|
2002 |
2003 |
| ADDITIONS TO NET ASSETS ATTRIBUTED TO: |
|
|
|
|
|
|
|
|
| Contributions: |
|
|
| Participants |
|
|
$ |
3,787,516 |
|
$ |
3,514,923 |
|
| Employer |
|
|
|
1,917,488 |
|
|
2,089,527 |
|
|
|
|
|
|
| |
| Total contributions |
|
|
|
5,705,004 |
|
|
5,604,450 |
|
|
|
|
|
|
| Investment (loss) income: |
|
|
| Interest and dividend income, investments |
|
|
|
1,141,533 |
|
|
3,000,825 |
|
| Interest income, participant loans |
|
|
|
188,730 |
|
|
130,584 |
|
| Net (depreciation) appreciation in fair value of investments |
|
|
|
(10,559,461 |
) |
|
14,863,164 |
|
|
|
|
|
|
| |
| Net investment (loss) income |
|
|
|
(9,229,198 |
) |
|
17,994,573 |
|
|
|
|
|
|
| |
| Total (reductions) additions |
|
|
|
(3,524,194 |
) |
|
23,599,023 |
|
|
|
|
|
|
DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO: |
|
|
| Distributions to participants |
|
|
|
8,418,278 |
|
|
12,533,034 |
|
| Asset transfers out |
|
|
|
- |
|
|
1,501,776 |
|
| Other deductions |
|
|
|
8,168 |
|
|
8,050 |
|
|
|
|
|
|
| |
| Total deductions |
|
|
|
8,426,446 |
|
|
14,042,860 |
|
|
|
|
|
|
| |
| Net (decrease) increase for the year |
|
|
|
(11,950,640 |
) |
|
9,556,163 |
|
|
|
|
|
|
| NET ASSETS AVAILABLE FOR PLAN BENEFITS: |
|
|
| Beginning of year |
|
|
|
111,094,961 |
|
|
99,144,321 |
|
|
|
|
|
|
| |
| End of year |
|
|
$ |
99,144,321 |
|
$ |
108,700,484 |
|
|
|
|
|
|
| (1) |
Company and Plan Structure |
| |
We use the following terms to identify various companies and plans. |
| |
GrafTech International Ltd. is the public parent company and the issuer of the publicly traded common stock held within the UCAR Carbon Savings Plan. Prior to May 7, 2002, GrafTech International Ltd. was named UCAR International Inc. |
| |
UCAR Carbon Company Inc. is a wholly owned subsidiary of GrafTech International Ltd. through which we conduct most of our United States operations. |
| |
UCAR Carbon Savings Plan is a savings program for the exclusive benefit of UCAR Carbon Company Inc.’s eligible employees and their beneficiaries and the eligible employees and their beneficiaries of any company or other entity adopting the UCAR Carbon Savings Plan. |
| (2) |
Description of the Plan |
| |
The following brief description of the UCAR Carbon Savings Plan (herein referred to as the “Plan”) is provided for general information only. Participants should refer to the Plan document for more complete description of the Plan’s provisions. |
| |
The Plan is a defined contribution plan consisting of several separate investment options as described below. |
| |
The
Plan is administered by the Savings Plan Administrative Committee. |
| |
The
Plan is available to all regular employees of UCAR Carbon Company Inc. and participating
affiliate companies (collectively, the “Company”). |
| |
Participating
non-union and collectively bargained Columbia, TN and Lawrenceburg, TN employees can
contribute 1% to 5% of their compensation into the Plan as basic contributions. An
additional 0.5% to 50% inclusive of employee compensation may be contributed as
supplemental contributions. Employee contributions are subject to applicable Internal
Revenue Code limitations. |
| |
The
Company contributes on behalf of each participating non-union and collectively bargained
Columbia, TN and Lawrenceburg, TN employee an amount equal to 100% of the employee’s
basic |
5
| |
contributions
up to 3% of pay and 50% of basic contributions up to another 2% of pay. Employer
contributions are subject to applicable Internal Revenue Code limitations. |
| |
Participating
collectively bargained Clarksburg, WV employees can contribute 1% to 7.5% of their
compensation into the Plan as basic contributions. An additional 0.5% to 10% of union
employee compensation may be contributed as supplemental contributions. Collectively
bargained employee contributions are subject to applicable Internal Revenue Code
limitations. |
| |
The
Company contributes on behalf of each participating collectively bargained Clarksburg, WV
employee an amount equal to 50% of the employee’s basic contribution. |
| |
The
Company makes an Employer Retirement Contribution on behalf of eligible participants in
the amount of 2.5% of compensation up to the Social Security Taxable Wage Base for the
Plan Year and 5% of compensation for amounts in excess of the Social Security Taxable
Wage Base. Employees who were grandfathered under the UCAR Carbon Retirement Plan,
employees covered by the Columbia, Tennessee collective bargaining agreement, and
employees covered by the Lawrenceburg, Tennessee collective bargaining agreement
became eligible for Employer] Retirement contributions under this plan as of April 1,
2003, May 1, 2003 and August 1, 2003, respectively. The employees covered by the
Clarksburg, WV collective bargaining agreement are not eligible to participate in the
Employer Retirement Contribution. |
| |
Effective
January 1, 2003 the Plan was amended to provide that all company contributions under the
Plan shall be made in the form of GrafTech common stock. Participants are not required to
keep the Company matching contributions in the GrafTech International Ltd. Common Stock
Fund. The day after a Company contribution is credited to the participant’s account,
the money can be transferred to any of the plan’s other funds. |
| |
Vesting and Distributions |
| |
Participants
are immediately vested in 100% of their savings account balance (including employer
contributions plus actual earnings thereon). |
| |
Participants
become fully vested in the Employer Retirement Contributions upon completion of at least
5 years service or attainment of a normal retirement date. |
| |
Withdrawals
from the Plan can be made for financial hardship, after age 59 ½, retirement or
other termination of employment or may be deferred under the terms of the Plan. Other
savings plan withdrawals are subject to conditions stated in the Plan. |
| |
Participants’ accounts
are credited with participant contributions, contributions from the Company and an
allocation of investment income from the Plan. The allocations of investment income are
based upon participants’ account balances and the allocation of their account
balances to the various investment options. |
| |
The
Plan permits participants to borrow money from their accounts. A minimum account balance
of 2,000 is required to qualify for a loan. The minimum loan is $1,000 and the maximum
loan is 50% |
6
| |
of a participants’ account balance up to a maximum loan of $50,000. Participants are
required to repay the loan plus a fixed interest rate based on current lending rates.
Interest is added to the participant’s account. |
| |
The
Plan’s trustee is Vanguard Fiduciary Trust Company and the Plan’s recordkeeper
is The Vanguard Group. |
| |
During the plan year ending December 31, 2002 and 2003, participants were able to allocate their
basic and supplemental contributions in one half-percentage point increments in any or
all of the following investment options (descriptions have been summarized from the fund
prospectus): |
| |
Vanguard
Retirement Savings Trust: Seeks stable returns by investing in a combination of
synthetic contracts, traditional insurance, and bank contracts. The average maturity
range of the trust is 2-3 years. Because the trust invests in contracts designed to
preserve a stable net asset value, the trust generates income without the price
volatility associated with traditional short-term credit instruments. The trust maintains
a strict credit policy requiring traditional contracts to be rated at least AA. |
| |
Vanguard
500 Index Fund: Seeks to track the performance of a benchmark index that measures the
investment return of large-capitalization stocks. The fund employs a “passive
management”, or indexing, investment approach designed to track the performance of
the Standard & Poor’s 500 Index, which is dominated by the stocks of large U.S.
companies. The fund attempts to replicate the target index by investing all, or
substantially all, of its assets in the stocks that make up the Index. |
| |
Vanguard
PRIMECAP Fund: Seeks to provide long-term capital appreciation by investing in stocks
of companies with above-average prospects for continued earnings growth, strong industry
positions, and skilled management teams. It also may invest in companies with
below-average earnings but bright prospects for earnings growth. The fund may not be
broadly diversified; at times the fund may invest a large portion of its assets in select
industries. |
| |
Vanguard
Value Index Fund: Seeks to track the performance of a benchmark index that measures
the investment return of large-capitalization value stocks. The Fund employs a “passive
management”, or indexing investment strategy designed to track the performance of
the MSCI® US Prime Market Value Index, a broadly diversified index of value stocks
of predominantly large U.S. companies. Prior to May 16, 2003 the fund’s target index
was the Standard & Poor’s 500/Barre Value Index. The Fund attempts to replicate
the target index by investing all, or substantially all, of its assets in the stocks that
make up the index. |
| |
Vanguard
LifeStrategy Conservative Growth Fund: Seeks to provide current income and low to
moderate growth of capital by investing in other Vanguard mutual funds according to a
fixed formula that over time should reflect an allocation of about 40% to bonds, 20% to
short-term reserves, and 40% to common stocks. The percentages of the fund’s assets
allocated to each of the underlying funds are 30% Vanguard Total Bonds Market Index |
7
| |
Fund,
25% Vanguard Asset Allocation Fund, 20% Vanguard Short-Term Corporate Fund, 20% Vanguard
Total Stock Market Index Fund and 5% Vanguard Total International Stock Index Fund. |
| |
Vanguard LifeStrategy Growth Fund: Seeks to provide capital appreciation and some current
income by investing in other Vanguard mutual funds according to a fixed formula that over
time should results in an allocation of about 80% of assets to common stocks and 20% to
bonds. The percentages of the Fund’s assets allocated to each of the underlying
funds are 50% Vanguard Total Stock Market Index Fund, 25% Vanguard Asset Allocation Fund,
15% Vanguard Total International Stock Index Fund and 10% Vanguard Total Bond Market
Index Fund. |
| |
Vanguard LifeStrategy Moderate Growth Fund: Seeks to provide growth of capital and a low to
moderate level of current income by investing in other Vanguard mutual funds according to
a fixed formula that typically results in an allocation of about 60% of assets to common
stocks and 40% to bonds. The percentages of the Fund’s assets allocated to each of
the underlying funds are 35% Vanguard Total Stock Market Index Fund, 30% Vanguard Total
Bond Market Index Fund, 25% Vanguard Asset Allocation Fund and 10% Vanguard International
Stock Index Fund. |
| |
Janus Overseas Fund: Seeks to provide long-term growth of capital through investments in a
diversified portfolio of foreign companies. The fund invests, under normal circumstances,
at least 80% of its net assets in securities of issuers from countries outside the United
States. The fund normally invests in securities of issuers from at least five different
countries, excluding the United States. On September 26, 2003, Janus Overseas Fund was
replaced by American Funds EuroPacific Growth Fund R-4. |
| |
UAM: ICM Small Company Portfolio: Seeks long-term capital appreciation. The fund normally
invests at least 80% of assets in equity securities small cap companies. It may invest up
to 20% of assets in American Depositary Receipts. The fund may also invest in equity
securities listed on the New York and American Stock Exchanges or traded on the
over-the-counter markets operated by the NASD. |
| |
American Funds Euro Pacific Growth R-4: On September 26, 2003, American Funds EuroPacific
Growth Fund R-4 became the savings plan’s option for investing in international
stocks. The fund seeks long-term growth of capital and normally invests at least 80% of
assets in equity securities of issuers domiciled in Europe and the Pacific Basin. It may
also hold cash or money market instruments. |
| |
Vanguard LifeStrategy Income Fund: Seeks to provide current income and some growth of capital
by investing in other Vanguard mutual funds according to a fixed formula that typically
results in an allocation of about 60% of assets to bonds, 20% to short-term reserves, and
20% to common stocks. The percentages of the Fund’s assets allocated to each of the
underlying funds are 50% Vanguard Total Bond Market Index Fund, 25% Vanguard Asset
Allocation Fund, 20% Vanguard Short-term Corporate Fund and 5% Vanguard Total Stock
Market Index Fund. |
| |
GrafTech International Ltd. Common Stock Fund (formerly UCAR Common Stock Fund): Seeks to
provide the possibility for long-term growth through increases in the value of the common
stock of GrafTech International Ltd. (herein referred to as “GrafTech Stock”). |
8
| |
GrafTech Stock is publicly traded on the New York Stock Exchange and had a closing price of $5.96
per share at December 31, 2002 and $13.50 at December 31, 2003. |
| |
GrafTech Discounted Stock Fund (formerly UCAR Discounted Stock Fund): The GrafTech Discounted
Stock Fund was discontinued as of December 31, 2002 and all assets invested in the
discounted fund were transferred to the GrafTech Common Stock Fund. |
| (3) |
Summary of Significant Accounting Policies |
| |
The
financial statements of the Plan are prepared under the accrual method of accounting. |
| |
Investment Valuation and Income Recognition |
| |
Investments
are reported at market value, based upon quoted market prices. Unrealized appreciation or
depreciation of investments carried at market value is recognized currently in the
financial statements. Purchases and sales of investments are recorded on the trade date.
Interest income is recorded on the accrual basis. Dividends are recorded on the
ex-dividend date. Participant loans are valued at cost, which approximates fair value. |
| |
Benefits are recorded when paid. |
| |
The preparation of financial statements in conformity with accounting principles generally
accepted in the United States of America requires management to make estimates and
assumptions that affect the reported amounts of net assets available for benefits and
changes therein. Actual results could differ from those estimates. The Plan utilizes
various investment instruments. Investment securities, in general, are exposed to various
risks, such as interest rate, credit and overall market volatility. Due to the level of
risk associated with certain investment securities, it is reasonably possible that
changes in the values of investment securities will occur in the near term and that such
changes could materially affect the amounts reported in the statements of net assets
available for Plan benefits. |
| |
On September 16, 2003, the Plan secured a favorable determination as a qualified plan under
Section 401(a) of the Internal Revenue Code (IRC), and that the trust created under the
Plan is exempt from Federal income tax under Section 501(a) of the IRC. This
determination letter was applicable for amendments adopted through June 10, 2003 and the
Company believes there have been no changes that would negatively impact the Plan’s
continued qualified status. Therefore the Plan has not recorded a provision for income
taxes. |
| |
All
costs and expenses, including transfer taxes and brokerage commissions incurred in
connection with the sale or purchase of stock in the GrafTech International Ltd. Common
Stock Fund are |
9
| |
charged
to the fund. For the years ended December 31, 2002 and 2003, the Company paid all costs
of administration and bore the expenses of collecting and distributing amounts from and
to the participants and of keeping the records of the Plan, except for certain loan
origination fees and annual loan maintenance fees bore by the participants. For the years
ended December 31, 2002 and 2003, plan expenses paid for by the Company amounted to
$24,102 and $22,978, respectively. |
| |
Although it has not expressed any intent to do so, the Company reserves the right to amend,
modify, suspend or terminate the Plan. In the event of Plan termination, participants
would receive the full value of their accounts. |
| (7) |
Related Party Transactions |
| |
The
Plan invests in shares of mutual funds managed by an affiliate of Vanguard Fiduciary
Trust Company (“VFTC”). VFTC acts as trustee for only those investments as
defined by the Plan. The Plan also invests in GrafTech Stock. GrafTech International Ltd.
is the public parent company and the issuer of the publicly traded common stock held
within the UCAR Carbon Savings Plan. Transactions in such investments qualify as
party-in-interest transactions, which are exempt from the prohibited transactions rules. |
| |
The
plan had no asset transfers in 2002. Asset transfers out to other plans amounted to
$1,501,776 in 2003 and pertained to GrafTech International Ltd.’s sale of its
non-strategic composite tooling business based in Irvine, California in June 2003. |
| |
At
December 31, 2002 and 2003 forfeited non-vested accounts totaled $1,544 and $47,577,
respectively. These accounts will be used to offset future employer contributions. |
| (10) |
Investments of 5% or more |
| |
Investments that represent 5% or more of the Plan’s net assets at December 31, 2002 and 2003 are
as follows: |
|
At December 31, |
| |
2002 |
2003 |
Vanguard Retirement Savings Trust |
|
|
$ | 58,441,980 |
|
$ | 57,605,563 |
|
| Vanguard 500 Index Fund | | |
| 10,286,858 |
|
| 11,288,844 |
|
| Vanguard PRIMECAP Fund | | |
| 6,408,033 |
|
| 8,516,555 |
|
| Vanguard Value Index Fund | | |
| 5,944,090 |
|
| 7,042,458 |
|
| GrafTech Common Stock Fund | | |
| (formerly UCAR Common Stock Fund) | | |
| 5,374,462 |
|
| 9,742,412 |
|
10
| |
During
2002 and 2003, the Plan’s investments (including gains and losses on investments
bought and sold, as well as held during the year) (depreciated) appreciated in value by
$(10,559,461) and $14,863,164, respectively, as follows: |
|
2002 |
2003 |
Mutual funds |
|
|
$ |
(7,107,138 |
) |
$ | 8,400,441 |
|
| Common Stock funds | | |
| (3,452,323 |
) |
| 6,462,723 |
|
|
| |
| |
| |
|
|
$ |
(10,559,461 |
) |
$ |
14,863,164 |
|
|
| |
| |
11
UCAR CARBON SAVINGS PLAN
December 31, 2003
Description
|
Current
Value
|
| * Vanguard Retirement Savings Trust, |
|
|
| |
|
| 57,605,563 shares | | |
$ | 57,605,563 |
|
| * Vanguard 500 Index Fund, 109,953 shares | | |
| 11,288,844 |
|
| * Vanguard PRIMECAP Fund, 160,569 shares | | |
| 8,516,555 |
|
| * Vanguard Value Index Fund, 371,634 shares | | |
| 7,042,458 |
|
| * Vanguard LifeStrategy Conservative Growth Fund, 232,018 shares | | |
| 3,373,545 |
|
| * Vanguard LifeStrategy Growth Fund, 112,457 shares | | |
| 2,042,216 |
|
| * Vanguard LifeStrategy Moderate Growth Fund, 120,733 shares | | |
| 2,005,376 |
|
| * UAM: ICM Small Company Portfolio, 72,899 shares | | |
| 2,356,091 |
|
| * American Funds Euro Pacific Growth Fund R-4, 47,249 shares | | |
| 1,414,157 |
|
| * Vanguard LifeStrategy Income Fund, 91,654 shares | | |
| 1,209,836 |
|
| * GrafTech International Ltd. Common Stock Fund | | |
| (formerly UCAR Common Stock Fund), 752,891 shares | | |
| par value $.01 | | |
| 9,742,412 |
|
| * Participant Loans Receivable (4.0%-9.5%) | | |
| 1,910,721 |
|
|
| |
|
Total |
|
|
$ |
108,507,774 |
|
|
| |
| * Represents
party-in-interest. |
|
|
|
|
|
12
To the Plan Administrator of
UCAR Carbon Savings Plan
Wilmington, Delaware
We have audited the accompanying statements of net
assets available for plan benefits of the UCAR Carbon Savings Plan (the “Plan”) as of December 31, 2003
and 2002, and the related statements of changes in net assets available for plan benefits for the years
then ended. These financial statements are the responsibility of the Plan’s management. Our responsibility
is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards
of the Public Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly,
in all material respects, the net assets available for plan benefits of the Plan as of December 31, 2003 and 2002,
and the changes in net assets available for plan benefits for the years then ended in conformity with
accounting principles generally accepted in the United States of America.
Our audits were conducted for the purpose of forming
an opinion on the basic financial statements taken as a whole. The supplemental schedule of assets held
for investment purposes at end of year is presented for the purpose of additional analysis and is not
a required part of the basic financial statements but is supplementary information required by the Department
of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security
Act of 1974. The supplemental schedule is the responsibility of the Plan’s management. Such supplemental
schedule has been subjected to the auditing procedures applied in our audit of the 2003 basic financial
statements and, in our opinion, is fairly stated in all material respects when considered in relation
to the basic financial statements taken as a whole.
/s/ Deloitte &
Touche LLP
Philadelphia, Pennsylvania
June 25, 2004
13
Pursuant to the requirement of the Securities Exchange
Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused
this annual report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: June 28, 2004
|
|
By:/s/ Corrado F. DeGasperis
Corrado F. DeGasperis
Vice President, Chief Financial and Chief
Information Officer,
GRAFTECH INTERNATIONAL LTD.
(Principal Financial Officer and Principal
Accounting Officer)
Chairman of the Savings Plan
Administrative Committee
|
14
EXHIBIT INDEX
| 23.1 |
|
Consent of Deloitte & Touche LLP. |