<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
[X] Annual Report Pursuant to Section 15(d) of the
Securities Exchange Act of 1934 (Fee Required)
For The Year Ended December 31, 1995
[ ] Transition Report Pursuant to Section 15(d) of the
Securities Exchange Act of 1934 (No Fee Required)
For The Transition Period from ________ to ________
Commission File Number 00107923
HANDLEMAN COMPANY SALARY DEFERRAL
AND STOCK PLAN
(Full title of the Plan)
HANDLEMAN COMPANY
(Name of issuer of the securities held pursuant to the Plan)
500 Kirts Boulevard
Troy, Michigan 48084
(Address of principal executive offices)
1 of 18
<PAGE>
The following financial statements and exhibits are presented pursuant to
Section 15(d) of the Securities Exchange Act of 1934:
<TABLE>
<CAPTION>
Page
----
<S> <C>
(a) Financial Statements:
Report of Independent Accountants I-1
Statement of Assets Available for Benefits
as of December 31, 1995 and 1994 I-2
Statement of Changes in Assets Available for
Benefits for the year ended December 31, 1995 I-3
Notes to Financial Statements I-4 to I-11
Item 27a -- Schedule of Assets Held for Investment
Purposes as of December 31, 1995 I-12
Item 27d -- Schedule of Reportable Transactions I-13 to I-15
for the year ended December 31, 1995
Schedules:
Schedule I, II and III have been omitted because
the required information is shown in the financial
statements or notes thereto, or in another schedule
Exhibit
Number
(b) 1. Consent of Independent Accountants with -------
respect to their report on their audit of
the financial statements of the Handleman
Company Salary Deferral and Stock Plan as
of December 31, 1995 and 1994, and for the
year ended December 31, 1995. 28.1
</TABLE>
SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons who administer the Plan) have duly caused this annual
report to be signed by the undersigned thereunto duly authorized.
HANDLEMAN COMPANY SALARY DEFERRAL AND STOCK PLAN
By: /s/ Richard J. Morris
---------------------
Richard J. Morris, Senior Vice President/Finance
Handleman Company
2 of 18
<PAGE>
HANDLEMAN COMPANY
SALARY DEFERRAL AND STOCK PLAN
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGES
-----
<S> <C>
Report of Independent Accountants 4
Financial Statements:
Statement of Assets Available for
Benefits as of December 31, 1995 and 1994 5
Statement of Changes in Assets Available
for Benefits for the year ended
December 31, 1995 6
Notes to Financial Statements 7-14
Supplemental Schedules:
Item 27a - Schedule of Assets Held for
Investment Purposes as of December 31, 1995 15
Item 27d - Schedule of Reportable Transactions
for the year ended December 31, 1995 16-18
</TABLE>
3 of 18
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Administrative Committee of the Handleman Company Salary Deferral and
Stock Plan:
We have audited the accompanying statement of assets available for benefits of
the Handleman Company Salary Deferral and Stock Plan as of December 31, 1995 and
1994, and the related statement of changes in assets available for benefits for
the year ended December 31, 1995. 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 generally accepted auditing
standards. 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, the financial statements referred to above present fairly, in
all material respects, the assets available for benefits of the Handleman
Company Salary Deferral and Stock Plan as of December 31, 1994 and 1993, and the
changes in assets available for benefits for the year ended December 31, 1994,
in conformity with generally accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules on pages 15
through 18 of this Form 11-K are presented for the purpose of additional
analysis and are not a required part of the basic financial statements but are
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 schedules have been subjected to the
auditing procedures applied in the audits of the basic financial statements and,
in our opinion, are fairly stated in all material respects in relation to the
basic financial statements taken as a whole.
Coopers & Lybrand L.L.P.
Detroit, Michigan
June 27, 1996
I-1
4 of 18
<PAGE>
HANDLEMAN COMPANY
SALARY DEFERRAL AND STOCK PLAN
STATEMENT OF ASSETS AVAILABLE FOR BENEFITS
December 31, 1995 and 1994
--------------------------
<TABLE>
<CAPTION>
1995 1994
---------- ----------
<S> <C> <C>
ASSETS:
Accrued dividends and interest $ 7,005 $ 20,373
Employee contributions receivable 137,124 47,443
Employer contribution receivable 34,172 129,328
Cash - 661
Investments at Estimated Fair Value
NBD Bank Investments:
Employee Benefit Money Market Fund (1),
(0 and 880,362 shares at
December 31, 1995 and 1994,
respectively) - 880,362
Stable Asset Income Fund (2), (0
and 3,776 shares at December 31,
1995 and 1994, respectively) - 708,381
KeyCorp Investments:
Employee Benefit Money Market Fund (3),
(37,462 and 0 shares at
December 31, 1995 and 1994,
respectively) 37,462 -
EB-Managed Guaranteed Investment Contract(4),
(61,505 shares and 0 shares at December 31,
1995 and 1994, respectively) 663,576 -
Investments at Fair Value as Determined
by Quoted Market Price
NBD Bank Investment:
Woodward Equity Index Fund (5), (0
and 140,501 shares at December 31, 1995
and 1994, respectively) - 1,496,485
KeyCorp Investments:
Victory U.S. Government Obligations Fund (6),
(96,514 shares and 0 shares at December 31,
1995 and 1994, respectively) 616,895 -
American Balanced Fund (7), (95,315
shares and 0 shares at December 31,
1995 and 1994, respectively) 1,348,712 -
Victory Stock Index Fund (8), (134,875
shares and 0 shares at December 31,
1995 and 1994, respectively) 1,749,331 -
Handleman Company common stock (9), (133,751
shares and 146,219 shares at December 31,
1995 and 1994, respectively) 769,068 1,663,245
Loans to participants at rates of 9.75%
to 10.0%, maturing in 4 months to 10 years 44,081 36,082
---------- ----------
ASSETS AVAILABLE FOR BENEFITS $5,407,426 $4,982,360
========== ==========
</TABLE>
(1) The Plan's cost of the investment in the NBD, NA Employee Benefit Money
Market Fund was $0 and $880,362 as of December 31, 1995 and 1994,
respectively.
(2) The Plan's cost of the investment in the Stable Asset Income Fund was $0
and $645,582 as of December 31, 1995 and 1994, respectively.
(3) The Plan's cost of the investment in the KeyCorp Employee Benefit Money
Market Fund was $37,462 and $0 as of December 31, 1995 and 1994,
respectively.
(4) The Plan's cost of the investment in the EB-Managed Guaranteed Investment
Contract Fund was $648,041 and $0 as of December 31, 1995 and 1994,
respectively.
(5) The Plan's cost of the investment in the Woodward Equity Index Fund was $0
and $1,477,441 as of December 31, 1995 and 1994, respectively.
(6) The Plan's cost of the investment in the Victory U.S. Obligations Fund was
$649,463 and $0 as of December 31, 1995 and 1994, respectively.
(7) The Plan's cost of the investment in the American Balanced Fund was
$1,385,069 and $0 as of December 31, 1995 and 1994, respectively.
(8) The Plan's cost of the investment in the Victory Stock Index Fund was
$1,624,902 and $0 as of December 31, 1995 and 1994, respectively.
(9) The Plan's cost of the common stock was $1,923,411 and $1,807,203 as of
December 31, 1995 and 1994, respectively.
The accompanying notes are an integral part of the financial statements.
I-2
5 of 18
<PAGE>
HANDLEMAN COMPANY
SALARY DEFERRAL AND STOCK PLAN
STATEMENT OF CHANGES IN ASSETS
AVAILABLE FOR BENEFITS
for the year ended December 31, 1995
------------------------------------
<TABLE>
<CAPTION>
Additions: 1995
----------
<S> <C>
Employer contributions 143,959
Employee authorized contributions 1,189,352
Dividend income 105,063
Interest income 37,975
Other 29,698
----------
Total additions $1,506,047
Deductions:
Participants' benefits 770,960
Net depreciation in fair value
of investments 266,469
Other 43,552
----------
Total deductions $1,080,981
==========
Net increase 425,066
Assets available for benefits,
beginning of year 4,982,360
----------
Assets available for benefits,
end of year $5,407,426
==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
I-3
6 of 18
<PAGE>
HANDLEMAN COMPANY
SALARY DEFERRAL AND STOCK PLAN
NOTES TO FINANCIAL STATEMENTS
-----------------------------
1. Description of Plan
The following description of the Handleman Company Salary Deferral and
Stock Plan (the "Plan") provides only general information. Participants
should refer to the Plan Document for a complete description of the Plan's
provisions.
General
The Plan is a defined contribution plan which includes salary deferral and
employee stock ownership provisions. The Plan covers all employees of the
Handleman Company (the "Company") and subsidiaries and affiliates that have
adopted the Plan who have one year of service and who are not covered by
collective bargaining agreements (unless they specifically refer to the
Plan). The Plan is subject to the provisions of the Employee Retirement
Income Security Act of 1974 (ERISA).
Contributions
Employee authorized contributions of tax deferred compensation are limited
in any one year to the lesser of twenty percent of employee compensation or
$9,500 in 1995. Effective July 1, 1995, each participant's maximum elective
deferral has been reduced to fifteen percent. In addition, total
contributions by highly compensated employees cannot exceed specific
percentage limitations of the aggregate contributions of all other
employees as set forth in the Internal Revenue Code.
Prior to July 1, 1995, the Company contributed to the Plan at the
discretion of its Board of Directors. Effective July 1, 1995, the Plan was
amended to provide for a Company matching contribution equal to 25 percent
of the elective contribution made by each participant, up to six percent of
such participant's compensation, to be invested in Company stock.
Plan Assets
To the extent practicable, Plan assets related to the Company stock portion
of the Plan are invested in Company stock. Employees may direct investment
of employee authorized contributions to the Plan into various investment
funds which are established by the Company from time to time.
Participant Accounts
Each participant's account is credited with employee authorized
contributions, in addition to an allocation of any Company contribution and
Plan earnings, net of Plan expenses. A participant must be employed by the
Company on the last day of the Company's fiscal year to receive the
allocation of Company contributions.
Salary Deferral Portion - Company contributions to the Salary Deferral
portion of the Plan are allocated to participants who are eligible as
defined by the Plan. There are certain limitations on the amounts
which can be allocated.
Stock Ownership Portion - Effective May 2, 1994, the Plan was amended
to discontinue Company contributions to this part of the plan.
I-4
7 of 18
<PAGE>
HANDLEMAN COMPANY
SALARY DEFERRAL AND STOCK PLAN
NOTES TO FINANCIAL STATEMENTS, Continued
1. Description of Plan, continued
Loans to Participants
The Plan allows participants to borrow against their account balances. The
maximum loan to any participant is the lesser of 50% of the participant's
non-forfeitable salary deferral account balance or $50,000.
Plan Expenses
Expenses of the Trustee and Administrative Committee are charged to
participant accounts unless the Company at its discretion elects to pay
these expenses. The Company paid such expenses for the year ended December
31, 1995.
Vesting
Participants are fully vested in amounts credited to their accounts except
as stated below.
Effective July 1, 1995, the Plan was amended to include a graded vesting
schedule for matching contributions of 20 percent for each year of service,
resulting in 100 percent vesting after five years of service.
Payment of Benefits
On termination of service, a participant will be eligible to receive the
plan assets allocated to the participant's account and which have vested or
an equivalent amount in cash. At December 31, 1995 and 1994, $321,048 and
$236,665, respectively, were recorded as benefits payable on the Form 5500.
2. Summary of Accounting Policies
Company Contributions
Company contributions are accrued in the plan year to which the
contributions relate. Company contributions are in the form of Company
stock.
Investments
At the end of the plan year, Company stock is valued at the closing market
price of the stock on the last business day of the Plan's year. The EB-
Managed Guaranteed Investment Contract Fund, Victory U.S. Government
Obligations Fund, American Balanced Fund, Victory Stock Index Fund and
Employee Benefit Money Market Fund are reflected at estimated fair values
or at fair value as determined by quoted market prices at the date of the
balance sheet, as reported by the Plan's investment custodian, KeyCorp.
The basis on which cost is determined to compute realized gains or losses
from sales of investments, other than the Company stock, is average cost.
The basis on which cost is determined for the Company stock is specific
identification.
The Plan presents in the statement of changes in assets the net
appreciation (depreciation) in fair value of investments which consists of
the realized gains or losses and the unrealized appreciation (depreciation)
on those investments.
For purposes of determining Company contributions, Company stock received
as the Company contribution is valued at the closing price on the day the
contribution is made.
I-5
8 of 18
<PAGE>
HANDLEMAN COMPANY
SALARY DEFERRAL AND STOCK PLAN
NOTES TO FINANCIAL STATEMENTS, Continued
2. Summary of Accounting Policies, continued
Dividend Income
Dividend income is recognized on the ex-dividend date. Dividend income on
Company stock for the year ended December 31, 1995 was $17,526.
Estimates
The preparation of financial statements in conformity with generally
accepted accounting principals requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ from
these estimates.
Investments
3. During the Plan year ended December 31, 1995, the Plan's investments
(including investments bought and sold, as well as held during the year)
(depreciated) appreciated in value by $266,469 as follows:
Investments at Estimated Fair Value
<TABLE>
<CAPTION>
<S> <C>
NBD Bank Investment:
Stable Asset Income Fund $ 23,565
Key Corp. Investment:
EB-Managed Guaranteed Investment Contract 23,130
Investments at Fair Value Determined
by Quoted Market Price
NBD Bank Investment:
Woodward Equity Index Fund 287,767
Key Corp. Investments:
Victory U.S. Government Obligation Fund 3,438
American Balanced Fund 6,589
Victory Stock Index Fund 224,806
Handleman Company Common Stock (835,764)
---------
$(266,469)
=========
</TABLE>
I-6
9 of 18
<PAGE>
HANDLEMAN COMPANY
SALARY DEFERRAL AND STOCK PLAN
NOTES TO FINANCIAL STATEMENTS, Continued
4. Fund Information
The following is a summary of assets for each investment fund option for
the years ended December 31, 1995 and 1994 and of changes by investment
fund for the year ended December 31, 1995. The Handleman common stock fund
includes both participant directed investments as well as investments of
company matching contributions. Effective July 1, 1995, the Plan changed
trustees from NBD Bank, NA ("preceding trust") to KeyCorp. The changes in
net assets for the period January 1, 1995 through December 31, 1995 were
as follows:
HANDLEMAN COMPANY
SALARY DEFERRAL AND STOCK PLAN
ASSETS AND LIABILITIES BY INVESTMENT PROGRAM
DECEMBER 31, 1995
<TABLE>
<CAPTION>
PARTICIPANT - DIRECTED
----------------------
HANDLEMAN MANAGED VICTORY U.S.
HANDLEMAN COMMON INVESTMENT OBLIGATIONS AMERICAN
ESOP FUND STOCK FUND FUND BALANCED FUND
----------- ----------- ----------- --------------- --------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Accrued dividends and interest $ 5,680 $ 1,167 $ 32 $ 30 $ 7
Employer contributions receivable - 34,172 - - -
Employee contributions receivable - 9,424 15,694 12,878 44,812
Key Corp. Investments:
Employee Benefit Money Market Fund - 37,462 - - -
EB-Managed Guaranteed Investment Contract - - 663,576 - -
Victory U.S. Government Obligations Fund - - - 616,895 -
American Balanced Fund - - - - 1,348,712
Victory Stock Index Fund - - - - -
Handleman Company Common Stock
(133,751 shares) 648,531 120,537 - - -
Loans to Participants - - - - -
----------- ---------- ---------- ---------- -----------
ASSETS AVAILABLE FOR BENEFITS $ 654,211 $ 202,762 $ 679,302 $ 629,803 $ 1,393,531
=========== ========== ========== ========== ===========
</TABLE>
<TABLE>
<CAPTION>
VICTORY
STOCK
INDEX FUND LOAN FUND TOTAL
---------- --------- ----------
<S> <C> <C> <C>
ASSETS:
Accrued dividends and interest $ 89 - $ 7,005
Employer contributions receivable - - 34,172
Employee contributions receivable 54,316 - 137,124
Key Corp. Investments:
Employee Benefit Money Market Fund - - 37,462
EB-Managed Guaranteed Investment Contract - - 663,576
Victory U.S. Government Obligations Fund - - 616,895
American Balanced Fund - - 1,348,712
Victory Stock Index Fund 1,749,331 - 1,749,331
Handleman Company Common Stock
(133,751 shares) - - 769,068
Loans to Participants - 44,081 44,081
---------- ------- ----------
ASSETS AVAILABLE FOR BENEFITS $1,803,736 $44,081 $5,407,426
========== ======= ==========
</TABLE>
I-7
10 of 18
<PAGE>
HANDLEMAN COMPANY
SALARY DEFERRAL AND STOCK PLAN
ASSETS AND LIABILITIES BY INVESTMENT PROGRAM
DECEMBER 31, 1994
-----------------
<TABLE>
<CAPTION>
PARTICIPANT - DIRECTED
----------------------------------------------
HANDLEMAN HANDLEMAN EQUITY MONEY MARKET FIXED
ESOP FUND COMMON STOCK INDEX FUND FUND INCOME FUND
--------------- --------------- ---------- ------------ -----------
<S> <C> <C> <C> <C> <C>
ASSETS:
Accrued dividends and interest $ 13,198 $ 2,922 $ 109 $ 4,000 $ 30
Employee contributions receivable - 4,750 26,158 8,403 8,132
Employer contribution receivable 129,328 - - - -
Cash - 62 479 46 73
NBD Bank Investments:
Employee Benefit Money
Market Fund 2,279 10,989 - 843,578 32
Stable Asset Income Fund - - - - 708,381
Woodward Equity Index Fund - - 1,496,485 - -
Handleman Company common stock
(146,219 shares) 1,363,731 299,514 - - -
Loans to participants 340 - - - -
---------- ---------- ---------- -------- --------
ASSETS AVAILABLE FOR BENEFITS $1,508,876 $ 318,237 $1,523,231 $856,027 $716,648
========== ========== ========== ======== ========
SEGREGATED
ASSET FUND LOAN FUND TOTAL
---------- ------------- ----------
ASSETS:
Accrued dividends and interest $ 108 $ 6 $ 20,373
Employee contributions receivable - - 47,443
Employer contribution receivable - - 129,328
Cash 1 661
NBD Bank Investments:
Employee Benefit Money
Market Fund 23,325 159 880,362
Stable Asset Income Fund - - 708,381
Woodward Equity Index Fund - - 1,496,485
Handleman Company common stock
(146,219 shares) - - 1,663,245
Loans to participants - 35,742 36,082
---------- -------- ----------
ASSETS AVAILABLE FOR BENEFITS $ 23,434 $ 35,907 $4,982,360
========== ======== ==========
</TABLE>
I-8
11 of 18
<PAGE>
HANDLEMAN COMPANY
SALARY DEFERRAL AND STOCK PLAN
INCOME AND CHANGES IN EQUITY BY INVESTMENT PROGRAM
DECEMBER 31, 1995
<TABLE>
<CAPTION>
PARTICIPANT - DIRECTED
---------------------------------------
HANDLEMAN HANDLEMAN EQUITY MONEY MARKET FIXED
ESOP FUND STOCK FUND INDEX FUND FUND INCOME FUND
--------- ---------- ---------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Additions:
Employer contributions $ (16,333) $ - $ - $ - $ -
Employee authorized
contributions - 32,808 211,944 69,363 67,474
Dividend Income 12,910 3,319 24,541 - -
Interest income 70 322 1,480 25,753 682
Other 13 - - - -
----------- --------- ----------- --------- ---------
Total additions (3,340) 36,449 237,965 95,116 68,156
Deductions:
Participants' benefits 136,878 20,903 80,329 50,132 41,589
Net depreciation (appreciation) in
fair value of investments 181,263 38,121 (287,767) - (23,565)
Trust to trust transfer 1,172,922 284,943 1,980,029 889,491 774,979
Other 15,089 - - - -
Transfers between funds (616) 10,719 (11,395) 11,520 (8,199)
----------- --------- ----------- ---------- ---------
Total deductions 1,505,536 354,686 1,761,196 951,143 784,804
----------- --------- ----------- ---------- ---------
Net increase (decrease) (1,508,876) (318,237) (1,523,231) (856,027) (716,648)
Assets available for benefits,
beginning of year 1,508,876 318,237 1,523,231 856,027 716,648
Assets available for benefits,
end of year $ - $ - $ - $ - $ -
=========== ========= =========== ========== =========
PRECEDING
SEGREGATED TRUST
ASSET FUND LOAN FUND TOTAL
---------- ----------- -----
<C> <C> <C>
Additions:
Employer contributions $ - $ - $ (16,333)
Employee authorized
contributions - - 381,589
Dividend Income - - 40,770
Interest income 734 1,726 30,767
Other 10,797 134 10,944
--------- --------- -----------
Total additions 11,531 1,860 447,737
Deductions:
Participants' benefits - - 329,831
Net depreciation (appreciation) in
fair value of investments - - (91,948)
Trust to trust transfer 34,237 40,187 5,176,788
Other 113 234 15,426
Transfers between funds 615 (2,644) -
--------- --------- -----------
Total deductions 34,965 37,767 5,430,097
--------- --------- -----------
Net increase (decrease) (23,434) (35,907) (4,982,360)
Assets available for benefits,
beginning of year 23,434 35,907 4,982,360
Assets available for benefits,
end of year $ - $ - $ -
========= ========= ===========
</TABLE>
6/24/96 2/16 PM I-9
12 of 18
<PAGE>
HANDLEMAN COMPANY
SALARY DEFERRAL AND STOCK PLAN
INCOME AND CHANGES IN EQUITY BY INVESTMENT PROGRAMS
FOR THE YEAR ENDED DECEMBER 31, 1995
------------------------------------
<TABLE>
<CAPTION>
PARTICIPANT-DIRECTED
-------------------------------
Preceding HANDLEMAN EB-MANAGED VICTORY U.S.
Trust HANDLEMAN COMMON INVESTMENT OBLIGATIONS
Subtotal ESOP FUND STOCK FUND FUND
-------- --------- --------- ----- ----
<S> <C> <C> <C> <C> <C>
Additions:
Employer contributions $ (16,333) $ - $ 160,292 $ - $ -
Employee authorized
contributions 381,589 52,348 95,250 77,063
Dividend Income 40,770 5,641 2,342 19,412
Interest income 30,767 158 262 1,011 937
Other 10,944 - - - -
---------- ---------- ---------- -------- --------
Total additions 447,737 5,799 215,244 96,261 97,412
Deductions:
Participants' benefits 329,831 54,221 8,868 93,937 66,345
Net depreciation
(appreciation) in
fair value of
investments (91,948) 469,014 147,366 23,130 (3,438)
Other 15,426 1,275 2,799 1 30
Trust to trust transfer 5,176,788 (1,172,922) (284,943) (775,066) (923,940)
Transfers between funds - - 138,392 121,217 328,612
---------- ---------- --------- -------- -------
Total deductions 5,430,097 (648,412) 12,482 (583,041) (532,391)
---------- ---------- --------- -------- -------
Net increase (decease) (4,982,360) 654,211 202,762 679,302 629,803
Assets available for
benefits, beginning of
year 4,982,360 - - - -
---------- ---------- ---------- -------- -------
Assets available for
benefits, end of
year - 654,211 $ 202,762 679,302 629,803
========== ========== =========== ======== ========
</TABLE>
<TABLE>
<CAPTION>
AMERICAN VICTORY STOCK
BALANCED FUND INDEX FUND
------------- -------------
<S> <C> <C>
Additions:
Employer contributions $ - $ -
Employee authorized
contributions 272,216 310,886
Dividend Income 13,018 23,880
Interest income 117 3,504
---------- ----------
Other
Total additions 285,351 338,270
Deductions:
Participants' benefits 15,724 202,034
Net depreciation
(appreciation) in
fair value of
investments (6,589) (224,806)
Other (2) 298
Trust to trust transfer (1,979,730)
Transfers between funds (1,117,313) 536,738
---------- ----------
Total deductions (1,108,180) (1,465,466)
---------- ----------
Net increase (decrease) 1,393,531 1,803,736
Assets available for
benefits, beginning of
year ---------- ----------
Assets available for
benefits, end of
year $ 1,393,531 $ 1,803,736
=========== ===========
</TABLE>
<TABLE>
<CAPTION>
LOAN FUND TOTAL
--------- -----
<S> <C> <C>
- $ 143,959
- 1,189,352
105,063
1,219 37,975
18,754 29,698
-------- ----------
19,973 1,506,047
- 770,960
266,469
(40,187) -
23,725 43,552
(7,646) -
-------- ----------
(24,108) 1,080,981
-------- ----------
44,081 425,066
- 4,982,360
-------- ----------
$ 44,081 $5,407,426
======== ==========
</TABLE>
I-10
13 of 18
<PAGE>
HANDLEMAN COMPANY
SALARY DEFERRAL AND STOCK PLAN
NOTES TO FINANCIAL STATEMENTS, Continued
-----------------------------
5. 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.
6. Tax Status
----------
The Plan obtained its latest determination letter on October 19, 1994, in
which the Internal Revenue Service stated that the amendments to the plan,
as then designed were in compliance with the applicable requirements of the
Internal Revenue Code. The Plan has been amended since receiving the
determination letter. However, the Plan administrator believes that the
plan is currently designed and being operated in compliance with the
applicable requirements of the Internal Revenue Code. Therefore, the Plan
administrator believes that the plan was qualified, and the related trust
was tax-exempt as of the financial statement date.
I-11
14 of 18
<PAGE>
HANDLEMAN COMPANY
SALARY DEFERRAL AND STOCK PLAN
Form 5500
Calendar Plan Year 1995
ITEM 27a, SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
Asterisk Identity of
denotes party- issue, borrower Description
in-interest to lessor, or of Current
the Plan similar party Investment Cost Value
- --------------- ---------------- ----------- ------- -------
<S> <C> <C> <C> <C>
Reporting Criteria I:
Investment assets held by
the Plan on the last day
of the Plan year
* Employee Benefit Cash Equivalents $ 37,462 $ 37,462
Money Market
Fund
* EB-Managed Investment $ 648,041 $ 663,576
Guaranteed Contracts
Investment
Contract
* Victory U.S. Short Term U.S. $ 649,463 $ 616,895
Government Treasury
Obligations Fund Securities
* American Balanced Common Stock $1,385,069 $ 1,348,712
Fund and Bond Fund
* Victory Stock Common $1,624,902 $ 1,749,331
Index Fund Stock Fund
* Handleman Common $1,869,858 $ 769,068
Company Stock
Common Stock $.01 par value
* Loans to Interest rates of $ $ 44,081
Participants 9.75% to 10% and
maturing in 4 months
to 10 years
</TABLE>
I-12
15 of 18
<PAGE>
HANDLEMAN COMPANY
SALARY DEFERRAL AND STOCK PLAN
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
for the year ended December 31, 1995
------------------------------------
<TABLE>
<CAPTION>
Current Value
Purchase Selling Cost of Asset on Net Gain
Identity of Party Involved Description of Asset Price Price of Asset Transaction or (Loss)
- -------------------------- -------------------- -------- ------- -------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
REPORTING CRITERION I: Any transaction within the plan year,
with respect to any plan asset, in-
volving an amount in excess of five
percent of the current value of plan
assets. See note A below.
REPORTING CRITERION II: Any series of transactions (other than
transactions with respect to securities)
within the plan year with or in con-
junction with the same person which,
when aggregated, regardless of the
category of asset and the gain or loss
on any transaction, involves an amount
in excess of five percent of the
current value of plan assets.
None.
REPORTING CRITERION III: Any transaction within the plan year
involving securities of the same issue
if within the plan year any series of
transactions with respect to such
securities, when aggregated, involves
an amount in exess of five percent of
the current value of plan assets.
NBD Bank, NA Employee Benefit Money Market Fund
237 purchases - 3,230,749 units 3,230,749 3,230,749 3,230,749
88 sales - 4,111,111 units 4,111,111 4,111,111 4,111,111
NBD Bank, NA Stable Asset Income Fund
4 sales - 4,130 units 799,190 712,826 799,190 86,364
</TABLE>
I-13
16 of 18
<PAGE>
HANDLEMAN COMPANY
SALARY DEFERRAL AND STOCK PLAN
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS, Continued
for the year ended December 31, 1995
------------------------------------
<TABLE>
<CAPTION>
Current Value
Purchase Selling Cost of Asset on Net Gain
Identity of Party Involved Description of Asset Price Price of Asset Transaction or (Loss)
- -------------------------- -------------------- -------- ------- -------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
REPORTING CRITERION III: Any transaction within the plan
year involving securities of
the same issue if within the plan
year any series of transactions with
respect to such securities, when aggre-
gated, involves an amount in exess of
five percent of the current value of
plan assets. (continued)
NBD Bank, NA Woodward Equity Index Fund
12 purchases - 16,034 units 187,261 187,261 187,261
4 sales - 156,536 units 1,971,512 1,664,702 1,971,512 306,810
KeyCorp Employee Benefit Money
Market Fund
53 purchases - 3,284,505 units 3,284,505 3,284,505 3,284,505
30 sales - 2,982,133 units 2,982,133 2,982,133 2,982,133
KeyCorp Victory U.S. Government
Obligations Fund
26 purchases - 2,021,668 units 2,929,918 2,929,918 2,929,918
11 sales - 1,925,154 units 2,281,379 2,280,455 2,281,379 924
KeyCorp EB-Managed Guaranteed Investment
Contract Fund
</TABLE>
I-14
17 of 18
<PAGE>
HANDLEMAN COMPANY
SALARY DEFERRAL AND STOCK PLAN
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS, Concluded
for the year ended December 31, 1995
------------------------------------
<TABLE>
<CAPTION>
Current Value
Purchase Selling Cost of Asset on Net Gain
Identity of Party Involved Description of Asset Price Price of Asset Transaction or (Loss)
- -------------------------- -------------------- -------- ------- -------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
17 purchases - 155,260 units 1,632,174 1,632,174 1,632,174
7 sales - 93,754 units 991,728 984,133 991,728 7,595
KeyCorp American Balanced Fund
14 purchases - 94,540 shares 1,375,010 1,375,010 1,375,010
KeyCorp Victory Stock Index Fund
21 purchases - 193,567 shares 2,330,245 2,330,245 2,330,245
7 sales - 58,691 shares 805,720 705,343 805,720 100,377
KeyCorp Handleman Company Stock
7 sales - 36,826 shares 393,978 363,860 393,978 30,178
REPORTING CRITERION IV: Any transaction within the plan year
with respect to securities with or
in conjunction with a person if any
prior or subsequent single transaction
within the plan year with such person
with respect to securities exceeds
five percent of the current value of
plan assets.
None.
NOTE A: Transactions already recorded under
Criterion III are not reported here.
</TABLE>
I-15
18 of 18
<PAGE>
EXHIBIT 28.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement of
the Handleman Company on Form S-8 (File No. 33-69030) of our report dated
June 27, 1996, on our audits of the financial statements and financial statement
schedules of the Handleman Company Salary Deferral and Stock Plan as of
December 31, 1995 and 1994, and for the year ended December 31, 1995, which
report is included in this Annual Report on Form 11-K.
Coopers & Lybrand L.L.P.
Detroit, Michigan
June 27, 1996
19
