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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, 1994 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 OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
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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NUMBER OUTSTANDING NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS AS OF MARCH 24, 1995 WHICH REGISTERED
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Common Stock Par Value $1 Per Share................. 14,098,580 New York Stock Exchange
Common Stock Purchase Rights........................ 14,098,580 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
requirements for the past 90 days. Yes /X/No / /
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Registration S-K is not contained herein, and will not be contained, to
the best of the registrant's knowledge, if 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 24, 1995 was $203,078,947.
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, 1994 Part II, Items 5-8
(2) Notice of Annual Meeting of Shareholders and Proxy Part III, Items 10-13
Statement dated March 31, 1995
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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 "Company", 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", which was published annually by the Company until it was discontinued
in 1994, has been widely distributed in trade and financial centers in this
country and abroad. The diversification program has added lines of precious
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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. In September
1994, the Company acquired Sumco Inc., a precision electroplating firm, which
does electroplating of electronic connector and connector stock for the
automotive, telecommunications, electronic and computer 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 19 and 20 of the Handy & Harman 1994 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%, 10.7%, and 11.3% of consolidated sales and service revenues
for 1994, 1993 and 1992, respectively. Export sales and revenues are not
significant in the total sales and revenues of any of the Company's business
segments.
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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 those businesses which have demonstrated potential
for above average growth. See Note 11 to the Consolidated Financial Statements
included in 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 20 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.
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
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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 consist 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. 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
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industries. Manufacturing jewelers use the Company's precious metal wire in a
wide range of production applications, 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
trimetallic strips which provide more versatile industrial applications 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 customers. The Company's rolled products are sold to
silversmiths for use as anodes in plating operations and for flatware and
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 electrical contacts and circuitry, to the
nuclear power industry
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for control assemblies, to the defense industry as foil for batteries, and to
the aerospace industry for use in guidance systems.
Powder Products - The Company produces silver/tin alloy powders
for use in dental applications and silver/copper alloy powders, which are 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.
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.
In addition, precision electroplating of electronic connectors and
connector stock is done for the automotive, telecommunication, electronic and
computer industries.
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
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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, determination 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
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
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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 19 of the Annual Report.
Working Capital Items - The Company maintains a constant 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 materials. 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 29 of the Annual Report, see Note 2 for
a comparison of the cost and market values of the Company's precious metals
inventories at December 31, 1993 and December 31, 1994 and Note 3 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 dependent upon such patents. The Company's trademarks are
registered
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in the United States and in several foreign countries. The Company 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 and in Chicago. It also has warehouse
facilities to support sales and distribution at each of its manufacturing and
processing plants and in Chicago.
Competition - The Company is one of the leading fabricators 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. Although there are no companies in the precious metals field
whose operations exactly parallel those of H&H in every area, there are
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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, 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.
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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 assembling 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 1994 there
can be no assurance that it will do so in the future. 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
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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 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
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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 suppliers. The Company has not experienced any problem in
obtaining the necessary quantities of raw materials. Prices and availability,
particularly of raw materials purchased from foreign suppliers, 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 salesmen; however, some are sold
through manufacturer's representatives and through distributors.
MANUFACTURING OF OTHER SPECIALTY PRODUCTS
Other Company subsidiaries manufacture plastic and steel fittings
and connections, plastic pipe and non-ferrous thermite welding powders for the
natural gas, electrical and water distribution industries.
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Distribution - Most of the Company's products comprising this
segment are sold directly to customers through Company salesmen. In particular,
gas distribution supplies and fittings, thermite welding powders and certain
other products are sold primarily through manufacturer's representatives to the
ultimate users. Some sales also are made by agents and manufacturer's
representatives to distributors.
Raw Materials - The raw materials used in this segment include
various steel alloys 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.
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GOVERNMENT REGULATION
During the last fiscal year, the Company spent or committed
approximately $5,200,000 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, 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 amount spent and committed above
includes approximately $1,600,000 for operations which have been sold and are
not expected to be repeated in the current fiscal year. Excluding these
expenditures for operations which have been sold, 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.
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ENERGY
The Company requires significant amounts of electricity, natural
gas, fuel oil and propane to operate its facilities. The Company has few
contracts covering natural gas or electricity, 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 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 reduction in fuel
supplies, could cause some curtailment of production.
EMPLOYEES
The Company had 4,826 employees on December 31, 1994. Of these,
approximately 33% are covered by collective bargaining agreements which expire
at various times during the next three years.
ITEM 2. PROPERTIES
The Company has 33 operating plants in the United States, Canada,
Mexico, England, Brazil (50% owned) and Singapore
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(50% owned) with a total area of approximately 2,600,000 square feet, including
warehouse, office and laboratory space, but not including the plants used by the
Brazil or Singapore operations. The Company owns or leases sales, service and
warehouse facilities at four other locations in the United States and England,
which, with the Company's executive and general offices, have a total area of
approximately 91,000 square feet.
The Company considers its manufacturing plants and service
facilities to be well maintained and efficiently equipped, and therefore
suitable for the work being done. The productive capacity and extent of
utilization of the Company's facilities is dependent in some cases on general
business conditions and in other cases on the seasonality of the utilization of
its 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.
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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 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.
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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.
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:
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 contaminated from the Montvale facility, and of $1,255,582 for future
expenditures over a 20-year period.
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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. Discovery procedures are
being carried out while 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,
1994.
EXECUTIVE OFFICERS OF THE COMPANY
As of March 31, 1995, the executive officers of the Company, their
ages, their present positions and offices, and their recent business experience
and employment, are as follows:
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Richard N. Daniel - Age 59; Chairman (since 1988) and Chief
Executive Officer of the Company (since 1983); a Director (since
1974).
Frank E. Grzelecki - Age 57; President and Chief Operating Officer
of the Company (since 1992); prior thereto Vice Chairman of the
Board (since 1989); a Director (since 1988).
Paul E. Dixon - Age 50; 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 1990).
Richard P. Schneider - Age 48; Vice President-Corporate
Development (since 1993); prior thereto Vice President-Corporate
Development of Sequa Corporation (a diversified manufacturing
company) (since prior to 1990).
Dennis C. Kelly - Age 43; Controller (since 1993) of the Company;
prior thereto Assistant Controller (since 1989).
James S. McElya - Age 47; Vice President of the Company (since
1994) and President of Handy & Harman Automotive Group, Inc.
(since 1994 and from 1987 to
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1992), a subsidiary; prior thereto, Group Vice President
(1992-1994).
John M. McLoone - Age 52; Vice President - Financial Services
(since 1992); prior thereto Group Vice President, Information
Technologies for W. R. Grace & Co. (a multinational company)
(since prior to 1990).
Stephen B. Mudd - Age 63; Vice President (since 1983) and
Treasurer (since 1977).
Robert M. Thompson - Age 62; Vice President (since 1994); prior
thereto Group Vice President (since 1984).
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.
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"
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on page 20 of the Annual Report and to Note 6 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 21 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 22 and 23 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 24 through 27 of the Annual
Report and by reference to the Summary of Significant Accounting Policies
contained on page 28 of the Annual Report and the Notes to Consolidated
Financial Statements commencing on page 29 of the Annual Report and by reference
to the Independent Auditors' Report set forth on page 35 of the Annual Report.
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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 31, 1995 (the "Proxy Statement"), for the 1995
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 1994 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, except that the officers who were
granted stock options in September 1994 did not file Forms 4 until November
1994.
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 1994," "Stock Options," "Long-Term Incentive Plan," "Compensation
Committee Report on Executive Compensation," "Pensions," "Compensation of
24
<PAGE> 26
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 Financial Statements, the
Independent Auditors' Report thereon and the items of Supplementary Information
incorporated by reference in Part II, Item 8 of this Report are set forth at the
respective
25
<PAGE> 27
pages of the Annual Report indicated in the list contained on page 18 of the
Annual Report, which list is incorporated herein by reference to the Annual
Report.
2. Financial Statement Schedule
The following Financial Statement Schedule is 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 II - Valuation and Qualifying Accounts and Reserves
(page S-1).
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.
(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).
26
<PAGE> 28
(4) Instruments defining the rights of security holders, including indentures.
(a) Revolving Credit Agreement dated as of September 28, 1994
among the Company, certain financial institutions as lenders,
The Bank of Nova Scotia, Chemical Bank and The Bank of New
York as Co-Agents and The Bank of Nova Scotia, as the
Administrative Agent (Filed as Exhibit 10.3 to the Company's
Current Report on Form 8-K dated October 12, 1994 and
incorporated herein by reference).
(b) Short Term Revolving Credit Agreement dated as of September
28, 1994 among the Company, certain financial institutions as
lenders, The Bank of Nova Scotia, Chemical Bank and The Bank
of New York as Co-Agents and The Bank of Nova Scotia, as the
Administrative Agent (Filed as Exhibit 10.4 to the Company's
Current Report on Form 8-K dated October 12, 1994 and
incorporated herein by reference).
(c) Fee Consignment Agreement dated as of September 28, 1994
between the Company and The Bank of Nova Scotia (filed as
Exhibit 10.5 to the Company's Current Report on Form 8-K dated
October 12, 1994 and incorporated herein by reference).
27
<PAGE> 29
(d) Short Term Fee Consignment Agreement dated as of September 28,
1994 between the Company and The Bank of Nova Scotia, (filed
as Exhibit 10.6 to the Company's Current Report on Form 8-K
dated October 12, 1994 and incorporated herein by reference).
(e) Dollar Supply Agreement dated as of September 28, 1994 among
the Company, certain financial institutions as lenders, The
Bank of Nova Scotia, Chemical Bank and The Bank of New York as
Co-Agents and The Bank of Nova Scotia, as the Administrative
Agent (filed as Exhibit 10.7 to the Company's Current Report
on Form 8-K dated October 12, 1994 and incorporated herein by
reference).
(f) Short Term Dollar Supply Agreement dated as of September 28,
1994 among the Company, certain financial institutions as
lenders, The Bank of Nova Scotia, Chemical Bank and the Bank
of New York as Co-Agents and the Bank of Nova Scotia, as the
Administrative Agent (filed as Exhibit 10.8 to the Company's
Current Report on Form 8-K dated October 12, 1994 and
incorporated herein by reference).
28
<PAGE> 30
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).
(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) Handy & Harman Management Incentive Plan Corporate Group
Participants, as amended and restated on December 15, 1994.
(d) Subsidiary, Division, Group or Unit Management Incentive Plan,
as amended and restated on December 15, 1994.
(e) Handy & Harman Deferred Fee Plan For Directors, as amended and
restated on December 15, 1994, effective as of January 1,
1995.
(f) Form of Executive Agreement entered into with the Company's
executive officers in September
29
<PAGE> 31
1986 (Filed as Exhibit 10(d) to the Company's 1986 Annual
Report on Form 10-K and incorporated herein by reference).
(g) 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).
(h) 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).
(i) 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).
(j) 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).
(k) 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).
30
<PAGE> 32
(l) Amendment to Agreement between the Company and R. N. Daniel
approved by the Company on May 11, 1993 (Filed as Exhibit
10(m) to the Company's 1993 Annual Report on Form 10-K and
incorporated herein by reference).
(m) Supplemental Executive Retirement Plan approved and restated
by the Company in December 1994.
(n) 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).
(o) 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).
(p) 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).
(q) Handy & Harman Supplemental Executive Plan (Filed as Exhibit
10(q) to the Company's 1992 Annual
31
<PAGE> 33
Report on Form 10-K and incorporated herein by reference).
(11) Statement re computation of per share earnings. Incorporated
by reference to item (h) of Summary of Significant Accounting
Policies on page 28 of the Annual Report.
(13) Pages 18 through 36 of the Company's Annual Report to
Shareholders for 1994. 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.
(21) List of Subsidiaries of the Company is filed as Exhibit 21 to
this Annual Report on Form 10-K.
(23) 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 Schedule as part of this
Annual Report on Form 10-K pursuant to Part IV hereof and
incorporated herein by reference thereto.
32
<PAGE> 34
(b) Reports on Form 8-K
The Company filed a Report on Form 8-K on October 12, 1994 with
respect to (i) the acquisition by the Company, on September 9, 1994, of all the
shares of capital stock of Sumco Inc. and (ii) the execution of certain credit
agreements by the Company on September 28, 1994.
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
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 registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with
the securities being registered, the registrant will, unless in the opinion
of its counsel the matter
33
<PAGE> 35
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
34
<PAGE> 36
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 23, 1995 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 3/23/95
- -------------------
(R.N. Daniel) (Principal Executive Officer)
/s/ F.E. Grzelecki President and Director 3/23/95
- -------------------
(F.E. Grzelecki) (Chief Operating Officer)
/s/ J.M. McLoone Vice President - Financial Services 3/23/95
- -------------------
(J.M. McLoone) (Principal Financial Officer)
/s/ D.C. Kelly Controller (Principal 3/23/95
- -------------------
(D.C. Kelly) Accounting Officer)
/s/ C.A. Abramson Director 3/23/95
- -------------------
(C.A. Abramson)
/s/ R.E. Cornelia Director 3/23/95
- -------------------
(R.E. Cornelia)
/s/ G.G. Garbacz Director 3/23/95
- -------------------
(G.G. Garbacz)
/s/G.M. Nichols Director 3/23/95
- -------------------
(G.M. Nichols)
/s/ H.P. Sotos Director 3/23/95
- -------------------
(H.P. Sotos)
</TABLE>
35
<PAGE> 37
F-1
REPORT AND CONSENT OF INDEPENDENT AUDITORS
The Board of Directors and Shareholders
Handy & Harman:
Under the date of February 17, 1995 we reported on the consolidated balance
sheet of Handy & Harman and Subsidiaries as of December 31, 1994 and 1993 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, 1994, as
contained in the 1994 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 1994. In connection with our audit of
the aforementioned consolidated financial statements, we also audited the
related consolidated financial statement schedule on page S-1. This consolidated
financial statement schedule is the responsibility of the Company's management.
Our responsibility is to express an opinion on this consolidated financial
statement schedule based on our audits.
In our opinion, such consolidated financial statement schedule, when considered
in relation to the basic consolidated financial statements taken as a whole,
presents 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 17, 1995.
KPMG PEAT MARWICK LLP
New York, New York
March 23, 1995
36
<PAGE> 38
HANDY & HARMAN AND SUBSIDIARIES S-1
SCHEDULE II
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, 1994 $3,721 $ 906(b) $1,030 $3,597
- ------------------------------------------------------------------------------
Year ended
December 31, 1993 $3,325 $1,195 $ 799 $3,721
- ------------------------------------------------------------------------------
Year ended
December 31, 1992 $3,347 $ 627 $ 649 $3,325
- ------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
1994 1993 1992
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
(a) Provision for doubtful
accounts - charged to
costs and expenses $784 $1,195 $627
- ------------------------------------------------------------------------------
</TABLE>
(b) Includes $122 acquired through business combination.
<PAGE> 39
EXHIBIT INDEX
-------------
Exhibit
No.
- -------
10(c) Handy & Harman Management Incentive Plan Corporate Group
Participants, as amended and restated on December 15, 1994.
10(d) Subsidiary, Division, Group or Unit Management Incentive Plan,
as amended and restated on December 15, 1994.
10(e) Handy & Harman Deferred Fee Plan For Directors, as amended and
restated on December 15, 1994, effective as of January 1, 1995.
10(m) Supplemental Executive Retirement Plan approved and restated by
the Company in December 1994.
13 Pages 18 through 36 of the Company's Annual report to shareholders
for 1994. 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.
21 List of Subsidiaries of the Company is filed as Exhibit 21 to this
Annual Report on Form 10-K.
27 Financial Data Schedule.
<PAGE> 1
Exhibit 10(c)
HANDY & HARMAN
MANAGEMENT INCENTIVE PLAN
CORPORATE GROUP PARTICIPANTS
The name of this Plan is "The Handy & Harman Management Incentive Plan
- - Corporate Group Participants". The purpose of this Plan is to promote the
interests of the stockholders of the Company and to provide incentive to those
officers and management employees who can contribute to the profits of the
Company. Effective as of January 1, 1994, the Plan is amended and restated with
respect to any and all Incentive Awards earned beginning in the 1994 Fiscal Year
(except as set forth in the Regulations) as follows:
SECTION I. - Definitions
The terms herein used will have the following definitions:
a. The term "Plan" means The Handy & Harman Management Incentive Plan -
Corporate Group Participants, as amended from time to time.
b. The term "Company" means Handy & Harman, a New York corporation.
c. The term "Board of Directors" means the Board of Directors of the
Company.
d. The term "Salary" shall mean the highest rate of basic compensation,
expressed as an annual rate, paid to a Participant during the Fiscal
Year.
e. The term "Employee" means any person who is a regular, full time and
active employee of the Company, including officers and directors, and
who is paid by the Company on a salary basis, but excluding any person
who is a regular and full time employee of a subsidiary or division of
the Company having a separate Management Incentive Plan.
f. The term "Participant" means any person selected to participate in the
Plan for any Fiscal Year.
g. The term "Corporate Group Participant" means any Participant who is
designated by the Committee to participate in the
<PAGE> 2
Corporate Group Incentive Plan Provisions for any Fiscal Year.
h. The term "Committee" means the Management Incentive Committee or the
Incentive Awards Committee provided for in Section II.
i. The term "Incentive Award" means an award under the Plan to a
Participant, and either paid currently or paid on a deferred basis.
j. The term "Incentive Plan Provisions" means monies out of the Net
Earnings or Consolidated Net Earnings of the Company, as the case may
be, for any Fiscal Year, which are made available for distribution as
Incentive Awards as the result of the operation of this Plan or any
Subsidiary, Division, Group or Unit Management Incentive Plan.
k. The term "Fiscal Year" shall mean the fiscal year of the Company,
January 1 to December 31.
SECTION II. - The Committee.
a. The Compensation Committee of the Board of Directors shall comprise the
"Management Incentive Committee" or the "Incentive Awards Committee".
The Committee shall have full power and authority to interpret and
administer the Plan in accordance with the terms of the Plan and the
Regulations (as defined herein).
b. The Committee shall select one of its members as Chairman and shall
hold its meetings at such times and places as it may determine. A
majority of its members shall constitute a quorum. All determinations
of the Committee shall be made by a majority of its members. Any
decision or determination reduced to writing and signed by a majority
of the members of the Committee shall be as fully effective as if it
had been made by a majority vote at a meeting of the Committee duly
called and held. The members of the Committee may receive such
compensation for their services as the Board of Directors may
determine.
2
<PAGE> 3
SECTION III. - Regulations.
The Board of Directors shall have the power to adopt rules and
regulations (the "Regulations") not inconsistent with the provisions of the
Plan, governing the selection and eligibility of Participants of the Plan, and
for the administration of the Plan and to alter, amend or revoke any Regulation
so adopted.
SECTION IV. - Participants.
Participants in the Plan shall be limited to those Employees selected
by the Committee in accordance with the Regulations.
SECTION V. - Determination of Incentive Plan Provision.
The amount of the Incentive Plan Provisions for Corporate Group
Participants shall be seven and one-half percent (7.5%) of the Consolidated Net
Earnings in excess of fifteen percent (15%) of Shareholders Equity, or such
lesser percentages of Consolidated Net Earnings in excess of fifteen percent
(15%) of Shareholders Equity, as may be fixed and determined by the Committee in
accordance with the Regulations.
The term "Consolidated Net Earnings" means, for the purpose of
computing the amount which may be fixed and determined by the Committee as the
Corporate Group Incentive Plan Provision, the consolidated earnings of the
Company and its subsidiaries for such Fiscal Year, exclusive of LIFO adjustments
and before deducting taxes based upon income and the amount of any Incentive
Plan Provisions for such Fiscal Year, as reported to the President of the
Company by the Company's independent auditors.
The term "Shareholders Equity" means, for the purpose of computing the
amount which may be fixed and determined by the Committee as the Corporate Group
Incentive Plan Provision for any Fiscal Year, the sum of items 1-3 below, less
the sum of items 4-6 below, as of the close of business of the preceding Fiscal
Year as shown by the Consolidated Balance Sheet of the Company and its
subsidiaries for such preceding Fiscal Year as prepared by the Company's
independent auditors.
1. Common Stock of the Company outstanding.
2. Capital Surplus.
3. Retained Earnings.
3
<PAGE> 4
4. Treasury Stock
5. Foreign Currency Translation Adjustments
6. Unearned Compensation
SECTION VI. - Report of Chief Executive.
As soon as possible after the close of each Fiscal Year, the Chief
Executive Officer of the Company shall determine and report in writing to the
Committee the Consolidated Net Earnings of the Company and its subsidiaries for
such Fiscal Year and the maximum amount of the Corporate Group Incentive Plan
Provision available for such fiscal year out of the Consolidated Net Earnings as
reported. The Committee shall rely upon and be bound by such report.
SECTION VII. - Incentive Awards.
a) Upon the fixing of the formula for determining the amount of the
Corporate Group Incentive Plan Provision, the Committee may allot, in
such manner as it may determine in accordance with the Regulations,
such shares or percentages of the amounts available in the Incentive
Plan Provision to each of the Participants as it may select from those
designated to participate in the Incentive Plan Provisions. At the sole
discretion of the Committee, based upon the recommendation of the Chief
Executive Officer of the Company, an Incentive Plan Provision may be
determined for Incentive Awards to recognize outstanding overall effort
applied to the enhancement of the long-term growth potential of the
Company. The total amount of the Incentive Plan Provision which may be
made available for Incentive Awards under the preceding sentence shall
not exceed 25% of the aggregate of the salaries of Participants to whom
Incentive Awards are granted under the preceding sentence.
b) The Committee's selection of the Participants to whom Incentive Awards
shall be made and its determination of the amounts and method of
payment of such Incentive Awards shall be final.
c) No Participant shall receive an Incentive Award greater than 100% of
the Participant's Salary in the Fiscal Year for which the Incentive
Award was earned.
4
<PAGE> 5
SECTION VIII. - Expenses; Forfeitures of Incentive Awards.
a) All expenses incurred by the Committee in interpreting and
administering the Plan shall be charged against Plan reserves.
b) The amount of any Incentive Award forfeited by a Participant shall be
retained by the Company and shall not be re-credited to the Incentive
Plan Provision.
SECTION IX. - Termination of Plan.
The Board of Directors may suspend or discontinue the Plan at any time.
SECTION X. - Effective Date.
This Plan shall become effective in accordance with the resolution of
the Board of Directors or the preamble hereto.
5
<PAGE> 6
HANDY & HARMAN
MANAGEMENT INCENTIVE PLAN - CORPORATE GROUP PARTICIPANTS
RULES AND REGULATIONS
Set forth below are the rules and regulations under which the Handy &
Harman Management Incentive Plan Corporate Group Participants is to be
administered. The terms used herein are as defined in the Plan.
1) Participation in the Plan shall be limited to those Employees who can
contribute the most to the Company's profitability.
2) At the beginning of each fiscal year the Chief Executive Officer of the
Company shall submit to the Committee a written list of his
recommendations as to the Employees who should be selected as
Participants in the Corporate Group Incentive Plan Provision.
3) Upon receipt of such list from the Chief Executive Officer,
participants shall be selected each year by the Committee. Participants
shall be notified in writing by the Chief Executive Officer of the
Company of their selection as Participants for that Fiscal Year.
4) Not all officers need be selected as Participants. The selection of an
Employee as a Participant one year does not require selection of that
Employee as a Participant in subsequent years.
5) At the end of each Fiscal Year, the Chief Executive Officer shall
submit to the Committee a written list of his recommendations as to the
amount of Incentive Award each Participant should receive for that
Fiscal Year.
6) Incentive Awards granted to Participants shall be based upon the
relative contribution made by each Participant toward total earnings
and growth for the Fiscal Year in which he is selected as a
Participant.
6
<PAGE> 7
7) If a Participant's work performance has been unsatisfactory, no
Incentive Award will be made to that Participant for that Fiscal Year.
8) No excess of an Incentive Plan Provision, over and above the total of
the Incentive Awards approved by the Committee for such year, shall be
carried forward to a following Fiscal Year.
9) Incentive Awards which are less than 10% of the Participant's annual
salary rate shall be paid in cash in full. Incentive awards which are
10% or more of the Participant's annual salary rate may either be paid
in cash in full, or on a deferred basis in accordance with the terms of
these Regulations.
10) As soon as possible following the receipt of the report of the Chief
Executive Officer referred to in Section VI of the Plan and the list of
the Chief Executive Officer's recommendations as to the amount of
Incentive Award for each Participant, the Committee shall fix and
determine (a) the formula for determining the Incentive Plan Provision
for the Corporate Group for such Fiscal Year, and (b) the share or
percentage of the available amount in the Incentive Plan Provision to
be allotted as Incentive Awards to the Participants in such Incentive
Plan Provision for such Fiscal Year.
11) Except as otherwise provided herein, for all or any portion of an
Incentive Award to be paid to a Participant, the Participant (a) must
be an Employee of the Company, or (b) must have retired under the
Company's retirement plan as of the date the Incentive Award, or
portion thereof is payable.
l2) In the event of the death of a Participant, all unpaid portions of
Incentive Awards shall be considered payable, and shall be paid (a) to
the Participant's estate, or (b) as provided herein or (c) to or among
such relatives (by blood or marriage) of the deceased Participant as
the Committee may determine, in its sole discretion.
13) Incentive Awards, or portions thereof, shall not be made or paid to
individuals who resign from their position with the Company or whose
employment is terminated by the Company prior to the date the Incentive
Award, or portion thereof is allotted, unless otherwise provided herein
or determined by the Committee.
7
<PAGE> 8
14) Unless deferred as provided herein, Incentive Awards for any Fiscal
Year shall be paid as directed by the Committee on or after February
lst, but not later than March 15th, of the following year. Any
Incentive Award, or portion thereof, which is to be paid on a deferred
basis shall be placed in the Reserve Account (as hereinafter defined)
of the Participant pursuant to the terms hereof.
15) The Committee shall keep minutes of its actions and shall report all
action taken to the Board of Directors.
16) A Participant may elect to defer all or any portion of his or her
Incentive Award for a Fiscal Year (subject to Section 9 of these
Regulations), by giving written notice to the Committee specifying: (1)
the amount to be deferred; (2) an election of payment in either a
single lump sum or annual installments, as provided in Section 18
(each, a "Payment Option"); and (3) a Retirement Date (as hereinafter
defined), which, in the case of a lump sum distribution, must be no
earlier than the earlier of (a) three years after the date of such
election or (b) the Participant's termination of employment with the
Company. A form of notice is attached as Exhibit A. Any such election
shall be made by the Participant prior to the end of the Fiscal Year
with respect to which such Incentive Award is to be earned. Separate
deferral elections may be made with respect to Incentive Awards
attributable to different Fiscal Years; provided, however, that a
single Payment Option and a single Retirement Date shall apply to
amounts deferred by a Participant hereunder. Such election may be
revoked by the Participant, and a new election of a Payment Option
and/or a Retirement Date may be made, provided that such new election
shall be null and void and of no force and effect unless (1) such new
election is made at least one year prior to the Participant's
termination of employment with the Company, (2) in the event the new
election involves a revocation of an annual installment Payment Option
and the election of a lump sum distribution Payment Option, the newly
elected Retirement Date is at least three years after the date of the
new election, and (3) in the event the new election involves a change
in the Retirement Date applicable to a previous lump sum distribution
election, (a) the new election is made at least one year prior to the
Retirement Date previously in effect and (b) the new Retirement Date is
at least three years after the date of the new election. If more than
one election notice has been filed, the election in the most recent
valid notice shall control. An amount equal to the
8
<PAGE> 9
portion of any Incentive Award so deferred shall be credited to the
Participant on the Company's books in a reserve account (the "Reserve
Account"). Deferred amounts credited to a Participant's Reserve Account
shall, except as otherwise provided in Section 17, 18, 22, 23, 24 or 27
hereof, commence to be paid on the last day of the month in which the
Participant becomes age 65, or on such other date as the Participant
shall designate in his or her election hereunder (the "Retirement
Date").
17) Notwithstanding anything to the contrary herein, the Committee, in its
sole discretion and in accordance with rules as it may prescribe, may
permit distribution of all or any portion of deferred amounts in the
case of the Participant's hardship and may determine to cause
distributions on the Retirement Date to be made in a lump sum.
18) Except as otherwise provided herein, deferred amounts credited to the
Participant's Reserve Account shall be paid in one of the following
Payment Options, as elected by the Participant:
(i) Lump-Sum Distribution. The Participant may elect to receive the
value of his or her Reserve Account in a lump sum distribution.
(ii) Annual Installments. The Participant may elect to receive the
value of his or her Reserve Account in quarter-annual
installments over a period of between three and twenty years, as
elected by the Participant. The first payment shall be made on
the first day of the next calendar quarter following the
Retirement Date and shall be equal to the amount credited to the
Participant in the Reserve Account as of the date of such
payment, divided by the total number of payments to be made; and
the succeeding installment payments, in amounts equal to the
amount credited to the Participant in the Reserve Account as of
the date of payment divided by the number of remaining
installment payments to be made, shall continue to be made
thereafter at quarter-annual intervals until the last such
payment, equal to the entire amount then credited to the
Participant in the Reserve Account, is made. Amounts so paid
shall be subtracted as paid from the amount credited to the
Participant in the Reserve Account.
9
<PAGE> 10
19) The Committee shall appoint a committee of three, which may include the
participant, to administer the Participants' Reserve Accounts and any
of the Company's funds invested in connection therewith. The Company
may create a grantor trust (within the meaning of section 671 of the
Internal Revenue Code of 1986, as amended (the "Code")), for this
purpose to which it shall from time to time contribute amounts equal to
the amounts deferred hereunder. Such trust shall conform to the terms
of the model trust as described in the Internal Revenue Service Revenue
Procedure 92-64 (I.R.B. 1992-33). Payment of benefits from such trust
shall, to that extent, discharge the Company's obligations under this
Plan. The Participant shall elect that amounts credited to his or her
Reserve Account be invested in one or more investment funds which shall
be made available for such purposes under such trust or otherwise. A
form of such investment election is attached as Exhibit B. The
Participant may amend his or her investment election no more than four
times per calendar year, subject to any restrictions which the
committee may impose from time to time. Notwithstanding the existence
of any such trust or other funding vehicle, it is expressly understood
that neither the Participant nor his or her beneficiary (the
"Beneficiary") shall have any present or future interest in the funds
so invested, which, together with the dividend and interest income
thereon and any capital gains realized with respect thereto, shall
constitute assets of the Company. It is further understood that neither
the Plan nor these Regulations create any fund or trust for the benefit
of the Participant or his or her Beneficiary, that the Company's
obligation hereunder is limited to the contractual obligation to make
payments to the Participant or to his or her Beneficiary as provided
herein, and that with respect to such payments the rights of the
Participant or his or her Beneficiary shall be those of an unsecured
creditor of the Company. Amounts equal to the dividend or interest
income from such investments shall be added to the amount credited to
the Participant in the Reserve Account as such income is earned or
reported to the committee by the investment manager. Amounts equal to
unrealized gains and losses with respect to such investments shall be
added to or subtracted from the amount so credited as such gains and
losses are realized or reported, as the case may be. The corporation
income tax on any income earned by funds so invested shall be paid by
the Company and shall not be a charge against the Participant's Reserve
Account.
10
<PAGE> 11
20) The amount credited to the Participant in the Reserve Account on any
date for which a computation is made shall be equal to the sum of (i)
the cash credited to such account at the opening of business on such
date as provided in Section 19 hereof, plus (ii) the closing market
value of the securities, if any, in which the Company's funds are
invested in connection with such account, as hereinabove provided, as
of the close of business on the last business day prior to the date of
computation. If any portion of such funds are deposited with a bank in
a discretionary investment management account, the amount credited to
the Participant on any computation date shall include an amount equal
to the value on such date, or on the preceding day, of the investments
in such account, as verified by the bank in a quarterly summary value
statement issued in its capacity as investment manager. If funds
invested in connection with the Reserve Accounts of two or more
Participants are commingled in an account for any investment purpose,
the amount credited to the Participant in the Reserve Account shall
include an amount equal to a proportionate share of the value of such
account.
21) The Participant shall file with the Company a Beneficiary statement
designating an individual or the Participant's estate as Beneficiary.
If no Beneficiary statement is filed, the Beneficiary shall be the
Participant's estate. If more than one Beneficiary statement has been
filed, the Beneficiary designated in the Beneficiary statement bearing
the most recent date shall be the Beneficiary. A form of designation of
Beneficiary is attached as Exhibit C.
22) If the Participant's employment with the Company shall terminate before
the Retirement Date due to:
a. permanent and total disability which prevents the Participant
from engaging in any occupation for wage or profit; or
b. physical or mental disability which prevents the Participant
from performing his duties in a manner satisfactory to the
Company,
the amount credited to the Participant in the Reserve Account as of the
date of the disability shall be distributed, commencing as of such
date, based on the Payment Option then in effect with respect to the
Participant. For the
11
<PAGE> 12
purpose of this paragraph, a determination by the Board that such
disability exists shall be conclusive.
23) In the event the Participant shall die before the Retirement Date and
while employed by the Company, the amount credited to the Participant
in the Reserve Account as of the date of the Participant's death shall
be distributed to the Beneficiary, if an individual, based on the
Payment Option then in effect with respect to the Participant. If the
Beneficiary is the Participant's estate, the amount credited to the
Participant in the Reserve Account as of the date of the Participant's
death shall be paid to the Participant's estate in one lump sum.
If distribution is being made to a Participant in installments (as
provided in Section 18 hereof) and such Participant dies before all
installment payments have been made, the amount credited to the
Participant in the Reserve Account as of the date of the Participant's
death shall be distributed to the Beneficiary, if an individual, by
continuation of the remaining installment payments. If the Beneficiary
is the Participant's estate, the amount credited to the Participant in
the Reserve Account as of the date of the Participant's death shall be
paid to the Participant's estate in one lump sum.
If distribution is being made to a Beneficiary in installments and such
Beneficiary dies before all installment payments have been made, the
amount credited to the Participant in the Reserve Account as of the
date of the Beneficiary's death shall be paid to the estate of the
Beneficiary in one lump sum.
24) In the event that the Participant's employment with the Company shall
terminate before the Retirement Date for reasons other than death or
disability, the Reserve Account shall be credited as hereinabove
provided with an amount equal to all or a portion of the Incentive
Award, if any, made for the year of such termination. In the event of
such termination, the Reserve Account shall continue to be
administered, and payments with respect thereto shall be made, as
otherwise provided herein. In the event that, following such
termination, the Participant shall die, whether before or after the
Retirement Date, distribution shall be made, commencing as soon as
practicable following the Participant's death, to the Participant's
Beneficiary, if an individual, in accordance with the Payment Option
12
<PAGE> 13
then in effect with respect to the Participant or, if the Beneficiary
is the Participant's estate, in a lump sum. In the event that the
Beneficiary shall die prior to the complete distribution of the Reserve
Account, the amount credited to the Reserve Account as of the date of
the Beneficiary's death shall be paid to the estate of the Beneficiary
in one lump sum.
25) The Company's obligation hereunder to make payments to the Participant
with respect to amounts credited to the Participant in the Reserve
Account shall terminate forthwith if, prior to or following his
termination from the Company, the Participant shall without the prior
written consent of the Company, directly or indirectly engage in any
business which is substantially similar to the business of the Company,
either as a proprietor, stockholder, partner, officer, employee,
consultant or otherwise, provided that the ownership of less than two
percent (2%) of the stock in any corporation engaged in a business
which is similar to that of the Company shall not be deemed the
occurrence of such an event.
26) Neither the Participant, his or her spouse, nor any Beneficiary shall
have the power to transfer, assign, anticipate, mortgage or otherwise
encumber in advance any of the benefits payable hereunder, nor shall
said benefits be subject to seizure for the payment of any debts or
judgments of any of them, or be transferable by operation of law in the
event of bankruptcy, insolvency or otherwise of the Participant, his or
her spouse or Beneficiary.
27) Notwithstanding anything to the contrary provided herein, a Participant
may, with the consent of the Company, continue in active employment
after the Retirement Date. In such event, the Committee may defer the
start of the payments provided for in Section 16 until the first day of
the next calendar quarter following the Participant's termination of
employment. If this is done, appropriate adjustments may be made in the
amounts payable or in the number of installment payments (if
applicable), to take into account the effect of the delay.
28) Deferral elections made pursuant to the terms and conditions of these
Regulations shall supersede any prior elections in effect under
applicable Deferred Compensation Agreements between a Participant and
the Company with respect to amounts earned in respect of Fiscal Years
prior
13
<PAGE> 14
to 1994. In the absence of any deferral election by a Participant
in respect of the 1994 Fiscal Year, such Participant shall nevertheless
make a new deferral election hereunder with respect to such pre-1994
amounts, which election shall supersede such prior elections.
14
<PAGE> 15
EXHIBIT A
HANDY & HARMAN
MANAGEMENT INCENTIVE PLAN
CORPORATE GROUP PARTICIPANTS
ELECTION NOTICE
As provided in the Handy & Harman Management Incentive
Plan-Corporate Group Participants, as amended and restated (the "Plan"), I
hereby elect to defer payment of all or a portion of any Incentive Award for the
year 19 in the following manner:
Amount of Deferral (fill in one)
$_________________
(amount)
or
_________________%
(percentage)
Payment Option: The compensation deferred is to be paid to me
in (choose one):*
________ one lump sum.
________ quarter-annual installments (choose 3-20
years). Payments begin on the first day of
next calendar quarter following Retirement
Date.
Retirement Date: If the lump sum payment option is chosen,
the lump sum is to be paid on (choose one):*
________ the last day of the month in which I become age 65.
________ ________, 19__ (some other date which must be after
the earlier of (i) three years from the date of this
election, or (ii) your termination of employment with
the Company).
Date: ____________________ _________________________________
(Signature)
_________________________________
(Print Name)
________________________
* If you have previously elected a Payment Option and Retirement Date,
your prior election will apply and you need not complete these
Sections. If you wish to change either or both of your Payment Option
and Retirement Date, you may do so (subject to the terms and conditions
of the Plan and Regulations).
15
<PAGE> 16
EXHIBIT B
HANDY & HARMAN
MANAGEMENT INCENTIVE PLAN
CORPORATE GROUP PARTICIPANTS
INVESTMENT ELECTION
I hereby direct that amounts credited to my Account under
the Handy & Harman Management Incentive Plan-Corporate Group Participants, as
amended and restated, be invested as follows:
% Pooled Account - Company selected investment manager
- ----
% T. Rowe Price International Stock Fund
- ----
% T. Rowe Price Prime Reserve Fund
- ----
% T. Rowe Price GNMA Fund
- ----
% T. Rowe Price Capital Appreciation Fund
- ----
% T. Rowe Price Spectrum Growth Fund
- ----
% T. Rowe Price Stable Value Fund
- ----
100% Total
- ----
Future deferrals will be allocated as shown above or a
different allocation of the Reserve Account may be selected by notifying the
committee in writing. No more than four changes may be made in any calendar
year.
Date: ___________________ __________________________________
(Signature)
__________________________________
(Print Name)
16
<PAGE> 17
EXHIBIT C
HANDY & HARMAN
MANAGEMENT INCENTIVE PLAN
CORPORATE GROUP PARTICIPANTS
DESIGNATION OF BENEFICIARY(IES)
In accordance with the provisions of the Handy & Harman
Management Incentive Plan-Corporate Group Participants, as amended and restated
(the "Plan"), I hereby designate the person (or persons) named below my
beneficiary (or beneficiaries) to receive any amounts in my deferred
compensation account in the event of my death, hereby revoking all prior
designations of beneficiary(ies), if any, made by me under the Plan.
NAME ADDRESS
Dated: ____________
________________________________
(Signature)
________________________________
(Print Name)
17
<PAGE> 1
Exhibit 10 (d)
SUBSIDIARY, DIVISION, GROUP OR UNIT
MANAGEMENT INCENTIVE PLAN
The name of this Plan is "Subsidiary, Division, Group or Unit
Management Incentive Plan." The purpose of this Plan is to promote the interests
of Subsidiary, Division, Group or Unit (the "Company") and to provide incentive
to those Officers and management employees who can contribute to the profits of
the Company. Effective as of January 1, 1994, the Plan is amended and restated
with respect to any and all Incentive Awards earned beginning in the 1994 Fiscal
Year (except as otherwise set forth in the Regulations) as follows:
SECTION I. - DEFINITIONS
The terms herein used will have the following definitions:
a) The term "Plan" means this Management Incentive Plan.
b) The term "Salary" shall mean the highest rate of basic
compensation, expressed as an annual rate, paid to a Participant
during the fiscal year.
c) The term "Employee" means any person who is a regular and full
time and active employee of the Company, or of any wholly-owned
subsidiary thereof, including Officers and Directors, and who is
paid on salary basis.
d) The term "Participant" means any person selected to participate in
the Plan for any fiscal year.
e) The term "Committee" means the Incentive Awards Committee provided
for in Section II.
f) The term "Incentive Award" means an award under the Plan to a
Participant, and either paid currently or paid on a deferred
basis.
g) The term "Incentive Plan Provision" means monies which are made
available for distribution as Incentive Awards as the result of
the operation of the Plan.
h) The term "Fiscal Year" shall mean the fiscal year of the Company,
January 1 to December 31.
i) The term "Operating Profit" shall be the amount reported in the
audited financial statements in accordance with
<PAGE> 2
Generally Accepted Accounting Principals (GAAP) and shall
exclude (i) interest (except interest charged on precious
metals which are used by the business, and not included in the
assets of the business), (ii) provision for payments of
Management Incentive Plan (MIP) bonuses, and (iii) other
income and deduction items approved for exclusion by the
President of Handy & Harman. Examples of items which may be
excluded in this category are as follows:
a. Gain or loss on sale of fixed assets.
b. Timing differences and special reserves.
c. Windfall profits from settlement of an insurance claim.
j) The term "Capital Employed" shall mean total assets
of the business minus non-interest bearing debt. This is also
the same as Shareholders' Equity plus interest bearing debt
which includes the Cash Management Accounts.
k) The term "Return on Capital" shall mean annual
Operating Profit divided by monthly average Capital Employed.
SECTION II. - THE COMMITTEE
The Board of Directors of Handy & Harman, the Parent Company, shall
appoint a Committee, who shall be Directors of Handy & Harman, to be known as
the "Incentive Awards Committee." The Committee shall have full power and
authority to interpret and administer the Plan in accordance with the terms of
the Plan and the Regulations (as hereinafter defined). The Committee shall
select one of its members as Chairman and shall hold its meetings at such times
and places as it may determine. A majority of its members shall constitute a
quorum. All determinations of the Committee shall be made by a majority of its
members. Any decision or determination reduced to writing and signed by a
majority of the members of the Committee shall be as fully effective as if it
had been made by a majority vote at a meeting of the Committee duly called and
held. The members of the Committee may receive such compensation for their
services as the Board of Directors of Handy & Harman may determine.
SECTION III. - REGULATIONS
The Board of Directors of Handy & Harman shall have the power to adopt
rules and regulations (the "Regulations") not inconsistent with the provisions
of the Plan, governing the selection and eligibility of the Participants of the
Plan, and for the adminis-
2
<PAGE> 3
tration of the Plan and to alter, amend or revoke any Regulation so adopted.
SECTION IV. - PARTICIPANTS
Participants in the benefits of the Plan shall be limited to those
Employees selected by the Committee in accordance with the Regulations.
SECTION V. - DETERMINATION OF INCENTIVE PLAN PROVISION
The Incentive Plan Provision shall consist of two parts, hereinafter
referred to as "Part A" and "Part B," respectively. Although most Participants
will be included in both the A & B portion of the Plan at the discretion of the
President of the Company, some individuals will only participate in either the A
or B portion. The maximum amount made available for distribution as Incentive
Awards under the respective Parts shall be determined as follows:
A. DETERMINATION OF PART A
1. Operating Profit and Return on Capital Goals shall be
established for the Company for such fiscal year by the
beginning of such year, or as soon thereafter as is
possible.
2. Upon approval of the Operating Profit and Return on
Capital Goals by the President of Handy & Harman, such
Goals shall be the basis for calculating the Incentive
Plan Provision under Part A, by utilizing the Operating
Profit and Return on Capital of the Company for such
fiscal year and applying the formula set forth in
Appendix A attached hereto. The Incentive Plan Award
under Part A in accordance with the Chart listed as
Appendix A will be calculated in two steps:
1. The percent of Operating Profit Goal achieved
(75% of A).
2. The percent of Return on Capital Goals achieved
(25% of A).
These two, calculated separately and added together,
will represent the Provision under Part A.
3. The amount of the Incentive Plan Provision determined
under this Part A shall not exceed a sum equal to 4% of
the Company's Operating Profit for
3
<PAGE> 4
such fiscal year, notwithstanding the fact that the
calculation made pursuant to sub-section 2, above, may
produce a greater sum.
4. In the event that the President of Handy & Harman
approves an Operating Goal for a fiscal year which
projects a net operating loss, he may submit to the
Committee as soon as possible after the end of the
fiscal year a recommendation for the determination of an
appropriate Incentive Plan Provision under Part A for
such fiscal year. The Committee shall consider such
recommendation and establish such Incentive Plan
Provision, if any, as it may deem appropriate and proper
under the circumstances, without regard to the
limitations stated in sub-section 3 of this Section or
by the formula set forth in Appendix A.
b) DETERMINATION OF PART B
At the sole discretion of the Committee based upon the
recommendation of the President of Handy & Harman, an
Incentive Plan Provision may be determined under this Part B
for Incentive Awards to recognize outstanding overall effort
applied to the enhancement of the long-term growth potential
of the Company. The total amount of the Incentive Plan
Provision which may be made available for Incentive Awards
under this Part B shall not exceed 25% of the aggregate of the
salaries of Participants to whom Incentive Awards are granted
under this Part B.
c) Except as provided in paragraph d, below, the total
amount of the Incentive Plan Provision, whether determined
under Part A, Part B or both of such Parts, shall not exceed a
sum equal to 7% of the Company's Operating Profit for such
fiscal year, notwithstanding the fact that the calculations
made pursuant to the above provisions of this Section may
produce a greater sum.
d) In the extraordinary circumstance where the President of Handy
& Harman determines that an exceptionally high level of
performance in the area of achievement of long-term future
growth potential for the Company has been accomplished during
a fiscal year, the Committee may determine an amount of
Incentive Plan Provision to be made available for Incentive
Awards to the Participants responsible for such achievement
under Part B, notwithstanding the limitation set forth in
paragraph c, above.
4
<PAGE> 5
e) No Participant shall receive an Incentive Award that exceeds
75% of his Salary for the Fiscal Year for which the Incentive
Award was earned.
SECTION VI. - REPORT TO INCENTIVE AWARD COMMITTEE
As soon as possible after the close of the Fiscal Year, the
President of Handy & Harman shall report, in writing, to the Committee (i) the
Operating Profit (or Loss) of the Company for such fiscal year, and (ii) the
determination of the Incentive Plan Provision for such fiscal year under Part A,
made in accordance with the procedure set forth above. The President shall also
include in such report any recommendation as to Incentive Awards to be made
available pursuant to Part B, with such supporting information as may be deemed
appropriate to enable the Committee to make its determination of an Incentive
Plan Provision under said Part B. The Committee may rely upon the factual
information set forth in such report.
SECTION VII. - INCENTIVE AWARDS
a) Upon the receipt of the Report referred to in Section VI
containing the determination of the amount of the Incentive
Plan Provision under Part A for the Fiscal Year, an amount not
exceeding such amount may be allotted by the Committee as
Incentive Awards under Part A for such fiscal year to such
Employees as it may select as Participants.
b) The Committee may determine an amount of Incentive Plan
Provision to be made available as Incentive Awards under Part
B, pursuant to the recommendation of the President of Handy &
Harman. Any such amount shall be allotted by the Committee as
Incentive Awards to such Employees as it may select as
Participants.
c) The Committee's selection of the Participants to whom
Incentive Awards shall be made in accordance with the Plan and
the Regulations and its determination of the amounts and
method of payment of such Incentive Awards shall be final.
SECTION VIII. - FORFEITURE OF INCENTIVE AWARDS
The amount of any Incentive Award forfeited by a Participant
shall be retained by the Company and shall not be re-credited to the Incentive
Plan Provision.
5
<PAGE> 6
SECTION IX. - TERMINATION OF PLAN
The Board of Directors of the Handy & Harman may suspend or
discontinue the Plan at any time.
SECTION X. - EFFECTIVE DATE
This Plan shall become effective in accordance with the
resolution of the Board of Directors of Handy & Harman or the preamble hereto.
* * *
6
<PAGE> 7
APPENDIX A
MANAGEMENT INCENTIVE PLAN
*
FORMULA FOR DETERMINATION OF
INCENTIVE PLAN PROVISION UNDER
PART A
<TABLE>
<CAPTION>
INCENTIVE PLAN PROVISION
(APPLICABLE % OF TOTAL OF
PERCENT OF PARTICIPANTS' SALARIES)
GOAL ACHIEVED OPERATING PROFIT RETURN ON CAPITAL
---------------- -----------------
<S> <C> <C>
Less than - 80% 0 0
Over 80% - 82% 1.50% .50%
" 82% - 84% 2.25% .75%
" 84% - 86% 3.00% 1.00%
" 86% - 88% 5.25% 1.75%
" 88% - 90% 7.50% 2.50%
" 90% - 92% 9.00% 3.00%
" 92% - 94% 11.25% 3.75%
" 94% - 96% 12.75% 4.25%
" 96% - 98% 15.00% 5.00%
" 98% - 100% 17.25% 5.75%
" 100% - 102% 18.00% 6.00%
" 102% - 104% 18.75% 6.25%
" 104% - 106% 19.50% 6.50%
" 106% - 108% 21.00% 7.00%
" 108% - 110% 21.75% 7.25%
" 110% - 112% 23.25% 7.75%
" 112% - 114% 24.00% 8.00%
" 114% - 116% 24.75% 8.25%
" 116% - 118% 26.25% 8.75%
" 118% - 120% 27.00% 9.00%
" 120% - 122% 27.75% 9.25%
" 122% - 124% 29.25% 9.75%
" 124% - 126% 30.00% 10.00%
" 126% - 128% 30.75% 10.25%
" 128%- 130% 31.50% 10.50%
" 130% 32.25% 10.75%
</TABLE>
7
<PAGE> 8
MANAGEMENT INCENTIVE PLAN
RULES AND REGULATIONS
Set forth below are the Rules and Regulations under which the
Management Incentive Plan is to be administered. The terms used herein are as
defined in the Plan.
1. Participation in the Plan shall be limited to officers and
those employees holding positions as heads of major
departments or operational functions, or who perform other
important duties, and who can contribute substantially to the
Company's profitability and growth.
2. An Incentive Award granted to a Participant shall be based
upon the relative contribution made by the Participant during
the Fiscal Year toward total corporate earnings and growth. If
a Participant's work performance has been unsatisfactory, no
Incentive Award will be made to that Participant for the
fiscal year.
3. Not all officers need be selected as Participants. The
selection of an employee as a Participant one year does not
require selection of that employee as a Participant in
subsequent years.
4. At the beginning of each fiscal year the President of the
Company shall submit to the Corporate Group Vice President of
Handy & Harman (or the person holding the equivalent position)
a written list of his recommendations as to the employees who
should be selected as Participants in the Plan for that year.
The Corporate Group Vice President shall review such list with
the President of Handy & Harman, following which an approved
list of recommendations shall be submitted to the Committee in
writing.
5. Upon receipt of such list of approved recommendations from the
President of Handy & Harman, Participants shall be selected
for such year by the Committee. Participants shall be notified
in writing by the President of the Company of their selection
as Participants for that fiscal year.
6. At the end of each fiscal year, the President of the Company
shall submit to the Corporate Group Vice President of Handy &
Harman (or the person holding the equivalent position) a
written list of his recommendations as to the amount of
Incentive Award each Participant should receive for that
fiscal year. The Corporate Group Vice President shall review
such list with the
8
<PAGE> 9
President of Handy & Harman, following which an approved list
of recommendations shall be submitted to the Committee in
writing.
7. As soon as possible following receipt of the report of the
President of Handy & Harman showing the determination of the
Incentive Plan Provision under Part A of Section V of the Plan
for the fiscal year and the list of approved recommendations
as to the amount of Incentive Award for each Participant, the
Committee shall fix and determine the portion or percentage of
the available amount in the Incentive Plan Provision to be
allotted as Incentive Awards under said Part A to the
respective Participants for such fiscal year.
8. In the event that the President of Handy & Harman shall submit
to the Committee a recommendation that an Incentive Plan
Provision should be determined under Part B of Section V of
the Plan for the fiscal year, the Committee may, in its sole
discretion, fix and determine the amount of such Incentive
Plan Provision under said Part B and the portion or percentage
of the available amount in such Incentive Plan Provision to be
allotted as Incentive Awards for such fiscal year to the
respective Participants.
9. Incentive Awards which are less than 10% of the Participant's
annual salary rate shall be paid in cash in full. Incentive
Awards which are 10% or more of the Participant's annual
salary rate may either be paid in cash in full, or on a
deferred basis in accordance with the terms of these
Regulations.
10. Except as otherwise provided herein, for all or any portion of
an Incentive Award to be paid to a Participant, the
Participant (a) must be an Employee of the Company, or of a
wholly-owned subsidiary thereof, or (b) must have retired
under the Company's retirement plan as of the date the
Incentive Award, or portion thereof, is payable. Incentive
Awards, or portions thereof, shall not be made or paid to
individuals who resign from their position with the Company,
or whose employment is terminated by the Company, or by a
wholly-owned subsidiary thereof, prior to the date the
Incentive Award, or portion thereof, is payable, unless
otherwise provided herein or determined by the Committee.
11. In the event of the death of a Participant, all unpaid
portions of Incentive Awards shall be considered payable, and
shall be paid (a) to the Participant's estate, or (b)
9
<PAGE> 10
as provided herein, or (c) to or among such relatives (by
blood or marriage) of the deceased Participant as the
Committee may determine, in its sole discretion.
12. No excess of the Plan Provision, over and above the total of
the Incentive Awards approved by the Committee for such year,
shall be carried forward to a following fiscal year.
13. Unless deferred as provided herein, Incentive Awards for any
Fiscal Year shall be paid as directed by the Committee on or
after February 1st, but not later than March 15th of the
following year. Any Incentive Award, or portion thereof, which
is to be paid on a deferred basis shall be placed in the
Reserve Account (as hereinafter defined) of the Participant
pursuant to the terms hereof.
14. The Committee shall keep minutes of its actions and shall
report all action taken to the Board of Directors of Handy &
Harman.
15. A Participant may elect to defer all or any portion of his or
her Incentive Award for a Fiscal Year (subject to Section 9 of
these Regulations), by giving written notice to the Committee
specifying: (1) the amount to be deferred; (2) an election of
payment in either a single lump sum or annual installments, as
provided in Section 17 (each, a "Payment Option"); and (3) a
Retirement Date (as hereinafter defined), which, in the case
of a lump sum distribution, must be no earlier than the
earlier of (a) three years after the date of such election or
(b) the Participant's termination of employment with the
Company. A form of notice is attached as Exhibit A. Any such
election shall be made by the Participant prior to the end of
the Fiscal Year with respect to which such Incentive Award is
to be earned. Separate deferral elections may be made with
respect to Incentive Awards attributable to different Fiscal
Years; provided, however, that a single Payment Option and a
single Retirement Date shall apply to amounts deferred by a
Participant hereunder. Such election may be revoked by the
Participant, and a new election of a Payment Option and/or a
Retirement Date may be made, provided that such new election
shall be null and void and of no force and effect unless (1)
such new election is made at least one year prior to the
Participant's termination of employment with the Company, (2)
in the event the new election involves a revocation of an
annual installment Payment Option and the election of a lump
sum distribution Payment Option, the newly elected Retirement
Date is at least three years after the date of the new
election, and (3) in the event the new election involves a
change in
10
<PAGE> 11
the Retirement Date applicable to a previous lump sum
distribution election, (a) the new election is made at least
one year prior to the Retirement Date previously in effect and
(b) the new Retirement Date is at least three years after the
date of the new election. If more than one election notice has
been filed, the election in the most recent valid notice shall
control. An amount equal to the portion of any Incentive Award
so deferred shall be credited to the Participant on the
Company's books in a reserve account (the "Reserve Account").
Deferred amounts credited to a Participant's Reserve Account
shall, except as otherwise provided in Section 16, 17, 21, 22,
23 or 26 hereof, commence to be paid on the last day of the
month in which the Participant becomes age 65, or on such
other date as the Participant shall designate in his or her
election hereunder (the "Retirement Date").
16. Notwithstanding anything to the contrary herein, the
Committee, in its sole discretion and in accordance with rules
as it may prescribe, may permit distribution of all or any
portion of deferred amounts in the case of the Participant's
hardship and may determine to cause distributions on the
Retirement Date to be made in a lump sum.
17. Except as otherwise provided herein, deferred amounts credited
to the Participant's Reserve Account shall be paid in one of
the following Payment Options, as elected by the Participant:
(i) Lump-Sum Distribution. The Participant may elect
to receive the value of his or her Reserve Account in
a lump sum distribution.
(ii) Annual Installments. The Participant may elect to
receive the value of his or her Reserve Account in
quarter-annual installments over a period of between
three and twenty years, as elected by the
Participant. The first payment shall be made on the
first day of the next calendar quarter following the
Retirement Date and shall be equal to the amount
credited to the Participant in the Reserve Account as
of the date of such payment, divided by the total
number of payments to be made; and the succeeding
installment payments, in amounts equal to the amount
credited to the Participant in the Reserve Account as
of the date of payment divided by the number of
remaining installment payments to be made, shall
continue to be made thereafter at quarter-annual
intervals until the last such
11
<PAGE> 12
payment, equal to the entire amount then credited to
the Participant in the Reserve Account, is made.
Amounts so paid shall be subtracted as paid from the
amount credited to the Participant in the Reserve
Account.
18. The Committee shall appoint a committee of three, which may
include the participant, to administer the Participants'
Reserve Accounts and any of the Company's funds invested in
connection therewith. The Company or Handy & Harman may create
a grantor trust (within the meaning of section 671 of the
Internal Revenue Code of 1986, as amended (the "Code")), for
this purpose to which it shall from time to time contribute
amounts equal to the amounts deferred hereunder. Such trust
shall conform to the terms of the model trust as described in
the Internal Revenue Service Revenue Procedure 92-64 (I.R.B.
1992-33). Payment of benefits from such trust shall, to that
extent, discharge the Company's obligations under this Plan.
The Participant shall elect that amounts credited to his or
her Reserve Account be invested in one or more investment
funds which shall be made available for such purposes under
such trust or otherwise. A form of such investment election is
attached as Exhibit B. The Participant may amend his or her
investment election no more than four times per calendar year,
subject to any restrictions which the committee may impose
from time to time. Notwithstanding the existence of any such
trust or other funding vehicle, it is expressly understood
that neither the Participant nor his or her beneficiary (the
"Beneficiary") shall have any present or future interest in
the funds so invested, which, together with the dividend and
interest income thereon and any capital gains realized with
respect thereto, shall constitute assets of the Company or
Handy & Harman, as the case may be. It is further understood
that neither the Plan nor these Regulations create any fund or
trust for the benefit of the Participant or his or her
Beneficiary, that the Company's obligation hereunder is
limited to the contractual obligation to make payments to the
Participant or to his or her Beneficiary as provided herein,
and that with respect to such payments the rights of the
Participant or his or her Beneficiary shall be those of an
unsecured creditor of the Company. Amounts equal to the
dividend or interest income from such investments shall be
added to the amount credited to the Participant in the Reserve
Account as such income is earned or reported to the committee
by the investment manager. Amounts equal to unrealized gains
and losses with respect to such investments shall be added to
or subtracted from the amount so credited as such gains and
losses are realized or
12
<PAGE> 13
reported, as the case may be. The corporation income tax on
any income earned by funds so invested shall be paid by the
Company and shall not be a charge against the Participant's
Reserve Account.
19. The amount credited to the Participant in the Reserve Account
on any date for which a computation is made shall be equal to
the sum of (i) the cash credited to such account at the
opening of business on such date as provided in Section 18
hereof, plus (ii) the closing market value of the securities,
if any, in which the Company's (or Handy & Harman's) funds are
invested in connection with such account, as hereinabove
provided, as of the close of business on the last business day
prior to the date of computation. If any portion of such funds
are deposited with a bank in a discretionary investment
management account, the amount credited to the Participant on
any computation date shall include an amount equal to the
value on such date, or on the preceding day, of the
investments in such account, as verified by the bank in a
quarterly summary value statement issued in its capacity as
investment manager. If funds invested in connection with the
Reserve Accounts of two or more Participants are commingled in
an account for any investment purpose, the amount credited to
the Participant in the Reserve Account shall include an amount
equal to a proportionate share of the value of such account.
20. The Participant shall file with the Company a Beneficiary
statement designating an individual or the Participant's
estate as Beneficiary. If no Beneficiary statement is filed,
the Beneficiary shall be the Participant's estate. If more
than one Beneficiary statement has been filed, the Beneficiary
designated in the Beneficiary statement bearing the most
recent date shall be the Beneficiary. A form of designation of
Beneficiary is attached as Exhibit C.
21. If the Participant's employment with the Company shall
terminate before the Retirement Date due to:
a. permanent and total disability which prevents the
Participant from engaging in any occupation for wage or
profit; or
b. physical or mental disability which prevents the
Participant from performing his duties in a manner
satisfactory to the Company,
the amount credited to the Participant in the Reserve Account
as of the date of the disability shall be
13
<PAGE> 14
distributed, commencing as of such date, based on the Payment
Option then in effect with respect to the Participant. For the
purpose of this paragraph, a determination by the Board of
Directors of Handy & Harman that such disability exists shall
be conclusive.
22. In the event the Participant shall die before the Retirement
Date and while employed by the Company, the amount credited to
the Participant in the Reserve Account as of the date of the
Participant's death shall be distributed to the Beneficiary,
if an individual, based on the Payment Option then in effect
with respect to the Participant. If the Beneficiary is the
Participant's estate, the amount credited to the Participant
in the Reserve Account as of the date of the Participant's
death shall be paid to the Participant's estate in one lump
sum.
If distribution is being made to a Participant in installments
(as provided in Section 17 hereof) and such Participant dies
before all installment payments have been made, the amount
credited to the Participant in the Reserve Account as of the
date of the Participant's death shall be distributed to the
Beneficiary, if an individual, by continuation of the
remaining installment payments. If the Beneficiary is the
Participant's estate, the amount credited to the Participant
in the Reserve Account as of the date of the Participant's
death shall be paid to the Participant's estate in one lump
sum.
If distribution is being made to a Beneficiary in installments
and such Beneficiary dies before all installment payments have
been made, the amount credited to the Participant in the
Reserve Account as of the date of the Beneficiary's death
shall be paid to the estate of the Beneficiary in one lump
sum.
23. In the event that the Participant's employment with the
Company shall terminate before the Retirement Date for reasons
other than death or disability, the Reserve Account shall be
credited as hereinabove provided with an amount equal to all
or a portion of the Incentive Award, if any, made for the year
of such termination. In the event of such termination, the
Reserve Account shall continue to be administered, and
payments with respect thereto shall be made, as otherwise
provided herein. In the event that, following such
termination, the Participant shall die, whether before or
after the Retirement Date, distribution shall be made,
commencing as soon as practicable following the Participant's
death, to the Participant's Beneficiary, if an individual, in
14
<PAGE> 15
accordance with the Payment Option then in effect with respect
to the Participant or, if the Beneficiary is the Participant's
estate, in a lump sum. In the event that the Beneficiary shall
die prior to the complete distribution of the Reserve Account,
the amount credited to the Reserve Account as of the date of
the Beneficiary's death shall be paid to the estate of the
Beneficiary in one lump sum.
24. The Company's obligation hereunder to make payments to the
Participant with respect to amounts credited to the
Participant in the Reserve Account shall terminate forthwith
if, prior to or following his termination from the Company,
the Participant shall without the prior written consent of the
Company, directly or indirectly engage in any business which
is substantially similar to the business of the Company,
either as a proprietor, stockholder, partner, officer,
employee, consultant or otherwise, provided that the ownership
of less than two percent (2%) of the stock in any corporation
engaged in a business which is similar to that of the Company
shall not be deemed the occurrence of such an event.
25. Neither the Participant, his or her spouse, nor any
Beneficiary shall have the power to transfer, assign,
anticipate, mortgage or otherwise encumber in advance any of
the benefits payable hereunder, nor shall said benefits be
subject to seizure for the payment of any debts or judgments
of any of them, or be transferable by operation of law in the
event of bankruptcy, insolvency or otherwise of the
Participant, his or her spouse or Beneficiary.
26. Notwithstanding anything to the contrary provided herein, a
Participant may, with the consent of the Company, continue in
active employment after the Retirement Date. In such event,
the Committee may defer the start of the payments provided for
in Section 15 until the first day of the next calendar quarter
following the Participant's termination of employment. If this
is done, appropriate adjustments may be made in the amounts
payable or in the number of installment payments (if
applicable), to take into account the effect of the delay.
27. Deferral elections made pursuant to the terms and conditions
of these Regulations shall supersede any prior elections in
effect under applicable Deferred Compensation Agreements
between a Participant and the Company with respect to amounts
earned in respect of Fiscal Years prior to 1994. In the
absence of any deferral election by a Participant in respect
of the 1994 Fiscal
15
<PAGE> 16
Year, such Participant shall nevertheless make a new deferral
election hereunder with respect to such pre-1994 amounts,
which election shall supersede such prior elections.
16
<PAGE> 17
EXHIBIT A
SUBSIDIARY, DIVISION, GROUP OR UNIT
MANAGEMENT INCENTIVE PLAN
ELECTION NOTICE
As provided in the Subsidiary, Division, Group or Unit Management
Incentive Plan, as amended and restated (the "Plan"), I hereby
elect to defer payment of all or a portion of any Incentive Award
for the year 19 in the following manner:
Amount of Deferral (fill in one)
$________________
(amount)
or
_________________%
(percentage)
Payment Option: The compensation deferred is to be
paid to me in (choose one):(1)
________ one lump sum.
________ quarter-annual installments (choose 3-20
years). Payments begin on first day of next
calendar quarter following Retirement Date.
Retirement Date: If the lump sum payment option is
chosen, the lump sum is to be paid on (choose one):*
________ the last day of the month in which I become age 65.
________________, 19__ (some other date which must be
after the earlier of (i) three years from the
date of this election, or (ii) your termina
tion of employment with the Company).
Date: ____________________________________
(Signature)
____________________________________
(Print Name)
_________________________________
(1) If you have previously elected a Payment Option and
Retirement Date, your prior election will apply and you
need not complete these Sections. If you wish to change
either or both of your Payment Option and Retirement
Date, you may do so (subject to the terms and conditions
of the Plan and Regulations).
17
<PAGE> 18
EXHIBIT B
SUBSIDIARY, DIVISION, GROUP OR UNIT
MANAGEMENT INCENTIVE PLAN
INVESTMENT ELECTION
I hereby direct that amounts credited to my Account under the
Subsidiary, Division, Group or Unit Management Incentive Plan, as amended and
restated, be invested as follows:
% Pooled Account - Company selected investment manager
- ----
% T. Rowe Price International Stock Fund
- ----
% T. Rowe Price Prime Reserve Fund
- ----
% T. Rowe Price GNMA Fund
- ----
% T. Rowe Price Capital Appreciation Fund
- ----
% T. Rowe Price Spectrum Growth Fund
- ----
% T. Rowe Price Stable Value Fund
- ----
100% Total
- ----
Future deferrals will be allocated as shown above or a
different allocation of the Reserve Account may be selected by notifying the
committee in writing. No more than four changes may be made in any calendar
year.
Date: _____________________
(Signature)
_____________________
(Print Name)
18
<PAGE> 19
EXHIBIT C
SUBSIDIARY, DIVISION, GROUP OR UNIT
MANAGEMENT INCENTIVE PLAN
DESIGNATION OF BENEFICIARY(IES)
In accordance with the provisions of the Subsidiary, Division,
Group or Unit Management Incentive Plan, as amended and restated (the "Plan"), I
hereby designate the person (or persons) named below my beneficiary (or
beneficiaries) to receive any amounts in my deferred compensation account in the
event of my death, hereby revoking all prior designations of beneficiary(ies),
if any, made by me under the Plan.
Name Address
Dated:
--------------------------------
(Signature)
--------------------------------
(Print Name)
19
<PAGE> 1
Exhibit 10(e)
HANDY & HARMAN
DEFERRED FEE PLAN FOR DIRECTORS
(As amended and restated as of January 1, 1995)
Section 1. Effective Date. The effective date of the Handy &
Harman Deferred Fee Plan For Directors (the "Plan") is December 1, 1980.
Effective as of January 1, 1995, the Plan is amended and restated with respect
to any and all fees earned beginning in the 1995 Fiscal Year as follows:
Section 2. Eligibility. Any member of the Board of Directors
(the "Board") of Handy & Harman (the "Company") who is not an officer or other
employee of the Company is eligible to participate in the Plan.
Section 3. Deferred Compensation Account. A deferred
compensation account (the "Account") shall be established for each director who
elects to participate in the Plan.
Section 4. Amount of Deferral. A participant may elect to
defer receipt of all or any part of the compensation payable to the participant
for serving on the Board or committees of the Board. An amount equal to the
compensation deferred shall be credited to the participant's Account on the date
such compensation would otherwise be payable.
Section 5. Time and Period of Election to Participate. An
election to participate in the Plan shall be effective when made as to
compensation not then earned and shall continue until the participant terminates
his participation in the Plan as provided in Section 7, except that compensation
earned before January 1, 1981 may not be deferred under the Plan.
Section 6. Manner of Election to Participate. A participant
shall elect to participate in the Plan by giving written notice to the Company
specifying: (1) the amount to be deferred; (2) an election of payment in either
a single lump sum or annual installments, as provided in Section 10 (each, a
"Payment Option"); and (3) a Retirement Date (as hereinafter defined), which, in
the case of a lump sum distribution, must be no earlier
<PAGE> 2
than the earlier of (a) three years after the date of such election or (b) the
participant's termination of service as a director. A form of notice is attached
as Exhibit A. Such election may be revoked by the participant, and a new
election of a Payment Option and/or a Retirement Date may be made, provided that
such new election shall be null and void and of no force and effect unless (1)
such new election is made at least one year prior to the participant's
termination from service as a director, (2) in the event the new election
involves a revocation of an annual installment Payment Option and the election
of a lump sum distribution Payment Option, the newly elected Retirement Date is
at least three years after the date of the new election, and (3) in the event
the new election involves a change in the Retirement Date applicable to a
previous lump sum distribution election, (a) the new election is made at least
one year prior to the Retirement Date previously in effect and (b) the new
Retirement Date is at least three years after the date of the new election.
Deferred amounts credited to a participant's Account shall commence to be paid
on such date as the participant shall designate in his or her deferral election
hereunder or, in the case of installment payments under Sections 10 hereof, the
commencement date specified in such Section (the applicable commencement date
being referred to herein as the "Retirement Date"). A single Payment Option and
a single Retirement Date shall apply to all amounts deferred by a participant
hereunder. If more than one election notice has been filed, the election in the
most recent valid notice shall control. Notwithstanding such elections, the
Board, in its sole discretion, may determine to make distributions in cases of
hardship and may determine to cause distributions on the Retirement Date to be
made in a lump sum.
Section 7. Termination of Election. A participant may
terminate his participation in the Plan by written notice to the Company. If
participation in the Plan is terminated ("Termination"), an amount equal to the
compensation earned by the terminating participant before Termination which has
not been credited to the terminating participant's Account shall be credited to
such Account. A Termination shall not affect payment of amounts credited to any
Account; such amounts may be paid only as provided in Section 10.
2
<PAGE> 3
Section 8. Value of Accounts. The value of each participant's
Account shall include amounts credited under Section 4 (deferred compensation)
adjusted for realized and unrealized income or loss resulting from investments
made under Section 9, and less the amount of any payments made under Section 10.
The corporation income tax on any income earned by funds so invested shall be
paid by the Company and shall not be a charge against the participant's Account.
Section 9. Management of Accounts. The Board shall appoint a
committee of three, which may include the participant, to administer the
participant's Account and any of the Company's funds invested in connection
therewith. The Company may create a grantor trust (within the meaning of section
671 of the Internal Revenue Code of 1986, as amended (the "Code")) for this
purpose to which it shall from time to time contribute amounts equal to the
amounts deferred hereunder. Such trust shall conform to the terms of the model
trust as described in the Internal Revenue Service Revenue Procedure 92-64
(I.R.B. 1992-33). Payment of benefits from such trust shall, to that extent,
discharge the Company's obligations under this Plan. The participant shall elect
that amounts credited to his or her Account be invested in one or more
investment funds which shall be made available for such purposes under such
trust or otherwise. A form of such investment election is attached as Exhibit B.
The participant may amend his or her investment election no more than four times
per calendar year, subject to any restrictions which the committee may impose
from time to time. Notwithstanding the existence of any such trust or other
funding vehicle, it is expressly understood that neither the participant nor his
or her beneficiary shall have any present or future interest in the funds so
invested, which, together with the dividend and interest income thereon and any
capital gains realized with respect thereto, shall constitute assets of the
Company. It is further understood that this Plan creates no fund or trust for
the benefit of the participant or his or her beneficiary, that the Company's
obligation hereunder is limited to the contractual obligation to make payments
to the participant or to his or her beneficiary as provided herein, and that
with respect to such payments the rights of the participant or his beneficiary
shall be those of an unsecured creditor of the Company.
3
<PAGE> 4
Section 10. Payment of Deferred Compensation. Except as
otherwise provided herein, payments shall be made from a participant's Account,
in accordance with one of the following Payment Options, as elected by the
participant:
(i) Lump Sum Distribution. The participant may elect to
receive the value of his or her Account in a lump sum
distribution.
(ii) Annual Installments. If annual installments are
elected, amounts credited to the participant's Account
shall be paid in annual installments over a period of
between three and twenty years, as elected by the
participant. The first payment shall be made on
January 15 of the first calendar year following the
participant's termination of service as a member of
the Board and shall be equal to the value of the
participant's Account as of the date of such first
payment divided by the total number of payments to be
made. Subsequent installment payments shall be made on
each January 15 thereafter; each such subsequent
installment payment shall be equal to the value of the
participant's Account as of the date of such
subsequent installment payment divided by the number
of installment payments (including such subsequent
installment payment) remaining to be made.
Except as provided in Section 12, all payments made from a
participant's Account shall be paid to the participant. Notwithstanding the
foregoing provisions of this Section 10, if amounts become payable to an estate
of a participant or of a beneficiary pursuant to Section 11 or 12, an amount
equal to the value of the participant's Account on the date of the death
occasioning payments to such estate shall be paid in one lump sum within 60 days
after the date of such death.
Section 11. Determination of Beneficiary. A participant shall
designate a beneficiary by giving written notice to the Company. If more than
one beneficiary designation notice has been filed, the beneficiary
4
<PAGE> 5
(or beneficiaries) designated in the most recent notice shall control. A form of
designation of beneficiary is attached as Exhibit C.
If no beneficiary is designated, the beneficiary shall be the
participant's estate. If a designated beneficiary fails to survive the
participant, such beneficiary shall be replaced by the participant's estate as
beneficiary. If there is no sufficient evidence that the participant and such
designated beneficiary have died otherwise than simultaneously, for purposes of
the Plan the participant shall be deemed to have survived the designated
beneficiary.
If a designated beneficiary who has survived the participant
shall die, such beneficiary's estate shall replace the beneficiary as
beneficiary.
Section 12. Death of Participant. If a participant dies before
all payments under Section 10 to which he is or might become entitled under the
Plan have been made, all payments made under Section 10 after his death shall be
paid to the beneficiary (or beneficiaries) determined under Section 11.
Section 13. Participant's Rights Unsecured. The obligation of
the Company hereunder is supported only by the general assets of the Company; no
provisions of the Plan shall be construed to give any participant or beneficiary
at any time a security interest in any Account or any other asset in trust with
the Company for the benefit of any participant or beneficiary.
Section 14. Statement of Account. Statements will be sent to
participants during February, May, August and November of each year as to the
value of their Accounts as of the last day of the preceding calendar quarter.
Section 15. Assignability. No right to receive payments
hereunder shall be transferable or assignable by a participant or a beneficiary,
except by will or by the laws of descent and distribution.
Section 16. Participation in Other Plans. Nothing in this Plan
will affect any right which a participant may otherwise have to participate in,
or under,
5
<PAGE> 6
any other retirement plan or agreement which the Company may now or hereafter
have.
Section 17. Amendment. This Plan may at any time or from time
to time be amended, modified or terminated by the Board. No amendment,
modification or termination shall, without the consent of a participant,
adversely affect such participant's accruals in his Account.
6
<PAGE> 7
EXHIBIT A
HANDY & HARMAN
DEFERRED FEE PLAN FOR DIRECTORS
ELECTION NOTICE
As provided in the Handy & Harman Deferred Fee Plan For
Directors, as amended and restated as of January 1, 1995 (the "Plan"), I hereby
elect to participate in the Plan and to defer payment of compensation hereafter
earned by me for services on the Board of Directors of Handy & Harman and
committees thereto in the following manner:
Amount of Deferral (fill in one)
$________________ per year
(amount)
or
________________% per year
(percentage)
Payment Option: The compensation deferred is to be
paid to me in (choose one):*
________ one lump sum.
________ annual installments [choose 3-20 years].
Retirement Date: If the lump sum payment option is
chosen, the lump sum is to be paid on (choose one):*
________ the January 15 of the calendar year following the
termination of my services as a member of the Board
of Directors.
________ ________, 19__ (some other date, more than three
years after the date of this election).
Date:_____________________ _________________________________
(Signature)
_________________________________
(Print Name)
________________________________
* If you have previously elected a Payment Option and Retirement Date,
your prior election will apply and you need not complete these
Sections. If you wish to change either or both of your Payment Option
and Retirement Date, you may do so (subject to the terms and conditions
of the Plan).
7
<PAGE> 8
EXHIBIT B
HANDY & HARMAN
DEFERRED FEE PLAN FOR DIRECTORS
INVESTMENT ELECTION
I hereby direct that amounts credited to my Account under the
Handy & Harman Deferred Fee Plan for Directors, as amended and restated as of
January 1, 1995, be invested as follows:
% Pooled Account - Company selected investment manager
- ----
% T. Rowe Price International Stock Fund
- ----
% T. Rowe Price Prime Reserve Fund
- ----
% T. Rowe Price GNMA Fund
- ----
% T. Rowe Price Capital Appreciation Fund
- ----
% T. Rowe Price Spectrum Growth Fund
- ----
% T. Rowe Price Stable Value Fund
- ----
100% Total
- ----
Future deferrals will be allocated as shown above or a
different allocation of the Account may be selected by notifying the committee
in writing. No more than four changes may be made in any calendar year.
Date: _____________________ ________________________________
(Signature)
________________________________
(Print Name)
8
<PAGE> 9
EXHIBIT C
HANDY & HARMAN
DEFERRED FEE PLAN FOR DIRECTORS
DESIGNATION OF BENEFICIARY(IES)
In accordance with the provisions of the Handy & Harman
Deferred Fee Plan For Directors, as amended and restated as of January 1, 1995
(the "Plan"), I hereby designate the person (or persons) named below my
beneficiary (or beneficiaries) to receive any amounts in my deferred
compensation account in the event of my death, hereby revoking all prior
designations of beneficiary(ies), if any, made by me under the Plan.
NAME ADDRESS
Dated: ____________ _____________________________
(Signature)
_____________________________
(Print Name)
9
<PAGE> 1
EXHIBIT 10(m)
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
This Supplemental Executive Retirement Plan (the "Supplemental
Plan") was adopted and established, effective September 28, 1989, by Handy &
Harman, a New York corporation (the "Company") for Eligible Executives who
participate in the Handy & Harman Pension Plan (the "Pension Plan") which
Pension Plan is intended to satisfy the requirements of the Internal Revenue
Code of 1986, as amended (the "Code"). The Supplemental Plan is hereby amended
and restated, effective as of January 1, 1995.
1. PURPOSE. The Supplemental Plan shall provide for the payment of
supplementary retirement benefits to compensate an Eligible Executive for the
amount of the reduction, if any, in his benefits under the Pension Plan on
account of (i) the application of Section 401(a)(17) or Section 415 of the Code,
or (ii) the exclusion from "pay," as defined in Section 3.1 of the Pension Plan
of amounts received under the Company's Management Incentive Plan ("MIP").
2. PARTICIPATION. As used in the Supplemental Plan, the term
"Eligible Executive" shall mean any corporate officer of the Company who
participates in the Pension Plan. Subject to the provisions of Section 10
hereof, no corporate officer shall receive any benefits hereunder prior to the
time such officer
1
<PAGE> 2
shall have become eligible for Early Retirement, Normal Retire-ment or eligible
for Disability Retirement under the Pension Plan after the effective date herein
and have been an Officer of the Company for Five (5) years.
3. RETIREMENT BENEFITS. The benefit payable under the Supplemental
Plan shall be an amount equal to the excess, if any, of (a) over (b), where:
(a) equals the initial benefit which would be payable pursuant to
the Pension Plan determined without regard to the limits of
Section 401(a)(17) or Section 415 of the Code and including within
the definition of "pay" under the Pension Plan fifty percent (50%)
of the amounts awarded to the Eligible Executive pursuant to the
MIP; and
(b) equals the initial benefit payable under the Pension Plan.
Benefits under the Supplemental Plan shall commence at the same
time, shall be payable in the same manner (except such benefits shall not be
adjusted for cost of living increases under the Pension Plan), and shall
continue on a coterminous basis with the benefits paid to the Eligible Executive
under the Pension Plan. Benefits hereunder, if any, shall be paid to the
Eligible Executive or in the event of the Eligible Executive's death, to the
surviving spouse or such other beneficiary of the Eligible
2
<PAGE> 3
Executive to whom payments under the Pension Plan are made following the death
of the Eligible Executive.
4. SOURCE OF BENEFITS. The benefits payable under the Supplemental
Plan shall be paid exclusively from the Company's general assets. In this
regard, the Company may create a grantor trust (within the meaning of Section
671 of the Code) in connection with the Supplemental Plan to which it shall from
time to time contribute amounts to accumulate an appropriate reserve against its
obligations hereunder. Such trust and any assets held by such trust to assist
the Company in meeting its obligations under the Supplemental Plan shall conform
to the terms of the model trust as described in the Internal Revenue Service
Procedure 92-64 (I.R.B. 1992-33). Notwithstanding the creation of such trust,
the benefits hereunder shall be a general obligation of the Company. Payment of
benefits from such trust shall, to that extent, discharge the Company's
obligations under this Supplemental Plan. Eligible Executives shall have only a
contractual right as general creditors of the Company to the amounts, if any,
payable hereunder and such right shall not be secured by any assets of the
Company or the trust.
5. CONSTRUCTION. The Company intends the Supple- mental Plan to be
exempt from Title I of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), as a benefit plan which is unfunded and is maintained by an
employer primarily
3
<PAGE> 4
for the purpose of providing deferred compensation for a select group of
management or highly compensated employees, and any ambiguities in construction
shall be resolved in favor of interpretations which will effectuate such
intention. The Supplemental Plan shall be governed by and construed in
accordance with the laws of the State of New York to the extent such laws are
not preempted by ERISA.
6. ADMINISTRATION OF THE SUPPLEMENTAL PLAN. The Supplemental Plan
shall be administered by the Compensation Committee of the Board of Directors of
the Company (the "Committee"). The Committee shall have authority to make,
amend, interpret and enforce all appropriate rules and regulations for the
administration of the Supplemental Plan and decide or resolve any and all
questions including interpretations of the Supplemental Plan as may arise in
connection with the Supplemental Plan. The Committee shall also designate from
time to time those eligible for inclusion in the Supplemental Plan. The
Committee may employ agents and delegate to them such administrative duties as
it sees fit and may consult with counsel who may be counsel to the Company. The
decision or action of the Committee in respect of any question arising out of or
in connection with the administration, interpretation and application of the
Supplemental Plan and the rules and regulations thereunder
4
<PAGE> 5
shall be final and conclusive and binding upon all persons having any interest
therein.
7. TERMINATION, SUSPENSION OR AMENDMENT. The Board of Directors of
the Company in its sole discretion may terminate, suspend or amend the
Supplemental Plan at any time or from time to time, in whole or in part;
provided, however, that no such termination, suspension or amendment shall
adversely affect the benefits of any corporate officer of the Company who is
vested or eligible for Disability Retirement under the Pension Plan and has been
an Officer of the Company for Five (5) years.
8. EFFECTIVE DATE. The effective date of the Supplemental Plan
shall be September 28, 1989, as amended December 13, 1993, and as amended and
restated as of January 1, 1995.
9. GENERAL CONDITIONS. No interest of any person and no benefit
payable hereunder shall be assigned as security for a loan and any such
purported assignment shall be null, void and of no effect. No such interest or
benefit shall be subject in any manner, either voluntarily or involuntarily, to
anticipation, sale, transfer, assignment or encumbrance by or through any person
and any such purported action shall be null, void and of no effect.
No Eligible Executive and no other person shall have any legal or
equitable right or interest in the Supplemental Plan which are not expressly
granted hereunder. Participation
5
<PAGE> 6
hereunder does not give any person any right to be retained in the service of
the Company or to continue in its employ, the right and power of the Company to
dismiss or discharge any executive is expressly reserved.
10. ACCELERATION OF PAYMENTS. In the event a "change in control"
of the Company as hereinafter defined shall occur, the Actuarial Equivalent (as
defined in the Pension Plan) of the amount of the benefits hereunder shall be
determined for each Eligible Executive and for each other executive who is a
corporate officer of the Company. The aggregate amount of all such Actuarial
Equivalents shall be paid into a grantor trust (which may include the grantor
trust referred to in Section 4 hereof) established by the Company for payment to
such Eligible Executives and other executives in accordance with the terms of
such trust fund. For purposes of the Supplemental Plan, "change in control"
shall occur if
(a) any "person," as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") (other than the Company, any trustee or other
fiduciary holding securities under an employee benefit plan of the
Company or any corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as
their ownership of stock in the Company), is or becomes the
6
<PAGE> 7
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing 25%
or more of the combined voting power of the Company's then outstanding
securities;
(b) during any period of two consecutive years (not including any
period prior to the adoption of the Supplemental Plan), individuals
who at the beginning of such period constitute the Board of Directors
of the Company, and any new director (other than a director designated
by a person who has entered into an agreement with the Company to
effect a transaction described in clause (a), (c) or (d) of this
Section) whose election by the Company's stockholders was approved by
a vote of at least two-thirds (2/3) of the directors then still in
office who either were directors at the beginning of the period or
whose election or nomination for election was previously so approved,
cease for any reason to constitute at least a majority thereof;
(c) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation; other than
(i) a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) more than
70% of the combined voting power of the voting securities of the Com-
7
<PAGE> 8
pany or such surviving entity outstanding immediately after such merger or
consolidation or (ii) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no "person"
(as hereinabove defined) acquires more than 50% of the combined voting power of
the Company's then outstanding securities; or
(d) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets.
8
<PAGE> 1
<TABLE>
<CAPTION>
FINANCIAL REVIEW
<S> <C>
The Company's Business.................................... 19
Stock Trading and Dividends............................... 20
Selected Quarterly Data................................... 20
Five Year Selected Financial Data......................... 21
Management's Discussion and Analysis...................... 22
FINANCIAL STATEMENTS
Consolidated Statement of Income.......................... 24
Consolidated Balance Sheet................................ 25
Consolidated Statement of Shareholders' Equity............ 26
Consolidated Statement of Cash Flows...................... 27
Summary of Significant Accounting Policies................ 28
Notes to Consolidated Financial Statements................ 29
Independent Auditors' Report.............................. 35
Responsibility for Financial Statements................... 36
</TABLE>
<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 1994, 1993 and 1992 found in
Note 7 of the Notes to Consolidated Financial Statements on page 32. A further
analysis of the industry segments can be found under "Management's Discussion
and Analysis" beginning on page 22.
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, the subsidiaries sold
in 1993 manufactured a variety of specialty metal products using copper, steel,
nickel, plastics and other raw materials. These products were sold, generally in
a finished product state, to substantially the same industries as are the
products of the other business segments. The remaining unit in this segment
manufactures products using steel and plastic which are sold principally to
water and natural gas distribution companies.
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" beginning on page 22.
<TABLE>
<CAPTION>
(Thousands of dollars) 1994 1993 1992
- ---------------------------------------------------------------
<S> <C> <C> <C>
Sales and service revenues:
Precious metals $434,466 $340,582 $267,333
Automotive (OEM) 181,866 156,607 140,739
Wire/Tubing 150,038 136,079 128,433
Other non-precious metal
businesses 15,078 24,985 35,705
$781,448 $658,253 $572,210
- ---------------------------------------------------------------
Profit contribution before
unallocated expenses:
Precious metals $ 14,708 $ 10,301 $ 14,830
Automotive (OEM) 14,045 12,400 10,369
Wire/Tubing 15,365 12,617 11,908
Other non-precious metal
businesses 2,048 (2,512) 94
- ---------------------------------------------------------------
46,166 32,806 37,201
General corporate expenses (1,850) (2,075) (1,805)
Interest expense (net) (15,995) (15,484) (16,329)
Income before income taxes
and cumulative effect
of accounting change $ 28,321 $ 15,247 $ 19,067
- ---------------------------------------------------------------
</TABLE>
<PAGE> 3
The following table segregates identifiable assets to the four
reported segments, corporate and discontinued operations.
<TABLE>
<CAPTION>
Assets
- --------------------------------------------------------------------
(Thousands of dollars) 1994 1993 1992
- --------------------------------------------------------------------
<S> <C> <C> <C>
Precious metals $198,271 $215,024 $169,502
Automotive (OEM) 71,028 62,834 64,604
Wire/Tubing 92,696 80,442 73,518
Other non-precious metal businesses 16,149 17,160 28,695
Corporate 3,859 3,987 3,468
Discontinued operations 23,015 26,713 31,564
$405,018 $406,160 $371,351
- --------------------------------------------------------------------
</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 1994, 1993 and 1992.
<TABLE>
<CAPTION>
Percent of shipments
- -------------------------------------------------------------
1994 1993 1992
<S> <C> <C> <C>
Rolled Products 43% 50% 40%
Wire Products 43% 33% 27%
Bullion 2% 1% 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, 1995, there were 2,259 holders of record of Common Stock of
Handy & Harman. Dividend payments are subject to the restrictions described in
Note 3 to the Consolidated Financial Statements.
<TABLE>
<CAPTION>
Common Stock Dividend Paid on
Sales Prices Common Stock
High Low Per Share
- --------------------------------------------------------------------------------
1994
<S> <C> <C> <C>
January 1-March 31 $16 1/4 $14 3/8 5(cent)
April 1-June 30 14 3/4 13 5(cent)
July 1-September 30 17 5/8 13 5/8 5(cent)
October 1-December 31 17 1/8 13 1/2 5(cent)
1993
January 1-March 31 $15 7/8 $12 7/8 5(cent)
April 1-June 30 17 5/8 14 5/8 5(cent)
July 1-September 30 16 3/4 11 3/4 5(cent)
October 1-December 31 15 12 1/8 5(cent)
- --------------------------------------------------------------------------------
</TABLE>
SELECTED QUARTERLY DATA
Summarized financial data for interim periods of 1994 and 1993 (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 SFAS No. 109, a benefit of $576,000 or $.04 per share.
<TABLE>
<CAPTION>
1994 Quarter Ended
Mar.31 June 30 Sept. 30 Dec. 31
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sales $188,731 $199,732 $194,743 $198,242
Gross profit 25,901 28,525 25,560 27,423
Net income 4,453 5,071 3,477 3,510
Earnings per share $ .32 $ .36 $ .25 $ .25
- --------------------------------------------------------------------------------
<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
Earnings per share $ .26 $ .24 $ .02 $ .16
- --------------------------------------------------------------------------------
</TABLE>
<PAGE> 4
HANDY & HARMAN AND SUBSIDIARIES
FIVE YEAR SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
Dollars in thousands
except per share figures 1994 1993 1992 1991 1990
=================================================================================================================================
<S> <C> <C> <C> <C> <C>
OPERATIONS
Sales and service revenues $781,448 $658,253 $572,210 $531,526 $572,002
After tax earnings (loss)-excluding
net LIFO gains(b) 16,511 9,476(a) 11,697 (8,653) 12,060
Net LIFO gains(b) -- -- -- -- 5,430
Income (loss) from continuing
operations 16,511 9,476(a) 11,697 (8,653) 17,490
Net loss from discontinued operations -- -- -- (25,856) (7,764)
Net income (loss) 16,511 9,476(a) 11,697 (34,509) 9,726
Dividends 2,811 2,803 2,801 6,013 9,225
- ---------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA
After tax earnings (loss)-
excluding net LIFO gains(b) 1.18 .68(a) .84 (.62) .86
Net LIFO gains(b) -- -- -- -- .39
Net income (loss) from continuing operations 1.18 .68(a) .84 (.62) 1.25
Net loss from discontinued operations -- -- -- (1.85) (.55)
Net income (loss) 1.18 .68(a) .84 (2.47) .70
Dividends .20 .20 .20 .43 .66
Average shares outstanding (thousands) 14,050 14,021 14,001 13,985 13,973
- ---------------------------------------------------------------------------------------------------------------------------------
FINANCIAL POSITION (AT DECEMBER 31)
Current assets 187,336 226,441 200,613 191,072 274,290
Current liabilities 153,593 114,534 92,444 96,004 222,295
Working capital 33,743 111,907 108,169 95,068 51,995
Property, plant and equipment-net 117,200 106,220 109,605 112,363 137,250
Total assets 405,018 406,160 371,351 358,708 472,451
Long-term debt 131,750 188,750 186,287 181,329 113,988
Deferred income taxes 13,551 11,276 7,681 4,059 18,420
Shareholders' equity 106,124 91,600 84,939 77,316 117,748
LIFO reserve(c) 139,068 141,273 105,416 111,209 125,271
- ---------------------------------------------------------------------------------------------------------------------------------
STATISTICAL DATA
Property, plant and equipment
acquired through capital expenditures 18,567 15,147 14,440 12,728 16,042
Depreciation and amortization 15,683 15,816 14,854 16,372 18,493
Interest expense (net)-continuing
operations 15,995 15,484 16,329 22,199 22,313
Number of shareholders 2,259 2,238 3,046 3,218 3,214
Number of employees at December 31 4,826 4,246 4,478 4,333 4,594
- ---------------------------------------------------------------------------------------------------------------------------------
FINANCIAL RATIOS
Return on average shareholders'
equity-excluding net LIFO gain(b) 16.7% 10.7% 14.4% (35.4%) 3.7%
Current ratio 1.2 2.0 2.2 2.0 1.2
=================================================================================================================================
</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.
<PAGE> 5
HANDY & HARMAN AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
LIQUIDITY, CAPITAL RESOURCES AND OTHER FINANCIAL DATA
The Company's precious metal inventories, consisting principally of gold and
silver, is readily convertible to cash. Furthermore, these precious metal
inventories which are stated in the Balance Sheet at LIFO cost have a market
value of $139,068,000 in excess of such cost as of December 31, 1994.
It is the Company's policy to obtain funds necessary to finance
inventories and receivables from various banks under commercial credit
facilities. 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 resulting from sale of precious metal products. In addition,
receivables resulting from the sale of precious metal bullion 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 and inventories and maintains bank credit facilities
well in excess of anticipated requirements.
Consistent with other precious metal refining and fabricating companies,
some of the Company's gold and silver requirements are furnished by customers
and suppliers on a consignment basis. Title to the consigned gold and silver
remains with the Consignor. The value of consigned gold and silver held by the
Company is not included in the Company's Balance Sheet. The Company's gold and
silver requirements are provided from a combination of owned inventories,
precious metals which have been purchased and sold for future delivery and gold
and silver received from suppliers and customers on a consignment basis.
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 2002. The proceeds were used to reduce portions of other long-term
debt.
During the third quarter of 1994, the Company finalized $215,000,000 of
Revolving Credit Facilities with twenty banks which replaced the existing Credit
Facilities dated March 16, 1992. These Credit Facilities provided $161,250,000
for a three year period and $53,750,000 for 364 days. As of December 31, 1994,
$55,000,000 was borrowed under the long-term agreement and there were no
borrowings under the short-term agreement. In addition to the Revolving Credit
Facilities, the banks also provided $250,750,000 of Gold and Silver Fee
Consignment Facilities. The Fee Consignment Facility of $125,375,000 is for a
three-year period and the short-term Fee Consignment Facility of $125,375,000 is
for 364 days. All gold and silver consigned to the Company pursuant to these
Consignment Agreements will be located at the Company's plants in Fairfield,
Connecticut and East Providence, Rhode Island. As of December 31, 1994, 87,000
ounces of gold and 16,652,000 ounces of silver were leased under this fee
consignment facility. As a result of this fee consignment facility the Company
was able to realize $53,087,000 of futures receivable on sales of precious
metals for future delivery and increase futures payable for purchase of precious
metals for future receipt by approximately $37,772,000. This enabled the Company
to reduce its bank borrowings.
Over the past three years the Company's operating activities have provided
net cash of $81,463,000 of which $64,437,000 was used in investing activities
and $15,890,000 was used for financing activities.
CASH FLOW FROM OPERATING ACTIVITIES
Net cash provided by operating activities amounted to $9,145,000 in 1994,
$48,979,000 in 1993 and $23,339,000 in 1992. Net cash flow from operating
activities decreased $39,834,000 from 1993 to 1994 primarily due to a use of
cash to support an increase in accounts receivable related to higher levels of
sales in 1994 versus 1993 and an increase in liabilities in 1993. This increase
in liabilities was primarily attributable to purchases of precious metals and
advances from smelter in 1993 by the Company's refining business. Although the
level of liabilities associated with the refining business decreased in 1994,
other operating units' accounts payable increased, which maintained comparable
levels of liabilities between 1994 and 1993. The 1993 increase of $25,640,000 in
net cash provided by operating activities over 1992 was primarily attributable
to the increase in 1993's liabilities as stated above as well as the decreased
level of accounts receivable for 1993 versus 1992.
CASH USED IN INVESTING ACTIVITIES
Net cash used in investing activities amounted to $47,703,000 in 1994,
$6,133,000 in 1993 and $10,601,000 in 1992. Net cash used for investing
activities increased $41,570,000 in 1994 over 1993 primarily due to the payments
in 1994 for the purchase of Sumco Inc. in the amount of $26,000,000 and related
acquired debt of $3,921,000, the decrease in proceeds from net investing
activities of discontinued operations of $2,531,000 in 1994 from 1993, the
increase in capital expenditures of $3,565,000 for plant expansion and machinery
and equipment in the automotive and wire/tubing segments, and the proceeds from
the sale of business units in 1993 for $5,072,000. The proceeds from the sale of
business units in 1993 was the primary reason for the decrease in net cash used
for investing activity for 1993 versus 1992.
CASH USED IN FINANCING ACTIVITIES
During this past three year period the Company's net financing activities were
the net decrease of $42,777,000 in debt, cash provided by the net increase in
futures payable of $35,302,000 and dividend payments of $8,415,000 for a total
net cash usage of $15,890,000. The net cash provided by financing was
$37,798,000 in 1994 due to the Company's ability to realize its futures
receivable of $53,087,000 and increase futures payable by $37,772,000,
<PAGE> 6
as previously described, offset by the net decrease of debt of $50,250,000 and
payment of dividends of $2,811,000. Net cash used by financing was $42,288,000
in 1993 and $11,400,000 in 1992 primarily due to the purchases of precious
metals by the Company's refinery business and related immediate sale for future
delivery which eliminates the economic risk of precious metal price
fluctuations.
The Company's foreign operations consist of six wholly owned subsidiaries,
(one in Canada, three in the United Kingdom, one in Denmark and one in Mexico),
and two equity investments, (one in Asia, and one in Brazil). Substantially all
unremitted earnings of such entities are free from legal or contractual
restrictions.
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.
COMPARISON OF 1994 VERSUS 1993
Sales for the precious metal segment increased $93,884,000 (28%). Sales of
refining outturn, primarily in kilo bar and grain form, increased from
$102,018,000 in 1993 to $157,142,000 in 1994. This type of precious metal sales
can fluctuate significantly from period to period, however, the profit
contribution effect for such fluctuation is minor since the profit margin on
these sales is less than the margins on other products in this segment. The
average price for gold was $384.14 per ounce and the average price for silver
was $5.29 per ounce representing increases of 7% and 23%, respectively, from the
prior year. The profit contribution (pre-tax income before deducting interest
and Corporate expenses) increased $4,407,000 (43%) due to strong sales and
operating profits of our precision electroplating companies offset by lower
sales for other industrial products caused by overcapacity and intense
competition. Management is focused on improving the profit contribution from
this segment by expanding capacity at its precision electroplating companies and
by rationalizing other facilities where necessary. Refinery earnings continue to
be subject to precious metal price fluctuations as well as its ability to
generate foreign earnings.
The automotive (OEM) segment sales increased $25,259,000 (16%) and the
profit contribution increased $1,645,000 (13%) due to the continued strength of
the automotive industry. However with additional expenses being incurred
relating to facility expansion and realignment to match changing volume
requirements, earnings during the first half of 1995 are not anticipated to be
at the same level as the prior year's comparable period.
Although there are concerns relative to the longevity of the current
strength in the automotive industry, the Company continues to pursue new product
development in order to participate in growth opportunities in the automotive
industry.
Sales for the wire/tubing segment increased $13,959,000 (10%) due to the
improved economy, both domestic and European. The profit contribution increased
$2,748,000 (22%) due to increased sales as well as improved manufacturing
performance through capital investment which increased capacity in both the wire
and tubing companies. Potential for increased profits in this segment comes from
continued capital investment in machinery and equipment as well as a new tubing
facility in Denmark.
In the other non-precious metal segment, sales decreased $9,907,000 (40%)
primarily due to the sale of three businesses in 1993. Profit contribution
increased $4,560,000. Excluding the charge of $2,800,000 in 1993 relating to the
sale of Valley Metals, Inc. and New Industrial Techniques, Inc. and operating
losses of $1,125,000 of the sold businesses, the profit contribution increased
$635,000 primarily due to the increased sales to the natural gas industry by
this segment's remaining unit.
Interest expense increased $511,000 (3%) primarily due to higher effective
interest rates.
The Company's income taxes are primarily composed of U.S. Federal and state
income taxes. The effective income tax rate was similar for 1994 and 1993.
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. This type of precious metal sales can fluctuate
significantly from period to period, however, the profit contribution effect for
such fluctuation is minor since the profit margin on these sales is less than
the margins on other products in this segment. 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%).
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.
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.
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.
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, or an
increase of 2.9%. The primary reason for the increase was the 1993 change in the
U.S. Federal statutory tax rate and its effect on 1993's provision for taxes as
well as the prior year's net deferred tax liability.
<PAGE> 7
HANDY & HARMAN AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
Year ended December 31 1994 1993 1992
===============================================================================================================
<S> <C> <C> <C>
Sales and service revenues $781,448,000 $658,253,000 $572,210,000
Cost of sales and service 674,039,000 571,376,000 479,278,000
- ---------------------------------------------------------------------------------------------------------------
Gross profit 107,409,000 86,877,000 92,932,000
- ---------------------------------------------------------------------------------------------------------------
Selling, general, and administrative expenses 60,472,000 53,900,000 56,394,000
- ---------------------------------------------------------------------------------------------------------------
Income from operations 46,937,000 32,977,000 36,538,000
- ---------------------------------------------------------------------------------------------------------------
Other deductions:
Interest expense (net) 15,995,000 15,484,000 16,329,000
Other (net) 2,621,000 2,246,000 1,142,000
- ---------------------------------------------------------------------------------------------------------------
18,616,000 17,730,000 17,471,000
- ---------------------------------------------------------------------------------------------------------------
Income before income taxes and cumulative
effect of accounting change 28,321,000 15,247,000 19,067,000
Income tax provision 11,810,000 6,347,000 7,370,000
- ---------------------------------------------------------------------------------------------------------------
Income before cumulative effect of accounting change 16,511,000 8,900,000 11,697,000
Cumulative effect of accounting change -- 576,000 --
- ---------------------------------------------------------------------------------------------------------------
Net income $ 16,511,000 $ 9,476,000 $ 11,697,000
===============================================================================================================
Earnings per share:
Income before cumulative effect of accounting change $1.18 $.64 $.84
Cumulative effect of accounting change -- .04 --
- ---------------------------------------------------------------------------------------------------------------
Net income $1.18 $.68 $.84
===============================================================================================================
Average number of shares outstanding 14,050,000 14,021,000 14,001,000
===============================================================================================================
</TABLE>
The accompanying summary of significant accounting policies and notes are an
integral part of the financial statements.
<PAGE> 8
HANDY & HARMAN AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
December 31 1994 1993
====================================================================================================================
<S> <C> <C>
ASSETS
Current assets:
Cash $ 2,559,000 $ 3,320,000
Accounts receivable, less allowance for doubtful accounts of
$3,597,000 in 1994 and $3,721,000 in 1993 82,733,000 67,897,000
Futures receivable -- 53,087,000
Inventories 89,939,000 88,692,000
Prepaid expenses, deposits and other current assets 12,105,000 13,445,000
- --------------------------------------------------------------------------------------------------------------------
Total current assets 187,336,000 226,441,000
- --------------------------------------------------------------------------------------------------------------------
Investments in affiliates, at equity 2,207,000 1,824,000
Property, plant and equipment 273,018,000 249,384,000
Less accumulated depreciation and amorization 155,818,000 143,164,000
- --------------------------------------------------------------------------------------------------------------------
117,200,000 106,220,000
Prepaid retirement costs (net) 47,459,000 43,627,000
Intangibles, net of amortization 22,991,000 1,120,000
Deferred charges 2,745,000 1,696,000
Other assets 2,185,000 1,518,000
Noncurrent assets of discontinued operations 22,895,000 23,714,000
- --------------------------------------------------------------------------------------------------------------------
$405,018,000 $406,160,000
====================================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term borrowings $ 34,750,000 $ 28,000,000
Current maturities of long-term debt 7,000,000 7,000,000
Accounts payable 45,044,000 46,980,000
Futures payable 37,772,000 --
Advances from smelter 4,118,000 8,935,000
Other current liabilities 24,909,000 23,619,000
- --------------------------------------------------------------------------------------------------------------------
Total current liabilities 153,593,000 114,534,000
- --------------------------------------------------------------------------------------------------------------------
Long-term debt, less current maturities 131,750,000 188,750,000
Deferred income taxes 13,551,000 11,276,000
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 11,830,000 11,296,000
Retained earnings 84,114,000 70,414,000
Foreign currency translation adjustment (720,000) (951,000)
- --------------------------------------------------------------------------------------------------------------------
109,835,000 95,370,000
Less: Treasury stock 1994 - 532,652 shares; 1993 - 588,252 shares - at cost 3,491,000 3,770,000
Unearned compensation 220,000 --
- --------------------------------------------------------------------------------------------------------------------
Total shareholders' equity 106,124,000 91,600,000
- --------------------------------------------------------------------------------------------------------------------
$405,018,000 $406,160,000
====================================================================================================================
</TABLE>
The accompanying summary of significant accounting policies and notes are an
integral part of the financial statements.
<PAGE> 9
HANDY & HARMAN AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
Three Years Ended December 31, 1994
<TABLE>
<CAPTION>
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, 1992 $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 1988
long-term incentive 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 1988 long-
term incentive 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
incentive stock option
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
Net income 16,511,000 16,511,000
Cash dividends on
common stock - $.20
per share (2,811,000) (2,811,000)
Stock issued under
1988 long-term incentive
plan (28,600 shares) 296,000 144,000 (220,000) 220,000
Stock awarded under
outside director stock
option plan (awarded
4,110 shares) 36,000 36,000
Stock issued under the
incentive stock option
plan (27,000 shares) 202,000 135,000 337,000
Translation adjustment 231,000 231,000
- -----------------------------------------------------------------------------------------------------------------------------------
Balance,
December 31, 1994 $14,611,000 $11,830,000 $84,114,000 ($720,000) ($3,491,000) ($220,000) $106,124,000
===================================================================================================================================
</TABLE>
The accompanying summary of significant accounting policies and notes are an
integral part of the financial statements.
<PAGE> 10
HANDY & HARMAN AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Increase (Decrease) in Cash
-------------------------------------------------
Year ended December 31, 1994 1993 1992
=======================================================================================================================
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 16,511,000 $ 9,476,000 $ 11,697,000
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 15,683,000 15,816,000 14,854,000
Provision for doubtful accounts 784,000 1,195,000 627,000
Loss (gain) on disposal of property, plant and equipment 454,000 (7,000) 274,000
Provision for disposal of business units 1,300,000 2,800,000 537,000
Net prepaid retirement costs (3,832,000) (4,793,000) (4,652,000)
Equity in earnings of affiliates (338,000) (117,000) (206,000)
Earned compensation - 1988 long-term incentive
and outside director stock option plans 277,000 214,000 226,000
Changes in assets and liabilities, net of effects
from acquisitions and divestitures:
Accounts receivable (12,813,000) 2,119,000 (5,498,000)
Inventories (459,000) (3,714,000) 2,115,000
Prepaid expenses (1,425,000) 556,000 (2,425,000)
Deferred financing costs (1,832,000) -- (1,699,000)
Deferred charges and other assets (714,000) 880,000 (250,000)
Accounts payable and other current liabilities (1,654,000) 12,024,000 4,117,000
Advances from smelter (4,817,000) 8,935,000 --
Deferred income taxes 2,020,000 3,595,000 3,622,000
- -----------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 9,145,000 48,979,000 23,339,000
- -----------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Proceeds from sale of property, plant and equipment 307,000 945,000 2,428,000
Capital expenditures (18,567,000) (15,002,000) (13,829,000)
Acquisition, net of cash and debt acquired (29,943,000) -- --
Divestitures, net of cash sold -- 5,072,000 --
Investment in affiliates -- (179,000) --
Net investing activities of discontinued operations 500,000 3,031,000 800,000
- -----------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (47,703,000) (6,133,000) (10,601,000)
- -----------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Proceeds from short-term borrowings 6,750,000 5,500,000 9,600,000
Repayment of short-term debt -- -- (108,263,000)
Proceeds from other long-term debt -- -- 50,364,000
Repayment of other long-term debt (7,000,000) (10,594,000) (44,134,000)
Net increase/(decrease) in long-term revolving credit facilities (50,000,000) 10,000,000 95,000,000
Net (increase)/decrease in futures receivable 53,087,000 (44,391,000) (8,696,000)
Net increase/(decrease) in futures payable 37,772,000 -- (2,470,000)
Dividends paid (2,811,000) (2,803,000) (2,801,000)
- -----------------------------------------------------------------------------------------------------------------------
Net cash provided/(used) in financing activities 37,798,000 (42,288,000) (11,400,000)
- -----------------------------------------------------------------------------------------------------------------------
Effect of exchange rate changes on net cash (1,000) (50,000) (172,000)
- -----------------------------------------------------------------------------------------------------------------------
Net change in cash (761,000) 508,000 1,166,000
Cash at beginning of year 3,320,000 2,812,000 1,646,000
- -----------------------------------------------------------------------------------------------------------------------
Cash at end of year $ 2,559,000 $ 3,320,000 $ 2,812,000
=======================================================================================================================
Cash paid during the year for:
Interest, net of contango on futures and
forward contracts and interest rate swap $ 15,721,000 $ 15,719,000 $ 17,112,000
Income taxes $ 8,709,000 $ 2,668,000 $ 537,000
=======================================================================================================================
</TABLE>
The accompanying summary of significant accounting policies and notes are an
integral part of the financial statements.
<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 affiliates, which are 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. The Company uses undiscounted cash flows when evaluating annually
the recoverability of the unamortized balance for the excess of purchase price
over net assets acquired in a business combination.
E -- FUTURES CONTRACTS
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.
Additionally, to the extent that an increase in inventory is required to support
operations, precious metals are purchased and immediately sold for future
delivery, creating a futures receivable and eliminating the economic risk of
price fluctuations. Also to the extent there is a decrease in inventory required
to support operations, precious metals are sold and immediately purchased for
future receipt, creating a futures payable and also eliminating the economic
risk of price fluctuations.
Future sales and purchases of precious metals are excluded from sales and
cost of sales in the accompanying income statement. The related margin deposits
are included with the futures receivable/payable. The income/expense from the
future sales/purchases of precious metals is amortized over the contract period
and is included in interest expense.
F -- SALES AND SERVICE
A high percentage of the sales prices for the Company's precious metals products
(see "The Company's Business," page 19) 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.
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.
G -- 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 amounted to $576,000 and is shown as a separate item in the Consolidated
Statement of Income on page 24.
H -- 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
1994, 1993 and 1992.
I -- FOREIGN CURRENCY TRANSLATION
Assets and liabilities of foreign subsidiaries have been translated at current
exchange rates, and related revenues and expenses have been translated at
average rates of exchange in effect during the year. Resulting cumulative
translation adjustments have been recorded as a separate component of
shareholder's equity.
J -- FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value amounts for cash, receivables (net), and short-term borrowings
approximate carrying amounts due to the short maturities of these instruments.
The fair value of long-term debt was estimated based on the current rates
offered to the Company for the debt of the same remaining maturities. The
difference between the fair value and the carrying value is not material and the
Company has no plans to retire significant portions of its long-term debt prior
to scheduled maturity.
K -- RECLASSIFICATIONS
Certain reclassifications have been made to the 1993 and 1992 consolidated
financial statements to conform to the 1994 presentation.
<PAGE> 12
HANDY &HARMAN AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1 -- ACQUISITION AND DIVESTITURES
On September 9, 1994 the Company acquired 100% of Sumco Inc.'s shares
outstanding for $26,000,000. The acquisition has been accounted for as a
purchase; accordingly, the purchase price has been allocated to the underlying
assets and liabilities based on their respective estimated fair values at the
date of acquisition. The estimated fair value of assets acquired is $11,100,000
and liabilities assumed is $7,100,000 (inclusive of $3,921,000 of debt). The
excess of the purchase price over the fair value of the assets acquired and
liabilities assumed was $22,000,000 and is being amortized over a period of 40
years. This business was not material to the revenues of the Company. Included
in Other Deductions are provisions for the disposals of our interest in a
Mexican joint venture of $1,300,000 and land and buildings of $400,000.
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. 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. Also included in Other Deductions is the
loss on sale of a building amounting to $319,000.
2 -- INVENTORIES AND FEE CONSIGNMENT FACILITIES
The components of inventories at December 31, 1994 and 1993 are as follows:
<TABLE>
<CAPTION>
1994 1993
- ---------------------------------------------------------------
<S> <C> <C>
Precious metals:
Fine and fabricated metals in
various stages of completion $ 37,825,000 $ 38,879,000
Non-precious metals:
Base metals, factory supplies
and raw materials 25,175,000 25,635,000
Work in process 18,521,000 14,893,000
Finished goods 8,418,000 9,285,000
- ---------------------------------------------------------------
$ 89,939,000 $ 88,692,000
- ---------------------------------------------------------------
</TABLE>
Other inventory information at December 31:
<TABLE>
<CAPTION>
1994 1993
- ---------------------------------------------------------------
<S> <C> <C>
Precious metals stated at LIFO cost $ 32,450,000 $ 32,450,000
- ---------------------------------------------------------------
LIFO inventory-excess of year-end
market value over LIFO cost $139,068,000 $141,273,000
- ---------------------------------------------------------------
Dec. 31 market value per ounce
Silver $ 4.87 $ 5.08
Gold $382.40 $391.75
- ---------------------------------------------------------------
</TABLE>
Consigned precious metal ounces due to/(from) customers
and suppliers:
<TABLE>
<CAPTION>
1994 1993
- ---------------------------------------------------------------
<S> <C> <C>
Silver ounces
Net open account (2,135,000) 11,515,000
Leased 19,517,000 6,102,000
- ---------------------------------------------------------------
Total 17,382,000 17,617,000
- ---------------------------------------------------------------
Gold ounces
Net open account (32,000) 73,000
Leased 326,000 347,000
- ---------------------------------------------------------------
Total 294,000 420,000
- ---------------------------------------------------------------
</TABLE>
In 1994 the Company finalized a Gold and Silver Fee Consignment Facility
amounting to $250,750,000. The Fee Consignment Facility of $125,375,000 is for a
three-year period and the short-term Fee Consignment Facility of $125,375,000 is
for 364 days. As of December 31,1994, 16,652,000 ounces of silver and 87,000
ounces of gold were leased to the Company and are included in leased amounts
above. The fee rate at December 31, 1994 for gold was 1.37% and silver was .79%.
3 -- DEBT AND CREDIT AGREEMENTS
The Company's borrowing requirements are primarily related to the level of
inventory, the market value of precious metals and the 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, 1994, the Company
had short-term credit facilities of $53,750,000 (see discussion below regarding
revolving credit facilities); short-term bank borrowing amounted to $34,750,000.
The corresponding amounts for December 31, 1993 were: credit facilities
$53,750,000 and short-term bank borrowings - $28,000,000.
At December 31, 1994, 1993, and 1992 the average interest rate for
outstanding short-term borrowing was 6.9%, 4.0%, and 4.9%, respectively. During
1994, the average month-end short-term borrowing was $53,777,000; the weighted
average interest rate of 5.4% was computed on the basis of the number of days
the borrowings were outstanding; and the maximum month-end short-term borrowing
was $117,000,000. The corresponding amounts for the years ended December 31,
1993 and 1992 were: average month-end borrowing - $15,688,000 and $44,273,000,
weighted average interest rate 4.3% and 7.4%, and maximum month-end borrowing -
$36,000,000 and $137,663,000.
<PAGE> 13
Long-term debt at December 31, 1994 and 1993 is summarized as follows:
<TABLE>
<CAPTION>
1994 1993
- ------------------------------------------------------------------
<S> <C> <C>
Credit facility $55,000,000 $105,000,000
8.83% notes due 2002 50,000,000 50,000,000
9.37% note due 1999 18,000,000 21,500,000
10.20% note due 1998 8,250,000 11,750,000
Industrial revenue bonds,
floating rate, due 2004 - 2005 7,500,000 7,500,000
- ------------------------------------------------------------------
138,750,000 195,750,000
Less installments due within year 7,000,000 7,000,000
- ------------------------------------------------------------------
Total long-term debt $131,750,000 $188,750,000
- ------------------------------------------------------------------
</TABLE>
Maturities of long-term debt in each of the next five years are as follows (in
thousands): $7,000, $7,000, $59,750, $3,500 and $4,000.
During the third quarter of 1994, the Company finalized $215,000,000 of
Revolving Credit Facilities with twenty banks which replaced the existing Credit
Facilities dated March 16, 1992. These Credit Facilities both provided
$161,250,000 for a three year period and $53,750,000 for 364 days. Under both of
these credit facilities interest is payable at the prime rate or LIBOR plus 1%,
at the Company's option.
All of the above loans have restrictive covenants which under the most
restrictive covenants of the Company's long-term loan agreements $13,221,000 of
consolidated retained earnings were unrestricted at December 31, 1994, 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 $130,000,000. At December 31, 1994
the Company was in compliance with all covenants.
4 -- INCOME TAXES
The components of income from operations before income taxes and cumulative
effect of accounting change consisted of the following (in thousands):
<TABLE>
<CAPTION>
1994 1993 1992
- -------------------------------------------------------------
<S> <C> <C> <C>
Domestic $26,932 $14,852 $18,841
Foreign 1,389 395 226
- -------------------------------------------------------------
$28,321 $15,247 $19,067
- -------------------------------------------------------------
</TABLE>
The provision for taxes on income was comprised of the following
(in thousands):
<TABLE>
<CAPTION>
1994
- --------------------------------------------------------------
Current Deferred Total
- --------------------------------------------------------------
<S> <C> <C> <C>
State and local $2,693 - $2,693
Foreign 748 ($25) 723
Federal 6,094 2,300 8,394
- --------------------------------------------------------------
$9,535 $2,275 $11,810
- --------------------------------------------------------------
<CAPTION>
1993
- --------------------------------------------------------------
Current 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
- --------------------------------------------------------------
<CAPTION>
1992
- --------------------------------------------------------------
Current 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>
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at December 31,
1994 and 1993 follow (in thousands):
<TABLE>
<CAPTION>
1994
- -------------------------------------------------------------------------------
Deferred Tax Deferred Tax Net Deferred
Assets Liabilities Liability
<S> <C> <C> <C>
Prepaid retirement costs $16,610 ($16,610)
Property, plant and equipment 9,229 (9,229)
Restructuring and discontinued
operations $6,797 - 6,797
Foreign tax credit carryforwards 495 - 495
All other 7,073 2,077 4,996
- -------------------------------------------------------------------------------
Total $14,365 $27,916 ($13,551)
- ------------------------------------------------------------------------------
<CAPTION>
- ------------------------------------------------------------------------------
1993
- ------------------------------------------------------------------------------
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>
<PAGE> 14
Due to the Company's current taxable income and expected taxable income,
management believes it is more likely than not that the Company will realize the
benefit of the existing deferred tax asset at December 31,1994.
Principal items making up the change in the net deferred tax liability
follows (in thousands):
<TABLE>
<CAPTION>
1994 1993 1992
- ---------------------------------------------------------------------
<S> <C> <C> <C>
Prepaid retirement costs $1,340 $1,643 $1,655
Property plant and equipment (257) (1,372) (1,360)
Restructuring 558 2,510 4,191
Foreign tax credit carryforwards 689 (919) (265)
Investment tax credit carryforwards 1,502 - (33)
Effect of 1993 income tax rate change
on deferred taxes - 275 -
Other (1,557) 1,458 (566)
- ---------------------------------------------------------------------
$2,275 $3,595 $3,622
- ---------------------------------------------------------------------
</TABLE>
Deferred income taxes have not been provided on the undistributed earnings
of foreign subsidiaries and other foreign investments carried at equity. These
earnings have been substantially reinvested and the Company does not plan to
initiate any action that would precipitate the payment of income taxes thereon.
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>
1994 1993 1992
- ---------------------------------------------------------------------
<S> <C> <C> <C>
U.S. Federal effective statutory tax rate 35.0% 34.3% 34.0%
State and local income taxes, net
of Federal income tax benefit 6.2 6.5 6.4
Foreign tax credit - (2.2) (1.7)
Effect of 1993 income tax rate
change on deferred taxes - 1.8 -
Net effect of foreign tax rates 0.2 0.4 0.2
Other 0.3 0.8 (0.2)
- ---------------------------------------------------------------------
41.7% 41.6% 38.7%
- ---------------------------------------------------------------------
</TABLE>
5 -- COMMITMENTS
Commitments at December 31, 1994 for the purchase of additional property, plant
and equipment approximated $3,600,000. Rent expense for 1994, 1993, and 1992 was
$3,460,000, $3,363,000, and $4,444,000, respectively. Operating lease and rental
commitments for future years are as follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------
<S> <C>
1995 $2,662,000
1996 2,564,000
1997 1,901,000
1998 1,363,000
1999 1,316,000
2000 and beyond 7,275,000
- -------------------------------------------------------------
Total lease and rental commitments $17,081,000
- -------------------------------------------------------------
</TABLE>
6 -- STOCK OPTION AND LONG-TERM INCENTIVE PLANS
1982 STOCK OPTION PLAN
At December 31, 1994, 25,000 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, 1992 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
Options expired - (18,000) $16.625 - 18.687
- -------------------------------------------------------------------------------------
Balance, December 31, 1994 - 25,000 $16.625
- -------------------------------------------------------------------------------------
</TABLE>
All options under the 1982 stock option plan are exercisable at December 31,
1994.
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. Stock Appreciation Rights (SAR's) may
be granted under this non-qualified stock option plan, but no SAR's 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> <C>
Balance, January 1, 1992 506,000 494,000 $ 9.625 - 14.125
Options granted (32,000) 32,000 $11.3125 - 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
Options granted (118,000) 118,000 $ 13.75 - 16.625
Options exercised - (27,000) $ 9.625 - 12.625
Options expired 15,000 (15,000) $12.625
- -------------------------------------------------------------------------------
Balance, December 31, 1994 231,200 738,000 $ 9.625 - 16.625
- ------------------------------------------------------------------------------
</TABLE>
There are 268,200 options exercisable under this plan at December 31, 1994.
<PAGE> 15
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. Transactions under this Plan are summarized below:
<TABLE>
<CAPTION>
1994 1993 1992
- --------------------------------------------------------------
<S> <C> <C> <C>
Options outstanding January 1 7,062 7,379 7,252
Options awarded 4,110 5,236 8,532
Options expired (2,381) - -
Options exercised - (5,553) (8,405)
- --------------------------------------------------------------
Options outstanding December 31 8,791 7,062 7,379
- --------------------------------------------------------------
Shares subject to award
December 31 75,225 76,954 82,190
- --------------------------------------------------------------
</TABLE>
All options outstanding under this plan are exercisable at December 31, 1994.
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 1,000 shares were forfeited and
28,600 shares were issued in 1994. 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 $277,000, $214,000, and $226,000
in 1994, 1993 and 1992, respectively.
7 -- SEGMENT INFORMATION
Information regarding the Company's industry segments and discontinued
operations is contained on page 19 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>
1994 1993 1992
- ---------------------------------------------------------------------
<S> <C> <C> <C>
Depreciation and
amortization expense:
Precious metals $ 5,059,000 $ 4,645,000 $ 4,327,000
Automotive (OEM) 4,693,000 4,713,000 4,120,000
Wire/Tubing 4,355,000 4,046,000 3,734,000
Other non-precious
metal businesses 504,000 1,748,000 1,810,000
Corporate 1,072,000 664,000 863,000
- ---------------------------------------------------------------------
$15,683,000 $15,816,000 $14,854,000
- ---------------------------------------------------------------------
Property, plant and
equipment additions:
Precious metals:
Expenditures $ 5,647,000 $ 5,650,000 $ 3,717,000
Transfer - - 1,389,000
- ---------------------------------------------------------------------
5,647,000 5,650,000 5,106,000
- ---------------------------------------------------------------------
Automotive (OEM):
Expenditures 3,778,000 1,895,000 3,204,000
- ---------------------------------------------------------------------
Wire/Tubing:
Expenditures 8,017,000 6,310,000 4,727,000
- ---------------------------------------------------------------------
Other non-precious
metal businesses:
Expenditures 1,069,000 932,000 937,000
- ---------------------------------------------------------------------
Corporate:
Expenditures 56,000 215,000 1,244,000
- ---------------------------------------------------------------------
18,567,000 15,002,000 15,218,000
- ---------------------------------------------------------------------
Discontinued operations:
Expenditures - 145,000 611,000
Transfer - - (1,389,000)
- ---------------------------------------------------------------------
- 145,000 (778,000)
- ---------------------------------------------------------------------
$18,567,000 $15,147,000 $14,440,000
- ---------------------------------------------------------------------
</TABLE>
<PAGE> 16
8 -- SUPPLEMENTAL INFORMATION
<TABLE>
<CAPTION>
1994 1993
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
a-Property, plant and equipment: Life/yrs
--------
Land $ 6,365,000 $ 4,933,000
Buildings and improvements 10-50 68,491,000 61,163,000
Machinery and equipment 3-20 169,099,000 155,795,000
Furniture and fixtures 2-20 17,254,000 15,585,000
Automotive 4-8 1,160,000 970,000
Leasehold improvements lease life 2,323,000 4,039,000
Construction in progress 8,326,000 6,899,000
- --------------------------------------------------------------------------------------
$273,018,000 $249,384,000
- --------------------------------------------------------------------------------------
</TABLE>
Depreciation and amortization of property, plant and equipment charged to
operations for 1994, 1993 and 1992 was $14,633,000, $14,659,000, and $14,157,000
respectively.
<TABLE>
<CAPTION>
1994 1993
- --------------------------------------------------------------------------------------
<S> <C> <C>
b-Intangibles (net of amortization):
Patents and other $ 704,000 $ 729,000
Excess of purchase price over
net assets acquired in business
combinations 22,287,000 391,000
$22,991,000 $1,120,000
- --------------------------------------------------------------------------------------
</TABLE>
c- Major Customer:
A customer from the automotive (OEM) segment represented 10.7%, 10.7%, and
11.3% of consolidated sales and service revenues for 1994, 1993 and 1992,
respectively.
9 -- 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 1994, 1993 and
1992 are as follows:
<TABLE>
<CAPTION>
1994 1993 1992
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost-benefits
earned during the
period $ 3,858,000 $ 3,546,000 $ 4,572,000
Interest cost on the
projected benefits
obligation 7,530,000 7,253,000 8,130,000
Return on plan assets 43,000 (15,563,000) (16,738,000)
Net amortization
and deferral (15,540,000) (106,000) (987,000)
Net periodic pension
cost (credit) ($ 4,109,000) ($ 4,870,000) ($ 5,023,000)
- --------------------------------------------------------------------------------
</TABLE>
Assumptions used in the accounting at December 31 are:
<TABLE>
<CAPTION>
1994 1993 1992
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Discount rate:
Beginning of year 6.5% 7.0% 7.5%
End of year 7.0% 6.5% 7.0%
Compensation increase 5.0% 5.0% 5.0%
Expected asset return 8.5% 8.5% 9.5%
- --------------------------------------------------------------------------------
</TABLE>
The plans' funded status as of December 31 and the amounts recognized in
the accompanying financial statements are as follows:
<TABLE>
<CAPTION>
1994 1993
- -----------------------------------------------------------------------
<S> <C> <C>
Actuarial present value of
benefit obligations:
Vested benefit obligation $ 96,944,000 $ 95,980,000
Accumulated benefit
obligation $100,710,000 $100,139,000
Projected benefit obligation $112,920,000 $114,490,000
Plan assets at fair value 150,575,000 156,295,000
Plan assets in excess of projected
benefit obligation 37,655,000 41,805,000
Unrecognized net loss 30,074,000 24,584,000
Unrecognized prior service cost (3,418,000) (3,740,000)
Unrecognized net asset (13,145,000) (15,944,000)
Prepaid pension cost $ 51,166,000 $ 46,705,000
- -----------------------------------------------------------------------
</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.
<PAGE> 17
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
Certain operations of the Company provide postretirement medical benefits to
current and retired employees. 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
6.5%, 7% and 7.5% for the years ended 1994, 1993 and 1992, respectively. The
components of net periodic postretirement benefit cost are as follows:
<TABLE>
<CAPTION>
1994 1993 1992
- --------------------------------------------------------------------
<S> <C> <C> <C>
Service cost $ 207,000 $ 261,000 $ 324,000
Interest cost 577,000 694,000 698,000
Amortization of transition
obligation 433,000 574,000 417,000
$1,217,000 $1,529,000 $1,439,000
- --------------------------------------------------------------------
</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, 1994 and 1993.
<TABLE>
<CAPTION>
Accumulated Postretirement Benefit Obligation:
1994 1993
- ------------------------------------------------------------------------
<S> <C> <C>
Retirees $ 3,783,000 $ 4,576,000
Future retirees 5,079,000 6,376,000
Total accumulated postretirement
benefit obligation 8,862,000 10,952,000
Unrecognized transition obligation (5,969,000) (6,340,000)
Unrecognized actuarial gain (loss) 814,000 (1,534,000)
Net postretirement benefit liability -
classified with prepaid retirement costs $ 3,707,000 $ 3,078,000
- ------------------------------------------------------------------------
</TABLE>
The assumed discount rate used to measure the accumulated postretirement
benefit obligation was 7% for 1994 and 6.5% for 1993. 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,
1994 and 1993.
SAVINGS PLAN
The Company has a savings plan which qualifies 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 $900,000, $862,000 and $581,000, for 1994,
1993 and 1992, respectively.
10 -- 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, 1994, 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.
11 -- 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 classified to
report separately the net assets of these businesses.
The net assets related to discontinued operations, primarily working
capital and property, plant and equipment, were recorded at their estimated net
realizable value. Included in assets of discontinued operations is the Company's
investment in, and receivable from, GO/DAN Industries, a joint venture
partnership. Approximately $1,000,000 of operating losses for the discontinued
operations from the date of discontinuance to December 31, 1994 were charged
against the $1,000,000 reserve for operating losses established in the second
quarter of 1991.
<PAGE> 18
INDEPENDENT AUDITORS' REPORT
KPMG Peat Marwick LLP
New York, NY
To the Board of Directors and
Shareholders of Handy & Harman:
We have audited the consolidated balance sheet of Handy & Harman and
Subsidiaries as of December 31, 1994 and 1993, 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, 1994. 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, 1994 and 1993, and the results of
their operations and their cash flows for each of the years in the three-year
period ended December 31, 1994 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 LLP
- -------------------------
KPMG PEAT MARWICK LLP
February 17, 1995
<PAGE> 19
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 LLP, 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 LLP 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.
<PAGE> 1
Exhibit (21)
HANDY & HARMAN
SUBSIDIARIES AS OF DECEMBER 31, 1994
A-1 Sales, Inc.
Alloy Ring Service, Inc.
American Chemical & Refining Company, Incorporated
Camdel Metals Corporation
Con-Ind Limited
Continental Industries, Inc.
Daniel Radiator Corporation
Exxtrusions Corporation
H&H Productions, Inc. (Formerly Greenback Industries, Inc.)
Handy & Harman Automotive Group, Inc.
Handy & Harman Automotive de Mexico, S.A. de C.V.
Handy & Harman Electronic Materials Corporation
(Formerly New Industrial Techniques, Inc.)
Handy & Harman Envirotech Systems, Ltd. (Formerly Monico
Manufacturing & Supply Co., Inc.
Handy & Harman Europe Ltd.
Handy & Harman of Canada, Limited
Handy & Harman International, Ltd
Handy & Harman International (Korea) Limited
Handy & Harman de Mexico, S.A. de C.V. (55% owned)
Handy & Harman Peru, Inc.
<PAGE> 2
Handy & Harman Radiator Corporation
Handy & Harman Tube Company, Inc.
Indiana Tube Corporation
Jackson Industries, Inc.
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.
Northvale Design & Development Company, Inc.
Pal-Rath Realty, Inc. (Formerly Rathbone Corporation)
Platina Laboratories, Inc.
Rigby-Maryland (Stainless), Ltd.
South Windsor Metallurgical, Inc.
Sumco 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 Mizuno 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.
<PAGE> 3
Ltd. The Company owns 12-1/2% of Handy & Harman Manufacturing (Singapore) Pte.
Ltd.
The Company also has a 2% interest in Ravel Inc., formerly named R.V.L.
Investments, Inc.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
FORM 10-K
</LEGEND>
<MULTIPLIER> 1000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-1-1994
<PERIOD-END> DEC-31-1994
<EXCHANGE-RATE> 1
<CASH> 2,559
<SECURITIES> 0
<RECEIVABLES> 86,330
<ALLOWANCES> 3,597
<INVENTORY> 80,939
<CURRENT-ASSETS> 187,336
<PP&E> 273,018
<DEPRECIATION> 155,818
<TOTAL-ASSETS> 405,018
<CURRENT-LIABILITIES> 153,593
<BONDS> 131,750
<COMMON> 14,611
0
0
<OTHER-SE> 91,513
<TOTAL-LIABILITY-AND-EQUITY> 405,018
<SALES> 781,448
<TOTAL-REVENUES> 781,448
<CGS> 674,039
<TOTAL-COSTS> 674,039
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 784
<INTEREST-EXPENSE> 15,995
<INCOME-PRETAX> 28,321
<INCOME-TAX> 11,810
<INCOME-CONTINUING> 16,511
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 16,511
<EPS-PRIMARY> 14,050
<EPS-DILUTED> 14,050
</TABLE>
