UNITED STATES SECURITIES and EXCHANGE COMMISSION
Washington, DC 20549
Form 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT to SECTION 13 or 15(d) of the SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended September 30, 1995
Commission file number: 1-3940
NATIONAL-STANDARD COMPANY
(Exact Name of Registrant as Specified in Its Charter)
Indiana 38-1493458
(State or Other Jurisdiction of (IRS Employer Identification No.)
Incorporation or Organization)
1618 Terminal Road, Niles, Michigan 49120
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (616) 683-8100
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which Registered
Common stock, $.01 par value New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: NONE
(Title of Class)
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 (or for such shorter period that the
Registrant was required to file such reports), 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 Regulation S-K (Section 229.405 of this chapter) is not contained
herein, and will not be contained, to the best of 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. [X]
The aggregate market value of the common shares held by non-affiliates of the
registrant on November 30, 1995, based on the closing price of the shares on
the New York Stock Exchange and assuming that 61 percent of the shares were
held by non-affiliates, was approximately $36,954,686.
As of November 30, 1995, 5,385,018 shares of common stock, par value of
$ .01, were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE:
Portions of the annual Proxy Statement relating to the Annual Meeting of
Shareholders scheduled for January 25, 1996 are incorporated by reference
into Part III of this report.
The sequential page in this report where the Exhibit Index appears is page
34.
PART I
ITEM 1. Business
National-Standard Company, an Indiana corporation, and its subsidiaries (the
"Company") have generally operated prior to 1992 in two business segments:
(i) wire and related products and (ii) machinery and other products. As a
result of divestitures prior to 1992, the Company currently operates in only
the wire and related products segment.
In Fiscal Year 1995, there were no material changes to the Company's business.
During the prior three years, the Company disposed of various business
units and product lines as described in the following report.
Wire and Related Products Segment
The Company produces tire bead wire, welding wire, wire cloth, hose
reinforcing wire, stainless steel spring and specialty wire, plated wire, and
nonwoven metal fiber materials. These products are generally sold directly to
other manufacturers by Company salesmen. In addition, certain classes of wire
are sold through various types of distributors.
The Company also produces filters for automotive air bag inflators, which are
sold by Company salesmen to automotive air bag manufacturers.
Wire and related products are supplied to major markets consisting of air bag
filtration, tire, spring, automotive component, electric component, hydraulic
hose, telecommunications, and fabricated metal products.
The Company's wire products are generally highly competitive with a number of
other producers located both in the U.S. and in foreign countries. In some
cases, the Company's customers are also manufacturing products for their own
use similar to those produced by the Company. The Company remains the
leading U.S. producer of tire bead wire for the tire industry. Bekaert
Corporation, Delta Wire Corporation, and Amercord, Inc. are the Company's
major bead wire competitors. The Company is the major supplier of air bag
filtration materials in the U.S. While there are a limited number of
manufacturers in the Company's line of filtration materials, the Company
regards the field as highly competitive. Competitive factors for all of the
Company's products are generally considered to be price, service and product
quality.
Although wire and related products are generally basic materials or fabricated
products which do not require assembly, production time is relatively
short and backlog is not significant. There was a backlog of approximately
$36,620,000 and $27,750,000 at September 30, 1995 and 1994, respectively.
During 1995, the Company installed additional air bag filter manufacturing
capacity at a new leased facility in Mesa, Arizona. The Company invested
approximately $2,355,000 for the additional capacity, funded through
available capital expenditure lines of credit.
During 1993, the Company added air bag filter wire cloth weaving capacity at
new leased facilities in Knoxville, Tennessee and Clearfield, Utah. In
addition, certain air bag filtration products and manufacturing processes
were relocated from the Corbin, Kentucky facility to the new facilities.
During 1990, the Company entered into a joint venture with Toyota Tsusho
America, Inc., and a group of Japanese wire weavers. The venture was
established to ensure that the Company would have sufficient quantities of
competitively priced woven wire cloth to maintain its position as a major
supplier of filtration materials and filters for the automotive air bag
market. During 1991, the venture was self-funding, requiring no cash
contributions from the Company. During 1992, the Company contributed cash of
$120,000 and equipment valued at $180,000 to the venture. No additional
investments have been made in the venture. During 1995, the Company expanded
the joint venture to a second manufacturing site for the production of wire
cloth for air bag inflator filters. The expansion was funded from the
venture's operating cash flow and from external financing available to the
venture. Future capacity requirements will be dependent on market conditions.
During 1994, the Company discontinued the manufacture of hose wire in North
America and closed its Columbiana, Alabama facility. The North American hose
wire market is served from capacity available in the Company's Kidderminster,
England facility. Sufficient bead wire manufacturing capacity to serve the
Company's North American market was relocated to the Company's other North
American wire facilities. The Company provided $4,870,000 during the first
quarter of 1994 for relocation of equipment, plant environmental stabiliza-
tion, and employee severance. Approximately $2,700,000 and $1,760,000 of
cash outlays related to the plant closure were made during 1994 and 1995,
respectively. Cash outlays during 1996 related to the closure are expected
to be $205,000, primarily for plant environmental stabilization.
In 1993, the Company sold the Telford Wire Division, Telford, England and the
Taydor Engineers business unit in Stourport, England. Proceeds of $1,344,000
were used to reduce its United Kingdom borrowings.
During 1988, the Company closed its strip steel and flat wire facility
located in Clifton, New Jersey. Prior to 1992, the facility was included in
the "machinery and other products" segment. During the past seven years, the
Company has undertaken to obtain New Jersey approval to transfer title for
the property. Due to the environmental regulations in the State of New
Jersey, title to real estate cannot be passed without the Department of
Environmental Protection s written approval. This project has involved
demolition of the buildings and continuing remediation of environmental
problems from production wastes through use of an on-site landfill and
off-site disposal. The cash outlays related to the property, which have been
primarily environmental, were $304,000, $285,000, $282,000, $380,000,
$3,027,000, $712,000, and $3,028,000 in 1995, 1994, 1993, 1992, 1991, 1990,
and 1989, respectively. These cash outlays, up to the estimated realizable
value of the property, have been reported as other assets, with the balance
charged to operations. In 1995, 1994, 1993, 1992, 1991 and 1990, the Company
expensed $1,110,000, $2,030,000, $0, $333,000, $3,898,000 and $2,933,000,
respectively, associated with the project, primarily to adjust the property
value to current market and to recognize the current estimated cost of soil
remediation. The Company expects to spend $300,000 in 1996 on the project.
Future cash outlays of approximately $3,035,000 will be needed prior to sale
of the property. The Company intends to spend this amount in conjunction with
or just prior to the sale.
Environmental
In addition to amounts spent in connection with the Clifton, New Jersey
facility, the Company had cash outlays of approximately $2,777,000, $2,531,0-
00, and $1,471,000 during the 1995, 1994, and 1993 fiscal years on pollution
control equipment and related operational environmental projects and proce-
dures at the Company's eight North American plants. The largest annual cash
outlays during 1995, 1994 and 1993 were $1,751,000, $1,740,000 and $607,000,
respectively, at the closed Columbiana facility, primarily for plant environ-
mental stabilization in 1995 and 1994, and environmental operational proce-
dures in 1993. Compliance with federal, state, and local environmental
regulations which have been enacted or adopted is estimated to require
operational cash outlays of approximately $3,080,000 during 1996. During
1995, 1994 and 1993, the Company provided $3,315,000, $2,832,000 and $4,651,-
000, respectively, for the estimated cost of compliance with environmental
regulations and continuing modifications in operating requirements. The
majority of the 1994 provisions related to the closing of the Columbiana
facility. The majority of the 1995 and 1993 provisions were made in the
Company's fourth quarter as a result of an expansion of clean-up operations
and changes in estimated costs to complete. In addition to the amounts
charged to earnings, $119,000, $165,000 and $142,000 of costs were capital-
ized in the respective years. The Company's actual environmental related cash
outlays for 1995, 1994 and 1993 were $3,081,000, $2,816,000 and $1,753,000,
respectively, of which $304,000, $285,000 and $282,000 were spent on the
Clifton, New Jersey property. The Company does not expect existing
regulations will have any material effect on its net earnings or competitive
position.
The Company has previously been designated a potentially responsible party
(PRP) by the Environmental Protection Agency (EPA) for five actual or
potential superfund sites, all of which have in excess of twenty other PRP's.
The Company has completed or is undertaking all investigative work requested
or required by the appropriate governmental agencies or by relevant statutes,
regulations, or local ordinances at minimal out-of-pocket costs. In one
instance, the Company has no record of participation at the site. In two
instances, the Company's records indicate that it had only de minimus
involvement. The Company has reviewed its involvement at the other two sites
and has previously accrued $500,000 for its share of estimated site remediat-
ion based upon all information currently available. The Company does not
believe future costs for these sites will have a materially adverse effect on
the consolidated financial condition of the Company or its consolidated
results of operations.
On April 15, 1995, the City of Stillwater, Oklahoma issued an administrative
order concerning the Company's Stillwater plant's wastewater discharge, which
resulted in the plant temporarily ceasing operations. Following extensive
evaluations on the plant's wastewater treatment system, a consent order was
signed on April 20, 1995, allowing limited production at the plant. Follow-
ing the city's approval of limited additional wastewater discharge, the plant
was able to operate all manufacturing lines and return to full production on
April 27, 1995. The loss of production during the period impacted third
quarter earnings by $559,000.
Litigation has been filed against the Company by the City of Stillwater,
Oklahoma alleging, among other things, violations of a wastewater discharge
permit at the Stillwater, Oklahoma facility. The Company has responded to
the suit by filing its answer to the complaint denying the allegations.
Additionally, the Company has filed counterclaims for damages resulting from
the temporary suspension of operations at the facility and has begun
discovery in the matter.
The litigation is in the preliminary stages and therefore the Company cannot
predict how the matter will be finally resolved. Nonetheless, based on
current information, it believes that even an adverse result in such litiga-
tion would not have a material adverse effect on the Company. The Company
believes that it is in full compliance with the wastewater permit issued by
the City of Stillwater and with all other permits needed to operate the
Stillwater facility.
General
The Company's major raw material steel is purchased in several forms from
domestic and foreign steel companies. Raw materials were readily available
during the year and no shortages are anticipated for the 1996 fiscal year.
The Company also purchases a variety of component parts for use in some of
the products it manufactures. The Company believes that its sources of supply
of these materials are adequate for its needs. The Company's major sources of
energy needed in its operations are natural gas, fuel oil and electrical
power. In certain locations where the Company believes its regular source of
energy may be interrupted, it has made plans for alternative fuels.
The Company owns or is licensed under a number of patents covering various
products and processes. Although these have been of value in the growth of
the business and will continue to be of considerable value in its future
growth, the Company's success or growth has not generally been dependent upon
any one patent or group of related patents. The Company believes that the
successful manufacture and sale of its products generally depend more upon
its technological know-how and manufacturing skills. Seasonal activity has no
material effect on the Company's level of business or working capital
requirements. The Company's largest customers include the major producers of
automotive air bag restraint systems, i.e., TRW and Morton International, and
some of the major tire and rubber companies, i.e., the Cooper Tire and Rubber
Company, the Dunlop Tire and Rubber Corporation (owned by Sumitomo), the
Firestone Tire and Rubber Company (owned by Bridgestone), Gates Rubber
Company, General Tire (owned by Continental), the Goodyear Tire and Rubber
Company, and the Uniroyal-Goodrich Company (owned by Michelin). TRW account-
ed for approximately 17%, Goodyear accounted for approximately 13%, Morton
accounted for approximately 11%, and the ten largest customers, in the
aggregate, accounted for approximately 60% of consolidated sales in the last
fiscal year. Generally, business with these customers is on the basis of
purchase orders without firm commitments to purchase specific quantities. No
other material part of the Company's business is dependent upon any single
customer or very few customers, the loss of which would have a material
adverse effect upon the Company.
During the 1995 fiscal year, the Company spent approximately $912,000 on
research and development of new products and process alternatives compared to
$959,000 and $982,000 for the years ended September 30, 1994 and 1993,
respectively. These cash outlays are for Company sponsored activities.
Only three products, high carbon steel wire, low carbon steel wire, and air
bag inflator filters, each account for 10% or more of total sales. High
carbon and low carbon steel wire were, respectively, 35% and 24% of total
sales in 1995; 38% and 21% of total sales in 1994; and 51% and 20% of total
sales in 1993. Air bag inflator filters accounted for 13% of total sales in
1995; 12% of total sales in 1994; and less than 10% of total sales in 1993.
During 1993, the Company experienced work stoppages by the United Steelworke-
rs of America at the Niles, Michigan; Corbin, Kentucky; and Columbiana,
Alabama plants. The Niles and Corbin strikes were settled during 1993 with
modified health care benefits similar to the health benefits for salaried
employees. The Columbiana plant was closed on June 1, 1994, and certain
production equipment was relocated to other Company facilities. The Company
continued to supply product during the work stoppages. Additional costs,
including security services, additional wages, and air freight, were approxi-
mately $4,500,000 for the three work stoppages in 1993, and $4,266,000 for
the work stoppage in Columbiana in 1994. Additionally, in 1993, as a result
of the work stoppage in Columbiana, the Company discontinued hose wire
plating in North America and wrote down the value of its hose wire plating
equipment by $909,000.
At September 30, 1995, the Company employed 1,403 persons in its operations
throughout the world.
During 1993, the Company elected early adoption of The Financial Accounting
Standards Board's Statement of Financial Accounting Standards No. 106,
"Accounting for Postretirement Benefits Other than Pensions." The one-time
transition obligation recognized at the time of adoption was $48,676,000.
Primarily as a result of this accounting change, the Company has a negative
net worth of $21,475,000.
International Operations
The Company has foreign subsidiaries in Canada and the United Kingdom which
are similar to certain of the Company's domestic operations and with general-
ly the same markets. The financial information about foreign and domestic
operations for the three years ended September 30, 1995 is included in Note
13 of Notes to Consolidated Financial Statements in Item 8, "Financial
Statements and Supplementary Data" section of this Report (incorporated
herein by this reference). Foreign operations are subject to the usual risks
of doing business abroad, such as possible devaluation of currency, restric-
tions on the transfer of funds and, in certain parts of the world, political
instability.
Accounting principles dictate that results of operations for the Company's
international operations are translated into U.S. dollars in accordance with
the Statement of Financial Accounting Standards No. 52. A translation
adjustment is recorded as a separate component of shareholders' equity,
"Cumulative Translation Adjustment." The Cumulative Translation Adjustment
account, at the end of 1995, reflects a slight increase of approximately
$100,000. This minor change is due to the U.S. dollar's position against the
British pound and the Canadian dollar remaining substantially unchanged since
the end of 1994. The change in exchange rates does not have a materially
adverse effect on the cash flow of the international operations.
During October 1995, the Company acquired substantially all of the inventory
and equipment of Engineering and Welding Supplies, Limited, Walsall, England
for approximately $800,000. The acquisition provides additional weld
capacity in support of the Company's strategy to increase weld wire sales in
the United Kingdom and Europe. The acquisition was funded by working capital
available in the United Kingdom.
ITEM 2. Properties
The Company conducts its domestic operations from facilities having an
aggregate floor space of approximately 1,212,000 square feet. The domestic
total includes principal facilities in Niles, Michigan (456,000 square feet);
Stillwater, Oklahoma (314,000 square feet); Corbin, Kentucky (225,000 square
feet); Mishawaka, Indiana (78,000 square feet); Knoxville, Tennessee (50,000
square feet); Clearfield, Utah (53,000 square feet); and Mesa, Arizona
(36,000 square feet). The Knoxville facility was leased in 1993 for a five-
year term with renewal options. The Clearfield facility was leased in 1993
and a renewal option was exercised in 1995 extending the terms until 1999
with additional renewal options. The Mesa facility was leased in 1994 for a
five-year term with renewal options.
The Company also operates from principal facilities in England (260,000
square feet) and Canada (107,000 square feet).
The majority of the Company's plants are of modern construction and the
remaining older plants are well maintained and considered adequate for their
current use. Manufacturing of wire and wire related products is conducted at
all Company facilities. The Company's plants generally are operated on a
multishift basis and, while particular plants may be operating at capacity
levels, overall the Company's facilities are adequate to provide for a
significant increase in unit volume due to the Company's ability to redis-
tribute production of similar products between Company facilities with
minimal cost or inconvenience.
ITEM 3. Legal Proceedings
The Company is not involved in any material pending legal proceedings;
however, your attention is drawn to the discussion of the Stillwater matter
under Item 1.
ITEM 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security holders since the last annual
meeting held January 26, 1995.
ITEM 4A. Executive Officers of the Registrant (Furnished in accordance with
Item 401(b) of Regulation S-K, pursuant to General Instruction G(3)
of Form 10-K)
The following table sets forth certain data concerning the Executive Officers
of the Registrant, all of whom are elected annually by the Board of Direc-
tors. Some of the Officers of the Registrant also serve as Directors or
Officers of the subsidiaries.
Date Assumed
Name Age Present Position Present Position
Michael B. Savitske 54 President and Chief Executive Officer 1989
William D. Grafer 50 Vice President, Finance 1987
David L. Lawrence 48 Treasurer, Assistant Secretary 1987
Rene J. VanSteelandt 57 General Counsel and Secretary 1991
All of the above-named officers of the Registrant have been employees of the
Company for more than five years.
PART II.
ITEM 5.Market for the Registrant's Common Equity and Related Shareholder
Matters
Common stock market prices, information on stock exchanges and number of
shareholders is included in Note 14 of Notes to Consolidated Financial
Statements in Item 8, "Financial Statements and Supplementary Data" section
of this Report (incorporated herein by this reference). No dividends were
paid during fiscal 1995 or 1994, nor during the portion of fiscal 1996 prior
to filing of this Report. Under current loan agreements, the Company is
restricted from paying any dividends. Future dividends will be based on the
Company's financial performance.
ITEM 6. Selected Financial Data (In thousands, except per share and employee
data)
The following selected financial data are derived from the consolidated
financial statements of the Company. The data should be read in conjunction
with the consolidated financial statements, related notes and other financial
information included herein. Specifically, discussions regarding accounting
changes, divestitures, and other related information that affects the
comparability of this data can be found in Items 7, 8, and 14 herein.
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
For the Year:
Net sales $247,420 $ 217,916 $ 208,254 $215,133 $232,695
Operating profit
(loss) $ 12,924 $ (1,110) $ (1,055) $ 44 $(15,783)
Net earnings (loss)
before effect of
accounting change $ 7,350 $ (4,625) $ (4,701) $ (5,885) $(22,885)
Net earnings (loss) $ 7,350 $ (4,625) $ (53,377) $ (5,885) $(22,885)
At Year-End:
Shareholders' equity $(21,475) $ (28,266) $ (24,827) $ 25,320 $ 29,237
Net current assets $ 10,471 $ 6,263 $ (39) $ 1,483 $ 4,740
Total assets $116,099 $ 108,685 $ 103,976 $113,939 $119,009
Long-term debt $ 34,152 $ 34,328 $ 24,100 $ 29,346 $ 37,338
Ratio of current
assets to current
liabilities 1.2 : 1.0 1.1 : 1.0 1.0 : 1.0 1.0 : 1.0 1.1 : 1.0
Common shares out-
standing 5,385 5,366 5,359 4,502 4,479
Average common shares
outstanding used
in per share
calculations 5,373 5,365 5,085 4,379 4,276
Number of employees 1,403 1,282 1,248 1,460 1,473
Per Common Share:
Earnings (loss)
before effect of
accounting change $ 1.37 $ ( .86) $( .92) $ (1.34) $ (5.36)
Net earnings (loss) $ 1.37 $ ( .86) $ (10.50) $ (1.34) $ (5.36)
Dividends declared $ .00 $ .00 $ .00 $ .00 $ .00
</TABLE>
ITEM 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Dollars in thousands except share data)
Results of Operations
Net sales for the year of $247,420 were 14% above 1994, as sales of air bag
inflator filtration products increased 32% over 1994 due to the significant
growth of that market segment and the Company's position as the leading
supplier of those materials in North America. The Company's weld wire
product lines experienced 19% growth over 1994 due primarily to improving
North American automotive sales. Growth in both products is expected to
continue for at least the next several years.
Net sales for 1994 of $217,916 were 4.6% above 1993 due primarily to growth
in air bag materials business. During 1994, the Company experienced in-
creased demand for its air bag materials and weld wire product lines, as
sales increased 68% and 15%, respectively, over 1993. These increases were
offset by a decline in hose wire sales as the Company ceased the manufacture
of hose wire in North America during 1993, and a decline in bead wire sales
due to the impact of the work stoppage at Columbiana early in 1994 and work
stoppages at customer facilities at the end of 1994. During 1993, sales for
remaining operations decreased 3.2% as increased sales of air bag filtration
materials and welding wire were offset by lower sales from business units
sold in 1992 and 1991.
Over the past several years, the Company's strategy has been to focus on a
core wire business and to develop the air bag filtration materials business.
This strategy has led to the divestiture of the non-core specialty wire
business and all of its non-wire related businesses. Proceeds from the
divestitures have been utilized to fund investment in the remaining business
and to reduce debt. Since September 30, 1990, debt has been reduced $17,165
and the air bag filtration materials sales have increased 226%. The effect
of the divestiture activities on the Company's sales and gross margins is
shown in the following table:
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Net Sales
Remaining operations $ 247,420 $216,937 $197,418 $193,863 $ 176,517
Divested operations - 979 10,836 21,270 56,178
Total $ 247,420 $217,916 $208,254 $215,133 $ 232,695
Gross Profit
Remaining operations $ 37,328 $ 25,069 $ 24,283 $ 24,314 $ 16,215
Divested operations - (1,213) (278) 1,138 6,579
Total $ 37,328 $ 23,856 $ 24,005 $ 25,452 $ 22,794
Gross Profit %
Remaining operations 15.1% 11.6% 12.3% 12.5% 9.2%
Divested operations - (123.9)% (2.6)% 5.4% 11.7%
Total 15.1% 10.9% 11.5% 11.8% 9.8%
</TABLE>
Gross profit margins change due to several factors. For the Company, the most
significant factor is the level of sales and production. As production
increases, a relatively lower level of fixed costs is associated with each
unit, and the gross profit percentage increases. Similarly, as volume falls,
fewer units are available to cover the fixed costs of manufacturing and the
profit percentage decreases. In addition to volume, changes in product mix,
selling prices, and costs also affect the gross margins.
During 1993, the Company experienced work stoppages by the United Steelworke-
rs of America at the Niles, Michigan; Corbin, Kentucky; and Columbiana,
Alabama plants. The Niles and Corbin strikes were settled during 1993 with
modified health care benefits similar to the health benefits for salaried
employees. The Columbiana plant was struck on June 1, 1993. The plant
operated during the remainder of 1993 and through May 1994 with replacement
workers and personnel from other Company facilities. The Company continued
to supply product during the work stoppages. Additional costs including
security services, additional wages, and air freight were approximately
$4,500 for the three work stoppages in 1993. In addition, as a result of the
work stoppage in Columbiana, the Company discontinued hose wire plating in
North America in 1993 and wrote down the value of its hose wire plating
equipment by $909.
During 1994, the additional costs of operating the Columbiana facility
including security services, additional wages, and freight were approximately
$4,266. In addition, during 1994, the Company provided $4,870 for the
closure of the Columbiana plant. The closure provision is included in
selling and administrative expense as noted on page 11.
Between 1990 and 1992, the political changes that occurred in the Eastern
Bloc countries had a negative effect on International business activity, and
a general slowdown in the Company's Western European markets caused a 10%
decline in volume of major product lines. This decline caused capacity in
international operations to be under-utilized in 1992. During 1993, sales to
other worldwide markets from international operations increased 8%, resulting
in better capacity utilization and improved operating results. During 1994,
sales from international operations decreased 5% as new worldwide capacity
was added in Copperply and bead wire and aggressive pricing affected bead and
hose wire margins. During 1995, sales increased 7% due to increased demand
for all products.
In recent years, the Company has not been able to raise prices in line with
inflation and rising raw material costs due to the effects of worldwide
overcapacity in the Company's major product lines and competitive pressure in
the Company's automotive markets. Since 1990, inflation as measured by the
Consumer Price Index has risen 15%, while average selling prices have risen
only 4%. Had selling prices increased 15%, sales in 1995 would have been
approximately $275,000.
In 1993, the Company sold the Telford Wire Division and Taydor Engineers
business units in England. Proceeds of $1,344 were used to reduce its United
Kingdom borrowings.
In 1993, environmental expense provisions totaling $3,600 were recorded to:
(1) decommission hose wire plating equipment and dispose of hazardous
materials normally used in the plating process, (2) provide for soil remedia-
tion at an unused fill site, and (3) provide for the closure of waste water
surface impoundments which are no longer in use. In 1994, additional
environmental expense provisions of $700 relating to the disposal of hazard-
ous materials normally used in the hose wire plating process were recorded.
During 1995, 1994 and 1993, the Company provided $3,315, $2,832 and $4,651,
respectively, for the estimated cost of compliance with environmental
regulations and continuing modifications in operating requirements. The
majority of the 1994 provisions were made in the Company's first quarter and
are related to the closing of the Columbiana facility. The majority of the
1995 and 1993 provisions were made in the Company's fourth quarter as a
result of an expansion of clean-up operations and changes in estimated costs
to complete. In addition to the amounts charged to earnings, $119, $165 and
$142 of costs were capitalized in the respective years. The Company's actual
environmental related cash outlays for 1995, 1994 and 1993 were $3,081,
$2,816 and $1,753, respectively, of which $304, $285 and $282 were spent on
the Clifton, New Jersey property.
The Company has previously been designated a potentially responsible party
(PRP) by the Environmental Protection Agency (EPA) for five actual or
potential superfund sites, all of which have in excess of twenty other PRP's.
The Company has completed or is undertaking all investigative work requested
or required by the appropriate governmental agencies or by relevant statutes,
regulations, or local ordinances at minimal out-of-pocket costs. In one
instance, the Company has no record of participation at the site. In two
instances, the Company's records indicate that it had only de minimus
involvement. The Company has reviewed its involvement at the other two sites
and has previously accrued $500 for its share of estimated site remediation
based upon all information currently available. The Company does not believe
future costs for these sites will have a materially adverse effect on the
consolidated financial condition of the Company or its consolidated results
of operations.
On April 15, 1995, the City of Stillwater, Oklahoma issued an administrative
order concerning the Company's Stillwater plant's wastewater discharge, which
resulted in the plant temporarily ceasing operations. Following extensive
evaluations on the plant's wastewater treatment system, a consent order was
signed on April 20, 1995, allowing limited production at the plant. Follow-
ing the city's approval of limited additional wastewater discharge, the plant
was able to operate all manufacturing lines and return to full production on
April 27, 1995. The loss of production during the period impacted third
quarter earnings by $559.
Litigation has been filed against the Company by the City of Stillwater,
Oklahoma alleging, among other things, violations of a wastewater discharge
permit at the Stillwater, Oklahoma facility. The Company has responded to
the suit by filing its answer to the complaint denying the allegations.
Additionally, the Company has filed counterclaims for damages resulting from
the temporary suspension of operations at the facility and has begun discov-
ery in the matter.
The litigation is in the preliminary stages and therefore the Company cannot
predict how the matter will be finally resolved. Nonetheless, based on
current information, it believes that even an adverse result in such litiga-
tion would not have a material adverse effect on the Company. The Company
believes that it is in full compliance with the wastewater permit issued by
the City of Stillwater and with all other permits needed to operate the
Stillwater facility.
The Company has reviewed its current environmental projects which are
expected to be completed in 1996 and all environmental regulations and acts
to ensure continuing compliance. In 1996, the Company expects to spend $300
on the Clifton, New Jersey project. Future cash outlays of approximately
$3,035 will be needed prior to sale of the property. These amounts have
already been accrued for financial statement purposes. Additionally, the
Company expects to spend $3,080 on environmentally related capital and
operational projects, of which $600 will be charged against 1996 earnings.
In 1989, in response to expected market changes, the Company adopted a
strategy that included, among other things, the decision to exit non-strate-
gic and/or non-profitable businesses and to continually adapt general and
administrative cost levels to the changing business.
In 1995, 1994, 1993, and 1992, $2,842, $6,955, $2,390, and $2,677, respec-
tively, the net cost of restructuring the Company in those years, including
net loss on sale of fixed assets and product lines of $0, $0, $196, and
$1,451, respectively; the write-off of nonproductive facilities and obsolete
inventory of $120, $4,219, $909, and $681, respectively; severance costs of
the salaried and hourly workforce, and provision for transferring manufac-
turing of certain product lines between plants, is included in selling and
administrative costs. The 1995 and 1994 net cost of restructuring also
included $1,400 and $1,700 respectively, for the Columbiana plant environmen-
tal stabilization. The Company will incur no further material cash outflows
related to the restructuring.
The Company expects to increase selling and administrative expense in 1996 by
$3,000 due to additional management, quality and engineering personnel. The
additional employees will focus on quality, process improvements and plant
modernization. The increase in expense is expected to be funded by improved
operating margins in all the Company's product lines.
The following summary shows the changing level of selling and administrative
expense and identifies selling and administrative expense directly attribut-
able to divested operations and amounts attributable to restructuring activi-
ties.
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Selling and Admin-
istrative Expense:
Remaining operations $ 21,562 $ 18,011 $ 22,549 $ 21,970 $ 20,813
Divested operations - - 121 761 4,987
Restructuring costs $ 2,842 6,955 2,390 2,677 12,777
Total $ 24,404 $ 24,966 $ 25,060 $ 25,408 $ 38,577
As a Percent of Sales
Remaining operations 8.7% 8.3% 11.4% 10.6% 10.7%
Divested operations - - 22.1% 9.0% 13.6%
Total 9.9% 11.5% 12.0% 11.8% 16.6%
The net effect of all the above elements is seen in the Company's operating
profit (loss).
</TABLE>
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Operating Profit (Loss)
Remaining operations $ 15,766 $ 7,058 $ 1,547 $ 2,739 $ (2,968)
Divested operations - (1,213) (212) (18) (38)
Restructuring costs (2,842) (6,955) (2,390) (2,677) (12,777)
Total $ 12,924 $ (1,110) $ (1,055) $ 44 $(15,783)
Operating profit by Geographic Area is presented in Note 13 of Notes to
Consolidated Financial Statements in Item 8.
</TABLE>
Interest expense, including capitalized interest, increased in 1995 and 1994
due to higher interest rates in both years and higher average borrowings in
1995.
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Interest expense $ 5,631 $ 3,885 $ 3,742 $ 4,990 $ 6,653
Capitalized interest $ 0 $ 168 $ 100 $ 50 $ 166
Average borrowings $ 41,567 $ 36,572 $ 37,240 $ 45,743 $ 56,760
Average interest rate 13.2% 11.1% 10.3% 11.0% 12.0%
</TABLE>
Other income in 1995 and 1994 is primarily the Company's share of profits in
the joint venture.
In 1995, income taxes as a percentage of pre-tax income vary from the
domestic statutory rate primarily due to the Company's utilization of net
operating loss carryforwards.
In 1994, income taxes as a percentage of pre-tax loss vary from the domestic
statutory rate primarily due to the Company's inability to record a tax
benefit on losses.
Financial Condition
Prior to the net income of $7,350 in 1995, the Company experienced net losses
of $4,625, $53,377, $5,885, and $22,885 in 1994, 1993, 1992, and 1991,
primarily due to changes in accounting, restructuring charges, and environ-
mental provisions. Working capital increased $6,139 in 1995 as current assets
increased to support the higher sales in air bag inflator filtration materi-
als and increased $6,302 in 1994 due to increased current assets.
Net cash from 1995 operations of $10,586 was due primarily to improved
results from operations.
Net cash from 1994 operations of $1,088 was due primarily to the increased
profitability after considering all non-cash charges to earnings. This was
offset by the $1,786 increase in Inventories necessary to support the
Company's growing weld wire and air bag inflator material business and a
$5,571 decrease in Accounts Payable and Accrued Expenses. The $9,178 of net
cash generated from new financing, along with the net cash from operations
and $256 of proceeds from the sale of certain equipment, was used to invest
$10,489 in property, plant, and equipment.
Net cash from operations was $9,070 and $6,057 in 1993 and 1992, respective-
ly, due primarily to the $6,015 increase in Accounts Payable and actual
operating results. Of the 1993 and 1992 cash flow from operations of
$15,127, $7,314 was invested in property, plant, and equipment, and $7,813
was used for debt reduction. During 1994, the Company completed its plan to
exit non-profitable and non-strategic product lines and subsidiaries. In
accordance with this plan, certain facilities and product lines were sold in
1993 and 1992, and the proceeds of $2,037 were used for additional debt
reduction. During 1993, the Company sold the Telford Wire Division, using
the proceeds to reduce debt. In October 1992, the Company sold its interest
in the Indian affiliate and the Taydor Engineers business unit, using the
proceeds to reduce debt. During 1993 and 1992, the Company reduced its debt
by $12,182.
During 1995, 1994, and 1993, the Company invested $22,685 in property, plant
and equipment. Approximately one-third of this amount relates to the
Company's commitment to automotive air bag inflator filters and filter media.
The Company's total capital expenditures for 1996 are expected to be $8,000,
primarily for projects to add filtration material and weld wire capacity and
improve quality and operating efficiencies. While divestiture activities and
debt reductions have affected the Company's cash flow in recent years, it
expects that improved results of operations from restructuring activities
will fund future expansion of working capital and productive capacity. With
the completion of the restructuring activities, the Company was able to
obtain new long- and short-term financing in 1994 and increase and extend
this financing in 1995. The Company is confident that adequate long- and
short-term financing will be available in the future.
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Current ratio 1.2 : 1.0 1.1 : 1.0 1.0 : 1.0 1.0 : 1.0 1.1 : 1.0
Total debt to total
capital, excluding
SFAS No. 106
adjustment 57.9% 65.2% 57.4% 62.9% 61.3%
Long-term debt to
total capital,
excluding SFAS
No. 106 adjustment 48.1% 52.5% 41.8% 43.0% 49.5%
</TABLE>
The Company will continue to pursue cost reduction activities in both its
domestic and international operations, including personnel reductions and
costs associated with administering its employee benefit programs.
ITEM 8. Financial Statements and Supplementary Data
The Report of Independent Auditors, Consolidated Financial Statements and
Supplementary Schedules are set forth on pages 15 to 33 of this Report and
are incorporated herein by reference.
ITEM 9. Disagreements on Accounting and Financial Disclosure
Not applicable.
PART III
ITEM 10. Directors and Executive Officers of the Registrant
Identification of Directors
Information in respect of Directors as set forth under the caption "Election
of Directors" in the annual Proxy Statement relating to the Annual Meeting of
Shareholders scheduled for January 25, 1996 is incorporated herein by
reference.
In respect of information as to the Company's Executive Officers, see the
caption "Executive Officers of the Registrant" at the end of Part I of this
report.
ITEM 11. Executive Compensation
The information set forth under the caption "Organization and Remuneration of
the Board" and the information relating to Executive Officers' compensation
in the annual Proxy Statement relating to the Annual Meeting of Shareholders
scheduled for January 25, 1996 is incorporated herein by reference.
ITEM 12. Security Ownership of Certain Beneficial Owners and Management
The information set forth under the captions "Stock Ownership of Certain
Beneficial Owners and Management" and "Election of Directors" in the annual
Proxy Statement relating to the Annual Meeting of Shareholders scheduled for
January 25, 1996 is incorporated herein by reference.
ITEM 13. Certain Relationships and Related Transactions
The information set forth under the caption "Information Regarding Other
Transactions" in the annual Proxy Statement relating to the Annual Meeting of
Shareholders scheduled for January 25, 1996 is incorporated herein by
reference.
PART IV
ITEM 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) The following documents are filed as part of this report:
1. Financial Statements and Schedules
The financial statements and schedule listed in the accompanying
Index to Consolidated Financial Statements and Schedule are filed
as part of this report.
2. Exhibits
The exhibits listed in the accompanying Exhibit Index and required
by Item 601 of Regulation S-K (numbered in accordance with Item 601
of Regulation S-K) are filed or incorporated by reference as part
of this Report.
(b) There were no reports on Form 8-K filed during the three months ended
September 30, 1995.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, National-Standard Company has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
NATIONAL-STANDARD COMPANY
/s/ Michael B. Savitske
Michael B. Savitske
President and Chief Executive Officer, Director
/s/ William D. Grafer
William D. Grafer
Vice President, Finance
(Principal Financial and Accounting Officer)
Dated: December 1, 1995
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
Registrant and in the capacities and on the dates indicated:
HAROLD G. BERNTHAL Director )
DAVID F. CRAIGMILE Director )-By: /s/ Rene J. VanSteelandt
JOHN E. GUTH, JR. Chairman of the Board ) Rene J. VanSteelandt
ERNEST J. NAGY Director ) Attorney-in-Fact
CHARLES E. SCHROEDER Director )
DONALD F. WALTER Director ) December 1, 1995
NATIONAL-STANDARD COMPANY
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE
Page Reference
in Report on
Form 10-K
Consolidated Statements of Operations for the years ended
September 30, 1995, 1994, and 1993 16
Consolidated Statements of Shareholders' Equity for the
years ended September 30, 1995, 1994, and 1993 17
Consolidated Balance Sheets at September 30, 1995 and 1994 18
Consolidated Statements of Cash Flows for the years ended
September 30, 1995, 1994 and 1993 19
Notes to Consolidated Financial Statements 20-31
Report of Independent Auditors 32
Schedule:
II. Valuation and Qualifying Accounts 33
Schedules other than those listed above have been omitted from this Annual
Report because they are not required, are not applicable, or the required
information is included in the consolidated financial statements or the notes
thereto.
NATIONAL-STANDARD COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands Except Share Data)
<TABLE>
<CAPTION>
Year Ended September 30
1995 1994 1993
<S> <C> <C> <C>
Net sales . . . . . . . . . . . . . . . $247,420 $ 217,916 $ 208,254
Cost of sales . . . . . . . . . . . . 210,092 194,060 184,249
Gross profit . . . . . . . . . . . . . 37,328 23,856 24,005
Selling and administrative expenses . . 24,404 24,966 25,060
Operating profit (loss) . . . . . . 12,924 (1,110) (1,055)
Interest expense . . . . . . . . . . . (5,631) (3,885) (3,742)
Other income, net . . . . . . . . . . . 296 426 96
Income (loss) before income taxes
and effect of accounting change . . 7,589 (4,569) (4,701)
Income taxes . . . . . . . . . . . . . 239 56 -
Income (loss) before effect of
accounting change . . . . . . . . . 7,350 (4,625) (4,701)
Effect of accounting change . . . . . . - - (48,676)
Net income (loss) . . . . . . . . . . . $ 7,350 $ (4,625) $ (53,377)
Income (loss) per share before effect
of accounting change . . . . . . . . . $ 1.37 $ (.86) $ ( .92)
Income (loss) per share . . . . . . . . $ 1.37 $ (.86) $ (10.50)
See accompanying notes to consolidated financial statements.
</TABLE>
NATIONAL-STANDARD COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Dollars in Thousands except Share Data)
<TABLE>
<CAPTION>
Excess of
Additional
Pension
Liability
Receivable Unamortized Over Un-
Retained Cumulative Trea- ESOP Prepaid Value of recognized
Common Earnings Translation sury Common ESOP Restricted Prior
Stock (Deficit) Adjustment Stock Stock Expense Stock Service Cost
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at Septem-
ber 30, 1992 $ 24,096 $ 4,803 $ (407) $ (93) $ (1,169) $ (175) $ (62) $ (1,673)
Restricted stock
award activity (3)
ESOP payments 1,152
Prepaid ESOP expense
amortization 175
Restricted stock
amortization 20
Stock contributed
to pension trust 2,745
Stock issuance 91 29
Adjustment for
foreign currency
translation (2,018)
Adjustment of pension
liability 1,039
Net loss for 1993 (53,377)
Balance at Septem-
ber 30, 1993 $ 26,932 $(48,574) $ (2,425) $ (67) $ (17) $ - $ (42) $ (634)
Restricted stock
award activity 68 (18) (62)
ESOP payments 17
Restricted stock
amortization 33
Deferred debt
discount 384
Stock issuance 1
Adjustment for
foreign currency
translation 323
Adjustment of
pension liability 440
Net loss for 1994 (4,625)
Balance at Septem-
ber 30, 1994 $ 27,384 $(53,199) $ (2,102) $ (84) $ - $ - $ (71) $ (194)
Restricted stock
award activity 58 (21) (54)
Restricted stock
amortization 40
Stock options
exercised 152
Stock issuance 1
Adjustment for
foreign currency
translation (103)
Adjustment of
pension liability (632)
Net loss for 1995 7,350
Balance at Septem- ber 30, 1995 $ 27,594 $(45,849) $ (2,205) $ (104) $ - $ - $ (85) $ (826)
See accompanying notes to consolidated financial statements.
</TABLE>
NATIONAL-STANDARD COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands except Share Data)
<TABLE>
<CAPTION>
September 30
1995 1994
<S> <C> <C>
Assets
Current assets:
Cash . . . . . . . . . . . . . . . . . . . . . $ 2,064 $ 378
Receivables, less allowance for doubtful
accounts ($398 and $398, respectively) . . . . 26,071 24,682
Inventories . . . . . . . . . . . . . . . . . . 26,388 25,146
Other current assets . . . . . . . . . . 4,350 4,837
Total current assets . . . . . . . . . . . . . 58,873 55,043
Property, plant and equipment, net . . . . . . . . 44,650 42,862
Other assets . . . . . . . . . . . . . . . . . 12,576 10,780
$116,099 $108,685
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable . . . . . . . . . . . . . . . $ 26,605 $ 29,041
Employee compensation and benefits . . . . . . 3,319 1,780
Accrued pension . . . . . . . . . . . . . . . . 965 115
Other accrued expenses . . . . . . . . . . . . 7,813 6,599
Current accrued postretirement benefit cost . . 2,700 3,000
Notes payable to banks and current portion
of long-term debt . . . . . . . . . . . . . . 7,000 8,245
Total current liabilities . . . . . . . . . . . 48,402 48,780
Other long-term liabilities . . . . . . . . . . . . 6,365 5,818
Long-term debt . . . . . . . . . . . . . . . . . . 34,152 34,328
Accrued postretirement benefit cost . . . . . . . . 48,655 48,025
Shareholders' equity:
Common stock - $.01 par value.
Authorized 25,000,000 shares; issued 5,399,094 and
5,376,526 shares, respectively . . . . . . 27,594 27,384
Preferred stock - $1.00 par value.
Authorized 600,000 shares; issued none--
Retained earnings (deficit) . . . . . . . . . . (45,849) (53,199)
Cumulative translation adjustment . . . . . . . (2,205) ( 2,102)
Treasury stock, at cost; 14,076 and 10,813 shares,
respectively . . . . . . . . . . . . . . . . . (104) ( 84)
Unamortized value of restricted stock . . . . . (85) ( 71)
Excess of additional pension liability over
unrecognized prior service cost . . . . . . . (826) ( 194)
(21,475) (28,266)
$116,099 $108,685
See accompanying notes to consolidated financial statements.
</TABLE>
NATIONAL-STANDARD COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands except Share Data)
<TABLE>
<CAPTION>
Year Ended September 30
1995 1994 1993
<S> <C> <C> <C>
Operating Activities:
Net earnings (loss) . . . . . . . . . . . $ 7,350 $ (4,625) $(53,377)
Non-cash charges (credits) to earnings:
Depreciation and amortization . . . . . 6,217 6,552 6,524
Prepaid ESOP expense amortization . . . - - 175
Postretirement benefit transition
obligation . . . . . . . . . . . . . - - 48,676
Loss on divested operations and
asset writedowns . . . . . . . . . . - 4,254 196
Changes in short-term assets and
liabilities, net of dispositions:
Receivables . . . . . . . . . . . . . . (1,389) 160 1,967
Inventories . . . . . . . . . . . . . . (1,242) (1,786) (207)
Other current assets . . . . . . . . . 487 (733) 7
Accounts payable . . . . . . . . . . . (2,436) (2,301) 3,918
Employee compensation and benefits,
accrued pension,and other accrued
expenses . . . . . . . . . . . . . . 3,303 (3,270) (2,258)
Currency translation effect on
short-term assets and liabilities . (167) 812 (2,033)
Changes in other long-term assets
and liabilities . . . . . . . (1,537) 2,025 5,482
Net cash provided by operating
activities . . . . . . . . . . . . . 10,586 1,088 9,070
Investing Activities:
Capital expenditures . . . . . . . . . (7,650) (10,489) (4,546)
Divestiture proceeds, net . . . . . . . - - 2,037
Disposal of property, plant and
equipment . . . . . . . . . . . . . . 73 256 -
Net cash used for investing
activities . . . . . . . . . . . . (7,577) (10,233) (2,509)
Financing Activities:
Term loan advance . . . . . . . . . . . 1,471 20,062 -
Net borrowings under revolving
credit agreements . . . . . . . . . . (345) 4,048 (4,955)
Principal payments under term loans . . (2,581) (14,932) (3,836)
Purchases of treasury stock . . . . . . (20) (11) -
Stock option proceeds . . . . . . . . . 152 - -
Decrease in notes receivable due
from ESOP . . . . . . . . . . . . . . - 17 1,152
Net cash (used for) provided by
financing activities . . . . . . . . (1,323) 9,184 (7,639)
Net increase (decrease) in cash . . . . 1,686 39 (1,078)
Cash at beginning of year . . . . . . . 378 339 1,417
Cash at end of year . . . . . . . . . . $ 2,064 $ 378 $ 339
Supplemental Disclosures:
Interest paid . . . . . . . . . . . . . $ 4,994 $ 4,480 $ 3,842
Income taxes paid . . . . . . . . . . . $ 255 $ 56 $ -
See accompanying notes to consolidated financial statements.
</TABLE>
NATIONAL-STANDARD COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands except Share Data)
1. SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
Principles of Consolidation - The consolidated financial statements
include the Company and all its subsidiaries ("Company"). Intercompany
accounts and transactions have been eliminated in the consolidated
financial statements. The Company's 50 percent investment in a domestic
joint venture is carried at equity in underlying net assets. The Company's
share of operations of this affiliated company is not material.
Revenue Recognition - The Company's policy is to record sales when the
product is shipped.
Translation of Currencies - The Company complies with the provisions of
Statement of Financial Accounting Standards (SFAS) No. 52, "Foreign
Currency Translation." In the application of this accounting standard, ex-
change adjustments resulting from foreign currency transactions are
recognized currently in income. Adjustments resulting from the translation
of financial statements are reflected as a separate component of sharehol-
ders' equity.
Inventories - Inventories are stated at lower of cost or replacement
market. Cost for the material content of domestic steel inventories is
determined on the last-in, first-out (LIFO) method; the cost for other
inventories is determined on the first-in, first-out (FIFO) method.
Property, Plant and Equipment - Property, plant and equipment are stated
at cost less accumulated depreciation. Depreciation is computed on a
straight-line basis over the estimated useful lives of the related assets.
For tax purposes, depreciation has generally been computed on a straight--
line basis over prescribed lives.
Research and Development - Research and development costs are expensed
currently. The Company expended $912, $959 and $982 in 1995, 1994 and
1993, respectively, on research and development activities.
Earnings Per Share - Earnings per share are based on the average number of
shares of common stock outstanding during the year plus common stock
equivalents for the dilutive effect of shares of common stock issuable
upon the exercise of certain stock options. Nonleveraged unallocated
shares in the Company Employee Stock Ownership Plan are not considered
outstanding for purposes of calculating earnings per share. Common shares
used in calculating earnings per share for 1995, 1994, and 1993 were
5,373,000, 5,365,000 and 5,085,000, respectively.
Statement of Cash Flows - For purposes of the statement of cash flows, the
Company considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents.
Income Taxes - In February 1992, the Financial Accounting Standards Board
(FASB) issued SFAS No. 109, "Accounting for Income Taxes." SFAS No. 109
requires a change from the deferred to the liability method of computing
deferred income taxes. Under the liability method, deferred income taxes
are generally determined based on the difference between the financial
statement and tax bases of assets and liabilities using enacted tax rates
in effect in the years in which the differences are expected to reverse.
Deferred tax assets are recorded when it is more likely than not that such
tax benefits will be realized.
Effective October 1, 1992, the Company elected early adoption of SFAS No.
109. The adoption of SFAS No. 109 had no effect on the financial state-
ments of the Company.
Postretirement Benefits Other than Pensions - In December 1990, the FASB
issued SFAS No. 106, "Employers' Accounting for Postretirement Benefits
Other than Pensions." SFAS No. 106 requires that the cost of postretireme-
nt benefits be recognized during an employee's years of service versus on
a pay-as-you-go basis upon retirement. SFAS No. 106 was not required to
be adopted by the Company until fiscal 1994; however, early adoption was
elected effective October 1, 1992.
Reclassification - Certain 1994 and 1993 amounts in the Consolidated
Financial Statements have been reclassified to conform with 1995 presenta-
tion.
2. INVENTORIES
<TABLE>
<CAPTION>
1995 1994
<S> . . . . . . . . . . . . . . . . . . . . . . <C> <C>
Finished goods . . . . . . . . . . . . . . . . $ 1,059 $ 2,601
Work in process . . . . . . . . . . . . . . . . 15,383 14,400
Raw material (including certain partially
processed materials) . . . . . . . . . . . . . 9,946 8,145
$ 26,388 $ 25,146
</TABLE>
The material content of domestic steel inventories amounting to $16,532
and $13,854 at September 30, 1995 and 1994, respectively, is valued on a
LIFO basis. Had the FIFO method been used, inventory would have been
$4,914 and $4,009 higher than that reported at September 30, 1995 and
1994, respectively.
3. PROPERTY, PLANT AND EQUIPMENT
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Cost:
Land . . . . . . . . . . . . . . . . . . . . . $ 331 $ 331
Land improvements . . . . . . . . . . . . . . . 1,943 1,943
Buildings . . . . . . . . . . . . . . . . . . . 23,440 22,410
Machinery and equipment . . . . . . . . . . . . 115,249 108,138
Construction in progress . . . . . . . . . . . 5,872 8,326
146,835 141,148
Less accumulated depreciation . . . . . . . . . 102,185 98,286
$ 44,650 $ 42,862
</TABLE>
The Company had capitalized interest costs of $0, $168, and $100 in 1995,
1994, and 1993 with respect to qualifying construction projects. Total
interest cost incurred before recognition of the capitalized amounts was
$5,631, $4,053, and $3,842 in 1995, 1994, and 1993, respectively.
4. RETIREMENT BENEFITS
The Company and its subsidiaries have several pension plans covering
substantially all employees, including certain employees in foreign
countries. The Company's policy is to fund the net periodic pension cost
accrued for each plan year, but not more than the maximum deductible
contribution nor less than the minimum required contribution.
The following table sets forth the pension plans' funded status and
amounts recognized in the Company's consolidated balance sheet at Septem-
ber 30, 1995 and 1994:
<TABLE>
<CAPTION>
Assets Accumulated
Exceed Benefits
Accumulated Exceed
Benefits Assets
1995
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested benefit obligation . . . . . . . . . . $ 65,212 $ 11,671
Accumulated benefit obligation . . . . . . . . $ 65,809 $ 12,109
Projected benefit obligation for service
rendered to-date . . . . . . . . . . . . . . . $ 71,123 $ 12,718
Plan assets at fair value . . . . . . . . . . . 89,701 11,082
Plan assets in excess of (less than)
projected benefit obligation . . . . . . . . . 18,578 (1,636)
Unrecognized net (gain) loss from past
experience, different from that assumed . . . (7,432) 315
Prior service cost not yet recognized
in net periodic pension cost . . . . . . . . . 445 343
Unrecognized net asset at October 1, 1985
being recognized over 15 years . . . . . . . . (475) (59)
Unrecognized net asset for the United Kingdom
plan at October 1, 1989 being recognized
over 12.6 years . . . . . . . . . . . . . . . (3,815) -
Additional minimum liability . . . . . . . . . - (1,203)
(Accrued) prepaid pension cost . . . . . . . . $ 7,301 $ (2,240)
Intangible asset . . . . . . . . . . . . . . . $ - $ 377
Charge to equity (excess of additional
pension liability over unrecognized
prior service cost) . . . . . . . . . . . . . $ - $ 826
1994
Actuarial present value of benefit obligations:
Vested benefit obligation . . . . . . . $ 62,020 $ 2,915
Accumulated benefit obligation . . . . . $ 62,786 $ 3,061
Projected benefit obligation for service
rendered to-date . . . . . . . . . . . . . . . $ 67,587 $ 3,061
Plan assets at fair value . . . . . . . . . . . 88,758 2,828
Plan assets in excess of (less than)
projected benefit obligation . . . . . . . . . 21,171 (233)
Unrecognized net (gain) loss from past
experience, different from that assumed . . . (13,294) 194
Prior service cost not yet recognized
in net periodic pension cost . . . . . . . . . 238 147
Unrecognized net asset at October 1, 1985
being recognized over 15 years . . . . . . . . (699) 41
Unrecognized net asset for the United Kingdom
plan at October 1, 1989 being recognized
over 12.6 years . . . . . . . . . . . . . . . (4,374) -
Additional minimum liability . . . . . . . . . - (382)
(Accrued) prepaid pension cost . . . . . . . . $ 3,042 $ (233)
Intangible asset . . . . . . . . . . . . . . . $ - $ 188
Charge to equity (excess of additional
pension liability over unrecognized
prior service cost) . . . . . . . . . . . . . $ - $ 194
</TABLE>
Net pension cost related to Company-sponsored plans included the following
components:
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Service costs -- benefits earned
during the year . . . . . . . . . . $ 1,546 $ 1,467 $ 1,436
Interest cost on projected benefit
obligation . . . . . . . . . . . . . 6,001 5,814 5,985
Actual return on plan assets . . . . (15,300) (5,995) (17,739)
Net amortization and deferral . . . . 4,871 (3,084) 9,863
Benefit curtailment recognition . . . - 284 -
Net periodic pension income . . . . . $ (2,882) $ (1,514) $ (455)
</TABLE>
The weighted average discount rate and rate of increase in future
compensation levels used in determining the 1995 actuarial present value
of the projected benefit obligation were 7.75% and 4%, respectively, for
U.S. plans and 8.5% and 6.5%, respectively, for foreign plans. The 1994
rates were 8.75% and 5%, respectively, for U.S. plans and 9% and 7%,
respectively, for foreign plans. The 1995 and 1994 expected long-term
rate of return on assets was 10.5% in 1995 and 1994 for U.S. plans and
9.5% and 10% in 1995 and 1994, respectively, for foreign plans.
In August of 1992, the Internal Revenue Service temporarily waived the
minimum funding standard for certain of the Company's domestic defined
benefit pension plans for plan years ending December 31, 1990 and 1991.
These waivers were granted in accordance with Section 412(d) of the
Internal Revenue Code and Section 303 of the Employee Retirement Income
Security Act of 1974. The Company made contributions to the plans in 1992
of $1,460. During 1993, the Company contributed $765 to the plans. In
January 1993, the Company contributed 844,513 shares of previously
authorized and unissued common stock valued at $2,745. The Company's
pension plans owned shares of the Company's common stock representing
slightly less than 10% of the plans' asset value immediately after the
January 1993 contribution. The plans currently own 1,475,079 shares of
the Company's common stock. The Company made contributions to the plans
in 1995 and 1994 of $187 and $238, respectively. The Company has made the
contributions necessary to fully fund several of the plans which
previously received funding waivers. For those plans with remaining
waiver amortization bases, the Company intends to comply with all
conditions of the waivers, including elimination of the waiver
amortization bases in installments through 1996.
The Company has an Employee Stock Ownership Plan (ESOP) for its eligible
domestic employees. The amount of Company contributions made to the ESOP
and charged to expense was $265 for 1995, $248 for 1994, and $1,191 for
1993.
5. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
The Company provides certain health care and life insurance benefits for
all eligible retirees. Eligible retirees include salaried retirees and
certain groups of collectively bargained retirees. The health care plan
is contributory, with all future retirees' and current salaried retirees'
contributions subject to an annual indexing. The Company funds the cost
of these benefits on a claims-paid basis which totalled $2,697 for 1995,
$2,794 for 1994, and $3,500 for 1993.
Excluding the one-time transition charge of $48,676 in 1993, the adoption
of SFAS No. 106 effective October 1, 1992 had the effect of increasing the
Company's net loss by $753 for 1993.
The following table sets forth the plan's funded status, reconciled with
amounts recognized in the Company's consolidated balance sheet at
September 30, 1995 and 1994:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees . . . . . . . . . . . . . . . . . $(33,520) $(33,358)
Fully eligible active plan participants . . (2,390) (1,723)
Other active plan participants . . . . . . (5,235) (3,980)
(41,145) (39,061)
Plan assets at fair value . . . . . . . . . - -
Accumulated postretirement benefit
obligation in excess of plan assets . . . (41,145) (39,061)
Unrecognized prior service cost . . . . . . (2,241) -
Unrecognized net (gain) loss from past
experience different from that assumed
and from changes in assumptions . . . . . (7,969) (11,964)
Accrued postretirement benefit cost . . . . $(51,355) $(51,025)
</TABLE>
The accrued postretirement benefit cost includes approximately $2,700 and
$3,000 of expected 1996 and 1995 payments, respectively, that are included
in the balance sheet as a current liability.
Net periodic postretirement benefit cost included the following
components:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Service cost -- benefits attributed to
service during the period . . . . . . . . $ 298 $ 410
Interest on accumulated postretirement
benefit obligation . . . . . . . . . . . . 3,296 3,980
Net amortization and deferral . . . . . . . (567) -
Net periodic postretirement benefit cost . $ 3,027 $ 4,390
</TABLE>
For measurement purposes, the annual rate of increase in the per capita
cost of covered health care benefits was assumed to be approximately 9%
for 1996; the rate was assumed to decrease gradually to 5% for 2001 and
remain at that level thereafter. The health care cost trend rate
assumption has a significant effect on the amounts reported. To
illustrate, increasing the assumed health care cost trend rates by one
percentage point in each year would increase the accumulated
postretirement benefit obligation as of September 30, 1995 by $3,806 and
the aggregate of the service and interest cost components of net periodic
postretirement benefit cost for the year then ended by $336.
The 1995 and 1994 weighted-average discount rates used in determining the
accumulated postretirement benefit obligation were 7.75% and 8.75%,
respectively. The weighted-average discount rates used in determining the
1995 and 1994 net periodic postretirement benefit cost and the transition
obligation were 8.75% and 7.75%, respectively.
6. OTHER ASSETS
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Notes receivable, net . . . . . . . . . . . . . $ 108 $ 365
Equity in affiliates . . . . . . . . . . . . . . 500 450
Property held for sale . . . . . . . . . . . . . 3,856 4,680
Intangible pension asset . . . . . . . . . . . . 377 188
Prepaid pension cost . . . . . . . . . . . . . 6,027 2,924
Other . . . . . . . . . . . . . . . . . . . . 1,708 2,173
$ 12,576 $ 10,780
</TABLE>
In 1994, the Company closed its Columbiana, Alabama facility and is
continuing its preparation for sale.
During the past seven years, the Company has undertaken a project to
obtain New Jersey approval to transfer title for property it owns in
Clifton, New Jersey. This project has involved demolition of the buildings
and continuing environmental remediation from production wastes through
use of an on-site landfill and off-site disposal. Cash outlays, primarily
related to the remediation, have been capitalized to the extent that, when
added to the estimated costs to complete the project, they do not exceed
the estimated realizable sale value of the property. In 1995, 1994, and
1993, the Company expensed $1,110, $2,030, and $0, respectively,
associated with the project.
7. DEBT
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Credit arrangement expiring in November 1995,
interest at 10.25% in 1995 and 9.25% in 1994 . $ 685 $ 1,707
Revolving credit arrangement expiring on
October 1, 1997, interest at prime plus
1.75% in 1995 and 2.0% in 1994 . . . . . . . . 20,658 19,447
Promissory notes payable in monthly installments
with the balance due October 1, 1997, interest
at prime plus 2.0% in 1995 and 2.25% in 1994 . 16,277 17,357
Various debt due to 1997 . . . . . . . . . . . 130 112
Foreign subsidiary short-term operating lines of
credit with interest at approximately 8.75%
in 1995 and 7.75% in 1994 . . . . . . . . . . 3,402 3,950
. . . . . . . . . . . . . . . . . . . . 41,152 42,573
Less short-term debt and current portion of long-
term debt included in current liabilities . . 7,000 8,245
$ 34,152 $ 34,328
</TABLE>
The existing debt agreements are collateralized by substantially all
assets and contain, among other things, provisions as to the maintenance
of working capital and net worth, restrictions on cash dividends,
redemptions of Company stock and incurrence of indebtedness. The
revolving credit arrangement provides for maximum borrowing levels based
on a percentage of qualified accounts receivable and inventory.
Substantially all cash is restricted under existing debt agreements.
Aggregate maturities on long-term debt, based upon the credit agreements
for the three fiscal years subsequent to September 30, 1996, amount to
$2,852 in 1997, $31,300 in 1998, and $0 in 1999. There are no maturities
extending beyond 1999.
8. LEASES
Minimum rental commitments under noncancellable operating leases,
primarily machinery and equipment, in effect at September 30, 1995 were:
1996 . . . . . . . . . . . $3,616
1997 . . . . . . . . . . . 2,553
1998 . . . . . . . . . . . 2,085
1999 . . . . . . . . . . . 1,609
2000 . . . . . . . . . . . 5
Later years . . . . . . . 0
Operating lease rental expense was $4,353 in 1995, $2,626 in 1994, and
$2,485 in 1993.
9. INCOME TAXES
The domestic and foreign components of earnings (loss) before income taxes
are as follows:
1995 1994 1993
Domestic . . . . . . . . . . . . . $ 7,462 $ (3,861) $(54,609)
Foreign . . . . . . . . . . . . . . 127 (708) 1,232
$ 7,589 $ (4,569) $(53,377)
The provisions for income taxes are as follows:
1995 1994 1993
Currently payable:
Domestic . . . . . . . . . . . . $ 216 $ - $ -
Foreign . . . . . . . . . . . . 23 56 -
$ 239 $ 56 $ -
At September 30, 1995, the Company had tax loss carryforwards of $27,900
in the United States, $7,800 in the United Kingdom and $1,000 in Canada.
The United Kingdom carryforward period is unlimited; however, if not
utilized to offset future taxable income, $1,900 of the United States loss
will expire in 2002, $3,500 in 2004, $8,100 in 2005, $12,400 in 2006, $900
in 2008, and $1,100 in 2009. The period for utilizing the majority of the
Canadian loss will expire in 1996.
At September 30, 1995, and after giving full effect to the 35% post-1986
investment tax credit reduction required by the Tax Reform Act of 1986,
the Company has total United States tax credit carryforwards of
approximately $1,400, which expire as follows: 2000, $700; 2001, $500;
2002, $100; and 2003, $100.
A reconciliation of differences between taxes computed at the federal
statutory rate and the actual tax provisions is as follows:
<TABLE>
<CAPTION>
1995 1994 1993
Actual % Actual % Actual %
<S> <C> <C> <C> <C> <C> <C>
Taxes at federal
statutory rate $2,656 35.0 $(1,553)(34.0) $ (18,148)(34.0)
ESOP amortization - - - - 60 .1
Utilization of net
operating loss
carryforward (2,541) (33.5) - - - -
Foreign 23 .3 56 1.2 - -
Losses with no current
benefit 92 1.2 1,558 34.1 18,496 34.7
Other 9 .1 (5) (.1) (408) (.8)
$ 239 3.1 $ 56 1.2 $ - -
</TABLE>
The net deferred tax asset included the following components:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Deferred tax assets
Accrued postretirement benefits . . . . . . $ 17,974 $ 17,349
Net operating loss carryforwards . . . . . 12,698 14,884
Tax credit carryforwards . . . . . . . . . 1,395 1,396
Environmental reserves . . . . . . . . . . 2,488 2,381
Depreciation . . . . . . . . . . . . . . . - 1,371
Inventory reserves . . . . . . . . . . . . 1,047 1,250
Reserve against property held for sale . . 3,635 3,014
Other . . . . . . . . . . . . . . . . . . . 3,030 2,819
42,267 44,464
Valuation allowance . . . . . . . . . . . . . . (38,544) (42,512)
3,723 1,952
Deferred tax liabilities
Fixed assets . . . . . . . . . . . . . . . (1,488) (871)
Pension . . . . . . . . . . . . . . . . . . (2,235) (1,081)
(3,723) (1,952)
Net deferred . . . . . . . . . . . . . . . . . $ 0 $ 0
</TABLE>
The undistributed earnings of foreign subsidiaries amounting to $2,880 are
intended to be reinvested; however, those earnings remitted to the parent
company should have little or no additional tax under relevant current
statutes.
10. OTHER INCOME (EXPENSE), NET
<TABLE>
<CAPTION>
1995 1994 1993
<S> . . . . . . . . . . . . . . . <C> <C> <C>
Joint venture . . . . . . . . . . $ 200 $ 300 $ -
Rent . . . . . . . . . . . . . . . 204 200 255
Other . . . . . . . . . . . . . . (108) (74) (159)
$ 296 $ 426 $ 96
</TABLE>
11. LITIGATION
The Company is involved in certain legal actions and claims arising in
the ordinary course of business. After taking into consideration legal
counsel's evaluation of such actions, management is of the opinion that
their outcome will not have a material effect on the Company's consoli-
dated financial statements.
12. COMMON STOCK
The status of the stock option plans which provide for the purchase of
the Company's common stock by officers and key employees is summarized as
follows:
<TABLE>
<CAPTION>
Options Outstanding
Number Option
of Shares Price
<S> <C> <C>
Balance, September 30, 1992 . . . . . . . . . 49,976 $ 555
Transactions during 1993:
Options granted . . . . . . . . . . . . . 320,500 2,764
Options expired . . . . . . . . . . . . . (2,200) (32)
Options cancelled . . . . . . . . . . . . (5,983) (67)
Transactions during 1994:
Options expired . . . . . . . . . . . . . (23,988) (287)
Options cancelled . . . . . . . . . . . . (8,000) (69)
Transactions during 1995:
Options granted . . . . . . . . . . . . . 70,000 744
Options cancelled . . . . . . . . . . . . (5,000) (43)
Options exercised . . . . . . . . . . . . (16,868) (152)
Balance, September 30, 1995 . . . . . . . . . 378,437 $3,413
</TABLE>
The Long-Term Incentive Plan, under which all options were previously
granted, expired September 17, 1990; however, during 1993, the National-
Standard Stock Option Plan (the "1993 Plan") was approved. The 1993 Plan
allows the Compensation Committee of the Board of Directors, which
consists of four members who are not executive employees of the Company,
to select employees who will be granted options to purchase shares of
common stock at the fair market value on the date of grant. Under the
1993 Plan, 450,000 shares is the maximum amount available to be issued
upon the exercise of options, and the term of each option is ten years
from the date of the grant. During 1995 and 1993, 70,000 and 320,500
options, respectively, were granted to a group of key management employ-
ees. The exercise price is $10-5/8 for all options granted in 1995 and
$8-5/8 for those granted in 1993.
A Restricted Stock Award Program ("Plan") was established in 1989. The
Plan provides for grants of shares of common stock to selected employees,
subject to forfeiture if employment terminates prior to the end of the
prescribed restricted period. Such stock shall be made available from
authorized and unissued shares of common stock or treasury stock of the
Company. However, the maximum number of shares that may be issued at any
time under the Plan is 250,000. At September 30, 1995, certain employees
held 16,075 shares of restricted common stock of the Company. Awards for
5,700 and 8,500 of these shares were granted in 1995 and 1994,
respectively, with 2,875 subsequently vesting or being forfeited. The
amount of compensation represented by the grant of restricted stock is
amortized over a four-year vesting period.
All stock options outstanding at September 30, 1995 are currently
exercisable.
13. SEGMENT INFORMATION
The Company currently operates in one industry segment: Wire and Related
Products.
The Wire and Related Products Segment manufactures and sells various
types of wire used mainly by other manufacturers in their products. The
major use of the wire is for reinforcing tires and other rubber products.
The Segment also produces wire cloth and filters for automotive air bag
inflators for the air bag manufacturing industry.
The Company operates its business segments primarily in two geographic
areas -- United States and Europe. Due to its nature and relative
immateriality, the operation in Canada has been combined with the
operations in Europe and the combined total reported as foreign
operations.
Intersegment sales are billed at approximate market prices and are
eliminated in consolidation. Sales to unaffiliated customers which
individually totaled 10% or more of consolidated sales include sales to
three customers in 1995 of $41,163, $31,276, and $27,915, sales to three
customers in 1994 of $38,038, $27,621, and $25,583, and sales to one
customer in 1993 of $42,292.
Operating profit is total sales less operating expenses and does not
include general corporate expenses, interest, equity in income of
affiliate, loss on sale of subsidiary, and income taxes. General
corporate expense includes certain nonrecurring costs. Included in 1995,
1994 and 1993, respectively, are approximately $2,842, $6,955, and $2,390
of costs associated with divestitures and restructuring. Included in the
divestiture and restructuring costs in 1995 and 1994 are $1,110 and
$2,030, respectively, for costs associated with the Athenia Steel
property project in Clifton, New Jersey. The information reported for
geographic areas necessarily includes allocations of shared expenses and
the cost of assets. Assets not identified to geographic areas are
principally cash and investments.
<TABLE>
<CAPTION>
Year Ended September 30
1995 1994 1993
<S> <C> <C> <C>
GEOGRAPHIC AREAS
Net Sales
United States . . . . . . . . . $191,262 $ 170,667 $ 159,520
Foreign . . . . . . . . . . . . 57,342 51,579 54,719
Eliminations <F1> . . . . . . . (1,184) (4,330) (5,985)
$247,420 $ 217,916 $ 208,254
Operating Profit (Loss)
United States . . . . . . . . . $ 17,847 $ 8,628 $ 3,620
Foreign . . . . . . . . . . . . 864 197 2,324
Segment Operating Profit (Loss) 18,711 8,825 5,944
General Corporate Expense . . . (5,787) (9,935) (6,999)
$ 12,924 $ (1,110) $ (1,055)
Total Assets
United States . . . . . . . . . $ 70,806 $ 62,933 $ 65,142
Foreign . . . . . . . . . . . . 23,588 24,348 26,088
Corporate . . . . . . . . . . . 21,705 21,404 12,746
$116,099 $ 108,685 $ 103,976
<FN>
<F1> Represents primarily sales of foreign wire to the United States.
</FN>
</TABLE>
The net assets of foreign subsidiaries included in the consolidated
figures at appropriate rates of exchange are as follows:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Net current assets . . . . . . . . . . . . . . $ 3,922 $ 2,679
Plant, equipment and other assets, net of
long-term debt, deferred taxes, and other
long-term liabilities . . . . . . . . . . . . 4,055 5,210
$ 7,977 $ 7,889
</TABLE>
14. QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter
<S> <C> <C> <C> <C>
September 30, 1995
Net sales . . . . . . . . $58,605 $66,654 $59,907 $62,254
Gross profit . . . . . . . 8,391 11,666 7,725 9,546
Earnings:
Net . . . . . . . . . . . 1,927 2,792 1,052 1,579
Per share . . . . . . . . .36 .52 .19 .29
Common stock:
Market price:
High . . . . . . . . . 13-5/8 13 16-3/4 16-3/8
Low . . . . . . . . . . 9-3/8 10-1/4 11-1/4 13-1/4
September 30, 1994
Net sales . . . . . . . . $52,242 $58,051 $52,534 $55,089
Gross profit . . . . . . . 5,257 6,133 6,014 6,452
Earnings (loss):
Net . . . . . . . . . . (4,518) 611 673 (1,391)
Per share . . . . . . . (.84) .11 .13 (.26)
Common stock:
Market price:
High . . . . . . . . . 9-7/8 9-3/8 14 13-7/8
Low . . . . . . . . . 7-1/2 7-7/8 7-5/8 11-1/4
</TABLE>
Common stock market prices are as reported in The Wall Street Journal.
Common stock is traded on the New York Stock Exchange.
At September 30, 1995, there were 2,370 shareholders.
Independent Auditors' Report
The Board of Directors
National-Standard Company:
We have audited the consolidated financial statements of National-Standard
Company and subsidiaries as listed in the accompanying index. In connection
with our audits of the consolidated financial statements, we also have
audited the financial statement schedule as listed in the accompanying index.
These consolidated financial statements and financial statement schedule are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements and financial
statement schedule 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 National-
Standard Company and subsidiaries as of September 30, 1995 and 1994, and the
results of their operations and their cash flows for each of the years in the
three-year period ended September 30, 1995, in conformity with generally
accepted accounting principles. Also in our opinion, the related 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 note 1 to the consolidated financial statements, the Company
adopted the provisions of the Financial Accounting Standards Board's
Statement of Financial Accounting Standards No. 106, "Employers' Accounting
for Postretirement Benefits Other Than Pensions," in 1993.
KPMG Peat Marwick LLP
Chicago, Illinois
November 8, 1995
NATIONAL-STANDARD COMPANY AND SUBSIDIARIES
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
Years Ended September 30, 1995, 1994 and 1993
<TABLE>
<CAPTION>
1995 1994 1993
(In thousands)
<S> <C> <C> <C>
Allowance for Doubtful Accounts:
Balance at Beginning of Period . . . . . . . . . . $ 398 $ 386 $ 404
Additions (Recoveries) Charged to
Costs and Expenses . . . . . . . . . . . . . . 28 72 48
Recoveries of Accounts Previously Written Off . - - 1
Deductions (Uncollectible Accounts Written Off) (28) (60) (67)
BALANCE AT END OF PERIOD . . . . . . . . . . . . . $ 398 $ 398 $ 386
</TABLE>
NATIONAL-STANDARD COMPANY
INDEX TO EXHIBITS
Exhibit
(3)(i) Articles of Incorporation (incorporated by reference to Exhibit
(3)(i) to Registrant's Annual Report on Form 10-K for 1994, filed
December 14, 1994).
(3)(ii) By-Laws (incorporated by reference to Exhibit (3)(ii) to
Registrant's Annual Report on Form 10-K for 1994, filed December 14,
1994).
(10) Material Contracts.
(a) Management Contracts and Remunerative Plans.
(i) National-Standard Company Restricted Stock Award Plan
(incorporated by reference to Exhibit (10)(a) to Registrant's
Quarterly Report on Form 10-Q for the first quarter of 1989
filed January 30, 1989).
(ii) National-Standard Company Supplemental Retirement Plan
(incorporated by reference to Exhibit (10)(a)(ii) to
Registrant's Annual Report on Form 10-K for 1991, filed
January 31, 1992).
(iii) National-Standard Spouse's Benefit Plan for Salaried Employees
(incorporated by reference to Exhibit (10)(a)(iii) to
Registrant's Annual Report on Form 10-K for 1991, filed
January 31, 1992).
(iv) Amended and Restated Supplemental Compensation Agreements
(incorporated by reference to Exhibit (10)(a)(iv) to
Registrant's Annual Report on Form 10-K for 1992, filed
February 23, 1993).
(v) Deferred Compensation Plan (incorporated by reference to
Exhibit (10)(a)(v) to Registrant's Annual Report on Form 10-K
for 1994, filed December 14, 1994).
(vi) National-Standard Stock Option Plan (incorporated by reference
to Exhibit A to Registrant's annual Proxy Statement relating
to the Annual Meeting of Shareholders held May 19, 1993, filed
April 15, 1993).
(b) Loan and Security Agreement by and between National-Standard
Company and Foothill Capital Corporation dated as of May 24,
1994 (incorporated by reference to Exhibit (10) to
Registrant's Quarterly Report on Form 10-Q for the third
quarter of 1994, filed August 5, 1994).
(11) Statement Regarding Earnings Per Share Calculation.
(21) Subsidiaries of National-Standard Company.
(23) Consent of Independent Auditors.
(24) Powers of Attorney.
(27) Financial Data Schedule.
NATIONAL-STANDARD COMPANY
EXHIBIT 11
Earnings Per Share Calculation
<TABLE>
<CAPTION>
(In Thousands)
1995 1994 1993
(In Thousands)
<S> <C> <C> <C>
Weighted average number of Common
Shares outstanding 5,373 5,365 5,108
Weighted average number of nonleveraged,
unallocated Common Shares in the
Employee Stock Ownership Plan - - (23)
Common Shares used in calculating
earnings per share 5,373 5,365 5,085
</TABLE>
NATIONAL-STANDARD COMPANY
EXHIBIT 21
Parents and Subsidiaries
The Registrant has no parent.
All subsidiaries of the Registrant, National-Standard Company, an Indiana
Corporation, listed below are included in the consolidated financial statements.
<TABLE>
<CAPTION>
State or Country % of
in which Voting
Incorporated or Securities
Organized Owned
<S> <C> <C>
National-Standard Export Company Delaware 100%
National-Standard Company of Canada, Limited Canada 100
National-Standard Company, Limited United Kingdom 100
National-Standard (Wire Cord), Limited United Kingdom 100<F1>
<FN>
<F1> 100% owned by National-Standard Company, Limited
</FN>
</TABLE>
A domestic affiliate, 50% owned, is not considered significant and is not named
above. Financial statements of this affiliate are included in the consolidated
financial statements on an equity basis.
EXHIBIT 23
The Board of Directors
National-Standard Company:
We consent to incorporation by reference in the registration statements (Nos. 2-
71276 and 33-68926) on Form S-8 of National-Standard Company of our report dated
November 8, 1995; relating to the consolidated balance sheets of National-
Standard Company and subsidiaries as of September 30, 1995 and 1994, and the
related consolidated statements of operations, shareholders' equity and cash
flows for each of the years in the three-year period ended September 30, 1995,
and the related schedule, which report appears in the September 30, 1995 annual
report on Form 10-K of National-Standard Company. Our report refers to a change
in accounting.
KPMG Peat Marwick LLP
Chicago, Illinois
December 1, 1995
EXHIBIT 24
POWER OF ATTORNEY
The undersigned, a director of NATIONAL-STANDARD COMPANY (the "Company"), does
hereby constitute and appoint R. J. VanSTEELANDT his true and lawful attorney-
in-fact and agent, with full power of substitution and re-substitution, for him
and in his name, place and stead, to sign the Company's Form 10-K Annual Report
pursuant to Section 13 of the Securities Exchange Act of 1934 for the fiscal
year ended September 30, 1995, and any amendments thereto and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto the attorney-in-fact full
power and authority to sign the 10-K on behalf of the undersigned and to make
such filing, as fully to all intents and purposes as the undersigned might or
could do in person, hereby ratifying and confirming all that the attorney-in-
fact, or his substitutes, may lawfully do or cause to be done by virtue hereof.
Date: November 15, 1995
/s/ Harold G. Bernthal L.S.
Harold G. Bernthal
POWER OF ATTORNEY
The undersigned, a director of NATIONAL-STANDARD COMPANY (the "Company"), does
hereby constitute and appoint R. J. VanSTEELANDT his true and lawful attorney-
in-fact and agent, with full power of substitution and re-substitution, for him
and in his name, place and stead, to sign the Company's Form 10-K Annual Report
pursuant to Section 13 of the Securities Exchange Act of 1934 for the fiscal
year ended September 30, 1995, and any amendments thereto and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto the attorney-in-fact full
power and authority to sign the 10-K on behalf of the undersigned and to make
such filing, as fully to all intents and purposes as the undersigned might or
could do in person, hereby ratifying and confirming all that the attorney-in-
fact, or his substitutes, may lawfully do or cause to be done by virtue hereof.
Date: November 15, 1995
/s/ David F. Craigmile L.S.
David F. Craigmile
POWER OF ATTORNEY
The undersigned, a director of NATIONAL-STANDARD COMPANY (the "Company"), does
hereby constitute and appoint R. J. VanSTEELANDT his true and lawful attorney-
in-fact and agent, with full power of substitution and re-substitution, for him
and in his name, place and stead, to sign the Company's Form 10-K Annual Report
pursuant to Section 13 of the Securities Exchange Act of 1934 for the fiscal
year ended September 30, 1995, and any amendments thereto and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto the attorney-in-fact full
power and authority to sign the 10-K on behalf of the undersigned and to make
such filing, as fully to all intents and purposes as the undersigned might or
could do in person, hereby ratifying and confirming all that the attorney-in-
fact, or his substitutes, may lawfully do or cause to be done by virtue hereof.
Date: November 15, 1995
/s/ John E. Guth, Jr. L.S.
John E. Guth, Jr.
POWER OF ATTORNEY
The undersigned, a director of NATIONAL-STANDARD COMPANY (the "Company"), does
hereby constitute and appoint R. J. VanSTEELANDT his true and lawful attorney-
in-fact and agent, with full power of substitution and re-substitution, for him
and in his name, place and stead, to sign the Company's Form 10-K Annual Report
pursuant to Section 13 of the Securities Exchange Act of 1934 for the fiscal
year ended September 30, 1995, and any amendments thereto and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto the attorney-in-fact full
power and authority to sign the 10-K on behalf of the undersigned and to make
such filing, as fully to all intents and purposes as the undersigned might or
could do in person, hereby ratifying and confirming all that the attorney-in-
fact, or his substitutes, may lawfully do or cause to be done by virtue hereof.
Date: November 15, 1995
/s/ Ernest J. Nagy L.S.
Ernest J. Nagy
POWER OF ATTORNEY
The undersigned, a director of NATIONAL-STANDARD COMPANY (the "Company"), does
hereby constitute and appoint R. J. VanSTEELANDT his true and lawful attorney-
in-fact and agent, with full power of substitution and re-substitution, for him
and in his name, place and stead, to sign the Company's Form 10-K Annual Report
pursuant to Section 13 of the Securities Exchange Act of 1934 for the fiscal
year ended September 30, 1995, and any amendments thereto and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto the attorney-in-fact full
power and authority to sign the 10-K on behalf of the undersigned and to make
such filing, as fully to all intents and purposes as the undersigned might or
could do in person, hereby ratifying and confirming all that the attorney-in-
fact, or his substitutes, may lawfully do or cause to be done by virtue hereof.
Date: November 15, 1995
/s/ Charles E. Schroeder L.S.
Charles E. Schroeder
POWER OF ATTORNEY
The undersigned, a director of NATIONAL-STANDARD COMPANY (the "Company"), does
hereby constitute and appoint R. J. VanSTEELANDT his true and lawful attorney-
in-fact and agent, with full power of substitution and re-substitution, for him
and in his name, place and stead, to sign the Company's Form 10-K Annual Report
pursuant to Section 13 of the Securities Exchange Act of 1934 for the fiscal
year ended September 30, 1995, and any amendments thereto and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto the attorney-in-fact full
power and authority to sign the 10-K on behalf of the undersigned and to make
such filing, as fully to all intents and purposes as the undersigned might or
could do in person, hereby ratifying and confirming all that the attorney-in-
fact, or his substitutes, may lawfully do or cause to be done by virtue hereof.
Date: November 15, 1995
/s/ Donald F. Walter L.S.
Donald F. Walter
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains annual summary financial information extracted from
National-Standard Company's 1995 Form 10-K and is qualified in its entirety by
reference to such Form 10-K filing.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> SEP-30-1995
<CASH> 2,064
<SECURITIES> 0
<RECEIVABLES> 26,469
<ALLOWANCES> 398
<INVENTORY> 26,388
<CURRENT-ASSETS> 58,873
<PP&E> 146,835
<DEPRECIATION> 102,185
<TOTAL-ASSETS> 116,099
<CURRENT-LIABILITIES> 48,402
<BONDS> 0
<COMMON> 27,594
0
0
<OTHER-SE> (49,069)
<TOTAL-LIABILITY-AND-EQUITY> 116,099
<SALES> 247,420
<TOTAL-REVENUES> 247,420
<CGS> 210,092
<TOTAL-COSTS> 210,092
<OTHER-EXPENSES> (296)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,631
<INCOME-PRETAX> 7,589
<INCOME-TAX> 239
<INCOME-CONTINUING> 7,350
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,350
<EPS-PRIMARY> 1.37
<EPS-DILUTED> 1.37
</TABLE>
