UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
AMENDMENT NO. 1
(Mark One)
(x) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 27, 1996
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________________ to
__________________
Commission File Number 1-8544
APL LIMITED
(Exact name of registrant as specified in its charter)
Delaware 94-2911022
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1111 Broadway
Oakland, CA 94607
(Address of principal executive offices)
Registrant's telephone number: (510) 272-8000
______________
TABLE OF CONTENTS
Page
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS
OF THE REGISTRANT 3-5
Item 11. EXECUTIVE COMPENSATION 5-12
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT 12-14
Item 13. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS 14
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND
REPORTS ON FORM 8-K 15
SIGNATURES 16
EXPLANATORY NOTE: The Annual Meeting of Stockholders
originally scheduled for May 14, 1997 will be rescheduled to a
later date in order to solicit proxies for stockholder approval
of the Agreement and Plan of Merger, dated as of April 13,
1997, among APL Limited (the "company"), Neptune Orient Lines
Ltd and Neptune U.S.A., Inc., pursuant to which each
outstanding share of common stock of the company will be
converted into the right to receive $33.50 in cash, Neptune
U.S.A., Inc. will merge with and into the company, and the
company will become a wholly-owned subsidiary of Neptune Orient
Lines Ltd. A detailed proxy statement describing the proposed
merger and other business to be presented at the meeting will
be mailed prior to the rescheduled meeting. The company's Form
10-K, filed on March 5, 1997, incorporated certain information
from the proxy statement by reference and is hereby amended to
include the full text of that information.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following sets forth certain information with respect
to the directors of the company:
Charles S. Arledge (Age 61). Mr. Arledge became a director of
the company in July 1983. Mr. Arledge is a partner of Signal
Ventures, a private investment firm. He was Vice President,
Strategic Planning of Aerojet-General Corporation from 1986 to
1989.(a)(c)
John H. Barr (Age 67). Mr. Barr became a director of the
company in July 1983. He is a real estate developer of
industrial and mobile home parks.(b)(d)
Tully M. Friedman (Age 55). Mr. Friedman was elected as a
director of the company in April 1994. He is Chairman and
Chief Executive Officer of Tully M. Friedman & Company, LLC, a
San Francisco-based investment firm. He was a general partner
of Hellman & Friedman until March 31, 1997. Mr. Friedman is
currently on the Advisory Board of Tevecap, S.A., the Boards of
Directors of Levi Strauss & Co., Mattel, Inc., McKesson
Corporation, and a member of the Board of Representatives of
Falcon Holding Group, L.P.(a)
Joji Hayashi (Age 57). Mr. Hayashi became the Chairman of the
Board of Directors in October 1995. He was President and Chief
Executive Officer of American President Lines, Ltd. from May
1990 until October 1995. He has been a director of the company
since July 1983.
F. Warren Hellman (Age 62). Mr. Hellman became a director of
the company in November 1988. He is a general partner of Hellman
& Friedman, a San Francisco-based investment firm. Mr. Hellman
is also a director of Williams-Sonoma, Inc., Levi Strauss & Co.,
Franklin Resources, Inc., MobileMedia Corporation and numerous
private companies.(b)(d)
Toni Rembe (Age 60). Ms. Rembe has been a director of the
company since October 1993. She has been a partner in the law
firm of Pillsbury Madison & Sutro LLP since 1971, where she is
managing partner of the firm's Tax Group and a former member of
the Executive Committee. She is also a director of Pacific
Telesis Group, Potlatch Corporation and Transamerica
Corporation, and
a Trustee and the President of both the van Loben Sels
Foundation and the American Conservatory Theater.(a)(c)
Timothy J. Rhein (Age 56). Mr. Rhein was named President and
Chief Executive Officer of the company in October 1995. He
served as the company's President and Chief Operating Officer
from July 1995 to October 1995. Prior to that, Mr. Rhein was
President and Chief Executive Officer of APL Land Transport
Services, Inc. from May 1990 to October 1995 and President and
Chief Operating Officer of American President Lines, Ltd. from
January 1987 to May 1990. He has been a director of the
company since July 1990.(d)
Forrest N. Shumway (Age 70). Mr. Shumway became a director of
the company in August 1987. He retired as Vice Chairman of the
Board of Allied-Signal Inc. in December 1987, a position he had
held since 1985. Mr. Shumway is also a director of
Transamerica Corporation, The Clorox Company and Aluminum
Company of America.(b)(c)(d)
G. Craig Sullivan (Age 57). Mr. Sullivan was elected as a
director of the company in April 1994. Mr. Sullivan has been
the Chairman of the Board and Chief Executive Officer of The
Clorox Company since July 1, 1992. Prior to that, he was The
Clorox Company's Vice Chairman and Chief Executive Officer (May-
June 1992) and Group Vice President (1989-1992).(b)(d)
Barry L. Williams (Age 52). Mr. Williams became a director of
the company in July 1983. He is President of Williams Pacific
Ventures Inc., a venture capital and real estate investment and
consulting firm. He was President of C.N. Flagg Power Inc., a
construction services company, from July 1988 until its sale in
July 1992, and a Managing Principal of Bechtel Investments,
Inc. until May 1987. He is also a director of Tenera, Inc.,
CH2M Hill Companies, Ltd., The USA Group, Inc., PG&E
Corporation, Simpson Manufacturing Company, Inc. and Newhall
Land and Farming Co., Inc.(a)(c)
(a) Member of the Audit Committee
(b) Member of the Compensation Committee
(c) Member of the Nominating Committee
(d) Member of the Executive Committee
The following sets forth certain information with respect
to the remaining executive officers of the company:
John G. Burgess (Age 52). Mr. Burgess was elected Executive
Vice President of the company in May 1995. He has also served
as Executive Vice President of American President Lines, Ltd.
since December 1992. Prior to that, he served as Executive
Vice President and Chief Operating Officer American President
Lines, Ltd. from May 1990 to November 1992.
Maryellen B. Cattani (Age 53). Ms. Cattani was elected
Executive Vice President of the company in March 1995. She has
also served as General Counsel and Secretary of the company
since July 1991 and as a Senior Vice President from July 1991
to March 1995. Prior to joining the company, she was a partner
in the law firm of Morrison & Foerster from 1989 to 1991.
L. Dale Crandall (Age 55). Mr. Crandall was elected Executive
Vice President and Chief Financial Officer of the company in
March 1995 and Treasurer of the company in September 1995.
Prior to that, Mr. Crandall was managing partner of Price
Waterhouse's Los Angeles office since 1990.
Michael Goh (Age 47). Mr. Goh was elected Executive Vice
President of the company in April 1996. Prior to that, he
served as Senior Vice President of the company from March 1996
to April 1996, Senior Vice President of American President
Lines, Ltd. from January 1996 to March 1996 and in various
capacities with APL Land Transport Services, Inc., including
Senior Vice President from May 1992 to July 1994 and Vice
President from May 1989 to April 1992.
James S. Marston (Age 63). Mr. Marston was elected Executive
Vice President and Chief Information Officer of the company in
May 1995. He served as Senior Vice President and Chief
Information Officer of the company from September 1987 to May
1995.
William J. Stuebgen (Age 49). Mr. Stuebgen has served as Vice
President, Controller of the company since October 1990.
The executive officers of the company are elected by the
Board of Directors. Each officer holds office until his or her
successor has been duly elected and qualified, or until the
earliest of his or her death, resignation, retirement or
removal by the Board.
ITEM 11. EXECUTIVE COMPENSATION
Information is set forth below as to the compensation
awarded to, earned by or paid to the Chief Executive Officer of
the company, each of the four most highly compensated executive
officers of the company other than the Chief Executive Officer,
and the company's directors, for services rendered to the
company and its subsidiaries during the last three fiscal
years.
Summary Compensation Table
Annual Compensation Long-Term Compensation
Other Awards All
Annual Restricted Securities Other
Name and Compen- Stock Underlying Compen-
Principal Position Year Salary Bonus(1) sation Awards(2) Options sation
John G. Burgess 1996 $276,025 $138,120 $ 0 $2,092 0 $17,215
Executive Vice 1995 $275,810 $ 63,740 $ 0 $2,793 17,500 $17,263
President 1994 $275,810 $119,915 $8,283 $ 0 15,000 $17,093
L. Dale Crandall 1996 $365,200 $180,834 $ 0 $12,460 0 $ 94,320
Executive Vice (4)1995 $275,305 $ 92,837 $ 0 $ 3,129 80,000 $430,080
President, Chief
Financial Officer
and Treasurer
Joji Hayashi 1996 $365,040 $172,142 $ 0 $ 0 0 $23,257
Chairman of 1995 $365,040 $ 92,797 $ 0 $ 0 0 $23,214
the Board 1994 $365,040 $177,382 $12,220 $ 0 32,000 $22,977
James S. Marston 1996 $291,200 $131,084 $ 0 $ 0 0 $18,722
Executive Vice 1995 $291,200 $ 67,296 $ 0 $ 0 0 $19,466
President and Chief 1994 $291,200 $134,050 $12,961 $ 0 22,000 $19,170
Information Officer
Timothy J. Rhein 1996 $525,000 $324,097 $ 0 $56,159 60,000 $31,500
President and Chief 1995 $393,265 $155,000 $ 0 $13,629 30,000 $23,283
Executive Officer 1994 $365,040 $177,382 $13,809 $ 0 32,000 $22,847
(1)
Under the Company's 1995 Stock Bonus Plan, certain of the
company's executives and key employees can elect to receive
all or any part of their bonuses in the form of phantom
shares. Messrs. Burgess, Crandall and Rhein designated that
$11,993, $70,822 and $319,087, respectively, of their
bonuses payable with respect to 1996, and $15,918, $17,829
and $77,490, respectively, of their bonuses payable with
respect to 1995, be credited to them in the form of phantom
shares.
(2) The amounts shown with respect to 1995 and 1996 represent
the value of premium phantom shares received under the 1995 Stock
Bonus Plan. Participants who elect to receive their bonuses in
the form of phantom shares receive a premium in the form of
additional phantom shares equal to 17.6% of the shares
representing their converted bonuses. Premium phantom shares
vest in two years, subject to earlier vesting in the event the
participant's employment terminates due to death or disability or
in the event of a change in control with respect to the company.
The term "change of control" has the same meaning in this plan as
in the 1989 Stock Incentive Plan. If the participant's
employment terminates in less than two years for any reason other
than death or disability, the premium phantom shares are
forfeited. Premium phantom shares carry a right to dividend
equivalents, which are converted into additional phantom shares.
The unvested premium phantom shares held by Messrs. Burgess,
Crandall and Rhein as of the end of fiscal 1996 had values of
$3,109, $3,483 and $15,170, respectively, based on the closing
price of the company's Common Stock on the New York Stock
Exchange on December 27, 1996. The premium phantom shares
accrued in fiscal 1996 were not credited to participants until
February 14, 1997. Accordingly, these units had no fiscal 1996
year-end value.
(3) During fiscal year 1996, the Company paid premiums on life
insurance for Messrs. Burgess, Crandall, Hayashi and Marston in
the amount of $653, $1,076, $1,355 and $2,068, respectively; made
matching contributions under the company's SMART Plan for
Messrs. Burgess, Crandall and Rhein in the amount of $4,780,
$9,000 and $9,000, respectively; made matching contributions
under the company's 1995 Deferred Compensation Plan for Messrs.
Burgess, Crandall, Hayashi, Marston and Rhein of $11,782,
$12,912, $21,902, $16,654, and $22,500, respectively; and forgave
$71,332 in principal and accrued interest on a loan made to Mr.
Crandall in 1995 in connection with the sale of his home in
Southern California, pursuant to his employment agreement.
(4)Mr. Crandall joined the company on March 31, 1995, and his
compensation is for the period from March 31 to December 29,
1995.
Information is provided below with respect to all stock
option grants to and exercises by the five executive officers
named in the Summary Compensation Table during fiscal year
1996.
Option Grants in Last Fiscal Year
Individual Grants
Number of % of Total
Securities Options Grant
Underlying Granted to Exercise Date
Options Employees InPrice perExpiration Present
Name Granted(1)(2) Fiscal Year Share(1)
Date Value(3)
John G. Burgess 0 0% N/A N/A 0
L. Dale Crandall 0 0% N/A N/A 0
Joji Hayashi 0 0% N/A N/A 0
James S. Marston 0 0% N/A N/A 0
Timothy J. Rhein 10,000 6.8% $22.375 7/26/03 $ 81,209
50,000 34.0% $22.375 7/26/03 $406,047
(1) All options were granted with an exercise price at or above
fair market value. During fiscal year 1996, no stock
appreciation rights were awarded to any executive officer.
(2)These options become exercisable in installments based upon
achievement of specified targets for appreciation in the
value of the company's Common Stock. See "Compensation
Committee Report on Executive Compensation." On July 27,
1998, the options will vest as to 60% of the covered shares
if not otherwise vested, and on July 27, 2002, the options
will vest as to the remaining 40% if not otherwise vested.
In addition, the options will vest in full in the event of
the employee's death or disability or upon a "change in
control" of the company. As defined in the 1989 Stock
Incentive Plan, a "change in control" of the company occurs
when: (a) any person, entity or group becomes the beneficial
owner of at least 20% of the company's outstanding Common
Stock or of the combined voting power of the company's
outstanding securities, except by reason of (i) repurchases
of securities by the company or its employee benefit plans
and (ii) certain business combinations in which (1) the
company's prior stockholders continue to own a majority of
the successor entity's common stock and voting power in
substantially the same proportions as before the
combination, (2) no person or entity beneficially owns 20%
or more of the successor's common stock or voting power
except to the extent that such ownership existed before the
combination, and (3) the successor's board of directors
consists of at least a majority of the "Incumbent Board," as
described below; (b) the "Incumbent Board" ceases to
constitute a majority of the company's Board of Directors;
(c) a business combination occurs that does not meet the
requirements summarized in clause (ii) above; or (d) the
company's stockholders approve a complete liquidation or
dissolution of the company. As defined in the plan, the
"Incumbent Board" consists of those individuals who were
directors of the company on January 28, 1997, together with
any other directors whose election or nomination was
approved by a majority of the directors then comprising the
"Incumbent Board," subject to certain exceptions.
(3)"Grant Date Present Values" were determined based upon a
model that uses the Black-Scholes option pricing
methodology. These are estimated values based upon the
following arbitrary assumptions: stock price volatility
calculated using the daily stock prices for the 18-month
period prior to the valuation date; a risk-free interest
rate curve based on the
interbank borrowing rate; exercise on the option expiration
date; and a future dividend yield of 1.72%. The actual
value, if any, that an executive ultimately realizes upon
the exercise of an option will be the difference between the
market price of the underlying shares and the option
exercise price on the date of exercise.
Aggregated Option Exercises in Last Fiscal Year and
Fiscal Year-End Option Values
Number of Value of
Securities Underlying Unexercised
Unexercised In-the-Money
Options at Fiscal Options at
Shares Year-End Fiscal Year-End
Acquired on Value Exercisable/ Exercisable/
Name Exercise Realized Unexercisable
John G. Burgess 0 $0 34,580/ 55,000$144,045/$ 55,000
L. Dale Crandall 0 $0 0/ 80,000$ 0/$ 80,000
Joji Hayashi 0 $0 38,168/ 80,000$265,080/$ 80,000
James S. Marston 0 $0 23,300/ 55,000$164,707/$ 55,000
Timothy J. Rhein 0 $0 15,251/170,000$ 73,078/$140,000
Pension Plan Table
The following table illustrates the approximate retirement
income which may become payable under the APL Limited
Retirement Plan (the "Retirement Plan") (including the
supplemental benefits under the company's Excess-Benefit Plan
and 1995 Supplemental Executive Retirement Plan) to an employee
credited with the number of years of service shown, assuming
that benefits commence at age 65 and are payable in the normal
form (generally a joint and 50% survivor benefit).
Annual Retirement Income
5-Year Average Years of Service
Annual Compensation 15 20 25 30 35
$400,000 $120,000 $160,000 $180,000 $200,000 $200,000
$500,000 $150,000 $200,000 $225,000 $250,000 $250,000
$600,000 $180,000 $240,000 $270,000 $300,000 $300,000
$700,000 $210,000 $280,000 $315,000 $350,000 $350,000
$800,000 $240,000 $320,000 $360,000 $400,000 $400,000
$900,000 $270,000 $360,000 $405,000 $450,000 $450,000
The amounts shown in the table are subject to adjustment
for Social Security benefits. The credited years of service of
the executive officers of the company named in the Summary
Compensation Table are as follows: Mr. Burgess, 11 years; Mr.
Crandall, 2 years; Mr. Hayashi, 27 years; Mr. Marston, 9 years;
and Mr. Rhein, 29 years. The compensation covered by the
Retirement Plan, Excess-Benefit Plan and 1995 Supplemental
Executive Retirement Plan was $339,980, $458,037, $457,837,
$358,496 and $680,000 for Messrs. Burgess, Crandall, Hayashi,
Marston and Rhein, respectively, during 1996. Covered
compensation for any year is equal to the sum of the employee's
annual salary rate on June 1 and any cash bonus that the
employee receives or defers during the year. However, before
June 1, 1997, the compensation on which retirement income would
be determined is different from such amount because benefits
accruing before that date are based upon a five-year average of
the employee's compensation. Retirement benefits are
supplemented for Mr. Crandall under the terms of his employment
agreement. See "Employment Contracts, Termination of
Employment and Change-in-Control Arrangements and Certain
Transactions."
Compensation of Directors
Directors who are not employees of the company receive an
annual retainer of $24,000, a fee of $1,000 per meeting when
attending Board or stockholder meetings and an additional fee
of $850 for each committee meeting attended. The Chairpersons
of the company's Audit and Compensation Committees each receive
an annual retainer of $3,000. All directors are reimbursed for
their reasonable expenses incurred in connection with the
company's business. A director may elect to defer receipt of
compensation earned as a director under a deferred compensation
plan and may elect to receive such compensation in the form of
Common Stock or phantom shares under the 1995 Stock Bonus Plan.
Under the Retirement Plan for Directors of APL Limited
(the "Retirement Plan for Directors"), directors who have never
been employees of the company are eligible to receive an
unfunded benefit if they complete five years of service as a
director or if they attain age 70 or become permanently and
totally disabled while serving as a director. The benefit is
equal to the amount of the annual retainer paid by the company
to its directors, as adjusted during the period that the
retired director is receiving the benefit, and is paid for a
period equal to the lesser of 10 years or one year for each
full or partial year of service as a director. A reduced
benefit for a director's surviving spouse is provided in the
event that the director dies before retirement or dies after
retirement but before expiration of his or her benefit. In
addition, the Retirement Plan for Directors provides for
mandatory retirement of a director not later than the date of
the annual meeting of stockholders of the company coinciding
with or next following his or her 70th birthday (72nd birthday
for individuals who were directors on September 15, 1992).
Under the 1992 Directors' Stock Option Plan, directors who
have never been company employees receive options to purchase
10,000 shares of Common Stock upon election or appointment to
the Board of Directors, and all non-employee directors receive
annual grants of options to purchase 2,000 shares of Common
Stock. These options have exercise prices equal to the fair
market value of the company's Common Stock on the grant date.
They vest in three equal annual installments and, if held for
at least six months, vest in full upon the non-employee
director's retirement, death or disability or a change in
control of the company. The term "change in control" has the
same definition in this plan as in the 1989 Stock Incentive
Plan (see above). As provided in the plan, Ms. Rembe and
Messrs. Arledge, Barr, Friedman, Hellman, Shumway, Sullivan and
Williams each received options to purchase 2,000 shares of
Common Stock in fiscal year 1996.
Employment Contracts, Termination of Employment and Change-in-
Control Arrangements and Certain Transactions
Messrs. Burgess, Crandall, Hayashi, Marston and Rhein are
employed at annual salaries of not less than $303,860,
$376,160, $380,000, $299,940 and $600,000, respectively, under
employment agreements that expire when they attain age 65.
These agreements may be terminated by either party for any
reason upon 30 days' notice. While the agreements remain in
effect, these individuals are entitled to receive their
salaries and to participate in the employee benefit and
compensation plans maintained by the company. If the company
terminates their employment without cause, specified
percentages of
their base salaries (150% for Messrs. Burgess and Marston,
155% for Messrs. Crandall and Hayashi and 160% for Mr. Rhein),
and participation in all insurance and similar plans, will
continue for three years (but not beyond age 65) and the
applicable period will be counted as employment with the
company for purposes of determining the termination date of
options, vesting under the company's executive compensation
programs, including the 1989 Stock Incentive Plan and 1995
Stock Bonus Plan, and calculation of a supplemental retirement
benefit. In the event of such termination, Mr. Hayashi would
also be credited with service for purposes of calculating the
supplemental retirement benefit for a period during which he
was employed by the company in a seagoing position. These
agreements with Messrs. Burgess, Crandall, Hayashi, Marston and
Rhein also provide that the company will compensate them for
any amounts that they do not receive as a result of any
provision in any plan or agreement limiting payments which are
nondeductible by the company for federal income tax purposes on
account of Internal Revenue Code provisions relating to golden
parachute payments.
As of January 28, 1997, the company entered into
additional employment agreements with the officers named in the
Summary Compensation Table. Under these agreements, each of
these officers has agreed to remain employed by the company for
a specified period after a change in control of the company
(each, an "Employment Period"). The agreements also protect
these officers against certain material reductions in
compensation, benefits, titles and duties, and against material
changes in their office locations, following a change in
control. So long as each such officer remains employed with
the company during his Employment Period, he will be entitled
to receive an amount equal to his annual salary (annualized
from his highest monthly salary during the 12 months prior to
the change of control) and annual bonus, and certain other
benefits. In addition, if such officer resigns for good reason
(including a resignation due to a material reduction in
compensation, benefits, title or duties or a material
relocation and a resignation within a specified time period)
during his Employment Period, or such officer's employment is
terminated other than for cause or disability during that
period, then the company will be obligated to pay a lump-sum
amount equal to up to three times such officer's annual base
salary and bonus plus the value of certain retirement benefits
and other payments foregone due to the termination or
resignation. Such officer will also be entitled to continued
employee benefits for a specified period. If it is determined
that any payment made to an officer pursuant to his agreement
would subject him to an excise tax pursuant to the Internal
Revenue Code, the company will also be obligated to pay the
officer an additional amount sufficient to put him in the same
after-tax position that he would have been in, had no excise
tax been imposed. The term "change in control" has the same
meaning in these agreements as in the 1989 Stock Incentive
Plan, as described above.
The company has also agreed to provide Mr. Crandall with
an unfunded supplemental retirement benefit equal to the
difference between the amount of the pension benefits actually
paid under the company's qualified and non-qualified defined
benefit pension plans and the amount of a hypothetical pension
benefit. If Mr. Crandall's employment terminates after he
reaches age 65, the hypothetical pension benefit will be equal
to 40% of his highest five-year average annual compensation
(subject to adjustment for Social Security benefits). If his
employment terminates before he reaches age 65, the
hypothetical pension benefit will be equal to the greater of
(i) $12,500 per
month (subject to cost-of-living increases not to exceed
three percent per year) or (ii) 40% of his highest five-year
average annual compensation, prorated based upon his length of
service with the company (subject to adjustment for Social
Security benefits). This hypothetical benefit for termination
prior to age 65 will also be reduced by the amount of any
retirement benefit that Mr. Crandall receives from his prior
employer. If Mr. Crandall is not otherwise eligible for
retiree health insurance coverage from the company when his
employment terminates, the company will provide coverage
comparable to the coverage then being provided to its retiring
employees. Mr. Crandall will be required to contribute to the
cost of this coverage on the same basis as retiring employees.
To assist him in the sale of his home in Southern California,
the company made a loan in the amount of $400,000 to
Mr. Crandall in fiscal 1995 which bears interest at the prime
rate and is payable in annual installments of $50,000 over
eight years commencing in March 1996. Payment of the first
installment and accrued interest was forgiven in 1996, and
payment of the next four installments and accrued interest will
be forgiven as they become due, provided Mr. Crandall continues
to be employed by the company (or is treated as being so
employed under his employment agreement), or in the event that
his employment terminates due to disability.
Long-Term Incentive Program
The performance stock options discussed above will vest
based upon the company's achievement of the stock price targets
set forth below.
Vested
Percentage of
Time Period Stock Price Target Original Option
July 27, 1996 to $33.563 33 1/3%
July 26, 1997 $36.919 66 2/3%
$42.513 100 %
July 27, 1997 to $35.800 33 1/3%
July 26, 1998 $38.038 66 2/3%
$42.513 100 %
July 27, 1998 none 60 %
July 27, 1998 to Total return on the company's
July 26, 2002 Common Stock 100 %
(appreciation plus dividends) since date
of grant is
at least 100% total return of median
company in S&P 500 Index for
same period.
July 27, 2002 none 100 %
Before July 27, 1998, no portion of the options will vest
unless the total return on the company's Common Stock from the
date of grant to the potential vesting date has been at least
75% of the total return of the median company in the S&P 500
Index for the same period. This minimum requirement applies in
addition to the targets in the table above. These options will
also vest in full upon a "change in control" of the company, as
defined above.
Performance Graph
The following graph compares the cumulative total return
on the company's Common Stock with a comparable return on the
indicated indices for the last five fiscal years. The total
return on the company's Common Stock is determined based on the
change in the price of the Common Stock and assumes
reinvestment of all dividends and an original investment of
$100. The total returns on the indicated indices also assume
reinvestment of dividends and an original investment in each
index of $100 on December 27, 1991.
Total Return to Stockholders
December 27 December 25 December 31 December 30 December 29 December 27
1991 1992 1993 1994 1995 1996
APL Limited 100 95.40 142.63 127.80 118.28 123.57
S&P
Transportation100 108.66 129.34 108.44 151.10 172.90
S&P 500 Index 100 107.62 118.46 120.03 165.13 203.05
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Stock Ownership of Directors and Executive Officers
The following table sets forth, as of December 31, 1996,
the number of shares of Common Stock beneficially owned by the
directors and nominees named above, the executive officers
listed in the Summary Compensation Table and the directors and
executive officers of the company as a group. Except as
otherwise indicated, and subject to applicable community
property laws, each person has sole investment and voting power
with respect to the shares shown. Ownership information is
based upon information furnished by the respective individuals
and contained in the company's records.
Number of
Common Shares
Beneficially Percent of
Name Owned(1) Class
John G. Burgess 38,351 *
L. Dale Crandall 0 *
Joji Hayashi 44,682 *
James S. Marston 36,826 *
Timothy J. Rhein 15,251 *
Charles S. Arledge 19,914 *
John H. Barr 45,784 *
Tully M. Friedman 2,036,030(2) 8.29%
F. Warren Hellman 2,042,697(2) 8.31%
Toni Rembe 12,999 *
Forrest N. Shumway 19,999 *
G. Craig Sullivan 8,332 *
Barry L. Williams 4,528 *
All directors and executive officers
as a group (17 persons including
the 13 named above) 2,343,855 9.45%
* Less than 1%.
(1)Includes shares of Common Stock which may be acquired
pursuant to the exercise of options exercisable on December
31, 1996 or within 60 days thereafter, as follows: Mr.
Burgess, 34,580; Mr. Hayashi, 38,168; Mr. Marston, 23,300;
Mr. Rhein, 15,251; Mr. Arledge, 13,999; Mr. Barr, 13,999;
Mr. Friedman, 7,332; Mr. Hellman, 13,999; Ms. Rembe, 11,999;
Mr. Shumway, 13,999; Mr. Sullivan, 7,332; Mr. Williams,
3,333; and all directors and executive officers as a group,
244,451. Also includes shares attributable to accounts
under the company's SMART Plan as of December 31, 1996, as
follows: Mr. Hayashi, 1,717; Mr. Marston, 990; and all
directors and executive officers as a group, 6,189.
(2)Includes an aggregate of 2,028,698 shares of Common Stock
held by Hellman & Friedman Capital Partners, a California
Limited Partnership, Hellman & Friedman Capital Partners
International (BVI), APC Partners, L.P. and H&F Redwood
Partners, L.P. Messrs. Hellman and Friedman are directors
and officers of each of the corporate general partners of
such partnerships. Messrs. Hellman and Friedman each
beneficially owns 50% of the stock of each such corporation
and share investment and voting power with respect to the
shares of Common Stock held by the above-named partnerships.
Messrs. Hellman and Friedman disclaim beneficial ownership
of these shares. The address of Mr. Hellman is c/o Hellman
& Friedman, One Maritime Plaza, 12th Floor, San Francisco,
CA 94111. Mr. Friedman's address is c/o Tully M. Friedman &
Company, LLC, One Maritime Plaza, Suite 1000, San Francisco,
CA 94111.
Each of the following stockholders has advised the company
under the rules of the Securities and Exchange Commission that
it is the beneficial owner of more than 5% of the Common Stock
of the company. The following information is furnished as of
December 31, 1996 with respect to any person known by the
company to be the beneficial owner of more than 5% of the
outstanding shares of the Common Stock of the company. Except
as otherwise indicated, the named beneficial owner has sole
voting and investment power with respect to the shares shown.
Certain Beneficial Ownership of Securities
Number of Shares Percent of
Name and Address of Beneficial Owner Beneficially Owned Class(1)
Hellman & Friedman Capital Partners(2) 1,263,996
APC Partners, L.P.(2) 653,833
8.25%
Hellman & Friedman Capital Partners
International (BVI)(2) 68,227
H&F Redwood Partners, L.P.(2) 42,642
Franklin Resources 3,118,165 12.68%
777 Mariner's Island Blvd.
San Mateo, CA
Pioneering Management 1,278,100 5.20%
60 State Street
Boston, MA
Primecap Management 1,599,800 6.50%
225 South Lake Avenue
Pasadena, CA
Trimark Investment Management 2,340,000 9.52%
One First Canadian Place
Ontario, Canada
(1) All percentages are given as of March 17, 1997, based on
24,590,789 shares of Common Stock outstanding.
(2)The voting and dispositive powers with respect to the shares
of Common Stock held by Hellman & Friedman Capital Partners,
a California Limited Partnership, Hellman & Friedman Capital
Partners International (BVI), APC Partners, L.P., and H&F
Redwood Partners, L.P. (the "H&F Group") are indirectly
controlled by Hellman & Friedman Capital Management, Inc.,
H&F Capital Management International, Inc., APC
Administrators, Inc. and H&F Redwood Investors, Inc.,
respectively. A trust of which Mr. F. Warren Hellman is a
trustee and a beneficiary and a trust of which Mr. Tully M.
Friedman is a trustee and a beneficiary each owns 50% of the
stock of each such corporation. As a result, Messrs.
Hellman and Friedman could be deemed to beneficially own
100% of the 2,028,698 shares of the Common Stock of the
company owned by the H&F Group. Messrs. Hellman and
Friedman disclaim such beneficial ownership. The address of
Mr. Hellman is c/o Hellman & Friedman, One Maritime Plaza,
12th Floor, San Francisco, CA 94111. Mr. Friedman's address
is c/o Tully M. Friedman & Company, LLC, One Maritime Plaza,
Suite 1000, San Francisco, CA 94111.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The law firm of Pillsbury Madison & Sutro LLP, of which
Ms. Rembe is a partner, provides legal services to the company.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
ON FORM 8-K
(a) Documents filed as part of this report:
3.Exhibits required by Item 601 of Regulation S-K
The following documents are exhibits to this Form 10-K
Exhibit No. Description of Document
2.2* Agreement and Plan of Merger, dated as of April 13, 1997,
by and among Neptune Orient Lines Ltd, Neptune U.S.A.,
Inc. and APL Limited incorporated by reference to the
identically numbered exhibit to the Form 8-K (File No. 1-
8544), dated April 13, 1997 and filed on April 14, 1997.
10.71 Employment Agreement between the company and John G.
Burgess dated January 28, 1997.**
10.72 Employment Agreement between the company and Maryellen B.
Cattani dated January 28, 1997.**
10.73 Employment Agreement between the company and L. Dale
Crandall dated January 28, 1997.**
10.74 Employment Agreement between the company and Michael Goh
dated January 28, 1997.**
10.75 Employment Agreement between the company and Joji Hayashi
dated January 28, 1997.**
10.76 Employment Agreement between the company and James S.
Marston dated January 28, 1997.**
10.77 Employment Agreement between the company and Timothy J.
Rhein dated January 28, 1997.**
* Incorporated by Reference
** Denotes management contract or compensatory plan.
Pursuant to Item 601 (b)(4)(iii)(A) of Regulation S-K,
certain instruments defining the rights of holders of the long-
term debt of the company and its consolidated subsidiaries have
not been filed because the amount of securities authorized
under each such instrument does not exceed ten percent of the
total assets of the company and its subsidiaries on a
consolidated basis. A copy of any such instrument will be
furnished to the Commission upon request.
(b) Reports on Form 8-K during the fourth quarter:
No current report on Form 8-K was filed during the fourth
quarter of the fiscal year for which this report on Form
10-K is filed.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended, the registrant has
duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
APL LIMITED (Registrant)
By /s/William J. Stuebgen
William J. Stuebgen
Vice President,
Controller and
Chief Accounting Officer
April 18, 1997