Section 436 measurement date. A “Section 436 measurement date” means the section 436 date as defined in Regulation 1.436-1(j)(8).
|
(d)
|
Unpredictable contingent event benefit. The term “unpredictable contingent event benefit” means an unpredictable contingent event as defined in Regulation 1.436‑1(j)(9).
|
(a)
|
provide direction to the trustee(s) thereunder, including, but not by way of limitation, the direction of investment of all or part of the Plan assets and the establishment of investment criteria, and
|
(b)
|
appoint and provide for use of investment advisors and investment managers.
|
(a)
|
the person participates knowingly in, or knowingly undertakes to conceal, an act or omission of such other fiduciary, knowing such act or omission is a breach; or
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(b)
|
by the person’s failure to discharge such person’s duties solely in the interest of the Members and other persons entitled to benefits under the Plan, for the exclusive purpose of providing benefits and defraying reasonable expenses of administering the Plan not met by the Company, the person has enabled such other fiduciary to commit a breach; or
|
(c)
|
the person has knowledge of a breach by such other fiduciary and does not make reasonable efforts to remedy the breach; or
|
(d)
|
in the case of a member of either Committee, if the Committee of which the person is a member improperly allocates responsibilities among its members or to others and the person fails to review prudently such allocation.
|
(a)
|
Applications for benefits and inquiries concerning the Plan (or concerning present or future rights to benefits under the Plan) shall be submitted to the Company in writing. An application for benefits shall be submitted on the prescribed form and shall be signed by the Member, or in the case of a benefit payable after his death, by his Beneficiary.
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(b)
|
In the event that an application for benefits is denied in whole or in part, the Company shall notify the applicant in writing of the denial and of the right to review of the denial. The written notice shall set forth, in a manner calculated to be understood by the applicant, specific reasons for the denial, specific references to the provisions of the Plan on which the denial is based, a description of any information or material necessary for the applicant to perfect the application, an explanation of why the material is necessary, and an explanation of the review procedure under the Plan.
|
(c)
|
An applicant whose application for benefits was denied in whole or in part, or the applicant’s duly authorized representative, may appeal the denial by submitting to the Plan Administration Committee a request for a review of the application within 60 days after receiving written notice of the denial from the Company. The Company shall give the applicant or his representative an opportunity to review pertinent materials, other than legally privileged documents, in preparing the request for review. The request for a review shall be in writing and addressed to the Plan Administration Committee. The request for a review shall set forth all of the grounds on which it is based, all facts in support of the request and any other matters that the applicant deems pertinent. The Plan Administration Committee may require the applicant to submit such additional facts, documents, or other materials as it may deem necessary or appropriate in making its review.
|
(d)
|
The Plan Administration Committee shall act on each request for a review within 60 days after receipt, unless special circumstances require further time for processing and the applicant is advised of the extension. In no event shall the decision on review be rendered more than 120 days after the Plan Administration Committee received the request for a review. The Plan Administration Committee shall give prompt written notice of its decision to the applicant and or the Company. In the event that the Plan Administration Committee
|
(e)
|
The Plan Administration Committee shall adopt such rules, procedures, and interpretations of the Plan as it deems necessary or appropriate in carrying out its responsibilities under this Section 5.09.
|
(f)
|
No legal action for benefits under the Plan shall be brought unless and until the claimant (i) has submitted a written application for benefits in accordance with Paragraph (a), (ii) has been notified by the Company that the application is denied, (iii) has filed a written request for a review of the application in accordance with Paragraph (c), and (iv) has been notified in writing that the Plan Administration Committee has affirmed the denial of the application; provided, however, that legal action may be brought after the Company or the Plan Administration Committee has failed to take any action on the claim within the time by Paragraphs (b) and (d) above.
|
(a)
|
The Company’s contributions to the Plan are conditioned upon their deductibility under Code Section 404. In the event that all or part of the Company’s deductions under Code Section 404 for contributions to the Plan are disallowed by the Internal Revenue Service, the portion of the contributions to which such disallowance applies shall be returned to the Company without interest, but reduced by any investment loss attributable to those contributions. Such return shall be made within one year after the disallowance of deduction.
|
(b)
|
The Company may recover without interest the amount of its contributions to the Plan made on account of a mistake in fact, reduced by any investment loss attributable to those contributions if recovery is made within one year after the date of those contributions.
|
(a)
|
The Board of Directors may terminate the Plan for any reason at any time. In case of termination of the Plan, the rights of Members to the benefits accrued under the Plan to the date of the termination, to the extent then funded or protected by law, if greater, shall be nonforfeitable. The funds of the Plan shall be used for the exclusive benefit of persons entitled to benefits under the Plan as of the date of termination, except as provided in Section 6.02. However, any funds not required to satisfy all liabilities of the Plan for benefits because of erroneous actuarial computation shall be returned to the Company except as otherwise provided in Section 8.06. The Plan Administration Committee shall determine on the basis of an actuarial valuation the share of the funds of the Plan allocable to each person entitled to benefits under the Plan in accordance with Section 4044 of ERISA or corresponding provision of any applicable law in effect at the time. In the event of a partial termination of the Plan, the provisions of this Section shall be applicable only to the Members affected by that partial termination.
|
(b)
|
Plan Merger or Consolidation. The Board of Directors may, in its sole discretion, merge this Plan with another qualified plan, subject to any applicable legal requirements. However, the Plan may not be merged or consolidated with, nor may its assets or liabilities be transferred to, any other plan unless each Member or other person entitled to a benefit under the Plan would, if the resulting plan were then terminated, receive a benefit immediately after the merger, consolidation, or transfer which is equal to or greater than the benefit he or she would have been entitled to receive immediately before the merger, consolidation, or transfer, if the Plan had then terminated; provided that, subject to the provisions of Article 10 on or after the date of the first occurrence of a Change in Control (i) no transfer of assets or liabilities, except as specifically permitted under Section 8.01(a), between the Plan and any Employee Benefit Plan, as hereinafter defined, (ii) no spin-off of Plan assets or Plan liabilities to any Employee Benefit Plan, (iii) no withdrawal of Plan assets, in the event such withdrawal is permitted under applicable law or (iv) no merger or consolidation of the Plan with any Employee Benefit Plan shall be permitted.
|
(a)
|
The provisions of this Section shall apply (i) in the event the Plan is terminated, to any Member who is a highly compensated employee or highly compensated former employee (as those terms are defined in Code Section 414(q)) of the Company or an Associated Company and (ii) in any other event, to any Member or former Member who is one of the 25 highly compensated employees or highly compensated former employees of the Company or
|
(b)
|
If, (i) after payment of an Accrued Benefit or other benefits to any one of the Members or to whom this Section applies, the value of Plan assets equals or exceeds 110% of the value of current liabilities (as that term is defined in Code Section 412(1)(7)) of the Plan, (ii) the value of the Accrued Benefit and other benefits of any one of the Members or former Members to whom this Section applies is less than 1% of the value of current liabilities of the Plan, or (iii) the value of the Accrued Benefit and other benefits of any one of the Members or former Members to whom this Section applies does not exceed $3,500 ($5,000 effective January 1, 1998), the provisions of Paragraph (a) above will not be applicable to the payment of benefits to the Member or former Member.
|
(c)
|
Notwithstanding Paragraph (a) of this Section, in the event the Plan is terminated, the restriction of this Section shall not be applicable if the benefits payable to any highly compensated employee and any highly compensated former employee is limited to a benefit that is nondiscriminatory under Code Section 401(a)(4).
|
(d)
|
If it should subsequently be determined by statute, court decision acquiesced in by the Commissioner of Internal Revenue, or ruling by the Commissioner of Internal Revenue, that the provisions of this Section are no longer necessary to qualify the Plan under the Code, this Section shall be ineffective without the necessity of further amendment to the Plan.
|
(a)
|
Notwithstanding any other provision of the plan, in the event of a Change in Control, neither the Board of Directors, its designee, the Plan Administration Committee nor the Trustee may merge or consolidate the Plan with any other plan, transfer any Plan assets to any other retirement or welfare benefit plan, transfer any other welfare or retirement benefit plan’s liabilities to the Plan, spin-off or split-off any part of the Plan or group of Members in the Plan, or reduce future Plan benefits, or cause or permit the Plan to acquire any security or real or personal property of the Company or any Associated Company, during the five-year period commencing on the date on which the Change in Control occurs.
|
(b)
|
Notwithstanding any other provision of the Plan, in the event of a Change in Control, neither the Board of Directors nor its designee may, during the five-year period commencing on the date on which the Change in Control occurs, designate any new Participating Units or designate any new groups of Employees as eligible to participate in the Plan.
|
(c)
|
Notwithstanding any other provision of the Plan, if at any time during the five-year period commencing on the date on which a Change in Control occurs, the Plan is terminated, any Member who was an Employee on the date of the Change in Control shall, if not previously vested, become fully vested in all Plan benefits. If the Plan has surplus assets, all of the surplus assets shall be allocated to Plan Members who were Members as of the date on which a Change in Control occurs (including Members who terminated employment with entitlement to a retirement allowance and Members who are, on the date on which a Change in Control occurs, receiving a retirement allowance) on pro rata basis, in relation to the benefits accrued prior to the date of Change in Control and none of this surplus may be recovered by the Company, any successor or any Associated Company. For purposes of this Section 8.06(c) the amount of surplus assets will be determined as part of the process of purchasing non-participating group annuity contracts in connection with the termination of the Plan. In purchasing such annuities, the Plan shall seek competitive bids from at least three unrelated insurance companies. In no event shall the increase in the Retirement Allowance payable pursuant to this paragraph cause the retirement allowance to exceed the limitations in Section 4.08 of the Plan.
|
(d)
|
Notwithstanding any other provision of the Plan, if at any time during the five-year period commencing on the date on which a Change in Control occurs (i) a Substantial Reduction in Force (as hereinafter defined) occurs or (ii) any action prohibited by Paragraph (a) or (b) of this Section 8.06 is taken, then any Member who was an Employee on the date of the Change in Control shall, if not previously vested, become fully vested in all Plan benefits. Furthermore, if, as of the date either of the events described in (i) or (ii) above occurs, the fair market value of the Plan’s assets exceeds the Plan’s current liability pursuant to Code
|
(1)
|
10% or more within any consecutive 12-month period.
|
(2)
|
15% or more within any consecutive 24-month period.
|
(3)
|
20% or more within any consecutive 36-month period.
|
(4)
|
25% or more within any consecutive 48-month period.
|
(5)
|
30% or more within a 60-month period; and
|
(e)
|
In the event the Internal Revenue Service makes a final determination that the utilization of surplus assets of the Plan (or any portion thereof) in accordance with Paragraph (c) or (d) of this Section 8.06 cannot be accomplished in any manner without disqualifying the Plan, the Company shall utilize such assets which cannot be so utilized to provide benefits to those Members who were Employees on the date of the Change in Control in any manner that the Company deems to be in the best interests of such Members and which would not disqualify the Plan. Such utilization may include the transfer of such assets to another employee benefit plan of the Company, including a voluntary employees’ beneficiary association as described in Code Section 501(c)(9); provided, however, that in no event shall any such assets be
|
(a)
|
Except as required by any applicable law or by Paragraph (e), no benefit under the Plan shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge except any election to make a contribution necessary to provide post-retirement medical benefits under any Plan maintained by the Company, and any attempt so to do shall be void, except as specifically provided in the Plan, nor shall any such benefit be in any manner liable for or subject to garnishment, attachment, execution or levy or liable for or subject to the debts, contracts, liabilities, engagements or torts of the person entitled to such benefit.
|
(b)
|
Subject to applicable Federal and State law, in the event that the Plan Administration Committee shall find that any Member or other person who is or may become entitled to benefits hereunder has become bankrupt or that any attempt has been made to anticipate, alienate, sell, transfer, assign, pledge, encumber or charge any of his or her benefits under the Plan, except as specifically provided in the Plan, or if any garnishment, attachment, execution, levy or court order for payment of money has been issued against any of his or her benefits under the Plan, then such benefit shall cease and terminate. In such event the Plan Administration Committee shall hold or apply the payments to or for the benefit of such Member or other person who is or may become entitled to benefits hereunder, his or her spouse, children, parents or other blood relatives, or any of them.
|
(c)
|
Notwithstanding the foregoing provisions of the Plan, payment shall be made in accordance with the provisions of any judgment, decree, or domestic relations order which:
|
(d)
|
The Plan Administration Committee shall resolve any questions arising under this Article 9 on a basis uniformly applicable to all persons similarly situated.
|
(e)
|
A Member’s benefits under the Plan shall be offset by the amount the Member is required to pay to the Plan under the circumstances set forth in Code Section 401(a)(13).
|
10.01
|
Subject to Section 10.02, the Board of Directors or its delegate reserves the right at any time and from time to time, and retroactively if deemed necessary or appropriate to conform with governmental regulations or other policies, to modify or amend in whole or in part any or all of the provisions of the Plan; provided that no such modification or amendment shall make it possible for any part of the funds of the Plan to be used for, or diverted to, purposes other than for the exclusive benefit of Members, spouses, or contingent annuitants or other persons who are or may become entitled to benefits hereunder prior to the satisfaction of all liabilities with respect to them; and that no modification or amendment shall be made which has the effect of decreasing the Accrued Benefit of any Member or of reducing the nonforfeitable percentage of the Accrued Benefit of a Member attributable to Company contributions below that nonforfeitable percentage thereof computed under the Plan as in effect on the later of the date on which the amendment is adopted or becomes effective. Any action to amend the Plan by the Board of Directors shall be taken in such manner as may be permitted under the by-laws of the Company and any action to amend the Plan by a delegate of the Board of Director shall be in writing.
|
10.02
|
Notwithstanding the above, on or after the date a Change in Control first occurs, Section 8.01, Section 8.06 and this Article 10, as they pertain to events occurring on or after the date such Change in Control occurs, may not be further amended by the Board of Directors without written consent of not less than three‑quarters of the Members and other persons then receiving benefits under the Plan.
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Rayonier Advanced Materials Inc.;
|
2.
|
Based on my knowledge, this 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 report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this 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 report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, 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 report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
|
/s/ PAUL G. BOYNTON
|
|
Paul G. Boynton
Chairman, President and Chief Executive Officer
|
|
Rayonier Advanced Materials Inc.
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Rayonier Advanced Materials Inc.;
|
2.
|
Based on my knowledge, this 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 report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this 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 report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, 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 report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
|
/s/ MARCUS J. MOELTNER
|
|
Marcus J. Moeltner
Chief Financial Officer and
Senior Vice President, Finance
|
|
Rayonier Advanced Materials Inc.
|
1.
|
The quarterly report on Form 10-Q of Rayonier Advanced Materials Inc. (the "Company") for the quarterly period ended September 28, 2019 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ PAUL G. BOYNTON
|
|
/s/ MARCUS J. MOELTNER
|
Paul G. Boynton
|
|
Marcus J. Moeltner
|
Chairman, President and Chief Executive Officer
Rayonier Advanced Materials Inc.
|
|
Chief Financial Officer and
Senior Vice President, Finance
Rayonier Advanced Materials Inc.
|