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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, 1995 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 27, 1996 WHICH REGISTERED
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Common Stock Par Value $1 Per Share............. 14,030,372 New York Stock Exchange
Common Stock Purchase Rights.................... 14,030,372 New York Stock Exchange
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SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
None
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, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. / /
The aggregate market value of the Common Stock outstanding and held by
non-affiliates (as defined in Rule 405 under the Securities Act of 1933) of the
registrant, based upon the closing sale price of the Common Stock on the New
York Stock Exchange on March 27, 1996 was $224,607,000.
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 December 31, Part I, Item 1
1995 Part II, Items 5-8
(2) Notice of Annual Meeting of Shareholders and Proxy Statement dated Part III,
April 1, 1996 Items 10-13
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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, a review entitled "The Silver Market",
which was published annually by the Company until it was discontinued in 1994,
had been widely distributed in trade and financial centers in this country and
abroad. The diversification program has added lines of precious metals products
and various specialty manufacturing operations, including stainless steel and
specialty metal alloy products, for industrial users in a wide range of
applications which include the electrical, electronic, automotive original
equipment, office equipment, oil and other energy related, refrigeration,
utility, telecommunications and medical industries. 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 of
non-precious metal wire, cable and tubing products primarily stainless steel and
specialty alloys; (b) manufacturing and selling precious metals products and
providing refining services; and (c) manufacturing and selling other specialty
products supplied to natural gas, electrical and water utility companies.
Three-year financial data for the Company's business segments appear under the
caption "The Company's Business" on pages 15 and 16 of the Handy & Harman 1995
Annual Report to Shareholders (hereinafter referred to as the "Annual Report")
and are incorporated by reference herein.
Export sales and revenues are not significant in the total sales and
revenues of any of the Company's business segments.
In June 1991 the Company announced a major restructuring 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.
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. Nickel alloy, galvanized, carbon steel and stainless steel wire
products redrawn from rods are produced for such diverse applications as
bearings, brushes, cable lashing, hose reinforcement, nails, knitted mesh, wire
rope and cloth, air bags and antennas in the aerospace, automotive, chemical,
communications, marine, medical, petrochemical, welding and other industries.
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Raw Materials -- The raw materials used in this segment include stainless,
galvanized 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 sales personnel and the remainder are sold
through manufacturer's representatives and distributors.
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 16 of the
Annual Report, showing percentages of gross shipments of these classes of
precious metals products which contributed ten percent or more to total sales
and revenues, is incorporated herein by reference.
The Company's profits from the products manufactured in this segment are
derived from the "value added" of processing and fabricating and 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 sterling and other alloys of silver, and
other precious metal alloys in drawn and coiled wire and rod forms of differing
diameters, ranging from seven thousandths of an inch to one fourth 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 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
precious metals in sheets, strips and bars of varying thicknesses, widths and
lengths. These precious metal rolled products range in standard thickness from
foils five ten thousandths of an inch thick to strips or bars three eighths of
an inch thick and in standard widths from strips one eighth 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
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power industry 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.
Precision Plating and Surface Finishing -- The Company produces precision
electroplated materials and stamped parts (often using gold, silver, palladium
and various base metals on such materials and stamped parts) for use in the
semiconductor, telecommunications, automotive electronics and computer
industries.
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 metals powders,
which are not as coarse and are produced by atomization spraying.
The Company exited the karat gold fabricated product business in 1995.
Karat gold was used in the production of wire products, rolled products and
grain beads stated above. See Note 1 to the Consolidated Financial Statements
included in the Annual Report.
Refining Services -- The Company recovers precious metals from waste and
scrap generated by users of the Company's precious metals products and other
industrial users of precious metals, from metal-bearing objects delivered for
that purpose, by non-manufacturing refining customers, and from high grade
mining concentrates and bullion. The Company receives a fee for this service.
After controlled sampling, assaying, weighing, 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. In addition to such precious metal
recovery services, the Company is in the start-up phase of a component retrieval
business which entails the disassembly services for computers and other
electronic hardware, recovering and usable integrated circuits and recycling or
appropriately disposing of the rest.
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. The prices of gold and silver are subject to fluctuations and are
expected to continue to be affected by world market conditions. Nonetheless, the
Company has not experienced any problem in obtaining the necessary quantities of
raw materials required for this segment and, in the normal course of business,
receives precious metals from suppliers and customers. These metals are
returnable in fabricated or commercial bar form under agreed upon terms. Since
precious metals are fungible, the Company does not physically segregate supplier
and customer metals from its own inventories. Therefore, to the extent that
supplier or customer metals are used by the Company, the amount of inventory
which the Company must own is reduced. All raw materials used in this segment
are readily available from several sources. For a discussion of the Company's
inventory purchasing and pricing and of the Company's practices to eliminate the
economic risk of precious metal price fluctuations, see "The Company's Business"
on page 15 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 26 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, 1995 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
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metals business, as a whole, is not dependent upon such patents. The Company's
trademarks are registered 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 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 OTHER SPECIALTY PRODUCTS
A subsidiary of the Company manufactures plastic and steel fittings and
connections, plastic pipe and non-ferrous thermite welding powders for the
natural gas, electrical and water distribution industries.
Distribution -- Most of the Company's products comprising this segment are
sold directly to customers through Company sales personnel. 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, with the remaining sales 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.
AUTOMOTIVE ORIGINAL EQUIPMENT
During 1995 the Company sold, in two phases, its automotive segment which
manufactured a wide variety of parts, cables, components and assemblies for
North American automotive original equipment manufacturers. The cable operations
were sold on July 20, 1995 and the remaining operations on December 29, 1995.
See Note 1 to the Consolidated Financial Statements included in the Annual
Report.
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SHARE REPURCHASE
The Company may, at the discretion of its Board of Directors, elect to
repurchase additional shares (up to an aggregate of one and one-half million),
of its currently outstanding Common Stock.
GOVERNMENT REGULATION
During the last fiscal year, the Company spent or committed approximately
$4,800,000 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. Typical of 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 $700,000 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.
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 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 2,567 employees on December 31, 1995. Of these,
approximately 30 percent are covered by collective bargaining agreements, which
expire at various times during the next three years.
ITEM 2. PROPERTIES
The Company has 26 active operating plants in the United States, Canada,
England, Denmark and Singapore (50% owned) with a total area of approximately
2,000,000 square feet, including warehouse, office and laboratory space, but not
including the plants used by the Singapore operation. The Company owns or leases
sales, service and warehouse facilities at five other locations in the United
States and England, which, with the Company's executive and general offices,
have a total area of approximately 109,000 square feet and owns ten
non-operating or discontinued locations with a total area of approximately
906,000 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
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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:
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; Retford, Notts. and
Liversedge, Yorkshire, England; and Kolding, Denmark. All these plants are owned
in fee except the Retford plant, which is leased.
PRECIOUS METALS
The Company's principal precious metal products and refining services
operations are conducted in: Fairfield and South Windsor, Connecticut; and
Attleboro, Massachusetts. Other precious metal operations are conducted in:
Phoenix, Arizona; North Attleboro, Massachusetts; East Providence, Rhode Island;
Cudahy, Wisconsin; Indianapolis, Indiana; Toronto, Canada and Singapore (50
percent owned). The Company owns all these operating plants in fee.
OTHER SPECIALTY PRODUCTS
The principal facilities currently engaged in the Company's other specialty
products businesses are located in Tulsa and Broken Arrow, Oklahoma, and Bolton,
England. The Oklahoma plants are owned in fee while the Bolton plant is leased.
COMPANY'S OFFICES
The Company's executive offices are in New York, New York and occupy 17,000
square feet under a lease. The Company has its general offices in leased
premises containing approximately 30,000 square feet located in Rye, New York.
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
An action was commenced in April 1993 by the Borough of Park Ridge, New
Jersey against Handy & Harman Electronic Materials Corporation, a subsidiary
("HHEM"), Handy & Harman and other defendants, 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. This action seeks
recovery of the alleged cost of treatment and remediation of water wells of the
Borough of Park Ridge as a result of alleged contamination by the defendants.
Although the precise amount of the Borough's claims is not known, a settlement
demand of approximately $4.5 million has been made by the plaintiff.
The presently scheduled trial date falls in September of 1996 but there is
no assurance that the trial will take place during 1996.
The Handy & Harman defendants deny responsibility for the alleged
contamination of the Park Ridge wells and assert that if any such contamination
exists as a result of operation of the Montvale facility, damages arising
therefrom are the responsibility of the owner or operator thereof prior to the
purchase of the facility by HHEM from Plessey Incorporated (Plessey). The Handy
& Harman defendants have asserted substantial cross-claims against Plessey,
GEC -- Marconi Materials Corp. and a vendor of the chemical involved. The
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Handy & Harman defendants are seeking from the Plessey defendants, in the event
that the Handy & Harman defendants are held to be responsible for any damages
asserted by the Borough, return of the purchase price, repayment of amounts
spent by HHEM in remediation of the site, contribution and indemnity.
Plessey has asserted cross-claims for contribution and indemnity against
the Handy & Harman defendants, as have other parties.
Handy & Harman has filed a separate action, since consolidated with the
above Park Ridge action, against Twin Cities Fire Insurance Company and other
carriers, claiming coverage under various liability insurance policies.
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, 1995.
EXECUTIVE OFFICERS OF THE COMPANY
As of March 27, 1996, the executive officers of the Company, their ages,
their present positions and offices, and their recent business experience and
employment, are as follows:
Richard N. Daniel -- age 60; Chairman (since 1988) and Chief Executive
Officer of the Company (since 1983); a Director (since 1974).
Frank E. Grzelecki -- age 58; 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 51; 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 The
Warnaco Group (since prior to 1990).
Dennis C. Kelly -- age 44; Controller (since 1993) of the Company;
prior thereto Assistant Controller (since 1989).
John M. McLoone -- age 53; 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 64; Vice President (since 1983) and Treasurer
(since 1977).
Richard P. Schneider -- age 49; Vice President -- Corporate
Development (since 1993); prior thereto Vice President -- Corporate
Development of Sequa Corporation (a diversified manufacturing company)
(since prior to 1990).
Robert M. Thompson -- Age 63; 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.
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
The information for this Item is incorporated by reference to the section
entitled "Stock Trading and Dividends" on page 16 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 17 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 18 through 20 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 21 through 24 of the Annual
Report and by reference to the Summary of Significant Accounting Policies
contained on page 25 of the Annual Report and the Notes to Consolidated
Financial Statements commencing on page 26 of the Annual Report and by reference
to the Independent Auditors' Report set forth on page 32 of the Annual Report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not Applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The information for this Item is incorporated by reference to the section
entitled "Election of Directors," on pages 2 and 3 of the Company's Proxy
Statement, dated April 1, 1996 (the "Proxy Statement"), for the 1996 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 1995 fiscal year a director, officer or
beneficial owner of more than ten percent of any class of equity securities of
the registrant failed to file on a timely basis reports required by Section
16(a) of the Exchange Act of 1934, as amended.
ITEM 11. EXECUTIVE COMPENSATION
The information for this Item is incorporated by reference to the sections
entitled "Executive Compensation," "Base Salaries," "Annual Incentive Awards for
1995," "Stock Options," "Long-Term Incentive Plan," "Compensation Committee
Report on Executive Compensation," "Pensions," "Compensation of Directors,"
"Employment Contracts and Termination of Employment and Change-in-Control
Agreements" on pages 4 to 11 of the Proxy Statement.
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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 pages 1, 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 (pages 21 through 24 of the Annual
Report), the Summary of Significant Accounting Policies and Notes to
Consolidated Financial Statements (pages 25 through 31 of the Annual Report),
the Independent Auditors' Report (page 32 of the Annual Report) and the items of
Supplementary Information incorporated by reference in Part II, Item 8 of this
Report are incorporated by reference.
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).
(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).
9
<PAGE> 11
(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).
(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).
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 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).
(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).
10
<PAGE> 12
(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 Report on Form 10-K and incorporated herein by
reference).
(r) Amended and Restated Agreement between the Company and Mr. Grzelecki
(Filed as Exhibit 10(r) to this Annual Report on Form 10-K.
(s) Press Release of the Company dated November 6, 1995 (Filed as Exhibit
10(s) to this Annual report on Form 10-K.
(t) 1995 Omnibus Stock Incentive Plan (Filed as Exhibit 4.1 to the
Company's Registration Statement on Form S-8 (Registration No. 33-80803) on
December 22, 1995, under the Securities Act of 1933 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 25
of the Annual Report.
(13) Pages 15 through 32 of the Company's Annual Report to Shareholders for
1995. 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. 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.
(B) REPORTS ON FORM 8-K
The Company filed a Report on Form 8-K on January 10, 1996, with respect to
the sale of the assets of the Handy & Harman Automotive Group, Inc.
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 undertakes 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) and 33-80803 (filed December 22, 1995):
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 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.
11
<PAGE> 13
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 28, 1996
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 (Principal March 28, 1996
- ---------------------------------------- Executive Officer)
(R.N. Daniel)
/s/ F.E. GRZELECKI President and Director (Chief March 28, 1996
- ---------------------------------------- Operating Officer)
(F.E. Grzelecki)
/s/ J.M. MCLOONE Vice President -- Financial Services March 28, 1996
- ---------------------------------------- (Principal Financial Officer)
(J.M. McLoone)
/s/ D.C. KELLY Controller (Principal Accounting March 28, 1996
- ---------------------------------------- Officer)
(D.C. Kelly)
/s/ C.A. ABRAMSON Director March 28, 1996
- ----------------------------------------
(C.A. Abramson)
/s/ R.E. CORNELIA Director March 28, 1996
- ----------------------------------------
(R.E. Cornelia)
/s/ G.G. GARBACZ Director March 28, 1996
- ----------------------------------------
(G.G. Garbacz)
/s/ G.M. NICHOLS Director March 28, 1996
- ----------------------------------------
(G.M. Nichols)
/s/ H.P. SOTOS Director March 28, 1996
- ----------------------------------------
(H.P. Sotos)
/s/ E.J. SUSSMAN Director March 28, 1996
- ----------------------------------------
(E.J. Sussman)
/s/ R.E. TETRAULT Director March 28, 1996
- ----------------------------------------
(R.E. Tetrault)
</TABLE>
12
<PAGE> 14
F-1
REPORT AND CONSENT OF INDEPENDENT AUDITORS
THE BOARD OF DIRECTORS AND SHAREHOLDERS HANDY & HARMAN:
Under the date of February 12, 1996 we reported on the consolidated balance
sheet of Handy & Harman and Subsidiaries as of December 31, 1995 and 1994 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, 1995, as
contained in the 1995 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 1995. 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.
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.
We also consent to the incorporation by reference in the Registration
Statements on Form S-8 (Registration Nos. 2-78264, 33-37919, 33-43709 and
33-80803) of Handy & Harman of our report dated February 12, 1996.
KPMG PEAT MARWICK LLP
New York, New York
March 28, 1996
13
<PAGE> 15
THE COMPANY'S BUSINESS
The Company's industry segments are: manufacturing of specialty wire and
tubing, manufacturing of precious metals products and refining services, and
manufacturing of other non-precious metal products. The table below presents
information about the segments with additional segment information for 1995,
1994 and 1993 found in Note 7 of the Notes to Consolidated Financial Statements
on page 29. A further analysis of the industry segments can be found under
"Management's Discussion and Analysis" beginning on page 18.
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.
The precious metals segment is engaged in precision plating and surface
finishing for electronic and electrical components, 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 business unit in the other non-precious metal businesses segment
manufactures products using steel and plastic which are sold principally to
water and natural gas distribution companies. Certain subsidiaries sold in 1993
manufactured a variety of specialty metal products using copper, steel, nickel,
plastics and other raw materials.
14
<PAGE> 16
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 18.
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
(Thousands of dollars)
<S> <C> <C> <C>
Sales and service revenues:
Wire/Tubing.............................................. $175,092 $153,750 $139,344
Precious metals.......................................... 404,505 434,671 340,725
Other non-precious metal businesses...................... 15,900 15,078 25,032
-------- -------- --------
$595,497 $603,499 $505,101
======== ======== ========
Profit contribution before unallocated expenses:
Wire/Tubing.............................................. $ 18,225 $ 14,395 $ 11,898
Precious metals.......................................... 13,287 13,582 9,418
Other non-precious metal businesses...................... 2,275 1,938 (2,673)
-------- -------- --------
33,787 29,915 18,643
General corporate expenses................................. (1,800) (1,850) (2,075)
Interest expense (net)..................................... (17,337) (13,427) (13,588)
-------- -------- --------
Income from continuing operations before income taxes and
cumulative effect of accounting change................... $ 14,650 $ 14,638 $ 2,980
======== ======== ========
</TABLE>
The following table segregates identifiable assets to the three reported
segments, corporate and discontinued operations.
<TABLE>
<CAPTION>
ASSETS
----------------------------------
1995 1994 1993
-------- -------- --------
(Thousands of dollars)
<S> <C> <C> <C>
Wire/Tubing................................................ $103,939 $ 92,696 $ 80,442
Precious metals............................................ 158,868 150,812 171,397
Other non-precious metal businesses........................ 10,568 16,149 17,160
Corporate.................................................. 67,674 51,318 47,614
Discontinued operations.................................... -- 94,043 89,547
-------- -------- --------
$341,049 $405,018 $406,160
======== ======== ========
</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 1995, 1994 and 1993.
<TABLE>
<CAPTION>
PERCENT OF SHIPMENTS
----------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Rolled Products........................................................ 33% 43% 50%
Wire Products.......................................................... 53% 43% 33%
Bullion................................................................ 2% 2% 1%
</TABLE>
STOCK TRADING AND DIVIDENDS
Handy & Harman Common Stock is traded on the New York Stock Exchange. The
following table 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.
15
<PAGE> 17
At February 15, 1996, there were 3,096 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
SALES PRICES DIVIDEND PAID ON
------------- COMMON STOCK
HIGH LOW PER SHARE
---- ---- ----------------
<S> <C> <C> <C>
1995
January 1-March 31.......................................... $16 1/2 $14 1/8 6c
April 1-June 30............................................. 16 1/2 14 7/8 6c
July 1-September 30......................................... 16 7/8 14 5/8 6c
October 1-December 31....................................... 16 5/8 13 5/8 6c
1994
January 1-March 31.......................................... $16 1/4 $14 3/8 5c
April 1-June 30............................................. 14 3/4 13 5c
July 1-September 30......................................... 17 5/8 13 5/8 5c
October 1-December 31....................................... 17 1/8 13 1/2 5c
</TABLE>
SELECTED QUARTERLY DATA
Summarized financial data for interim periods of 1995 and 1994 (expressed
in thousands of dollars, except per share data) are shown below.
<TABLE>
<CAPTION>
1995 QUARTER ENDED
-----------------------------------------------
MAR. 31 JUNE 30 SEPT. 30 DEC. 31
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Sales........................................... $153,417 $154,358 $137,349 $150,373
Gross profit.................................... 25,695 24,737 20,369 19,499
Earnings (loss):
Continuing operations......................... 4,166 (1,261) 2,337 2,482
Discontinued operations....................... 1,022 140 (629) 10,383
-------- -------- -------- --------
Net income (loss)............................... $ 5,188 $ (1,121) $ 1,708 $ 12,865
-------- -------- -------- --------
Earnings (loss) per share:
Continuing operations......................... $ .30 $ (.09) $ .16 $ .18
Discontinued operations....................... .07 .01 (.04) .73
-------- -------- -------- --------
Net income (loss)............................... $ .37 $ (.08) $ .12 $ .91
======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
1994 QUARTER ENDED
-----------------------------------------------
MAR. 31 JUNE 30 SEPT. 30 DEC. 31
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Sales........................................... $143,091 $153,098 $153,668 $153,642
Gross profit.................................... 18,476 20,564 20,147 21,742
Earnings:
Continuing operations......................... 1,754 2,288 2,252 2,240
Discontinued operations....................... 2,699 2,783 1,225 1,270
-------- -------- -------- --------
Net income...................................... $ 4,453 $ 5,071 $ 3,477 $ 3,510
-------- -------- -------- --------
Earnings per share:
Continuing operations......................... $ .13 $ .16 $ .16 $ .16
Discontinued operations....................... .19 .20 .09 .09
-------- -------- -------- --------
Net income...................................... $ .32 $ .36 $ .25 $ .25
======== ======== ======== ========
</TABLE>
The 1995 continuing operations second quarter includes the after tax impact
of nonrecurring charges of $6,150,000 or $.44 per share.
16
<PAGE> 18
The 1995 discontinued operation's fourth quarter includes the gain from its
sale of $11,496,000, net of taxes.
FIVE YEAR SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
(Dollars in thousands except per share figure)
OPERATIONS
Sales and service revenues........... $595,497 $603,499 $505,101 $434,483 $416,143
Income (loss) from continuing
operations......................... 7,724 8,534 2,312(a) 5,454 (12,786)
Income (loss) from discontinued
operations......................... 10,916 7,977 7,164 6,243 (21,723)
Net income (loss).................... 18,640 16,511 9,476(a) 11,697 (34,509)
Dividends............................ 3,383 2,811 2,803 2,801 6,013
-------- -------- -------- -------- --------
PER SHARE DATA
Income (loss) from continuing
operations......................... .55 .61 .17(a) .39 (.92)
Income (loss) from discontinued
operations......................... .77 .57 .51 .45 (1.55)
Net income (loss).................... 1.32 1.18 .68(a) .84 (2.47)
Dividends............................ .24 .20 .20 .20 .43
Average shares outstanding
(thousands)........................ 14,092 14,050 14,021 14,001 13,985
-------- -------- -------- -------- --------
FINANCIAL POSITION (AT DECEMBER 31)
Current assets....................... 163,101 187,336 226,441 200,613 191,072
Current liabilities.................. 113,621 153,593 114,534 92,444 96,004
Working capital...................... 49,480 33,743 111,907 108,169 95,068
Property, plant and equipment-net.... 91,406 117,200 106,220 109,605 112,363
Total assets......................... 341,049 405,018 406,160 371,351 358,708
Long-term debt....................... 93,500 131,750 188,750 186,287 181,329
Deferred income taxes................ 13,534 13,551 11,276 7,681 4,059
Shareholders' equity................. 120,394 106,124 91,600 84,939 77,316
LIFO reserve(b)...................... 141,458 139,068 141,273 105,416 111,209
-------- -------- -------- -------- --------
STATISTICAL DATA
Property, plant and equipment
acquired through capital
expenditures....................... 23,143 18,567 15,147 14,440 12,728
Depreciation and amortization........ 16,668 15,683 15,816 14,854 16,372
Interest expense (net)-continuing
operations......................... 17,337 13,427 13,588 14,171 19,409
Number of shareholders............... 3,096 2,259 2,238 3,046 3,218
Number of employees at December 31... 2,567 4,826 4,246 4,478 4,333
-------- -------- -------- -------- --------
FINANCIAL RATIOS
Return on average shareholders'
equity............................. 16.5% 16.7% 10.7% 14.4% (35.4%)
Current ratio........................ 1.4 1.2 2.0 2.2 2.0
======== ======== ======== ======== ========
</TABLE>
- ---------------
(a) Includes a benefit of $576,000 or $.04 per share, from cumulative effect of
accounting change.
(b) Excess of year-end market value of LIFO inventory over cost.
17
<PAGE> 19
MANAGEMENT'S DISCUSSION AND ANALYSIS
LIQUIDITY, CAPITAL RESOURCES AND OTHER FINANCIAL DATA
The Company's precious metal inventory, 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 $141,458,000 in excess of such cost as of December 31, 1995.
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.
During the third quarter of 1994, the Company finalized $215,000,000 of
Revolving Credit Facilities with twenty banks which provided $161,250,000 for a
three year period and $53,750,000 for 364 days. Due to the sale of Handy &
Harman's automotive segment, the three year portion of the credit facility was
reduced to $96,250,000. As of December 31, 1995, $25,000,000 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 as part of
the refinancing in 1994. These facilities have been reduced to $158,500,000
after the Company exited the karat gold business in 1995. The Fee Consignment
Facility of $79,250,000 is for a three-year period and the short-term Fee
Consignment Facility of $79,250,000 is for 364 days. All gold and silver
consigned to the Company pursuant to these Consignment Agreements are located at
the Company's plant in Fairfield, Connecticut. As of December 31, 1995, 10,000
ounces of gold and 13,687,000 ounces of silver were leased under these fee
consignment facilities. In 1994 as a result of this fee consignment facility the
Company was able to realize $53,087,000 of futures receivables on sales of
precious metals for future delivery and increase futures payable for purchases
of precious metals for future receipt by approximately $37,772,000 which enabled
the Company to reduce its bank borrowings.
In addition to the Revolving Credit Facilities the Company has arrangements
with four institutional lenders for $50,000,000 of long-term borrowings at a
rate of 8.83% maturing in 2002.
Over the past three years the Company's operating activities and investing
activities have provided net cash of $78,370,000 and $16,801,000, respectively,
which were used for financing activities amounting to $91,208,000.
CASH FLOW FROM OPERATING ACTIVITIES
Net cash provided by operating activities amounted to $20,246,000 in 1995,
$9,145,000 in 1994 and $48,979,000 in 1993. Net cash flow from operating
activities increased $11,101,000 from 1994 to 1995 primarily due to a decrease
in working capital requirements of $20,543,000, an increase in net income of
$2,129,000, non-cash restructuring and nonrecurring charges of $8,369,000,
partially offset by the gain on sale of business segment of $19,716,000. The
decrease in working capital requirements was due primarily to a decrease in
accounts receivable caused by the exit of the karat gold business as well as
lower sales of the discontinued automotive segment.
18
<PAGE> 20
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 providing a source of cash in 1993 not duplicated in 1994
as described below. 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.
CASH PROVIDED/(USED) IN INVESTING ACTIVITIES
Net cash provided/(used) in investing activities amounted to $70,637,000 in
1995, ($47,703,000) in 1994 and ($6,133,000) in 1993. Net cash provided by
investing activities increased $118,340,000 in 1995 over 1994 primarily due to
net proceeds of $68,032,000 from the sale of the automotive (OEM) segment, an
increase of $24,250,000 in net investing activities of discontinued operations
due to 1994's remaining discontinued operations net assets being realized in
1995 from the sale of the Company's investment in and receivable from GO/DAN
Industries, a joint venture, payments in 1994 for the purchase of Sumco Inc. in
the amount of $26,000,000 and related acquired debt of $3,921,000, offset
partially by the 1995 increase in capital expenditures of $4,576,000, primarily
for plant expansion and machinery and equipment in the wire/tubing segment.
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 wire/tubing and discontinued
automotive segments, and the proceeds from the sale of business units in 1993
for $5,072,000.
CASH USED IN FINANCING ACTIVITIES
During this past three year period the Company's net financing activities
were the repayment of $81,844,000 in debt, cash provided by the net decrease in
futures receivable of $1,015,000, dividend payments of $8,997,000, and the
purchase of Company stock of $1,382,000 for a total net cash usage of
$91,208,000.
The net cash used in financing activities was $86,718,000 in 1995 primarily
due to the decrease in futures payable of $37,772,000 and increase in futures
receivable of $7,681,000 (futures previously described), repayment of debt of
$36,500,000, payment of dividends of $3,383,000 and purchase of the Company's
common stock amounting to $1,382,000 (cash -- settlement basis) which is part of
a plan to buy back up to 1.5 million shares of the Company's common stock
announced on November 6, 1995.
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, as previously described, offset by the repayment
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 primarily due to the
purchases of precious metals by the Company's refining business and related
immediate sale for future delivery which eliminates the economic risk of
precious metal price fluctuations.
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.
The Company's foreign operations consist of five wholly owned subsidiaries,
(one in Canada, three in the United Kingdom, and one in Denmark), and one equity
investment in Asia. Substantially all unremitted earnings of such entities are
free from legal or contractual restrictions.
19
<PAGE> 21
COMPARISON OF 1995 VERSUS 1994
Sales for the wire/tubing segment increased $21,342,000 (14%) due to the
strong demand for wire products, most notably in Europe through the Company's
U.K. business unit and also a strong increase in demand for seamless stainless
steel tubing brought about by rapid growth in the semiconductor fabrication
industry. Profit contribution (pre-tax income before deducting interest and
Corporate expenses) increased $3,830,000 (27%) due to the increased sales above,
reduced production costs stemming from new and/or improved manufacturing
equipment and facilities, and reduced raw material costs all of which were
partially offset by start up costs of the new tubing facility in Europe. Capital
investment as well as new product development has created the potential for
increased profits from this segment.
Sales for the precious metal segment decreased $30,166,000 (7%). Sales of
refining outturn, primarily in kilo bar and grain form, decreased from
$157,142,000 in 1994 to $127,742,000 in 1995. 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 significantly less than margins on other products in this
segment. The average price of gold in 1995 was $384.19 per ounce and in 1994 was
$384.14 per ounce. The average price of silver in 1995 was $5.19 per ounce and
in 1994 was $5.29 per ounce. Decreased product sales due to exiting the karat
gold fabricated product line, discussed below, were primarily offset by
increased sales of the precision plating and surface finishing companies. The
profit contribution decreased $295,000 (2%). In 1995 nonrecurring charges of
$5,342,000 for severance costs, asset write-downs and other costs related to the
decision to exit the karat gold fabricated product line in East Providence,
Rhode Island and $4,207,000 of additional costs, primarily asset write-downs,
related to the Company's ongoing operation in Fairfield, Connecticut were
recorded. Excluding these nonrecurring charges the profit contribution increased
$9,254,000 (68%) due to the increased sales of the precision plating and surface
finishing companies as well as controlling operating costs. We anticipate
earnings progress in our precious metal fabrication business, however, we still
have concerns about the current performance of our refining operations.
In the other non-precious metal segment, sales increased $822,000 (5%) and
profit contribution increased $337,000 (17%) primarily due to substantial growth
of this business unit's thermOweld(R) product line, which is anticipated to
continue in 1996.
Interest expense increased $3,910,000 (29%) primarily due to higher
interest rates on borrowings and leased metal during the year.
The effective income tax rate for 1995 was 47.3% and 1994 was 41.7%. The
reason for the higher effective income tax rate for 1995 over 1994 is
attributable to the valuation allowance for the deferred tax asset on foreign
losses as well as goodwill amortization associated with the acquisition of Sumco
Inc. in September 1994.
During 1995 the Financial Accounting Standards Board issued SFAS No. 121
"Accounting for Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed of" and SFAS No. 123 "Accounting for Stock-based Compensation", both
effective for fiscal years beginning after December 15, 1995. The Company will
implement SFAS No. 123 using the proforma disclosure method described in the
pronouncement. The future adoption in 1996 of SFAS No. 121 is not expected to
have a material effect on the Company's consolidated financial position or
results of operations.
COMPARISON OF 1994 VERSUS 1993
Sales for the wire/tubing segment increased $14,406,000 (10%) due to the
improved economy, both domestic and European. The profit contribution increased
$2,497,000 (21%) due to increased sales as well as improved manufacturing
performance through capital investment which increased capacity in both the wire
and tubing companies.
Sales for the precious metal segment increased $93,946,000 (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 significantly less than the margins on other
20
<PAGE> 22
products in this segment. The average price for gold in 1994 was $384.14 per
ounce and in 1993 was $359.84 per ounce. The average price for silver in 1994
was $5.29 per ounce and in 1993 was $4.30 per ounce. The profit contribution
increased $4,164,000 (44%) primarily due to strong sales and operating profits
of our precision plating and surface finishing companies offset by lower sales
for other industrial products caused by overcapacity and intense price
competition.
In the other non-precious metal segment, sales decreased $9,954,000 (40%)
primarily due to the sale of three businesses in 1993. Profit contribution
increased $4,611,000. 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
$686,000 due to the increased sales to the natural gas industry by this
segment's remaining unit.
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.
21
<PAGE> 23
CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
Sales and service revenues........................ $595,497,000 $603,499,000 $505,101,000
Cost of sales and service......................... 505,197,000 522,570,000 441,052,000
------------ ------------ ------------
Gross profit...................................... 90,300,000 80,929,000 64,049,000
Selling, general, and administrative expenses..... 52,256,000 50,273,000 45,266,000
Restructuring charge.............................. 5,342,000 -- --
------------ ------------ ------------
Continuing operations: operating income........... 32,702,000 30,656,000 18,783,000
------------ ------------ ------------
Other deductions:
Interest expense (net).......................... 17,337,000 13,427,000 13,588,000
Other (net)..................................... 715,000 2,591,000 2,215,000
------------ ------------ ------------
18,052,000 16,018,000 15,803,000
------------ ------------ ------------
Income from continuing operations before income
taxes and cumulative effect of accounting
change.......................................... 14,650,000 14,638,000 2,980,000
Income tax provision.............................. 6,926,000 6,104,000 1,244,000
------------ ------------ ------------
Income from continuing operations before
cumulative effect of accounting change.......... 7,724,000 8,534,000 1,736,000
Cumulative effect of accounting change............ -- -- 576,000
------------ ------------ ------------
Income from continuing operations................. 7,724,000 8,534,000 2,312,000
------------ ------------ ------------
Discontinued operations:
Income/(loss) from operations, net of income
taxes/(benefit)($401,000), $5,706,000,
$5,103,000................................... (580,000) 7,977,000 7,164,000
Gain on disposal, net of income
taxes -- $8,220,000.......................... 11,496,000 -- --
------------ ------------ ------------
10,916,000 7,977,000 7,164,000
------------ ------------ ------------
Net income........................................ $ 18,640,000 $ 16,511,000 $ 9,476,000
============ ============ ============
Earnings per share:
Continuing operations:
Income from continuing operations before
cumulative effect of accounting change..... $ .55 $ .61 $ .13
Cumulative effect of accounting change....... -- -- .04
------------ ------------ ------------
Total continuing operations..................... .55 .61 .17
Discontinued operations......................... .77 .57 .51
------------ ------------ ------------
Net income........................................ $ 1.32 $ 1.18 $ .68
------------ ------------ ------------
Average number of shares outstanding.............. 14,092,000 14,050,000 14,021,000
============ ============ ============
</TABLE>
- ---------------
The accompanying summary of significant accounting policies and notes are an
integral part of the financial statements.
22
<PAGE> 24
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------
1995 1994
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash........................................................... $ 6,637,000 $ 2,559,000
Accounts receivable, less allowance for doubtful accounts of
$3,021,000 in 1995 and $3,597,000 in 1994................... 61,036,000 82,733,000
Futures receivable............................................. 7,681,000 --
Inventories.................................................... 84,422,000 89,939,000
Prepaid expenses, deposits and other current assets............ 3,325,000 12,105,000
------------ ------------
Total current assets............................................. 163,101,000 187,336,000
------------ ------------
Investments in affiliates, at equity............................. 2,686,000 2,207,000
Property, plant and equipment.................................... 214,345,000 273,018,000
Less accumulated depreciation and amortization................. 122,939,000 155,818,000
------------ ------------
91,406,000 117,200,000
Prepaid retirement costs (net)................................... 51,152,000 47,459,000
Intangibles, net of amortization................................. 22,141,000 22,991,000
Other assets..................................................... 10,563,000 4,930,000
Noncurrent assets of discontinued operations..................... -- 22,895,000
------------ ------------
$341,049,000 $405,018,000
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term borrowings.......................................... $ 40,000,000 $ 34,750,000
Current maturities of long-term debt........................... 3,500,000 7,000,000
Accounts payable............................................... 32,899,000 45,044,000
Futures payable................................................ -- 37,772,000
Advances from smelter.......................................... -- 4,118,000
Federal and foreign taxes on income............................ 8,072,000 1,342,000
Other current liabilities...................................... 29,150,000 23,567,000
------------ ------------
Total current liabilities........................................ 113,621,000 153,593,000
------------ ------------
Long-term debt, less current maturities.......................... 93,500,000 131,750,000
Deferred income taxes............................................ 13,534,000 13,551,000
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................................................ 12,033,000 11,830,000
Retained earnings.............................................. 99,371,000 84,114,000
Foreign currency translation adjustment........................ (748,000) (720,000)
------------ ------------
125,267,000 109,835,000
Less: Treasury stock 1995 -- 603,800 shares; 1994 -- 532,652
shares -- at cost.............................................. 4,873,000 3,491,000
Unearned compensation....................................... -- 220,000
------------ ------------
Total shareholders' equity....................................... 120,394,000 106,124,000
------------ ------------
$341,049,000 $405,018,000
============ ============
</TABLE>
- ---------------
The accompanying summary of significant accounting policies and notes are an
integral part of the financial statements.
23
<PAGE> 25
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
THREE YEARS ENDED DECEMBER 31, 1995
-------------------------------------------------------------------------------------------------
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, 1993... $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
Net income................. 18,640,000 18,640,000
Cash dividends on common
stock -- $.24 per
share.................... (3,383,000) (3,383,000 )
Remeasurement and
amortization of stock
issued under 1988 long-
term incentive plan...... 4,000 (6,000) 220,000 218,000
Stock awarded under outside
director stock option
plan (awarded
3,290 -- issued 2,852
shares).................. 34,000 14,000 48,000
Stock issued under the
incentive stock option
plan (22,800 shares)..... 165,000 115,000 280,000
Shares purchased by Company
for treasury (95,500
shares).................. (1,505,000) (1,505,000 )
Translation adjustment..... (28,000) (28,000 )
----------- ----------- ------------ ----------- ------------ ----------- - ------------
Balance, December 31,
1995..................... $14,611,000 $12,033,000 $99,371,000 $(748,000) $(4,873,000) -- $120,394,000
=========== =========== ============ ============ ============ ============ ============
</TABLE>
- ---------------
The accompanying summary of significant accounting policies and notes are an
integral part of the financial statements.
24
<PAGE> 26
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------
1995 1994 1993
------------ ------------ ------------
INCREASE (DECREASE) IN CASH
<S> <C> <C> <C>
Cash flows from operating activities:
Net income...................................................... $ 18,640,000 $ 16,511,000 $ 9,476,000
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization............................... 16,668,000 15,683,000 15,816,000
Provision for doubtful accounts............................. 329,000 784,000 1,195,000
Loss/(gain) on disposal of property, plant and equipment.... 91,000 454,000 (7,000)
(Gain)/loss on disposal of business units................... (460,000) 1,300,000 2,800,000
Net prepaid retirement costs................................ (2,339,000) (3,832,000) (4,793,000)
Equity in earnings of affiliates............................ (451,000) (338,000) (117,000)
Earned compensation -- 1988 long-term incentive and outside
director stock option plans............................... 266,000 277,000 214,000
Restructuring and nonrecurring charges...................... 8,369,000 -- --
Gain on sale of business segment............................ (19,716,000) -- --
Changes in assets and liabilities, net of effects from
acquisitions and divestitures:
Accounts receivable....................................... 3,369,000 (12,813,000) 2,119,000
Inventories............................................... (7,877,000) (459,000) (3,714,000)
Prepaid expenses.......................................... 1,210,000 (1,425,000) 556,000
Deferred financing costs.................................. -- (1,832,000) --
Deferred charges and other assets......................... (1,671,000) (714,000) 880,000
Accounts payable and other current liabilities............ 1,223,000 (2,996,000) 12,024,000
Advances from smelter..................................... (4,118,000) (4,817,000) 8,935,000
Federal and foreign taxes on income....................... 6,730,000 1,342,000 --
Deferred income taxes..................................... (17,000) 2,020,000 3,595,000
-------------- -------------- --------------
Net cash provided by operating activities....................... 20,246,000 9,145,000 48,979,000
-------------- -------------- --------------
Cash flows from investing activities:
Proceeds from sale of property, plant and equipment........... 520,000 307,000 945,000
Capital expenditures.......................................... (23,143,000) (18,567,000) (15,002,000)
Acquisition, net of cash and debt acquired.................... -- (29,943,000) --
Divestitures, net of cash sold................................ 68,032,000 -- 5,072,000
Investment in affiliates -- net............................... 478,000 -- (179,000)
Net investing activities of discontinued operations........... 24,750,000 500,000 3,031,000
-------------- -------------- --------------
Net cash provided/(used) in investing activities................ 70,637,000 (47,703,000) (6,133,000)
-------------- -------------- --------------
Cash flows from financing activities:
Proceeds from short-term borrowings........................... 5,250,000 6,750,000 5,500,000
Repayment of other long-term debt............................. (11,750,000) (7,000,000) (10,594,000)
Net increase/(decrease) in long-term revolving credit
facilities.................................................. (30,000,000) (50,000,000) 10,000,000
Net (increase)/decrease in futures receivable................. (7,681,000) 53,087,000 (44,391,000)
Net increase/(decrease) in futures payable.................... (37,772,000) 37,772,000 --
Dividends paid................................................ (3,383,000) (2,811,000) (2,803,000)
Purchase of treasury stock.................................... (1,382,000) -- --
-------------- -------------- --------------
Net cash provided/(used) in financing activities................ (86,718,000) 37,798,000 (42,288,000)
-------------- -------------- --------------
Effect of exchange rate changes on net cash..................... (87,000) (1,000) (50,000)
-------------- -------------- --------------
Net change in cash.............................................. 4,078,000 (761,000) 508,000
Cash at beginning of year....................................... 2,559,000 3,320,000 2,812,000
-------------- -------------- --------------
Cash at end of year............................................. $ 6,637,000 $ 2,559,000 $ 3,320,000
============== ============== ==============
Cash paid during the year for:
Interest, net of contango on futures and forward contracts and
interest rate swap.......................................... $ 20,979,000 $ 15,721,000 $ 15,719,000
Income taxes.................................................. $ 6,365,000 $ 8,709,000 $ 2,668,000
============== ============== ==============
</TABLE>
- ---------------
The accompanying summary of significant accounting policies and notes are an
integral part of the financial statements.
25
<PAGE> 27
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. The
assessment of the recoverability of goodwill will be impacted if estimated
future operating cash flows are not achieved.
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 the 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
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 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. 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.
26
<PAGE> 28
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 21.
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 1995, 1994 and 1993.
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
shareholders' 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 debt of the same remaining maturities. The fair value
of long-term debt exceeded its carrying value by approximately $8,000,000. 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 1994 and 1993 consolidated
financial statements to conform to the 1995 presentation.
L -- NEW FINANCIAL ACCOUNTING STANDARDS
During 1995 the Financial Accounting Standards Board issued SFAS No. 121
"Accounting for Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed of" and SFAS No. 123 "Accounting for Stock-based Compensation", both
effective for fiscal years beginning after December 15, 1995. The Company will
implement SFAS No. 123 using the proforma disclosure method described in the
pronouncement. The future adoption in 1996 of SFAS No. 121 is not expected to
have a material effect on the Company's consolidated financial position or
results of operations.
27
<PAGE> 29
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1: ACQUISITIONS, DIVESTITURES, RESTRUCTURING AND OTHER CHARGES
The Company sold its automotive (OEM) segment in two phases during 1995 and
recorded a net gain on its sale amounting to $19,716,000. The first phase was
the sale of this segment's cable operations on July 20, 1995 for which the
Company received cash of $3,211,000. The cable operations' working capital
retained by the Company also generated approximately $3,000,000 in cash. The
second phase was the sale of this segment's remaining operations on December 29,
1995 for which the Company received $64,821,000 (net of cash sold) with an
additional amount due of $5,246,000 in 1996. Accordingly, the results of this
segment for all years presented are reported in the accompanying consolidated
statement of income as discontinued operations. Revenues from this segment for
1995, 1994, and 1993 were $150,629,000, $181,866,000 and $156,607,000,
respectively. The assets and liabilities of this discontinued operation included
in the consolidated balance sheet for 1994 are as follows: Working
capital -- $25,582,000, Net property, plant and equipment -- $24,813,000, Other
assets -- $318,000.
During 1995 the Company exited the karat gold fabricated product line
located in its East Providence, Rhode Island facility. A restructuring charge to
exit the business amounting to $5,342,000 was recorded as follows: employee
separation (155 employees) -- $733,000, asset write-downs -$3,819,000, and other
exit costs -- $790,000. This action was substantially completed at December 31,
1995. In addition to this restructuring charge, a charge of $4,207,000,
primarily asset write-downs, was recorded relating to the Company's ongoing
operation in Fairfield, Connecticut.
Included in other deductions for 1995 is a gain on the sale of the
Company's joint venture in Brazil amounting to $460,000.
On September 9, 1994 the Company acquired 100% of Sumco Inc.'s outstanding
shares 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 the Company's interest in a
Mexican joint venture of $1,300,000 and land and building 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 were not material to the revenues of the Company.
NOTE 2: INVENTORIES AND FEE CONSIGNMENT FACILITIES
The components of inventories at December 31, 1995 and 1994 are as follows:
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Precious Metals:
Fine and Fabricated metals in various stages of completion...... $34,230,000 $37,825,000
Non-Precious Metals:
Base metals, factory supplies and raw materials................. 21,797,000 25,175,000
Work in process................................................. 19,384,000 18,521,000
Finished goods.................................................. 9,011,000 8,418,000
----------- -----------
$84,422,000 $89,939,000
=========== ===========
</TABLE>
28
<PAGE> 30
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
OTHER INVENTORY INFORMATION AT DECEMBER 31, 1995 AND 1994:
<TABLE>
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
Precious metals stated at LIFO cost............................. $ 28,870,000 $ 32,450,000
============ ============
LIFO inventory-excess of year-end market value over LIFO cost... $141,458,000 $139,068,000
============ ============
Dec. 31 market value per ounce:
Silver.......................................................... $ 5.11 $ 4.87
Gold............................................................ $ 386.95 $ 382.40
============ ============
</TABLE>
Consigned precious metal ounces due to/(from) customers and suppliers:
<TABLE>
<CAPTION>
1995 1994
---------- ----------
<S> <C> <C>
Silver ounces
Net open account.................................................... 6,130,000 (2,135,000)
Leased.............................................................. 11,987,000 19,517,000
---------- ----------
Total............................................................... 18,117,000 17,382,000
========== ==========
Gold ounces
Net open account.................................................... 9,000 (32,000)
Leased.............................................................. 113,000 326,000
---------- ----------
Total............................................................... 122,000 294,000
========== ==========
</TABLE>
In 1994 the Company finalized a Gold and Silver Fee Consignment Facility
amounting to $250,750,000 of which $158,500,000 remains after exiting the karat
gold business in 1995. The Fee Consignment Facility of $79,250,000 is for a
three-year period and the short-term Fee Consignment Facility of $79,250,000 is
for 364 days. As of December 31, 1995, 13,687,000 ounces of silver and 10,000
ounces of gold were leased to the Company and are included in leased amounts
above. The fee rate at December 31, 1995 for gold was 3.75% and silver was
2.00%.
NOTE 3: DEBT AND CREDIT AGREEMENTS
The Company's borrowing requirements are primarily related to the level of
inventories, the market value of precious metals, and 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, 1995, the Company
had short-term credit facilities of $53,750,000; (see discussion below regarding
revolving credit facilities) short-term bank borrowing amounted to $40,000,000.
The corresponding amounts for December 31, 1994 were: credit
facilities -- $53,750,000 and short-term bank borrowings -- $34,750,000.
At December 31, 1995, 1994, and 1993 the average interest rate for
outstanding short-term borrowing was 6.0%, 6.9% and 4.0%, respectively. During
1995, the average month-end short-term borrowing was $54,300,000; the weighted
average interest rate of 6.5% was computed on the basis of the number of days
the borrowings were outstanding; and the maximum month-end short-term borrowing
was $75,500,000. The corresponding amounts for the years ended December 31, 1994
and 1993 were: average month-end borrowing-$53,777,000 and $15,688,000 weighted
average interest rate 5.4% and 4.3%, and maximum month-end
borrowing-$117,000,000 and $36,000,000.
29
<PAGE> 31
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
Long-term debt at December 31, 1995 and 1994 is summarized as follows:
<TABLE>
<CAPTION>
1995 1994
----------- ------------
<S> <C> <C>
Credit facility.................................................. $25,000,000 $ 55,000,000
8.83% notes due 2002............................................. 50,000,000 50,000,000
9.37% note due 1999.............................................. 14,500,000 18,000,000
10.20% note due 1998............................................. -- 8,250,000
Industrial revenue bonds, floating rate, due 2004 -- 2005........ 7,500,000 7,500,000
----------- ------------
97,000,000 138,750,000
Less installments due within year................................ 3,500,000 7,000,000
----------- ------------
Total long-term debt............................................. $93,500,000 $131,750,000
=========== ============
</TABLE>
Maturities of long-term debt in each of the next five years are as follows
(in thousands): $3,500, $3,500, $38,500, $14,000 and $10,000. During the third
quarter of 1994, the Company finalized $215,000,000 of Revolving Credit
Facilities with twenty banks. These Credit Facilities provided both $161,250,000
for a three year period and $53,750,000 for 364 days. Due to the sale of the
Company's automotive segment, the three year portion of the credit facility was
reduced to $96,250,000. Under both of these credit facilities interest is
payable at the prime rate or LIBOR plus 1%, at the Company's option.
All the above loans have restrictive covenants which, under the most
restrictive covenants of the Company's long-term loan agreements $17,280,000 of
consolidated retained earnings were unrestricted at December 31, 1995, 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 $134,000,000. At December 31, 1995
the Company was in compliance with all covenants.
NOTE 4: INCOME TAXES
The components of pre-tax income are as follows (in thousands):
<TABLE>
<CAPTION>
1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
Continuing operations -- domestic............................. $13,270 $13,249 $ 2,585
Continuing operations -- foreign.............................. 1,380 1,389 395
------- ------- -------
14,650 14,638 2,980
Discontinued operations -- domestic........................... 18,735 13,683 12,267
------- ------- -------
Total....................................................... $33,385 $28,321 $15,247
======= ======= =======
</TABLE>
30
<PAGE> 32
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
The provision for taxes on income was comprised of the following (in thousands):
<TABLE>
<CAPTION>
1995
-------------------------------
CURRENT DEFERRED TOTAL
------- ------- -------
<S> <C> <C> <C>
CONTINUING OPERATIONS
Federal....................................................... $ 2,902 $ 1,792 $ 4,694
FOREIGN....................................................... 1,594 (386) 1,208
STATE AND LOCAL............................................... 256 768 1,024
------- ------- -------
4,752 2,174 6,926
------- ------- -------
DISCONTINUED OPERATIONS
Federal....................................................... 7,598 (1,655) 5,943
STATE AND LOCAL............................................... 2,412 (536) 1,876
------- ------- -------
10,010 (2,191) 7,819
------- ------- -------
TOTAL....................................................... $14,762 $ (17) $14,745
======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
1994
------------------------------
CURRENT DEFERRED TOTAL
------ ------ --------
<S> <C> <C> <C>
CONTINUING OPERATIONS
Federal........................................................ $1,940 $2,116 $ 4,056
Foreign........................................................ 748 (25) 723
State and local................................................ 1,325 -- 1,325
------ ------ -------
4,013 2,091 6,104
------ ------ -------
DISCONTINUED OPERATIONS
Federal........................................................ 4,154 184 4,338
State and local................................................ 1,368 -- 1,368
------ ------ -------
5,522 184 5,706
------ ------ -------
Total........................................................ $9,535 $2,275 $ 11,810
====== ====== =======
</TABLE>
<TABLE>
<CAPTION>
1993
-----------------------------
CURRENT DEFERRED TOTAL
------- ------ ------
<S> <C> <C> <C>
CONTINUING OPERATIONS
Federal......................................................... $(3,083) $3,803 $ 720
Foreign......................................................... 160 91 251
State and local................................................. 573 (300) 273
------- ------ ------
(2,350) 3,594 1,244
------- ------ ------
DISCONTINUED OPERATIONS
Federal......................................................... 3,875 1 3,876
State and local................................................. 1,227 -- 1,227
------- ------ ------
5,102 1 5,103
------- ------ ------
Total......................................................... $ 2,752 $3,595 $6,347
======= ====== ======
</TABLE>
31
<PAGE> 33
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at December 31,
1995 and 1994 follow (in thousands):
<TABLE>
<CAPTION>
1995
----------------------------------------------
DEFERRED TAX DEFERRED TAX NET DEFERRED
ASSETS LIABILITIES LIABILITY
------------ ------------ ------------
<S> <C> <C> <C>
Prepaid retirement costs.............................. $ 17,903 $(17,903)
Property, plant and equipment......................... 5,054 (5,054)
Restructuring and discontinued operations............. $ 5,972 -- 5,972
All other............................................. 6,254 1,913 4,341
Valuation allowance................................... (890) -- (890)
------- ------- --------
Total............................................... $ 11,336 $ 24,870 $(13,534)
======= ======= ========
</TABLE>
<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............................................. 7,255 2,077 5,178
Valuation allowance................................... (182) -- (182)
------- ------- --------
Total................................................. $ 14,365 $ 27,916 $(13,551)
======= ======= ========
</TABLE>
Due to the Company's current taxable income and expected future taxable
income, management believes it is more likely than not that the Company will
realize the benefit of the existing deferred tax assets other than the deferred
tax asset on foreign losses for which a valuation allowance has been provided.
Principal items making up the change in the net deferred tax liability
follow (in thousands):
<TABLE>
<CAPTION>
1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
Prepaid retirement costs...................................... $ 1,293 $ 1,340 $ 1,643
Property plant and equipment.................................. (4,175) (257) (1,372)
Restructuring................................................. 825 558 2,510
Foreign tax credit carryforwards.............................. 495 689 (919)
Investment tax credit carryforwards........................... -- 1,502 --
Effect of 1993 income tax rate change on deferred taxes....... -- -- 275
All other..................................................... 1,545 (1,557) 1,458
------- ------- -------
$ (17) $ 2,275 $ 3,595
======= ======= =======
</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.
32
<PAGE> 34
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
The major elements contributing to the difference between the U.S. Federal
statutory tax rate and the consolidated effective tax rate for continuing
operations are as follows:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
U.S. Federal effective statutory tax rate.............................. 35.0% 35.0% 34.0%
State and local income taxes, net of Federal income tax benefit........ 4.6 5.9 6.0
Foreign tax credit..................................................... -- -- (11.5)
Valuation allowance.................................................... 4.8 1.2 2.0
Effect of 1993 income tax rate change on deferred taxes................ -- -- 9.2
Net effect of foreign tax rates........................................ 0.1 0.4 1.9
Other.................................................................. 2.8 (0.8) --
---- ---- ----
47.3% 41.7% 41.6%
==== ==== ====
</TABLE>
NOTE 5: COMMITMENTS
Commitments at December 31, 1995 for the purchase of additional property,
plant and equipment approximated $1,450,000. Rent expense for 1995, 1994, and
1993 was $3,591,000, $3,460,000 and $3,363,000, respectively. Operating lease
and rental commitments for future years are as follows:
<TABLE>
<S> <C>
1996............................................................................ $ 1,974,000
1997............................................................................ 1,482,000
1998............................................................................ 1,219,000
1999............................................................................ 918,000
2000............................................................................ 847,000
2001 and beyond ................................................................ 6,490,000
-----------
Total lease and rental commitments.............................................. $12,930,000
===========
</TABLE>
NOTE 6: INCENTIVE PLANS
HANDY & HARMAN 1995 OMNIBUS STOCK INCENTIVE PLAN (SUCCESSOR TO THE HANDY &
HARMAN LONG-TERM INCENTIVE STOCK OPTION PLAN ADOPTED IN 1991)
After incorporating 1994's remaining "shares available for option" of the
predecessor plan the combined number of shares subject to award under this
succeeding plan adopted in 1995 shall not exceed 1,000,000 shares of Common
Stock. The compensation committee of the Board of Directors may grant options,
stock appreciation rights (tandem or stand alone), shares of restricted or
phantom stock, and stock bonuses, in such amounts and with such terms and
conditions as the compensation committee shall determine, subject to the
provisions of the plan. Through 1995 only options have been awarded under the
successor and predecessor plans and, commencing one year after the date of
grant, each option becomes exercisable cumulatively at the rate of 25% per year
(20% for predecessor plan awarded options). These options expire ten years from
the date
33
<PAGE> 35
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
such options were granted.
Successor and predecessor plans' transactions are as follows:
<TABLE>
<CAPTION>
SHARES SHARES UNDER OPTION
AVAILABLE ----------------------------
FOR RANGE OF
OPTION SHARES PRICE
-------- ------- ----------------
<S> <C> <C> <C>
Balance, January 1, 1993............................. 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...................................... 45,200 (45,200) $ 12.625-15.312
-------- ------- ---------------
Balance, December 31, 1993........................... 348,200 648,000 $ 9.625-15.3125
Options granted...................................... (118,000) 118,000 $ 13.75 -16.625
Options exercised.................................... -- (27,000) $ 9.625-12.625
Options expired...................................... 23,000 (23,000) $ 12.625-15.312
-------- ------- ---------------
Balance, December 31, 1994........................... 253,200 716,000 $ 9.625-16.625
Increase in shares subject to award.................. 746,800
Options granted...................................... (162,000) 162,000 $ 15.125-15.438
Options exercised.................................... -- (22,800) $ 9.625-12.937
Options expired...................................... 28,200 (28,200) $ 11.313-16.625
-------- ------- ---------------
Balance, December 31, 1995........................... 866,200 827,000 $ 9.625-16.625
======== ======= ===============
</TABLE>
There are 397,600 options exercisable under this plan at December 31, 1995.
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>
1995 1994 1993
------ ------ ------
<S> <C> <C> <C>
Options outstanding January 1.................................... 8,791 7,062 7,379
Options awarded.................................................. 3,290 4,110 5,236
Options expired.................................................. -- (2,381) --
Options exercised................................................ (2,852) -- (5,553)
------ ------ ------
Options outstanding December 31.................................. 9,229 8,791 7,062
------ ------ ------
Shares subject to award December 31.............................. 71,935 75,225 76,954
====== ====== ======
</TABLE>
All options outstanding under this plan are exercisable at December 31,
1995.
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,
22,000 shares were issued in 1992, of which 1,000 shares were forfeited, and
28,600 shares were issued in 1994 of which 1,300 were forfeited. The market
value of shares issued under the Plan is recorded as unearned compensation and
shown as a separate component of shareholders' equity. This compensation is
amortized to expense over the period the employees become vested.
34
<PAGE> 36
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
Compensation expense for both the Outside Director Stock Option Plan and
the 1988 Long-Term Incentive Plan amounted to $266,000, $277,000 and $214,000,
in 1995, 1994 and 1993, respectively.
1982 STOCK OPTION PLAN
The 25,000 options outstanding at December 31, 1994 expired in March 1995.
NOTE 7: SEGMENT INFORMATION
Information regarding the Company's industry segments and discontinued
operations is contained on page 15 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>
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Depreciation and amortization expense:
Wire/Tubing....................................... $ 5,029,000 $ 4,355,000 $ 4,046,000
Precious metals................................... 6,132,000 5,059,000 4,645,000
Other non-precious metal businesses............... 543,000 504,000 1,748,000
Corporate......................................... 1,053,000 1,072,000 664,000
Discontinued operations........................... 3,911,000 4,693,000 4,713,000
----------- ----------- -----------
$16,668,000 $15,683,000 $15,816,000
=========== =========== ===========
Property, plant and equipment additions:
Wire/Tubing:
Expenditures................................... $11,378,000 $ 8,017,000 $ 6,310,000
----------- ----------- -----------
Precious Metals:
Expenditures................................... 8,431,000 5,647,000 5,650,000
----------- ----------- -----------
Other non-precious metal businesses:
Expenditures................................... 929,000 1,069,000 932,000
----------- ----------- -----------
Corporate:
Expenditures................................... 47,000 56,000 215,000
----------- ----------- -----------
20,785,000 14,789,000 13,107,000
----------- ----------- -----------
Discontinued operations:
Expenditures................................... 2,358,000 3,778,000 2,040,000
----------- ----------- -----------
$23,143,000 $18,567,000 $15,147,000
=========== =========== ===========
</TABLE>
35
<PAGE> 37
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
NOTE 8: SUPPLEMENTAL INFORMATION
<TABLE>
<CAPTION>
LIFE/
YEARS 1995 1994
---------- ------------ ------------
<S> <C> <C> <C>
a-Property, plant and equipment:
Land.......................................... $ 3,872,000 $ 6,365,000
Buildings and improvements 10-50 48,594,000 68,491,000
Machinery and equipment....................... 3-20 140,107,000 169,099,000
Furniture and fixtures........................ 2-20 11,974,000 17,254,000
Automotive.................................... 4-8 515,000 1,160,000
Leasehold improvements........................ Lease Life 2,269,000 2,323,000
Construction in progress...................... -- 7,014,000 8,326,000
---------- ------------ ------------
$214,345,000 $273,018,000
========== ============ ============
</TABLE>
Depreciation and amortization of property, plant and equipment charged to
operations for 1995, 1994 and 1993 was $15,066,000, $14,633,000 and $14,659,000,
respectively.
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
b-Intangibles (net of amortization):
Patents and other............................................... $ 455,000 $ 704,000
Excess of purchase price over net assets acquired in business
combinations................................................. 21,686,000 22,287,000
----------- -----------
$22,141,000 $22,991,000
=========== ===========
</TABLE>
NOTE 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 the 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 1995, 1994 and
1993 are as follows:
<TABLE>
<CAPTION>
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
Service cost-benefits earned during the period... $ 3,582,000 $ 3,858,000 $ 3,546,000
Interest cost on the projected benefits
obligation..................................... 7,974,000 7,530,000 7,253,000
Return on plan assets............................ (37,283,000) 43,000 (15,563,000)
Net amortization and deferral.................... 21,399,000 (15,540,000) (106,000)
----------- ----------- -----------
Net periodic pension cost (credit)............... $ (4,328,000) $ (4,109,000) $ (4,870,000)
=========== =========== ===========
</TABLE>
36
<PAGE> 38
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
Assumptions used in the accounting at December 31 are:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Discount rate:
Beginning of year................................................... 7.0% 6.5% 7.0%
End of year......................................................... 7.0% 7.0% 6.5%
Compensation increase................................................. 5.0% 5.0% 5.0%
Expected asset return................................................. 8.0% 8.5% 8.5%
============ ============
</TABLE>
The plans' funded status as of December 31 and the amounts recognized in
the accompanying financial statements are as follows:
<TABLE>
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested benefit obligation..................................... $106,422,000 $ 96,944,000
------------ ------------
Accumulated benefit obligation................................ $111,635,000 $100,710,000
------------ ------------
Projected benefit obligation.................................. $122,555,000 $112,920,000
Plan assets at fair value....................................... 181,835,000 150,575,000
------------ ------------
Plan assets in excess of projected benefit obligation........... 59,280,000 37,655,000
Unrecognized net loss........................................... 4,032,000 30,074,000
Unrecognized prior service cost................................. (1,467,000) (3,418,000)
Unrecognized net asset.......................................... (6,403,000) (13,145,000)
------------ ------------
Prepaid pension cost............................................ $ 55,442,000 $ 51,166,000
============ ============
</TABLE>
The plans' assets are invested primarily in stocks and insurance contracts.
During the fourth quarter of 1995, the Company incurred a pension
curtailment due to the sale of the automotive segment. The result was a gain of
$1,354,000 which is included in the net periodic pension credit for 1995 and has
been classified in discontinued operations.
The cost of living provision in effect for a certain Company pension plan
was eliminated with respect to benefits credited after October 31, 1992 and the
definition of average pay was changed from a final five year average to career
average pay starting January 1, 1993 for all units covered under the plan. The
result was a decrease in the projected benefit obligation and a reduction in
unrecognized prior service cost of $7,130,000. This amount is being amortized
over 16 years.
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
Certain operations of the Company provide postretirement medical benefits
to current and retired employees. Certain employees of these operations become
eligible for postretirement medical benefits after fulfilling minimum age and
service requirements.
Postretirement benefit costs were determined assuming discount rates of 7%,
6.5% and 7% for the years ended 1995, 1994 and 1993, respectively. The
components of net periodic postretirement benefit cost are as follows:
<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Service cost........................................... $ 174,000 $ 207,000 $ 261,000
Interest cost.......................................... 596,000 577,000 694,000
Amortization of transition obligation.................. 371,000 433,000 574,000
--------- --------- ---------
$1,141,000 $1,217,000 $1,529,000
========= ========= =========
</TABLE>
37
<PAGE> 39
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
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, 1995 and 1994.
Accumulated Postretirement Benefit Obligation:
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Retirees.......................................................... $ 4,272,000 $ 3,783,000
Future retirees................................................... 4,856,000 5,079,000
----------- -----------
Total accumulated postretirement benefit obligation............... 9,128,000 8,862,000
Unrecognized transition obligation................................ (5,432,000) (5,969,000)
Unrecognized actuarial gain (loss)................................ 594,000 814,000
----------- -----------
Net postretirement benefit liability -- classified with prepaid
retirement costs................................................ $ 4,290,000 $ 3,707,000
=========== ===========
</TABLE>
The assumed discount rate used to measure the accumulated postretirement
benefit obligation was 6.5% for 1995 and 7% for 1994. 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,
1995 and 1994.
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 become immediately vested. The charge to operations for the Company's
matching contribution amounted to $932,000, $900,000 and $862,000 for 1995, 1994
and 1993, respectively.
NOTE 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, 1995, the Company had reserved common shares as
issuable pursuant to these rights. At the present time, the rights have no
dilutive effects on the earnings per share calculation.
NOTE 11: PREVIOUSLY DISCONTINUED OPERATIONS
On June 27, 1991, the Company announced its planned divestiture of six
businesses which were 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 1994 and prior consolidated financial statements of the Company had been
classified to report separately the net assets of these businesses. The
remaining discontinued operations net assets were realized in September 1995
with proceeds amounting to $24,750,000 from the sale of the Company's investment
in, and receivable from GO/DAN Industries, a joint venture partnership.
38
<PAGE> 40
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and
Shareholders of Handy & Harman:
We have audited the consolidated balance sheets of Handy & Harman and
Subsidiaries as of December 31, 1995 and 1994, 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, 1995. 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, 1995 and 1994, and the results of
their operations and their cash flows for each of the years in the three-year
period ended December 31, 1995 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.
KPMG PEAT MARWICK LLP
NEW YORK, NEW YORK
FEBRUARY 12, 1996
39
<PAGE> 41
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 and such amounts could differ from actual results. 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.
40
<PAGE> 42
S-1
HANDY & HARMAN AND SUBSIDIARIES
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
<TABLE>
<CAPTION>
BALANCE, BALANCE,
BEGINNING ADDITIONS DEDUCTIONS CLOSE
DESCRIPTION OF PERIOD (A) FROM RESERVE OF PERIOD
- ------------------------------------------------- --------- --------- ------------ ---------
(Thousands of Dollars)
<S> <C> <C> <C> <C>
Allowance for doubtful accounts receivable
(deducted from accounts receivable):
Year ended December 31, 1995..................... $ 3,597 $ 329 $ 905 $ 3,021
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
</TABLE>
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ------
<S> <C> <C> <C>
(a) Provision for doubtful accounts -- charged to costs and
expenses...................................................... $329 $784 $1,195
(b) Includes $122 acquired through business combination.
</TABLE>
41
<PAGE> 43
EXHIBIT INDEX
- -------------
Exhibits
- ----------
10(r) Amended and Restated Agreement between the Company and Mr. Grzelecki
(Filed as Exhibit 10(r) to this Annual Report on Form 10-K.
10(s) Press Release of the Company dated November 6, 1995 (Filed as Exhibit
10(s) to this Annual report on Form 10-K.
(21) List of Subsidiaries of the Company. Filed as Exhibit 21 to this
Annual Report on Form 10-K.
(27) Financial Data Schedule.
<PAGE> 1
Exhibit 10(r)
[CONFORMED]
AMENDED AND RESTATED AGREEMENT
AGREEMENT, dated as of November 3, 1995 by and between Handy & Harman,
a New York corporation (the "Company") and Frank E. Grzelecki (the "Executive").
WHEREAS, the Company and the Executive entered into a Letter Agreement
dated as of May 23, 1989, as amended (the "Agreement"), an Executive Agreement
dated as of July 1, 1989, as amended (the "Executive Agreement") and an Amended
Agreement dated as of September 22, 1994 (the "Amended Agreement"); and
WHEREAS, the Amended Agreement provides that when the Executive's
employment with the Company ends, whether the basis for such action being
instituted on the part of the Company or the Executive, the Executive shall
become entitled to the payment of severance benefits for one year in an amount
equal to the Executive's annual salary at the date of termination (the
"Severance Payment"); to full employee benefits coverage for one year (the
"Severance Benefits"); to continued medical benefits for himself and his spouse
until eligibility for Medicare (the "Medical Benefit"); and to certain
retirement benefits as indicated in an Agreement dated May 12, 1992; and
1
<PAGE> 2
WHEREAS, the Company considers its relationship with the Executive a
vital element in protecting and enhancing the best interests of the Company and
wishes to benefit from the Executive's substantial knowledge and experience by
extending its relationship with the Executive, and the Executive desires to
continue such relationship with the Company.
NOW, THEREFORE, in consideration of the foregoing, the Company and the
Executive agree as follows:
1. The Company and the Executive agree that this document, being
entered into this day, shall replace both the Agreement and the Amended
Agreement upon its execution and which shall provide for the payment of an
amount equal to the Severance Payment, such payment to be made in installments
over a five-year period. Notwithstanding any provision to the contrary herein,
the Executive (or his beneficiary) may, upon written notice to the Company,
call for the acceleration of the Severance Payment. Upon such written notice,
the Company shall pay to the Executive (or his beneficiary) a lump sum amount
equal to the remaining balance of the Severance Payment; and
(i) In the case of the death of the Executive during the five-year
period, the remainder of the Severance Payment shall be paid to his
beneficiary; and
2
<PAGE> 3
(ii) The Executive shall remain entitled to the Supplemental Retirement
Benefits as provided by amendment to the Agreement, dated as of May 12, 1992,
subject to the terms and conditions provided in such amendment and in the
Agreement, which provisions are incorporated by reference in this Agreement as
attached hereto as Exhibit A (a Certified Copy of the Resolutions of the Board
of Directors of Handy & Harman dated May 12, 1992) to this Agreement; and
(iii) From and after the date of the Executive's termination of
employment, the Company shall provide the Medical Benefit, without cost to the
Executive and his spouse, over the lives of both the Executive and his spouse.
Such Medical Benefit shall be provided on a basis no less favorable to the
Executive and his spouse than the medical coverage provided to active senior
executive officers of the Company as of the date of execution of this
Agreement; any future improvements in medical benefits adopted by the Company
for active senior executive officers will be deemed to be in effect for the
Executive and his spouse pursuant to the Medical Benefit, without cost to the
Executive or his
3
<PAGE> 4
spouse, on the date of effectiveness of such future improvements for active
senior executive officers of the Company.
(iv) The Company shall take all actions necessary and appropriate to
cause all outstanding options to remain outstanding and continue to vest and
become exercisable pursuant to the terms of the original grant, subject to the
terms of the applicable stock option plan and the applicable stock option
agreement. In addition, the Company shall extend the post exercise period for
the Executive's options granted under the 1991 Long-Term Incentive Stock Option
Plan to no less than one year from the effective (termination-retirement) date
of the Executive or for the term of the Consulting Agreement, referenced in
paragraph numbered 2 on page 5 of this Agreement, whichever period is longer,
but not beyond the original term of such option.
(v) The Executive shall be entitled to appropriate office space and
related expenses, off of the premises
4
<PAGE> 5
of the Company's headquarters in Rye, New York, along with appropriate
secretarial services for the four-year period following severance of
employment, which expenses shall not exceed $3,000 per month.
2. The Company and the Executive may enter into a Consulting Agreement
(the "Consulting Agreement"), copy of which is attached hereto as Exhibit B.
3. The obligations of the Company under this Agreement shall be binding
upon any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company.
IN WITNESS WHEREOF, the Company and the Executive have caused this
Amendment to be duly executed all as of November 3, 1995.
HANDY & HARMAN
By /s/ Paul E. Dixon
----------------------------------
Paul E. Dixon
/s/ Frank E. Grzelecki
------------------------------------
Frank E. Grzelecki
5
<PAGE> 6
Exhibits A and B (Omitted)
6
<PAGE> 1
Exhibit 10(s)
FROM: ON BEHALF OF:
Robert W. Block International Handy & Harman
30 East 60th Street
New York, NY 10022 Contact:
(212) 755-8047 Dennis C. Kelly
FOR IMMEDIATE RELEASE:
HANDY & HARMAN ANNOUNCES THIRD QUARTER RESULTS
AND A PLAN TO BUY BACK UP TO 1.5 MILLION SHARES
NEW YORK, NY -- November 6, 1995... Handy & Harman today reported results for
the third quarter and nine months of 1995 and a plan to buy back up to 1.5
million shares of the Company's common stock.
For the quarter ended September 30, 1995, Handy & Harman's results were net
income of $1,708,000 or $.12 per share compared to $3,477,000 or $.25 per share
for last year's comparable period. Sales for the third quarter of 1995 and 1994
were $166,395,000 and $194,743,000, respectively.
Net income for the first nine months of 1995 amounted to $12,266,000 or $.87
per share prior to nonrecurring after-tax charges of $6,491,000 or $.46 per
share for costs related to the decision to exit the karat gold fabricated
product line in East Providence, RI, for additional costs primarily related to
the Company's ongoing operation in Fairfield, CT and also for the sale of the
Company's two automotive cable business units. After including these
nonrecurring charges, nine month operating results were net income of
$5,775,000 or $.41 per share compared to net income for the comparable period
last year of $13,001,000 or $.93 per share. Sales for the nine months ended
September 30, 1995 and 1994 were $560,678,000 and $583,206,000, respectively.
(more)
<PAGE> 2
Commenting on the results, Richard N. Daniel, Chairman and Chief Executive
Officer, said, "Lower third quarter profits were the result of summer shutdowns
at customer facilities, particularly automotive assembly plants; of continuing
competitive pressures in the refining sector; and of ongoing new product
start-ups in the automotive O.E.M. segment. Business activity levels and
operating performance for the last quarter of the year are improving and we
expect results to return to previous year levels."
Additionally, the Board of Directors has authorized the buy back of up to 1.5
million shares of currently outstanding common stock. The Company has
approximately 14 million shares outstanding. The shares may be purchased from
time to time in the open market or unsolicited negotiated transactions
including block purchases. The timing of the program and the amount of stock
repurchased will be dictated by overall financial and market conditions.
Regarding the stock buy back plan, Mr. Daniel stated, "As we complete our exit
from the gold fabrication business, we are moving to liquidate a portion of our
precious metal inventory in order to match levels of ownership with current
requirements. The proceeds from such sales, along with cash provided from
recent divestiture of several business units, will be used to fund the stock
buy back plan, and, at the same time, provide capital for growth and expansion
opportunities."
Handy & Harman is a diversified manufacturer providing engineered products,
system components and precious metal fabrication and refining for industry
worldwide. Founded in 1867, Handy & Harman is headquartered in New York. The
shares of Handy & Harman are traded on the New York Stock Exchange with ticker
symbol: HNH
###
<PAGE> 1
Exhibit 21
HANDY & HARMAN
SUBSIDIARIES AS OF DECEMBER 31, 1995
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.
(Formerly Handy & Harman Radiator Corporation)
Handy & Harman Electronic Materials Corporation
(Formerly New Industrial Techniques, Inc.)
Handy & Harman Envirotech Systems, Ltd.
(Formerly Monico Manufacturing & Supply Co., Inc.)
Handy & Harmon Europe Ltd.
Handy & Harmon of Canada, Limited
Handy & Harmon International, Ltd.
Handy & Harmon International (Korea) Limited
Handy & Harmon Peru, Inc.
Handy & Harmon Tube Company, Inc.
Indiana Tube Corporation
Jackson Industries, Inc.
Jet Tool Company, Inc.
<PAGE> 2
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 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. Ltd. The
Company owns 12-1/2% of Handy & Harman Manufacturing (Singapore) Pte. Ltd.
The Company also has a 1% interest in Ravel Inc., formerly named R.V.L.
Investments, Inc.
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<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
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<RECEIVABLES> 71,738
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<PP&E> 214,345
<DEPRECIATION> 122,939
<TOTAL-ASSETS> 341,049
<CURRENT-LIABILITIES> 113,621
<BONDS> 93,500
0
0
<COMMON> 14,611
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<TOTAL-LIABILITY-AND-EQUITY> 341,049
<SALES> 595,497
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