CARPENTER TECHNOLOGY CORP — Annual Report 2001

Jun 28, 2001

11-K 1 tal11k.htm RETIREMENT PLAN OF TALLEY METALS TECHNOLOGY INC. The following table was generated by the Internet Assistant Wizard for Microsoft Excel. ------------------------- START OF CONVERTED OUTPUT -------------------------

Form 11-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
ANNUAL REPORT
Pursuant to Section 15(d) of the
Securities Exchange Act of 1934
For the year ended December 31, 2000
Commission File Number 1-5828
RETIREMENT PLAN OF TALLEY METALS TECHNOLOGY, INC. (Full title of the plan)
CARPENTER TECHNOLOGY CORPORATION (Name of issuer of the securities held pursuant to the plan)
1047 N. Park Rd.
Wyomissing, Pennsylvania 19610-1339
(Address of principal executive
office of the issuer)

SIGNATURES
Pursuant to the
requirements of the Securities Exchange Act of 1934, Carpenter Technology Corporation has duly caused this annual report to be signed on its behalf by the undersigned thereunto duly authorized.
			RETIREMENT PLAN OF TALLEY METALS TECHNOLOGY, INC. (Name of Plan)
Date	June 28, 2001	By	/s/ Terrence E. Geremski
			Terrence E.
Geremski Senior Vice President - Finance and Chief Financial Officer

Financial Statements and Exhibits — (a)	Financial Statements
	The financial statements filed as part of this report are listed in the Index to Financial Statements included herein.
(b)	Exhibits
	(1)	Consent of Independent Accountants

| RETIREMENT PLAN OF TALLEY
METALS TECHNOLOGY, INC. | |
| --- | --- |
| INDEX TO FINANCIAL
STATEMENTS | |
| FORM 11-K ANNUAL REPORT | |
| | Form 11-K |
| | Pages |
| Report of Independent Accountants | 5 |
| Financial Statements: | |
| Statements of Net Assets Available
for Benefits as of December 31, 2000 and 1999 | 6 |
| Statements
of Changes in Net Assets Available for Benefits for the years ended December 31, 2000 and 1999 | 7 |
| Notes to Financial Statements | 8-12 |
| Supplemental Schedule: | |
| Assets Held for Investment Purposes at
End of Year | 13 |
| Consent of Independent Accountants | 14 |

| Report of Independent Accountants |
| --- |
| To the Participants and Administrator of the
Retirement Plan of Talley Metals Technology, Inc.: |
| In our opinion, the accompanying statements of net assets available
for benefits and the related statements of changes in net assets available for benefits present fairly, in all material
respects, the net assets available for benefits of the Retirement Plan of Talley Metals Technology,
Inc. (the "Plan") at December 31, 2000 and 1999, and the changes in net assets available
for benefits for the years then ended in conformity with accounting principles generally accepted in the
United States of America. 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 of these statements in accordance with auditing standards generally accepted in the United States of America, which 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, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. |
| 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. This supplemental schedule is the responsibility
of the Plan's management. The supplemental schedule has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly
stated in all material respects in relation to the basic financial statements taken as a whole. /s/PricewaterhouseCoopers LLP |
| June 4, 2001 |

RETIREMENT PLAN OF TALLEY METALS TECHNOLOGY, INC.
STATEMENTS OF NET ASSETS
AVAILABLE FOR BENEFITS as of December 31, 2000 and 1999 (dollars in thousands)
ASSETS	2000	1999
Investments, at fair value	$ 6,843	$ 6,580
Receivables:
Investment income receivable	12	9
Contributions - salary deferral	-	32
Contributions - company	-	47
Total receivables	12	88
Total assets	6,855	6,668
Net assets available for benefits	$ 6,855	$ 6,668
The accompanying notes are an integral part of these financial statements.

RETIREMENT PLAN OF TALLEY METALS TECHNOLOGY, INC.
STATEMENTS OF CHANGES IN
NET ASSETS AVAILABLE FOR BENEFITS for the years ended December 31, 2000 and 1999 (dollars in thousands)
	2000	1999
Additions to net assets attributed to:
Investment income:
Net appreciation in fair value of investments	$ -	$ 338
Interest and Dividends	200	205
	200	543
Contributions:
Employer	659	772
Participant	469	592
Rollover	217	1
	1,345	1,365
Total additions	1,545	1,908
Deductions from net assets attributed to:
Net depreciation in fair value of investments	165	-
Benefits paid to participants	1,188	1,240
Administrative expenses	5	7
Total deductions	1,358	1,247
Net
increase	187	661
Net assets available for benefits:
Beginning
of year	6,668	6,007
End
of year	$ 6,855	$ 6,668
The accompanying notes are an integral part of these financial statements.

| RETIREMENT PLAN OF TALLEY METALS TECHNOLOGY, INC. NOTES TO
FINANCIAL STATEMENTS | |
| --- | --- |
| 1. | Description of Plan: |
| | The following brief description of the Retirement Plan of Talley Metals Technology, Inc.
(the Plan) is provided for general information purposes only. Participants should refer to the Plan document for more complete information. |
| | General: |
| | The Plan is a defined contribution plan covering all employees of Talley Metals Technology, Inc. and Amcan Specialty Steels, Inc. (collectively called the Company) who have one year of service and are age eighteen or older. It is subject to provisions of the Employee Retirement Income Security Act of 1974 (ERISA). Prior to June 1, 1998, the Plan had been designed as a money purchase pension plan. Any contributions made prior to that date and earnings on those contributions will be subject to the terms of
those plan documents. |
| | Effective July 1, 1999, Amcan Specialty Steels, Inc. was merged into Talley Metals Technology, Inc., at which time these employees became eligible to participate in the Plan. |
| | Contributions: |
| | Each participant may, at their discretion, contribute between 1% and 15% of their compensation through elective deferrals. |
| | The Company makes annual Guaranteed Contributions to the Plan on behalf of participants. The amount of such contributions is five percent of each participant's earnings during the calendar year. In addition, the employer also makes a matching contribution of 100% of the first 3% of the participant's total earnings that a
participant contributes to the Plan. Participants may also contribute amounts representing contributions from other qualified defined benefit or defined contribution plans. |
| | Participants may direct all contributions in one or more of the investment options in five percent increments as directed by the participants based on their personal investment goals. The Plan currently offers seven mutual funds, a fixed income fund, and the stock of Carpenter Technology Corporation. |

| | Participant's
Accounts: | |
| --- | --- | --- |
| | Participant accounts are maintained and updated by the recordkeeper, Marshall & Ilsley (M&I), which also acts as the trustee. Each participant's account is credited with the participant's contribution, the Company's contributions and an allocation of Plan
investment earnings. | |
| | Vesting: | |
| | Participants are 100% vested in all contributions. | |
| | Participant
Loans: | |
| | Loans are available to participants who are active employees of the Company. Participants are subject to certain restrictions on their number of loans, amount and
terms of repayment. Interest is charged at the prime rate for commercial lenders at the time the loan is initiated, plus one percent. Loan repayments must be made under a level amortization schedule through regular payroll deductions, and payment in full is required
at the time of the participant's separation. | |
| | Payment
of Benefits: | |
| | On termination of service due to death, disability, or retirement, a participant is
entitled to full distribution of all amounts credited to his or her account. For termination of
service due to other reasons, a participant is entitled to the amount credited to his or her account. Payments will be paid out in a lump sum or under a variety of annuity forms available for election by the participant. Benefit payments are recorded upon distribution. | |
| 2. | Summary of
Significant Accounting Policies: | |
| | A. | The financial statements of
the Plan are prepared under the accrual method of accounting. |
| | B. | 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 assets, liabilities, and changes therein, and disclosure of contingent assets and liabilities. Actual results could differ from those estimates. |

| | C. — D. | The
investment in the M&I Stable Principal Fund is stated at contract value, which represents contributions made under the contract, plus earnings, less participant withdrawals and administrative expenses. The investment in the other trust funds are stated at their fair value, based on the current market values of the underlying assets of the funds, or as determined by the trustee. Purchases and sales of investments are reflected on a trade-date basis. Gain or loss on sales of investments is based on average cost. Dividend income is recorded on the ex-dividend date. Income from other investments is recorded as earned on an accrual basis. — The
net appreciation (depreciation) in the fair value of investments in the statement of changes in net assets available for benefits consists of realized gains or losses and unrealized appreciation (depreciation) on investments. | |
| --- | --- | --- | --- |
| | E. | Benefits are recorded when
paid. | |
| | F. | Investments
are exposed to various risks, such as interest rate, market and credit risks. Due to the level of risk associated with certain investments and the level of uncertainty related to changes in the value of investments, it is reasonably possible that changes in these risks in the near term could materially affect the amounts reported in the statement of net assets available for benefits and the statement of changes in net assets available for benefits. | |
| 3. | Investments: | | |
| | The following presents investments that represent 5 percent or more of the Plan's net assets. (Shares and dollars in thousands) | | |
| | | at December 31 | |
| | | 2000 | 1999 |
| | M&I Stable Principal Fund, 2,489 and 2,167 shares, respectively | $ 2,489 | $ 2,167 |
| | Vanguard Wellington Fund, 14 and 14 shares,
respectively | $ 400 | $ 402 |
| | Vanguard Windsor II Fund, 24 and 33 shares,
respectively | $ 656 | $ 834 |
| | Vanguard Index 500 Fund, 10 and 12 shares,
respectively | $ 1,198 | $ 1,675 |
| | Vanguard U.S. Growth Fund, 29 and 20 shares,
respectively | $ 794 | $ 878 |

| | During 2000 and 1999, the Plan's investments (including gains and losses on investments
bought and sold, as well as held during the year) depreciated and appreciated in value by
$165,000 and $338,000 respectively, as follows: | | |
| --- | --- | --- | --- |
| | | (in thousands) | |
| | | 2000 | 1999 |
| | Common stock | $ 135 | $ (43) |
| | Mutual funds | (300) | 381 |
| | | $ (165) | $
338 |
| 4. | Tax Status of the Plan: | | |
| | The Internal Revenue Service has determined and informed the Company by a
letter dated December 20, 1999, that the Plan is qualified and that the trust established under the
Plan is tax-exempt, under the appropriate sections of the Internal Revenue Code (the Code). The Plan administrator believes the Plan is currently being operated in compliance with applicable sections of the Code. | | |
| 5. | Administrative Expenses: | | |
| | The participants are assessed a fee for loan originations. In addition,
investment income is shown net of investment management fees. All other expenses are paid by the Company. | | |
| 6. | Plan Termination: | | |
| | Although it has not expressed any intent to do so, the Company has the right
under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. | | |
| 7. | Related Party Transactions: | | |
| | Certain Plan investments are shares of mutual funds managed by Marshall &
Ilsley. Marshall & Ilsley is the trustee as defined by the Plan and, therefore, these transactions
qualify as party-in-interest. Loan origination fees paid by plan participants to Marshall &
Ilsley for the years ended December 31, 2000 and 1999 were $5,000 and $7,000 respectively. | | |
| 8. | Subsequent Event: Effective July 1, 2001, salaried exempt employees of the Company will become participants in the Savings Plan of Carpenter Technology Corporation. At that time, they will be
given the election to retain their balance in the Plan or transfer it to the Savings Plan of
Carpenter Technology Corporation. | | |

| Schedule H, line
4i - Schedule of Assets Held at End of
Year | | | |
| --- | --- | --- | --- |
| Retirement Plan
of Talley Metals Technology, Inc. | | | |
| as of December 31, 2000 | | | |
| (A) | (B) Identity of issue, borrower, lessor or similar party | (C) Description of investment, including maturity date, rate of interest, collateral, par or maturity value | (E) Current Value |
| * | M&I Stable Principal Fund | Fixed income funds | $ 2,488,709 |
| | Vanguard Wellington Fund | Mutual fund | $ 400,212 |
| | Vanguard Equity Income Fund | Mutual fund | $ 255,801 |
| | Vanguard Windsor II Fund | Mutual fund | $ 655,934 |
| | Vanguard Index Trust (500 Portfolio) | Mutual fund | $ 1,197,524 |
| | Vanguard U.S. Growth Portfolio | Mutual fund | $ 793,806 |
| | American Century Fund | Mutual fund | $ 216,907 |
| | Neuberger & Berman Genesis Trust | Mutual fund | $ 203,457 |
| * | Carpenter Technology Corporation Stock Fund | Corporate common stock | $ 291,030 |
| | Participant Loans | Loans to Participants - interest rate
range 8.75% to 10.5%; no loans due past 12/8/2005 | $ 339,769 |
| * Party-in-Interest | | | |

| CONSENT OF INDEPENDENT ACCOUNTANTS |
| --- |
| We hereby consent to the incorporation by
reference in the Registration Statement on Form S-8 (number 2-83780) of Carpenter
Technology Corporation of our report dated June 7, 2001 relating to the financial statements of the Retirement Plan of Talley Metals
Technology, Inc., which appears in this Form 11-K. /s/PricewaterhouseCoopers LLP |
| PricewaterhouseCoopers LLP Philadelphia, PA June 28, 2001 |

------------------------- END OF CONVERTED OUTPUT -------------------------

Last Updated on 6/19/01 By U00954