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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1993 COMMISSION FILE NUMBER 1-5365
HANDY & HARMAN
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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NEW YORK 13-5129420
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
250 PARK AVENUE
NEW YORK, NY 10177
(ADDRESS OF PRINCIPAL
EXECUTIVE OFFICES)
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Registrant's telephone number, including area code (212) 661-2400
Securities registered pursuant to Section 12(b) of the Act:
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NAME OF EACH EXCHANGE
NUMBER OUTSTANDING ON
TITLE OF EACH CLASS AS OF MARCH 25, 1994 WHICH REGISTERED
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Common Stock Par Value $1 Per Share............... 14,023,780 New York Stock Exchange
Common Stock Purchase Rights...................... 14,023,780 New York Stock Exchange
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SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
None
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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months and (2) has been subject to such filing
requirement for the past 90 days. Yes /X/ No / /
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. / /
The aggregate market value of the Common Stock outstanding and held by
non-affiliates (as defined in Rule 405 under the Securities Act of 1933) of the
registrant, based upon the closing sale price of the Common Stock on the New
York Stock Exchange on March 25, 1994 was $210,420,497.
Certain portions of the respective documents listed below have been
incorporated by reference into the indicated Part of this Annual Report on Form
10-K.
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(1) Annual Report to Shareholders for fiscal year ended Part I, Item 1
December 31, 1993. Part II, Items 5-8
(2) Notice of Annual Meeting of Shareholders and Proxy Part III, Items 10-13
Statement dated March 30, 1994.
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PART I
ITEM 1. BUSINESS
GENERAL
Handy & Harman (hereinafter "H&H" or the "Company"), was
incorporated in the State of New York in 1905 as the successor to a partnership
which commenced business in 1867. Unless the context indicates otherwise, the
terms, "H&H" and the "Com- pany", refer to Handy & Harman and its consolidated
subsidiaries.
Historically, until commencing a diversification
program in 1966, the Company was engaged primarily in the manufacture of silver
and gold alloys in mill forms and the refining of precious metals from jewelry
and industrial scrap. The Company's markets were largely among silversmiths
and manufacturing jewelers, users of silver brazing alloys, and manufacturers
who required silver and gold primarily for the properties of those metals. As
part of these precious metals operations, the Company still publishes a daily
New York price for its purchases of silver and gold and now also publishes a
daily price for its fabricated silver and gold. The silver price is
recognized, relied on and used by others throughout the world. Further, the
review entitled "The Silver Market", published annually by the Company since
1916, is widely distributed in trade and financial centers in this country and
abroad.
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The diversification program has added lines of precious metals
products and various specialty manufacturing operations, including stainless
steel and specialty metal alloy products, for industrial users in a wide range
of applications which include the electrical, electronic, automotive original
equipment, office equipment, oil and other energy-related, refrigeration,
utility, telecommunications and medical industries.
The Company's business segments are (a) manufacturing and
selling precious metals products and providing refining services; (b)
manufacturing and selling products for the original equipment automotive
industry; (c) manufacturing and selling of non-precious metal wire and tubing
products; and (d) manufacturing and selling other specialty products.
Three-year financial data for the Company's business segments appear under the
caption "The Company's Business" on pages 18 and 19 of the Handy & Harman 1993
Annual Report to Shareholders (hereinafter referred to as the "Annual Report")
and are incorporated by reference herein.
One customer of the Automotive Original Equipment Group
represented 10.7%, 11.3%, and 10.5% of consolidated sales and service revenues
for 1993, 1992 and 1991, respectively. Export sales and revenues are not
significant in the total sales and revenues of any of the Company's business
segments.
In June 1991 the Company announced a major restructur-
ing program designed to strengthen the Company's balance sheet by
reducing debt and interest expense, to provide a sound basis for
improved profitability and to allow management to concentrate on
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those businesses which have demonstrated potential for above average growth.
The program called for divestiture of six businesses deemed to be non-core
operations that no longer fit within the Company's long-term strategies. The
six discontinued businesses were those involved in the manufacture of
automotive replacement parts, proprietary chemicals, metal powders, pressur-
ized vessels, coldheaded parts and specialized platinum group metals refinings
and products. See Notes 1 and 10 to the Consol- idated Financial Statements
included in the Annual Report and Management's Discussion and Analysis on page
21 of the Annual Report.
PRECIOUS METALS
PRODUCTS AND REFINING SERVICES
The operational structure of the parent company's precious
metals activities consists of two distinct profit centers: Products Operations
and Refining Operations. Both of these profit centers and the activities of
other precious metals subsidiaries are included in the following discussion of
the precious metals segment of the Company's business. Within the precious
metals segment of the Company's business, two principal classes of products
are manufactured: wire products and rolled products. The table on page 19 of
the Annual Report, showing percentages of gross shipments of these classes of
precious metals products which contributed 10% or more to total sales and
revenues, is incorporated herein by reference.
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In the following discussion of the Company's precious metals
products, the term "karat" refers to the amount of gold in a gold alloy. Pure
gold is 24-karat, and karat golds generally range between 10-karat (41.6%) and
18-karat (75%). The usual alloy metals are silver, copper, nickel and zinc.
By varying the other elements in the alloy, karat golds may be fabricated in a
number of colors including white, green, yellow and red. Sterling silver is an
alloy of silver, which contains a minimum of 92.5% pure silver.
The Company's profits from the products manufactured in
this segment are derived from the "value added" of processing and
fabricating, not from the purchase and resale, of precious
metals. In accordance with general practice in the industry,
prices to customers are a composite of two factors, namely, (1)
the value of the precious metal content of the product plus (2)
an amount referred to as "fabrication values" to cover the cost
of base metals, labor, overhead, financing and profit.
Wire Products - In the manufacture of the Company's
wire products, precious metal alloys are cast, extruded and then
drawn into wire. The Company's precious metal wire products con-
sist of karat golds, sterling and other alloys of silver, and
other precious metal alloys in drawn and coiled wire and rod
forms of differing diameters, ranging from .007 of an inch to
.25 of an inch. The Company also manufactures Easy Flo(R), Sil-
Fos(R) and other silver brazing alloys in wire form for making
permanent, strong, leak-tight joints of the metals joined.
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Brazing alloy wire is also sold in preformed rings and special
shapes. The Company's precious metal alloy wire products are
marketed for electrical conductive and contact applications in a
wide variety of industries, including the aerospace, electronics
and appliance industries. Manufacturing jewelers use the Com-
pany's precious metal wire in a wide range of production applica-
tions, including, for example, necklaces, bracelets, earring
parts and pins and clips.
Rolled Products - The Company's rolled products are
manufactured from karat golds, sterling and lesser alloys of silver, and alloys
of other precious metals in sheets, strips and bars of varying thicknesses,
widths and lengths. These precious metal rolled products range in standard
thickness from foils .0005 of an inch thick to strips or bars .375 of an inch
thick, and in standard widths from strips .125 of an inch wide to fifteen
inches wide. Rolled products are shipped in lengths up to many hundred feet.
The Company's rolled products include precious metals bonded with other metals
in bimetallic and tri- metallic strips which provide more versatile industrial
applica- tions at a lower cost than would be possible if a solid precious metal
or a precious metal alloy were used.
Because of the physical properties of precious metals
and precious metal alloys, the Company's rolled products have a
wide variety of applications by the Company's industrial cus-
tomers. The Company's rolled products are sold to silversmiths
for use as anodes in plating operations and for flatware and
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hollowware, to manufacturing jewelers for a variety of jewelry,
to mints and others for coins, commemorative medals and ingots,
to manufacturers of electrical and electronic devices for elec-
trical contacts and circuitry, to the nuclear power industry for
control assemblies, to the defense industry as foil for batter-
ies, and to the aerospace industry for use in guidance systems.
Powder Products - The Company produced a variety of precious
metal powders and flakes which it sold under various names, including
Silpowder(R) and Silflake(R), for use in the production of electronic parts and
in powder metal contacts, batteries, conductive coatings and other electrical
applications. It produced a line of silver oxide powders for use in chemical
silver alumina catalysts and in button batteries. The Company sold this
business in 1992 and effectively exited the business in December 1992.
However, it continues to produce silver/tin alloy powders for use in dental
applications and silver/copper alloy powders, sold under the names Easy-Flo(R)
and Sil-Fos(R), for use in industrial brazing applications.
Other Precious Metals Products - The Company produces grain
beads of various precious metal alloys by melting the metal and then pouring it
through water. Grain beads are distinguished from the Company's precious metal
powders, which are not as coarse and are produced by atomization spraying. The
major grain product is karat gold grain produced in a number of colors,
including white, green, yellow and red. The Company also produces grain in
various silver and other gold alloys.
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Electronic parts are selectively electroplated in order to
deposit gold, silver, palladium, and various base metals on such parts for
applications in computer connectors, semi-conductor devices and
telecommunication equipment.
Refining Services - The Company recovers precious metals from
waste and scrap generated by users of the Company's precious metals products
and other industrial users of precious metals, from metal-bearing objects
delivered for that purpose by non-manufacturing refining customers, and from
high grade mining concentrates and bullion. The Company receives a fee for
this service. After controlled sampling, assaying, weighing, deter- mination
of values and settlement with the customer, the Company purchases for its own
use the precious metal resulting from such refining, or, upon request by the
customer, returns an equivalent amount of metal to the customer.
Raw Materials - The raw materials for the Company's precious
metals products consist principally of silver, gold, copper, cadmium, zinc,
nickel, tin, and the platinum group metals in various forms. Gold and silver
constitute the major portion of the value of the raw materials involved. In
addition, the Company buys waste and scrap containing precious metals for
recycling and refining, as described above. The Company purchases all of its
precious metals at free market prices from either refining customers, primary
producers or bullion dealers. Over the past several years, the prices of gold
and silver have been subject to fluctuations, and are expected to continue to
be
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affected by world market conditions; however, the Company has not experienced
any problem in obtaining the necessary quantities of raw materials required for
this segment. In the normal course of business, the Company receives precious
metals from suppliers and customers. These metals are returnable in fabricated
or commercial bar form under agreed upon terms. Since precious metals are
fungible, the Company does not physically segregate supplier and customer
metals from its own inventories. Therefore, to the extent that supplier or
customer metals are used by the Company, the amount of inventory which the
Company must own is reduced. All raw materials used in this segment are
readily available from several sources. For a discussion of the Company's
inventory purchasing and pricing, and of the Company's practices to eliminate
the economic risk of precious metal price fluctuations, see "The Company's
Business" on page 18 of the Annual Report.
Working Capital Items - The Company maintains a con-
stant level of inventory of fine and fabricated precious metals
in various stages of processing and/or refining for customer
delivery requirements and for a continuous supply of raw mate-
rials. Such inventories are carried under the Last-In, First-
Out (LIFO) method of accounting. The LIFO carrying values are
substantially less than the market values of the inventories. In
the Notes to Consolidated Financial Statements, commencing on
page 28 of the Annual Report, see Note 7 for a comparison of the
cost and market values of the Company's precious metals invento-
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ries at December 31, 1992 and December 31, 1993 and see Note 2 for a discussion
of the effects of fluctuations in precious metals prices on the Company's
credit requirements. Both Notes are incorporated by reference herein.
Product Development, Patents and Trademarks - While the
Company holds a number of patents and trademarks related to its precious metals
products and processes, and is licensed under others, the precious metals
business, as a whole, is not depen- dent upon such patents. The Company's
trademarks are registered in the United States and in several foreign
countries. The Com- pany maintains a technical laboratory and staff in
connection with its precious metals operations and a portion of the work of
that staff is devoted to metallurgical products and development.
Distribution Facilities - The Company distributes precious
metals products directly to customers from its plants and service branches,
except that certain products, primarily brazing alloys, are distributed through
independent distributors throughout the United States and Canada. The Company
has a marketing organization trained to service its customers and dealers, to
solicit orders for its precious metal and related products, and to obtain
refining business. This organization markets all of the Company's refining
services and precious metals products and provides special technical assistance
with respect to precious metals through product engineers and other technical
personnel. The Company maintains customer service and sales offices at its
various manufacturing and processing plants
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and in Los Angeles and Chicago. It also has warehouse facilities to support
sales and distribution at each of its manufacturing and processing plants and
in Chicago and Los Angeles.
Competition - The Company is one of the leading fab-
ricators and refiners of precious metals. The Company currently
sells its precious metal fabricated products to approximately
5,000 customers throughout the United States and Canada. Al-
though there are no companies in the precious metals field whose
operations exactly parallel those of H&H in every area, there are
a number of competitors in each of the classes of the Company's
precious metals products. Many of these competitors also carry
on activities in other product lines in which the Company is not
involved. Competition is based on quality, service and price,
each of which is of equal importance.
MANUFACTURING OF AUTOMOTIVE
ORIGINAL EQUIPMENT
Through Handy & Harman Automotive Group, Inc. (the "Automotive
Group"), a subsidiary, the Company manufactures a wide variety of parts,
components and assemblies for the North American domestic automobile original
equipment manufacturers (the OEM market).
The Automotive Group produces a wide variety of tubular parts
for the OEM market from steel, stainless steel and other metals. Formed
and brazed tubing parts made from stainless and carbon steel and various other
metals are produced as air pipes,
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brake and fuel lines, components of fuel delivery systems, and other tubing
parts. The Automotive Group also produces small diameter cables and a variety
of control assemblies for automotive applications, including parking brake
cables, speedometer cables, various transmission cables and other mechanical
assemblies, made from steel and other materials. In addition, the Automotive
Group produces plastic parts, tubing, fuel lines, plastic component manifolds
and assemblies for the OEM market.
Raw Materials - The raw materials used in this segment
include stainless and carbon steels, tin, zinc, nickel and
various plastic compositions. Raw materials are purchased at
open market prices principally from domestic suppliers. The
Automotive Group has not experienced any problem in obtaining
sufficient quantities of raw materials.
Competition - There are many companies, domestic and foreign,
which manufacture products of the type manufactured by the Automotive Group.
Some are larger than the Company and many are larger than the Automotive
Group's operation with which they compete. Competition is based to a great
extent on price, quality, service and new product introduction. The domestic
automobile industry has traditionally engineered and manufactured in its own
plants a high percentage of the parts used in assem- bling its automobiles. In
recent years the industry has begun to purchase more parts and assemblies from
outside suppliers such as the Automotive Group. Although this trend continued
during 1993 there can be no assurance that it will do so in the future.
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Equally as important is the industry trend to use outside suppliers to
participate in the engineering and designing of some parts and assemblies.
Research and Development Center - The Automotive Group
operates a Research and Development Center in Auburn Hills, Michigan. The
Center contains approximately 40,000 square feet of floor space and
"state-of-the-art" equipment, including chassis rolls, dynamometers, vibration
equipment and flow testing equipment. A number of highly-qualified personnel
currently are employed at the Center which also houses automotive
administrative and sales personnel. They offer the capability to design,
fabricate and test complete fuel and cable control systems; to support the
Automotive Group and other units of the Company in the design, fabrication and
testing of automotive components; and to assist in the design and development
of new components and systems for automotive purposes.
Distribution - Essentially all of the Automotive Group's
original equipment products is sold directly to the major domestic automobile
companies through its sales and marketing employees.
MANUFACTURING OF WIRE AND TUBING PRODUCTS
The Company, through several subsidiaries, manufactures
a wide variety of non-precious metal wire and tubing products.
Small diameter precision drawn tubing fabricated from stainless
steel, nickel alloy and carbon and alloy steel is produced in
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many sizes and shapes to critical specifications for use in the semi-conductor,
aircraft, petrochemical, automotive, appliance, refrigeration and
instrumentation industries. Additionally, tubular product is manufactured for
the medical industry for use as implants, surgical supplies and
instrumentation. Stainless steel wire products are redrawn from rods for such
diverse applications as bearings, brushes, cable lashing, hose reinforcement,
nails, knitted mesh, wire cloth, air bags and antennas in the aerospace,
automotive, chemical, communications, marine, medical, petrochemical and other
industries.
Raw Materials - The raw materials used in this segment
include stainless and carbon steels, nickel alloys and a variety
of high performance alloys. The Company purchases all such raw
materials at open market prices from domestic and foreign suppli-
ers. The Company has not experienced any problem in obtaining
the necessary quantities of raw materials. Prices and availabil-
ity, particularly of raw materials purchased from foreign suppli-
ers, will be affected by world market conditions and governmental
policies.
Competition - There are many companies, domestic and
foreign which manufacture wire and tubing products of the types
manufactured by this segment. Competition is based on quality,
service, price and new product introduction, each of which is of
equal importance.
Distribution - Most of the products manufactured by
this segment are sold directly to customers through Company
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salesmen; however, some are sold through manufacturer's represen-
tatives and through distributors.
MANUFACTURING OF OTHER SPECIALTY PRODUCTS
Other Company subsidiaries manufacture a large number of other
specialty products for industrial use. Plastic and steel fittings and
connections, plastic pipe and non-ferrous thermite welding powders are produced
for the natural gas, electrical and water distribution industries. In 1993 the
Company sold its business which used powdered metals to make custom-molded
structural parts and assemblies from ferrous and non-ferrous powdered metals
for components and assemblies for office products, business machines, hand-held
power tools, hydraulic motors and pumps and lawn and garden equipment. Also in
1993, the Company sold the large industrial heat exchanger business which made
packaged power units for oil and gas, construction, agricultural and the skiing
industries.
Distribution - Most of the Company's specialty prod- ucts
comprising this segment are sold directly to customers through Company
salesmen, although some are sold by agents and manufacturer's representatives.
In particular, gas distribution supplies and fittings, thermite welding powders
and certain other products are sold primarily through manufacturer's
representa- tives to the ultimate users, although some sales also are made by
manufacturer's representatives to distributors.
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Raw Materials - The raw materials used in this segment include
various steel alloys, copper, tin, zinc, nickel and various plastic
compositions. The Company purchases all such raw materials at open market
prices primarily from domestic suppliers. The Company has not experienced any
problem in obtaining the necessary quantities of raw materials. Prices and
availability, particularly as to raw materials purchased from foreign
suppliers, will continue to be affected by world market conditions and
governmental policies.
Competition - There are many companies, domestic and foreign,
which manufacture products of the type manufactured by this segment. Some are
larger than the Company, and many are larger than the Company's operations with
which they compete. Competition in portions of this segment's business is
based primarily on price, and significant competition has come from
lower-priced foreign imports. Competition is otherwise generally based on
quality, service and price, each of which is of equal importance.
GOVERNMENT REGULATION
During the last fiscal year, the Company spent or committed
approximately $2,700,000 in complying with federal, state and local
occupational safety and health, environmental control and equal employment
opportunity laws and regulations. These expenditures included monies spent by
the Company in the clean-up of hazardous wastes and toxic substances under
Federal,
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State and local laws and regulations relating to protection of the environment.
Like many other large domestic manufacturing concerns, the Company's operations
may affect the environment. These operations may produce, process, and dispose
of materials and waste products which, under certain conditions, are toxic or
hazardous under such environmental laws and regulations. The Company expects
to make comparable expenditures and commitments during the current fiscal year,
provided that no further changes are made in such laws and regulations or in
their application. Such expenditures are not material to the competitive
position or financial condition of the Company; however, such laws and
regulations may require capital expenditures not now contemplated and may
result in increased operating costs. See Item 3 Legal Proceedings.
ENERGY
The Company requires significant amounts of electrici- ty,
natural gas, fuel oil and propane to operate its facilities. The Company has
few contracts covering natural gas or electrici- ty, but has some one-year
contracts for the delivery of fuel oil and/or propane at some facilities.
These contracts are the result of competitive bidding.
In an attempt to minimize the effects of any fuel shortages,
the Company has made a number of process and equipment changes to allow use of
alternate fuels in key processes, and the Company has equipped certain plants
with alternate fuel reserves
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intended to reduce any curtailment upon a local shortage. A general and
continuing shortage of such fuels, however, or a government allocation of
supplies resulting in a general reduc- tion in fuel supplies, could cause some
curtailment of produc- tion.
EMPLOYEES
The Company had 4,246 employees on December 31, 1993. Of
these, approximately 35% are covered by collective bargaining agreements which
expire at various times during the next three years.
ITEM 2. PROPERTIES
The Company has 32 operating plants in the United States,
Canada, Mexico, England, Brazil (50% owned) and Singapore (50% owned) with a
total area of approximately 2,500,000 square feet, including warehouse, office
and laboratory space, but not including the plants used by the Brazil or
Singapore operations and by the discontinued operations described in Notes 1
and 10 to the Consolidated Financial Statements included in the Annual Report.
The Company owns or leases sales, service and warehouse facilities at 4 other
locations in the United States and Canada, which, with the Company's executive
and general offices, have a total area of approximately 115,000 square feet.
The Company considers its manufacturing plants and
service facilities to be well maintained and efficiently
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equipped, and therefore suitable for the work being done. Theproductive
capacity and extent of utilization of the Company'sfacilities is dependent in
some cases on general business condi-tions and in other cases on the
seasonality of the utilization ofits products. Productivity can be expanded
readily to meet additional demands.
A description of the Company's principal plants by
industry segment is as follows:
Precious Metals
The Company's principal precious metal products and refining
services operations are conducted in Fairfield and South Windsor, Connecticut;
Attleboro, Massachusetts; and East Providence, Rhode Island. Other precious
metal operations are conducted in Phoenix, Arizona; North Attleboro,
Massachusetts; Cudahy, Wisconsin; Indianapolis, Indiana; Toronto, Canada and
Singapore (50% owned). The Company owns all these operating plants in fee.
Automotive Original Equipment
The headquarters of Handy & Harman Automotive Group, Inc. is
located in Auburn Hills, Michigan in the same building as the sales offices and
the Engineering Research and Development Center. Manufacturing facilities are
in Dover and Archbold, Ohio; Kendallville and Angola, Indiana; and Martinsburg,
West Virginia. All of this segment's operating plants are owned in fee. The
Auburn Hills building is leased. The Automotive Group
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also has operated in Mexico through a "maquiladora" arrangement and now has
"National Supplier Status."
Wire and Tubing
The headquarters of the wire portion of this segment is in
Cockeysville, Maryland and the headquarters of the tubing portion of this
segment is in Norristown, Pennsylvania. Manufacturing facilities are located
in Cockeysville, Maryland; Norristown, Pennsylvania; Willingboro and Middlesex,
New Jersey; Oriskany, New York; Camden, Delaware; Evansville, Indiana; Salto,
Sao Paulo, Brazil; Retford, Notts. and Liversedge, Yorkshire, England. All
these plants are owned in fee except the Retford and Salto plants which are
leased.
Other Specialty Products
The principal facilities currently engaged in the Company's
other specialty products businesses are located in Tulsa and Broken Arrow,
Oklahoma; and Bolton, England. The Oklahoma plants are owned in fee while the
Bolton plant is leased.
Company's Offices
The Company's executive offices are in New York, New York and
occupy 17,000 square feet under a lease. The Company has leased approximately
30,000 square feet in Rye, New York, for its general offices and approximately
8,500 square feet in New York, New York for its Corporate MIS Center.
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ITEM 3. LEGAL PROCEEDINGS
There are no pending legal proceedings to which the Company or
any of its subsidiaries is a party or which any of their property is the
subject, other than ordinary, routine litigation incidental to the business,
none of which individually or in the aggregate is material to the business or
financial condition of the Company, except as follows:
Palmer Well Fields
On February 25, 1991 the Massachusetts Department of
Environmental Protection ("MDEP") filed a lien against the property owned by
Pal-Rath Realty, Inc. (a subsidiary of the Company formerly named Rathbone
Corporation) which is located in Palmer, Massachusetts and is leased to
Rathbone Realty, Inc. whose affiliated corporation purchased the business and
assets of Pal-Rath Realty (other than the real estate) in May 1988. The lien
is for a claim in the amount of $1,131,105.31 for expenses allegedly incurred
in connection with the Palmer Well Fields known as the Galaxy Well Field and
Gravel Pack Well No. 2. A claim has also been made against a neighboring
industry and a lien similarly filed against that industry's property. The MDEP
has not allocated the alleged liability between Pal-Rath and the other
industry.
In June 1987, the Massachusetts Department of Environmental
Quality Engineering (now called the Massachusetts Department of Environmental
Protection) had issued a Notice of Responsibility to Rathbone (now Pal-Rath)
relating to alleged contami-
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nation of the Palmer Well Fields by Rathbone. Rathbone responded to that
letter and has from time to time assisted the MDEP and also conducted an
extensive investigation of the Rathbone proper- ty. In November 1990 the MDEP
had issued a letter requesting submittal of good faith offers by Pal-Rath and
its neighbor to pay past costs and to conduct further work. In January 1991
Pal-Rath responded that the MDEP's request for money was not supported by the
law or the facts and that it would not pay past costs but would conduct or
assist in further work. Discussions were continuing when the MDEP filed its
liens. Agreement has been reached to submit the matter to non-binding
mediation before the Massachusetts Office of Dispute Resolutions. The
mediation proceedings are continuing.
Although the final outcome of this matter cannot be assured,
the Company believes that it will not have a materially adverse affect on the
financial position of the Company.
Montvale, New Jersey Facility
On April 13, 1993, the Borough of Park Ridge, New Jersey sued
Handy & Harman Electronic Materials Corporation, a subsidiary ("HHEM"), and
Handy & Harman, in the Superior Court of New Jersey, Law Division, Bergen
County, asserting that a chemical used at a formerly owned facility in
Montvale, New Jersey, an adjoining municipality, had migrated and entered a
drinking water supply of Park Ridge. Park Ridge seeks reimbursement of
$2,190,437 expended in the construction and operation of water treatment
equipment for wells alleged to have been
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contaminated from the Montvale facility, and of $1,255,582 for future
expenditures over a 20-year period.
The lawsuit includes as additional defendants the prior owner
and operator of the Montvale facility, and a vendor of the chemical involved.
Evidence exists that contamination existed at Park Ridge prior to HHEM's
ownership of the site and that there are other sources of the contamination of
the Park Ridge wells. HHEM has worked with the New Jersey Department of
Environmental Protection and Energy to investigate and implement a remedy for
conditions at the site; and Park Ridge has requested the assistance of the New
Jersey DEPE to investigate whether there is a connection between the
contamination at the site and at the Park Ridge wells. HHEM is negotiating
with Park Ridge and the other defendants to agree on a settlement of all
outstanding issues.
Although the final outcome of this matter cannot be assured,
the Company believes that it will not have a materially adverse affect on the
financial position of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None during the fourth quarter of the year ended December 31,
1993.
EXECUTIVE OFFICERS OF THE COMPANY
As of March 30, 1994, the executive officers of the Company,
their ages, their present positions and offices, and
22
<PAGE> 24
their recent business experience and employment, are as follows:
Richard N. Daniel - Age 58; Chairman (since 1988) and Chief Executive
Officer of the Company (since 1983); a Director (since 1974).
Frank E. Grzelecki - Age 56; President and Chief Operating Officer of
the Company (since 1992); prior thereto Vice Chairman of the Board
(since 1989); a Director (since 1988); prior thereto a Management
Consultant (since 1986);
Paul E. Dixon - Age 49; Vice President, General Counsel and Secretary
(since 1993); prior thereto Vice President and General Counsel (since
1992); prior thereto Senior Vice President and General Counsel of
Warnaco Group (since prior to 1989).
Richard P. Schneider - Age 47; Vice President-Corporate Development
(since 1993); prior thereto Vice President-Corporate Development of
Sequa Corporation (a diversified manufacturing company) (since prior
to 1989).
Dennis C. Kelly - Age 42; Controller (since 1993) of the Company;
prior thereto Assistant Controller (since 1989); and prior thereto
Director of Internal Audit (since 1985).
23
<PAGE> 25
James S. McElya - Age 46; Group Vice President (since 1992); prior
thereto President of Handy & Harman Automotive Group, Inc. (since
1987), a subsidiary.
John M. McLoone - Age 51; Vice President - Financial Services (since
1992); prior thereto Group Vice President, Information Technologies
for W. R. Grace & Co. (a multinational company) (since prior to 1989).
Stephen B. Mudd - Age 62; Vice President (since 1983) and Treasurer
(since 1977).
Robert M. Thompson - Age 61; Group Vice President (since 1984); prior
thereto President of Handy & Harman Tube Company, Inc. (1976 to 1984),
a subsidiary.
There are no family relationships between any of the executive
officers. The regular term of office for all executive officers is one year,
beginning on May 1. There are no arrangements or understandings between any of
the executive officers and any other person pursuant to which such officer was
elected to be an officer.
24
<PAGE> 26
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
The information for this Item is incorporated by reference to
the section entitled "Stock Trading and Dividends" on page 19 of the Annual
Report and to Note 5 of the Notes to Consolidated Financial Statements included
in the Annual Report.
ITEM 6. SELECTED FINANCIAL DATA
The information for this Item is incorporated by reference to
the section entitled "Five Year Selected Financial Data" on page 20 of the
Annual Report.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information for this Item is incorporated by reference to
the section entitled "Management's Discussion and Analysis" on pages 21 and 22
of the Annual Report.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information for this Item is incorporated by reference to
the Consolidated Financial Statements contained on pages 23 through 26 of the
Annual Report and by reference to the Summary of Significant Accounting
Policies contained on page 27 of the Annual Report and the Notes to
Consolidated Financial Statements commencing on page 28 of the Annual Report
and by
25
<PAGE> 27
reference to the Independent Auditors' Report set forth on page 34 of the
Annual Report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not Applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The information for this Item is incorporated by reference to
the section entitled "Election of Directors," on pages 2 and 3 of the Company's
Proxy Statement, dated March 30, 1994 (the "Proxy Statement"), for the 1994
Annual Meeting of Shareholders, and by reference to the item captioned
"Executive Officers of the Company" at the end of Part I of this Annual Report
on Form 10-K. No person who was during the 1993 fiscal year a director,
officer or beneficial owner of more than ten percent of any class of equity
securities of the registrant failed to file on a timely basis reports required
by Section 16(a) of the Exchange Act of 1934, as amended.
ITEM 11. EXECUTIVE COMPENSATION
The information for this Item is incorporated by reference to
the sections entitled "Executive Compensation," "Base Salaries," "Annual
Incentive Awards for 1993," "Stock Options," "Long-Term Incentive Plan,"
"Compensation Committee
26
<PAGE> 28
Report on Executive Compensation," "Pensions," "Compensation of Directors,"
"Employment Contracts and Termination of Employment and Change-in- Control
Agreements" on pages 4 to 10 of the Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The information for this Item is incorporated by reference to
the sections entitled "Voting Rights and Principal Holders Thereof" and
"Election of Directors" on page 1 and pages 2 and 3, respectively, of the Proxy
Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information for this Item is incorporated by reference to
the section entitled "Election of Directors" on pages 2 and 3 of the Proxy
Statement.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM
8-K
(a) Documents Filed as a Part of This Report
1. Financial Statements
The Consolidated Financial Statements, the Summary of
Significant Accounting Policies and Notes to Consolidated Finan- cial
Statements, the Independent Auditors' Report thereon and the items of
Supplementary Information incorporated by reference in
27
<PAGE> 29
Part II, Item 8 of this Report are set forth at the respective pages of the
Annual Report indicated in the list contained on page 17 of the Annual Report,
which list is incorporated herein by reference to the Annual Report.
2. Financial Statement Schedules
The following Financial Statement Schedules are filed as a
part of this Report, beginning herein at the respective pages indicated:
(i) Report and Consent of Independent Auditors (page
F-1).
(ii) Schedule V - Property, Plant and Equipment (page
S-1).
(iii) Schedule VI - Accumulated Depreciation, Depletion
and Amortization of Property, Plant and
Equipment (page S-2).
(iv) Schedule VIII - Valuation and Qualifying Accounts
and Reserves (page S-3).
(v) Schedule X - Supplementary Income Statement
Information (page S-4).
All other Schedules are omitted because they are not applicable
or not required, or because the required information is included
in the Consolidated Financial Statements or Notes thereto.
3. Exhibits Required To Be Filed
The following exhibits required to be filed as part of
this Report have been included:
(3) Certificate of Incorporation and By-Laws.
28
<PAGE> 30
(a) The Restated Certificate of Incorporation of Handy &
Harman (Filed as Exhibit 3(a) to the Company's 1989
Annual Report on Form 10-K and incorporated herein by
reference).
(b) The By-Laws as amended (Filed as Exhibit 3(b) to the
Company's 1990 Annual Report on Form 10-K and
incorporated herein by reference).
(4) Instruments defining the rights of security holders,
including indentures.
(a) Revolving Credit Agreement dated as of March 16, 1992
among the Company, certain financial institutions as
lenders, The Bank of Nova Scotia, The Chase Manhattan
Bank, N.A. and Chemical Bank, as Co-Agents and The
Bank of Nova Scotia as the Administrative Agent
(Filed as Exhibit 4(a) to the Company's 1991 Annual
Report on Form 10-K and incorporated herein by
reference).
(b) Short Term Revolving Credit Agreement dated as of
March 16, 1992 among the Company, certain financial
institutions as lenders, The Bank of Nova Scotia, The
Chase Manhattan Bank, N.A. and Chemi- cal Bank, as
Co-Agents and The Bank of Nova Scotia, as the
Administrative Agent (Filed as Ex- hibit 4(b) to the
Company's 1991 Annual Report on Form 10-K and
incorporated herein by reference).
29
<PAGE> 31
(c) Amendment to Revolving Credit Agreement dated as of
March 16, 1992 among the Company, certain financial
institutions as lenders, The Bank of Nova Scotia, The
Chase Manhattan Bank, N.A. and Chemical Bank, as
Co-Agents and The Bank of Nova Scotia as the
Administrative Agent (filed as Exhibit 4(e) to the
Company's 1992 Annual Report on Form 10-K and
incorporated herein by reference).
(d) Amendment to Short Term Revolving Credit Agreement
dated as of March 16, 1992 among the Company, certain
financial institutions as lenders, The Bank of Nova
Scotia, The Chase Manhattan Bank, N.A. and Chemical
Bank, as Co-Agents and The Bank of Nova Scotia, as
the Administrative Agent (filed as Exhibit 4(d) to
the Company's Annual Report on Form 10- K and
incorporated herein by reference).
(e) Amendment to Revolving Credit Agreement dated
February 4, 1993 among the Company, certain financial
institutions as lenders, The Bank of Nova Scotia, The
Chase Manhattan Bank, N.A. and Chemical Bank, as
Co-Agents and The Bank of Nova Scotia as the
Administrative Agent.
(f) Amendment to Short Term Revolving Credit Agreement
dated February 4, 1993 among the Company, certain
financial institutions as lenders, The Bank of
30
<PAGE> 32
Nova Scotia, The Chase Manhattan Bank, N.A. and
Chemical Bank, as Co-Agents and the Bank of Nova
Scotia, as the Administrative Agent.
(g) Amendment to Revolving Credit Agreement dated July 1,
1993 among the Company, certain financial
institutions as lenders, The Bank of Nova Scotia, The
Chase Manhattan Bank, N.A. and Chemical Bank, as
Co-Agents and The Bank of Nova Scotia as the
Administrative Agent.
(h) Amendment to Short Term Revolving Credit Agreement
dated July 1, 1993 among the Company, certain
financial institutions as lenders, The Bank of Nova
Scotia, The Chase Manhattan Bank, N.A. and Chemical
Bank, as Co-Agents and the Bank of Nova Scotia, as
the Administrative Agent.
No other required to be filed. The Company agrees
to furnish to the Securities and Exchange Commission upon its
request therefor a copy of each instrument omitted pursuant
to Item 601(b)(4)(iii) of Regulation S-K.
(10) Material contracts.
(a) 1982 Stock Option Plan (Filed as Exhibit 1 to the
Company's Registration Statement on Form S-8
(Registration No. 2-78264) under the Securities Act
of 1933 and incorporated herein by reference).
31
<PAGE> 33
(b) Amendment to 1982 Stock Option Plan approved in
December 1988 (Filed as Exhibit 10(a) to the
Company's Report on Form 8-K for December 1988 and
incorporated herein by reference).
(c) Management Incentive Plan, as amended February 26,
1981 (Filed as Exhibit 10(b) to the Company's 1980
Annual Report on Form 10-K and incorporated herein
by reference thereto).
(d) Amendment to Management Incentive Plan approved in
December 1988 (Filed as Exhibit 10(d) to the
Company's Report on Form 8-K for December 1988 and
incorporated herein by reference).
(e) Amendment to Management Incentive Plan approved in
October 1991 (Filed as Exhibit 10(e) to the Company's
1991 Annual Report on Form 10-K and incorporated
herein by reference).
(f) Deferred Fee Plan For Directors, as amended February
26, 1981 (Filed as Exhibit 10(c) to the Company's
1980 Annual Report on Form 10-K and incorporated
herein by reference thereto).
(g) Form of Executive Agreement entered into with the
Company's executive officers in September 1986 (Filed
as Exhibit 10(d) to the Company's 1986 Annual Report
on Form 10-K and incorporated herein by reference
thereto).
32
<PAGE> 34
(h) Amendment to Executive Agreement approved in December
1988 (Filed as Exhibit 10(b) to the Company's Report
on Form 8-K for December 1988 and incorporated herein
by reference).
(i) 1988 Long-Term Incentive Plan (Filed as Exhibit 10(h)
to the Company's 1988 Annual Report on Form 10-K and
incorporated herein by reference).
(j) Amendment to 1988 Long-Term Incentive Plan approved
in December 1988 (Filed as Exhibit 10(c) to the
Company's Report on Form 8-K for December 1988 and
incorporated herein by reference).
(k) Amendment to 1988 Long-Term Incentive Plan approved
in June 1989 (Filed as Exhibit 10(j) to the Company's
1989 Annual Report on Form 10-K and incorporated
herein by reference).
(l) Agreement dated as of May 1, 1989 between the Company
and R. N. Daniel (Filed as Exhibit 10(k) to the
Company's 1989 Annual Report on Form 10-K and
incorporated herein by reference).
(m) Amendment to Agreement between the Company and R. N.
Daniel approved by the Company on May 11, 1993.
(n) Supplemental Executive Retirement Plan approved by
the Company in September, 1989 (Filed as Exhibit
10(l) to the Company's 1989 Annual Report on Form
10-K and incorporated herein by reference).
33
<PAGE> 35
(o) Outside Directors Stock Option Plan (Filed as Exhibit
10(m) to the Company's 1990 Annual Report on Form
10-K and incorporated herein by reference.
(p) Amended and Restated Joint Venture Agreement dated as
of June 1, 1990 by and between Allen Heat Transfer
Products Inc. and Handy & Harman Radiator
Corporation (Filed as Exhibit (2) to the Company's
Report on Form 8-K for June 1990 and incorporated
herein by reference).
(q) Handy & Harman Long-Term Incentive Stock Option Plan
(Filed as Exhibit 10(p) to the Company's 1991 Annual
Report on Form 10-K and incorporated herein by
reference).
(r) Handy & Harman Supplemental Executive Plan (Filed as
Exhibit 10(q) to the Company's 1992 Annual Report on
Form 10-K and incorporated herein by reference).
(11) Statement re computation of per share earnings.
Incorporated by reference to item (g) of Summary of
Significant Accounting Policies on page 27 of the
Annual Report.
(13) Pages 17 through 34 of the Company's Annual Report to
Shareholders for 1993. Except for those portions
which are expressly incorporated by reference in this
Annual Report on Form 10-K, this exhibit is furnished
for the information of the
34
<PAGE> 36
Commission and is not deemed to be filed as part of
this Annual Report on Form 10-K.
(22) List of Subsidiaries of the Company is filed as
Exhibit 22 to this Annual Report on Form 10-K.
(24) Report and Consent of Independent Auditors. Included
as part of the Report and Consent of Independent
Auditors on page F-1 filed with the Financial
Statement Schedules as part of this Annual Report on
Form 10-K pursuant to Part IV hereof and incorporated
herein by reference thereto.
(b) Reports on Form 8-K
The Company did not file a Report on Form 8-K during the
fourth quarter of the fiscal year ended December 31, 1993.
For the purposes of complying with the amendments to the rules
governing Form S-8 (effective July 13, 1990) under the Securities Act of 1933,
the undersigned registrant hereby under- takes as follows, which undertaking
shall be incorporated by reference into registrant's Registration Statements on
Form S-8 Nos. 2-78264 (filed July 1, 1982), 33-37919 (filed November 21, 1990)
33-43709 (filed October 31, 1991):
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange
35
<PAGE> 37
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the regis- trant in the successful defense of any action, suit or proceed- ing)
is asserted by such director, officer or controlling person in connection with
the securities being registered, the regis- trant will, unless in the opinion
of its counsel the matter has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question whether such indemnifica- tion
by it is against public policy as expressed in the Act and will be governed by
the final adjudication of such issue.
36
<PAGE> 38
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, Handy & Harman has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
HANDY & HARMAN
Dated: March 24, 1994 By /s/ R. N. Daniel
----------------------
R.N. Daniel
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf of
the Company, in the capacities and on the respective dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ R.N. Daniel Chairman and Director 3/24/94
- ------------------ (Principal Executive Officer)
(R.N. Daniel)
/s/ F.E. Grzelecki President and Director 3/24/94
- ------------------- (Chief Operating Officer)
(F.E. Grzelecki)
/s/ J.M. McLoone Vice President - Financial 3/24/94
- ----------------- Services
(J.M. McLoone) (Principal Financial Officer)
/s/ D.C. Kelly Controller (Principal 3/24/94
- -------------------
(D.C. Kelly) Accounting Officer)
/s/ C.A. Abramson Director 3/24/94
- ------------------
(C.A. Abramson)
/s/ R.E. Cornelia Director 3/24/94
- ------------------
(R.E. Cornelia)
/s/ G.G. Garbacz Director 3/24/94
- -------------------
(G.G. Garbacz)
Director
- -------------------
(G.M. Nichols)
/s/ H.P. Sotos Director 3/24/94
- -------------------
(H.P. Sotos)
/s/ L.M. Woods Director 3/24/94
- ------------------
(L.M. Woods)
</TABLE>
37
<PAGE> 39
F-1
REPORT AND CONSENT OF INDEPENDENT AUDITORS
The Board of Directors and Shareholders
Handy & Harman:
Under the date of February 18, 1994 we reported on the consolidated balance
sheet of Handy & Harman and Subsidiaries as of December 31, 1993 and 1992 and
the related consolidated statements of income, shareholders' equity and cash
flows for each of the years in the three-year period ended December 31, 1993,
as contained in the 1993 Annual Report to Shareholders. These consolidated
financial statements and our report thereon are incorporated by reference in
the Annual Report on Form 10-K for the year 1993. In connection with our audit
of the aforementioned consolidated financial statements, we also audited the
related consolidated financial statement schedules on pages S-1, S-2, S-3 and
S-4. These consolidated financial statement schedules are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these consolidated financial statement schedules based on our audits.
In our opinion, such consolidated financial statement schedules, when
considered in relation to the basic consolidated financial statements taken as
a whole, present fairly in all material respects the information set forth
therein.
We also consent to the incorporation by reference in the Registration
Statements on Form S-8 (Registration Nos. 2-78264, 33-37919 and 33-43709) of
Handy & Harman of our report dated February 18, 1994.
KPMG PEAT MARWICK
New York, New York
March 24, 1994
<PAGE> 40
HANDY & HARMAN AND SUBSIDIARIES S-1
SCHEDULE V
PROPERTY, PLANT AND EQUIPMENT
(Thousands of Dollars)
<TABLE>
<CAPTION>
Balance, Additions - at Cost Balance,
-------------------------
Beginning Other Retirements Translation Close
of Period Changes Expenditures or Sales Adjustment(b) of Period
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Classification
Year ended December 31, 1993
Land $ 5,309 $ 13 $ 371 $ (18) $ 4,933
Buildings and improvements 60,664 1,163 549 (115) 61,163
Machinery and equipment 158,726 (94) 9,883 12,527 (193) 155,795
Furniture and fixtures
(includes business machines) 14,151 (11) 2,146 670 (31) 15,585
Automotive 1,009 136 174 (1) 970
Improvements to leased property 4,013 88 56 (6) 4,039
Construction in progress 5,221 (40) 1,718 - - 6,899
- ------------------------------------------------------------------------------------------------------------------------------------
$249,093 (145)(c) $15,147 $14,347 $ (364) $249,384
====================================================================================================================================
Classification
Year ended December 31, 1992
Land $ 5,491 - - $ 132 $ (50) $ 5,309
Buildings and improvements 61,358 $ (1,105) $ 2,091 1,337 (343) 60,664
Machinery and equipment 152,090 (167) 14,258 6,335 (1,120) 158,726
Furniture and fixtures
(includes business machines) 13,868 27 1,964 1,538 (170) 14,151
Automotive 851 8 351 192 (9) 1,009
Improvements to leased property 4,177 153 799 1,053 (63) 4,013
Construction in progress 9,866 431 (5,023)(a) 53 - 5,221
- ------------------------------------------------------------------------------------------------------------------------------------
$247,701 $ (653)(d) $14,440 $10,640(e) $ (1,755) $249,093
====================================================================================================================================
Classification
Year ended December 31, 1991
Land $ 9,017 $( 2,748) $ 11 $ 787 $ ( 2) $ 5,491
Buildings and improvements 76,392 (10,389) 369 4,998 ( 16) 61,358
Machinery and equipment 167,534 ( 8,824) 7,391 13,899 (112) 152,090
Furniture and fixtures
(includes business machines) 14,943 ( 534) 1,011 1,532 ( 20) 13,868
Automotive 874 ( 93) 276 206 - 851
Improvements to leased property 5,133 ( 258) 21 708 ( 11) 4,177
Construction in progress 6,719 ( 390) 3,649 112 - 9,866
- ------------------------------------------------------------------------------------------------------------------------------------
$280,612 $(23,236)(c) $12,728 $22,242 $ (161) $247,701
====================================================================================================================================
</TABLE>
(a) Amounts represent transfers to depreciable assets in excess of new
construction in progress.
(b) The translation adjustment results from restating the property, plant
and equipment of the Company's Canadian and British subsidiaries in
U.S. dollars.
(c) Amounts represent reclass of discontinued operations property, plant
and equipment.
(d) Amounts represent reclass of discontinued operations property, plant
and equipment and contribution of machinery and equipment to Joint
Venture.
(e) Amounts include reclass of machinery and equipment to assets held for
resale.
Note: The depreciation and amortization policy is to provide for retirement
of property at the end of its estimated useful life, determined as
follows:
<TABLE>
<CAPTION>
Company Subsidiaries
-------- ------------
<S> <C> <C>
Buildings 50 years 10-40 years
Building improvements 10 years 10-20 years
Machinery and equipment 14 years 3-20 years
Furniture and fixtures 20 years 2-13 years
Business machines 8 years 7-10 years
Automotive 4 years 2-8 years
Improvements to
leased property Life of lease Life of lease
</TABLE>
<PAGE> 41
HANDY & HARMAN AND SUBSIDIARIES S-2
SCHEDULE VI
ACCUMULATED DEPRECIATION, DEPLETION,
AND AMORTIZATION OF
PROPERTY, PLANT AND EQUIPMENT
(Thousands of Dollars)
<TABLE>
<CAPTION>
Additions
---------------------
Balance, Charged to Balance,
Beginning Other Costs and Retirements Translation Close
of Period Changes Expenses or Sales Adjustment(a) of Period
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------
Classification
Year ended December 31, 1993
Buildings and improvement $ 24,252 $ 2,072 $ 523 (44) 25,757
Machinery and equipment 102,816 10,666 9,521 (137) 103,824
Furniture and fixtures
(includes business machines) 9,409 1,491 520 (22) 10,358
Automotive 637 193 154 (1) 675
Improvements to leased property 2,374 237 56 (5) 2,550
- ----------------------------------------------------------------------------------------------------------------------------
$139,488 $14,659 $10,774 $ (209) $143,164
============================================================================================================================
Year ended December 31, 1992
Buildings and improvements $ 22,862 $ 2,132 $ 654 $ ( 88) $ 24,252
Machinery and equipment 99,367 $ (1,058) 10,094 4,948 (639) 102,816
Furniture and fixtures
(includes business machines) 9,510 27 1,413 1,442 ( 99) 9,409
Automotive 523 8 269 158 ( 5) 637
Improvements to leased property 3,076 153 249 1,053 ( 51) 2,374
- ----------------------------------------------------------------------------------------------------------------------------
$135,338 $ 870)(c) $14,157 $ 8,255(d) $( 882) $139,488
============================================================================================================================
Year ended December 31, 1991
Buildings and improvement $ 26,252 $ (5,487) $ 2,535 $441 $3 $ 22,862
Machinery and equipment 104,126 (8,121) 11,147 7,734 (51) 99,367
Furniture and fixtures
(includes business machines 9,271 (478) 1,409 687 (5) 9,510
Automotive 660 (78) 110 168 (1) 523
Improvements to leased property 3,053 (255) 312 27 (7) 3,076
- ----------------------------------------------------------------------------------------------------------------------------
$143,362 $(14,419)(b) $15,513 $ 9,057 $ (61) $135,338
============================================================================================================================
</TABLE>
(a) The translation adjustment results from restating the accumulated
depreciation of the Company's Canadian and British subsidiaries in U.S.
dollars.
(b) Amounts represent reclass for discontinued operations property, plant and
equipment.
(c) Amounts represent reclass for discontinued operations property, plant and
equipment and contribution of machinery and equipment to Joint Venture.
(d) Amounts include reclass of machinery and equipment to assets held for
resale.
<PAGE> 42
HANDY & HARMAN AND SUBSIDIARIES S-3
SCHEDULE VIII
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
(Thousands of Dollars)
<TABLE>
<CAPTION>
Balance, Balance,
Beginning Additions Deductions Close
of Period (a) from Reserve of Period
=========================================================================================================================
<S> <C> <C> <C> <C>
Description
Allowance for doubtful
accounts receivable
(deducted from accounts
receivable):
Year ended
December 31, 1993 $3,325 $1,195 $ 799 $3,721
=========================================================================================================================
Year ended
December 31, 1992 $3,347 $ 627 $ 649 $3,325
=========================================================================================================================
Year ended
December 31, 1991 $1,165(c)
$3,400 $2,482 $1,370(b) $3,347
=========================================================================================================================
1993 1992 1991
- -------------------------------------------------------------------------------------------------------------------------
(a) Provision for doubtful
accounts - charged to
costs and expenses $1,195 $ 627 $2,482(1)
=========================================================================================================================
</TABLE>
(1) 1,530 of the provision for doubtful accounts was part of continuing
operations' reserve for restructuring, nonrecurring and unusual
charges.
(b) Items determined to be uncollectible, less recovery of amounts reviously
written off.
(c) $1,165 of allowance for doubtful accounts receivable reclassed to current
assets of discontinued operations.
<PAGE> 43
HANDY & HARMAN AND SUBSIDIARIES S-4
SCHEDULE X
SUPPLEMENTARY INCOME STATEMENT INFORMATION
Three Years Ended December 31, 1993
(Thousands of Dollars)
<TABLE>
<CAPTION>
Charged to Costs
and Expenses
<S> <C> <C> <C>
1993 1992 1991
- ---------------------------------------------------------------------------------------------------
Item (a)
Maintenance and repairs $11,065 $11,589 $11,712
===================================================================================================
</TABLE>
<PAGE> 44
EXHIBIT INDEX
Exhibit
Number Description
------- -----------
(3) Certificate of Incorporation and By-Laws.
(a) The Restated Certificate of Incorporation of Handy &
Harman (Filed as Exhibit 3(a) to the Company's 1989
Annual Report on Form 10-K and incorporated herein by
reference).
(b) The By-Laws as amended (Filed as Exhibit 3(b) to the
Company's 1990 Annual Report on Form 10-K and
incorporated herein by reference).
(4) Instruments defining the rights of security holders,
including indentures.
(a) Revolving Credit Agreement dated as of March 16, 1992
among the Company, certain financial institutions as
lenders, The Bank of Nova Scotia, The Chase Manhattan
Bank, N.A. and Chemical Bank, as Co-Agents and The
Bank of Nova Scotia as the Administrative Agent
(Filed as Exhibit 4(a) to the Company's 1991 Annual
Report on Form 10-K and incorporated herein by
reference).
(b) Short Term Revolving Credit Agreement dated as of
March 16, 1992 among the Company, certain financial
institutions as lenders, The Bank of Nova Scotia, The
Chase Manhattan Bank, N.A. and Chemi- cal Bank, as
Co-Agents and The Bank of Nova Scotia, as the
Administrative Agent (Filed as Ex- hibit 4(b) to the
Company's 1991 Annual Report on Form 10-K and
incorporated herein by reference).
(c) Amendment to Revolving Credit Agreement dated as of
March 16, 1992 among the Company, certain financial
institutions as lenders, The Bank of Nova Scotia, The
Chase Manhattan Bank, N.A. and Chemical Bank, as
Co-Agents and The Bank of Nova Scotia as the
Administrative Agent (filed as Exhibit 4(e) to the
Company's 1992 Annual Report on Form 10-K and
incorporated herein by reference).
(d) Amendment to Short Term Revolving Credit Agreement
dated as of March 16, 1992 among the Company, certain
financial institutions as lenders, The Bank of Nova
Scotia, The Chase Manhattan Bank, N.A. and Chemical
Bank, as Co-Agents and The Bank of Nova Scotia, as
the Administrative Agent (filed as Exhibit 4(d) to
the Company's Annual Report on Form 10- K and
incorporated herein by reference).
(e) Amendment to Revolving Credit Agreement dated
February 4, 1993 among the Company, certain financial
institutions as lenders, The Bank of Nova Scotia, The
Chase Manhattan Bank, N.A. and Chemical Bank, as
Co-Agents and The Bank of Nova Scotia as the
Administrative Agent.
(f) Amendment to Short Term Revolving Credit Agreement
dated February 4, 1993 among the Company, certain
financial institutions as lenders, The Bank of
Nova Scotia, The Chase Manhattan Bank, N.A. and
Chemical Bank, as Co-Agents and the Bank of Nova
Scotia, as the Administrative Agent.
(g) Amendment to Revolving Credit Agreement dated July 1,
1993 among the Company, certain financial
institutions as lenders, The Bank of Nova Scotia, The
Chase Manhattan Bank, N.A. and Chemical Bank, as
Co-Agents and The Bank of Nova Scotia as the
Administrative Agent.
(h) Amendment to Short Term Revolving Credit Agreement
dated July 1, 1993 among the Company, certain
financial institutions as lenders, The Bank of Nova
Scotia, The Chase Manhattan Bank, N.A. and Chemical
Bank, as Co-Agents and the Bank of Nova Scotia, as
the Administrative Agent.
No other required to be filed. The Company agrees
to furnish to the Securities and Exchange Commission upon its
request therefor a copy of each instrument omitted pursuant
to Item 601(b)(4)(iii) of Regulation S-K.
<PAGE> 45
(10) Material contracts.
(a) 1982 Stock Option Plan (Filed as Exhibit 1 to the
Company's Registration Statement on Form S-8
(Registration No. 2-78264) under the Securities Act
of 1933 and incorporated herein by reference).
(b) Amendment to 1982 Stock Option Plan approved in
December 1988 (Filed as Exhibit 10(a) to the
Company's Report on Form 8-K for December 1988 and
incorporated herein by reference).
(c) Management Incentive Plan, as amended February 26,
1981 (Filed as Exhibit 10(b) to the Company's 1980
Annual Report on Form 10-K and incorporated herein
by reference thereto).
(d) Amendment to Management Incentive Plan approved in
December 1988 (Filed as Exhibit 10(d) to the
Company's Report on Form 8-K for December 1988 and
incorporated herein by reference).
(e) Amendment to Management Incentive Plan approved in
October 1991 (Filed as Exhibit 10(e) to the Company's
1991 Annual Report on Form 10-K and incorporated
herein by reference).
(f) Deferred Fee Plan For Directors, as amended February
26, 1981 (Filed as Exhibit 10(c) to the Company's
1980 Annual Report on Form 10-K and incorporated
herein by reference thereto).
(g) Form of Executive Agreement entered into with the
Company's executive officers in September 1986 (Filed
as Exhibit 10(d) to the Company's 1986 Annual Report
on Form 10-K and incorporated herein by reference
thereto).
(h) Amendment to Executive Agreement approved in December
1988 (Filed as Exhibit 10(b) to the Company's Report
on Form 8-K for December 1988 and incorporated herein
by reference).
(i) 1988 Long-Term Incentive Plan (Filed as Exhibit 10(h)
to the Company's 1988 Annual Report on Form 10-K and
incorporated herein by reference).
(j) Amendment to 1988 Long-Term Incentive Plan approved
in December 1988 (Filed as Exhibit 10(c) to the
Company's Report on Form 8-K for December 1988 and
incorporated herein by reference).
(k) Amendment to 1988 Long-Term Incentive Plan approved
in June 1989 (Filed as Exhibit 10(j) to the Company's
1989 Annual Report on Form 10-K and incorporated
herein by reference).
(l) Agreement dated as of May 1, 1989 between the Company
and R. N. Daniel (Filed as Exhibit 10(k) to the
Company's 1989 Annual Report on Form 10-K and
incorporated herein by reference).
(m) Amendment to Agreement between the Company and R. N.
Daniel approved by the Company on May 11, 1993.
(n) Supplemental Executive Retirement Plan approved by
the Company in September, 1989 (Filed as Exhibit
10(l) to the Company's 1989 Annual Report on Form
10-K and incorporated herein by reference).
(o) Outside Directors Stock Option Plan (Filed as Exhibit
10(m) to the Company's 1990 Annual Report on Form
10-K and incorporated herein by reference.
(p) Amended and Restated Joint Venture Agreement dated as
of June 1, 1990 by and between Allen Heat Transfer
Products Inc. and Handy & Harman Radiator
Corporation (Filed as Exhibit (2) to the Company's
Report on Form 8-K for June 1990 and incorporated
herein by reference).
(q) Handy & Harman Long-Term Incentive Stock Option Plan
(Filed as Exhibit 10(p) to the Company's 1991 Annual
Report on Form 10-K and incorporated herein by
reference).
(r) Handy & Harman Supplemental Executive Plan (Filed as
Exhibit 10(q) to the Company's 1992 Annual Report on
Form 10-K and incorporated herein by reference).
<PAGE> 46
(11) Statement re computation of per share earnings.
Incorporated by reference to item (g) of Summary of
Significant Accounting Policies on page 27 of the
Annual Report.
(13) Pages 17 through 34 of the Company's Annual Report to
Shareholders for 1993. Except for those portions
which are expressly incorporated by reference in this
Annual Report on Form 10-K, this exhibit is furnished
for the information of the
Commission and is not deemed to be filed as part of
this Annual Report on Form 10-K.
(22) List of Subsidiaries of the Company is filed as
Exhibit 22 to this Annual Report on Form 10-K.
(24) Report and Consent of Independent Auditors. Included
as part of the Report and Consent of Independent
Auditors on page F-1 filed with the Financial
Statement Schedules as part of this Annual Report on
Form 10-K pursuant to Part IV hereof and incorporated
herein by reference thereto.
<PAGE> 1
[EXECUTION COPY]
SECOND AMENDMENT
TO
REVOLVING CREDIT AGREEMENT
This SECOND AMENDMENT TO REVOLVING CREDIT AGREEMENT, dated as of February
4, 1993 (this "Amendatory Agreement"), among HANDY & HARMAN, a New York
corporation ("the Borrower"), certain financial institutions signatories hereto
(the "Lenders"), THE BANK OF NOVA SCOTIA, THE CHASE MANHATTAN BANK, N.A. and
CHEMICAL BANK, as the co-agents (collectively referred to herein as the
"Co-Agents") and THE BANK OF NOVA SCOTIA, as administrative agent (the
"Administrative Agent"),
W I T N E S S E T H :
WHEREAS, the Borrower, the Lenders, the Co-Agents and the Administrative
Agent are parties to a Revolving Credit Agreement, dated as of March 16, 1992
(as amended or otherwise modified to the date hereof, the "Existing Credit
Agreement"); and
WHEREAS, the parties hereto have agreed, subject to the conditions and
terms hereinafter set forth, to amend the Existing Credit Agreement in certain
respects as herein provided (the Existing Credit Agreement, as so amended by
this Amendatory Agreement, being referred to as the "Credit Agreement");
NOW, THEREFORE, in consideration of the agreements herein contained, the
parties hereto agree as follows:
PART I
DEFINITIONS
SUBPART 1.1. Certain Definitions. The following terms (whether or not
underscored) when used in this Amendatory Agreement shall have the following
meanings (such meanings to be equally applicable to the singular and plural
form thereof):
"Administrative Agent" is defined in the preamble.
"Amendatory Agreement" is defined in the preamble.
"Borrower" is defined in the preamble.
"Co-Agents" is defined in the preamble.
"Credit Agreement" is defined in the second recital.
"Existing Credit Agreement" is defined in the first recital.
"Second Amendment Effective Date" is defined in Subpart 3.1.
"Lenders" is defined in the preamble.
<PAGE> 2
SUBPART 1.2. Other Definitions. Terms for which meanings are provided in
the Existing Credit Agreement are, unless otherwise defined herein or the
context otherwise requires, used in this Amendatory Agreement with such
meanings.
PART II
AMENDMENTS TO THE
EXISTING CREDIT AGREEMENT
Effective on (and subject to the occurrence of) the Second Amendment
Effective Date, the Existing Credit Agreement is hereby amended in accordance
with Subparts 2.1 through 2.3; except as so amended, the Existing Credit
Agreement shall continue in full force and effect.
SUBPART 2.1. Amendment to Article I. Article I of the Existing Credit
Agreement is hereby amended in accordance with Subparts 2.1.1 through 2.1.2.
SUBPART 2.1.1. Section 1.1 of the Existing credit Agreement is hereby
amended by inserting the following definition in such Section in the
appropriate alphabetical sequence:
"Second Amendment" means the Second Amendment, dated as of February
4, 1993, to this Agreement among the Borrower, the Lenders party thereto,
the Co-Agents and the Administrative Agent.
SUBPART 2.1.2. Section 1.1 in its entirety, of the Existing Credit
Agreement is further amended by deleting in its entirety the definition of
"Stated Maturity Date" appearing in such Section, and inserting the following
definition in place thereof:
"Stated Maturity Date" means March 16, 1995, as such date may be
extended pursuant to Section 2.7.
SUBPART 2.2. Amendments to Article II. Article II of the Existing Credit
Agreement is hereby amended in accordance with Subparts 2.2.1 through 2.2.2.
SUBPART 2.2.1. Section 2.7.1 of the Existing Credit Agreement is hereby
amended in its entirety to read as follows:
"SECTION 2.7.1 Request for Extension of Commitment Termination Dates
and Maturity of Loans. Any term or provision of this Agreement to the
contrary notwithstanding, not later than 45 days nor more than 60 days
before each anniversary of the Effective Date (if the Revolving Loan
Commitment then remains in effect), the Borrower may, by delivery of a
duly completed Extension Request to the Administrative Agent, irrevocably
request that each Lender and each Issuer
-2-
<PAGE> 3
(a) extend for a one year period the then existing Loan
Commitment Termination Date relating to such Lender's Revolving Loan
Commitment; and
(b) extend for a one year period the then existing Letter of
Credit Commitment Termination Date relating to such Issuer's Letter
of Credit Commitment and each Lender's obligation to participate,
pursuant to Section 2.6.7, in the Letters of Credit."
SUBPART 2.2.2. Clauses (b) and (c) of Section 2.7.2 of the Existing Credit
Agreement are hereby amended in their entirety to read as follows:
"(b) Each Lender and Issuer shall, within 30 days of receipt of the
notice described in clause (a), notify the Administrative Agent whether or
not it consents to the requests of the Borrower set forth in such
Extension Request, such consent to be in the sole discretion of such
Lender or Issuer, as the case may be. Each Lender hereby acknowledges and
agrees that its consent to the Borrower's request to extend the Loan
Commitment Termination Date (and therefore, the then existing Stated
Maturity Date) shall also be deemed to be a consent by such Lender to an
extension of its obligations to participate, pursuant to Section 2.6.7, in
the Letters of Credit. If any Lender or Issuer does not so notify the
Administrative Agent of its decision within such 30 day period, such
Lender or Issuer, as the case may be, shall be deemed not to have
consented to such requests of the Borrower.
(c) The Administrative Agent shall promptly notify the Borrower
whether the Lenders and Issuers have consented to such request. If the
Administrative Agent does not so notify the Borrower within 5 days prior
to the next occurring anniversary of the Effective Date, the
Administrative Agent shall be deemed to have notified the Borrower that
the Lenders and Issuers have not consented to the Borrower's request."
SUBPART 2.3. Amendment to Article VII. Clause (a) of Section 7.2.4 of
the Existing Credit Agreement is hereby amended by deleting the last two lines
contained in such clause, and substituting the following under the column
headings "Period" and "Adjusted Consolidated Tangible Net Worth", respectively:
"10/01/94 through 12/31/94 130,000,000
01/01/95 and thereafter 130,000,000 plus 25% of
the Borrower's Net Income
for the immediately
preceding Fiscal Year;"
-3-
<PAGE> 4
PART III
CONDITIONS TO EFFECTIVENESS
SUBPART 3.1. Second Amendment Effective Date. This Amendatory Agreement
shall become effective on the date (the "Second Amendment Effective Date") when
all of the conditions set forth in this Subpart 3.1 shall have been satisfied.
SUBPART 3.1.1. Execution of Counterparts. The Administrative Agent shall
have received counterparts of this Amendatory Agreement, duly executed on
behalf of the Borrower and the Required Lenders.
SUBPART 3.1.2. Legal Details, etc. All documents executed or submitted
pursuant hereto shall be satisfactory in form and substance to the
Administrative Agent and its counsel. The Administrative Agent and its counsel
shall have received all information and such counterpart originals or such
certified or other copies or such materials, as the Administrative Agent or its
counsel may reasonably request, and all legal matters incident to the
transactions contemplated by this Amendatory Agreement shall be satisfactory to
the Administrative Agent and ,its counsel.
PART IV
MISCELLANEOUS
SUBPART 4.1. Cross-References. References in this Amendatory Agreement
to any Part or Subpart are, unless otherwise specified or otherwise required by
the context, to such Part or Subpart of this Amendatory Agreement.
SUBPART 4.2. Loan Document Pursuant to Existing Credit Agreement. This
Amendatory Agreement is a Loan Document executed pursuant to the Existing
Credit Agreement and shall be construed, administered and applied in accordance
with all of the terms and provisions of the Existing Credit Agreement.
SUBPART 4.3. Successors and Assigns. This Amendatory Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns.
SUBPART 4.4. Counterparts. This Amendatory Agreement may be executed by
the parties hereto in several counterparts, each of which when executed and
delivered shall be deemed to be an original and all of which shall constitute
together but one and the same agreement.
SUBPART 4.5. Costs and Expenses. The Borrower agrees to pay all costs and
expenses incurred by the Administrative Agent (including fees and out-of-pocket
expenses of counsel to the Administrative Agent) incurred in connection with
the preparation, execution and delivery of this Amendatory Agreement and the
other agreements entered into in connection herewith.
-4-
<PAGE> 5
SUBPART 4.6. Representations, No Default, etc. As of the Second Amendment
Effective Date, the Borrower hereby represents and warrants that
(a) the representations and warranties set forth in Article VI of
the Credit Agreement (excluding, however, those contained in Section 6.7)
are true and correct in all material respects (unless stated to relate
solely to an earlier date, in which case such representations and
warranties were true and correct as of such earlier date);
(b) except as disclosed by the Borrower to the Administrative Agent
and the Lenders pursuant to Section 6.7 of the Credit Agreement,
(i) no litigation, arbitration or governmental investigation
or proceeding is pending or, to the knowledge of the Borrower,
threatened against the Borrower or any of its Subsidiaries which may
reasonably be expected to materially adversely affect the Borrower's,
or the Borrower and its Subsidiaries' taken as a whole, businesses,
operations, assets, revenues, properties or prospects or which
purports to affect the legality, validity or enforceability of the
Credit Agreement, the Notes or any other Loan Document; and
(ii) no development has occurred in any litigation,
arbitration or governmental investigation or proceeding disclosed
pursuant to Section 6.7 of the Credit Agreement which may reasonably
be expected to materially adversely affect the businesses,
operations, assets, revenues, properties or prospects of the Borrower
or the Borrower and its Subsidiaries, taken as a whole; and
(c) no Default has occurred and is continuing.
SUBPART 4.7. Limited Waiver, etc. No amendment, waiver or approval by
the Issuer or any Lender under this Amendatory Agreement shall, except as may
be otherwise stated in this Amendatory Agreement, be applicable to subsequent
transactions. No waiver or approval hereunder shall require any similar or
dissimilar waiver or approval to be granted after the date hereof, and except
as expressly modified by this Amendatory Agreement, the provisions of the
Existing credit Agreement shall
-5-
<PAGE> 6
remain in full force and effect, without amendment or other modification.
SUBPART 4.8. Governing Law. THIS AMENDATORY AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the parties hereto have caused this Amendatory
Agreement to be executed by their respective authorized officers as of the day
and year first above written.
HANDY & HARMAN
By /s/ Stephen B. Mudd
-----------------------
Title: Vice President and Treasurer
THE BANK OF NOVIA SCOTIA,
in its capacity as Administrative
Agent, Co-Agent and Lender
By /s/ Stephen Lockart
-----------------------
Title: Vice President
THE CHASE MANHATTAN BANK, N.A.,
in its capacity as
Co-Agent and Lender
By /s/ Edward J. McNulty
-----------------------
Title: Managing Director
CHEMICAL BANK, in its capacity
as Co-Agent and Lender
By /s/ Raymond G. Dunning
-----------------------
Title: Vice President
-6-
<PAGE> 7
THE BANK OF NEW YORK
By /s/ Ken Sneider
-----------------------
Title: Vice President
LTCB TRUST COMPANY
By /s/ Fumi Kamoshia
-----------------------
Title: Senior Vice President
THE BANK OF TOKYO TRUST COMPANY
By /s/ Jeffrey Millar
-----------------------
Title: Vice President
NBD BANK, N.A.
By /s/ Anna R. Hoffman
-----------------------
Title: Vice President
WESTPAC BANKING CORPORATION
By /s/ Joan F. Clarke
-----------------------
Title: Vice President
SHAWMUT BANK, CONNECTICUT
By /s/ John Raleigh
-----------------------
Title: Vice President
-7-
<PAGE> 8
THE FUJI BANK LTD.
By /s/ Takashi Nagao
-----------------------
Title: Vice President and Manager
GIROCREDIT BANK, FKA
GIROZENTRALE UND BANK DER
OSTERREICHISCHEN SPARKASSEN AG"
By /s/ Dhuane G. Stephens
-----------------------
Title: Vice President
By /s/ Lalit Malhorta
-----------------------
Title: Senior Vice President
IBJ SCHRODER BANK & TRUST COMPANY
By /s/ David G. Goodall
-----------------------
Title: Assistant Vice President
-8-
<PAGE> 1
[EXECUTION COPY]
SECOND AMENDMENT
TO SHORT TERM
REVOLVING CREDIT AGREEMENT
This SECOND AMENDMENT TO SHORT TERM REVOLVING CREDIT AGREEMENT, dated as
of February 4, 1993 (this "Amendatory Agreement"), among HANDY & HARMAN, a New
York corporation (the "Borrower"), certain financial institutions signatories
hereto (the "Lenders"), THE BANK OF NOVA SCOTIA, THE CHASE MANHATTAN BANK, N.A.
and CHEMICAL BANK, as the co-agents (collectively referred to herein as the
"Co-Agents") and THE BANK OF NOVA SCOTIA, as administrative agent (the
"Administrative Agent"),
W I T N E S S E T H :
WHEREAS, the Borrower, the Lenders, the Co-Agents and the Administrative
Agent are parties to a Short Term Revolving Credit Agreement, dated as of March
16, 1992 (as amended or otherwise modified to the date hereof, the "Existing
Credit Agreement"); and
WHEREAS, the parties hereto have agreed, subject to the conditions and
terms hereinafter set forth, to amend the Existing Credit Agreement in certain
respects as herein provided (the Existing Credit Agreement, as so amended by
this Amendatory Agreement, being referred to as the "Credit Agreement");
NOW, THEREFORE, in consideration of the agreements herein contained, the
parties hereto agree as follows:
PART I
DEFINITIONS
SUBPART 1.1. Certain Definitions. The following terms (whether or not
underscored) when used in this Amendatory Agreement shall have the following
meanings (such meanings to be equally applicable to the singular and plural
form thereof):
"Administrative Agent" is defined in the preamble.
"Amendatory Agreement" is defined in the preamble.
"Borrower" is defined in the preamble.
"Co-Agents" is defined in the preamble.
"Credit Agreement" is defined in the second recital.
"Existing Credit Agreement" is defined in the first recital.
-1-
<PAGE> 2
"Second Amendment Effective Date" is defined in Subpart 3.1.
"Lenders" is defined in the preamble.
SUBPART 1.2. Other Definitions. Terms for which meanings are provided in
the Existing Credit Agreement are, unless otherwise defined herein or the
context otherwise requires, used in this Amendatory Agreement with such
meanings.
PART II
AMENDMENTS TO THE
EXISTING CREDIT AGREEMENT
Effective on (and subject to the occurrence of) the Second Amendment
Effective Date, the Existing Credit Agreement is hereby amended in accordance
with Subparts 2.1 through 2.3; except as so amended, the Existing Credit
Agreement shall continue in full force and effect.
SUBPART 2.1. Amendment to Article I. Section 1.1 of the Existing Credit
Agreement is hereby amended by inserting the following definition in such
Section in the appropriate alphabetical sequence:
"Second Amendment" means the Second Amendment, dated as of February 4,
1993, to this Agreement among the Borrower, the Lenders party thereto, the
Co-Agents and the Administrative Agent.
SUBPART 2.2. Amendment to Article II. Article II of the Existing Credit
Agreement is hereby amended in accordance with Subparts 2.2.1 through 2.2.2.
SUBPART 2.2.1. Section 2.6.1 of the Existing Credit Agreement is hereby
amended in its entirety to read as follows:
"SECTION 2.6.1. Request for Extension of Loan Commitment Termination
Dates and Maturity of Loans. Any term or provision of this Agreement to
the contrary notwithstanding, not later than 45 days nor more than 60 days
before each anniversary of the Effective Date (if the Revolving Loan
Commitment then remains in effect), the Borrower may, by delivery of a
duly completed Extension Request to the Administrative Agent, irrevocably
request that each Lender and the Swing Line Lender extend for an
additional 364 day period (such period to commence on the day immediately
following the then Stated Maturity Date) the Loan Commitment Termination
Date relating to such Lender's Revolving Loan Commitment (which shall also
be deemed to be a request that the Swing Line Lender extend for such
period
-2-
<PAGE> 3
the Swing Line Loan Commitment); provided, that the Loan Commitment
Termination Date shall not be extended beyond the Commitment Termination
Date (as such term is defined in the Long Term Credit Agreement). The
failure of the Borrower to request such an extension hereunder shall
automatically terminate the Borrower's rights to request additional such
extensions."
SUBPART 2.2.2. Clause (b) of Section 2.6.2 of the Existing Credit
Agreement is hereby amended by deleting the number "20" each time it appears in
such clause, and inserting the number "30" in place thereof.
SUBPART 2.3. Amendment to Article VII. Clause (a) of Section 7.2.4 of
the Existing Credit Agreement is hereby amended by deleting the last two lines
contained in such clause, and substituting the following under the column
headings "Period" and "Adjusted Consolidated Tangible Net Worth", respectively:
<TABLE>
<S> <C>
"10/01/94 through 12/31/94 130,000,000
01/01/95 and thereafter 130,000,000 plus 25% of
the Borrower's Net Income
for the immediately
preceding Fiscal Year;"
</TABLE>
PART III
CONDITIONS TO EFFECTIVENESS
SUBPART 3.1. Second Amendment Effective Date. This Amendatory Agreement
shall become effective on the date (the "Second Amendment Effective Date") when
all of the conditions set forth in this Subpart 3.1 shall have been satisfied.
SUBPART 3.1.1. Execution of Counterparts. The Administrative Agent shall
have received counterparts of this Amendatory Agreement, duly executed on
behalf of the Borrower, the Required Lenders and the Swing Line Loan Lender.
SUBPART 3.1.1. Legal Details, etc. All documents executed or submitted
pursuant hereto shall be satisfactory in form and substance to the
Administrative Agent and its counsel. The Administrative Agent and its counsel
shall have received all information and such counterpart originals or such
certified or other copies or such materials, as the Administrative Agent or its
counsel may reasonably request, and all legal matters incident to the
transactions contemplated by this Amendatory Agreement shall be satisfactory to
the Administrative Agent and its counsel.
-3-
<PAGE> 4
PART IV
MISCELLANEOUS
SUBPART 4.1. Cross-References. References in this Amendatory Agreement to
any Part or Subpart are, unless otherwise specified or otherwise required by
the context, to such Part or Subpart of this Amendatory Agreement.
SUBPART 4.2. Loan Document Pursuant to Existing Credit Agreement. This
Amendatory Agreement is a Loan Document pursuant to the Existing Credit
Agreement and shall be construed, administered and applied in accordance with
all of the terms and provisions of the Existing Credit Agreement.
SUBPART 4.3. Successors and Assigns. This Amendatory Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns.
SUBPART 4.4. Counterparts. This Amendatory Agreement may be executed by
the parties hereto in several counterparts, each of which when executed and
delivered shall be deemed to be an original and all of which shall constitute
together but one and the same agreement.
SUBPART 4.5. Costs and Expenses. The Borrower agrees to pay all costs and
expenses incurred by the Administrative Agent (including fees and out-of-pocket
expenses of counsel to the Administrative Agent) incurred in connection with
the preparation, execution and delivery of this Amendatory Agreement and the
other agreements entered into in connection herewith.
SUBPART 4.6. Representations, No Default, etc. As of the Second Amendment
Effective Date, the Borrower hereby represents and warrants that
(a) the representations and warranties set forth in Article VI of
the Credit Agreement (excluding, however, those contained in Section 6.7)
are true and correct in all material respects (unless stated to relate
solely to an earlier date, in which case such representations and
warranties were true and correct as of such earlier date);
(b) except as disclosed by the Borrower to the Administrative Agent
and the Lenders pursuant to Section 6.7 of the Credit Agreement,
(i) no litigation, arbitration or governmental investigation
or proceeding is pending or, to the knowledge of the Borrower,
threatened against the Borrower or any of its Subsidiaries which may
reasonably be expected to materially adversely affect
-4-
<PAGE> 5
(ii) no development has occurred in any litigation,
arbitration or governmental investigation or proceeding disclosed
pursuant to Section 6.7 of the Credit Agreement which may reasonably
be expected to materially adversely affect the businesses,
operations, assets, revenues, properties or prospects of the Borrower
or the Borrower and its Subsidiaries, taken as a whole; and
(c) no Default has occurred and is continuing.
SUBPART 4.7. Limited Waiver, etc. No amendment, waiver or approval by any
Lender under this Amendatory Agreement shall, except as may be otherwise stated
in this Amendatory Agreement, be applicable to subsequent transactions. No
waiver or approval hereunder shall require any similar or dissimilar waiver or
approval to be granted after the date hereof, and except as expressly modified
by this Amendatory Agreement, the provisions of the Existing Credit Agreement
shall remain in full force and effect, without amendment or other modification.
SUBPART 4.8. Governing Law. THIS AMENDATORY AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the parties hereto have caused this Amendatory
Agreement to be executed by their respective authorized officers as of the day
and year first above written.
HANDY & HARMAN
By /s/ Stephen B. Mudd
----------------------------
Title: Vice President and Treasurer
THE BANK OF NOVIA SCOTIA,
in its capacity as Administrative
Agent, Co-Agent and Lender
By /s/ Stephen Lockart
-----------------------
Title: Vice President
-5-
<PAGE> 6
THE CHASE MANHATTAN BANK, N.A.,
in its capacity as
Co-Agent and Lender
By /s/ Edward J. McNulty
-----------------------
Title: Managing Director
CHEMICAL BANK, in its capacity
as Co-Agent and Lender
By /s/ Raymond G. Dunning
-----------------------
Title: Vice President
THE BANK OF NEW YORK
By /s/ Ken Sneider
-----------------------
Title: Vice President
LTCB TRUST COMPANY
By /s/ Fumi Kamoshia
-----------------------
Title: Senior Vice President
THE BANK OF TOKYO TRUST COMPANY
By /s/ Jeffrey Millar
-----------------------
Title: Vice President
NBD BANK, N.A.
By /s/ Anna R. Hoffman
-----------------------
Title: Vice President
-6-
<PAGE> 7
WESTPAC BANKING CORPORATION
By /s/ Joan F. Clarke
----------------------------
Title: Vice President
SHAWMUT BANK, CONNECTICUT
By /s/ John Raleigh
-----------------------
Title: Vice President
THE FUJI BANK LTD.
By /s/ Takashi Nagao
-----------------------
Title: Vice President and Manager
GIROCREDIT BANK, FKA
GIROZENTRALE UND BANK DER
OSTERREICHISCHEN SPARKASSEN AG"
By /s/ Dhuane G. Stephens
-----------------------
Title: Vice President
By /s/ Lalit Malhorta
-----------------------
Title: Senior Vice President
IBJ SCHRODER BANK & TRUST COMPANY
By /s/ David G. Goodall
-----------------------
Title: Assistant Vice President
-7-
<PAGE> 1
[EXECUTION COPY]
THIRD AMENDMENT
TO
REVOLVING CREDIT AGREEMENT
This THIRD AMENDMENT TO REVOLVING CREDIT AGREEMENT, dated as of July 1,
1993 (this "Amendatory Agreement"), among HANDY & HARMAN, a New York
corporation ("the Borrower"), certain financial institutions signatories hereto
(the "Lenders"), THE BANK OF NOVA SCOTIA, THE CHASE MANHATTAN BANK, N.A. and
CHEMICAL BANK, as the co-agents (collectively referred to herein as the
"Co-Agents") and THE BANK OF NOVA SCOTIA, as administrative agent (the
"Administrative Agent"),
W I T N E S S E T H :
WHEREAS, the Borrower, the Lenders, the Co-Agents and the Administrative
Agent are parties to a Revolving Credit Agreement, dated as of March 16, 1992
(as amended or otherwise modified to the date hereof, the "Existing Credit
Agreement"); and
WHEREAS, the parties hereto have agreed, subject to the conditions and
terms hereinafter set forth, to amend the Existing Credit Agreement in certain
respects as herein provided and to add Fleet National Bank as a Lender (the
Existing Credit Agreement, as so amended by this Amendatory Agreement, being
referred to as the "Credit Agreement");
NOW, THEREFORE, in consideration of the agreements herein contained, the
parties hereto agree as follows:
PART I
DEFINITIONS
SUBPART 1.1. Certain Definitions. The following terms (whether or not
underscored) when used in this Amendatory Agreement shall have the following
meanings (such meanings to be equally applicable to the singular and plural
form thereof):
"Administrative Agent" is defined in the preamble.
"Amendatory Agreement" is defined in the preamble.
"Borrower" is defined in the preamble.
"Co-Agents" is defined in the preamble.
"Credit Agreement" is defined in the second recital.
"Existing Credit Agreement" is defined in the first recital.
"Lenders" is defined in the preamble.
<PAGE> 2
SUBPART 1.2. Other Definitions. Terms for which meanings are provided in
the Existing Credit Agreement are, unless otherwise defined herein or the
context otherwise requires, used in this Amendatory Agreement with such
meanings.
PART II
AMENDMENTS TO THE
EXISTING CREDIT AGREEMENT
Effective on (and subject to the occurrence of) the Third Amendment
Effective Date, the Existing Credit Agreement is hereby amended in accordance
with SUBPARTS 2.1 through 2.2; except as so amended, the Existing Credit
Agreement shall continue in full force and effect.
SUBPART 2.1. Amendment to Article I. Article I of the Existing Credit
Agreement is hereby amended in accordance with Subparts 2.1.1 through 2.1.3.
SUBPART 2.1.1. Section 1.1 of the Existing Credit Agreement is hereby
amended by inserting the following definition in such Section in the
appropriate alphabetical sequence:
"Third Amendment" means the Third Amendment, dated as of July 1,
1993, to this Agreement among the Borrower, the Lenders party thereto
(including Fleet National Bank), the Co-Agents and the Administrative
Agent.
SUBPART 2.1.2. Section 1.1 in its entirety, of the Existing Credit
Agreement is further amended by deleting in their entirety the definitions of
"Loan Commitment Amount", "Percentage" and "Stated Maturity Date" appearing in
such Section, and inserting the following definitions in place thereof:
"Loan Commitment Amount" means, on any day, $161,250,000, as such
amount may be reduced from time to time pursuant to Section 2.2.
"Percentage" means, relative to any Lender, the percentage set forth
on Schedule I attached to the Third Amendment, as such percentage may be
adjusted from time to time pursuant to Lender Assignment Agreement(s)
executed by such Lender and its Assignee Lender(s) pursuant to Section
10.11.1.
"Stated Maturity Date" means June 30, 1996, as such date may be
extended pursuant to Section 2.7.
SUBPART 2.2. Amendments to Article X. Article X of the Existing Credit
Agreement is hereby amended in accordance with Subpart 2.2.1.
-2-
<PAGE> 3
SUBPART 2.2.1. The tenth line following Clause (c) of Section 10.11.1 of
the Existing Credit Agreement is hereby amended by adding the phrase ", or if
less, all of such Lender's Loans and Commitment" immediately after the
parenthetical "(such amount to be reduced pro rata by any permanent reductions
in the amount of the Commitment)".
PART III
CONDITIONS TO EFFECTIVENESS
SUBPART 3.1. Third Amendment Effective Dates. This Amendatory Agreement
shall become effective as set forth below when each of the applicable
conditions set forth in this SUBPART 3.1 shall have been satisfied.
SUBPART 3.1.1. Execution of Counterparts. (a) With respect to the
effectiveness of SUBPART 2.1 hereof the Administrative Agent shall have
received counterparts of this Amendatory Agreement, duly executed on behalf of
the Borrower and all of the Lenders.
(b) With respect to the effectiveness of SUBPART 2.2 hereof the
Administrative Agent shall have received counterparts of this Amendatory
Agreement, duly executed on behalf of the Borrower and the Required Lenders.
SUBPART 3.1.2. Addition of Fleet National Bank as Lender SUBPART 2.1 shall
become effective only upon (i) the receipt by the Administrative Agent of an
executed counterpart of this Amendatory Agreement from Fleet National Bank
signifying its agreement to become a Lender under the Credit Agreement and (ii)
payment by Fleet National Bank to the Administrative Agent for the account of
the other Lenders an amount of funds necessary that, after giving effect to a
pro rata distribution of such funds to the other Lenders, each Lender's
Percentage (after giving effect to the effectiveness of SUBPART 2.1 hereof) of
all outstanding Loans and participations in Letters of Credit shall not be
exceeded.
SUBPART 3.1.3. New Revolving Notes. SUBPART 2.1 hereof shall only become
effective upon the receipt by Fleet Bank, N.A. and The Daiwa Bank, Limited from
the Borrower of a new Revolving Loan Note in a principal amount equal to such
Lender's new Percentage of the Loan Commitment Amount.
SUBPART 3.1.4. Legal Details, etc. All documents executed or submitted
pursuant hereto shall be satisfactory in form and substance to the
Administrative Agent and its counsel. The Administrative Agent and its counsel
shall have received all information and such counterpart originals or such
certified or other copies or such materials, as the Administrative Agent or its
counsel may reasonably request, and all legal matters incident to the
transactions contemplated by this Amendatory Agreement shall be satisfactory to
the Administrative Agent and its counsel.
-3-
<PAGE> 4
PART IV
MISCELLANEOUS
SUBPART 4.1. Cross-References. References in this Amendatory Agreement to
any Part or Subpart are, unless otherwise specified or otherwise required by
the context, to such Part or Subpart of this Amendatory Agreement.
SUBPART 4.2. Loan Document Pursuant to Existing Credit Agreement. This
Amendatory Agreement is a Loan Document executed pursuant to the Existing
Credit Agreement and shall be construed, administered and applied in accordance
with all of the terms and provisions of the Existing Credit Agreement.
SUBPART 4.3. Successors and Assigns. This Amendatory Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns.
SUBPART 4.4. Counterparts. This Amendatory Agreement may be executed by
the parties hereto in several counterparts, each of which when executed and
delivered shall be deemed to be an original and all of which shall constitute
together but one and the same agreement.
SUBPART 4.5. Costs and Expenses. The Borrower agrees to pay all costs and
expenses incurred by the Administrative Agent (including fees and out-of-pocket
expenses of counsel to the Administrative Agent) incurred in connection with
the preparation, execution and delivery of this Amendatory Agreement and the
other agreements entered into in connection herewith.
SUBPART 4.6. Representations, No Default, etc. As of the date of
effectiveness of the respective SUBPARTS hereof, the Borrower hereby represents
and warrants that
(a) the representations and warranties set forth in Article VI of
the Credit Agreement (excluding, however, those contained in Section 6.7)
are true and correct in all material respects (unless stated to relate
solely to an earlier date, in which case such representations and
warranties were true and correct as of such earlier date);
(b) except as disclosed by the Borrower to the Administrative Agent
and the Lenders pursuant to Section 6.7 of the Credit Agreement,
(i) no litigation, arbitration or governmental investigation or
proceeding is pending or, to the knowledge of the Borrower,
threatened against the Borrower or any of its Subsidiaries which may
reasonably be expected to materially adversely affect the Borrower's,
or the Borrower and its Subsidiaries' taken as a whole, businesses,
operations, assets, revenues, properties or prospects or which
purports to
-4-
<PAGE> 5
affect the legality, validity or enforceability of the Credit
Agreement, the Notes or any other Loan Document; and
(ii) no development has occurred in any litigation, arbitration
or governmental investigation or proceeding disclosed pursuant to
Section 6.7 of the Credit Agreement which may reasonably be expected
to materially adversely affect the businesses, operations, assets,
revenues, properties or prospects of the Borrower or the Borrower and
its Subsidiaries, taken as a whole; and
(c) no Default has occurred and is continuing.
SUBPART 4.7. Limited Waiver, etc. No amendment, waiver or approval by the
Issuer or any Lender under this Amendatory Agreement shall, except as may be
otherwise stated in this Amendatory Agreement, be applicable to subsequent
transactions. No waiver or approval hereunder shall require any similar or
dissimilar waiver or approval to be granted after the date hereof, and except
as expressly modified by this Amendatory Agreement, the provisions of the
Existing Credit Agreement shall remain in full force and effect, without
amendment or other modification.
SUBPART 4.8. Governing Law. THIS AMENDATORY AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
-5-
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have caused this Amendatory
Agreement to be executed by their respective authorized officers as of the day
and year first above written.
HANDY & HARMAN
By /s/ Stephen B. Mudd
---------------------------------------
Title: Vice President & Treasurer
THE BANK OF NOVA SCOTIA,
in its capacity as Administrative
Agent, Co-Agent and Lender
By /s/ Stephen Lockart
---------------------------------------
Title: Vice President
THE CHASE MANHATTAN BANK, N.A.
in its capacity as
Co-Agent and Lender
By /s/ Edward J. McNulty
---------------------------------------
Title: Managing Director
CHEMICAL BANK, in its capacity
as Co-Agent and Lender
By /s/ Raymond G. Dunning
---------------------------------------
Title: Vice President
THE BANK OF NEW YORK
By /s/ Ken Sneider
---------------------------------------
Title: Vice President
-6-
<PAGE> 7
LTCB TRUST COMPANY
By /s/ Ichiro Murakami
---------------------------------------
Title: Vice President
THE BANK OF TOKYO TRUST COMPANY
By /s/ Jeffrey Millar
---------------------------------------
Title: Vice President
NBD BANK, N.A.
By /s/ Anna R. Hoffman
---------------------------------------
Title: Vice President
WESTPAC BANKING CORPORATION
By /s/ Mark S. Olin
---------------------------------------
Title: Vice President
SHAWMUT BANK CONNECTICUT
By /s/ Robert M. Surdam, Jr.
---------------------------------------
Title: Vice President
THE FUJI BANK LTD.
By /s/ Y. Shiotsugu
---------------------------------------
Title: Vice President and Manager
-7-
<PAGE> 8
GIROCREDIT BANK (FKA GIROZENTRALE UND
BANK DER OSTERREICHISCHEN SPARKASSEN AG)
By /s/ Dhuane G. Stephens
---------------------------------------
Title: Vice President
By /s/ Lalit Malhotra
---------------------------------------
Title: Senior Vice President
IBJ SCHRODER BANK & TRUST COMPANY
By /s/ David G. Goodall
---------------------------------------
Title: Assistant Vice President
FLEET BANK, N.A.
By /s/ John V. Rubin
---------------------------------------
Title: Vice President
-8-
<PAGE> 9
SCHEDULE I
(to Third Amendment)
<TABLE>
<CAPTION>
NAME OF LENDER PERCENTAGE
- -------------- ----------
<S> <C>
The Bank of Nova Scotia 11.627906977%
The Chase Manhattan Bank, N.A. 11.627906977%
Chemical Bank 11.627906977%
The Bank of New York 9.302325581%
LTCB Trust Company 9.302325581%
The Bank of Tokyo Trust Company 6.976744186%
NBD Bank, N.A. 6.976744186%
Westpac Banking Corporation 6.976744186%
Fleet Bank, N.A. 6.976744186%
Shawmut Bank Connecticut 4.651162791%
The Fuji Bank Ltd. 4.651162791%
Girocredit Bank (FKA Girozentrale und
Bank der Osterreichischen Sparkassen AG 4.651162791%
IBJ Schroder Bank & Trust Company 4.651162791%
</TABLE>
<PAGE> 1
[EXECUTION COPY]
THIRD AMENDMENT
TO SHORT TERM
REVOLVING CREDIT AGREEMENT
This THIRD AMENDMENT TO SHORT TERM REVOLVING CREDIT AGREEMENT, dated as
of July 1, 1993 (this "Amendatory Agreement"), among HANDY & HARMAN, a New York
corporation ("the Borrower"), certain financial institutions signatories hereto
(the "Lenders"), THE BANK OF NOVA SCOTIA, THE CHASE MANHATTAN BANK, N.A. and
CHEMICAL BANK, as the co-agents (collectively referred to herein as the
"Co-Agents") and THE BANK OF NOVA SCOTIA, as administrative agent (the
"Administrative Agent"),
W I T N E S S E T H:
WHEREAS, the Borrower, the Lenders, the Co-Agents and the Administrative
Agent are parties to a Short Term Revolving Credit Agreement, dated as of March
16, 1992 (as amended or otherwise modified to the date hereof, the "Existing
Credit Agreement"); and
WHEREAS, the parties hereto have agreed, subject to the conditions and
terms hereinafter set forth, to amend the Existing Credit Agreement in certain
respects as herein provided and to add Fleet National Bank as a Lender (the
Existing Credit Agreement, as so amended by this Amendatory Agreement, being
referred to as the "Credit Agreement");
NOW, THEREFORE, in consideration of the agreements herein contained, the
parties hereto agree as follows:
PART I
DEFINITIONS
SUBPART 1.1. Certain Definitions. The following terms (whether or not
underscored) when used in this Amendatory Agreement shall have the following
meanings (such meanings to be equally applicable to the singular and plural
form thereof):
"Administrative Agent" is defined in the preamble.
"Amendatory Agreement" is defined in the preamble.
"Borrower" is defined in the preamble.
"Co-Agents" is defined in the preamble.
"Credit Agreement" is defined in the second recital.
<PAGE> 2
"Existing Credit Agreement" is defined in the first recital.
"Lenders" is defined in the preamble.
SUBPART 1.2. Other Definitions. Terms for which meanings are provided
in the Existing Credit Agreement are, unless otherwise defined herein or the
context otherwise requires, used in this Amendatory Agreement with such
meanings.
PART II
AMENDMENTS TO THE
EXISTING CREDIT AGREEMENT
Effective on (and subject to the occurrence of) the Third Amendment
Effective Date, the Existing Credit Agreement is hereby amended in accordance
with SUBPARTS 2.1 through 2.2; except as so amended, the Existing Credit
Agreement shall continue in full force and effect.
SUBPART 2.1. Amendment to Article I. Article I of the Existing Credit
Agreement is hereby amended in accordance with Subparts 2.1.1. through 2.1.3.
SUBPART 2.1.1. Section 1.1 of the Existing Credit Agreement is hereby
amended by inserting the following definition in such Section in the
appropriate alphabetical sequence:
"Third Amendment" means the Third Amendment, dated as of July 1,
1993, to this Agreement among the Borrower, the Lenders party thereto
(including Fleet National Bank), the Co-Agents and the Administrative
Agent.
SUBPART 2.1.2. Section 1.1 in its entirety, of the Existing Credit
Agreement is further amended by deleting in their entirety the definitions of
"Loan Commitment Amount", "Percentage" and "Stated Maturity Date" appearing in
such Section, and inserting the following definitions in place thereof:
"Loan Commitment Amount" means, on any day, $53,750,000, as such
amount may be reduced from time to time pursuant to Section 2.2.
"Percentage" means, relative to any Lender, the percentage set
forth on Schedule I attached to the Third Amendment to this Credit
Agreement, as such percentage may be adjusted from time to time pursuant
to Lender Assignment Agreement(s) executed by such Lender and its
Assignee Lender(s) pursuant to Section 10.11.1.
"Stated Maturity Date" means June 30, 1994, as such date may be
extended pursuant to Section 2.6; provided, that
-2-
<PAGE> 3
in no event shall the Stated Maturity Date be extended beyond the Stated
Maturity Date (as such term is defined in the Long Term Credit
Agreement) of the Indebtedness outstanding under the Long Term Credit
Agreement.
SUBPART 2.2. Amendments to Article X. Article X of the Existing Credit
Agreement is hereby amended in accordance with Subpart 2.2.1.
SUBPART 2.2.1. The tenth line following Clause (c) of Section 10.11.1 of
the Existing Credit Agreement is hereby amended by adding the phrase ", or if
less, all of such Lender's Loans and Commitment" immediately after the
parenthetical "(such amount to be reduced pro rata by any permanent reductions
in the amount of the Commitment)".
PART III
CONDITIONS TO EFFECTIVENESS
SUBPART 3.1. Third Amendment Effective Dates. This Amendatory Agreement
shall become effective as set forth below when each of the applicable
conditions set forth in this SUBPART 3.1 shall have been satisfied.
SUBPART 3.1.1. Execution of Counterpartys. (a) With respect to the
effectiveness of SUBPART 2.1 hereof the Administrative Agent shall have
received counterparts of this Amendatory Agreement, duly executed on behalf of
the Borrower and all of the Lenders.
(b) With respect to the effectiveness of SUBPART 2.2 hereof the
Administrative Agent shall have received counterparts of this Amendatory
Agreement, duly executed on behalf of the Borrower and the Required Lenders.
SUBPART 3.1.2. Addition of Fleet National Bank as Lender. SUBPART 2.1
shall become effective only upon (i) the receipt by the Administrative Agent of
an executed counterpart of this Amendatory Agreement from Fleet National Bank
signifying its agreement to become a Lender under the Credit Agreement and (ii)
payment by Fleet National Bank to the Administrative Agent for the account of
the other Lenders an amount of funds necessary that, after giving effect to a
pro rata distribution of such funds to the other Lenders, each Lender's
Percentage (after giving effect to the effectiveness of SUBPART 2.1 hereof) of
all outstanding Loans and participations in Letters of Credit shall not be
exceeded.
SUBPART 3.1.3. New Revolving Loan Notes. SUBPART 2.1 hereof shall only
become effective upon the receipt by Fleet Bank, N.A. and The Daiwa bank,
Limited from the Borrower of a new Revolving
-3-
<PAGE> 4
Loan Note in a principal amount equal to such Lender's new Percentage of the
Loan Commitment Amount.
SUBPART 3.1.4. Legal Details, etc. All documents executed or submitted
pursuant hereto shall be satisfactory in form and substance to the
Administrative Agent and its counsel. The Administrative Agent and its counsel
shall have received all information and such counterpart originals or such
certified or other copies or such materials, as the Administrative Agent or its
counsel may reasonably request, and all legal matters incident to the
transactions contemplated by this Amendatory Agreement shall be satisfactory to
the Administrative Agent and its counsel.
PART IV
MISCELLANEOUS
SUBPART 4.1. Cross-References. References in this Amendatory Agreement
to any Part or Subpart are, unless otherwise specified or otherwise required by
the context, to such Part or Subpart of this Amendatory Agreement.
SUBPART 4.2. Loan Document Pursuant to Existing Credit Agreement. This
Amendatory Agreement is a Loan Document executed pursuant to the Existing
Credit Agreement and shall be construed, administered and applied in accordance
with all of the terms and provisions of the Existing Credit Agreement.
SUBPART 4.3. Successors and Assigns. This Amendatory Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns.
SUBPART 4.4. Counterparts. This Amendatory Agreement may be executed
by the parties hereto in several counterparts, each of which when executed and
delivered shall be deemed to be an original and all of which shall constitute
together but one and the same agreement.
SUBPART 4.5. Costs and Expenses. The Borrower agrees to pay all costs
and expenses incurred by the Administrative Agent (including fees and
out-of-pocket expenses of counsel to the Administrative Agent) incurred in
connection with the preparation, execution and delivery of this Amendatory
Agreement and the other agreements entered into in connection herewith.
SUBPART 4.6. Representations, No Default, etc. As of the date of
effectiveness of the respective SUBPARTS hereof, the Borrower hereby represents
and warrants that
(a) the representations and warranties set forth in Article VI
of the Credit Agreement (excluding, however, those contained in Section
6.7) are true and correct in all
-4-
<PAGE> 5
material respects (unless stated to relate solely to an earlier date, in
which case such representations and warranties were true and correct as
of such earlier date);
(b) except as disclosed by the Borrower to the Administrative
Agent and the Lenders pursuant to Section 6.7 of the Credit Agreement,
(i) no litigation, arbitration or governmental
investigation or proceeding is pending or, to the knowledge of
the Borrower, threatened against the Borrower or any of its
Subsidiaries which may reasonably be expected to materially
adversely affect the Borrower's, or the Borrower and its
Subsidiaries' taken as a whole, businesses, operations, assets,
revenues, properties or prospects or which purports to affect the
legality, validity or enforceability of the Credit Agreement, the
Notes or any other Loan Document; and
(ii) no development has occurred in any litigation,
arbitration or governmental investigation or proceeding disclosed
pursuant to Section 6.7 of the Credit Agreement which may
reasonably be expected to materially adversely affect the
businesses, operations, assets, revenues, properties or prospects
of the Borrower or the Borrower and its Subsidiaries, taken as a
whole; and
(c) no Default has occurred and is continuing.
SUBPART 4.7. Limited Waiver, etc. No amendment, waiver or approval by
the Issuer or any Lender under this Amendatory Agreement shall, except as may
be otherwise stated in this Amendatory Agreement, be applicable to subsequent
transactions. No waiver or approval hereunder shall require any similar or
dissimilar waiver or approval to be granted after the date hereof, and except
as expressly modified by this Amendatory Agreement, the provisions of the
Existing Credit Agreement shall
-5-
<PAGE> 6
remain in full force and effect, without amendment or other modification.
SUBPART 4.8. Governing Law. THIS AMENDATORY AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
-6-
<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have caused this Amendatory
Agreement to be executed by their respective authorized officers as of the day
and year first above written.
HANDY & HARMAN
By /s/ Stephen B Mudd
-------------------------
Title: Vice-President & Treasurer
THE BANK OF NOVA SCOTIA,
in its capacity as Administrative
Agent, Co-Agent and Lender
By /s/ Stephen Lockhart
-------------------------
Title: Vice-President
THE CHASE MANHATTAN BANK, N.A.,
in its capacity as
Co-Agent and Lender
By /s/ Edward J. McNulty
-------------------------
Title: Managing Director
CHEMICAL BANK, in its capacity
as Co-Agent and Lender
By /s/ Raymond G. Dunning
-------------------------
Title: Vice President
THE BANK OF NEW YORK
By /s/ Ken Sneider
-------------------------
Title: Vice President
-7-
<PAGE> 8
LTCB TRUST COMPANY
By /s/ Ichiro Murakami
-----------------------------
Title: Vice President
THE BANK OF TOKYO TRUST COMPANY
By /s/ Jeffrey Millar
-----------------------------
Title: Vice President
NBD BANK, N.A.
By /s/ Anna R. Hoffman
-----------------------------
Title: Vice President
WESTPAC BANKING CORPORATION
By /s/ Mark S. Olin
-----------------------------
Title: Vice President
SHAWMUT BANK CONNECTICUT
By /s/ Robert M. Surdam, Jr.
------------------------------
Title: Vice President
THE FUJI BANK LTD.
By /s/ Y. Shiotsuga
------------------------------
Title: Vice President and Manager
-8-
<PAGE> 9
GIROCREDIT BANK (FKA GIROZENTRALE UND
BANK DER OSTERREICHISCHEN SPARKASSEN AG)
By /s/ Dhuane G. Stephens
----------------------------
Title: Vice President
By /s/ Lalit Malhotra
-----------------------------
Title: Lalit Malhotra
Senior Vice President
IBJ SCHRODER BANK & TRUST COMPANY
By /s/ David G. Goodall
-------------------------------
Title: Assistant Vice President
FLEET BANK, N.A.
By /s/ John V. Rubin
-------------------------------
Title: Vice President
-9-
<PAGE> 10
SCHEDULE I
(to Third Amendment)
<TABLE>
<CAPTION>
NAME OF LENDER PERCENTAGE
- -------------- ----------
<S> <C>
The Bank of Nova Scotia 11.627906977%
The Chase Manhattan Bank, N.A. 11.627906977%
Chemical Bank 11.627906977%
The Bank of New York 9.302325581%
LTCB Trust Company 9.302325581%
The Bank of Tokyo Trust Company 6.976744186%
NBD Bank, N.A. 6.976744186%
Westpac Banking Corporation 6.976744186%
Fleet Bank, N.A. 6.976744186%
Shawmut Bank Connecticut 4.651162791%
The Fuji Bank Ltd. 4.651162791%
Girocredit Bank (FKA Girozentrale und
Bank der Osterreichischen Sparkassen AG 4.651162791%
IBJ Schroder Bank & Trust Company 4.651162791%
</TABLE>
<PAGE> 1
SECRETARY'S CERTIFICATE
I, PAUL E. DIXON, being the duly elected and acting Secretary of Handy &
Harman, a New York corporation (hereinafter the "Company") DO HEREBY CERTIFY
that the following is a true and complete copy of certain resolutions which
were duly adopted by the Board of Directors of this Company, at a Meeting which
was duly called and held on the 11th day of May 1993, and at which a quorum was
present and acting throughout, AND I DO FURTHER CERTIFY that said resolutions
have not been rescinded or amended and remain in full force and effect at the
date hereof:
RESOLVED, that in order for the Company to continue to
benefit from the knowledge and experience of Richard N. Daniel, Chairman
of the Board and Chief Executive Officer of the Company, and in the best
interests of the Company, the Agreement dated as of May 1, 1989 for the
employment of Mr. Daniel for a 3-year period, be, and it hereby is,
extended for an additional year pursuant to Section 1.2 thereof so that
the term of employment thereunder shall continue through April 30, 1996;
and further
RESOLVED, that the Agreement between Richard N. Daniel and
Handy & Harman dated May 1, 1989, be amended in part by adding to
Section 4. Termination, a paragraph (e) on page 6 to read as follows:
"(e) From the end of the Employment Period, the Company will continue to
provide Medical Benefits equivalent to those received by other Officers
of the Company through the year in which the Executive reaches his 65th
Birthday. Thereafter, the Executive will be eligible for the normal
retiree benefits."
IN WITNESS WHEREOF I have hereunto affixed my signature and the seal
of the Company this 19th day of May 1993.
/s/ Paul E Dixon
-----------------
Secretary
<PAGE> 1
FINANCIAL REVIEW
<TABLE>
<S> <C>
The Company's Business . . . . . . . . . . . . . . . . . . . 18
Stock Trading and Dividends . . . . . . . . . . . . . . . . . 19
Selected Quarterly Data . . . . . . . . . . . . . . . . . . . 19
Five Year Selected Financial Data . . . . . . . . . . . . . . 20
Management's Discussion and Analysis . . . . . . . . . . . . 21
FINANCIAL STATEMENTS
Consolidated Statement of Income . . . . . . . . . . . . . . 23
Consolidated Balance Sheet . . . . . . . . . . . . . . . . . 24
Consolidated Statement of Shareholders' Equity . . . . . . . 25
Consolidated Statement of Cash Flows . . . . . . . . . . . . 26
Summary of Significant Accounting Policies . . . . . . . . . 27
Notes to Consolidated Financial Statements . . . . . . . . . 28
Independent Auditors' Report . . . . . . . . . . . . . . . . 34
Responsibility for Financial Statements . . . . . . . . . . . 34
</TABLE>
17
<PAGE> 2
THE COMPANY'S BUSINESS
The Company's industry segments are: manufacturing of precious metals products
and refining services, manufacturing of automotive original equipment (OEM),
manufacturing of specialty wire and tubing, and manufacturing of other
non-precious metal products. The table below presents information about the
segments with additional segment information for 1993, 1992 and 1991 found in
Note 6 of the Notes to Consolidated Financial Statements on page 30. A further
analysis of the industry segments can be found under "Management's Discussion
and Analysis" beginning on page 21.
The precious metals segment is engaged in the manufacturing of a
variety of products, generally in mill forms, containing silver, gold and other
precious metals in combination (alloys) with non-precious metals, and the sale
of such products to users in a wide range of industries, including silverware
and jewelry, electrical and electronic, automotive and appliance. The Company
also provides metal refining services for the recovery of precious metals from
jewelry and industrial scrap as well as the recovery of high grade mining
concentrates and bullion.
It is the Company's operating policy to maintain constant inventory
levels under the last-in, first-out (LIFO) method of accounting. Precious
metals are purchased at the same prices and quantities as selling commitments
to customers. In the normal course of business, the Company accepts precious
metals from suppliers and customers, which quantities are returnable in
fabricated or commercial bar form under agreed upon terms. Since precious
metals are fungible, the Company does not physically segregate the supplier and
customer metals. Therefore, to the extent such metals are used by the Company
to meet its operating requirements, the amount of inventory which the Company
must own is reduced. The Company's inventory positions are sufficient to
protect against any losses in connection with these supplier and customer
accounts. To the extent that additional inventory is required to support
operations, precious metals are purchased and immediately sold for future
delivery, eliminating the economic risk of price fluctuations. Such purchases
and sales are not included in either sales or cost of sales. From time to
time, management reviews the appropriate inventory levels and may elect to make
adjustments.
A high percentage of the selling price for precious metals products is
the cost of the precious metal content. Therefore, both sales and cost of
sales are influenced by fluctuations in the prices of precious metals. Service
revenues, which represent charges to customers for processing refining lots, do
not include the value of precious metals. In addition, certain customers
choose to do business on a "toll" basis, that is, to furnish bullion to Handy &
Harman for fabrication. When the metals are returned to the customer in
fabricated form, the customer pays only a fabrication charge, and the precious
metal value of this consignment business is not included in sales or cost of
sales.
The automotive OEM segment manufactures a variety of products for the
automotive industry. These products include fuel lines and fuel injection
hardware, cables, tubular parts and assemblies, plastic and metal controls and
control assemblies, as well as air pipes and power steering cylinder tubing.
The wire and tubing segment has two basic product types. Stainless
steel wire is drawn from rod to a wide range of smaller diameters.
Applications are widespread and include springs, telecommunication support
cables, antennas, brushes, and belts. Tubing is manufactured from carbon
steel, stainless steel, and a variety of specialty alloys. Applications are
similarly numerous including refrigeration, automotive, hydraulic, medical and
aerospace.
In the other non-precious metal businesses segment, a number of
subsidiaries manufacture a variety of specialty metal products using copper,
steel, nickel, plastics and other raw materials. These products are sold,
generally in a finished product state, to substantially the same industries as
are the products of the other business segments.
The following table provides details of sales and service revenues
from continuing operations, as well as profit contribution by each reportable
segment, before general corporate and interest expenses. See "Management's
Discussion and Analysis" on page 21.
<TABLE>
<CAPTION>
(Thousands of dollars) 1993 1992 1991
====================================================================================================
<S> <C> <C> <C>
Sales and service revenues:
Precious metals $340,582 $267,333 $258,032
Automotive (OEM) 156,607 140,739 118,193
Wire/Tubing 136,079 128,433 117,160
Other non-precious metal
businesses 24,985 35,705 38,141
- ----------------------------------------------------------------------------------------------------
$658,253 $572,210 $531,526
====================================================================================================
Profit contribution before
unallocated expenses:
Precious metals $ 10,301 $ 14,830 $ 5,833
Automotive (OEM) 12,400 10,369 7,052
Wire/Tubing 12,617 11,908 9,822
Other non-precious metal
businesses (2,512) 94 387
- ----------------------------------------------------------------------------------------------------
32,806 37,201 23,094
General corporate expenses (2,075) (1,805) (12,048)
Interest expense (net) (15,484) (16,329) (22,199)
- ----------------------------------------------------------------------------------------------------
Income (loss) from
continuing operations
before taxes $ 15,247 $ 19,067 ($11,153)
====================================================================================================
</TABLE>
Handy & Harman Electronic Materials Corporation, previously included in the
"Other non-precious metal businesses" segment, has been classified within the
"Precious metals" segment. Figures for prior years have been restated
accordingly.
18
<PAGE> 3
The effect of the restructuring, nonrecurring and unusual charges on continuing
operations, as discussed in Note 1 to the Consolidated Financial Statements, on
the above segments' profit contribution before unallocated expenses for the
period ended December 31, 1991, is as follows:
<TABLE>
<S> <C>
=====================================================
Precious metals $ 5,684
Automotive (OEM) 1,220
Wire/Tubing 1,211
Other non-precious metal businesses 1,772
- -----------------------------------------------------
9,887
General corporate expenses 10,452
- -----------------------------------------------------
Total $20,339
=====================================================
</TABLE>
The following table segregates identifiable assets to the four reported
segments, Corporate and discontinued operations.
<TABLE>
<CAPTION>
Assets
==================================================================================
<S> <C> <C> <C>
(Thousands of dollars) 1993 1992 1991
- ----------------------------------------------------------------------------------
Precious metals $221,783 $169,502 $155,740
Automotive (OEM) 62,834 64,604 60,763
Wire/Tubing 80,442 73,518 73,792
Other non-precious metal businesses 17,160 28,695 28,207
Corporate 3,987 3,468 2,383
Discontinued operations 26,713 31,564 37,823
- ----------------------------------------------------------------------------------
$412,919 $371,351 $358,708
==================================================================================
</TABLE>
The comparison of Handy & Harman's precious metals segment sales
dollars from year to year is affected by changing market values of the silver,
gold and other precious metals which comprise a substantial portion of the
sales price. The table below shows all classes of similar precious metals
products (measured by gross weight of shipments as a percentage of total
segment shipments) which contributed 10% or more to total sales and revenues
during 1993, 1992 and 1991.
<TABLE>
<CAPTION>
Percent of shipments
==================================================================================
1993 1992 1991
- ----------------------------------------------------------------------------------
<S> <C> <C> <C>
Rolled Products 50% 40% 46%
Wire Products 33% 27% 31%
Bullion 1% 3% 3%
==================================================================================
</TABLE>
STOCK TRADING AND DIVIDENDS
Handy & Harman Common Stock is traded on the New York Stock Exchange. The
table below sets forth, for the quarterly periods indicated, the reported high
and low sales prices for the Common Stock on the New York Stock Exchange and
the dividends paid on the Common Stock during such periods.
At February 15, 1994, there were 2,238 holders of record of Common
Stock of Handy & Harman. Dividend payments are subject to the restrictions
described in Note 2 to the Consolidated Financial Statements.
<TABLE>
<CAPTION>
Common Stock Dividend Paid on
Sales Prices Common Stock
High Low Per Share
========================================================================================
<S> <C> <C> <C>
1993
January 1-March 31 $15 7/8 $12 7/8 5c.
April 1-June 30 17 5/8 14 5/8 5c.
July 1-September 30 16 3/4 11 3/4 5c.
October 1-December 31 15 3/4 12 1/8 5c.
- ----------------------------------------------------------------------------------------
1992
January 1-March 31 $12 5/8 $10 1/8 5c.
April 1-June 30 13 1/8 10 1/4 5c.
July 1-September 30 13 1/8 11 3/4 5c.
October 1-December 31 14 5/8 12 1/8 5c.
========================================================================================
</TABLE>
SELECTED QUARTERLY DATA
Summarized financial data for interim periods of 1993 and 1992 (expressed in
thousands of dollars, except per share data) are shown below. The first quarter
of 1993 includes the cumulative effect of a change in accounting for income
taxes in accordance with FASB No. 109, a benefit of $576,000 or $.04 per share.
<TABLE>
<CAPTION>
1993 Quarter Ended
Mar.31 June 30 Sept. 30 Dec. 31
========================================================================================
<S> <C> <C> <C> <C>
Sales $157,809 $161,991 $162,017 $176,436
Gross profit 24,396 23,781 18,578 20,122
Net income 3,702 3,332 213 2,229
- ----------------------------------------------------------------------------------------
Net income per share $ .26 $ .24 $ .02 $ .16
========================================================================================
</TABLE>
<TABLE>
<CAPTION>
1992 Quarter Ended
Mar.31 June 30 Sept. 30 Dec. 31
========================================================================================
<S> <C> <C> <C> <C>
Sales $138,346 $147,822 $141,473 $144,569
Gross profit 23,114 25,294 21,625 22,899
Net income 2,815 3,205 2,792 2,885
- ----------------------------------------------------------------------------------------
Net income per share $ .20 $ .23 $ .20 $ .21
========================================================================================
</TABLE>
19
<PAGE> 4
HANDY & HARMAN AND SUBSIDIARIES
FIVE YEAR SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
Dollars in thousands
except per share figures 1993 1992 1991 1990 1989
============================================================================================================================
<S> <C> <C> <C> <C> <C>
OPERATIONS
Sales and service revenues $658,253 $572,210 $531,526 $572,002 $580,720
After tax earnings (loss)-excluding
net LIFO gains(b) 9,476(a) 11,697 (8,653) 12,060 11,805
Net LIFO gains(b) -- -- -- 5,430 2,536
Income (loss) from continuing
operations 9,476(a) 11,697 (8,653) 17,490 14,341
Net loss from discontinued operations -- -- (25,856) (7,764) (6,575)
Net income (loss) 9,476(a) 11,697 (34,509) 9,726 7,766
Dividends 2,803 2,801 6,013 9,225 9,206
- ----------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA
After tax earnings (loss)-
excluding net LIFO gains(b) .68(a) .84 (.62) .86 .85
Net LIFO gains(b) -- -- -- .39 .18
Net income (loss) from continuing operations .68(a) .84 (.62) 1.25 1.03
Net loss from discontinued operations -- -- (1.85) (.55) (.47)
Net income (loss) .68(a) .84 (2.47) .70 .56
Dividends .20 .20 .43 .66 .66
Average shares outstanding (thousands) 14,021 14,001 13,985 13,973 13,944
- ----------------------------------------------------------------------------------------------------------------------------
FINANCIAL POSITION (AT DECEMBER 31)
Current assets 233,200 200,613 191,072 274,290 272,102
Current liabilities 121,293 92,444 96,004 222,295 208,926
Working capital 111,907 108,169 95,068 51,995 63,176
Property, plant and equipment-net 106,220 109,605 112,363 137,250 150,826
Total assets 412,919 371,351 358,708 472,451 455,731
Long-term debt 188,750 186,287 181,329 113,988 115,037
Deferred income taxes 11,276 7,681 4,059 18,420 15,332
Shareholders' equity 91,600 84,939 77,316 117,748 116,436
LIFO reserve(c) 141,273 105,416 111,209 125,271 167,656
- ----------------------------------------------------------------------------------------------------------------------------
STATISTICAL DATA
Property, plant and equipment
acquired through capital expenditures 15,147 14,440 12,728 16,042 24,007
Depreciation and amortization 15,816 14,854 16,372 18,493 18,833
Interest expense (net)-continuing
operations 15,484 16,329 22,199 22,313 23,652
Number of shareholders 2,238 3,046 3,218 3,214 3,116
Number of employees at December 31 4,246 4,478 4,333 4,594 5,022
- ----------------------------------------------------------------------------------------------------------------------------
FINANCIAL RATIOS
Return on average shareholders'
equity-excluding net LIFO gains(b) 10.7% 14.4% (35.4%) 3.7% 4.5%
Current ratio 1.9 2.2 2.0 1.2 1.3
=============================================================================================================================
</TABLE>
(a) Includes a benefit of $576,000 or $.04 per share, from cumulative effect of
accounting change.
(b) Net LIFO gains (after tax) are due to change in levels of precious metal
inventories stated at LIFO cost.
(c) Excess of year-end market value of LIFO inventory over cost.
20
<PAGE> 5
HANDY & HARMAN AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
LIQUIDITY AND CAPITAL RESOURCES
The Company's precious metal inventories, consisting principally of gold and
silver, may be considered as an equivalent to cash. Furthermore, these
precious metals inventories which are stated in the balance sheet at LIFO cost
have a market value substantially in excess of such cost. It is the Company's
policy to obtain funds necessary to finance inventories and receivables from
various banks under commercial lines of credit.
Trade accounts receivable resulting from sales of fabricated precious
metals are financed primarily by bank borrowings. Fluctuations in the market
prices of gold and silver have a direct effect on the dollar volume of sales
and the corresponding amount of customer receivables. In addition, receivables
resulting from sales of precious metals for future delivery are also financed
by bank borrowings. The Company adjusts the level of its credit facilities
from time to time in accordance with its borrowing needs for receivables, as
well as other working capital items, and maintains bank lines of credit well in
excess of anticipated requirements. During the first quarter of 1992 the
Company finalized a $200,000,000 credit facility with twelve banks which was
used to replace the existing lines of credit at December 31, 1991. This credit
facility was increased by $15,000,000 in 1993 and provides $161,250,000 for a
three year period (extended an additional year in 1993) and $53,750,000 for 364
days, of which $133,000,000 was utilized at December 31, 1993. In the third
quarter of 1992 the Company completed arrangements with four institutional
lenders for $50,000,000 of long-term borrowings maturing in ten years. The
proceeds are currently used to reduce portions of the previously mentioned
credit facility.
The Company's program to expand productive capacity through acquisition of
new businesses and expenditures for new property, plant and equipment will
continue to be financed with internally generated funds and long-term debt, if
necessary.
For additional information with regard to the Company's cash requirements
and commitments, see Notes 2 and 4 of the Notes to Consolidated Financial
Statements.
The Company's foreign operations consist of four wholly owned subsidiaries
(one in Canada, two in the United Kingdom and one in Mexico) and three equity
investments (one in Asia, one in Mexico, and one in Brazil). Substantially all
unremitted earnings of such entities are free from legal or contractual
restrictions.
On June 27, 1991, the Company announced a major restructuring program
which called for the divestiture of six businesses deemed to be non-core
operations that no longer fit within the Company's long-term strategies and the
liquidation of certain precious metals inventories in a manner that resulted in
no material change in the Company's LIFO reserve. The Company was able to
reduce total borrowings by $68,000,000 during 1991 primarily as a result of
this restructuring program.
OPERATIONS
RESTRUCTURING, NONRECURRING AND UNUSUAL CHARGES
The restructuring program strengthens the Company's balance sheet, reduces debt
and interest expense, provides a sound basis for improved profitability and
allows management to concentrate on those businesses which have demonstrated
potential for above average growth. As a result of this program, the Company
recorded restructuring, nonrecurring and unusual charges of $54,330,000
($38,130,000 after tax, or $2.73 per share) in the second quarter of 1991.
These charges are summarized as follows:
* Restructuring and nonrecurring charges for write-down of certain
facilities, equipment and other assets - $13,181,000 ($8,904,000 after
tax, or $.64 per share).
* Other unusual charges to operating expenses for estimated additional
environmental remediation expenses, reserves for certain receivables from
jewelry industry customers, and health care charges, including those
associated with the recently adopted Financial Accounting Standards Board
Statement No. 106 which requires recognition of post retirement health
benefits on an accrual basis - $7,158,000 ($4,835,000 after tax, or $.34
per share).
* Costs associated with discontinued operations - $33,991,000 ($24,391,000
after tax, or $1.75 per share).
21
<PAGE> 6
COMPARISON OF 1993 VERSUS 1992
Sales for the precious metal segment increased $73,249,000 (27%). Sales of
refining outturn in bullion form increased from $26,355,000 in 1992 to
$102,018,000 in 1993. The profit margin on this business is less than the
margins on fabricated products. The average price for gold was $359.84 per
ounce and the average price of silver was $4.30 per ounce representing
increases of 5% and 9%, respectively from the previous year. Benefits from
higher precious metal prices and higher volumes in 1993 were offset by
competitive pricing pressures in 1993 which was the primary reason for the
decreased profit contribution (pre-tax income before deducting interest and
Corporate expense) of $4,529,000 (31%). Although some improvement is
anticipated in 1994, any earnings increase in this segment will be modest
unless there is a significant advance in the price of precious metals.
The automotive (OEM) segment sales increased by $15,868,000 (11%) and the
profit contribution increased $2,031,000 (20%) due to the rising North American
production rate over 1992. Continued increases in this North American
production rate in 1994, along with our commitment of funds to our technical
facility personnel and equipment, should enhance operating profits in this
segment.
Sales for the wire/tubing segment increased $7,646,000 (6%) and the profit
contribution increased $709,000 (6%) primarily due to the demand from the
telecommunications industry in the first half of 1993. This cyclical demand is
expected again in 1994, however it will be partially offset by the continued
lower levels in surgical orders and the interruption of orders for
refrigeration tubing from mainland China experienced in the second half of
1993. Resumption of these orders are anticipated in the latter part of 1994
and a modest improvement in contribution is expected overall from this segment
in 1994.
In the other non-precious metal segment, sales decreased $10,720,000 (30%)
primarily due to the sale of three businesses in 1993. Profit contribution
decreased $2,606,000 due to the charge of $2,800,000 relating to the sale of
New Industrial Techniques, Inc. and Valley Metals, Inc. The remaining
subsidiary in this segment (Continental Industries, Inc. and its United Kingdom
division, Kontite, Ltd.) has relatively unique product lines. This, along with
the substantial capital investment in 1993, should improve future operating
results.
Interest expense decreased $845,000 (5%) primarily due to decreased levels
of borrowings in 1993, offset by higher effective interest rates.
The effective tax rate for 1993 was 41.6% compared to 38.7% in 1992. Note
3 of the Notes to Consolidated Financial Statements analyzes the components of
the effective rate.
COMPARISON OF 1992 VERSUS 1991
Sales for the precious metals segment increased $9,301,000 (4%). Sales of
refining outturn in bullion form increased from $24,869,000 in 1991 to
$26,355,000 in 1992. The average price for gold was $343.83 per ounce and the
average price for silver was $3.94 representing a decrease of 5% for gold and
3% for silver. The profit contribution increased by $8,997,000 (154%).
Excluding $5,684,000 of restructuring, nonrecurring and unusual charges in 1991
described previously, the profit contribution increased $3,313,000 (29%)
primarily due to the higher level of sales of industrial products.
The automotive (OEM) segment sales increased by $22,546,000 (19%). The
profit contribution increased $3,317,000 (47%). Excluding $1,220,000 of
restructuring, nonrecurring and unusual charges discussed previously, the
profit contribution increased $2,097,000 (25%) primarily due to the increased
sales brought about by the increases in the industry's North American
production rate during 1992 as well as sales of new product.
Sales for the wire/tubing segment increased by $11,273,000 (10%) resulting
from increased demand for wire products from customers in the communications
industry as well as increased demand in both fabricated tubulars for the
medical industry and refrigeration tubing. The profit contribution increased
$2,086,000 (21%). Excluding $1,211,000 of restructuring, nonrecurring and
unusual charges discussed previously, the profit contribution increased
$875,000 (8%) due to the above mentioned sales increase.
The sales of the other non-precious metal businesses segment decreased
$2,436,000 (6%) primarily due to lower volumes from oil field services and
aerospace related customers. The profit contribution decreased $293,000 (76%).
Excluding the charge for restructuring, nonrecurring and unusual charges in
1991 previously discussed, the profit contribution decreased $2,065,000 (96%)
due to lower volumes described above.
Interest expense decreased $5,870,000 principally due to decreased levels
of borrowings primarily brought about by the sale of precious metal in 1991
previously described and lower interest rates in 1992.
The effective income tax rate in 1992 was a 38.7% expense compared to a
22.4% benefit in 1991. The lower effective rate for 1991 was due in part to
the Company's inability to recognize certain state tax benefits. Note 3 of the
Notes to Consolidated Financial Statements analyzes the components of the
effective tax rate.
22
<PAGE> 7
HANDY & HARMAN AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
Year ended December 31 1993 1992 1991
=================================================================================================================================
<S> <C> <C> <C>
Sales and service revenues $658,253,000 $572,210,000 $531,526,000
Cost of sales and service 571,376,000 479,278,000 446,993,000
- ---------------------------------------------------------------------------------------------------------------------------------
Gross profit 86,877,000 92,932,000 84,533,000
- ---------------------------------------------------------------------------------------------------------------------------------
Selling, general, and administrative expenses 53,900,000 56,394,000 59,753,000
Restructuring and nonrecurring charges -- -- 13,181,000
- ---------------------------------------------------------------------------------------------------------------------------------
Income from operations 32,977,000 36,538,000 11,599,000
- ---------------------------------------------------------------------------------------------------------------------------------
Other deductions:
Interest expense (net) 15,484,000 16,329,000 22,199,000
Other (net) 2,246,000 1,142,000 553,000
- ---------------------------------------------------------------------------------------------------------------------------------
17,730,000 17,471,000 22,752,000
- ---------------------------------------------------------------------------------------------------------------------------------
Income (loss) from continuing operations before income taxes
and cumulative effect of accounting change 15,247,000 19,067,000 (11,153,000)
Income tax provision (benefit) 6,347,000 7,370,000 (2,500,000)
- ----------------------------------------------------------------------------------------------------------------------------------
Income (loss) before cumulative effect of accounting change 8,900,000 11,697,000 (8,653,000)
Cumulative effect of accounting change 576,000 -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Income (loss) from continuing operations 9,476,000 11,697,000 (8,653,000)
- ----------------------------------------------------------------------------------------------------------------------------------
Discontinued operations:
Loss from discontinued operations (less applicable tax benefit
of $770,000) -- -- (1,465,000)
Provision for loss on disposal (including $1,000,000 in 1991
for operating losses during phase-out period), net of
income tax benefits of $9,600,000 -- -- (24,391,000)
- ---------------------------------------------------------------------------------------------------------------------------------
-- -- (25,856,000)
- ---------------------------------------------------------------------------------------------------------------------------------
Net income (loss) $ 9,476,000 $ 11,697,000 ($34,509,000)
=================================================================================================================================
Earnings (loss) per share:
Continuing operations:
Income (loss) before cumulative effect of accounting change $.64 $.84 ($.62)
Cumulative effect of accounting change .04 -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Total continuing operations .68 .84 (.62)
Discontinued operations -- -- (1.85)
- ---------------------------------------------------------------------------------------------------------------------------------
Net income (loss) $.68 $.84 ($2.47)
=================================================================================================================================
</TABLE>
The accompanying summary of significant accounting policies and notes are an
integral part of the financial statements.
23
<PAGE> 8
HANDY & HARMAN AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
December 31 1993 1992
==========================================================================================================================
<S> <C> <C>
ASSETS
Current assets:
Cash $ 3,320,000 $ 2,812,000
Receivables 127,743,000 80,706,000
Refundable income taxes 500,000 1,000,000
Inventories 88,692,000 87,668,000
Prepaid expenses and deposits 9,946,000 10,709,000
Assets held for sale -- 1,632,000
Current assets of discontinued operations (net) 2,999,000 16,086,000
- --------------------------------------------------------------------------------------------------------------------------
Total current assets 233,200,000 200,613,000
- --------------------------------------------------------------------------------------------------------------------------
Investment in 50% or less owned companies 1,824,000 1,520,000
Property, plant and equipment 249,384,000 249,093,000
Less accumulated depreciation and amortization 143,164,000 139,488,000
- --------------------------------------------------------------------------------------------------------------------------
106,220,000 109,605,000
Prepaid retirement costs (net) 43,627,000 38,834,000
Intangibles, net of amortization 1,120,000 1,694,000
Deferred charges 1,696,000 1,978,000
Other assets 1,518,000 1,629,000
Noncurrent assets of discontinued operations 23,714,000 15,478,000
- --------------------------------------------------------------------------------------------------------------------------
$412,919,000 $371,351,000
==========================================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term borrowings $ 28,000,000 $ 22,500,000
Current maturities of long-term debt 7,000,000 10,057,000
Accounts payable 53,739,000 28,571,000
Advances from smelter 8,935,000 --
Other current liabilities 20,389,000 26,281,000
Restructuring accruals 3,230,000 5,035,000
- --------------------------------------------------------------------------------------------------------------------------
Total current liabilities 121,293,000 92,444,000
- --------------------------------------------------------------------------------------------------------------------------
Long-term debt, less current maturities 188,750,000 186,287,000
Deferred income taxes 11,276,000 7,681,000
Commitments
- --------------------------------------------------------------------------------------------------------------------------
Shareholders' equity:
Common stock - par value $1; 60,000,000 shares authorized;
14,611,432 shares issued 14,611,000 14,611,000
Capital surplus 11,296,000 11,213,000
Retained earnings 70,414,000 63,741,000
Foreign currency translation adjustment (951,000) (693,000)
- --------------------------------------------------------------------------------------------------------------------------
95,370,000 88,872,000
Less: Treasury stock 1993 - 588,252 shares; 1992 - 596,318 shares - at cost 3,770,000 3,797,000
Unearned compensation -- 136,000
- --------------------------------------------------------------------------------------------------------------------------
Total shareholders' equity 91,600,000 84,939,000
- --------------------------------------------------------------------------------------------------------------------------
$412,919,000 $371,351,000
==========================================================================================================================
</TABLE>
The accompanying summary of significant accounting policies and notes are an
integral part of the financial statements.
24
<PAGE> 9
HANDY & HARMAN AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Three Years Ended December 31, 1993
Foreign
Par Value $1 Currency Total
Common Capital Retained Translation Treasury Unearned Shareholders'
Stock Surplus Earnings Adjustment Stock Compensation Equity
===============================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
Balance,
January 1, 1991 $14,611,000 $10,987,000 $95,367,000 $923,000 ($3,950,000) ($190,000) $117,748,000
Net loss (34,509,000) (34,509,000)
Cash dividends on
common stock-$.43
per share (6,013,000) (6,013,000)
Remeasurement and
amortization of stock
issued under restricted
stock option plan (42,000) 190,000 148,000
Stock awarded under
outside director stock
option plan (awarded
5,600 - issued 1,413
shares) 39,000 7,000 46,000
Translation adjustment (104,000) (104,000)
- -------------------------------------------------------------------------------------------------------------------------------
Balance,
December 31, 1991 14,611,000 10,984,000 54,845,000 819,000 (3,943,000) 77,316,000
Net income 11,697,000 11,697,000
Cash dividends on
common stock-$.20
per share (2,801,000) (2,801,000)
Stock issued under
restricted stock
option plan (20,600
shares net of 1,400
shares forfeited) 181,000 104,000 (136,000) 149,000
Stock awarded under
outside director stock
option plan (awarded
8,532 - issued 8,405
shares) 48,000 42,000 90,000
Translation adjustment (1,512,000) (1,512,000)
- -------------------------------------------------------------------------------------------------------------------------------
Balance,
December 31, 1992 14,611,000 11,213,000 63,741,000 (693,000) (3,797,000) (136,000) 84,939,000
Net income 9,476,000 9,476,000
Cash dividends on
common stock-$.20
per share (2,803,000) (2,803,000)
Remeasurement and
amortization of stock
issued under restricted
stock option plan 12,000 136,000 148,000
Stock awarded under
outside director stock
option plan (awarded
5,236-issued 5,553 shares) 71,000 28,000 99,000
Stock issued under the
1991 long-term incentive
plan (2,513 shares) (1,000) (1,000)
Translation adjustment (258,000) (258,000)
- -------------------------------------------------------------------------------------------------------------------------------
Balance,
December 31, 1993 $14,611,000 $11,296,000 $70,414,000 ($951,000) ($3,770,000) -- $91,600,000
===============================================================================================================================
</TABLE>
The accompanying summary of significant accounting policies and notes are an
integral part of the financial statements.
25
<PAGE> 10
HANDY & HARMAN AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Increase (Decrease) in Cash
--------------------------------------------------------
Year Ended December 31, 1993 1992 1991
=============================================================================================================================
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 9,476,000 $ 11,697,000 ($34,509,000)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization 15,816,000 14,854,000 16,372,000
Provision for doubtful accounts 1,195,000 627,000 952,000
Loss (gain) on disposal of property, plant and equipment (7,000) 274,000 (97,000)
Loss on sale of business units 2,800,000 537,000 --
Net prepaid retirement costs (4,793,000) (4,652,000) (6,190,000)
Equity in earnings of 50% or less-owned companies (117,000) (206,000) (128,000)
Earned compensation-1988 long-term incentive
and outside director stock option plans 225,000 226,000 214,000
Continuing operations-reserves for
restructuring, nonrecurring and unusual
charges, net of $6,600,000 in taxes -- -- 13,739,000
Discontinued operations reserves, net of
$9,600,000 in taxes -- -- 24,391,000
Changes in assets and liabilities, net of effects
from divestitures, investments and reserves for
continuing and discontinued operations:
Accounts receivable (49,031,000) (14,111,000) 10,032,000
Refundable income taxes 500,000 -- (1,000,000)
Inventories (3,714,000) 2,115,000 59,838,000
Prepaid expenses 556,000 (2,425,000) 222,000
Deferred financing costs -- (1,699,000) --
Deferred charges and other assets 380,000 (250,000) (383,000)
Accounts payable and other current liabilities 18,772,000 1,564,000 (7,213,000)
Advances from smelter 8,935,000 -- --
Deferred income taxes 3,595,000 3,622,000 1,666,000
- -----------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 4,588,000 12,173,000 77,906,000
- -----------------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Proceeds from sale of property, plant and equipment 945,000 2,428,000 335,000
Capital expenditures (15,002,000) (13,829,000) (12,158,000)
Divestitures, net of cash sold 5,072,000 -- --
Investment in 50% or less-owned companies (179,000) -- --
Net investing activities of discontinued operations 3,031,000 800,000 6,341,000
- -----------------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (6,133,000) (10,601,000) (5,482,000)
- -----------------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Short-term borrowings 5,500,000 (98,663,000) (45,399,000)
Current maturities of long-term debt (3,057,000) 8,576,000 (2,222,000)
Increase (decrease) in long-term debt 2,463,000 92,654,000 (20,355,000)
Dividends paid (2,803,000) (2,801,000) (6,013,000)
- -----------------------------------------------------------------------------------------------------------------------------
Net cash provided/(used) in financing activities 2,103,000 (234,000) (73,989,000)
- -----------------------------------------------------------------------------------------------------------------------------
Effect of exchange rate changes on net cash (50,000) (172,000) (4,000)
- -----------------------------------------------------------------------------------------------------------------------------
Net change in cash 508,000 1,166,000 (1,569,000)
Cash at beginning of year 2,812,000 1,646,000 3,215,000
- -----------------------------------------------------------------------------------------------------------------------------
Cash at end of year $ 3,320,000 $ 2,812,000 $ 1,646,000
=============================================================================================================================
Cash paid during the year for:
Interest, net of contango on futures and
forward contracts and interest rate swap $ 15,719,000 $ 17,112,000 $ 25,051,000
Income taxes $ 2,668,000 $ 537,000 $ 2,925,000
=============================================================================================================================
</TABLE>
The accompanying summary of significant accounting policies and notes are an
integral part of the financial statements.
26
<PAGE> 11
HANDY & HARMAN AND SUBSIDIARIES
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A -- PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company and
its wholly owned subsidiaries. All significant intercompany items have been
eliminated. Investments in 20%-50% owned companies are accounted for by the
equity basis of accounting.
B -- INVENTORIES
Precious metals inventories are valued at cost as computed under the last-in,
first-out (LIFO) method, which is lower than market. Non-precious metals
inventories are stated at the lower of cost (principally average) or market.
For precious metals inventories no segregation among raw materials, work in
process and finished goods is practicable.
C -- PROPERTY, PLANT AND EQUIPMENT, AND DEPRECIATION
Property, plant and equipment are stated at cost. Depreciation and
amortization are provided principally on the straight-line method for financial
reporting purposes and on accelerated methods for tax purposes.
D -- INTANGIBLES AND AMORTIZATION
Purchased patents are stated at cost, which is amortized over the respective
remaining lives of the patents. The excess of purchase price over net assets
acquired in business combinations is being amortized on the straight-line
method over 40 years.
E -- SALES, SERVICE REVENUES AND FUTURE CONTRACTS
A high percentage of the sales prices for the Company's precious metals
products (see "The Company's Business," Page 18) is the value of the precious
metals content. Changes in the unit sales price of such precious metals result
in corresponding changes in sales and cost of sales. The Company includes in
both sales and cost of sales the precious metal value of sales of fabricated
products if the customer purchased the precious metal from the Company, whether
or not the precious metal is sold at the same time as the fabricated product.
Consistent with the Company's policy of maintaining constant inventory
levels under the last-in, first-out (LIFO) method of accounting, precious
metals are purchased at the same prices and quantities as shipments to
customers. To the extent that additional inventory is required to support
operations, precious metals are purchased and immediately sold for future
delivery, eliminating the economic risk of price fluctuations.
Sales of precious metals for future delivery executed on the Commodity
Exchange are excluded from sales and cost of sales in the accompanying income
statement. The amount receivable arising from such sales for future delivery
and the related margin deposits are included in receivables (see Note 7a). The
income from sales of precious metals for future delivery is netted over the
contract period against the interest on short-term borrowing used to finance
receivables from these sales.
Service revenues, which represent charges to customers for processing
refining lots, are recognized in income when the lots are settled with the
customer as to precious metal content. Additional costs and smelter charges
relating to the settled lots are accrued at that time.
F -- TAXES ON INCOME
The Financial Accounting Standards Board Statement No. 109 ("SFAS 109"),
"Accounting for Income Taxes", was issued in February 1992 and was adopted by
the Company in the first quarter of 1993. Although SFAS No. 109 superseded
SFAS No. 96, "Accounting for Income Taxes" adopted by the Company in 1987, it
maintained the same requirement, among other things, that deferred tax
liabilities or assets at the end of each period be determined using the tax
rate expected to be in effect when taxes are actually paid or recovered. The
significant change in SFAS No. 109 over SFAS No. 96 was the recognition of
deferred tax assets with measurement based on the likelihood of realization of
a tax benefit in future years. The cumulative effect of this change to January
1, 1993 amounts to $576,000 and is shown as a separate item in the Consolidated
Statement of Income on page 23.
G -- INCOME PER SHARE
Per share amounts are based on the weighted average number of shares
outstanding during the year. Outstanding stock options are considered common
stock equivalents using the treasury stock method and are included in the
calculation when their effect would be dilutive; however they had no dilutive
effect in 1993, 1992 and 1991.
H -- POSTEMPLOYMENT BENEFITS
In 1993, the Company adopted Statement of Financial Accounting Standards No.
112, "Employers' Accounting for Postemployment Benefits." The adoption of this
standard did not have a material effect on the Company's financial position or
results of operations.
I -- RECLASSIFICATIONS
Certain reclassifications have been made to the 1992 consolidated financial
statements to conform to the 1993 presentation.
27
<PAGE> 12
HANDY & HARMAN AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 -- RESTRUCTURING AND DIVESTITURES
In 1993 the Company received $5,072,000 in cash and $800,000 in notes for the
sale of Valley Metals Inc., O&M Manufacturing Co. Division and New Industrial
Techniques, Inc. These businesses were not part of the restructuring program
described below. The assets sold amounted to $8,294,000 and the liabilities
assumed by the purchasers amounted to $1,233,000. A loss of $2,800,000 was
recorded in 1993 on the sale of two of these units. These businesses are not
material to the revenues of the Company.
During 1992 the Company identified three businesses for sale (Chemical
Products Division - sold in 1992, Valley Metals Inc. - and O&M Manufacturing
Co. Division both sold in 1993). A net charge of $537,000 was recorded in 1992
for the sale of these three businesses. A reclass of assets held for sale was
made at December 31, 1992 for the sale of Valley Metals Inc. in January 1993.
Also included in Other Deductions is the loss on sale of a building amounting
to $319,000.
As a result of the restructuring program announced on June 27, 1991, the
Company recorded restructuring, nonrecurring and unusual charges amounting to
$54,330,000. Continuing operations recorded restructuring and nonrecurring
charges for the write-down of certain facilities, equipment and other assets
amounting to $13,181,000 and also other unusual charges amounting to $7,158,000
for operating expenses estimated for additional environmental remediation
expenses; reserves for certain receivables from jewelry industry customers; and
health care charges, including those associated with the Financial Accounting
Standards Board Statement No. 106 which requires recognition of postretirement
health benefits on an accrual basis. Divestiture of six businesses deemed to
be non-core operations that no longer fit with the Company's long-term
strategies were also part of this restructuring program and costs associated
with these discontinued operations amounted to $33,991,000. For further
analysis of discontinued operations see Note 10.
NOTE 2 -- DEBT AND CREDIT AGREEMENTS
The Company's borrowing requirements are primarily related to the market value
of precious metals and the resulting changes in the Company's receivables. The
Company adjusts the level of its credit facilities from time to time in
accordance with its borrowing needs. At December 31, 1993, the Company had
various agreements with banks whereby credit facilities of approximately
$53,750,000 were available; short-term bank borrowing under these lines
amounted to $28,000,000. The corresponding amounts for December 31, 1992 were:
credit facilities--$50,000,000 and bank borrowings--$22,500,000.
At December 31, 1993, 1992, and 1991 the interest rate for outstanding
short-term borrowing was 4.0%, 4.9%, and 6.4%, respectively. During 1993, the
average month-end short-term borrowing was $15,688,000; the weighted average
interest rate 4.3% computed on the basis of the number of days the borrowings
were outstanding; and the maximum month-end short-term borrowing was
$36,000,000. The corresponding amounts for the years ended December 31, 1992
and 1991 were: average month-end borrowing--$44,273,000 and $147,598,000
weighted average interest rate 7.4% and 7.6%, and maximum month-end
borrowing--$137,662,500 and $165,500,000.
Long-term debt at December 31, 1993 and 1992 is summarized as follows:
<TABLE>
<CAPTION>
1993 1992
================================================================
<S> <C> <C>
Credit facility $105,000,000 $ 95,000,000
8.83% notes due 2002 50,000,000 50,000,000
9.37% note due 1999 21,500,000 25,000,000
10.20% note due 1998 11,750,000 18,000,000
Industrial revenue bonds,
floating rate, due 2004-2005 7,500,000 7,500,000
Other debt -- 844,000
- ----------------------------------------------------------------
195,750,000 196,344,000
Less installments due within year 7,000,000 10,057,000
- ----------------------------------------------------------------
Total long-term debt $188,750,000 $186,287,000
================================================================
</TABLE>
Maturities of long-term debt in each of the next five years are as follows (in
thousands): $7,000, $7,000, $112,000, $4,750 and $3,500. During the first
quarter of 1992 the Company finalized a $200,000,000 credit facility with
twelve banks which was used to replace the existing lines of credit at December
31, 1991. This credit facility was increased by $15,000,000 in 1993 and
provides $161,250,000 for a three year period (extended an additional year in
1993) and $53,750,000 for 364 days. The Company used a portion of the proceeds
to pay $91,688,000 of short-term borrowings, accordingly this amount had been
classified as long-term debt at December 31, 1991. Under this credit facility
interest is payable at the prime rate or LIBOR plus 1%, at the Company's
option.
In the third quarter of 1992 the Company completed arrangements with four
institutional lenders for $50,000,000 of long-term borrowings at a rate of
8.83% maturing in ten years. The proceeds were used to reduce portions of the
above mentioned credit facilities.
Under the most restrictive covenants of the Company's long-term loan
agreements, $7,405,000 of consolidated retained earnings were unrestricted at
December 31, 1993, as to the declaration of cash dividends and the acquisition
of capital stock by the Company. Additionally, the agreements require the
maintenance of specified ratios and a minimum tangible net worth of
$120,000,000. At December 31, 1993, the Company was in compliance with all
covenants.
28
<PAGE> 13
NOTE 3 -- INCOME TAXES
The components of income (loss) from continuing operations before income taxes
consisted of the following (in thousands):
<TABLE>
<CAPTION>
1993 1992 1991
=================================================================
<S> <C> <C> <C>
Domestic $14,852 $18,841 ($11,060)
Foreign 395 226 (93)
- -----------------------------------------------------------------
$15,247 $19,067 ($11,153)
=================================================================
</TABLE>
The provision for taxes on income was comprised of the following (in
thousands):
<TABLE>
<CAPTION>
1993
================================================================
Currently
Payable Deferred Total
- ----------------------------------------------------------------
<S> <C> <C> <C>
State and local $1,800 ($300) $1,500
Foreign 160 91 251
Federal -- 4,596 4,596
- ----------------------------------------------------------------
$1,960 $4,387 $6,347
================================================================
</TABLE>
<TABLE>
<CAPTION>
1992
================================================================
Currently
Payable Deferred Total
- ----------------------------------------------------------------
<S> <C> <C> <C>
State and local $2,230 ($ 330) $1,900
Foreign 150 (110) 40
Federal -- 5,430 5,430
- ----------------------------------------------------------------
$2,380 $4,990 $7,370
================================================================
</TABLE>
<TABLE>
<CAPTION>
1991
================================================================
Currently
Payable Deferred Total
- ----------------------------------------------------------------
<S> <C> <C> <C>
State and local $1,375 ($375) $1,000
Foreign 85 (65) 20
Federal -- (3,520) (3,520)
- ----------------------------------------------------------------
$1,460 ($3,960) ($2,500)
================================================================
</TABLE>
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at December
31, 1993 follow (in thousands):
<TABLE>
<CAPTION>
Deferred Tax Deferred Tax Net Deferred
Assets Liabilities Liability
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Prepaid retirement costs $15,270 ($15,270)
Property, plant and equipment 9,486 (9,486)
Restructuring and discontinued
operations $ 7,355 7,355
Foreign tax credit carryforwards 1,184 1,184
Investment tax credit carryforwards 1,502 1,502
All other 4,425 986 3,439
- -----------------------------------------------------------------------------
Total $14,466 $25,742 ($11,276)
=============================================================================
</TABLE>
Included in the deferred tax liability at December 31, 1992 are investment
and foreign tax credit carryforwards available to reduce income tax liabilities
in future years. Principal items making up the deferred U.S. Federal income tax
provisions follow (in thousands):
<TABLE>
<CAPTION>
1993 1992 1991
=======================================================================
<S> <C> <C> <C>
Book over tax depreciation ($1,372) ($1,360) ($1,090)
Restructuring 2,510 4,191 (5,555)
Employee benefits 1,643 1,655 2,300
Other (net) 1,815 944 825
- -----------------------------------------------------------------------
$4,596 $5,430 ($3,520)
=======================================================================
</TABLE>
The major elements contributing to the difference between the U.S. Federal
statutory tax rate and the consolidated effective tax rate are as follows:
<TABLE>
<CAPTION>
1993 1992 1991
=======================================================================
<S> <C> <C> <C>
U.S. Federal effective statutory tax rate 34.3% 34.0% (34.0%)
State and local income taxes, net
of Federal income tax benefit 6.5 6.4 5.9
Foreign tax credit (2.2) (1.7) --
Current year effect of income tax rate
change on deferred taxes 1.8 -- --
Net effect of foreign tax rates 0.4 0.2 0.5
Other 0.8 (0.2) 5.2
- -----------------------------------------------------------------------
41.6% 38.7% (22.4%)
=======================================================================
</TABLE>
NOTE 4 -- COMMITMENTS
Commitments at December 31, 1993 for the purchase of additional property, plant
and equipment approximated $609,000. Rent expense for 1993, 1992, and 1991 was
$3,363,000, $4,444,000, and $5,276,000, respectively. Operating lease and
rental commitments for continuing operations for future years are as follows:
<TABLE>
<S> <C>
============================================================
1994 $ 2,972,000
1995 2,741,000
1996 2,688,000
1997 2,010,000
1998 1,594,000
1999 and beyond 8,196,000
- ------------------------------------------------------------
Total lease and rental commitments $20,201,000
============================================================
</TABLE>
NOTE 5 -- STOCK OPTION AND LONG-TERM INCENTIVE PLANS
1982 STOCK OPTION PLAN
At December 31, 1993, 43,000 shares of common stock held in the treasury were
reserved for issuance under the Company's 1982 Stock Option Plan. No more
options may be granted under this plan. Transactions under this Plan are
summarized below:
<TABLE>
<CAPTION>
Shares under option
Shares -----------------------
Available Range of
for Option Shares Price
==================================================================================
<S> <C> <C> <C>
Balance, January 1, 1991 162,900 107,000 $15.437-20.875
Options expired 51,000 (51,000) $15.437-20.875
- ----------------------------------------------------------------------------------
Balance, December 31, 1991 213,900 56,000 $16.625-18.687
Options expired 4,000 (4,000) $16.625
Shares not granted (217,900) -- --
- ----------------------------------------------------------------------------------
Balance, December 31, 1992 -- 52,000 $16.625-18.687
Options expired -- (9,000) $16.625-17.000
- ----------------------------------------------------------------------------------
Balance, December 31, 1993 -- 43,000 $16.625-18.687
==================================================================================
</TABLE>
29
<PAGE> 14
HANDY & HARMAN LONG-TERM INCENTIVE STOCK OPTION PLAN
The number of shares subject to award under this plan adopted in 1991 shall not
exceed 1,000,000 shares of Common Stock. No stock appreciation rights are
outstanding under this plan. Commencing one year after the date of grant each
option will become exercisable cumulatively at the rate of 20% per year and
will expire 10 years from the date such option was granted. Transactions under
this Plan are summarized below:
<TABLE>
<CAPTION>
Shares under option
Shares -------------------------------
Available Range of
for Option Shares Price
=============================================================================
<S> <C> <C> <C>
Balance, January 1, 1991 -- -- --
Shares subject to award 1,000,000
Options granted (494,000) 494,000 $ 9.625 - 14.125
- -----------------------------------------------------------------------------
Balance, December 31, 1991 506,000 494,000 $ 9.625 - 14.125
Options granted (32,000) 32,000 $11.312 -12.5625
- -----------------------------------------------------------------------------
Balance, December 31, 1992 474,000 526,000 $ 9.625 - 14.125
Options granted (171,000) 171,000 $12.937 -15.3125
Options exercised -- (3,800) $ 9.625 - 12.625
Options expired 31,200 (31,200) $12.625
- -----------------------------------------------------------------------------
Balance, December 31, 1993 334,200 662,000 $ 9.625 -15.3125
=============================================================================
</TABLE>
OUTSIDE DIRECTOR STOCK OPTION PLAN
Under the Outside Director Stock Option Plan each outside director is awarded
fully and immediately exercisable options, on an annual basis, to purchase
Common Stock at an option price of $1. The market value of the Company's
shares at date of grant less the option price is amortized to compensation
expense during the year. A maximum of 100,000 shares are subject to award
under this Plan. Transactions under this Plan are summarized below:
<TABLE>
<CAPTION>
1993 1992 1991
============================================================
<S> <C> <C> <C>
Options outstanding January 1 7,379 7,252 3,065
Options awarded 5,236 8,532 5,600
Options exercised (5,553) (8,405) (1,413)
- ------------------------------------------------------------
Options outstanding December 31 7,062 7,379 7,252
============================================================
Shares subject to award
December 31 76,954 82,190 90,722
============================================================
</TABLE>
1988 LONG-TERM INCENTIVE PLAN
Shares issued under the 1988 Long-Term Incentive Plan are in the name of the
employee, who has all the rights of a shareholder, subject to certain
restrictions or forfeitures. Of the 400,000 shares which may be awarded under
this Plan 28,700 shares were issued in 1990, of which 400 shares were
forfeited, and 22,000 shares were issued in 1992, of which 1,400 shares were
forfeited. The market value of shares issued under the Plan is recorded as
unearned compensation and shown as a separate component of shareholders'
equity. This compensation is amortized to expense over the period the
employees become vested.
Compensation expense for both the Outside Director Stock Option Plan and
the 1988 Long-Term Incentive Plan amounted to $214,000, $226,000 and $214,000 in
1993, 1992 and 1991, respectively.
NOTE 6 -- SEGMENT INFORMATION
Information regarding the Company's industry segments and discontinued
operations is contained on page 18 under the heading "The Company's Business"
and is incorporated herein by reference.
Additional information concerning industry segments, corporate and
discontinued operations is as follows:
<TABLE>
<CAPTION>
1993 1992 1991
=======================================================================
<S> <C> <C> <C>
Depreciation and
amortization expense:
Precious metals $ 4,645,000 $ 4,327,000 $ 5,166,000
Automotive (OEM) 4,713,000 4,120,000 3,810,000
Wire/Tubing 4,046,000 3,734,000 3,787,000
Other non-precious
metal businesses 1,748,000 1,810,000 1,967,000
Discontinued operations -- -- 1,213,000
Corporate 664,000 863,000 429,000
- -----------------------------------------------------------------------
$15,816,000 $14,854,000 $16,372,000
=======================================================================
Property, plant and
equipment additions:
Precious metals:
Expenditures $ 5,650,000 $ 3,717,000 $ 2,916,000
Transfer -- 1,389,000 (1,630,000)
- -----------------------------------------------------------------------
5,650,000 5,106,000 1,286,000
- -----------------------------------------------------------------------
Automotive (OEM):
Expenditures 1,895,000 3,204,000 5,192,000
Transfer -- -- (642,000)
- -----------------------------------------------------------------------
1,895,000 3,204,000 4,550,000
- -----------------------------------------------------------------------
Wire/Tubing:
Expenditures 6,310,000 4,727,000 3,031,000
- -----------------------------------------------------------------------
6,310,000 4,727,000 3,031,000
- -----------------------------------------------------------------------
Other non-precious
metal businesses:
Expenditures 932,000 937,000 1,019,000
Transfer -- -- 761,000
- -----------------------------------------------------------------------
932,000 937,000 1,780,000
- -----------------------------------------------------------------------
Discontinued operations:
Expenditures 145,000 611,000 570,000
Transfer -- (1,389,000) 1,511,000
- -----------------------------------------------------------------------
145,000 (778,000) 2,081,000
- -----------------------------------------------------------------------
Corporate:
Expenditures 215,000 1,244,000 --
- -----------------------------------------------------------------------
$15,147,000 $14,440,000 $12,728,000
=======================================================================
</TABLE>
30
<PAGE> 15
NOTE 7 -- SUPPLEMENTAL INFORMATION
<TABLE>
<CAPTION>
1993 1992
================================================================
<S> <C> <C>
a-Receivables:
Trade accounts $ 70,761,000 $ 75,146,000
Notes 221,000 223,000
Allowance for doubtful accounts (3,721,000) (3,325,000)
- ----------------------------------------------------------------
67,261,000 72,044,000
Sales of precious metals for
future delivery 60,482,000 8,662,000
- ----------------------------------------------------------------
$127,743,000 $ 80,706,000
================================================================
b-Inventories:
Precious metals:
Fine and fabricated metals in
various stages of completion $ 38,879,000 $ 37,406,000
Non-precious metals:
Base metals, factory supplies
and raw materials 25,635,000 24,775,000
Work in process 14,893,000 16,257,000
Finished goods 9,285,000 9,230,000
$ 88,692,000 $ 87,668,000
- ----------------------------------------------------------------
Precious metals stated at LIFO cost $ 32,797,000 $ 32,783,000
================================================================
LIFO inventory-excess of year-end
market value over LIFO cost $141,273,000 $105,416,000
================================================================
Dec. 31 market value per ounce:
Silver $ 5.08 $ 3.67
Gold $391.75 $333.30
Market value of precious metals due
suppliers or held for customers
and returnable in commercial bar
or fabricated form $259,627,000 $165,789,000
================================================================
c-Property, plant and equipment:
Land $ 4,933,000 $ 5,309,000
Buildings and improvements 61,163,000 60,664,000
Machinery and equipment 155,795,000 158,726,000
Furniture and fixtures 15,585,000 14,151,000
Automotive 970,000 1,009,000
Improvements to leased property 4,039,000 4,013,000
Construction in progress 6,899,000 5,221,000
- ----------------------------------------------------------------
$249,384,000 $249,093,000
================================================================
</TABLE>
Depreciation and amortization of property, plant and equipment charged to
operations for 1993, 1992 and 1991 was $14,659,000, $14,157,000 and
$15,513,000, respectively.
<TABLE>
<CAPTION>
1993 1992
==============================================================
<S> <C> <C>
d-Intangibles (net of amortization):
Patents and other $ 729,000 $ 785,000
Excess of purchase price over
net assets acquired in business
combinations 391,000 909,000
- --------------------------------------------------------------
$1,120,000 $1,694,000
==============================================================
</TABLE>
e- Major Customer:
A customer from the automotive (OEM) segment represented 10.7%, 11.3% and
10.5% of consolidated sales and service revenues for 1993, 1992 and 1991,
respectively.
NOTE 8 -- RETIREMENT PLANS AND OTHER BENEFITS
RETIREMENT PLANS
The Company and substantially all of its subsidiaries have noncontributory
defined benefit plans covering most of their employees. The benefits are based
on years of service and employee's compensation at the time of retirement.
Contributions are made by the Company as necessary to provide assets sufficient
to meet the benefits payable to plan participants, and are determined in
accordance with applicable minimum funding standard requirements as promulgated
by the Internal Revenue Service. Such contributions are based on actuarial
computations of the amount sufficient to fund normal (current service) cost
plus an amortization of the unfunded actuarial accrued liability over periods
of up to 30 years.
The components of net periodic pension cost (credit) for 1993, 1992 and
1991 are as follows:
<TABLE>
<CAPTION>
1993 1992 1991
=================================================================
<S> <C> <C> <C>
Service cost-benefits
earned during the
period $ 3,546,000 $ 4,572,000 $ 3,715,000
Interest cost on the
projected benefits
obligation 7,253,000 8,130,000 7,205,000
Return on plan assets (15,563,000) (16,738,000) (16,050,000)
Net amortization
and deferral (106,000) (987,000) (1,060,000)
- -----------------------------------------------------------------
Net periodic pension
cost (credit) ($ 4,870,000) ($ 5,023,000) ($ 6,190,000)
=================================================================
</TABLE>
Assumptions used in the accounting at December 31 are:
<TABLE>
<CAPTION>
1993 1992 1991
============================================================
<S> <C> <C> <C>
Discount rate:
Beginning of year 7.0% 7.5% 8.0%
End of year 6.5% 7.0% 7.5%
Compensation increase 5.0% 5.0% 5.0%
Expected asset return 8.5% 9.5% 9.5%
to 10.5%
============================================================
</TABLE>
31
<PAGE> 16
The plans' funded status as of December 31 and the amounts
recognized in the accompanying financial statements are as follows:
<TABLE>
<CAPTION>
1993 1992
====================================================================
<S> <C> <C>
Actuarial present value of
benefit obligations:
Vested benefit obligation $ 95,980,000 $ 85,709,000
- --------------------------------------------------------------------
Accumulated benefit
obligation $100,139,000 $ 90,161,000
- --------------------------------------------------------------------
Projected benefit obligation $114,490,000 $104,333,000
Plan assets at fair value 156,295,000 146,567,000
- --------------------------------------------------------------------
Plan assets in excess of projected
benefit obligation 41,805,000 42,234,000
Unrecognized net loss 24,584,000 21,955,000
Unrecognized prior service cost (3,740,000) ( 4,332,000)
Unrecognized net asset (15,944,000) (19,066,000)
- --------------------------------------------------------------------
Prepaid pension cost $ 46,705,000 $ 40,791,000
====================================================================
</TABLE>
The plans' assets are invested primarily in stocks and insurance contracts.
The cost of living provision in effect for a certain Company pension plan
was eliminated with respect to benefits credited after October 31, 1992 and the
definition of average pay was changed from a final five year average to career
average pay starting January 1, 1993 for all units covered under the plan. The
result was a decrease in the projected benefit obligation and a reduction in
unrecognized prior service cost of $7,130,000. This amount is being amortized
over 16 years.
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
Certain operations of the Company provide postretirement medical benefits to
current and retired employees. In 1991 the Company adopted the provisions of
Statement of Financial Accounting Standards No. 106 ("SFAS 106"), "Employers'
Accounting for Postretirement Benefits Other than Pensions", to account for
these provided benefits. Certain employees of these operations become eligible
for postretirement medical benefits after fulfilling minimum age and service
requirements.
Postretirement benefit costs were determined assuming discount rates of 7%,
7.5% and 8% for the years ended 1993, 1992 and 1991, respectively. The
components of net periodic postretirement benefit cost are as follows:
<TABLE>
<CAPTION>
1993 1992 1991
====================================================================
<S> <C> <C> <C>
Service cost $ 261,000 $ 324,000 $ 305,000
Interest cost 694,000 698,000 695,000
Amortization of transition
obligation 574,000 417,000 432,000
- --------------------------------------------------------------------
$1,529,000 $1,439,000 $1,432,000
====================================================================
</TABLE>
The Company's funding policy with respect to these benefits is to pay the
amounts required to provide the benefits during each year. The following table
presents the Company's postretirement medical benefits funded status as of
December 31, 1993 and 1992.
<TABLE>
<CAPTION>
Accumulated Postretirement Benefit Obligation:
- ---------------------------------------------------------------------
1993 1992
=====================================================================
<S> <C> <C>
Retirees $ 4,576,000 $ 3,403,000
Future retirees 6,376,000 5,722,000
- ---------------------------------------------------------------------
Total accumulated postretirement
benefit obligation 10,952,000 9,125,000
Unrecognized transition obligation (6,340,000) (6,711,000)
Unrecognized actuarial loss (1,534,000) (457,000)
- ---------------------------------------------------------------------
Net postretirement benefit liability --
classified with prepaid retirement costs $ 3,078,000 $ 1,957,000
=====================================================================
</TABLE>
The assumed discount rate used to measure the accumulated postretirement
benefit obligation was 6.5% for 1993 and 7% for 1992. The unrecognized
transition obligation amortization period is 20 years beginning on January 1,
1991, the implementation date.
For measurement purposes, a 15% annual rate of increase in the health care
cost trend rate was assumed for 1992 through 1994; the rate was assumed to
decrease gradually to 6% by the year 2003 and remain at that level thereafter.
A 1% increase in the assumed health care trend rate would not have a
significant impact on the accumulated postretirement benefit obligation as of
December 31, 1993 and 1992.
Effective July 1, 1992 all participating union employees who are not
eligible to retire by June 30, 1995 were eliminated from receiving
postretirement medical benefits. The present value of this change reduced the
unrecognized transition obligation by $1,726,000 in 1992.
SAVINGS PLAN
During 1991 the Company established the Handy & Harman Savings Plan under
Section 401(k) of the Internal Revenue Code. This savings plan allows eligible
employees to contribute from 1% to 12% of their income on a pretax basis to
this savings plan. The Company matches 50% of the first 3% of the employee's
contribution. Such matching Company contributions are invested in shares of
the Company's common stock and becomes immediately vested. The charge to
operations for the Company's matching contribution amounted to $862,000,
$581,000, and $418,000 for 1993, 1992 and 1991, respectively.
32
<PAGE> 17
NOTE 9 -- COMMON STOCK PURCHASE RIGHTS
In 1989, the Board of Directors declared a dividend of one Common Stock
Purchase Right on each outstanding share of Handy & Harman Common Stock to
holders of record on February 6, 1989.
If the rights become exercisable, the rights will separate from the common
stock and each right will entitle the holder to purchase from the Company a
share of common stock at a predefined price. The rights are not exercisable
until either ten days after certain changes in ownership of the Company occurs
or ten days following the commencement of a tender offer for at least 20% of
the Company's common stock.
The rights are redeemable by the Company at a fixed price after certain
defined events or at any time prior to the expiration of the rights on January
26, 1999, if such events do not occur.
Through December 31, 1993, the Company had reserved common shares as
issuable pursuant to these rights. At the present time, the rights have no
dilutive effects on the earnings per share calculation.
NOTE 10 -- DISCONTINUED OPERATIONS
On June 27, 1991, the Company announced its planned divestiture of six
businesses which are involved in the manufacture of automotive replacement
parts, proprietary chemicals, metal powders, pressurized vessels, coldheaded
parts, and specialized platinum group metals refining and products.
Accordingly, the consolidated financial statements of the Company have been
reclassified to report separately the net assets and operating results of these
businesses. Financial results for periods prior to the date of discontinuance
have been restated to reflect continuing operations.
The net assets related to discontinued operations, primarily working
capital and property, plant and equipment, have been recorded at their
estimated net realizable value, as adjusted for estimated cash flows from
operations and estimated interest expense during the holding period (estimated
at one year). Included in assets of discontinued operations is the Company's
investment in, and receivable from, GO/DAN Industries (GDI), a joint venture
partnership. Approximately $1,000,000 of operating losses of the discontinued
operations from the date of discontinuance to December 31, 1993 were charged
against the reserve for operating losses established in the second quarter of
1991. Interest expense of $827,000 and $3,192,000 was allocated to the
discontinued operations based on net assets expected to be realized and the
value of precious metals used in their operations for 1992 and 1991
respectively.
33
<PAGE> 18
INDEPENDENT AUDITORS' REPORT
KPMG Peat Marwick
345 Park Avenue
New York, NY 10154
To the Board of Directors and
Shareholders of Handy & Harman:
We have audited the consolidated balance sheets of Handy & Harman and
Subsidiaries as of December 31, 1993 and 1992, and the related consolidated
statements of income, shareholders' equity, and cash flows for each of the
years in the three-year period ended December 31, 1993. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated 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 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Handy &
Harman and Subsidiaries as of December 31, 1993 and 1992, and the results of
their operations and their cash flows for each of the years in the three-year
period ended December 31, 1993 in conformity with generally accepted accounting
principles.
As discussed in the Summary of Significant Accounting Policies, the Company
adopted Statement of Financial Accounting Standard No. 109, "Accounting for
Income Taxes" in 1993.
/S/ KPMG PEAT MARWICK
- ---------------------
February 18, 1994
RESPONSIBILITY FOR FINANCIAL STATEMENTS
The financial statements presented in this Annual Report were prepared by Handy
& Harman which is responsible for their fairness. Such statements include, in
some instances, judgments as to those amounts which are estimates and
approximations. The Company believes that the consolidated financial statements
are in conformity with generally accepted accounting principles.
The Company depends upon an accounting system, including internal
accounting controls, administered by a staff of corporate accountants. The
controls are designed to provide reasonable assurance that the Company's
financial records are reliable, that the corporate assets are safeguarded and
that transactions are executed in accordance with the appropriate corporate
authorizations and recorded properly to permit the preparation of financial
statements in accordance with generally accepted accounting principles. It must
be recognized, however, that errors and irregularities may nevertheless occur,
so the effectiveness of such a financial system depends to a great extent upon
the careful selection of financial and other responsible managers. Also,
estimates and judgments are required to assess and balance the relative cost
and expected benefits of the Company's controls. The Company believes that its
accounting controls provide reasonable assurance that errors or irregularities
which could be material to the financial statements are prevented or would be
detected within a timely period by employees in the normal course of performing
their assigned functions. KPMG Peat Marwick, independent certified public
accountants, has been engaged by the Company to conduct quarterly reviews and
an audit of the Company's financial statements in accordance with generally
accepted auditing standards.
Such standards provide for numerous procedures, including obtaining an
understanding of the Company's accounting systems and performing reviews of
internal accounting control systems and tests of transactions deemed
appropriate by the auditors. KPMG Peat Marwick is a member of the SEC Practice
Section of the AICPA Division of CPA firms.
For many years the Company has had an Audit Committee of the Board of
Directors consisting exclusively of outside Directors of the Company. The
Committee meets periodically with the independent auditors, internal auditors,
management and corporate staff accountants to review and evaluate their
accounting, auditing and financial reporting activities and responsibilities.
The independent auditors as well as the internal auditors and the Corporate
Controller have full and free access to the Audit Committee. The independent
auditors meet with the Audit Committee, with and without Company employees
present, to discuss their audit plan and at a later date the results of their
audits.
34
<PAGE> 1
Exhibit (22)
HANDY & HARMAN
SUBSIDIARIES AS OF DECEMBER 31, 1993
A-1 Sales Inc.
Alloy Ring Service, Inc.
American Chemical & Refining Company, Incorporated
H&H Fabrications, Inc. (Formerly Brunner Engineering & Mfg., Inc.)
Camdel Metals Corporation
Con-Ind Limited
Continental Industries, Inc.
Daniel Radiator Corporation
Exxtrusions Corporation
Greenback Industries, Inc.
Handy & Harman Automotive Group, Inc.
Handy & Harman Automotive de Mexico, S.A. De C.V.
Handy & Harman Electronic Materials Corporation
Handy & Harman Envirotech Systems, Ltd. (Formerly Monico Manufacturing & Supply
Co., Inc.)
Handy & Harman of Canada, Limited
Handy & Harman International, Ltd.
Handy & Harman International (Korea) Limited
Handy & Harman Peru, Inc.
Handy & Harman Radiator Corporation
Handy & Harman Tube Company, Inc.
Handy & Harman Indiana Tube Corporation, Inc.
Indiana Tube Corporation
Jackson Industries, Inc.
<PAGE> 2
Jet Tool Company, Inc.
KJ-VMI Realty, Inc. (Formerly Valley Metals Inc.)
Kontite U.K. Limited
Lexington Tube Co., Inc.
Lucas-Milhaupt, Inc.
Maryland Specialty Wire, Inc.
Micro-Tube Fabricators, Inc.
H&H Powdered Metals, Inc. (Formerly New Industrial Techniques, Inc.)
Northvale Design & Development Company, Inc.
Pal-Rath Realty, Inc. (Formerly Rathbone Corporation)
Platina Laboratories, Inc.
Rigby-Maryland (Stainless), Ltd.
South Windsor Metallurgical, Inc.
U.S. Auto Radiator Manufacturing Corporation
Willing B Wire Corporation
In addition to the wholly-owned subsidiaries listed above, the
Company has a 50% interest in GO/DAN Industries, a joint venture partnership,
and has a 5% interest in Muzuno Handy Harman, Ltd. and a 50% interest in Handy
& Harman (Asia), S.A. Handy & Harman (Asia), S.A. owns 100% of Handy & Harman
(HK) Limited and 75% of Handy & Harman Manufacturing (Singapore) Pte. Ltd. The
Company owns 12_1/2% of Handy & Harman Manufacturing (Singapore) Pte. Ltd.
The Company also has a 5% interest in Ravel Inc., formerly
named R.V.L. Investments, Inc.
