SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-K
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES AND EXCHANGE ACT OF 1934
For the fiscal year ended September 29, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ___________ to __________
Commission file number 0-20686
UNIROYAL TECHNOLOGY CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 65-0341868
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
602 Sarasota Quay
Sarasota, Florida 34236
(Address of principal executive offices) (Zip Code)
(941) 362-1808
(Registrant's telephone number, including area code)
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, par value $.01 per share
(Title of class)
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 (29,405 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 January 3, 2003, the aggregate market value of the voting stock held by
non-affiliates of the registrant (assuming for this purpose that all directors
and officers of the registrant and all holders of 5% or more of the common stock
of the registrant are affiliates) was approximately $84,236 based on the closing
price for the stock on January 3, 2003.
APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes X No
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As of December 31, 2002, 30,362,888 shares of the registrant's common stock were
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
TABLE OF CONTENTS
Part I........................................................................3
Item 1. Business..........................................................3
Item 2. Properties.......................................................18
Item 3. Legal Proceedings................................................18
Item 4. Submission of Matters to a Vote of Security Holders..............19
Part II......................................................................19
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters..........................................................19
Item 6. Selected Financial Data..........................................20
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operation.............................................20
Item 7A. Quantitative and Qualitative Disclosures about Market Risks......20
Item 8. Financial Statements and Supplementary Data......................20
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.........................................20
Part III.....................................................................20
Item 10. Directors and Executive Officers of the Registrant...............20
Item 11. Executive Compensation...........................................22
Item 12. Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters..................................26
Item 13. Certain Relationships and Related Transactions...................28
Part IV......................................................................28
Item 14. Controls and Procedures..........................................28
Item 15. Exhibits, Financial Statement Schedule and Reports on Form 8-K...28
As previously reported, on August 25, 2002, Uniroyal Technology
Corporation (the "Company" or "Uniroyal") and its subsidiaries filed for
reorganization under Chapter 11 of Title 11 of the U.S. Code (the
"Bankruptcy Code") in the U.S. Bankruptcy Court for the District of Delaware
(the "Bankruptcy Court") (the "Bankruptcy Case").
On October 18, 2002, the Company submitted to the Securities and
Exchange Commission (the "SEC") a written request for permission to file
monthly operating reports which it is required to file with the Bankruptcy
Court and the U.S. Trustee in connection with its Bankruptcy Case (the
"Monthly Reports"), during the pendency of the Bankruptcy Case in lieu of
the periodic reports that it would otherwise file pursuant to the Securities
Exchange Act of 1934 (the "1934 Act"). The Monthly Reports provide an
ongoing record of assets and liabilities of the Company's estate, together
with a record of cash receipts and disbursements. On or about December 6,
2002, the SEC advised the Company that it had not satisfied the requirements
in order for the SEC to grant the Company's request because the average
daily trading activity in the Company's common stock since the commencement
of the Bankruptcy Case exceeded the SEC's volume limitations.
During the period prior to filing the Bankruptcy Case, the Company
considerably downsized its headquarters operations and reduced its workforce
and administrative staff. Because of the Company's lack of resources in
terms of personnel and funds to pay the costs of preparing such periodic
reports, the devotion by the Company of substantially all of its accounting
resources to the preparation and filing of documents required for the
Bankruptcy Case and the ongoing demands on the time of the remaining
accounting personnel following the commencement of the Bankruptcy Case and
further post-petition reductions in work force, the Company does not have,
and does not anticipate having in the near future, the resources necessary
to assemble the data to be included in, review, finalize and file its
periodic reports required under the 1934 Act. For the foregoing reasons, the
Company is unable to file its reports required under the 1934 Act and
intends to file this Annual Report on Form 10-K without financial
information and then to file under cover of Form 8-K its Monthly Reports
with the SEC in lieu of filing its periodic reports. The Company has not yet
filed any Monthly Reports with the Bankruptcy Court but expects to file such
Monthly Reports for the first three months following the commencement of the
Bankruptcy Case in the near future and to file such Monthly Reports with the
SEC shortly thereafter. The Company notes that the daily trading activity in
its common stock has decreased considerably from the levels prior to
December 31, 2002.
Item 1. Business
General
Uniroyal Technology Corporation is engaged in the development,
manufacture and sale of a broad range of materials employing compound
semiconductor technologies and plastic vinyl coated fabrics used in the
production of consumer, commercial and industrial products.
We are organized into two primary business segments: Compound
Semiconductor and Optoelectronics and Coated Fabrics.
The Compound Semiconductor and Optoelectronics segment
manufactures wafers, epitaxial wafers and package-ready dies used in
high brightness light emitting diodes ("HB-LEDs"), switches and
transformers.
The Coated Fabrics segment manufactures a wide selection of
plastic vinyl coated fabrics for use in furniture and seating
applications. The Coated Fabrics business is a leading supplier in its
marketplace because of its ability to provide specialized materials
with performance characteristics customized to the end user and its
ability to provide technical and customer support in connection with
the use of its products in manufacturing.
On November 9, 2001, we closed the sale of certain net assets
of our Uniroyal Adhesives and Sealants division ("UAS"), which
comprised our Specialty Adhesives segment. The Specialty Adhesives
segment manufactured and marketed liquid adhesives and sealants for use
in the commercial roofing industry and in the manufacture of furniture,
truck trailers and recreational vehicles.
The price of our common stock fell below $1.00 per share in
January 2002. On February 22, 2002, the Nasdaq Stock Market, Inc.
notified us that our stock was subject to delisting from the Nasdaq
National Market if it did not close at $1.00 per share for a minimum of
10 trading days prior to May 23, 2002. On June 18, 2002, our common
stock was transferred to the Nasdaq SmallCap Market. Our stock was
delisted by the Nasdaq SmallCap Market on September 5, 2002 and now
trades in the Pink Sheets.
For more information, see "Certain Business Risks and Uncertainties."
Uniroyal is a Delaware corporation. Our principal executive
offices are located at 602 Sarasota Quay, Sarasota, Florida 34236, and
our telephone number at that address is (941) 362-1808.
Current Developments
On August 25, 2002, Uniroyal and all of its subsidiaries filed
voluntary petitions for reorganization under Chapter 11 of the United
States Bankruptcy Code (the "Bankruptcy Code") in the United States
Bankruptcy Court for the District of Delaware (the "Bankruptcy Court").
Uniroyal and its subsidiaries (jointly referred to as the "Debtors")
are continuing to manage their properties and operate their businesses
as "debtors-in-possession" in the ordinary course under the
jurisdiction of the Bankruptcy Court and in accordance with the
applicable provisions of the Bankruptcy Code.
In connection with its filing for reorganization, the Debtors
entered into a Debtor-in-Possession Financing Agreement with The CIT
Group/Business Credit, Inc. The agreement provides for a credit line of
up to $15 million for the Debtors based on certain borrowing base
limitations. As of January 3, 2003, the Debtors had drawn down
approximately $8.4 million under the agreement under interim orders
issued by the Bankruptcy Court. As of January 3, 2003, we had
approximately $342,000 of availability under this agreement. The
Bankruptcy Court has not yet issued a final order approving the
agreement.
Uniroyal's subsidiary, Sterling Semiconductor, Inc.
("Sterling"), entered into an Asset Purchase Agreement as of November
27, 2002 to sell substantially all of its assets to Dow Corning
Enterprises, Inc. for a purchase price of $11.2 million, subject to
certain adjustments. On or about December 20, 2002, the Bankruptcy
Court issued an order approving bidding procedures for the sale of
Sterling's assets. Uniroyal anticipates that the Bankruptcy Court will
issue an order approving the sale of Sterling's assets to Dow Corning
Enterprises or a higher bidder on January 16, 2003. The sale is
important to the Debtors to provide liquidity for their reorganization.
Uniroyal has retained an investment banker and plans to file a
Plan of Reorganization ("Plan"). Uniroyal can give no assurances as to
the value, if any, current common shareholders will receive once the
Plan is approved by the Bankruptcy Court. Investment in Uniroyal's
stock involves considerable risk and subject to a total loss of an
investor's investment. The Company discourages investment in the common
stock.
Coated Fabrics Segment
General
The Coated Fabrics segment's Naugahyde(R) vinyl coated fabrics
products have various performance characteristics. We sell these
products in various markets depending upon the performance
characteristics required by end users. For example, for recreational
products which are used outdoors, such as boats, personal watercraft,
golf carts and snowmobiles, the segment sells a Naugahyde(R) product
that is designed primarily for weatherability. It also manufactures
Naugahyde(R) products that can withstand powerful cleaning agents,
which are widely used in hospitals and other medical facilities. Flame
and smoke retardant Naugahyde(R) vinyl coated fabrics are used for a
variety of commercial and institutional furniture applications,
including hospital furniture and school bus seats.
The segment has a state-of-the-art production line which
produces coated fabrics in more than 600 colors and 45 textures and
patterns.
Competition
The Coated Fabrics segment competes with respect to its
Naugahyde(R) products primarily on the basis of style, color, quality
and technology as well as price and customer service through technical
support and performance characteristics which meet customer needs.
The segment's principal competitors with respect to its
Naugahyde(R) products are:
o C. G. Spradling & Company;
o Morbern, Inc.; and
o OMNOVA Solutions.
Marketing
A predecessor of the segment introduced the segment's coated
fabrics products more than 50 years ago. Today, we market these
products under several nationally recognized brand names, including
NAUGAHYDE(R), NAUGASOFT(TM), NAUGAFORM(R) and DURAN(R). We market our
coated fabrics with a protective top finish under the name
BEAUTYGARD(R), and our flame and smoke retardant coated fabrics under
the brand name FLAME BLOCKER(R).
We market and sell our coated fabrics primarily through 12
national sales representatives, who are employees of Uniroyal, and
independent sales representatives. In the contract furniture
manufacturing market, we generally sell our coated fabrics through our
sales representatives and to distributors who sell to furniture
manufacturers, upholsterers and fabric distributors.
Representative customers and end users of the Coated Fabrics
segment include:
o Bombardier, Inc.;
o Club Car, Inc.;
o Deere & Co.;
o Freightliner Corporation;
o Harley-Davidson, Inc.;
o Kawasaki Heavy Industries, Inc.;
o Lazy-Boy, Incorporated;
o Michigan Seat Co.;
o Monaco Coach Corporation;
o Okamoto USA, Inc.;
o Polaris Industries, Inc.;
o Shelby Williams Industries, Inc.; and
o Yamaha Motor Corporation, USA.
Manufacturing Facilities
We manufacture our coated fabrics products at our facility
located in Stoughton, Wisconsin. The segment ceased manufacturing at
the facility in Port Clinton, Ohio on November 11, 1998. We own both of
these facilities. The Port Clinton facility is subject to a contract of
sale.
Trademarks and Patents
We own and control patents, trade secrets, trademarks, trade
names, copyrights and confidential information, which in the aggregate
are material to our business. We are not materially dependent, however,
upon any single patent or trademark. We have several trademarks that
have wide recognition and are valuable to our business. Among the
trademarks that are of material importance to us are NAUGAHYDE(R),
NAUGAFORM(R) and DURAN(R). Our trademarks are registered in the United
States and in a number of foreign jurisdictions with terms of
registration expiring generally between 2003 and 2016. No trademark
registration of material importance to us expired during fiscal 2002.
We intend to renew in a timely manner all those trademarks that are
required for the conduct of our business. We also hold 4 patents
(either current or pending) in the United States and Canada.
We use the trade name and trademark "Uniroyal" pursuant to a
license from Uniroyal Goodrich Licensing Services, Inc.
Raw Materials
The principal raw materials for the segment's coated fabrics
are casting paper, knit fabric, PVC plastic resins and plasticizers. We
have multiple sources for these materials.
Compound Semiconductor and Optoelectronics Segment
General
Compound semiconductors have emerged as an enabling technology
to meet the complex requirements of today's highly advanced electronic
devices. Many compound semiconductor materials have unique physical
properties that allow electrons to move at least four times faster
through them than through silicon-based devices. Advantages of compound
semiconductor devices over silicon devices include:
o higher operating speeds;
o lower power consumption;
o higher heat tolerance;
o reduced noise and distortion; and
o light emitting and detecting optoelectronics properties.
Compound semiconductors are composed of two or more elements
and usually consist of a metal, such as gallium, aluminum or indium,
and a non-metal, such as arsenic, phosphorous or nitrogen. The
resulting compounds include gallium arsenide, indium phosphide, gallium
nitride, indium antimonide and indium aluminum phosphide. The
performance characteristics of compound semiconductors are dependent on
the composition of these compounds. Many of the unique properties of
compound semiconductor materials are achieved by layering different
compound semiconductor materials in the same device. This layered
structure creates an optimal configuration to permit the emission or
detection of light and the detection of magnetic fields.
Although compound semiconductors are more expensive to
manufacture than silicon-based devices, electronics manufacturers are
increasingly integrating compound semiconductor devices into their
products in order to achieve higher performance applications targeted
for a wide variety of markets. These include solid-state lighting,
wireless communications and consumer and automotive electronics.
HB-LEDs are solid-state compound semiconductor devices that
emit light when direct current is applied. The advantages of HB-LEDs
over conventional light sources include:
o Efficiency. LEDs efficiently convert electricity to light
and require approximately 90% less energy than
conventional light sources.
o Longevity. LEDs have an expected life span of 50 times
longer than incandescent bulbs. LEDs also operate on low
voltage and qualify for UL low-wattage certification.
o Design Flexibility. LEDs can be arranged in virtually an
infinite number of configurations, making the use of
lines, points, fields and curves possible. LEDs can be
easily programmed to create subtle changes in color and
quality of light.
o Range of Colors. LEDs produce high-purity colored light
that can be mixed to create millions of colors.
SiC-based devices offer significant advantages over competing
products made from silicon, gallium, arsenide, sapphire and other
materials for certain electronic applications. SiC is a third
generation compound semiconductor material possessing unique physical
and electrical properties that far exceed those of silicon and GaAs,
the first and second generation materials, respectively. Electronic
devices made from this material can operate more efficiently and at
much higher temperatures than devices made from other common
semiconductor materials. SiC devices operate at much higher voltage
levels and allow power devices to be significantly smaller while
carrying power levels the same as or greater than comparable silicon
and GaAs-based devices. SiC is an excellent thermal conductor compared
to other commercially available semiconductor materials. This feature
enables SiC-based devices to operate at higher power levels and still
dissipate the excess heat generated. SiC has an extremely high melting
point and is one of the hardest known materials in the world. As a
result, SiC can withstand much higher electrical pulses and is much
more radiation-resistant than silicon or GaAs. SiC is also extremely
resistant to chemical breakdown and can operate in harsh environments.
Current product offerings include:
o Gallium nitride (GaN)-based blue, green and ultraviolet
LED products;
o 4H and 6H poly type SiC substrates in diameters of 50.8mm
(2-inch) and a recent introduction of 76.2mm (3-inch)
6H substrates;
o SiC substrates with epitaxial thin film coatings; and
o custom lighting products.
Future product offerings on a commercial basis include:
o semi-insulating SiC wafers useful in the manufacture of
microwave devices and
o SiC devices.
Competition
The semiconductor industry is intensely competitive and is
characterized by rapid technological change, price erosion and intense
foreign competition.
In the LED marketplace, our primary U.S. competitor is Cree,
Inc., a leading developer and manufacturer of compound semiconductor
materials and electronic devices, and currently the market leader in
the segment. Other competitors include:
o Hewlett Packard Corporation;
o LumiLeds Lighting, a joint venture between Agilent
Technologies and Philips Lighting;
o Nichia Chemical Industries, Ltd.;
o Siemens AG's subsidiary, Osram;
o Toshiba Corporation; and
o Toyoda Gosei Co. Ltd.
In addition, AXT, Inc., Lucky Goldstar and other Asian-based companies
have announced intentions to begin production of blue and green LEDs.
In the custom lighting arena, traditional light source
manufacturers are the main competition. Solid-state lighting, however,
will probably displace incandescent, fluorescent, neon and other
sources over time. Three multinationals, Philips Lighting, General
Electric and Osram, control 80% to 90% of the worldwide market. Each
has created joint ventures to address solid-state lighting.
In the SiC marketplace, Cree, Inc. is currently the dominant
supplier of SiC wafers, commanding approximately 90% of the market.
SiCrystal, a German-based company that entered the wafer market in 1998
and has limited capacity, produces low commercial volumes and presently
lacks epitaxy capability. Sixon Ltd, a development stage company
affiliated with the Kyota Institute of Technology in Japan, has been
active commercially for two years and has limited production
capability. II-VI, Inc., a U.S.-based company, produces a variety of
compound semiconductor crystals and has announced its intentions to
enter the SiC market.
Marketing
We market our optoelectronics products generally through an
executive sales approach, relying predominantly on the efforts of
senior management and a small direct sales staff for domestic product
sales. We believe that this approach is preferable in view of our
current customer base and product mix, particularly since the
production of lamp and display products incorporating LED chips is
concentrated among a relatively small number of manufacturers. Sales in
Japan, Taiwan, Hong Kong and Europe are primarily made by distributors
and independent sales representatives.
Customers for epitaxy and device dies include distributors
with value-added chip processing and testing capabilities, packagers on
a stand-alone basis and integrated packagers. Customers for packaged
components include original equipment manufacturers and various
suppliers.
Initial efforts have been focused on EPI wafers and die, while
introduction of packaged components has begun only in the first quarter
of fiscal 2002. New representatives and distributors have been signed
on for this effort. In addition, efforts to partner with other LED
producers who lack a die and/or epitaxial capability are ongoing. A
partner would provide the economical solution to package our die into
lamps and provide our customers a high brightness die (blue, green,
yellow and red) at a cost-effective price. It would also be our intent
to market the finished product in that producer's home market through
their distribution channel. This marketing effort would allow us to
obtain greater visibility in the market for our lamps.
In North America, we sell SiC substrates and epitaxy directly
to the customers and track customer needs through a database designed
for this purpose. In Europe, we are represented by a European
distributor based in England, and with offices in Germany and Sweden.
The distributor sells the company's SiC wafers in addition to other
compound semiconductor wafers manufactured in the United Kingdom. The
distributor has been in the semiconductor business since the late
1950s.
In Japan, we established a sales presence in 1997 for our SiC
substrates through a representation agreement with a Japanese
distributor with sales offices in Tokyo and Osaka. The distributor has
a 41-year track record in selling U.S. and European materials to the
Japanese electronics industry on behalf of Fortune-500 firms as well as
small producers of specialty products. We also sell through
representatives in Korea and Taiwan.
Manufacturing Facility
We operate a 77,000 square foot, state-of-the-art facility in
Tampa, Florida, for the development and manufacture of HB-LEDs. The
infrastructure and capital equipment were completed in two phases with
a total investment of approximately $54 million. The second phase of
construction, completed in August 2001, provided the infrastructure and
necessary space for future capacity expansion. Additional reactors for
blue, green and UV HB-LEDs will be staged in as required to further
increase the production capacity. The estimated cost of machinery for
this additional capacity is approximately $25.0 million. This is a
leased facility.
Our primary SiC facility, an ISO-9002 certified facility which
manufactures SiC and performs research and development, and executive
offices are located in Danbury, Connecticut. Sterling also subleases a
portion of Uniroyal Optoelectronics' Tampa, Florida facility for SiC
epitaxy. Both facilities are leased. We consolidated our former
Sterling, Virginia facility and the Danbury, Connecticut facility in
November, 2002.
The Company's NorLux Corp. subsidiary operates a 12,000 square
foot facility with a state-of-the-art 2,000 square foot manufacturing
section dedicated to HB-LED assembly. The facility houses an
engineering design and development lab, administrative offices and
warehouse to support the supply of custom and standard products. The
production environment provides for the appropriate atmosphere to
manufacture microelectronic products and LED assemblies. The facility
supports high-quality prototype, pre-production and stocking builds as
well as continuous pilot production in low- to mid-volumes. This is a
leased facility.
Intellectual Property
Currently, our SiC substrate, epitaxy and device production
and research development processes are not patented. As a general rule,
we believe that disclosing process technology in a patent could
potentially help competitors gain insight into our processes in a way
that could adversely affect the benefits of the patent. Therefore, we
retain our processes as trade secrets and seek to maintain them, along
with other trade secrets, in confidence through appropriate
non-disclosure agreements with employees and others to whom the
information needs to be disclosed. However, we may in the future patent
certain discrete elements of our processes in cases in which the
benefits of doing so outweigh the risk of disclosing process
information. We cannot give assurances that non-disclosure agreements
or any future patents will provide meaningful protection against
unauthorized or use of our proprietary technology know-how, or that it
will not otherwise become known or independently discovered by others.
Raw Materials
We depend on a limited number of suppliers for certain raw
materials, components and equipment used in the Optoelectronics
business, including certain key materials and equipment used in our
wafering, polishing, epitaxial deposition, device fabrication and
device test processes. In addition, the availability of these
materials, components and equipment to us is dependent in part on our
ability to provide our suppliers with accurate forecasts of our future
requirements. We endeavor to maintain ongoing communication with our
suppliers to guard against interruptions in supply and, to date,
generally have been able to obtain adequate supplies from our existing
sources. Most of our suppliers demand cash in advance payments for
their products and services. From time-to-time cash issues have led to
periodic disruptions in the purchase of raw materials leading to
production delays. However, any significant interruption in the supply
of these key materials, components or equipment could have a
significant adverse effect on our operations.
General
Employees
The Company has approximately 318 employees, including
approximately 156 hourly wage employees and 162 salaried employees. We
believe that at the present time our workforce is adequate to conduct
our business and that our relations with employees are generally
satisfactory, although there have been no salary increases in the last
twelve months and certain senior level employees have voluntarily
reduced their base salaries. Also, cash constraints have delayed
payments under our health care plans for active employees and retirees.
The Company is a party to one collective bargaining agreement.
At our coated fabrics manufacturing facility located in Stoughton,
Wisconsin, approximately 112 hourly employees are covered by an
agreement expiring on September 17, 2003 with Local 7-1207 of P.A.C.E.
International Union (formerly known as the United Paperworkers
International Union).
Research and Development
We are engaged in research and development programs designed
to develop new products, manufacturing processes, systems and
technologies and to enhance our existing products and processes.
Research and development is conducted within each of our business
segments. Investment in research and development has been an important
factor in establishing and maintaining our competitive position in many
of the specialized niche markets in which our products are marketed.
We currently employ a staff of approximately 40 individuals in
connection with our research and development efforts. The individuals
include chemists, process development engineers and laboratory
technicians and are responsible for new product development and
improvement of production processes.
Environmental Matters
The Company is subject to a wide range of federal, state and
local laws and regulations designed to protect the environment and
worker health and safety. The Company's management emphasizes
compliance with these laws and regulations. The Company has instituted
programs to provide guidance and training and to audit compliance with
environmental laws and regulations at Company owned or leased
facilities. The Company's policy is to accrue environmental and
cleanup-related costs of a non-capital nature when it is probable both
that a liability has been incurred and that the amount can be
reasonably estimated. The ultimate amounts of environmental liabilities
cannot be precisely determined and estimates of such liabilities made
by management, after consultation with internal and external
environmental consultants, require assumptions about future events due
to a number of uncertainties including the extent of contamination, the
appropriate remedy, the financial viability of other potentially
responsible parties and the final apportionment, if any, among the
potentially responsible parties. The estimates do not take into
consideration any potential increases in disposal costs but are based
upon current cost estimates. Since the ultimate outcome of these
matters may differ from the estimates used in our assessment to date,
the recorded liabilities will be periodically evaluated, as additional
information becomes available, to ascertain whether the accrued
liabilities are adequate. The Company does not reduce its estimated
obligations for proceeds from other potentially responsible parties or
insurance companies. Proceeds, if any, would be recorded as an offset
to environmental expense when received.
The Company may become subject to claims relating to certain
environmental matters. The operations of predecessor companies and
certain of their affiliates produced waste materials that, prior to
1980, were disposed of at some 36 known unregulated sites throughout
the United States. After 1980, waste disposal was limited to sites
permitted under federal and state environmental laws and regulations.
If any of the disposal sites are found to be releasing hazardous
substances into the environment, under current federal and state
environmental laws, the appropriate company might be subject to
liability for clean-up and containment costs.
Pursuant to a 1992 settlement agreement with the United States
Environmental Protection Agency (the "EPA"), the United States
Department of the Interior and the States of Wisconsin and Indiana (the
"EPA Settlement Agreement") in the event that the United States,
Wisconsin or Indiana asserts a claim against the Company for response
costs associated with pre-petition disposal activities at certain
sites, the governmental party will be entitled to pursue its claim in
the ordinary course, and the Company will be entitled to assert all of
its defenses. However, if and when the Company is held liable, and if
the liability is determined to arise from pre-petition disposal
activities of its predecessors, the Company may pay the liability in
discounted "plan dollars" (i.e., the value of the consideration that
the party asserting such claim would have received if the liability
were treated as a general unsecured claim under the Plan of
Reorganization of our predecessors). Such payment may be made in cash
or in the Company's stock, or a combination thereof, at the Company's
option. Claims arising from real property owned by the Company are not
affected by the EPA Settlement Agreement.
Coated Fabrics Segment
In October 2001, the EPA sent the Company a General Notice and
Notice of Potential Liability concerning the Chemical Recovery Systems
site in Elyria, Ohio. While a unit of Uniroyal, Inc. in Port Clinton,
Ohio is alleged to have sent hazardous materials to the site between
1974 and 1981, the Company's records do not support the allegation. The
Company does not have sufficient information to ascertain the level, if
any, of its liability in respect to the site. In any event, if the
Company is found to have liability in connection with the site, such
liability will be subject to the terms of the EPA Settlement Agreement.
Specialty Adhesives Segment
In connection with the July 1996 acquisition of a
manufacturing facility in South Bend, Indiana for the UAS operations,
the Company assumed costs of remediation of soil and ground water
contamination. Under the terms of the agreement for the purchase of the
facility, the Company placed $1,000,000 in an escrow account to be used
for the remediation. The $1,000,000 represented the total estimate of
the clean-up cost over a five to seven year period and was treated as a
part of the purchase price of the facility. As of December 31, 2002,
the Company had spent approximately $817,000 of related remediation
costs and had approximately $213,000 left in the original environmental
escrow account. In accordance with the asset purchase agreement for the
sale of UAS on November 9, 2001, $300,000 of the sales proceeds were
placed in another environmental escrow account pursuant to the terms of
an environmental escrow agreement with the purchaser of UAS.
Upon the sale of UAS in November 2001, the Company recorded
the $566,000 in the environmental escrow accounts as both an asset and
a liability within the net liabilities of the discontinued operations
of UAS. The Company has received a cost opinion from an independent
environmental consulting and engineering firm that estimated the
remediation costs for the South Bend facility at $416,000 over a
four-to-five year period. Because of the uncertainty regarding the
ultimate costs, the Company will not reverse any portion of the
environmental liability established for the South Bend facility until
such point in time that the funds from the environmental escrow
accounts, in excess of the anticipated remediation costs, are released
to the Company, which release is subject to certain conditions. We have
agreed with the purchaser of UAS that we will transfer the
environmental escrow accounts to such purchaser, which will assume
responsibility for completing the remediation.
High Performance Plastics Segment
During the second quarter of Fiscal 2000, the Company
established a $3,843,000 reserve for future environmental remediation
costs of the Stamford, Connecticut, Hackensack, New Jersey and
Stirling, New Jersey facilities used by HPPI in their operations, which
reserve was included within the discontinued operations of HPPI. The
majority of this environmental reserve ($3,693,000) related to a
portion of the Stamford real property acquired by the Company in
October of 1995. Prior to the purchase of this property in 1995, the
previous owner had performed extensive environmental remediation and
the Company received an environmental report showing lack of further
contamination. In connection with the sale of HPPI in February of 2000,
the Company conducted an environmental assessment in compliance with
the laws of the State of Connecticut. The environmental assessment
indicated that the portion of the Stamford real estate that was
acquired by the Company in 1995 was contaminated with total petroleum
hydrocarbons, DDT and other pesticide chemicals. The initial reserve
for the Stamford environmental remediation costs, established in the
second quarter of fiscal 2000, was based upon cost estimates from
independent environmental contractors. The Company spent approximately
$1,557,000 on remediation costs for the Stamford property during fiscal
2000 and charged the expenditures against the reserve established
above. At the end of fiscal 2000, the Company adjusted its
environmental reserves for HPPI (primarily as it related to the
Stamford facility) to $1,070,000. The adjustment was included with the
gain on the disposition of discontinued operations and was based upon
the revised estimates from third party environmental consultants. The
remediation cost estimate was reduced primarily as a result of a
revised remediation methodology which was ultimately approved by the
Connecticut Department of Environmental Protection in November of 2001.
The Company spent approximately $50,000 of remediation costs on the
Stamford real property during Fiscal 2001 and $494,000 during fiscal
2002. As of September 29, 2002, the Company estimated, and has reserved
for, environmental remediation costs at the Stamford facility of
approximately $253,000 which are expected to be incurred over the next
28 years. The purchaser of HPPI has deferred taking title to this
portion of the Stamford real property until it is comfortable with the
environmental condition of the property.
The balance of the HPPI environmental reserve established in
February of 2000 ($150,000) related to the Hackensack, New Jersey real
property and the Stirling, New Jersey property (which is currently
listed as held-for-sale). The reserves were established at that time
based upon ongoing environmental assessments at those facilities and
trust agreements entered into with the State of New Jersey. Remediation
expenditures for Hackensack and Stirling were minimal during fiscal
2000. The Company spent approximately $43,000 between the two
facilities on remediation efforts during fiscal 2001 and $5,000 during
fiscal 2002. At September 29, 2002, the Company (through both internal
and external environmental consultants) has estimated that the
remediation costs for both facilities approximates $250,000 which is
expected to be incurred over a three-year period. The Company's
remediation cost estimates for the Hackensack real property are based
on the fact that the majority of the original contamination identified
has naturally biodegraded and the remaining contamination has resulted
from an upstream property, the owner of which will be responsible for
the clean-up. The purchaser of HPPI has deferred taking title to the
Hackensack real property until it is comfortable with the environmental
condition of the property.
Based on information available as of September 29, 2002, the
Company believes that the costs of known environmental matters have
been adequately provided for; however, given the current liquidity
crisis of the Company, any additional environmental matters could have
a material adverse effect on the Company's operations, cash flows or
financial position.
History of Company
Our businesses trace their origins to a number of predecessor
companies which eventually were reorganized pursuant to the Third
Amended Plan of Reorganization under the Bankruptcy Code for Polycast
Technology Corporation and Its Affiliated Debtors (as subsequently
modified, the "Plan of Reorganization").
In October and November 1991, the predecessor companies filed
voluntary bankruptcy petitions with the United States Bankruptcy Court
for the Northern District of Indiana, South Bend Division (the "Indiana
Bankruptcy Court") for relief under the Bankruptcy Code.
The Plan of Reorganization of the predecessor companies was
substantially consummated on September 27, 1992. Pursuant to the Plan
of Reorganization, each of the predecessor companies transferred
substantially all of its assets to a newly organized subsidiary with a
name that was substantially identical to the name of its corresponding
predecessor company. In exchange, each of these new subsidiaries,
including Polycast Technology Corporation ("Polycast"), Uniroyal
Engineered Products, Inc. ("UEP"), Uniroyal Adhesives and Sealants
Company, Inc. ("UAS") and Ensolite, Inc. ("Ensolite"), agreed to assume
certain of the liabilities of its corresponding predecessor company. In
addition, we issued, or authorized for issuance, 19,150,000 (post-split
basis) shares of our common stock to holders of allowed unsecured
claims against the predecessor companies and 50 shares of Series A
Preferred Stock and 50 shares of Series B Preferred Stock to the
Pension Benefit Guaranty Corporation (the "PBGC"). The Indiana
Bankruptcy Court issued its final decree closing the bankruptcy of the
predecessor companies on September 27, 1999.
On June 7, 1993, in conjunction with the public offering of
our 11.75% Senior Secured Notes, we merged each of our operating
subsidiaries into the Company. In May 1993 we called and repurchased
from the PBGC all of the outstanding shares of Series A Preferred Stock
and 15 shares of the outstanding shares of Series B Preferred stock. On
December 16, 1996, we repurchased an additional 15 shares of such
stock, and on February 4, 1997, we repurchased the remaining 20 shares
of preferred stock. On November 13, 1997, the Company, certain officers
and directors of the Company and certain other persons purchased all of
the common stock held by the PBGC.
On April 14, 1998, we transferred all of the assets of our
High Performance Plastics segment to a newly created wholly-owned
subsidiary, High Performance Plastics, Inc. (HPPI). On that same day
HPPI, as borrower, entered into a credit agreement with Uniroyal HPP
Holdings, Inc. (the parent of HPPI and a wholly-owned subsidiary of the
Company), the Company and certain banks, including Fleet National Bank.
The credit agreement provided, among other things, for the borrowing by
HPPI of an aggregate principal amount of up to $110.0 million. On April
14, 1998, HPPI paid approximately $95.0 million to the Company. We used
this amount to defease the outstanding 11.75% Senior Secured Notes due
June 1, 2003, including the call premium and interest accrued through
the call date and to pay down its revolving line of credit with CIT.
The redemption of the outstanding Senior Secured Notes was completed by
June 1, 1998 at a call premium of 4.41%.
On February 28, 2000, we sold substantially all of the assets
of our High Performance Plastics segment to Spartech Corporation.
On November 9, 2001, we sold substantially all of the assets
of our Specialty Adhesives business to Royal Adhesives and Sealants,
LLC.
On August 25, 2002, we filed for reorganization under Chapter
11 of the United States Bankruptcy Code.
Certain Business Risks and Uncertainties
General
The Company discourages investment in its common stock.
Note that although we have agreed to sell our Sterling
Semiconductor, Inc. subsidiary, as discussed in "Item 1. Business
"Current Developments," such sale is subject to outstanding conditions.
Therefore, a number of the risks described below continue to describe
aspects of the operations of this subsidiary.
We Are Experiencing a Liquidity Crisis.
On August 25, 2002, Uniroyal and all of its subsidiaries filed
voluntary petitions for reorganization under Chapter 11 of the United
States Bankruptcy Code (the "Bankruptcy Code") in the United States
Bankruptcy Court for the District of Delaware (the "Bankruptcy Court").
Uniroyal and its subsidiaries (jointly referred to as the "Debtors")
are continuing to manage their properties and operate their businesses
as "debtors-in-possession" in the ordinary course under the
jurisdiction of the Bankruptcy Court and in accordance with the
applicable provisions of the Bankruptcy Code.
In connection with its filing for reorganization, the Debtors
entered into a Debtor-in-Possession Financing Agreement with The CIT
Group/Business Credit, Inc. The agreement provides for a credit line of
up to $15 million for the Debtors based on certain borrowing base
limitations. As of January 3, 2003, the Debtors had drawn down
approximately $8.4 million under the agreement under interim orders
issued by the Bankruptcy Court. As of January 3, 2003, we had
approximately $342,000 of availability under this agreement. The
Bankruptcy Court has not yet issued a final order approving the
agreement.
Uniroyal's subsidiary, Sterling Semiconductor, Inc.
("Sterling"), entered into an Asset Purchase Agreement as of November
27, 2002 to sell substantially all of its assets to Dow Corning
Enterprises, Inc. for a purchase price of $11.2 million, subject to
certain adjustments. On or about December 20, 2002, the Bankruptcy
Court issued an order approving bidding procedures for the sale of
Sterling's assets. Uniroyal anticipates that the Bankruptcy Court will
issue an order approving the sale of Sterling's assets to Dow Corning
Enterprises or a higher bidder on January 16, 2003. The sale is
important to the Debtors to provide liquidity for their reorganization.
Uniroyal has retained an investment banker and plans to file a
Plan of Reorganization ("Plan"). Uniroyal can give no assurances as to
value, if any, current common shareholders will receive once the Plan
is approved by the Bankruptcy Court. Investment in Uniroyal stock is at
high risk and subject to total loss of capital. The Company discourages
investment in the common shares.
We experienced net operating losses and negative cash flows
during fiscal 2001 and fiscal 2002 as we continued our transition to
the high technology arena. Investment spending related to start-up
costs and capital expenditures at our subsidiaries, Uniroyal
Optoelectronics, LLC and Sterling Semiconductor, Inc., have been
significant, and our liquidity became strained in early fiscal 2002 and
remains strained.
Our strategy to provide liquidity to fund our operations
requires us to reduce our operating costs and to sell certain assets
and close the sale of our Sterling Semiconductor subsidiary (which is
under contract). We have taken steps to reduce operating costs,
including layoffs of employees and reduction of salaries of officers.
Even if we successfully complete these steps, we will need to obtain
additional financing, which could require selling other assets at
unfavorable terms or borrowing funds which might not be available or
might only be available to us at terms we would not deem acceptable.
Our failure to implement our liquidity strategy successfully would have
a material adverse effect on our financial condition and results of
operations.
The Market Price of Our Common Stock Has Fluctuated Widely and Could
Be of No Value in the Future.
The market price of Uniroyal's common stock has been and may
continue to be subject to wide fluctuations. Factors affecting the
stock price may include:
o variations in our operating results and those of our
competitors from quarter to quarter;
o changes in earnings estimates by securities analysts;
o market conditions in the compound semiconductor and
coated fabrics industries;
o cash flow constraints;
o significant sales of our securities; and
o general economic and market conditions.
Uniroyal's stock price has fluctuated widely. For example,
between January 1, 2000 and September 29, 2002, the high and low sale
prices of our common stock fluctuated between approximately a high of
$36.44 and a low of $0.02 per share. The prices have been adjusted to
give effect to the 100% stock dividend declared on March 10, 2000 for
stockholders of record on March 20, 2000. The current market price of
our common stock may not be indicative of future market prices, and
investors may not be able to sustain or increase the value of their
investment in the common stock. The stock currently trades in the Pink
Sheets. At the close of trading on January 3, 2003, the price per share
of common stock was $0.005. It is possible that stockholders will
receive no value in the Company's reorganization.
Our future results of operations involve a number of
significant risks and uncertainties. Factors that could affect our
future operating results and cause actual results to vary materially
from expectations include, but are not limited to, dependence on key
personnel, product obsolescence, ability to generate consistent sales,
ability to finance research and development, government regulation,
technological innovations and acceptance, competition, reliance on
certain vendors and credit risks. Our historical sales results and our
current backlog cannot ensure that we will be able to achieve the
higher sales levels required for profitability. If our sales do not
increase significantly from historic levels or such increases are not
enough, we will have to further reduce our expenses and capital
expenditures to maintain cash levels necessary to sustain our
operations. Our future success will depend on increasing our revenues
and reducing our expenses to enable us to reach profitability.
The Market Price of, and the Efficiency of the Trading Market for, Our
Common Stock Could Decline as a Result of Lack of Equity Value in our
Reorganization.
Our shares of common stock are traded in the Pink Sheets and
are thinly traded.
Our stock may become subject to the so-called penny stock
rules that impose restrictive sales practice requirements on
broker-dealers who sell those securities.
The Markets in Which We Compete Are Highly Competitive. An Increase in
Competition Would Limit Our Ability to Maintain and Increase Our Market
Share.
The coated fabrics, compound semiconductor and optoelectronics
industries, in general, are highly competitive. Many of our competitors
have substantially greater resources than we do. Oversupply and intense
price competition periodically characterize the coated fabrics
industry.
We believe that our reputation for high quality products,
innovative technology and strong customer technical service permits us
to compete successfully in the markets that we presently serve.
However, we may not be able to continue to compete successfully in such
markets or to apply such strengths successfully to additional markets.
In addition, new entrants may come into the markets that we serve.
Companies may offer products based on alternative technologies and
processes that may be superior to ours in price, performance or
otherwise.
We have devoted and will be required to continue to devote
significant funds and technologies to the Compound Semiconductor and
Optoelectronics segment to develop and enhance its products. If the
Compound Semiconductor and Optoelectronics segment is unsuccessful in
developing and marketing its products, our business, financial
condition and results of operations may be materially and adversely
affected.
Our Continued Success Depends in Part on Our Ability to Attract and
Retain Certain Key Personnel.
The continued success of Uniroyal depends in part on our
ability to attract and retain certain key personnel, including
scientific, operational and management personnel. For example, some of
the equipment used in the production of HB-LED and SiC products must be
modified before it is put to use, and only a limited number of
employees possess the expertise needed to perform these modifications.
Furthermore, the number of individuals with experience in the
production of HB-LED and SiC products is limited. Accordingly, the
future success of the Compound Semiconductor and Optoelectronics
segment depends in part on retaining those individuals who are already
employees.
The competition for attracting and retaining employees,
especially scientists for the Compound Semiconductor and
Optoelectronics segment, is intense. Because of this intense
competition for these skilled employees, we may be unable to retain our
existing personnel or attract additional qualified employees in the
future. Specifically, we may experience increased costs in order to
attract and retain skilled employees. Failure to retain skilled
employees and attract additional qualified employees could have a
material adverse effect on our business, financial condition and
results of operations.
Protecting Our Trade Secrets and Securing Patent Protections Are
Critical to Our Ability to Compete Effectively for Business.
Trade Secrets. Our success and competitive position depend on
protecting our trade secrets and other intellectual property.
Particularly with respect to the business of our Compound Semiconductor
and Optoelectronics segment, our strategy is to rely more on trade
secrets than patents to protect our manufacturing and sales processes
and products. Reliance on trade secrets is only an effective business
practice insofar as trade secrets remain undisclosed and a proprietary
product or process is not reverse engineered or independently
developed. We take certain measures to protect our trade secrets,
including executing non-disclosure agreements with our employees,
customers and suppliers. If parties breach these agreements or the
measures we take are not properly implemented, we may not have an
adequate remedy. Disclosure of our trade secrets or reverse engineering
of our proprietary products, processes or devices could materially and
adversely affect Uniroyal's business, financial condition and results
of operations.
Patent Protection. Although we currently hold four U.S.
patents, these patents do not protect any material aspects of the
current or planned commercial versions of our products for our Compound
Semiconductor and Optoelectronics business segment. We are actively
pursuing patents on some of our recent inventions, but these patents
may not be issued. Even if these patents are issued, they may be
challenged, invalidated or circumvented. In addition, the laws of
certain other countries may not protect our intellectual property to
the same extent as U.S. laws.
Enforcement of Intellectual Property Rights by or against Us Could Be
Costly and Could Impair Our Business.
Other companies may hold or obtain patents on inventions or
may otherwise claim proprietary rights to technology necessary to our
business, especially with respect to the business of our Compound
Semiconductor and Optoelectronics segment. We cannot assure you that
third parties will not attempt to assert infringement claims against us
with respect to our current or future products, including our core
products. We cannot predict the extent to which such assertions may
require us to seek licenses or, if required, whether such licenses will
be offered or offered on acceptable terms or that disputes can be
resolved without litigation. Litigation against us or any of our
customers could impair our ability to sell our products. Litigation to
determine the validity of infringement claims alleged by third parties
could result in significant expense to us and divert the efforts of our
technical and management personnel, whether or not the litigation is
ultimately determined in our favor. We cannot predict the occurrence of
future intellectual property claims that could prevent us from selling
products, result in litigation or give rise to indemnification
obligations or damage claims.
Due to Protracted Product Qualification Periods, We May Incur
Significant Costs to Develop Products that May Ultimately Be
Unsuccessful.
Many of the markets in which we compete are characterized by
long lead times for new products requiring significant working capital
investment by Uniroyal and extensive testing, qualification and
approval by our customers and the end users of products. We face a
significant risk that we will incur significant costs for research and
development, manufacturing equipment, training, facility-related
overhead and other expenses to develop new products, only to have our
customers or end users not select them.
Even if our products are eventually approved and purchased by
customers and end users, our investment may fail to generate revenues
for several years while we develop and test such products.
Unsuccessful Control of Hazardous Materials Used in Our Manufacturing
Processes Could Result in Costly Remediation Fees, Penalties or Damages
Under Environmental and Safety Regulations.
Our operations are subject to extensive federal, state and
local laws and regulations: (1) controlling the discharge of materials
into the environment or otherwise relating to the protection of the
environment; and (2) regulating conditions which may affect the health
and safety of workers.
The operation of any manufacturing plant in the industries in
which we participate entails risks under such laws and regulations,
many of which provide for substantial fines and criminal sanctions for
violation. For example, our manufacturing processes involve the use of
certain hazardous raw materials, including, but not limited to,
ammonia, phosphine and arsene. If the control systems are unsuccessful
in preventing a release of these materials into the environment or
other adverse environmental conditions occur, we could experience
interruptions in our operations and incur substantial remediation and
other costs. We believe that our current legal and environmental
compliance and safety programs adequately address such concerns and
that we are in substantial compliance with applicable laws and
regulations. However, compliance with, or any violation of, current and
future laws or regulations could require us to make material
expenditures or otherwise have a material adverse effect on our
business, financial condition and results of operations.
Certain Provisions of Our Charter and Our Stockholder Rights Plan May
Adversely Affect our Stock Price and Make it More Difficult for a Third
Party to Acquire Uniroyal even if Such Acquisition Could Be Beneficial
to Some of Our Shareholders.
Provisions of Uniroyal's charter documents may have the effect
of delaying or preventing a change in control of Uniroyal or its
management, which could have a material adverse effect on the market
price of the common stock. These include provisions:
o eliminating the ability of stockholders to take actions
by written consent; and
o limiting the ability of stockholders to raise matters at
a meeting of stockholders without giving advance notice.
In addition, the Board of Directors has authority to issue up
to 1,000 shares of preferred stock and to fix the rights, preferences,
privileges and restrictions, including voting rights, of these shares
without any further vote or action by the stockholders. The rights of
the holders of common stock will be subject to, and could be adversely
affected by, the rights of the holders of any preferred stock that
Uniroyal may issue in the future. The issuance of preferred stock,
while providing desirable flexibility in connection with possible
acquisitions and other corporate purposes, could have the effect of
making it more difficult for a third party to acquire a majority of
Uniroyal's outstanding voting stock, thereby delaying, deferring or
preventing a change in control of Uniroyal.
Uniroyal's Stockholder Rights Plan has certain anti-takeover
effects. The plan grants to holders of common stock the right, when
exercisable, to purchase from Uniroyal a fraction of a share of
Uniroyal's Series C preferred stock. This right will cause substantial
dilution to a person or group that attempts to acquire Uniroyal without
conditioning the offer on the rights being redeemed or a substantial
number of rights being acquired.
Risk Factors Associated with Uniroyal's Coated Fabrics Business Segment
If Labor Relations at our Coated Fabrics Business Segment were
Materially Impaired, Our Business Would be Adversely Affected.
We are a party to a collective bargaining agreement at our
coated fabrics manufacturing facility located in Stoughton, Wisconsin.
Approximately 112 hourly employees are covered by an agreement expiring
on September 17, 2003 with Local 1207 of P.A.C.E. (formerly known as
the United Paperworkers International Union).
Although we believe our relationships with employees are good,
we can give no assurance that we will successfully negotiate the hourly
wages and/or benefits of employees at our coated fabrics manufacturing
facility when the applicable collective bargaining agreement expires.
Moreover, the wages and/or benefits we may agree upon might adversely
affect the Coated Fabrics segment's profitability. Furthermore, if we
were the subject of a strike, we could incur significant costs.
Growth is Difficult in Our Coated Fabrics Segment Due to the Maturity
of the Business Sector in Which it Operates
Our Coated Fabrics segment competes in a mature business
sector. We believe the key to generating growth in this sector (besides
acquiring other businesses) is to introduce new products or product
innovations that address unsatisfied market needs. We believe we will
need to significantly increase revenues from product sales and increase
profitability in this sector. We can give no assurance that we will
have resources available for, or otherwise be successful in, any
efforts to achieve such growth.
Our Coated Fabrics Segment is Particularly Sensitive to Changes in
General Economic Conditions
The recreational vehicle and upholstery markets, among others
in which the Coated Fabrics segment competes, are sensitive to changes
in general economic conditions which affect demand for the commercial
and consumer items that the Coated Fabrics segment manufactures.
Risk Factors Associated with Uniroyal's Compound Semiconductor and
Optoelectronics Business Segment
The Future Success of Our Compound Semiconductor and Optoelectronics
Segment Depends on Development of New Products
The future success of the Compound Semiconductor and
Optoelectronics segment depends on our ability to develop new products
and technology in the optoelectronics and SiC industries. We must
introduce new products in a timely and cost-effective manner and secure
production orders from our customers. The development of new HB-LED and
SiC products involves highly complex processes. The successful
development and introduction of these products depends on a number of
factors, including the following:
o achievement of technology breakthroughs required to make
commercially viable devices;
o the accuracy of our predictions of market requirements
and evolving standards;
o acceptance of our new product designs;
o our ability to recruit qualified research and development
personnel;
o timely completion of product designs and development;
o our ability to develop repeatable processes to
manufacture new products in sufficient quantities
for commercial sales;
o acceptance by the market of the products of the Compound
Semiconductor and Optoelectronics segment's customers;
o consistent cost-effective manufacturing processes; and
o cash flow constraints.
If any of these or other factors become problematic, we may
not be able to develop and introduce these new products in a timely or
cost-effective manner.
Our Compound Semiconductor and Optoelectronics Segment Has a Limited
Operating History and We Expect Operating Losses to Continue
The Compound Semiconductor and Optoelectronics business
segment started operations in the second quarter of fiscal 2000 and has
a limited operating history. The segment faces risks and difficulties
as an early stage business in a high growth and rapidly evolving
industry. Some of the specific risks and difficulties for the segment
include the following:
o building out our operational infrastructure;
o expanding our sales structure and marketing programs;
o increasing awareness of our products;
o providing services to our customers that are reliable and
cost-effective;
o securing sales of our products;
o responding to technological development or product
offerings by competitors;
o attracting and retaining qualified personnel; and
o cash flow constraints.
We incurred a significant net loss in fiscal 2002 and a $46.5
million in fiscal 2001. See "Item 1. Business - Current Developments."
We expect to continue to incur losses in 2003. To support the segment's
growth, we have increased our expense levels and our investments in
inventory and capital equipment. As a result, we will need to
significantly increase revenues and profit margins for the Compound
Semiconductor and Optoelectronics segment to become and stay
profitable. If the segment's sales and profit margins do not increase
to support the higher levels of operating expenses and if its product
offerings are not successful, our business, financial condition and
results of operations could be materially and adversely affected.
The Industries in Which Our Compound Semiconductor and Optoelectronics
Segment Operates are Rapidly Changing
The Compound Semiconductor and Optoelectronics segment
competes in markets characterized by rapid technological change,
evolving industry standards and continuous improvements in products.
Due to constant changes in these markets, its future success depends on
our ability to improve our manufacturing processes and tools and our
products. To remain competitive, we must continually introduce
manufacturing tools with higher capacity and better production yields
and refine production processes to meet ever higher customer
requirements.
Because we generally are unable to predict the amount of time
required and the costs involved to achieve certain research,
development and engineering objectives, actual development costs could
exceed budgeted amounts, and estimated product development schedules
could be extended. Our business, financial condition and results of
operations could be materially and adversely affected if with respect
to the Compound Semiconductor and Optoelectronics business:
o we are unable to improve our existing products on a
timely basis;
o our new products are not introduced on a timely basis;
o we incur budget overruns or delays in our research and
development efforts;
o our new products experience reliability or quality
problems; or
o we experience cash flow constraints that interfere with
any of the foregoing.
Our Operating Results Could be Harmed if We Lose Access to Certain
Limited Sources of Materials, Components or Equipment Used in Our
Compound Semiconductor and Optoelectronics Segment
We depend on a limited number of suppliers for certain raw
materials, components and equipment used in the Compound Semiconductor
and Optoelectronics segment, including certain key materials and
equipment used in our wafering, polishing, epitaxial deposition, device
fabrication and device test processes. In addition, the availability of
these materials, components and equipment to us is dependent in part on
our ability to provide our suppliers with accurate forecasts of our
future requirements. We endeavor to maintain ongoing communication with
our suppliers to guard against interruptions in supply and, to date,
generally have been able to obtain adequate supplies in a timely manner
from our existing sources. Most of our suppliers demand cash in advance
payments for their products and services. From time-to-time cash issues
have led to periodic disruptions in the purchase of raw materials
leading to production delays. However, any significant interruption in
the supply of these key materials, components or equipment could have a
significant adverse effect on our operations.
The Manufacture of the Compound Semiconductor and Optoelectronics
Segment's Products is a Highly Complex and Precise Process and
Production Could be Impaired or Disrupted if We Experience
Manufacturing Difficulties
The manufacture of the Compound Semiconductor and
Optoelectronics segment's products is a highly complex and precise
process. We now manufacture nearly all of our HB-LED epitaxial wafers
and dies at our Tampa, Florida facility. Minute impurities,
difficulties in the production process, defects in the layering of the
wafers' and dies' constituent compounds, wafer breakage or other
factors can cause a substantial percentage of wafers and dies to be
rejected or numerous dies on each wafer to be non-functional. These
factors can result in lower than expected production yields, which
would delay product shipments and could materially and adversely affect
our operating results. Because the majority of the manufacturing costs
for the Optoelectronics business are relatively fixed, the number of
shippable dies per wafer for a given product is critical to the
segment's financial results.
Additionally, because we manufacture most of our HB-LEDs at
our facility in Tampa, Florida, any interruption in manufacturing
resulting from fire, natural disaster, equipment failures or otherwise
could materially and adversely affect the Compound Semiconductor and
Optoelectronics segment's business, financial condition and results of
operations.
Item 2. Properties
The following table sets forth the location, size, general character
and nature of the Company's facilities:
SQUARE FEET GENERAL CHARACTER
LOCATION AND ENTITY OF FACILITY OF PROPERTY LEASED OR OWNED
- ------------------- ----------- ----------------- ---------------
Corporate
Sarasota, Florida 5,196 Corporate offices Leased
Stirling, New Jersey* 50,000 Previously manufactured acrylic sheet, Owned
rods & tubes - currently for sale
Port Clinton, Ohio* 240,000 Previously manufactured coated fabrics Owned
products - currently for sale
Coated Fabrics Segment
Stoughton, Wisconsin 198,275 Manufacture of coated fabrics products Owned
Compound Semiconductor and
Optoelectronics Segment
Danbury, Connecticut 11,070 Manufacture of SiC wafers Leased
Tampa, Florida 77,000 Manufacture of epitaxial wafers and
package-ready die Leased
Carol Stream, Illinois 12,000 Development of optoelectronic devices Leased
Sterling, Virginia** 14,000 Research and development,
SiC technology Leased
*The Company has entered into agreements to sell the Stirling, New Jersey and
Port Clinton, Ohio facilities.
**Operations and some staff of the Sterling, Virginia facility have been
distributed between the Danbury, Connecticut and Tampa, Florida locations. The
Sterling, Virginia location was closed as of December 31, 2002.
Item 3. Legal Proceedings
On February 23, 2001, the Company and its wholly owned
subsidiary, Sterling, were served with a complaint by AFG-NVC, LLC in
the Loudoun County, Virginia Circuit Court. The complaint sought
approximately $8,106,000 for alleged default under a lease and benefits
that the landlord believed it would have received under such lease. The
Company filed an answer seeking not less than $7,000,000 for breaches
of contract, fraud and constructive fraud on the part of the plaintiff.
On February 11, 2002, the Company reached a settlement and on April 26,
2002, executed settlement documents with the plaintiff whereby the
Company paid AFG-NVC, LLC $650,000 in the form of a secured promissory
note and 300,000 shares of the Company's common stock (valued at
approximately $135,000 at the time of settlement). The promissory note
is secured by a security interest in the Company's Stirling, New Jersey
facility which is currently subject to a sale contract. The term of the
note is one year and is due in full at maturity. Interest is payable
quarterly at 8% per annum. The Company recorded the $785,000 settlement
during the first quarter of Fiscal 2002.
The Company and certain of its officers are currently
defendants in five putative class action securities lawsuits filed in
July 2002 in the United States District Court for the Middle District
of Florida. The suits allege, among other things, violations of
Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), in connection with the valuation of a
promissory note held by the Company in December 1999, the write-down of
goodwill in the Company's subsidiary Sterling in December 2001, and
statements made in filings with the Securities and Exchange Commission
(the "SEC") and in press releases concerning Sterling. Management
intends to defend these suits vigorously.
The Company and certain of its officers are currently
defendants in a putative class action securities lawsuit filed by
certain former shareholders of Sterling in July 2002 in the United
States District Court for the Eastern District of Virginia. This action
was transferred to the United States District Court for the Middle
District of Florida in December, 2002. This suit alleges, among other
things, violations of Sections 11, 12 and 15 of the Securities Act of
1933, as amended, and Sections 10(b) and 20(a) of the Exchange Act in
connection with the exchange of common stock of the Company for
securities of Sterling in May 2000. The plaintiffs allege that the
Company misrepresented the timing of the attainment of commercial
viability of the Company's subsidiary UOE. Management intends to defend
this suit vigorously.
The Company and certain of its subsidiaries have been served
with several actions brought by vendors seeking approximately $4
million for purchases of equipment, supplies and services for which the
Company or such subsidiaries have failed to make payments. In one suit
the vendor has obtained pretrial attachment to certain of the Company's
bank accounts, effectively freezing approximately $142,000 of the
Company's cash. This amount was reclassified from cash to prepaid and
other assets as of June 30, 2002. These actions have been stayed under
the United States Bankruptcy Code and will be resolved in the Company's
Chapter 11 reorganization proceedings.
Uniroyal Retiree Benefits, Inc. ("URBI"), which provides
health care and life insurance services to certain persons who retired
from predecessors of the Company and certain other employers, filed an
action in June 2002 in the United States Bankruptcy Court for the
Northern District of Indiana seeking reopening of a 1995 order in an
adversary proceeding and a contempt citation against the Company in
connection with the Company's failure to make payments to URBI
aggregating $665,457. This action has been stayed and will also be
resolved in the Company's reorganization process.
Mechanics' liens have been filed against premises occupied by
UOE in Tampa, Florida and by Sterling in Sterling, Virginia. The claims
in connection with such liens aggregate approximately $2,411,000 in the
case of UOE and approximately $2,132,000 in the case of Sterling. The
existence of such liens violates the terms of the leases for such
premises. The failure to cure such defaults could result in the
termination of the leases, which could have a material adverse effect
on the businesses of UOE and Sterling. The landlord of the Tampa
facility filed an eviction notice in Hillsborough County Court based in
part on the existence of mechanics' liens against the premises. A
forbearance agreement was entered into with the landlord which has
since expired. These matters will be resolved in the Company's
reorganization proceedings. As of December 31, 2002, the Company closed
the Sterling, Virginia plant.
The Company knows of no other pending legal proceedings to
which the Company or any of its subsidiaries is a party or of which any
of their property is the subject other than routine litigation
incidental to the Company's business.
No legal proceedings, other than those previously mentioned,
were terminated during the fiscal year ended September 29, 2002, other
than routine litigation incidental to the Company's business.
Item 4. Submission of Matters to a Vote of Security Holders
No matter was submitted during the fourth quarter of fiscal
2002 to a vote of security holders, through the solicitation of proxies
or otherwise.
Part II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
Prior to the effective date of a plan of reorganization on
September 27, 1992, none of the Company's common stock, par value $.01
per share (the "Common Stock"), was issued, and consequently there was
no public market for the Common Stock. The Common Stock was admitted to
trading on the Nasdaq National Market System on September 28, 1992. The
common stock was transferred to the Nasdaq SmallCap Market on June 18,
2002 and was delisted on September 5, 2002. It currently trades in the
Pink Sheets. At the close of trading on January 3, 2003, the price per
share of Common Stock was $0.005.
As of January 3, 2003, there were 1,273 holders of record of
shares of Common Stock.
The following table sets forth the high and low sales price
per share of the Company's Common Stock as reported by Nasdaq and other
market information provides for the indicated dates. The prices have
been adjusted to give effect to the two-for-one stock split declared on
March 10, 2000 for stockholders of record on March 20, 2000:
Fiscal Year Ended Fiscal Year Ended
September 29, 2002 September 30, 2001
-------------------------------- -----------------------------
Quarter High Low High Low
- ------- ---- ---- ---- ----
First $ 4.19 $ 2.20 $ 15.13 $ 5.25
Second $ 3.20 $ .27 $ 8.75 $ 5.88
Third $ .80 $ .08 $ 10.11 $ 6.94
Fourth $ .29 $ .02 $ 8.50 $ 2.54
We have never paid cash dividends on our common stock. The
payment of any future dividends will be subject to the discretion of
our Board of Directors and will depend on our results of operations,
financial position and capital requirements, general business
conditions, legal restrictions on the payment of dividends and other
factors our Board of Directors deem relevant. We currently do not
anticipate paying cash dividends on the common stock in the foreseeable
future.
Item 6. Selected Financial Data.
Omitted.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operation.
Omitted.
Item 7A. Quantitative and Qualitative Disclosures about Market Risks.
See Item 1 above - "Certain Business Risks and Uncertainties."
Item 8. Financial Statements and Supplementary Data.
Omitted.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
Part III
Item 10. Directors and Executive Officers of the Registrant
Directors of the Company
=============================================================================
NOMINEE AGE POSITION DIRECTOR SINCE
=============================================================================
Peter C.B. Bynoe 51 Director 1992
-----------------------------------------------------------------------------
Thomas E. Constance 66 Director 1998
-----------------------------------------------------------------------------
Howard R. Curd 63 Chairman of the Board, 1992
Chief Executive Officer
and Director
-----------------------------------------------------------------------------
Curtis L. Mack 60 Director 1992
-----------------------------------------------------------------------------
Roland H. Meyer 75 Director 1992
-----------------------------------------------------------------------------
John A. Porter 59 Director 1994
-----------------------------------------------------------------------------
Robert L. Soran 59 President, 1993
Chief Operating Officer
and Director
=============================================================================
Peter C.B. Bynoe is Chairman of the Audit Committee and a member of the
Executive Committee of the Board of Directors. Mr. Bynoe is Chairman of Telemat
Ltd., a project management and financial services consulting firm he founded. He
is also a partner in the law firm of Piper Rudnick. Mr. Bynoe also formerly
served as the Executive Director of the Illinois Sports Facilities Authority,
a joint venture of the City of Chicago and the State of Illinois created to
build a new Comiskey Park for the Chicago White Sox. Mr. Bynoe was formerly the
co-owner and Managing General Partner of the National Basketball Association's
Denver Nuggets. Mr. Bynoe was an Overseer of Harvard University until June 2001.
Thomas E.Constance is a member of the Audit, Compensation, Option,
Trust Fund and Executive Committees of the Board of Directors. Mr. Constance is
Chairman and partner of Kramer, Levin, Naftalis & Frankel, a law firm in New
York City. He was a partner of Shea & Gould from 1971 to 1994 and served as
Chairman of the Executive Committee of that firm. Mr. Constance serves as a
Trustee of the M.D. Sass Foundation and St. Vincent's Services. He also serves
on the Advisory Board of Barrington Capital, L.P. and serves as a director of
Kroll, Inc. and Siga Technologies, Inc.
Howard R. Curd was appointed Chief Executive Officer of the Company
as of September 21, 1992. Mr. Curd is also a member of the Executive Committee
of the Board of Directors.
Curtis L. Mack is Chairman of the Trust Funds Committee and a member of
the Executive Committee of the Board of Directors. An attorney specializing in
labor law, Mr. Mack is a partner in the law firm of McGuireWoods LLP. Mr. Mack
was formerly a partner in Mack, Haygood & McLean, a law firm based in Atlanta,
Georgia, from 1994 to 1999 and was before that a partner in Mack & Bernstein, a
law firm based in Atlanta, Georgia, from 1983 to 1994. Mr. Mack taught labor and
employment law at the University of Florida Law School in 1973-1974; he was
General Counsel of the Florida Public Employees Relations Commission from 1974
to 1975, and he was Chairman of the Commission from 1975 to 1976; from 1976 to
1981 he was Regional Director of the National Labor Relations Board in Atlanta,
Georgia. Presently Mr. Mack is an adjunct professor at the University of
Michigan Law School, and also serves on the Advisory Board to the School of
Social Science at Michigan State University. Mr. Mack has served as Special
Assistant Attorney General for the State of Georgia since 1989 and as Chairman
of the Human Relations Commission of the City of Atlanta since 1989.
Roland H. Meyer is Chairman of the Compensation Committee and the
Option Committee and a member of the Executive Committee of the Board of
Directors. Mr. Meyer was elected Vice Chairman of American National Can Company,
a leading manufacturer of metal, glass and plastic packaging products, in 1987.
He was elected Chief Operating Officer of American National Can in 1988 and
President in 1989. Mr. Meyer served as President and Chief Operating Officer of
American National Can until his retirement in June 1992. Mr. Meyer was a
director of Allied Van Lines from 1987 to 1992 and was a director and Vice
Chairman of the Can Manufacturers Institute, Inc. from 1985 to 1994. Mr. Meyer
was a director of American National Can and a member of American National Can's
Executive Committee from 1984 to 2000. Mr. Meyer also served for various periods
as a director of certain subsidiaries of American National Can. Mr. Meyer was
also a director, Vice Chairman and Chairman of the Executive Committee of First
Commercial Bank of Tampa from 1988 to 2001 and is a director of the Catholic
Education Foundation, Inc. of the Diocese of St. Petersburg, Florida.
John A. Porter is a member of the Audit and Executive Committees of the
Board of Directors. Mr. Porter was formerly a director of WorldCom Inc., one of
the largest telecommunications companies in the United States. He was Chairman
of the Board of Directors of LDDS Communications, Inc. ("LDDS") from 1988 until
its merger with Metromedia Communications in 1993 and was Vice Chairman of the
Board from 1993 to 1997. He served as President and Chief Executive Officer of
Telephone Management Corporation from 1987 until it was acquired by LDDS in
August 1988. Mr. Porter is a former director of Inktomi Corporation. Mr. Porter
also serves as Chairman of the Board of Directors of TelTek, Inc., a holding
company that currently holds all of the stock of Phillips & Brooks/Gladwin,
Inc., an equipment manufacturer for deregulated electrical and
telecommunications markets, and Industrial Electric Manufacturing Inc., a
manufacturer of electrical power distribution products.
Robert L. Soran was elected President and Chief Operating Officer of
the Company as of September 21, 1992. Mr. Soran is also a member of the
Executive Committee of the Board of Directors. Mr. Soran was President and Chief
Executive Officer of Tropicana Products Inc., a fruit beverage processor
("Tropicana"), from 1986 until September 1991. Mr. Soran is a trustee of the
University of South Florida.
Executive Officers of the Company
Officers of the Company are appointed to serve until the meeting of the
Board of Directors following the next annual meeting of stockholders or until
their respective successors have been duly elected and qualified. Any officer of
the Company may be removed, pursuant to the Company's By-Laws, with or without
cause, by a vote of a majority of the entire Board of Directors. The following
table sets forth the name, age and position of each executive officer of the
Company:
================================================================================
NAME AGE POSITION
================================================================================
Howard R. Curd 63 Chairman of the Board of Directors and
Chief Executive Officer
- --------------------------------------------------------------------------------
Robert L. Soran 59 Director, President and Chief Operating Officer
- --------------------------------------------------------------------------------
George J. Zulanas, Jr. 58 Executive Vice President, Chief Financial
Officer and Treasurer
- --------------------------------------------------------------------------------
Oliver J. Janney 56 Executive Vice President, General Counsel
and Secretary
- --------------------------------------------------------------------------------
Martin J. Gutfreund 61 Vice President, Human Resources and
Administration
================================================================================
The business experience of Messrs. Curd and Soran is described above
under "Directors of the Company."
Messrs. Zulanas, Janney and Gutfreund were elected to the positions set
forth above as of September 21, 1992, except that Messrs. Zulanas and Janney
were elected to the office of Executive Vice President on March 10, 2000.
Mr. Gutfreund resigned as an officer of the Company effective October
1, 2002.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's officers and directors and persons who
own more than ten percent of a registered class of the Company's equity
securities to file reports of ownership and changes of ownership with the
Securities and Exchange Commission (the "S.E.C."). Officers, directors and
beneficial owners of more than ten percent of the Company's common stock, $.01
par value per share ("Common Stock"), are required by S.E.C. regulations to
furnish the Company with copies of all reports that they file with the S.E.C.
pursuant to Section 16(a) of the Exchange Act. Based solely on a review of the
copies of such forms furnished to the Company, the Company believes that during
fiscal 2002 its officers, directors and beneficial owner of more than ten
percent of the Common Stock complied with applicable Section 16(a) filing
requirements, except that Mr. Mack failed to file a report on Form 4 in
connection with a division of his stock holdings with his former spouse, which
transaction will be reflected in a report in Form 5.
Item 11. Executive Compensation
Compensation of Directors
Each director who is not an officer of the Company receives an annual
fee (the "Annual Retainer Fee") of $25,000, plus $1,000 for each meeting of the
Board of Directors attended, $2,500 per annum for service on a committee (except
the chairman of a committee, who receives $3,000 per annum) (the "Committee
Retainer Fees") and $500 to $1,000 for each committee meeting attended,
depending upon whether the committee meeting is held in conjunction with a
meeting of the Board of Directors, independent of a meeting of the Board of
Directors or by teleconference. Each director receives reimbursement of his
expenses incurred in attending each meeting of the Board of Directors or of a
committee.
Directors who are not officers of the Company may elect to apply up to
the entire amount of their Annual Retainer Fees and Committee Retainer Fees in
exchange for options to purchase Common Stock pursuant to the 1992 Non-Qualified
Stock Option Plan (the "1992 Non-Qualified Plan"). The 1992 Non-Qualified Plan
provides that Common Stock underlying each option issued pursuant to such Plan
may be purchased for 100% of the market price of the Common Stock on the date of
grant. Although the amount of the Annual Retainer Fee and Committee Retainer
Fees is initially paid for the option, such amount also constitutes 50% of the
consideration payable for the underlying Common Stock. When the Director
exercises the option, the additional 50% of the purchase price of the Common
Stock must be paid in cash by the Director. If the Director does not timely
exercise the option to purchase the Common Stock, the Annual Retainer Fee and
Committee Retainer Fees applied to acquire the option will be forfeited by the
Director. In addition, each director of the Company has received options to
purchase shares of Common Stock under the 1995 Non-Qualified Stock Option Plan.
No director who is not an officer of the Company may receive options to purchase
more than an aggregate of 60,000 shares of Common Stock in any calendar year
under all of the Company's stock option plans.
Because of cash constraints, the Company has not paid the cash fees to
directors since December 2001.
Compensation Committee Interlocks and Insider Participation
No executive officer of the Company served on the board of directors or
compensation committee of any entity which has one or more executive officers
serving as a member of the Company's Board of Directors or Compensation
Committee.
COMPENSATION OF EXECUTIVE OFFICERS
Report of the Compensation Committee and the Option Committee
Roles of the Compensation and Option Committees
The Compensation Committee is responsible for administering the
compensation program for the executive officers of the Company, and the Option
Committee administers the Company's stock option plans and the 2000 Stock Plan.
Compensation Philosophy
The Company's compensation philosophy with respect to the compensation
of the Company's executive officers consists of the following core principles:
o Base salary should be competitive in order to attract, retain and
motivate well-qualified executives.
o Incentive compensation should be directly related to achieving
specified levels of corporate financial performance. A significant
part of the executive officers' compensation should be at risk,
based upon the success of the Company.
o Long-term stock ownership of the Company's Common Stock by the
Company's executive officers creates a valuable link between the
Company's management and stockholders. Stock ownership gives
management strong incentives to properly balance the need for
short-term profits with long-term goals and objectives and to
develop strategies that build and sustain stockholder returns.
Executive Compensation Program
The Company's executive compensation program contains three components
which are intended to reflect the Company's compensation philosophy.
Base Salary. Base salary and adjustments to base salary are set by
employment agreements with Messrs. Curd, Soran, Zulanas and Janney. The base
salaries for executive officers are targeted at the upper quartiles of the
competitive market. For this purpose, the Compensation Committee reviews and
considers the salary ranges of executive officers in comparable positions at
companies comparable to the Company in various industries. The Compensation
Committee's practice is to review the base salary of each executive officer
annually, at which time the executive officer's base salary may be increased
beyond the contractually mandated incremental increases based upon the executive
officer's individual performance and contributions to the Company. The Committee
has not made any such increase in the past. To meet the Company's cash and
profit objectives, the salaries of the executive officers were reduced by 10% -
25% effective October 16, 2001 and higher percentages were deferred indefinitely
during the first two months of calendar 2002. On August 28, 2002, each of the
executive officers agreed to defer 20-50% of his base compensation from
September 15, 2002 until 10 days after the earlier of the consummation of the
Company's plan of reorganization or the termination of such officer's employment
by the Company.
Annual Bonus. The Company's executive officers, as well as a number of
other key employees of the Company, are eligible for an annual cash bonus
pursuant to the Company's Management Incentive Plan (the "MIP"). Target annual
bonus amounts for the executive officers are established at the beginning of the
fiscal year by the Compensation Committee. For this purpose, the Compensation
Committee reviews and considers bonus amounts awarded to officers of companies
in comparable positions in various industries comparable in size to the Company
and also considers Company performance and the achievement of each executive
officer in his area of responsibility and the resulting contribution to overall
corporate performance. Total payments into the MIP Plan for all participants,
including executive officers, were approximately $2,365,591 for fiscal 2000,
approximately $96,000 for fiscal 2001, and approximately $105,800 for fiscal
2002. No executive officer received any payment under the MIP for fiscal 2001 or
2002. Under the MIP the Compensation Committee has discretion to adjust an
individual's actual bonus payment from the amount that would otherwise be
payable under the formula, subject to approval by the full Board of Directors.
Long-Term Incentives. The executive officers of the Company and other
current members of management and other key employees and all employees at the
Company's headquarters and the Company's Compound Semiconductor and
Optoelectronics segment have been granted and currently hold stock options
pursuant to the Company's stock option plans. The Company's stock option plans
are intended to provide opportunities for stock ownership by management and
other key employees, which will increase their proprietary interest in the
Company and, consequently, their identification with the interests of the
stockholders of the Company. In addition, the executive officers have purchased
stock on their own as a demonstration of their commitment to the Company. Stock
options granted under the Company's stock option plans have exercise prices
equal to the fair market value of the Company's Common Stock on the dates of
grant. The stock options have terms ranging from three to ten years. A deferred
compensation plan was instituted for the executive officers in fiscal 1995; this
improves the Company's short-term cash flow. A split-dollar life insurance plan
was also instituted in fiscal 1995, to facilitate executive officers' saving for
retirement; this plan was revised in March 2000, so that each participant could
purchase for a nominal sum the paid-up policy at retirement or such earlier date
on which benefits would be payable. At the same time the Board of Directors
amended the Deferred Compensation Plan to reduce the rate of interest paid by
the Company on balances held under the plan. Effective October 1, 1998, the
Board of Directors approved a defined contribution retirement plan to provide
benefits for certain executives for ten years after their retirement; benefits
under such plan are conditional on an executive's being employed by the Company
until retirement; in March 2000 the Board of Directors approved an additional
ten years of paid-up benefits. On March 10, 2000, the stockholders approved a
stock grant plan for directors and key employees, including the executive
officers. To meet the Company's cash and profit objectives, the split-dollar
life insurance plan and the defined contribution retirement plan were terminated
on December 28, 2001.
Internal Revenue Code Section 162(m). Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Code") generally disallows a tax
deduction to publicly held companies for compensation to the chief executive
officer and the four other most highly compensated executive officers to the
extent that it exceeds $1 million per covered officer in
any fiscal year. Certain exceptions are provided for non-discretionary,
performance-related compensation. The Compensation Committee will review the
effects of Section 162(m), from time to time, as it reviews changes in the
compensation arrangements, to the extent it deems appropriate. The Compensation
Committee may recommend payments that are not deductible when it considers them
in the best interests of the Company and its stockholders. No such payments were
made for fiscal 2002.
Chief Executive Officer's Performance
The Compensation Committee has reviewed the compensation of the Chief
Executive Officer and has found the level appropriate in comparison with persons
holding similar positions in comparable companies and in light of developments
at the Company during fiscal 2002, including attempts to restructure the
Company, guiding the Company into the Chapter 11 proceedings and the continued
reduction in corporate overhead costs. The Compensation Committee believes that
the Chief Executive Officer is being appropriately compensated in a manner that
relates to the performance of the Company.
Compensation Committee Option Committee
- ---------------------- ----------------------
ROLAND H. MEYER, CHAIRMAN ROLAND H. MEYER, CHAIRMAN
THOMAS E. CONSTANCE THOMAS E. CONSTANCE
Summary Compensation Table
The following table sets forth the cash and other compensation paid by
the Company in respect of the fiscal year ended September 29, 2002, to the Chief
Executive Officer and the other four most highly compensated officers of the
Company. Certain of the executive officers of the Company also received certain
other compensation, including automobile allowances. The amount of such other
compensation received by each of these officers was less than the lesser of
$50,000 or 10% of his respective cash compensation as set forth in the Salary
and Bonus columns of this table. The salary figures set forth below include an
aggregate of $143,948 that the listed officers have deferred in fiscal 2002 to
accommodate the cash flow needs of the Company.
==============================================================================================================
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
==============================================================================================================
Name/Principal Position Fiscal Salary Bonus Other Annual Restricted Securities
Year ($) ($) Compensation Stock Awards Underlying
($) Options
====================================== ========= ========== ============ ============= ==============
Howard R. Curd 2002 449,377 0 0 0 0
Chairman of the Board & 2001 592,553 0 0 36,355 487,991
Chief Executive Officer 2000 571,939 400,357 1,637,039 (1) 0 0
- -------------------------------------- --------- ---------- ------------ ------------- --------------
Robert L. Soran 2002 391,412 0 0 0 0
President & Chief 2001 487,318 0 0 0 439,186
Operating Officer 2000 470,364 329,255 1,308,119 (2) 0 701,484
- -------------------------------------- --------- ---------- ------------ ------------- --------------
George J. Zulanas, Jr. 2002 222,533 0 0 0 0
Executive Vice President, Chief 2001 258,496 0 0 0 244,936
Financial Officer & Treasurer 2000 244,625 171,237 740,145 (3) 0 394,864
- -------------------------------------- --------- ---------- ------------ ------------- --------------
Oliver J. Janney 2002 221,344 0 0 0 0
Executive Vice President, 2001 253,251 0 0 0 162,666
General Counsel & Secretary 2000 239,121 517,385 330,709 (4) 0 343,242
- -------------------------------------- --------- ---------- ------------ ------------- --------------
Martin J. Gutfreund 2002 130,379 0 21,145 (5) 0 106,491
Vice President, Human 2001 143,922 0 0 0 65,000
Resources and Administration 2000 139,030 194,642 453,570 (6) 0 0
==============================================================================================================
(1) Includes commission of $1,633,100.
(2) Includes commission of $1,305,992.
(3) Includes commission of $738,397.
(4) Includes funding of supplemental retirement benefits in the amount of
$329,505.
(5) Includes automobile allowance of $21,002.
(6) Includes funding of supplemental retirement benefits in the amount of
$452,345.
Compensation Pursuant to Other Programs; Stock Option Plan
In addition to the salary administration program and MIP, in order to
retain and attract quality management, the Company maintains a compensation
program that includes stock option plans, a stock grant plan and benefit
programs such as disability and health insurance and death benefits. Stock
options for key employees are granted by the Option Committee, and the
Compensation Committee reviews the other benefit programs. The Option Committee
has delegated to Messrs. Curd and Soran, acting as a subcommittee of the Board
of Directors, the authority to grant limited stock options to key employees
other than executive officers.
No options were granted in the last fiscal year to the Chief Executive
Officer and the four most highly compensated executive officers of the Company
other than the Chief Executive Officer nor were any options exercised by any
such persons during fiscal 2002.
Agreements with Executives
Mr. Curd, Chairman of the Board and Chief Executive Officer of the
Company, is employed pursuant to an agreement which was amended and restated as
of April 25, 1995. The agreement provides for a base salary of $480,300. Mr.
Curd's base salary is subject to adjustment annually during the term of the
agreement based on changes in the U.S. Consumer Price Index for all Urban
Consumers, U.S. City Average (the "CPI"). Pursuant to this provision, Mr. Curd's
base salary was increased by 1.5% effective September 1, 2002. Mr. Curd is also
entitled to receive a bonus pursuant to the MIP at the end of each fiscal year.
Mr. Curd's employment agreement provides for a three-year base term subject to
automatic one-year extensions on each anniversary date of the agreement unless
such agreement is terminated by either party. In addition, Mr. Curd is entitled
to receive the base salary that he would have received for the balance of the
term of the agreement plus an amount equal to two years' salary as severance
upon termination of his employment by the Company. Mr. Curd's employment
agreement was amended to defer 50% of his base salary from September 15, 2002
until 10 days after the earlier to occur of the consummation of the Company's
plan of reorganization or the termination of his employment.
Mr. Soran, President and Chief Operating Officer of the Company, is
employed pursuant to an agreement which was amended and restated as of April 25,
1995. The agreement is for a two-year term subject to automatic annual one-year
extensions on each anniversary date of the agreement unless such agreement is
terminated by either party. Mr. Soran's employment agreement provides for a base
salary of $395,000. Mr. Soran's base salary is subject to adjustment annually
during the term of the agreement based on changes in the CPI. Pursuant to this
provision, Mr. Soran's base salary was increased by 1.5% effective September 1,
2002. Mr. Soran is also entitled to receive a bonus pursuant to the MIP at the
end of each fiscal year, as determined by the Board of Directors. In addition,
Mr. Soran is entitled to receive the base salary that he would have received for
the balance of the term of the agreement plus an amount equal to one year's
salary as severance upon termination of his employment by the Company. Mr.
Soran's employment agreement was amended to defer 50% of his base salary from
September 15, 2002 until 10 days after the earlier to occur of the consummation
of the Company's plan of reorganization or the termination of his employment.
Mr. Zulanas, Executive Vice President, Treasurer and Chief Financial
Officer of the Company, is employed pursuant to an agreement which was amended
and restated as of April 25, 1995. The agreement is for a two-year term subject
to annual one-year automatic extensions on each anniversary date of the
agreement unless such agreement is terminated by either party. Mr. Zulanas'
employment agreement provides for a base salary of $200,000. Mr. Zulanas' base
salary is subject to adjustment annually during the term of the agreement based
on changes in the CPI. Pursuant to this provision, Mr. Zulanas' base salary was
increased by 1.5% effective September 1, 2002. Mr. Zulanas is also entitled to
receive a bonus pursuant to the MIP at the end of each fiscal year, as
determined by the Board of Directors. In addition, Mr. Zulanas is entitled to
receive the base salary that he would have received for the balance of the term
of the agreement plus an amount equal to one year's salary as severance upon
termination of his employment by the Company. Mr. Zulanas's employment agreement
was amended to defer 40% of his base salary from September 15, 2002 until 10
days after the earlier to occur of the consummation of the Company's plan of
reorganization or the termination of his employment.
Mr. Janney, Executive Vice President, Secretary and General Counsel of
the Company, is employed pursuant to an agreement which was amended and restated
as of April 25, 1995. The agreement provides for a base salary of $195,500. Mr.
Janney's base salary is subject to adjustment annually during the term of the
agreement based on changes in the CPI. Pursuant to this provision, Mr. Janney's
base salary was increased by 1.5% effective September 1, 2002. Mr. Janney is
also entitled to receive a bonus pursuant to the MIP at the end of each fiscal
year. Mr. Janney's employment agreement provides for a two-year base term
subject to automatic one-year extensions on each anniversary date of the
agreement unless such agreement is terminated by either party. In addition, Mr.
Janney is entitled to receive his base salary for the balance of the term of the
agreement plus an amount equal to one year's salary as severance upon
termination of his employment by the Company. Mr. Janney's employment agreement
was amended to defer 20% of his base salary from September 15, 2002 until 10
days after the earlier to occur of the consummation of the Company's plan of
reorganization or the termination of his employment.
STOCK PERFORMANCE GRAPH
Because the Company is currently in reorganization proceedings under
Chapter 11 of the U.S. Bankruptcy Code and does not have the resources to
prepare the Stock Performance Graph, the graph is not included with this report.
Item 12. Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters.
The following table sets forth certain information regarding the
beneficial ownership of Common Stock as of January 3, 2003, by (a) each person
known to the Company to be the beneficial owner of more than five percent of the
Common Stock,(b) all directors and nominees, (c) the Chief Executive Officer and
the other four most highly compensated executive officers of the Company and
(d) all directors and executive officers of the Company as a group:
At January 3, 2003
NAME AND ADDRESS OF BENEFICIAL
OWNER(1) NUMBER OF SHARES OWNED(2) PERCENT OF CLASS(3)
- -------------------------------- ------------------------- -------------------
Dr. Thomas J. Russell 3,578,410 11.79%
Two N. Tamiami Trail, Suite 1200
Sarasota, Florida 34236
Emcore Corporation 1,984,110 6.53%
145 Belmont Drive
Somerset, New Jersey 08873
Howard R. Curd 2,240,036 (4) 7.15%
Robert L. Soran 1,977,025 (5) 6.27%
George J. Zulanas, Jr. 1,092,753 (6) 3.56%
John A. Porter 1,057,799 (7) 3.53%
Oliver J. Janney 756,235 (8) 2.46%
Roland H. Meyer 499,810 (9) 1.64%
Peter C.B. Bynoe 142,461 (10) (11)
Thomas E. Constance 123,564 (12) (11)
Curtis L. Mack 106,423 (13) (11)
All directors and executive officers
of the Company as a group 7,953,205 (14) 25.59%
(1) The address for all directors and executive officers is c/o the Company,
602 Sarasota Quay, Sarasota, Florida 34236.
(2) Information contained in the table reflects "beneficial ownership" as
defined in Rule 13d-3 under the Securities Exchange Act of 1934. This table
is based on information supplied by directors, officers and beneficial
owners of ten percent or more of the Common Stock, Forms 13D and 13G filed
with the Securities and Exchange Commission by beneficial owners of 5% or
more of the Common Stock. Unless otherwise indicated, the stockholders
identified in this table have sole voting and investment power with respect
to the shares beneficially owned by them.
(3) Applicable percentages are based on 30,362,888 shares of Common Stock
outstanding, plus, for each person or group, shares issuable pursuant to
options exercisable within 60 days under the Company's stock options plans
and shares issuable pursuant to outstanding warrants.
(4) Includes 969,131 shares of Common Stock issuable pursuant to options
exercisable within 60 days under the Company's stock option plans and
152,600 shares of Common Stock issuable pursuant to warrants.
(5) Includes 1,180,128 shares of Common Stock issuable pursuant to options
exercisable within 60 days under the Company's stock options plans. Does
not include 72,000 shares held by a family member residing in Mr. Soran's
household, as to which Mr. Soran disclaims beneficial ownership.
(6) Includes 569,876 shares of Common stock issuable pursuant to currently
exercisable options granted under the Company's stock option plans.
(7) Includes 159,920 shares of Common Stock issuable pursuant to currently
exercisable options granted under the Company's 1992 Non-Qualified Stock
Option Plan and 1995 Non-Qualified Stock Option Plan.
(8) Includes 414,508 shares of Common Stock issuable pursuant to currently
exercisable options granted under the Company's stock option plans.
(9) Includes 170,234 shares of Common Stock issuable pursuant to options
exercisable within 60 days under the Company's 1992 Non-Qualified Stock
Option Plan and 1995 Non-Qualified Stock Option Plan.
(10) Includes 105,000 shares of Common Stock issuable pursuant to options
exercisable within 60 days under the Company's 1992 Non-Qualified Stock
Option Plan and 1995 Non-Qualified Stock Option Plan.
(11) Less than one percent.
(12) Consists of Common Stock issuable pursuant to options exercisable within 60
days under the Company's 1992 Non-Qualified Stock Option Plan and 1995
Non-Qualified Stock Option Plan.
(13) Includes 92,823 shares of Common Stock issuable pursuant to options
exercisable within 60 days under the Company's 1992 Non-Qualified Stock
Option Plan and 1995 Non-Qualified Stock Option Plan.
(14) Includes 3,800,164 shares of Common Stock issuable pursuant to options
exercisable within 60 days under the Company's stock option plans.
Item 13. Certain Relationships and Related Transactions
Thomas E. Constance, a director of the Company, is Chairman and a
partner of the law firm of Kramer, Levin, Naftalis & Frankel, which performed
legal services for the Company during fiscal 2002. Peter C. B. Bynoe, a director
of the Company, is a partner of the law firm of Piper Rudnick, which performed
legal services for the Company during fiscal 2002. Curtis L. Mack, a director of
the Company, is a partner of the law firm of McGuireWoods, which performed legal
services for the Company during fiscal 2002.
Part IV
Item 14. Controls and Procedures
Omitted.
Item 15. Exhibits, Financial Statement Schedule and Reports on Form 8-K
(a) Exhibits:
2.1 Certificate of Ownership and Merger, dated June 7, 1993, of
Polycast Technology Corporation, Uniroyal Engineered Products,
Inc., Uniroyal Adhesives and Sealants, Inc. and Ensolite, Inc.
with Uniroyal. (1)
3.1 Amended and Restated Certificate of Incorporation of Uniroyal. (8)
3.2 By-Laws of Uniroyal, as amended to March 16, 2001. (8)
4.2 Amended and Restated Warrant Agreement dated January 1, 2001
between Uniroyal and Mellon Investor Services, LLC. (7)
10.7 Amended and Restated Employment Agreement, dated as of April 25,
1995, between Howard R. Curd and Uniroyal. (2)
10.8 Amended and Restated Employment Agreement, dated as of April 25,
1995, between Oliver J. Janney and Uniroyal.(2)
10.9 Amended and Restated Employment Agreement, dated as of April 25,
1995, between Robert L. Soran and Uniroyal. (2)
10.10 Amended and Restated Employment Agreement, dated as of April 25,
1995, between George J. Zulanas, Jr. and Uniroyal. (2)
10.16 Amended and Restated Uniroyal Technology Corporation 1992 Stock
Option Plan as amended and restated to March 20, 2001. (8)
10.28 Amended and Restated Uniroyal Technology Corporation 1992
Non-Qualified Stock Option Plan as amended November 30, 2000. (6)
10.40 Amended and Restated Uniroyal Technology Corporation 1994 Stock
Option Plan as amended and restated to March 16, 2001. (8)
10.41 Amended and Restated Uniroyal Technology Corporation 1995
Non-Qualified Stock Option Plan. (6)
10.44 Amended and Restated Shareholder Rights Agreement, dated as of
August 2, 2001, between Uniroyal Technology Corporation and Mellon
Investor Services, LLC, as rights agent. (9)
10.51 Asset Purchase Agreement dated as of December 24, 1999, among
Spartech Corporation, High Performance Plastics, Inc. Uniroyal HPP
Holdings, Inc. and Uniroyal Technology Corporation. (3)
10.53 Amended and Restated Uniroyal Technology Corporation Deferred
Compensation Plan Effective August 1, 1995, as amended April 3,
2000. (4)
10.54 Merger Agreement dated as of April 10, 2000, among Uniroyal
Technology Corporation, BayPlas4, Inc., and Sterling Semiconductor,
Inc. (5)
10.56 Split Dollar Insurance Agreement dated as of August 15, 1995, as
amended to March 10, 2000, by and between Uniroyal Technology
Corporation and Howard R. Curd. (6)
10.57 Split Dollar Insurance Agreement dated as of August 15, 1995, as
amended to March 10, 2000, by and between Uniroyal Technology
Corporation and Robert L. Soran. (6)
10.58 Split Dollar Insurance Agreement dated as of August 15, 1995, as
amended to March 10, 2000, by and between Uniroyal Technology
Corporation and George J. Zulanas, Jr. (6)
10.59 Split Dollar Insurance Agreement dated as of August 15, 1995, as
amended to March 10, 2000, by and between Uniroyal Technology
Corporation and Oliver J. Janney. (6)
10.60 Split Dollar Insurance Agreement dated as of August 15, 1995, as
amended to March 10, 2000, by and between Uniroyal Technology
Corporation and Martin J. Gutfreund. (6)
10.61 Uniroyal Technology Corporation 2000 Stock Plan, as amended
November 30, 2000. (6)
10.62 Uniroyal Technology Corporation 2001 Stock Option Plan. (8)
10.64 Credit Agreement dated as of August 2, 2001 between Uniroyal and
Emcore Corporation. (9)
10.65 Registration Rights Agreement between Uniroyal and Emcore
Corporation pursuant to the Membership Interest Purchase Agreement.
(11)
10.66 Asset Purchase Agreement dated as of August 24, 2001 between
Uniroyal Engineered Products, LLC and SAS Acquisition Corp. (10)
10.69 Debtor-in-Possession Financing Agreement dated August 26, 2002
among Uniroyal Technology Corporation, all subsidiaries of Uniroyal
Technology Corporation and the CIT Group/Business Credit,Inc. (12).
21.1 Subsidiaries of Uniroyal Technology Corporation. (13)
Footnotes to Exhibits:
(1) Contained in Uniroyal's Form 8-K, dated June 9, 1993.
(2) Contained in Uniroyal's Quarterly Report on Form 10-Q for the
quarterly period ended April 2, 1995 filed on May 12, 1995.
(3) Contained in Uniroyal's 8-K dated March 14, 2000.
(4) Contained in Uniroyal's Quarterly Report on Form 10-Q for the
quarterly period ended April 2, 2000, filed on May 17, 2000.
(5) Contained in Uniroyal's 8-K dated June 14, 2000.
(6) Filed with Uniroyal's Annual Report on Form 10-K for the year
ended October 1, 2000 filed on December 13, 2000.
(7) Contained in Uniroyal's Quarterly Report on Form 10-Q for the
quarterly period ended December 31, 2000 filed on February 5,
2001.
(8) Contained in Uniroyal's Quarterly Report on Form 10-Q for the
quarterly period ended April 1, 2001 filed on May 9, 2001.
(9) Contained in Uniroyal's 8-K dated August 6, 2001.
(10) Contained in Uniroyal's 8-K dated November 20, 2001.
(11) Contained in Uniroyal's Quarterly Report on Form 10-Q for the
quarterly period ended July 1, 2001 filed on August 15, 2001.
(12) Contained in Uniroyal's 8-K dated August 25, 2002.
(13) Filed with this report.
(b) Reports on Form 8-K:
Report on Form 8-K dated August 6, 2001, related to the completion of the
acquisition of Emcore Corporation's minority interest in Uniroyal
Optoelectronics, LLC.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
Date: January 14, 2003
By: /s/ Howard R. Curd
----------------------------------
Howard R. Curd, Chief Executive
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 and on the dates indicated.
/s/ Robert L. Soran /s/ Curtis L. Mack
- ----------------------------------------- ----------------------------------
Robert L. Soran, Director, President and Curtis L. Mack, Director
Chief Operating Officer Date: January 14, 2003
Date: January 14, 2003
/s/ George J. Zulanas, Jr. /s/ Roland H. Meyer
- ----------------------------------------- ----------------------------------
George J. Zulanas, Jr., Executive Vice Roland H. Meyer, Director
President, Treasurer and Chief Financial Date: January 14, 2003
Officer
Date: January 14, 2003
/s/ Howard R. Curd /s/ John A. Porter
- ----------------------------------------- ----------------------------------
Howard R. Curd, Director, Chairman of the John A. Porter, Director
Board and Chief Executive Officer Date: January 14, 2003
Date: January 14, 2003
/s/ Peter C. B. Bynoe
- -----------------------------------------
Peter C. B. Bynoe, Director
Date: January 14, 2003
/s/ Thomas E. Constance
- -----------------------------------------
Thomas E. Constance, Director
Date: January 14, 2003
POWER OF ATTORNEY
Each person whose signature to this report appears below hereby appoints Howard
R. Curd, Robert L. Soran and Oliver J. Janney, and each individually, any one of
whom may act without the joinder of the others, as his agent and
attorney-in-fact to sign on his behalf individually and in the capacity stated
below and to file all amendments to this report, which amendments make such
changes and additions to this report as such agent and attorney-in-fact may deem
necessary and appropriate.
/s/ Howard R. Curd /s/ Peter C. B. Bynoe
- ----------------------------------------- ----------------------------------
Howard R. Curd, Director, Chairman of the Peter C. B. Bynoe, Director
Board And Chief Executive Officer Date: January 14, 2003
Date: January 14, 2003
/s/ Robert L. Soran /s/ Thomas E. Constance
- ----------------------------------------- ----------------------------------
Robert L. Soran, Director, President and Thomas E. Constance, Director
Chief Operating Officer Date: January 14, 2003
Date: January 14, 2003
/s/ Curtis L. Mack
----------------------------------
Curtis L. Mack, Director
Date: January 14, 2003
/s/ Roland H. Meyer
----------------------------------
Roland H. Meyer, Director
Date: January 14, 2003
/s/ John A. Porter
----------------------------------
John A. Porter, Director
Date: January 14, 2003
UNIROYAL TECHNOLOGY CORPORATION
EXHIBIT 21.1
Subsidiaries of Uniroyal Technology Corporation
The following table sets forth, with respect to each subsidiary of the
Company, the state of organization and the percentage of voting securities
currently owned by the Company:
Percentage of Voting Securities Directly or
Subsidiary Name State of Organization Indirectly Owned by the Company
- ------------------------------------------------- ----------------------- ---------------------------------------------
Uniroyal Compound Semiconductors, Inc. (formerly
known as Uniroyal Optoelectronics, Inc.) Delaware 100%
Uniroyal Optoelectronics, Inc. Delaware (a)
Sterling Semiconductor, Inc. Delaware (a)
NorLux Corp. Delaware (a)
UEP Holdings, Inc. Delaware 100%
Uniroyal Engineered Products, LLC Delaware (b)
Uniroyal Liability Management Company, Inc. Delaware 69%
ULMC2 Corp. Delaware (c)
UnitechNJ, Inc. Delaware 100%
UnitechOH, Inc. Delaware 100%
UnitechIND, Inc. Delaware 100%
Uniroyal HPP Holdings, Inc. Delaware 100%
High Performance Plastics, Inc. Delaware (d)
UNR Service Corporation Delaware 100%
(a) A wholly-owned subsidiary of Uniroyal Compound Semiconductors, Inc.
(b) Ownership is as follows: 99% owned by UEP Holdings, Inc. and 1% owned by
Uniroyal Compound Semiconductors, Inc.
(c) A wholly-owned subsidiary of Uniroyal Liability Management Company, Inc.
(d) A wholly-owned subsidiary of Uniroyal HPP Holdings, Inc.