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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Fiscal Year Ended June 26, 1998
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 0-10726
C-COR ELECTRONICS, INC.
(Exact name of Registrant as specified in its charter)
Pennsylvania 24-0811591
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
60 Decibel Road
State College, Pennsylvania 16801
(Address of principal executive offices and Zip Code
Registrant's telephone number, including area code: (814) 238-2461
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
None Not Applicable
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.10 par value
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes (X) No ( )
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (ss.229.405 of this chapter) is not contained herein, and will
not be contained, to the best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. ( )
As of September 4, 1998, the aggregate market value of the voting stock held by
non-affiliates of the Registrant was $123,715,006.
As of September 4, 1998, the Registrant had 9,157,124 shares of Common Stock
outstanding.
Documents Incorporated by Reference:
1) 1998 Annual Report to Shareholders (Parts I, II and IV)
2) Proxy Statement dated September 21, 1998 (Part III)
PART I
Item 1. Business
Some of the information presented in this report constitutes forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995, including without limitation, continuation of increased domestic spending
for network upgrades, the continuation of competitive pricing pressures,
anticipated increased spending on product development, the continued
availability of capital resources and the Corporation's ability to assess the
risks of the year 2000 issue, with respect to its operations, and resolve them
in a timely manner. Although the Corporation believes that its expectations are
based on reasonable assumptions within the bounds of its knowledge of its
business and operations, there can be no assurance that actual results will not
differ materially from its expectations. Factors which could cause actual
results to differ from expectations include the timing of orders received from
customers, the gain or loss of significant customers, changes in the mix of
products sold, changes in the cost and availability of parts and supplies,
fluctuations in warranty costs, new product development activities, economic
conditions affecting domestic and international markets, regulatory changes
affecting the telecommunications industry, in general, and the Corporation's
operations, in particular, competition and changes in domestic and international
demand for the Corporation's products and other factors which may impact
operations and manufacturing. For additional information concerning these and
other important factors, which may cause the Corporation's actual results to
differ materially from expectations and underlying assumptions, please refer to
reports filed by the Corporation with the Securities and Exchange Commission.
Introduction
C-COR Electronics, Inc. (the "Corporation") was incorporated in the Commonwealth
of Pennsylvania on June 30, 1953. In fiscal year 1998 and prior to fiscal year
1996, the Corporation operated in one industry segment broadly defined as the
Electronic Distribution Products segment which represents the Corporation's
continuing operations and provides hybrid fiber/coax (HFC) equipment for signal
distribution applications, primarily to the CATV market. In fiscal years 1997
and 1996, the Corporation operated in two industry segments: the Electronic
Distribution Products segment and the Digital Fiber Optics Transmission Products
segment which has been reported as a discontinued business segment. The Digital
Fiber Optics Transmission Products segment provided products for long-distance,
point-to-point video, voice and data signal transmission applications, primarily
for telephony, distance-learning and other non-CATV markets. On July 10, 1997,
the Corporation announced the discontinuance of its Digital Fiber Optics
Transmission Products segment in a nine-month wind-down process. See
"Discontinued Operations." In the remainder of this document, the discussions
are based on the Corporation's continuing operations, the Electronic
Distribution Products segment, except where the context indicates otherwise.
The Corporation's headquarters are in State College, Pennsylvania, and its
manufacturing facilities are in State College and Tipton, Pennsylvania, and in
Tijuana, Mexico. The Corporation also maintains administrative offices in
Toronto, Canada; Almere, The Netherlands; and Hong Kong. In fiscal year 1998,
the Corporation began manufacturing the power supply component of its RF
amplifier products in Tijuana, Mexico. The Corporation substantially completed
the transfer of the power supply component production to this facility as of
June 26, 1998, and continues to ramp up production at this manufacturing
facility. As part of a restructuring, on June 25, 1998, the Corporation
announced the closing of its manufacturing plant located in Reedsville,
Pennsylvania. Additional information regarding this restructuring is
incorporated by reference to Note A (Summary of Significant Accounting Policies)
on page 22 of the Registrant's 1998 Annual Report to Shareholders.
The Corporation has been approved for ISO 9001 registration at its Pennsylvania
and Tijuana manufacturing facilities. ISO 9001 is the most comprehensive of all
ISO 9000 series requirements and includes quality assurance in design,
development, production, installation, and servicing. Criteria for registration
are set by the International Organization for Standardization, whose function is
to develop global standards in an effort to improve the exchange of goods and
services internationally. This designation builds on the Corporation's
reputation as a high-quality, global provider of transmission electronics.
ELECTRONICS DISTRIBUTION PRODUCTS SEGMENT
Products and Services
The Corporation provides three principal product families for use in broadband
voice, video, and data networks: RF amplifiers, amplitude modulation (AM) fiber
optic equipment, and network management systems. Amplifiers include a series of
FlexNet(R) 862 MHz and 750 MHz trunks, terminating bridgers, and line extenders
designed specifically for use in today's widely accepted HFC network
architectures. The newest addition to this line is FlexNet(R) 900 Series
amplifiers, which offer high performance, two-way capability, and advanced
powering for today's complex communications networks. The Corporation's other RF
distribution products include push-pull, power-doubling, and feedforward
technologies; trunk, minitrunk, and split-band amplifiers; and main line
passives to 1 GHz. For the international markets, particularly Europe, the
Corporation offers the I-Flex(TM) global product family, specially designed for
fiber-intensive architectures that require cabinet and pedestal mount housings.
Featuring 862 MHz bandwidth capability, the I-Flex(TM) product line consists of
amplifiers and fiber optic nodes. During fiscal year 1998, the Corporation
introduced two new I-Flex products, the line extender and the network management
agent, which the Corporation expects to be available for shipment beginning in
fiscal year 1999.
The Corporation's AM fiber optic products include a wide range of both headend
and strand-mounted equipment designed for use in HFC applications. Headend
equipment, which operates up to 862 MHz, includes a universal mainframe,
high-performance Distribution Feedback (DFB) transmitters at a variety of output
powers, receivers for both forward and return path applications, and power
supplies. FlexNode (TM), the Corporation's 6-port AM fiber optic node, features
750 MHz and 862 MHz bandwidth capability, maximum performance with RF and optics
in one module, simplified internal fiber management and 90 volt powering. The AM
fiber optic products are fully integrated into the Corporation's Cable Network
Management (CNM(TM)) system.
During fiscal year 1998, the Corporation introduced a completely new line of AM
fiber optic headend and node products for use in HFC applications. The
Corporation expects these products to be available for shipment beginning in
fiscal year 1999. Bearing the trade name NAVICOR(TM), these products offer a
total solution approach to the distribution portion of the network. Three of the
new headend products are used to transmit and receive voice, video and data
signals: the AM headend rack system, the 1550 nm transmitter and the
erbium-doped fiber amplifier (EDFA). NAVICOR optical nodes include the Quadrant:
four active output node, and two versions of the FlexNet(R) node: the Compass
and the GPS. The Corporation believes this group of nodes offers the
flexibility, scalability and cost effectiveness network operators are looking
for as they build today while planning for the future.
The Corporation believes network management is playing a critical role in
communication systems. CNM is the Corporation's network management system. This
user-friendly, computer-based control and monitoring system aids in outage
prediction, notifying the operator of problems, often before they even occur, so
maintenance crews can go directly to a problem without having to search the
system unit by unit. During fiscal year 1998, the Corporation introduced the
latest version of this product, CNM System 2, which is expected to be available
for shipment in fiscal year 1999.
In support of its products, the Corporation offers a complete line of technical
customer services, including pre-sale analysis and consultation, network design,
field engineering, technical documentation, training seminars, and equipment
repair and testing.
Sales and Distribution
The Corporation's principal customers include operators of communication
networks worldwide, as well as network integrators. Consolidation has occurred
among cable operators in the domestic CATV industry; however, the Corporation
does not consider that occurrence to have had a material impact on its business.
Most of the Corporation's sales are comprised of equipment manufactured or
provided by the Corporation, with the remainder being from services. Sales
efforts are conducted from the Corporation's headquarters; from offices in
Colorado, Canada, Europe and Hong Kong; and from 8 regional sales offices
located throughout the United States.
For the fiscal year ended June 26, 1998, the Corporation's international sales
represented 21% of net sales, primarily in the Canadian, Asian, European, and
Latin American markets. In fiscal years ended June 27, 1997, and June 28, 1996,
international sales were 19% and 39%, respectively, of net sales. See the
discussion of segment information in the Corporation's 1998 Annual Report to
Shareholders, Note R, incorporated herein by reference.
During the past fiscal year, the Corporation's CATV customers have included
almost all of the largest system operators in the United States. The
Corporation's largest customer during the fiscal year ended June 26, 1998, was
Time Warner Cable, which accounted for 31% of net sales. The Corporation's
largest customer during the fiscal year ended June 27, 1997, was Time Warner
Cable, which accounted for 36% of net sales. The Corporation's largest customers
during the fiscal year ended June 28, 1996, were Rogers Cablesystems, Inc. and
Time Warner Cable, each accounting for 18% of net sales. No other customer
accounted for 10% or more of net sales during fiscal years 1996, 1997, and 1998,
respectively.
At June 26, 1998, the Corporation's backlog of orders was $24.0 million. At June
27, 1997, the Corporation's backlog of orders was $34.9 million, and at June 28,
1996, it was $24.3 million. For additional information regarding backlog, refer
to Management's Discussion and Analysis of Financial Condition and Results of
Operation incorporated herein by reference to pages 13 through 16 of the
Registrant's 1998 Annual Report to Shareholders.
Research and Product Development
The Corporation operates in an industry that is subject to rapid changes in
technology. The Corporation's ability to compete successfully depends in large
part upon its ability to react to such changes. Accordingly, the Corporation is
engaged in ongoing research and development activities that are intended to
advance existing product lines, provide custom-designed variations of existing
product lines, and develop or evaluate new products. Research and development
activities for the three major product groups are conducted at the Corporation's
headquarters. The Corporation has an interdepartmental team which assigns
product development priorities. The result is a market-driven set of guidelines
for the timely development of new products. During the past fiscal year,
research and product development expenditures were primarily directed at
expanding the Corporation's AM fiber optic technology and network management
systems and RF amplifier line.
During fiscal year 1998, the Corporation also continued with product development
process improvements to reduce cycle time to design, develop and deliver new
products; reduce manufacturing costs; and improve design quality.
During the fiscal years ended June 26, 1998, June 27, 1997, and June 28, 1996,
the Corporation spent approximately $7,459,000, $5,681,000, and $4,857,000,
respectively, on research and development related to AM fiber optic systems, RF
distribution equipment, and network management. Anticipated product development
initiatives focused on AM fiber optics, network management, and other technology
areas, are expected to result in increased research and development expense in
future years. No research and product development expenditures above have been
capitalized.
Competition
The Corporation's products are marketed with emphasis on their premium quality
and are generally priced competitively with other manufacturers' product lines.
Equipment reliability, superior customer service, and an enhanced warranty
program are several of the key criteria for competition. In these respects, the
Corporation considers its competitive position to be favorable. Other bases for
competition include pricing and technological leadership. Although less
expensive products are available, the Corporation believes it is in a
competitive position with respect to pricing. The Corporation believes that its
strong commitment to efficient network design, a broad offering of technical
customer services, and its focus on research and development, enhance its
competitive position in the market.
There are several competing equipment vendors selling network products in the
United States, a few of which have greater sales of similar equipment than the
Corporation. The Corporation believes it offers a broader product line in the RF
distribution amplifier segment of the market, along with a growing number of AM
fiber optic and network management products.
Currently, CATV networks serve more than 65.0 million subscribers in the United
States. CATV construction has evolved to the point where this network passes
over 95% of TV households in the United States. The CATV industry claims that
market penetration is approximately 65%. Over the next several years, most
industry observers expect this trend to continue; however, there are alternative
methods of distributing entertainment video or information services to
subscribers. All of the methods compete, to a limited extent, with conventional
CATV services. The alternative distribution technologies include Off-Air
Broadcast Service, Multipoint Multichannel Distribution Service (MMDS), Local
Multichannel Distribution Service (LMDS), Satellite Master Antenna Television
(SMATV), and Direct Broadcast Satellite Service (DBS). Generally, these
alternative technologies are limited in terms of their ability to deliver
two-way service and local programming. Based upon these limitations, it is the
Corporation's belief that such technologies will mature to the point where they
serve a relatively narrow segment of the market. On the other hand, a CATV
network has two-way capability and has the ability to deliver substantial
amounts of information to subscribers. As a result, the Corporation believes the
CATV industry is uniquely positioned to benefit from the evolution that is
occurring in the telecommunications industry, particularly in the area of
high-speed data delivery. Similarly, due to its reputation and long-standing
tradition of servicing the CATV industry with excellence, the Corporation
believes it is strategically positioned to grow and expand with the CATV
industry.
External Influences/Industry
The primary market factors affecting the global communications industry include
access to technology advancements, funding, and government regulations. The
increased demand for products offered by the Corporation to domestic and
international customers has resulted from a combination of the market factors
listed above. In recent years, the global communications industry has grown
rapidly by constructing networks to meet the increased demand for video, voice,
and data services.
A significant amount of consolidation has occurred over recent years in the
domestic communications industry. In the CATV industry, cable companies have
acquired other cable companies in order to achieve efficiency through clustering
of properties. Telephone companies have also made investments in and
acquisitions of cable companies and other telephone companies. In the spring of
1998, AT&T announced the proposed acquisition of Tele-Communications, Inc. a
major cable operator.
In the area of technology, advancements in the global communications industry
are occurring at a rapid rate. Traditional, one-way broadband amplifier cascades
are being replaced by two-way HFC architectures which employ fiber optic
electronics to individual service cells (nodes). The Corporation believes that
HFC networks could have significant strategic advantages in the future as the
demand grows for the highest-capacity, lowest-cost networks for delivery of
two-way, high-speed, data service. The Corporation has combined its strength in
conventional RF amplifiers with an increasing presence in the areas of AM fiber
optics and network management systems, and believes it is well positioned to be
a supplier in the interactive multimedia network industry.
Cable operators have traditionally used HFC network architectures for providing
video services to the home. The HFC network architecture used in the CATV
industry has been utilized by several telephone operating companies, while
others continue to explore their options between HFC and other approaches and
technologies, such as DBS, FTTC (fiber to the curb) and ADSL (asymmetrical
digital subscriber line).
The regulatory environment in the United States has changed with passage of the
Telecommunications Act of 1996. Key provisions of the Telecommunications Act are
designed to enhance competition in the industry in that they permit telephone
companies to sell video services, and in some cases, to buy out local cable
companies; allow cable operators to control charges for many channels; allow
Regional Bell Operating Companies (RBOC's) to sell long-distance services, under
certain conditions; require local phone companies to open their networks to
competitors; and allow RBOCs to manufacture customer equipment.
International requirements for advanced services are increasing as well, as
mature markets are deregulating, and emerging economies are seeking to expand
their communications capabilities. The Corporation sees the international
markets as a key growth area now, and in the future, and will continue to pursue
opportunities in the international markets. The international markets continue
to represent distinct markets for HFC distribution equipment, and, in general,
demand can be highly variable.
Employees
The Corporation had approximately 1,200 employees as of September 4, 1998, of
whom approximately 70% were engaged in manufacturing, inspection, and quality
control activities. The remainder were engaged in executive, administrative,
sales, product development, research, and technical customer services
activities. The technical staff includes 93 engineers with baccalaureate or more
advanced degrees, and an additional 279 persons with at least two years of
technical college or military education equivalent to a two-year degree.
Suppliers
The Corporation closely monitors supplier delivery performance and quality and
employs a strategy of limiting the total number of global suppliers to those who
are quality leaders in their respective specialties and who will work with the
Corporation as partners in the supply function. Typical items purchased are die
cast aluminum housings, RF hybrids, printed circuit boards, fiber optic laser
transmitter assemblies, and standard electronic components. Although a few of
the components used by the Corporation are single-sourced, the Corporation has
experienced no significant difficulties to date in obtaining adequate quantities
of raw materials and component parts.
The Corporation uses in-house vendor supply relationships to gain access to key
parts needed in the manufacturing process on a "just-in-time" basis. The
Corporation has implemented a number of in-house vendor supply relationships to
date, and will continue to establish such relationships in the future in order
to decrease vendor lead times and reduce on-hand inventory.
DISCONTINUED OPERATIONS
Digital Fiber Optics Transmission Products Segment
On July 10, 1997, the Corporation announced the discontinuance of its Digital
Fiber Optics Transmission Products segment in a nine-month wind-down process.
The Corporation substantially completed the wind-down of this operation as of
March 1998. The Digital Fiber Optics Transmission Products segment provided
products for long-distance, point-to-point video, voice and data signal
transmission applications, primarily for telephony, distance-learning and other
non-CATV markets. Customers were primarily telcos, major broadcast companies and
educational institutions. The decision to discontinue this segment was based on
an assessment of the potential return on continued funding of product
development for the Corporation's proprietary digital technology versus other
opportunities for investments in the Corporation's core business, especially AM
fiber optics technology.
Research and development expenditures for this segment were $4,005,000 and
$4,544,000 in fiscal years 1997 and 1996, respectively.
This business segment has been accounted for as a discontinued business segment
and its results have been excluded from continuing operations for all periods
presented in the Corporation's consolidated financial statements incorporated
herein by reference to pages 17 through 20 of the Registrant's 1998 Annual
Report to Shareholders.
Additional information regarding discontinued operations and segment performance
is incorporated by reference to Notes B (Discontinued Operations) and R (Segment
Information) on pages 23 and 29 of the Registrant's 1998 Annual Report to
Shareholders.
Item 2. Properties
The Corporation operates the following principal facilities:
Approximate (O)Owned
Location Principal Use Square Feet (L)Leased
State College, Pennsylvania Administrative Offices
and Manufacturing 133,000 O
Tipton, Pennsylvania Manufacturing 45,000 O
Reedsville, Pennsylvania(1) Manufacturing 60,000 O
Tijuana, Mexico(2) Manufacturing 25,200 L
Almere, The Netherlands Administrative Offices 14,100 L
Ajax, Ontario, Canada Administrative Offices 5,000 L
(1) On June 25, 1998, the Corporation announced its decision to close its
manufacturing plant located in Reedsville, Pennsylvania, in order to reduce
costs and improve productivity and asset utilization. The Corporation had a
Lease/Option to Purchase Agreement with the Mifflin County Industrial
Development Corporation for the building and improvements located in Reedsville,
Pennsylvania. On August 10, 1998, the Corporation purchased the facility, which
is being held for sale.
(2) As of June 26, 1998, the Corporation leased approximately 25,200 square feet
of real property located in Tijuana, Mexico, for the purpose of manufacturing.
The Corporation has entered into a new lease agreement for manufacturing space
of approximately 61,900 square feet of real property, also located in Tijuana,
Mexico. The new lease commenced on September 15, 1998. The prior lease will be
terminated at such time as the Corporation has transferred all manufacturing to
the new facility, currently projected to take place by November 30, 1998.
The Corporation believes its current facilities are well maintained and in good
operating condition, and that such facilities are sufficient for its present
operations.
Item 3. Legal Proceedings
On or about March 31, 1995, certain shareholders of the Corporation filed a
complaint in the United States District Court for the Eastern District of
Pennsylvania against the Corporation and its Chief Executive Officer alleging
violations of Sections 10 (b) and 20 (a) of the Securities Exchange Act of 1934
and common law. On September 27, 1997, a tentative settlement was reached with
respect to this litigation, and the settlement amount was recorded in the
financial statements during the first quarter of fiscal year 1998. On July 14,
1998, the United States District Court for the Eastern District of Pennsylvania
approved the settlement reached by the parties and dismissed the case with
prejudice.
On August 28, 1998, the Corporation filed a complaint against Rockwell
International Corp. ("Rockwell") in the United States District Court for the
Middle District of Pennsylvania. The complaint was served on Rockwell on
September 11, 1998. The complaint alleges breach of contract, breach of implied
warranty and breach of the implied covenant of good faith and fair dealing by
Rockwell in connection with the development by Rockwell and sale to the
Corporation of an application specific integrated circuit ("ASIC") to be used by
the Corporation in the manufacture of high-speed digital fiber optic receivers
and transmitters. The ASIC was a component used in products sold by the
Corporation as part of its Digital Fiber Optics Transmission Products Segment,
which has been discontinued. The lawsuit seeks damages of not less than
$10,000,000.
Item 4. Submission of Matters to a Vote of Securities Holders
There were no matters submitted to a vote of security holders during the fourth
quarter of the fiscal year ended June 26, 1998.
Executive Officers of the Registrant
All executive officers of the Corporation are elected annually at the Annual
Meeting of the Board of Directors (which is normally held on the date of the
Annual Meeting of Shareholders of the Corporation) to serve in their office for
the next succeeding year and until their successors are duly elected and
qualified. The listing immediately following this paragraph gives certain
information about the Corporation's executive officers, including the age,
present position, and business experience during the past five years.
Name Age Position/Experience
Richard E. Perry 68 Chairman since June 1986; Chief
Executive Officer from July 1985 to August
1996 and from March 1998 to July 1998;
President from July 1985 through December
1992.
David A. Woodle 42 President and Chief Executive Officer
since July 20,1998; General Manager-
Strategic Systems of Raytheon Systems
Company, a company providing computer systems
integration services to government and
commercial customers, from January 1998 to
July 1998; Vice President and General
Manager, Raytheon E-Systems, HRB Systems
from June 1996 to January 1998; VP, Strategic
Programs and TMS, Raytheon E-Systems, HRB
Systems from October 1990 to June 1996.
Edwin S. Childs 59 Vice President-Human Resources since August
1996; Director, Human Resources from
September 1986 to July 1996.
David J. Eng 45 Sr. Vice President-Sales since September
1998; Sr. Vice President-Worldwide Sales from
March 1997 to September 1998; Vice President-
Sales, North, Central and South America from
August 1996 to March 1997; Vice President-
Sales & Marketing from August 1994 to August
1996. Director, Regional Telephony Sales,
Scientific Atlanta, Inc. from March 1993 to
July 1994; Regional Sales Manager,
Scientific Atlanta, Inc. from April 1985 to
February 1993.
Lawrence R. Fisher, Jr. 48 Vice President-Engineering since August 1996;
Director, RF Engineering Product Development
from June 1995 to July 1996; Manager, RF
Engineering from June 1994 to May 1995.
Director of Engineering, Calan, Inc. from
January 1993 to May 1994.
Lynn D. Hutcheson 50 Senior Vice President-Engineering and
Technology since March 1998, Independent
Consultant, Fiber Optic Technology from
August 1997 to March 1998; Vice
President-Engineering, ADC Broadband
Communications from September 1996 to August
1997; Director, Engineering, Raynet
Corporation/Ericsson Corp. from September
1987 to September 1996.
Chris A. Miller 45 Vice President-Finance, Secretary and
Treasurer since July 1995; Controller,
Planning Manager and Assistant Secretary from
February 1993 to July 1995; Controller and
Assistant Secretary from February 1987 to
February 1993.
Donald F. Miller 56 Vice President-Operations & Manufacturing
since August 1995; Plant Manager from
September 1987 to August 1995.
Gerhard B. Nederlof 50 Sr. Vice President, Marketing and Services
since 1998, Sr. Vice President, Marketing,
Business Development and Services from March
1997 to September 1998; Vice President-Sales,
Europe and Pacific Rim from August 1996 to
March 1997; Vice President-International from
January 1992 to August 1996. Managing
Director of DataCable B.V. from November 1981
to January 1992.
Note: Scott C. Chandler served as President and Chief Executive Officer of the
Corporation from August 13, 1996 until his resignation was effective on April 7,
1998.
PART II
Item 5. Market for the Registrant's Common Stock and Related Stockholder Matters
The information required by this item is incorporated herein by reference to
page 32 of the Registrant's 1998 Annual Report to Shareholders under the caption
"Stock Listing."
There were no sales of unregistered securities during fiscal year 1998.
Item 6. Selected Financial Data
The information required by this item is incorporated herein by reference to
page 2 of the Registrant's 1998 Annual Report to Shareholders.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The information required by this item is incorporated herein by reference to
pages 13 through 16 of the Registrant's 1998 Annual Report to Shareholders.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Not Applicable
Item 8. Financial Statements and Supplementary Data
The information required by this item is incorporated herein by reference to
pages 17 through 30 of the Registrant's 1998 Annual Report to Shareholders.
Item 9. Changes and Disagreements on Accounting and Financial Disclosure
None
PART III
Item 10. Directors and Executive Officers of the Registrant
The information with respect to Directors required by this item is incorporated
herein by reference to pages 2 and 3 of the Registrant's Proxy Statement dated
September 21, 1998.
The information with respect to Executive Officers required by this item is set
forth in Part I of this report.
To the Corporation's knowledge, based solely on a review of the copies of such
reports furnished to the Corporation and written representations that no other
reports were required during the fiscal year ended June 26, 1998, its officers,
directors, and ten-percent shareholders complied with all applicable Section
16(a) filing requirements.
Item 11. Executive Compensation
The information required by this item is incorporated herein by reference to
pages 7 through 14 of the Registrant's Proxy Statement dated September 21, 1998.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The information required by this item is incorporated herein by reference to
pages 4 and 7 of the Registrant's Proxy Statement dated September 21, 1998.
Item 13. Certain Relationships and Related Transactions
The Registrant had no related transactions or relationships requiring disclosure
under Regulation S-K, Item 404, during the fiscal year 1998.
PART IV
ITEM 14. Exhibits, Financial Statements and Reports on Form 8-K
(a) The following documents are filed as part of this report:
(1) As indicated in Item 8 of Part II, the following financial
statements of the Registrant included in the Registrant's 1998
Annual Report to Shareholders for the year ended June 26, 1998,
are incorporated by reference to pages 17 through 30 of the
Registrant's Annual Report to Shareholders.
Consolidated Balance Sheets -- Years ended June 26, 1998, and
June 27, 1997.
Consolidated Statements of Operations -- Years ended June 26,
1998, June 27, 1997, and June 28, 1996.
Consolidated Statements of Cash Flows -- Years ended June 26,
1998, June 27, 1997, and June 28, 1996.
Consolidated Statements of Shareholders' Equity -- Years ended
June 26, 1998, June 27, 1997, and June 28, 1996.
Notes to Consolidated Financial Statements.
Report of KPMG Peat Marwick LLP.
(2) The following financial statement schedule of the Registrant is
filed as a part of this report:
Schedule II -- Valuation and Qualifying Accounts
Report of KPMG Peat Marwick LLP
Schedules, other than the one listed above, have been omitted
because they are not applicable or the required information is
shown in the consolidated financial statements or notes thereto.
(3) Exhibits
NUMBER DESCRIPTION OF DOCUMENTS
(3) (a) Restated Articles of Incorporation of Registrant (incorporated by reference to Exhibit
3-a.1. to Amendment No. 2 to Form S-1 Registration Statement, File No. 2-70661).
(3) (b) Amendment to Articles of Incorporation of Registrant, filed September 21, 1995
(incorporated by reference to Exhibit (3) (b) of Registrant's Form 10-K for the year
ended June 30, 1995, Securities and Exchange Commission File No. 0-10726).
(3) (c) Bylaws of Registrant, as amended October 27, 1987, (incorporated by reference to Exhibit
(3) (b) to the Registrant's Form 10-K for the year ended June 30, 1988, Securities and
Exchange Commission File No., 0-10726).
(4) Specimen of Common Stock Certificate (incorporated by reference to Exhibit 4 to Amendment
No. 1 of Form S-1 Registration Statement, File No. 2-70661).
(10) (a) Deferred Compensation Plan between the Registrant and Richard E. Perry dated December 6,
1989, (incorporated by reference to Exhibit (10) (y) to the Registrant's Form 10-K for
the year ended June 30, 1990, Securities and Exchange Commission File No. 0-10726).
(10) (b) 1989 Non-Employee Directors' Non-Qualified Stock Option Plan (incorporated by reference
to Exhibit 28 to Form S-8 Registration Statement, File No. 33-35208).
(10) (c) Indemnification Agreement dated February 3, 1992, between the Registrant and Gerhard B.
Nederlof (incorporated by reference to Exhibit (10) (gg) to the Registrant's Form 10-K
for the year ended June 26, 1992, Securities and Exchange Commission File No. 0-10726).
(10) (d) Supplemental Retirement Plan Participation Agreement dated April 20, 1993, between the
Registrant and Gerhard B. Nederlof (incorporated by reference to Exhibit (10) (bb) to the
Registrant's Form 10-K for the year ended June 25, 1993, Securities and Exchange
Commission File No. 0-10726).
(10) (e) Change of Control Agreement dated May 21, 1993, between the Registrant and Gerhard B.
Nederlof (incorporated by reference to Exhibit (10) (gg) to the Registrant's Form 10-K
for the year ended June 25, 1993, Securities and Exchange Commission File No. 0-10726).
(10) (f) Change of Control Agreement dated August 22, 1994, between the Registrant and David J.
Eng (incorporated by reference to Exhibit (10) (oo) to the Registrant's Form 10-K for the
year ended June 24, 1994, Securities and Exchange Commission File No. 0-10726).
(10) (g) Form of Indemnification Agreement dated August 22, 1994, between the Registrant and David
J. Eng (incorporated by reference to Exhibit (10) (pp) to the Registrant's Form 10-K for
the year ended June 24, 1994, Securities and Exchange Commission File No. 0-10726).
(10) (h) Supplemental Retirement Plan Participation Agreement dated August 22, 1994, between the
Registrant and David J. Eng (incorporated by reference to Exhibit (10) (qq) to the
Registrant's Form 10-K for the year ended June 24, 1994, Securities and Exchange
Commission File No. 0-10726).
(10) (i) Change of Control Agreement dated May 23, 1995, between the Registrant and Joseph E.
Zavacky (incorporated by reference to Exhibit (10) (gg) to the Registrant's Form 10-K for
the year ended June 30, 1995, Securities and Exchange Commission File No. 0-10726).
(10) (j) Form of Indemnification Agreement dated May 23, 1995, between the Registrant and Joseph
E. Zavacky (incorporated by reference to Exhibit (10) (hh) to the Registrant's Form 10-K
for the year ended June 30, 1995, Securities and Exchange Commission File No. 0-10726).
(10) (k) Supplemental Retirement Plan Participation Agreement dated May 22, 1995, between the
Registrant and Chris A. Miller (incorporated by reference to Exhibit (10) (ii) to the
Registrant's Form 10-K for the year ended June 30, 1995, Securities and Exchange
Commission File No. 0-10726).
(10) (l) Change of Control Agreement dated May 22, 1995, between the Registrant and Chris A.
Miller (incorporated by reference to Exhibit (10) (jj) to the Registrant's Form 10-K for
the year ended June 30, 1995, Securities and Exchange Commission File No. 0-10726).
(10) (m) Form of Indemnification Agreement dated May 22, 1995, between the Registrant and Chris A.
Miller (incorporated by reference to Exhibit (10) (kk) to the Registrant's Form 10-K for
the year ended June 30, 1995, Securities and Exchange Commission File No. 0-10726).
10) (n) Supplemental Retirement Plan Participation Agreement dated August 24, 1995, between the
Registrant and Donald F. Miller (incorporated by reference to Exhibit (10) (ll) to the
Registrant's Form 10-K for the year ended June 30, 1995, Securities and Exchange
Commission File No. 0-10726).
(10) (o) Change of Control Agreement dated August 24, 1995, between the Registrant and Donald F.
Miller (incorporated by reference to Exhibit (10) (mm) to the Registrant's Form 10-K for
the year ended June 30, 1995, Securities and Exchange Commission File No. 0-10726).
(10) (p) Form of Indemnification Agreement dated August 24, 1995, between the Registrant and
Donald F. Miller (incorporated by reference to Exhibit (10) (nn) to the Registrant's Form
10-K for the year ended June 30, 1995, Securities and Exchange Commission File No.
0-10726).
(10) (q) Lease Agreement dated November 10, 1994, between the Registrant and Mifflin County
Industrial Development Corporation for a manufacturing building (incorporated by
reference to Exhibit (10) (oo) to the Registrant's Form 10-K for the year ended June 30,
1995, Securities and Exchange Commission File No. 0-10726).
(10) (r) Registrant's Retirement Savings and Profit Sharing Plan as Amended July 1, 1989, and
including amendments through April 19, 1994. (incorporated by reference to Exhibit
99.B14 to Form S-8 Registration Statement, File No. 333-02505).
(10) (s) Supplemental Retirement Plan Participation Agreement dated August 13, 1996, between the
Registrant and Edwin S. Childs. (incorporated by reference to Exhibit (10) (x) to the
Registrant's Form 10-K for the year ended June 28, 1996, Securities and Exchange
Commission File No. 0-10726).
(10) (t) Change of Control Agreement dated August 13, 1996, between the Registrant and Edwin S.
Childs. (incorporated by reference to Exhibit (10) (y) to the Registrant's Form 10-K for
the year ended June 28, 1996, Securities and Exchange Commission File No. 0-10726).
(10) (u) Form of Indemnification Agreement dated August 13, 1996, between the Registrant and Edwin
S. Childs. (incorporated by reference to Exhibit (10) (z) to the Registrant's Form 10-K
for the year ended June 28, 1996, Securities and Exchange Commission File No. 0-10726).
(10) (v) Supplemental Retirement Plan Participation Agreement dated August 13, 1996, between the
Registrant and Lawrence R. Fisher, Jr. (incorporated by reference to Exhibit (10) (aa) to
the Registrant's Form 10-K for the year ended June 28, 1996, Securities and Exchange
Commission File No. 0-10726).
(10) (w) Change of Control Agreement dated August 13, 1996, between the Registrant and Lawrence R.
Fisher, Jr. (incorporated by reference to Exhibit (10) (bb) to the Registrant's Form 10-K
for the year ended June 28, 1996, Securities and Exchange Commission File No. 0-10726).
(10) (x) Form of Indemnification Agreement dated August 13, 1996, between the Registrant and
Lawrence R. Fisher, Jr. (incorporated by reference to Exhibit (10) (cc) to the Registrant's
Form 10-K for the year ended June 28, 1996, Securities and Exchange Commission File No.
0-10726).
(10) (y) Amended and Restated Employment Agreement dated October 16, 1995, between the Registrant
and Richard E. Perry. (incorporated by reference to Exhibit (10) (dd) to the Registrant's
Form 10-K for the year ended June 28, 1996, Securities and Exchange Commission File No.
0-10726).
(10) (z) Employment Agreement dated July 2, 1996, between the Registrant and Scott C. Chandler.
(incorporated by reference to Exhibit (10) (ee) to the Registrant's Form 10-K for the
year ended June 28, 1996, Securities and Exchange Commission File No. 0-10726).
(10) (aa) Registrant's Supplemental Executive Retirement Plan effective May 1, 1996. (incorporated
by reference to Exhibit (10) (ff) to the Registrant's Form 10-K for the year ended June
28, 1996, Securities and Exchange Commission File No. 0-10726).
(10) (bb) (i) 1988 Stock Option Plan. (incorporated by
reference to Exhibit (10) (kk)(i) to the
Registrant's Form 10-K for the year ended June 28,
1996, Securities and Exchange Commission File No.
0-10726).
(10) (bb) (ii) Amendment to 1988 Stock Option Plan.
(incorporated by reference to Exhibit (10) (kk)(ii)
to the Registrant's Form 10-K for the year ended
June 28, 1996, Securities and Exchange Commission
File No. 0-10726).
(10) (cc) (i) 1992 Stock Purchase Plan. (incorporated by
reference to Exhibit (10) (ll)(i) to the
Registrant's Form 10-K for the year ended June 28,
1996, Securities and Exchange Commission File No.
0-10726).
(10) (cc) (ii) Amendment to 1992 Stock Purchase Plan.
(incorporated by reference to Exhibit (10) (ll)(ii)
to the Registrant's Form 10-K for the year ended
June 28, 1996, Securities and Exchange Commission
File No. 0-10726).
(10) (dd) Fiscal Year 1997 Profit Incentive Plan. (incorporated by reference to Exhibit (10) (mm) to the
Registrant's Form 10-K for the year ended June 28, 1996, Securities and Exchange Commission
File No. 0-10726).
(10) (ee) Note and Security Agreement effective November 14, 1996, between the Registrant and Mellon
Bank, N.A. (incorporated by reference to Exhibit (10) (jj) to the Registrant's Form 10-K for
the year ended June 27, 1997, Securities and Exchange Commission File No. 0-10726).
(10) (ff) Supplement to Note and Security Agreement effective November 14, 1996, between the
Registrant and Mellon Bank, N.A. (incorporated by reference to Exhibit (10) (kk) to the Registrant's
Form 10-K for the year ended June 27, 1997, Securities and Exchange Commission File No. 0-10726).
(10) (gg) Revolving Line of Credit Agreement effective November 14, 1996, between the Registrant and
Mellon Bank, N.A. (incorporated by reference to Exhibit (10) (ll) to the Registrant's Form 10-K for
the year ended June 27, 1997, Securities and Exchange Commission File No. 0-10726).
(10) (hh) Supplement to Revolving Line of Credit Agreement effective November 14, 1996, between the
Registrant and Mellon Bank, N.A. (incorporated by reference to Exhibit (10) (mm) to the Registrant's
Form 10-K for the year ended June 27, 1997, Securities and Exchange Commission File No. 0-10726).
(10) (ii) Amended and Restated Employment Agreement dated July 21, 1997, between the Registrant and Richard E.
Perry (incorporated by reference to Exhibit (10) (nn) to the Registrant's Form 10-K for the year
ended June 27, 1997, Securities and Exchange Commission File No. 0-10726).
(10) (jj) Amended and Restated Employment Agreement dated July 30, 1997, between the Registrant
and Gerhard B. Nederlof. (incorporated by reference to Exhibit (10) (oo) to the Registrant's Form
10-K for the year ended June 27, 1997, Securities and Exchange Commission File No. 0-10726).
(10) (kk) Notes and Security Agreement effective December 30, 1997, between the Registrant and Mellon Bank, N.A.
(incorporated by reference to Exhibit (10) (a) to the Registrant's Form 10-Q for the thirteen-week
period ended December 26, 1997, Securities and Exchange Commission File No. 0-10726).
(10) (ll) Supplement to Note and Security Agreement effective December 30, 1997, between the Registrant and
Mellon Bank, N.A. (incorporated by reference to Exhibit (10) (b) to the Registrant's Form 10-Q for the
thirteen-week period ended December 26, 1997, Securities and Exchange Commission File No. 0-10726).
(10) (mm) Revolving Line of Credit Agreement effective December 30, 1997, between the Registrant and Mellon Bank,
N.A. (incorporated by reference to Exhibit (10) (c) to the Registrant's Form 10-Q for the
thirteen-week period ended December 26, 1997, Securities and Exchange Commission File No. 0-10726).
(10) (nn) Supplement to Revolving Line of Credit Agreement effective December 30, 1997, between the Registrant
and Mellon Bank, N.A. (incorporated by reference to Exhibit (10) (d) to the Registrant's Form 10-Q for
the thirteen-week period ended December 26, 1997, Securities and Exchange Commission File No. 0-10726).
(10) (oo) Supplemental Retirement Plan Participation Agreement dated February 23, 1998, between the Registrant
and Lynn D. Hutcheson.
(10) (pp) Change of Control Agreement dated February 23, 1998, between the Registrant and Lynn D. Hutcheson.
(10) (qq) Form of Indemnification Agreement dated February 23, 1998, between the Registrant and
Lynn D. Hutcheson.
(10) (rr) Employment Agreement dated June 22, 1998, between the Registrant and David A. Woodle.
(10) (ss) Fiscal Year 1999 Profit Incentive Plan
(10) (tt) Fiscal Year 1999 Incentive Plan
(11) Statement re Computation of Earnings Per Share.
(13) Annual Report to Shareholders for the year ended June 26, 1998.
(21) Subsidiaries of the Registrant.
(23) Consent of Independent Auditors.
(27) Financial Data Schedule.
(b) Reports on Form 8-K filed in the fourth quarter of the fiscal year 1998
On March 30, 1998, the Registrant filed a Form 8-K with the Securities
and Exchange Commission reporting that Scott C. Chandler had resigned as
the Registrant's President and Chief Executive Officer and as a Director
of C-COR Electronics, Inc.
On June 16, 1998, the Registrant filed a Form 8-K with the Securities
and Exchange Commission reporting that its Board of Directors had
elected David A. Woodle as the Registrant's President and Chief
Executive Officer, effective July 20, 1998.
(c) Exhibits: See (a) (3) above.
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
C-COR ELECTRONICS, INC.
(Registrant)
September 24, 1998
/s/ David A. Woodle, President and
Chief Executive Officer
(principal executive officer)
/s/ Chris A. Miller, Vice President-Finance,
Secretary and Treasurer (principal
financial officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities indicated on the 24th day of September 1998.
/s/ Richard E. Perry, Director, Chairman
/s/ Donald M. Cook, Jr., Director
/s/ Anne P. Jones, Director
/s/ John J. Omlor, Director
/s/ Frank Rusinko, Jr., Director
/s/ J. J. Tietjen, Director
SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS
COL. A COL. B COL. C COL. D COL. E
ADDITIONS
DESCRIPTION Balance Charged Charged to Balance
at Beginning to Costs Other Accounts- Deductions- at End
of Period and Expenses Describe Describe of Period
- -------------------------------------------------------------------------------------------------------------------------------
Year ended June 26, 1998
Reserves deducted from assets to
which they apply:
Allowance for Doubtful Accounts $ 510,000 $ (79,000) $0 $ 1,000(1) $ 430,000
Inventory Reserve-Continuing Operations 1,233,000 1,674,000 0 920,000(2) 1,987,000
Inventory Reserve-Discontinued
Operations 3,630,000 (1,573,000) 0 1,212,000(2) 845,000
- -------------------------------------------------------------------------------------------------------------------------------
$ 5,373,000 $ 22,000 $0 $ 2,133,000 $ 3,262,000
- -------------------------------------------------------------------------------------------------------------------------------
Reserves not deducted from assets:
Product Warranty Reserve-Continuing
Operations $ 2,185,000 $ 966,000 $0 $ 1,435,000(3) $ 1,716,000
Product Warranty Reserve-Discontinued
Operations 3,429,000 1,283,000 0 2,421,000(3) 2,291,000
Workers' compensation self-insurance 1,162,000 921,000 0 764,000(4) 1,319,000
Allowance for Discontinued Operations 3,375,000 0 0 2,775,000(5) 600,000
- -------------------------------------------------------------------------------------------------------------------------------
$10,151,000 $ 3,170,000 $0 $ 7,395,000 $ 5,926,000
- -------------------------------------------------------------------------------------------------------------------------------
Year ended June 27, 1997
Reserves deducted from assets to which they apply:
Allowance for Doubtful Accounts $ 355,000 $ 157,000 $0 $ 2,000(1) $ 510,000
Inventory Reserve-Continuing Operations 1,112,000 1,323,000 0 1,202,000(2) 1,233,000
Inventory Reserve-Discontinued
Operations 305,000 3,418,000 0 93,000(2) 3,630,000
- -------------------------------------------------------------------------------------------------------------------------------
$ 1,772,000 $ 4,898,000 $0 $ 1,297,000 $ 5,373,000
- -------------------------------------------------------------------------------------------------------------------------------
Reserves not deducted from assets:
Product Warranty Reserve-Continuing
Operations $ 1,724,000 $ 2,310,000 $0 $ 1,849,000(3) $ 2,185,000
Product Warranty Reserve-Discontinued
Operations 0 4,028,000 0 599,000(3) 3,429,000
Workers' compensation self-insurance 704,000 1,068,000 0 610,000(4) 1,162,000
Allowance for Discontinued Operations 0 3,375,000 0 0 3,375,000
- -------------------------------------------------------------------------------------------------------------------------------
$ 2,428,000 $10,781,000 $0 $ 3,058,000 $10,151,000
- -------------------------------------------------------------------------------------------------------------------------------
Year ended June 28, 1996
Reserves deducted from assets to which they apply:
Allowance for Doubtful Accounts $ 657,000 $ 0 $0 $ 302,000(1) $ 355,000
Inventory Reserve-Continuing Operations 949,000 819,000 0 656,000(2) 1,112,000
Inventory Reserve-Discontinued
Operations 500,000 273,000 0 468,000(2) 305,000
- -------------------------------------------------------------------------------------------------------------------------------
$ 2,106,000 $ 1,092,000 $0 $ 1,426,000 $ 1,772,000
- -------------------------------------------------------------------------------------------------------------------------------
Reserves not deducted from assets:
Product Warranty Reserve-Continuing
Operations $ 1,751,000 $ 1,981,000 $0 $ 2,008,000(3) $ 1,724,000
Workers' compensation self-insurance 553,000 653,000 0 502,000(4) 704,000
- -------------------------------------------------------------------------------------------------------------------------------
$ 2,304,000 $ 2,634,000 $0 $ 2,510,000 $ 2,428,000
- -------------------------------------------------------------------------------------------------------------------------------
(1) Uncollectible accounts written off, net of recoveries.
(2) Inventory disposals.
(3) Warranty claims honored during year.
(4) Worker's compensation claims paid.
(5) Expenses for Discontinued Operations incurred from measurement date to
disposal date Note: Unless otherwise indicated, reserves relate to continuing
operations
EX-10.(OO)
2
RETIREMENT PLAN PARTICIPATION AGREEMENT
"Attachment D"
C-COR ELECTRONICS, INC.
SUPPLEMENTAL RETIREMENT PLAN
PARTICIPATION AGREEMENT
1. I, the undersigned Participant ("Participant"), hereby acknowledge
receipt of a copy of the Supplemental Retirement Plan of C-COR Electronics, Inc.
("Corporation"), effective April 20, 1993 (the "Plan"). By completion of this
Agreement, I agree to comply with the terms of the Plan in all respects. I
understand that all provisions of the Plan are hereby made a part of this
Agreement.
2. In consideration of the foregoing and subject to the terms of the Plan,
Corporation promises to pay the Supplemental Retirement Benefit therein
described of $ 1,500.00 per month.
3. Tax-Advice. I agree I have been advised by Corporation to consult my own
tax advisors with respect to this Agreement and that neither Corporation nor its
representatives have made or make any representation or warranties as to such
consequences.
4. Insurance Policies. I understand that Corporation may make application
to purchase a life insurance policy or policies on my life, which will be owned
by Corporation and under which it will be the sole beneficiary. I agree to
provide Corporation with such information as it may require in order to make
such application and to cooperate fully with Corporation in respect of such
application, including the taking of a physical examination if requested to do
so. In this connection, I represent that my date of birth is 3/18/48. In the
event the insurance company to which application is made declines to issue the
policy at standard premium rates, this Agreement will be void unless Corporation
decides otherwise. Similarly, if I should die prior to the date on which payment
of the Supplemental Retirement Benefit commences and the proceeds of a policy on
my life are not paid to Corporation because the information I have furnished in
connection with the application is materially false or my death was caused by
suicide within two (2) years of the date on the policy on my life issues,
Corporation will be under no obligation to pay the Survivor Benefit herein
provided.
5. No Employment Commitment. Nothing in this Agreement shall be construed
to imply any commitment on the part of Corporation to continue me in its employ.
6. Beneficiary. I hereby designate the following person or persons as my
beneficiary or beneficiaries under this Agreement.
Anne L. Hutcheson, spouse___________________
--------------------------------------------
I reserve the right to change my beneficiary at any time and for any reason
and without notice to or the consent of the beneficiary or beneficiaries, by
delivering a writing to that effect to the office of the Secretary of
Corporation or its successor.
7. Additional Conditions
____None______________________________________________
======================================================
8. This Agreement shall be governed by the laws of the Commonwealth of
Pennsylvania.
Dated: 2/23/98
L. D. Hutcheson
Participant
C-COR ELECTRONICS, INC.
By: Scott C. Chandler
Attachment H
LYNN D. HUTCHESON
C-COR ELECTRONICS, INC.
Supplemental Retirement Plan
1. Selection of Participants. This Plan is an unfunded non-qualified arrangement
for a select group of management and/or highly compensated employees of C-COR
Electronics Inc., (hereinafter "Corporation"). Each employee selected by
Corporation for participation hereunder (hereinafter "Participant") shall
indicate his agreement to the terms of this Plan by executing a Participation
Agreement to be provided by Corporation.
2. Definitions. Certain terms shall be defined hereunder as follows: a.
"Beneficiary" means a person, persons, trust or trusts which a
Participant shall, from time to time, designate in writing to receive any
benefits payable to him under this Plan in the event of his death.
b. "Committee" means the Compensation Committee of the Board of Directors
of Corporation.
c. "Disability" shall have the same meaning as the term is defined in
Corporation's Long Term Disability Plan.
d. "Effective Date of Plan" means April 20, 1993.
e. "Supplement Retirement Benefit" means a benefit provided to a
Participant if he elects to participate under the Plan and remains in
Corporation's employ until attaining the age specified in Section 3 of the Plan.
f. (1) "Participant" means full-time employees working more than 2,000
hours per year.
f. (2) "Participant Status Requirement" means a participant who has been a
participant in the Plan for five years, hired directly in the plan; or an
employee who has been a participant in the Plan for three years by being
promoted into the Plan and who has at least two additional years as an employee
of C-Cor Electronics, Inc.
g. "Participant Agreement" means the Agreement signed by Participant that
evidences his participation in the Plan. A blank Participation Agreement is
attached to this Plan and incorporated herein by this reference.
h. "Plan" means the Supplemental Retirement Plan of Corporation effective
April 20, 1993, and as it may be amended from time to time by the Corporation.
i. "Plan Administrator" means Corporation. Provided, however, that
Corporation shall only be designated as Plan Administrator and named Fiduciary
of the Plan for purposes of implementing the claims procedure contained in
Paragraph 14, and for no other purpose.
j. "Survivor Benefit" means a benefit provided to Participant's Beneficiary
if Participant elects to participate in the Plan and dies prior to commencement
of the Supplemental Retirement Benefit while in the employ of Corporation.
k. "Death Benefit" means a benefit provided to Participant's Beneficiary if
Participant elects to participate in the Plan and dies after commencement of the
Supplemental Retirement Benefit.
1. "Year of Service" means a consecutive 12-month period during which an
employee completes at least 2,000 hours of service with the Corporation.
3. Payments at Retirement.
a. Normal Retirement Date. If a Participant continues in employment with
Corporation until he attains age 65 and 10 years of participant status, then,
upon retirement, the Participant shall be entitled to receive from the
Corporation a Supplemental Retirement Benefit in the amount specified in his
Participation Agreement, payable in equal monthly installments, for a period of
15 years. Such payments shall begin on the first day of the month following the
Participant's attainment of his Normal Retirement Date.
b. Early Retirement.
(1) If a Participant's employment with the corporation terminates due to
Early Retirement or Disability prior to his attainment of Normal Retirement Date
but following his attainment of age 55 and ten (10) years of participant status,
such Participant may retire before his Normal Retirement Date and receive early
retirement benefits from the Plan. The early retirement benefit shall be equal
to the actuarial equivalent of the Supplemental Retirement Benefit (as specified
in the Participant's Agreement) commencing at the Normal Retirement Date. Such
actuarial equivalent early retirement benefit shall be equal to the Supplemental
Retirement Benefit multiplied by the early retirement factor set forth in
Appendix A.
(2) If a Participant's employment with the corporation terminates due to
Early Retirement or Disability prior to his attainment of Normal Retirement Date
but following his attainment of age 60 and attainment of participant status
requirements, but less than ten (10) years of participant status, such
Participant may retire before his Normal Retirement Date and receive early
retirement benefits from the Plan. This early retirement benefit shall be equal
to the early retirement benefit as calculated in Section 3.b. (1) and then
multiplied by a benefit percentage factor for years of participant status less
than ten (10) years as set forth in Appendix B.
(3) The Early Retirement or Disability Benefit to which the Participant is
entitled shall be paid in equal monthly installments for a period of 15 years.
Such payments shall begin on the first day of the month following the
Participant's termination of employment. Provided, however, that no early
retirement or disability benefit shall be payable under this Section 3.b. if the
Participant has not satisfied the participant status requirement. For
calculating participant status, the Extended Salary Plan of the Corporation,
effective October 1, 1987, shall be a predecessor plan to this Plan.
c. Late Retirement. If a Participant remains employed after the attainment
of his Normal Retirement Date, such benefit shall not commence until he actually
retires. The amount of the Participant's late retirement benefit shall be equal
to the actuarial equivalent of his Supplemental Retirement Benefit that would
have commenced at his Normal Retirement Date. Such actuarial equivalent late
retirement benefit shall be equal to the Supplemental Retirement Benefit
multiplied by the late retirement factors set forth in Appendix C and payable in
equal monthly installments for a period of 15 years.
d. Death Following Retirement. If a Participant should die after payment of
a Supplemental Retirement Benefit begins, but before receipt of the last of such
payments, the remaining balance of such payments shall be paid on their due
dates to the Participant's beneficiary designated in the Participant's Agreement
or, failing such designation, to the Participant's estate. As stated in Section
3.a., the total monthly payments of the Supplemental Retirement Benefit (for pre
and post death) shall not exceed fifteen (15) years.
4. Other Termination of Employment or Participant Status Short of Required
Participant Status. If a Participant's employment with the Corporation
terminates for any other reason (other than Death, Disability or Retirement), or
a Participant has not met the participant status requirements, then he shall not
be entitled to payment of a Supplemental Retirement Benefit under the Plan.
5. Survivor Benefits (Pre-Retirement Death of Participant).
(1) If an eligible Participant should die while in the Corporation's
employment, and the Participant has become eligible for either Early, Normal, or
Late Retirement, but before commencement of the Supplemental Retirement Benefit,
such eligible benefit shall become payable to the Participant's beneficiary or,
failing such designation, to the Participant's estate. Such benefit shall be
paid in equal monthly installments, for a period of 15 years. Such payments
shall begin on the first day of the month following the Participant's death.
(2) If a Participant should die while in the Corporation's employment, and
the Participant has not become eligible for either Early, Normal, or Late
Retirement, but has met the participant status requirements, the Participant's
beneficiary or, failing such designation, the Participant's estate, shall be
entitled to a survivor benefit. This survivor benefit shall be equal to the
actuarial equivalent of the Supplemental Retirement Benefit commencing at Normal
Retirement Date. Such actuarial equivalent survivor benefit shall be equal to
the Supplemental Retirement Benefit multiplied by the early retirement factors
set forth in Appendix A and payable in equal monthly installments for a period
of 15 years.
6. Status of Investments. All investments made by Corporation under this Plan
will be deemed made solely for the purpose of aiding Corporation in measuring
and meeting its obligations under this Plan. Corporation shall be the sole owner
of all such investments and of all rights and privileges conferred by the terms
of the instruments evidencing such investments. Nothing stated herein will cause
such investments to be treated as anything but the general assets of
Corporation, nor will anything stated herein cause such investments to represent
the vested, secured or preferred interest of any Participants or his
Beneficiaries.
7. General Creditor Status. A Participant shall have no claim with respect to
any particular asset of Corporation, but shall be and shall remain at all times
a general creditor of Corporation and, therefore, a Participant's rights under
the Plan shall have not priority over the rights of any general creditor of
Corporation.
8. No Assignment. Neither a Participant nor his personal representative shall
have any right to commute, sell, assign, transfer, encumber or otherwise dispose
of the right to receive payments hereunder which payments and the right thereto
are expressly declared to by non-assignable and non-transferable. Any attempted
assignment or transfer by a Participant or his personal representative shall be
of no effect. Corporation shall have the right to assign this Plan and to
transfer its obligations hereunder.
9. Revocation and Amendment. This Plan may be amended or terminated at any time
at the sole discretion of the Board of Directors of Corporation; provided,
however, that any such amendment or termination shall not affect the rights of
any Participant which may have accrued under the Plan at the time of amendment
or termination.
10. No Employment Guarantee. Nothing contained in this Plan shall be construed
as conferring upon any Participant the right to continue in the employment of
Corporation.
11. Authority or Committee. The Committee shall have the full power and
authority to interpret, construe and administer this Plan. The Committee's
interpretations and construction hereof and actions hereunder shall be binding
and conclusive on all persons for all purposes. No member of the Committee shall
be liable to any person for any action taken or omitted in connection with the
interpretation or administration of this Plan unless attributable to his own
willful misconduct or lack of good faith.
12. Liability of the Corporation. Nothing contained in the Plan or the
Participation Agreement shall constitute the creation of a trust or other
fiduciary relationship between Corporation and Participant or between
Corporation and Beneficiary or any other person. Corporation shall not be
considered a trustee by reason of the existence of this Plan or the
Participation Agreement.
13. Funding Assets. Corporation reserves the absolute right in its sole and
exclusive discretion either to fund the obligations of Corporation undertaken by
this Plan or to refrain from funding the same, and to determine the extent,
nature and method of such funding. Should Corporation elect to fund this Plan,
in whole or in part, through life insurance contracts, Corporation shall be the
owner and beneficiary of each such policy. Corporation reserves the absolute
right, in its sole discretion, to terminate any such contract, as well as any
other funding program, at any time, either in whole or in part. Title to, and
beneficial ownership of, any assets which Corporation may earmark to pay the
benefits hereunder shall at all times remain in Corporation. Participant and
Participant's Beneficiary shall not have any property interest whatsoever in any
specific assets of Corporation. Nothing set forth in this Plan shall cause such
assets to be treated as anything but the general assets of Corporation. If
Corporation purchases life insurance contracts on the life of the Participant,
Participant agrees to sign any applications that may be reasonably required for
that purpose and to undergo any medical examination or tests which may be
reasonably necessary in such regard.
14. Claims Procedure. In the event that benefits under paragraph 3 or 5 of this
Plan are not paid to the Participant or his Beneficiary, and such person feels
entitled to receive them, a claim shall be made in writing to the Plan
Administrator within 60 days from the date payments are not made. Such claim
shall be reviewed by the Plan Administrator. If the claim is denied, in full or
in part, the Plan Administrator shall provide a written notice within 90 days
setting forth the specific reasons for denial, specific reference to the
provisions of this Plan upon which the denial is based, and any additional
material or information necessary to perfect the claim, if any. Also, such
written notice shall indicate the steps to be taken if a review of the denial is
desired. If a claim is denied and a review is desired, the Participant shall
notify the Plan Administrator in writing within 60 days (and a claim shall be
deemed denied if the Plan Administrator does not take any action with the
aforesaid 90 day period). In requesting review, the Participant may review this
Plan or any documents relating to it and submit any written issues and comments
the Participant may feel appropriate. In its sole discretion, the Plan
Administrator shall then review the claim and provide a written decision within
60 days. This decision likewise shall state the specific reasons for the
decision and shall include specific reference to specific provisions of this
Plan on which the decision is based.
15. Governing Law. This Plan shall be governed by the laws of the Commonwealth
of Pennsylvania.
16. Language. Whenever used in this Plan, the singular number shall include the
plural, the plural the singular and the use of any gender shall include all
genders.
17. Effective Rate. This Plan shall be effective beginning April 20, 1993.
C-COR ELECTRONICS, INC.
By: Scott C. Chandler
President & CEO
Approved by C-COR Board of Directors on April 20, 1993.
April 20,1993
APPENDIX A
NUMBER OF EARLY RETIREMENT
YEARS PRIOR TO FACTOR
NORMAL RETIREMENT
DATE
1 0.9145
2 0.8372
3 0.7670
4 0.7034
5 0.6456
6 0.5932
7 0.5454
8 0.5020
9 0.4625
10 0.4264
11 0.3935
12 0.3635
13 0.3360
14 0.3108
15 0.2877
16 0.2665
17 0.2471
18 0.2292
19 0.2127
20 0.1976
21 0.1836
22 0.1707
23 0.1588
24 0.1479
25 0.1377
26 0.1283
27 0.1196
28 0.1116
29 0.1041
30 0.0972
31 0.0908
32 0.0848
33 0.0793
34 0.0741
35 0.0694
SOURCE: MODIFIED UP-84 MORTALITY TABLE AT 6.25%
April 20, 1993
APPENDIX B
NUMBER OF YEARS BENEFIT
LESS THAN TEN YEARS PERCENTAGE
OF PARTICIPANT STATUS
1 90%
2 80%
3 70%
4 60%
5 50%
SOURCE: BASED ON A STRAIGHT-LINE PERCENTAGE REDUCTION
April 20, 1993
APPENDIX C
NUMBER OF
YEARS AFTER LATE RETIREMENT
NORMAL RETIREMENT FACTOR
DATE
1 1.0817
2 1.1714
3 1.2700
4 1.3787
5 OR MORE 1.4986
SOURCE: MODIFIED UP-84 MORTALITY TABLE AT 6.25%