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
For the fiscal year ended December 31, 1998
--- TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from _____ to _____
_______________
SALARY DEFERRAL SAVINGS PLAN OF ENGELHARD CORPORATION
-----------------------------------------------------
(Full title of the plan)
ENGELHARD CORPORATION
(Exact name of issuer as specified in its charter)
101 WOOD AVENUE, ISELIN, NEW JERSEY 08830
- ----------------------------------- ---------
(Address of principal executive offices) (Zip code)
DELAWARE 22-1586002
- ------------------------------- ----------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
1
<PAGE>
Salary Deferral Savings Plan
of Engelhard Corporation
Table of Contents
Description Page
----------- ----
Report of Independent Accountants 3
Statements of Financial Condition 4-9
at December 31, 1998 and 1997
Statements of Income and Changes in Plan Equity 10-18
for each of the three years in the period
ended December 31, 1998
Notes to Financial Statements 19-28
Supplemental Schedule
Schedule of Investments at December 31, 1998 and 1997 29-30
Consent of Independent Public Accountants 31
2
<PAGE>
Report of Independent Accountants
---------------------------------
To the Pension and Employee Benefits Plans Committee of Engelhard Corporation:
In our opinion, the financial statements of the Salary Deferral Savings Plan of
Engelhard Corporation listed in the table of contents on page 2 of this Form
11-K present fairly, in all material respects, the financial condition of the
Plan at December 31, 1998 and 1997, and the income and changes in plan equity
for each of the three years in the period ended December 31, 1998, in conformity
with generally accepted accounting principles. 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 generally accepted auditing
standards 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 the opinion expressed above.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule listed in the
table of contents on page 2 of this Form 11-K 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 L.L.P.
New York, New York
June 18, 1999
3
<PAGE>
<TABLE>
Salary Deferral Savings Plan
of Engelhard Corporation
Statement of Financial Condition
at December 31, 1998
(Page 1 of 3)
<S> <C> <C> <C> <C> <C> <C>
Company Fixed Windsor II Windsor Equity
Stock Income Growth Growth Balanced Index
Fund Fund Fund Fund Fund Fund
----------- ----------- ------------ ----------- ----------- -----------
Assets:
Investments, at fair value
(combined cost of $142,886,268) $45,391,121 $27,603,965 $4,907,253 $26,638,674 $14,624,519 $18,577,286
Contributions Receivable:
Participants 148,215 115,885 50,738 152,035 84,517 117,023
Engelhard Corporation 264,995 - - - - -
Promissory notes from participants 64,354 38,946 6,966 37,640 20,666 26,265
----------- ----------- ----------- ----------- ---------- ----------
Total assets $45,868,685 $27,758,796 $4,964,957 $26,828,349 $14,729,702 $18,720,574
=========== =========== =========== =========== =========== ===========
Plan equity:
Plan equity $45,868,685 $27,758,796 $4,964,957 $26,828,349 $14,729,702 $18,720,574
=========== =========== =========== =========== =========== ===========
See Accompanying Notes to Financial Statements
</TABLE>
4
<PAGE>
<TABLE>
Salary Deferral Savings Plan
of Engelhard Corporation
Statement of Financial Condition
at December 31, 1998
(Page 2 of 3)
<S> <C> <C> <C> <C> <C> <C>
Life Life
International Small Short-Term Prime Strategy Strategy
Growth Cap Bond Cap Growth Income
Fund Fund Fund Fund Fund Fund
------------- ---------- ---------- --------- --------- ----------
Assets:
Investments, at fair value
(combined cost of $142,886,268) $3,521,901 $2,894,830 $2,047,021 $2,589,252 $2,060,528 $483,341
Contributions receivable:
Participants 28,877 24,964 14,792 29,990 35,867 3,172
Engelhard Corporation - - - - - -
Promissory notes from participants 4,989 4,102 2,897 3,680 2,945 684
---------- ---------- ---------- ---------- ---------- --------
Total assets $3,555,767 $2,923,896 $2,064,710 $2,622,922 $2,099,340 $487,197
========== ========== ========== ========== ========== ========
Plan equity:
Plan equity $3,555,767 $2,923,896 $2,064,710 $2,622,922 $2,099,340 $487,197
========== ========== ========== ========== ========== ========
See Accompanying Notes to Financial Statements
</TABLE>
5
<PAGE>
<TABLE>
Salary Deferral Savings Plan
of Engelhard Corporation
Statement of Financial Condition
at December 31, 1998
(Page 3 of 3)
<S> <C> <C> <C> <C> <C>
Life Strategy Vanguard Life Strategy
Conservative U.S. Moderate
Growth Growth Growth Loan
Fund Fund Fund Fund Combined
------------- ---------- ------------- ---------- ------------
Assets:
Investments, at fair value
(combined cost of 142,886,268) $891,549 $6,325,365 $1,649,482 $ - $160,206,087
Contributions receivable:
Participants 10,265 66,474 23,419 - 906,233
Engelhard Corporation - - - - 264,995
Promissory notes from participants 1,267 8,980 2,350 7,493,128 7,719,859
-------- ---------- ---------- ---------- ------------
Total assets $903,081 $6,400,819 $1,675,251 $7,493,128 $169,097,174
======== ========== ========== ========== ============
Plan equity:
Plan equity $903,081 $6,400,819 $1,675,251 $7,493,128 $169,097,174
======== ========== ========== ========== ============
See Accompanying Notes to Financial Statements
</TABLE>
6
<PAGE>
<TABLE>
Salary Deferral Savings Plan
of Engelhard Corporation
Statement of Financial Condition
at December 31, 1997
(Page 1 of 3)
<S> <C> <C> <C> <C> <C>
Company Fixed Equity
Stock Income Growth Balanced Index
Fund Fund Fund Fund Fund
----------- ----------- ------------ ----------- -----------
Assets:
Investments, at fair value
(combined cost of $118,907,680) $42,108,870 $24,554,164 $30,309,787 $10,364,961 $12,647,879
Contributions Receivable:
Participants 164,965 119,868 164,487 68,990 90,669
Engelhard Corporation 218,522 - - - -
Promissory notes from participants 77,085 57,939 51,091 16,574 24,558
----------- ----------- ----------- ---------- ----------
Total assets $42,569,442 $24,731,971 $30,525,365 $10,450,525 $12,763,106
=========== =========== =========== =========== ===========
Plan equity:
Plan equity $42,569,442 $24,731,971 $30,525,365 $10,450,525 $12,763,106
=========== =========== =========== =========== ===========
See Accompanying Notes to Financial Statements
</TABLE>
7
<PAGE>
<TABLE>
Salary Deferral Savings Plan
of Engelhard Corporation
Statement of Financial Condition
at December 31, 1997
(Page 2 of 3)
<S> <C> <C> <C> <C> <C>
Life Life
International Small Short-Term Strategy Strategy
Growth Cap Bond Growth Income
Fund Fund Fund Fund Fund
------------- ---------- ---------- --------- ----------
Assets:
Investments, at fair value
(combined cost of $118,907,680) $3,007,483 $2,737,142 $820,740 $733,444 $270,823
Contributions receivable:
Participants 31,145 26,599 10,918 20,854 2,580
Engelhard Corporation - - - - -
Promissory notes from participants 3,919 2,386 1,941 2,162 -
---------- --------- -------- -------- --------
Total assets $3,042,547 $2,766,127 $833,599 $756,460 $273,403
========== ========== ======== ======== ========
Plan equity:
Plan equity $3,042,547 $2,766,127 $833,599 $756,460 $273,403
========== ========== ======== ======== ========
See Accompanying Notes to Financial Statements
</TABLE>
8
<PAGE>
<TABLE>
Salary Deferral Savings Plan
of Engelhard Corporation
Statement of Financial Condition
at December 31, 1997
(Page 3 of 3)
<S> <C> <C> <C> <C> <C>
Life Strategy Vanguard Life Strategy
Conservative U.S. Moderate
Growth Growth Growth Loan
Fund Fund Fund Fund Combined
------------- ---------- ------------- --------- ------------
Assets:
Investments, at fair value
(combined cost of 118,907,680) $219,418 $1,833,349 $754,984 $ - $130,363,044
Contributions receivable:
Participants 3,388 36,408 12,270 - 753,141
Engelhard Corporation - - - - 218,522
Promissory notes from participants 350 3,110 997 7,024,068 7,266,180
-------- ---------- -------- ---------- ------------
Total assets $223,156 $1,872,867 $768,251 $7,024,068 $138,600,887
======== ========== ======== ========== ============
Plan equity:
Plan equity $223,156 $1,872,867 $768,251 $7,024,068 $138,600,887
======== ========== ======== ========== ============
See Accompanying Notes to Financial Statements
</TABLE>
9
<PAGE>
<TABLE>
Salary Deferral Savings Plan
of Engelhard Corporation
Statement of Income and Changes in Plan Equity
for the Year Ended December 31, 1998
(Page 1 of 3)
<S> <C> <C> <C> <C> <C> <C>
Company Fixed Windsor II Windsor Equity
Stock Income Growth Growth Balanced Index
Fund Fund Fund Fund Fund Fund
----------- ---------- ----------- ----------- ------------ ------------
Net investment income:
Dividends $ 867,717 $ - $ 480,958 $ 2,348,860 $ 1,061,504 $ 893,993
Interest - 1,554,014 - - - -
----------- ---------- ---------- ----------- ------------ ------------
867,717 1,554,014 480,958 2,348,860 1,061,504 893,993
Contributions and other receipts:
Participants 1,985,958 2,192,249 1,104,066 2,722,046 1,579,287 2,414,546
Engelhard Corporation 2,737,289 - - - - -
----------- ---------- ---------- ----------- ------------ ------------
4,723,247 2,192,249 1,104,066 2,722,046 1,579,287 2,414,546
Net realized gain on disposition of
investments 1,296,766 - 36,947 688,133 369,087 442,270
Unrealized appreciation (depreciation)
of investments 4,043,066 - (95,848) (2,683,638) 1,338,686 1,930,598
Distributions (2,137,372) (2,127,811) (145,165) (1,236,865) (619,478) (611,951)
Transfers (5,494,181) 1,408,373 3,583,999 (5,535,552) 550,091 888,012
------------ ------------ ---------- ----------- ------------ ------------
Change in net assets 3,299,243 3,026,825 4,964,957 (3,697,016) 4,279,177 5,957,468
Plan equity, beginning of year 42,569,442 24,731,971 - 30,525,365 10,450,525 12,763,106
============ =========== ========== =========== ============ ============
Plan equity, end of year $45,868,685 $27,758,796 $4,964,957 $26,828,349 $14,729,702 $18,720,574
============ =========== ========== =========== ============ ============
See Accompanying Notes to Financial Statements
</TABLE>
10
<PAGE>
<TABLE>
Salary Deferral Savings Plan
of Engelhard Corporation
Statement of Income and Changes in Plan Equity
for the Year Ended December 31, 1998
(Page 2 of 3)
<S> <C> <C> <C> <C> <C> <C>
Life Life
International Small Short-Term Prime Strategy Strategy
Growth Cap Bond Cap Growth Income
Fund Fund Fund Fund Fund Fund
------------- ---------- ---------- ----------- -------- --------
Net investment income:
Dividends $ 68,741 $ 225,951 $ 85,641 $ 89,906 $ 66,175 $ 25,396
Interest - - - - - -
---------- ---------- ---------- ---------- ---------- --------
68,741 225,951 85,641 89,906 66,175 25,396
Contributions and other receipts:
Participants 616,111 577,338 396,887 593,467 1,015,800 141,292
Engelhard Corporation - - - - - -
---------- ---------- ---------- ---------- ---------- --------
616,111 577,338 396,887 593,467 1,015,800 141,292
Net realized gain on disposition
of investments 96,006 66,958 2,267 5,255 28,451 5,382
Unrealized appreciation
(depreciation) of investments 336,936 (335,259) 1,825 259,756 163,107 6,386
Distributions (294,106) (129,823) (43,909) (1,705) (44,657) (845)
Transfers (310,468) (247,396) 788,400 1,676,243 114,004 36,183
---------- ---------- ---------- ---------- ---------- --------
Change in net assets 513,220 157,769 1,231,111 2,622,922 1,342,880 213,794
Plan equity, beginning of year 3,042,547 2,766,127 833,599 - 756,460 273,403
---------- ---------- ---------- ---------- ---------- --------
Plan equity, end of year $3,555,767 $2,923,896 $2,064,710 $2,622,922 $2,099,340 $487,197
========== ========== ========== ========== ========== ========
See Accompanying Notes to Financial Statements
</TABLE>
11
<PAGE>
<TABLE>
Salary Deferral Savings Plan
of Engelhard Corporation
Statement of Income and Changes in Plan Equity
for the Year Ended December 31, 1998
(Page 3 of 3)
<S> <C> <C> <C> <C> <C>
Life Life
Strategy Vanguard Strategy
Conservative U.S. Moderate
Growth Growth Growth Loan
Fund Fund Fund Fund Combined
------------ ---------- ----------- ---------- ------------
Net investment income:
Dividends $ 35,267 $ 378,919 $ 65,440 $ - $ 6,694,468
Interest - - - 510,419 2,064,433
-------- ---------- ---------- ---------- ------------
35,267 378,919 65,440 510,419 8,758,901
Contributions and other receipts:
Participants 271,268 1,162,658 693,404 351,398 17,817,775
Engelhard Corporation - - - - 2,737,289
-------- ---------- ---------- ---------- ------------
271,268 1,162,658 693,404 351,398 20,555,064
Net realized gain on disposition of
investments 783 79,276 20,847 - 3,138,428
Unrealized appreciation
(depreciation) of investments 39,509 750,006 109,325 - 5,864,455
Distributions (22,359) (56,102) (118,744) (229,669) (7,820,561)
Transfers 355,457 2,213,195 136,728 (163,088) -
-------- --------- ---------- ---------- ------------
Change in net assets 679,925 4,527,952 907,000 469,060 30,496,287
Plan equity, beginning of year 223,156 1,872,867 768,251 7,024,068 138,600,887
-------- ---------- ---------- ---------- ------------
Plan equity, end of year $903,081 $6,400,819 $1,675,251 $7,493,128 $169,097,174
======== ========== ========== ========== ============
See Accompanying Notes to Financial Statements
</TABLE>
12
<PAGE>
<TABLE>
Salary Deferral Savings Plan
of Engelhard Corporation
Statement of Income and Changes in Plan Equity
for the Year Ended December 31, 1997
(Page 1 of 3)
<S> <C> <C> <C> <C> <C>
Company Fixed Equity
Stock Income Growth Balanced Index
Fund Fund Fund Fund Fund
----------- ---------- ----------- ------------ ------------
Net investment income:
Dividends $ 819,447 $ - $ 4,880,851 $ 791,374 $ 1,558,580
Interest - 1,517,387 - - -
----------- ---------- ----------- ------------ ------------
819,447 1,517,387 4,880,851 791,374 1,558,580
Contributions and other receipts:
Participants 2,312,800 2,230,370 2,880,465 1,164,206 1,385,640
Engelhard Corporation 2,404,098 - - - -
----------- ---------- ----------- ------------ ------------
4,716,898 2,230,370 2,880,465 1,164,206 1,385,640
Net realized gain (loss) on disposition
of investments 1,299,661 - 703,758 252,369 249,513
Unrealized appreciation (depreciation)
of investments (5,192,044) - (436,574) 1,030,888 1,239,613
Transaction fees - - - - -
Distributions (2,077,923) (2,597,410) (1,466,096) (611,512) (536,238)
Transfers (2,413,985) (1,799,344) 1,233,660 657,446 753,675
------------ ------------ ----------- ------------ ------------
Change in net assets (2,847,946) (648,997) 7,796,064 3,284,771 4,650,783
Plan equity, beginning of year 45,417,388 25,380,968 22,729,301 7,165,754 8,112,323
============ =========== =========== ============ ============
Plan equity, end of year $42,569,442 $24,731,971 $30,525,365 $10,450,525 $12,763,106
============ =========== =========== ============ ============
See Accompanying Notes to Financial Statements
</TABLE>
13
<PAGE>
<TABLE>
Salary Deferral Savings Plan
of Engelhard Corporation
Statement of Income and Changes in Plan Equity
for the Year Ended December 31, 1997
(Page 2 of 3)
<S> <C> <C> <C> <C> <C>
Life Life
International Small Short-Term Strategy Strategy
Growth Cap Bond Growth Income
Fund Fund Fund Fund Fund
------------- ---------- ---------- -------- --------
Net investment income:
Dividends $ 128,390 $ 157,508 $ 56,581 $ 26,828 $ 8,018
Interest - - - - -
---------- ---------- -------- -------- --------
128,390 157,508 56,581 26,828 8,018
Contributions and other receipts:
Participants 563,616 473,715 209,656 259,086 22,287
Engelhard Corporation - - - - -
---------- ---------- -------- -------- --------
563,616 473,715 209,656 259,086 22,287
Net realized gain (loss) on disposition
of investments 102,799 70,631 436 4,505 (7,823)
Unrealized appreciation
(depreciation) of investments (150,130) 193,843 4,357 33,100 5,394
Transaction fees - (10,442) - - -
Distributions (189,083) (253,681) (240,736) (39,348) (95,877)
Transfers 139,613 381,406 70,174 312,348 232,468
---------- ---------- -------- -------- --------
Change in net assets 595,205 1,012,980 100,468 596,519 164,467
Plan equity, beginning of year 2,447,342 1,753,147 733,131 159,941 108,936
---------- ---------- -------- -------- --------
Plan equity, end of year $3,042,547 $2,766,127 $833,599 $756,460 $273,403
========== ========== ======== ======== ========
See Accompanying Notes to Financial Statements
</TABLE>
14
<PAGE>
<TABLE>
Salary Deferral Savings Plan
of Engelhard Corporation
Statement of Income and Changes in Plan Equity
for the Year Ended December 31, 1997
(Page 3 of 3)
<S> <C> <C> <C> <C> <C>
Life Life
Strategy Vanguard Strategy
Conservative U.S. Moderate
Growth Growth Growth Loan
Fund Fund Fund Fund Combined
------------ ---------- --------- ---------- ------------
Net investment income:
Dividends $ 13,432 $ 71,659 $ 31,473 $ - $ 8,544,141
Interest - - - 555,647 2,073,034
-------- ---------- -------- ---------- ------------
13,432 71,659 31,473 555,647 10,617,175
Contributions and other receipts:
Participants 130,609 435,224 295,982 - 12,363,656
Engelhard Corporation - - - - 2,404,098
-------- ---------- -------- ---------- ------------
130,609 435,224 295,982 - 14,767,754
Net realized gain (loss) on disposition
of investments 25,888 (22,168) 6,145 - 2,685,714
Unrealized appreciation
(depreciation) of investments 415 173,795 49,959 - (3,047,384)
Transaction fees - - - - (10,442)
Distributions (261,176) (43,745) (32,252) (330,664) (8,775,741)
Transfers 128,884 289,003 236,737 (222,085) -
-------- -------- -------- ---------- ------------
Change in net assets 38,052 903,768 588,044 2,898 16,237,076
Plan equity, beginning of year 185,104 969,099 180,207 7,021,170 122,363,811
-------- ---------- -------- ---------- ------------
Plan equity, end of year $223,156 $1,872,867 $768,251 $7,024,068 $138,600,887
======== ========== ======== ========== ============
See Accompanying Notes to Financial Statements
</TABLE>
15
<PAGE>
<TABLE>
Salary Deferral Savings Plan
of Engelhard Corporation
Statement of Income and Changes in Plan Equity
for the Year Ended December 31, 1996
(Page 1 of 3)
<S> <C> <C> <C> <C> <C>
Company Fixed Equity
Stock Income Growth Balanced Index
Fund Fund Fund Fund Fund
----------- --------- ---------- ----------- ----------
Net investment income:
Dividends $ 727,600 $ - $ 2,162,237 $ 646,837 $ 737,991
Interest - 1,544,409 - - -
----------- ---------- ----------- ----------- -----------
727,600 1,544,409 2,162,237 646,837 737,991
Contributions and other receipts:
Participants 2,371,769 2,359,733 2,275,185 842,352 927,083
Engelhard Corporation 2,065,895 - - - -
----------- ---------- ----------- ----------- -----------
4,437,664 2,359,733 2,275,185 842,352 927,083
Net realized gain (loss) on disposition
of investments 2,624,826 - 372,423 221,899 204,365
Unrealized appreciation (depreciation)
of investments (8,218,862) - 2,186,088 130,181 519,101
Transaction fees - - - - -
Distributions (2,604,553) (2,550,656) (1,197,839) (518,181) (408,588)
Transfers 1,819,595 (2,485,972) (824,155) (373,416) 15,874
------------ ------------ ----------- ----------- -----------
Change in net assets (1,213,730) (1,132,486) 4,973,939 949,672 1,995,826
Plan equity, beginning of year 46,631,118 26,513,454 17,755,362 6,216,082 6,116,497
============ =========== =========== =========== ===========
Plan equity, end of year $45,417,388 $25,380,968 $22,729,301 $7,165,754 $8,112,323
============ =========== =========== =========== ===========
See Accompanying Notes to Financial Statements
</TABLE>
16
<PAGE>
<TABLE>
Salary Deferral Savings Plan
of Engelhard Corporation
Statement of Income and Changes in Plan Equity
for the Year Ended December 31, 1996
(Page 2 of 3)
<S> <C> <C> <C> <C> <C>
Life Life
International Small Short-Term Strategy Strategy
Growth Cap Bond Growth Income
Fund Fund Fund Fund Fund
------------- -------- ---------- -------- ---------
Net investment income:
Dividends $ 104,764 $121,902 $34,004 $ 5,154 $ 3,910
Interest - - - - -
---------- ---------- ------- -------- --------
104,764 121,902 34,004 5,154 3,910
Contributions and other receipts:
Participants 410,564 296,101 157,291 34,200 109,788
Engelhard Corporation - - - - -
---------- ---------- ------- -------- --------
410,564 296,101 157,291 34,200 109,788
Net realized gain (loss) on disposition
of investments 105,158 42,347 1,221 (98) -
Unrealized appreciation
(depreciation) of investments 103,464 50,118 (6,977) 4,378 (4,762)
Transaction fees - (9,650) - - -
Distributions (269,098) (41,149) (60,471) - -
Transfers 61,220 292,269 168,764 116,307 -
---------- ---------- ------- -------- --------
Change in net assets 516,072 751,938 293,832 159,941 108,936
Plan equity, beginning of year 1,931,270 1,001,209 439,299 - -
---------- ---------- ------- -------- --------
Plan equity, end of year $2,447,342 $1,753,147 $733,131 $159,941 $108,936
========== ========== ======== ======== ========
See Accompanying Notes to Financial Statements
</TABLE>
17
<PAGE>
<TABLE>
Salary Deferral Savings Plan
of Engelhard Corporation
Statement of Income and Changes in Plan Equity
for the Year Ended December 31, 1996
(Page 3 of 3)
<S> <C> <C> <C> <C> <C>
Life Life
Strategy Vanguard Strategy
Conservative U.S. Moderate
Growth Growth Growth Loan
Fund Fund Fund Fund Combined
------------ -------- --------- -------- ------------
Net investment income:
Dividends $ 7,478 $ 70,352 $ 6,622 $ - $ 4,628,851
Interest - - - 539,133 2,083,542
-------- -------- -------- ---------- ------------
7,478 70,352 6,622 539,133 6,712,393
Contributions and other receipts:
Participants 1,305 41,866 4,956 - 9,832,193
Engelhard Corporation - - - - 2,065,895
-------- -------- -------- ---------- ------------
1,305 41,866 4,956 - 11,898,088
Net realized gain (loss) on disposition
of investments - 28,588 - - 3,600,729
Unrealized appreciation
(depreciation) of investments 1,466 (47,934) 3,383 - (5,280,356)
Transaction fees - - - - (9,650)
Distributions - - - (291,002) (7,941,537)
Transfers 174,855 876,227 165,246 (6,814) -
-------- -------- -------- ---------- ------------
Change in net assets 185,104 969,099 180,207 241,317 8,979,667
Plan equity, beginning of year - - - 6,779,853 113,384,144
-------- -------- -------- ---------- ------------
Plan equity, end of year $185,104 $969,099 $180,207 $7,021,170 $122,363,811
======== ======== ======== ========== ============
See Accompanying Notes to Financial Statements
</TABLE>
18
<PAGE>
Notes to Financial Statements
Note 1 - Description of the Plan
The Salary Deferral Savings Plan of Engelhard Corporation (the Plan), as
amended and restated as of June 5, 1997 is designed to provide eligible
employees of Engelhard Corporation (the Company) an opportunity to save part of
their income by having the Company reduce their compensation and contribute the
amount of the reduction to the Plan on a tax deferred and/or post-tax basis.
The following plan description is provided for general information
purposes. Participants of the Plan should refer to the plan document for more
detailed and complete information.
Eligibility
- -----------
Except as specifically included or excluded by the Board of Directors of the
Company (the Board), United States salaried employees of the Company and its
wholly-owned (directly or indirectly) domestic subsidiaries and all non-
collectively bargained hourly employees are eligible to participate in the Plan.
Contributions
- -------------
The Plan permits eligible employees participating in the Plan the opportunity
to defer up to 15 percent of their compensation, as defined, subject to certain
restrictions and limitations, and to have that amount contributed to the Plan
and the related taxes deferred. Effective January 1, 1995 employees may
contribute, subject to certain restrictions and limitations, up to 10 percent of
compensation to the Plan on a post-tax basis.
Matching Contributions
- ----------------------
The Company will contribute, on a monthly basis, subject to certain limitations
and exclusions, either cash or common stock of the Company in an amount equal to
50 percent of the first 6 percent contributed by the Participants. Participants
must have completed one year of service to be eligible for a matching
contribution.
Investments
- -----------
All contributions to the Plan are held and invested by Vanguard Fiduciary Trust
Company (the Trustee). The Trustee maintains 15 separate investment funds
within the Plan:
a) The Company Stock Fund consists of assets invested or held
for investment in the common stock of the Company. In the
event the assets cannot be immediately invested in Company
common stock, the funds are invested in short-term securities
pending investment in Company common stock.
b) The Fixed Income Fund consists of assets invested in shares
of the Vanguard Retirement Savings Trust. In the event the
assets cannot be immediately invested in such shares or
deposited as specified above, the assets are invested in
direct obligations of the United States Government or agencies
thereof or in obligations guaranteed as to the payment of
principal and interest by the United States Government.
19
<PAGE>
c) The Windsor II Fund consists of assets invested in the
Vanguard Windsor II fund, which invests primarily in stocks
which seeks long-term growth and income from dividends.
d) The Growth Fund consists of assets invested in the
Vanguard Windsor Fund, which invests primarily in common
stocks for the purpose of realizing long-term growth of
capital and income.
e) The Balanced Fund consists of assets invested in the
Vanguard Asset Allocation Fund, which invests in stocks,
bonds and cash reserves for the purpose of maximizing long-
term total return with less volatility than a portfolio of
common stock.
f) The Equity Index Fund consists of assets invested in
the Vanguard Growth and Income Portfolio, which invests
primarily in common stocks for the purpose of realizing a
total return greater than the Standard & Poor's 500 Index
while maintaining fundamental investment characteristics
similar to such Index.
g) The International Growth Fund consists of assets
invested in shares of the Vanguard International Growth
Portfolio or such other mutual fund or funds which invest
primarily in common stocks of companies based outside the
United States that have above-average growth potential for
the purpose of realizing long-term capital growth.
h) The Small Cap Fund consists of assets invested in
shares of the Vanguard Index Trust - Small Cap Stock Portfolio
or such other mutual fund or funds which invest primarily in
common stocks of small-sized companies for the purpose of
providing a comparatively low-cost method of passively
capturing the investment returns of small-sized companies and
attempting to provide investment results that parallel the
performance of the unmanaged Russell 2000 Small Stock Index.
i) The Short-Term Bond Fund consists of assets invested
in shares of the Vanguard Fixed Income Fund or Short-Term
Corporate Portfolio of the Vanguard Fixed Income Securities
Fund or such other mutual fund or funds which invest primarily
in relatively short maturity investment-grade bonds for the
purpose of providing a level of current income consistent with
a two to three year average maturity while helping to preserve
capital.
j) The Prime Cap funds consists of assets invested in the
Vanguard Prime Cap fund and seeks long-term growth of capital.
k) The Life Strategy Growth Fund consists of assets invested in
the Vanguard Life Strategy Growth Portfolio. This fund
invests in other Vanguard mutual funds representing a
combination of stocks, bonds and reserves in order to provide
growth of capital.
20
<PAGE>
l) The Life Strategy Income Fund consists of assets invested in
the Vanguard Life Strategy Income Portfolio. This fund
invests in other Vanguard mutual funds representing a
combination of stocks, bonds and reserves in order to provide
current income.
m) The Life Strategy Conservative Growth Fund consists of assets
invested in the Vanguard Life Strategy Conservative Growth
portfolio. This fund invests in other Vanguard mutual funds
representing a combination of stocks, bonds, and reserves in
order to provide current income and a low to moderate growth
of capital.
n) The Vanguard U.S. Growth portfolio seeks to provide long-term
capital appreciation by investing in common stocks of
companies with above-average growth potential for the purpose
of seeking long-term capital growth.
o) The Life Strategy Moderate Growth Fund consists of assets
invested in the Vanguard Life Strategy Moderate Growth Fund.
This fund invests in other Vanguard mutual funds representing
a combination of stocks, bonds and reserves in order to
provide growth of capital and a reasonable level of current
income.
Participants have the right to elect, subject to restrictions, the
investment fund or funds in which their contributions are invested. All matching
contributions are initially invested in the Company Stock Fund and participants
are restricted from transferring these contributions to other funds for one
year. Participants at their discretion may elect to transfer to another fund
their unrestricted balance. Their unrestricted balance is determined as the sum
of all prior year's unrestricted balances plus 25 percent of the prior year's
restricted balance after the addition of the prior year's restricted matching
contributions.
The number of Participants in each fund was as follows at December 31:
Participants 1998 1997
------------ ----- -----
Company Stock Fund 2,598 2,281
Fixed Income Fund 1,070 1,091
Growth Fund (Windsor II) 398 -
Growth Fund (Windor) 1,412 1,414
Balanced Fund 928 805
Equity Index Fund 1,137 896
International Growth Fund 507 475
Small Cap Fund 410 344
Short-Term Bond Fund 211 170
Prime Cap Fund 270 -
Life Strategy Growth Fund 295 170
Life Strategy Income Fund 52 28
Life Strategy Conservative Growth Fund 92 43
Vanguard U.S. Growth Fund 578 335
Life Strategy Moderate Growth Fund 208 109
21
<PAGE>
The total number of Participants in the Plan was less than the sum of the
number of Participants shown above because many were participating in more than
one fund.
The number of units representing Participant interests in each fund and the
related net asset value per unit were as follows at December 31:
<TABLE>
Participant Interests
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Company Fixed Windsor II Windsor Equity Int'l Small
Stock Income Growth Growth Balanced Index Growth Cap
Fund Fund Fund Fund Fund Fund Fund Fund
--------- ---------- ---------- --------- --------- --------- -------- --------
1998:
Units 1,396,307 27,758,796 166,330 1,723,080 604,172 608,601 189,439 137,920
Value per unit $32.85 $1.00 $29.85 $15.57 $24.38 $30.76 $18.77 $21.20
1997:
Units 1,449,913 24,731,971 - 1,797,725 496,462 487,327 185,634 116,469
Value per unit $29.36 $1.00 - $16.98 $21.05 $26.19 $16.39 $23.75
Life Life
Life Life Strategy Vanguard Strategy
Short-Term Prime Strategy Strategy Conservative U.S. Moderate
Bond Cap Growth Income Growth Growth Growth
Fund Fund Fund Fund Fund Fund Fund
---------- --------- --------- -------- ------------ -------- ---------
1998:
Units 190,471 55,034 111,726 36,853 61,392 170,734 99,362
Value per unit $10.84 $47.66 $18.79 $13.22 $14.71 $37.49 $16.86
1997:
Units 77,114 - 47,161 21,995 16,653 65,257 51,874
Value per unit $10.81 - $16.04 $12.43 $13.40 $28.70 $14.81
</TABLE>
Vesting
- -------
Participants at all times have a fully vested and non-forfeitable interest in
their contributions and in the matching contributions allocated to their
account.
Loan Provision
- --------------
The Plan allows Participants who have participated in the Plan for at least one
year to borrow funds from their accounts, subject to certain terms and
conditions, at a reasonable interest rate as determined by the Company in
accordance with applicable laws and regulations.
22
<PAGE>
Termination
- -----------
The Company, although it expects and intends to continue the Plan indefinitely,
has reserved the right of the Board to terminate or amend the Plan.
Distributions and Withdrawals
- -----------------------------
All distributions and withdrawals from the Plan are made to Participants in a
lump sum cash payment except those amounts distributed from the Company Stock
Fund which may, at the Participant's election, be paid in full shares of the
Company's Common Stock with cash paid in lieu of fractional shares.
Note 2 - Accounting Policies
The accounts of the Plan are maintained on an accrual basis. Purchases and
sales of investments are reflected on a trade date basis. Assets of the Plan are
valued at fair value. Gains and losses on distributions to participants and
sales of investments are based on average cost.
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported. Actual results may differ from
those estimates.
The Plan provides for various investment options in any combination of
stocks or mutual funds. Investment securities are exposed to various risks, such
as interest rate, market and credit. Due to the level of risk associated with
certain investment securities and the level of uncertainty related to changes in
the value of investment securities, it is at least reasonably possible that
changes in risks in the near term would materially affect participants' account
balances and the amounts reported in the statement of financial condition and
the statement of income and changes in plan equity.
Certain 1997 amounts have been reclassified to conform to 1998
classifications.
Note 3 - Income Tax Status
The Plan and the Trust created thereunder are intended to qualify under
Sections 401(a) and 501(a) of the Internal Revenue Code of 1986, as amended (the
Code) and the Plan includes a cash or deferred arrangement intended to meet the
requirements of Section 401(k) of the Code. The Internal Revenue Service has
issued a favorable determination letter as to the Plan's qualified status under
the Code. Amounts contributed to and earned by the Plan are not taxed to the
employee until a distribution from the Plan is made. In addition, the unrealized
appreciation on any shares of common stock of the Company distributed to an
employee is not taxed until the time of disposition of such shares. The Plan has
been amended since receiving the determination letter. However, the plan
administrator believes the Plan is designed and is currently operating in
compliance with the Internal Revenue Code.
Note 4 - Administrative Expenses
All expenses of the Plan, with the exception of loan application and loan
administration fees, are paid for by the Company. Investment advisory fees for
portfolio management of the Vanguard funds are paid directly from fund earnings.
23
<PAGE>
Advisory fees are included in the fund expense ratio and will not reduce the
assets of the Plan. Brokerage commissions paid to purchase Engelhard Corporation
common stock are being charged against each participant's fund unit value.
Note 5 - Concentrations of Credit Risk
Financial instruments which potentially subject the Plan to concentrations
of credit risk consist principally of investment contracts with insurance and
other financial institutions. The Plan places its investment contracts with
high-credit quality institutions and, by policy, limits the amount of credit
exposure to any one financial institution.
Note 6 - Investments
Investments in the Common Stock of the Company are valued at the
readily-available, quoted market price as of the valuation date and investments
in Vanguard Funds are valued based on the quoted net asset value (redemption
value) of the respective investment fund as of the valuation date.
<TABLE>
The net realized gain (loss) on disposition of investments was computed as follows:
Net realized gain (loss)
<S> <C> <C> <C> <C> <C> <C> <C>
Company Fixed Windsor II Windsor Equity Int'l
Stock Income Growth Growth Balanced Index Growth
Fund Fund Fund Fund Fund Fund Fund
----------- ----------- ----------- ----------- ---------- ----------- ----------
Year ended December 31, 1998 -
Amount realized $20,045,192 $10,796,138 $1,764,356 $10,014,411 $2,503,355 $4,417,345 $4,716,648
Cost-average 18,748,426 10,796,138 1,727,409 9,326,278 2,134,268 3,975,075 4,620,642
Net realized gain (loss) 1,296,766 - 36,947 688,133 369,087 442,270 96,006
Life
Life Life Strategy Vanguard
Small Short-term Prime Strategy Strategy Conservative U.S.
Cap Bond Cap Growth Income Growth Growth
Fund Fund Fund Fund Fund Fund Fund
---------- ----------- ----------- ----------- ----------- ------------ -----------
Year ended December 31, 1998 -
Amount realized $1,534,209 $2,644,925 $1,309,019 $357,992 $5,862,331 $373,171 $1,750,108
Cost-average 1,467,251 2,642,658 1,303,764 329,541 5,856,949 372,388 1,670,832
Net realized gain (loss) 66,958 2,267 5,255 28,451 5,382 783 79,276
Life
Strategy
Moderate
Growth
Fund Combined
----------- -----------
Year ended December 31, 1998 -
Amount realized $359,160 $68,448,360
Cost-average 338,313 65,309,932
Net realized gain (loss) 20,847 3,138,428
</TABLE>
24
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Company Fixed Equity Int'l Small
Stock Income Growth Balanced Index Growth Cap
Fund Fund Fund Fund Fund Fund Fund
------------ ----------- ----------- --------- ------------ ----------- -----------
Year ended December 31, 1997 -
Amount realized $39,601,904 $9,844,450 $18,957,239 $5,191,173 $10,324,840 $7,200,253 $3,786,809
Cost-average 38,302,243 9,844,450 18,253,481 4,938,804 10,075,327 7,097,454 3,716,178
Net realized gain (loss) 1,299,661 - 703,758 252,369 249,513 102,799 70,631
Life Life
Life Life Strategy Vanguard Strategy
Short-term Strategy Strategy Conservative U.S. Moderate
Bond Growth Income Growth Growth Growth
Fund Fund Fund Fund Fund Fund Combined
----------- ----------- ----------- ------------ ----------- ----------- ------------
Year ended December 31, 1997 -
Amount realized $14,604,327 $1,241,894 $4,522,250 $1,189,027 $6,117,191 $837,015 $123,418,372
Cost-average 14,603,891 1,237,389 4,530,073 1,163,139 6,139,359 830,870 120,732,658
Net realized gain (loss) 436 4,505 (7,823) 25,888 (22,168) 6,145 2,685,714
Company Fixed Equity Int'l Small
Stock Income Growth Balanced Index Growth Cap
Fund Fund Fund Fund Fund Fund Fund
----------- ----------- ----------- ---------- ----------- ----------- ----------
Year ended December 31, 1996 -
Amount realized $35,173,927 $9,360,463 $11,516,097 $7,588,654 $6,740,413 $2,201,845 $1,519,491
Cost-average 32,549,101 9,360,463 11,143,674 7,366,755 6,536,048 2,096,687 1,477,144
Net realized gain (loss) 2,624,826 - 372,423 221,899 204,365 105,158 42,347
Vanguard Life
Short-term U.S. Strategy
Bond Growth Growth
Fund Fund Fund Combined
----------- ----------- ----------- -----------
Year ended December 31, 1996 -
Amount realized $4,514,073 $5,022,468 $170,693 $83,808,124
Cost-average 4,512,852 4,993,880 170,791 80,207,395
Net realized gain (loss) 1,221 28,588 (98) 3,600,729
</TABLE>
25
<PAGE>
<TABLE>
<CAPTION>
The net unrealized appreciation (depreciation) of investments held was computed as follows:
Net unrealized appreciation (depreciation)
<S> <C> <C> <C> <C> <C> <C> <C>
Company Windsor II Windsor Equity Int'l Small
Stock Growth Growth Balanced Index Growth Cap
Fund Fund Fund Fund Fund Fund Fund
----------- ---------- ----------- ----------- ----------- ---------- ----------
Year ended December 31, 1998 -
Balance, beginning of year $3,311,669 $ - $ 2,664,689 $2,077,311 $2,715,759 $112,832 $ 349,219
Net change 4,043,066 (95,848) (2,683,638) 1,338,686 1,930,598 336,936 (335,259)
Balance, end of year 7,354,735 (95,848) (18,949) 3,415,997 4,646,357 449,768 13,960
Life Life
Life Life Strategy Vanguard Strategy
Short-term Prime Strategy Strategy Conservative U.S. Moderate
Bond Cap Growth Income Growth Growth Growth
Fund Fund Fund Fund Fund Fund Fund
----------- ----------- ---------- ---------- ------------ ----------- ----------
Year ended December 31, 1998 -
Balance, beginning of year $4,691 $ - $ 37,478 $ 632 $ 1,881 $125,861 $ 53,342
Net change 1,825 259,756 163,107 6,386 39,509 750,006 109,325
Balance, end of year 6,516 259,756 200,585 7,018 41,390 875,867 162,667
Combined
------------
Year ended December 31, 1998 -
Balance, beginning of year $11,455,364
Net change 5,864,455
Balance, end of year 17,319,819
Company Windsor Equity Int'l Small Short-term
Stock Growth Balanced Index Growth Cap Bond
Fund Fund Fund Fund Fund Fund Fund
----------- ---------- ---------- ----------- -------- ---------- ----------
Year ended December 31, 1997 -
Balance, beginning of year $ 8,503,713 $3,101,263 $1,046,423 $1,476,146 $262,962 $155,376 $ 334
Net change (5,192,044) (436,574) 1,030,888 1,239,613 (150,130) 193,843 4,357
Balance, end of year 3,311,669 2,664,689 2,077,311 2,715,759 112,832 349,219 4,691
Life Life
Life Life Strategy Vanguard Strategy
Strategy Strategy Conservative U.S. Moderate
Growth Income Growth Growth Growth
Fund Fund Fund Fund Fund Combined
----------- ---------- ------------ ----------- -------- ------------
Year ended December 31, 1997 -
Balance, beginning of year $ 4,378 $(4,762) $1,466 $(47,934) $ 3,383 $14,502,748
Net change 33,100 5,394 415 173,795 49,959 (3,047,384)
Balance, end of year 37,478 632 1,881 125,861 53,342 11,455,364
</TABLE>
26
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Company Windsor Equity Int'l Small Short-term
Stock Growth Balanced Index Growth Cap Bond
Fund Fund Fund Fund Fund Fund Fund
----------- ---------- ---------- ----------- -------- --------- -----------
Year ended December 31, 1996 -
Balance, beginning of year $16,722,575 $ 915,175 $ 916,242 $ 957,045 $159,498 $105,258 $ 7,311
Net change (8,218,862) 2,186,088 130,181 519,101 103,464 50,118 (6,977)
Balance, end of year 8,503,713 3,101,263 1,046,423 1,476,146 262,962 155,376 334
Life Life
Life Life Strategy Vanguard Strategy
Strategy Strategy Conservative U.S. Moderate
Growth Income Growth Growth Growth
Fund Fund Fund Fund Fund Combined
----------- ---------- ------------ ----------- -------- ------------
Year ended December 31, 1996 -
Balance, beginning of year $ - $ - $ - $ - $ - $19,783,104
Net change 4,378 (4,762) 1,466 (47,934) 3,383 (5,280,356)
Balance, end of year 4,378 (4,762) 1,466 (47,934) 3,383 14,502,748
</TABLE>
27
<PAGE>
Note 7 - Related Party Transactions
For the 1998 plan year, the Company transferred 141,420 treasury stock
shares (representing a contribution dollar amount of $2,737,289) to Vanguard to
fund the employer match. The number of shares transferred each month represented
the employer matching contribution divided by the closing market price on the
day the contribution was remitted.
28
<PAGE>
Salary Deferral Savings Plan of Engelhard Corporation
Schedule of Investments
at December 31, 1998
Approximate
Cost Market Value
------------ --------------
Common Stock of Engelhard Corporation $38,036,386 $ 45,391,121
(2,327,750 shares)
Vanguard Retirement Savings Trust 27,603,965 27,603,965
Vanguard Windsor II Fund 5,003,101 4,907,253
Vanguard Windsor Fund 26,657,623 26,638,674
Vanguard Asset Allocation Fund 11,208,522 14,624,519
Vanguard Growth and Income Portfolio 13,930,929 18,577,286
Vanguard International Growth Portfolio 3,072,133 3,521,901
Vanguard Index Trust 2,880,870 2,894,830
Vanguard Fixed Income Securities Fund 2,040,505 2,047,021
Vanguard Life Strategy Growth Portfolio 1,859,943 2,060,528
Vanguard Prime Cap Fund 2,329,496 2,589,252
Vanguard Life Strategy Income Portfolio 476,323 483,341
Vanguard Life Strategy Conservative Growth Portfolio 850,159 891,549
Vanguard U.S. Growth Fund 5,449,498 6,325,365
Vanguard Life Strategy Moderate Growth Portfolio 1,486,815 1,649,482
------------ ------------
Total $142,886,268 $160,206,087
29
<PAGE>
Salary Deferral Savings Plan of Engelhard Corporation
Schedule of Investments
at December 31, 1997
Approximate
Cost Market Value
----------- ------------
Common Stock of Engelhard Corporation $38,797,201 $ 42,108,870
(2,423,532 shares)
Vanguard Retirement Savings Trust 24,554,164 24,554,164
Vanguard Windsor Fund 27,645,098 30,309,787
Vanguard Asset Allocation Fund 8,287,650 10,364,961
Vanguard Growth and Income Portfolio 9,932,120 12,647,879
Vanguard International Growth Portfolio 2,894,651 3,007,483
Vanguard Index Trust 2,387,923 2,737,142
Vanguard Fixed Income Securities Fund 816,049 820,740
Vanguard Life Strategy Growth Portfolio 695,966 733,444
Vanguard Life Strategy Income Portfolio 270,191 270,823
Vanguard Life Strategy Conservative Growth Portfolio 217,537 219,418
Vanguard U.S. Growth Fund 1,707,488 1,833,349
Vanguard Life Strategy Moderate Growth Portfolio 701,642 754,984
------------ ------------
Total $118,907,680 $130,363,044
30
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
We consent to the incorporation by reference in the registration statements of
Engelhard Corporation and Subsidiaries on Form S-8 (File Nos. 2-89747, 33-28540)
of our report dated June 18, 1999, on our audits of the financial statements and
financial statement schedules of Salary Deferral Savings Plan of Engelhard
Corporation as of December 31, 1998 and 1997, and for the years ended
December 31, 1998, 1997 and 1996, which appears in this Form 11-K.
/s/ PRICEWATERHOUSECOOPERS L.L.P.
New York, New York
June 21, 1999
31
<PAGE>
Signature
---------
Form 11-K
Salary Deferral Savings Plan of Engelhard Corporation
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Pension and Employee Benefit Plans Committee of Engelhard Corporation has
duly caused this annual report to be signed on its behalf by the undersigned,
thereunto duly authorized, in Iselin, New Jersey on this 28th day of June,
1999.
/s/ John C. Hess
-------------
By: John C. Hess
Secretary to the Committee and
Vice President of Human Resources
32
