UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FORM 10-Q
For the period ended December 31, 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)
(616) 683-8100
(Registrant's telephone number, including area code)
Indicate by check mark whether 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.
[X] Yes [ ] No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Title of Each Class Shares Outstanding at February 1, 1996
Common Stock, $ .01 par value 5,380,396
Part I. FINANCIAL INFORMATION
National-Standard Company and Subsidiaries
Consolidated Statements of Operations (Unaudited)
($000, Except Per Share Amounts)
<TABLE>
<CAPTION>
Three Months Ended
December 31
1995 1994
<S> <C> <C>
Net Sales
$60,531
$58,605
Cost of sales 52,968 50,214
Gross profit 7,563 8,391
Selling and administrative expenses 5,336 5,115
Operating profit 2,227 3,276
Interest expense (1,335) (1,375)
Other income 3,622 35
Income before income taxes 4,514 1,936
Income taxes 170 9
Net income $4,344 $1,927
Income (loss) per share $ .81 $ .36
Dividends per share $ 0.00 $ 0.00
Average shares outstanding 5,384,606 5,366,675
See accompanying notes to financial statements.
</TABLE>
National-Standard Company and Subsidiaries
Consolidated Balance Sheets
($000)
<TABLE>
<CAPTION>
December 31, 1995 September 30, 1995
(Unaudited)
<S> <C> <C> <C> <C>
Assets
Current assets:
Cash $ 410 $ 2,064
Receivables, net 26,175 26,071
Inventories:
Raw material $11,292 $ 9,946
Work-in-process 17,811 15,383
Finished goods 1,147 30,250 1,059 26,388
Prepaid expenses 4,263 4,000
Other current assets 326 350
Total current assets $61,424 $58,873
Property, plant and equipment $147,619 $147,034
Less accumulated
depreciation 103,264 44,355 102,384 44,650
Other assets 12,467 12,576
$118,246 $116,099
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $30,375 $26,605
Employee compensation and benefits 2,290 3,319
Accrued pension 965 965
Other accrued expenses 7,763 7,813
Current accrued postretirement benefit cost 2,700 2,700
Notes payable under revolving credit agreement
expiring October 1997 (see Note 2) 18,098 -
Current portion of long-term debt 5,475 7,000
Total current liabilities $67,666 $48,402
Notes payable under revolving credit agreement
expiring October 1997 (see Note 2) - 20,658
Other long-term debt 12,788 13,494
Other long-term liabilities 6,321 6,365
Accrued postretirement benefit cost 48,655 48,655
Stockholders equity:
Common stock -- $ .01 par value.
Authorized 25,000,000 shares;
issued 5,402,644 and 5,399,094
shares, respectively $27,630 $27,594
Retained deficit (41,505) (45,849)
$(13,875) $(18,255)
Less:
Foreign currency translation
adjustments 2,120 2,205
Unamortized value of restricted
stock 109 85
Treasury stock, at cost, 28,748
and 14,076 shares,
respectively 254 104
Excess of additional pension
liability over unrecognized
prior service cost 826 (17,184) 826 (21,475)
$118,246 $116,099
See accompanying notes to financial statements.
</TABLE>
National-Standard Company and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
($000)
<TABLE>
<CAPTION>
Three Months Ended
December 31
1995 1994
<S> <C> <C>
Net cash provided by operating activities $ 4,447 $ 3,180
Investing Activities:
Capital expenditures (1,217) (2,676)
Net cash used for investing activities (1,217) (2,676)
Financing Activities:
Net borrowings (reduction) under revolving
credit agreements (4,027) 512
Principal payments under term loans (707) (808)
Other (150) (5)
Net cash used for financing activities (4,884) (301)
Net increase (decrease) in cash (1,654) 203
Beginning cash 2,064 378
Ending cash $ 410 $ 581
Supplemental Disclosures:
Interest paid $ 1,171 $ 1,166
Income taxes paid $ 1 $ 7
See accompanying notes to financial statements.
</TABLE>
National-Standard Company and Subsidiaries
Notes to Consolidated Financial Statements
1. In the opinion of management, all adjustments (consisting only of normal
recurring adjustments) necessary for a fair statement of the financial
statements for the interim periods included herein have been made.
The accounting policies followed by the Company are set forth in Note 1 to
the Company's financial statements in the 1995 National-Standard Company
Form 10-K, Annual Report, and this report should be read in conjunction
therewith.
2. On November 16, 1995, the Emerging Issues Task Force (EITF) of the Financial
Accounting Standards Board reached a consensus opinion that borrowings
outstanding under a revolving credit agreement with requirements similar to
those in the Company's agreement that expires October 1, 1997 should be
classified as short-term obligations. Accordingly, the Company has
classified all amounts due under its revolving credit agreement as a current
liability at December 31, 1995. Amounts outstanding under this agreement
were classified as long-term debt at September 30, 1995. There have been no
changes in the terms of the Company's revolving credit agreement since
September 30, 1995. Debt under the revolving credit agreement would have
been classified as long-term debt at December 31, 1995 had the EITF opinion
not been issued.
3. The results of operations for the three-month period ended December 31, 1995
are not necessarily indicative of the results to be expected for the full
year.
National-Standard Company and Subsidiaries
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Results of Operations
Net sales for the three months ended December 31, 1995 increased 3.3% over the
same period last year. Gross margin percentages were 12.5% for the current
three-month period compared to 14.3% for the same period last year.
Sales of air bag inflator filtration products increased approximately 12% over
the first quarter last year, while the Company's weld wire product lines
experienced an 11% decline over the same time period. Operating margins were
$2.2 million compared to $3.3 million for the same period last year, resulting
from a slowdown in the automotive industries and sales of lower margin products.
Net income for the quarter was $4.3 million or 81 cents per share versus $1.9
million or 36 cents per share for the same period last year. This year's net
income includes approximately $3.5 million from the sale of shares of Allmerica
Financial Corporation which the Company received as a result of the
demutualization of the State Mutual Life Assurance Company of America in which
the Company had participated since 1946.
Operations in the United Kingdom were breakeven in the current three-month
period compared to a net loss of $0.3 million for the same period last year on
slightly higher sales. The United Kingdom continues to experience increased
demand for its products and continued improvement is expected for the remainder
of the year.
Interest expense of $1.3 million in the current three-month period decreased 4%
over the same period last year, as a lower level of average borrowings was
offset by higher interest rates.
The Company remains in an operating loss carryforward position in the United
States, Canada, and the United Kingdom. Income tax expense on current income
was substantially offset by a portion of these carryforwards.
Liquidity and Capital Resources
Total borrowings decreased $4.7 million during the quarter, due primarily to the
sale of the Allmerica Financial Corporation shares.
During 1994, the Company entered into a long-term financing arrangement, which
was modified in September 1995, to provide up to $51.0 million in revolving
credit facilities, term loans and a line of credit for future capital
expenditures. The loans mature in October 1997 and are fully secured by the
Company's assets.
The Company believes adequate funding is in place to fund future growth and meet
the market demand for our products.
Part II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(10) Material Contracts
(i) National-Standard Company Targeted Retirement Benefit Plan.
(ii) National-Standard Company Deferred Compensation Plan.
(27) Financial Data Schedule
(b) There were no reports on Form 8-K filed for the three months ended
December 31, 1995.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NATIONAL-STANDARD COMPANY
Registrant
Date February 8, 1996 /s/ M. B. Savitske
M. B. Savitske
President and Chief Executive Officer
Date February 8, 1996 /s/ W. D. Grafer
W. D. Grafer
Vice President, Finance
NATIONAL-STANDARD COMPANY TARGETED RETIREMENT BENEFIT PLAN
C E R T I F I C A T E
I, _________________, duly-authorized Chairman of the Board of
Directors of National-Standard Company ("the Company") do hereby adopt the
attached National-Standard Company Targeted Retirement Benefit Plan on behalf of
the Company effective _______________________.
Dated this ______________ day of __________, 1995.
NATIONAL-STANDARD COMPANY
By
TABLE OF CONTENTS
PAGE
SECTION 1 1
Introduction 1
Purpose 1
Effective Date 1
Employers 1
Plan Administration 1
SECTION 2 1
Eligibility and Membership 1
Eligibility 1
Leave of Absence 2
Disability Retirement Date 2
Normal Retirement Date 2
Early Retirement Date 2
SECTION 3 2
Benefits 2
Amount of Benefits 2
Form of Payment 4
Earnings 5
Benefit Payments 6
Small Amounts 6
Final Average Earnings 6
Amount of Replacement Death Benefits 6
Amount of Disability Benefits 7
Early Retirement 7
SECTION 4 8
Miscellaneous 8
Information Required by Company 8
Employment Rights 8
Facility of Payment 8
Gender and Number 8
Review of Benefit Determinations 8
Committee's Decision Final 8
Action by Employer 9
Interests Not Transferable 9
Controlling Law 9
Designation of Beneficiary 9
SECTION 5 9
Amendment and Termination 9
NATIONAL-STANDARD COMPANY TARGETED RETIREMENT BENEFIT PLAN
SECTION 1
Introduction
1.1 Purpose. NATIONAL-STANDARD COMPANY TARGETED RETIREMENT BENEFIT PLAN (the
"plan") has been established by NATIONAL-STANDARD COMPANY (the "company")
to provide benefits for eligible employees of the company and its
subsidiaries which adopt the plan.
1.2 Effective Date. The effective date of the plan is May 1, 1995 (the
"effective date").
1.3 Employers. Any subsidiary of the company may adopt the plan, with the
company's consent, by resolution of its Board of Directors. The company
and its subsidiaries which adopt the plan are referred to below
collectively as the "employer" and individually as an "employer".
1.4 Plan Administration. The plan will be administered by the company.
SECTION 2
Eligibility and Membership
2.1 Eligibility. An employee who is a member of the plan during any period
commencing on or after the effective date shall continue as a member so
long as he meets all of the following requirements:
(a) he is employed as a salaried employee of an employer;
(b) he is a participant in the National-Standard Company Employees'
Pension Plan (the "pension plan"); and
(c) he is designated as a participant by the Board of Directors of
the company in writing.
A participant who ceases to be an employee of an employer and is reemployed
by an employer shall not again become eligible to participate in the plan
unless he is again designated as a participant by the Board of Directors of
the company.
2.2 Leave of Absence. A leave of absence which is not treated as a termination
of employment by an employer or which is required by law because of
military service will not interrupt membership in the plan.
2.3 Disability Retirement Date. A participant's "disability retirement date"
shall be the first day of the month following the date the participant
becomes disabled. For purposes of the plan, "disability" means the
inability to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment that can be expected
to result in death or which has lasted for a continuous period of not less
than six months. The disability of a participant shall be determined
by the Board of Directors of the company in its sole discretion. However,
if the condition constitutes total disability under the federal Social
Security Acts, the plan administrator may rely upon such determination that
the participant is disabled for the purposes of this plan. The
determination shall be applied uniformly to all participants similarly
situated.
2.4 Normal Retirement Date. A participant's "normal retirement date" will be
the first day of the month coincident with or next following his attainment
of age 65 years.
2.5 Early Retirement Date. A participant's "early retirement date" will be the
first day of the month coincident with or next following the date of his
retirement from the employ of the company or an employer before his normal
retirement date but after he has both attained age 55 years and completed
10 or more years of credited service under the pension plan.
SECTION 3
Benefits
3.1 Amount of Benefits. A participant in this plan will be entitled to receive
as his benefit under this plan an amount equal to:
(a) a monthly payment equal to 1/12 of 55% of the participant's final
average earnings; less
(b) An amount equal to the sum of:
(i) An amount of monthly benefit, payable in the form of
a life annuity, which is actuarially equivalent to
the amount payable to the participant under the
terminated National-Standard Retirement Plan for
Salaried Employees.
(ii) The amount of monthly pension benefit payable to him
under the pension plan payable in the form of a
straight life annuity.
(iii) An amount of benefit, payable in the form of a life
annuity, which is actuarially equivalent to the
aggregate deferred compensation payable to him under
all other non-qualified deferred compensation plans
of, and all other binding agreements with, the
company or any other corporation. For purposes of
this subparagraph 3.1(b), with respect to amounts
payable under the National-Standard Deferred
Compensation Plan, only amounts attributable to
"company contributions" made pursuant to paragraph
A-5 of Supplement A of such plan shall be considered.
Amounts attributable to the National-Standard
Spouse's Benefit Plan shall be offset as provided in
subparagraph 4.1(b)(vi).
(iv) An amount of benefit, payable in the form of a life
annuity, which is actuarially equivalent to the
amount of the participant's employer contribution
account under the National-Standard Company
Employees' Stock Savings Plan. In the event a
contribution account described in the preceding
sentence is not maintained, or a withdrawal from the
account has previously been made, the offset under
this subparagraph 3.1(b) shall equal the sum of the
amount of any contribution account previously
distributed to the participant projected from the
date of distribution until the date of determination
using an annual interest rate of 7% plus the
participant's employer contribution account as of the
date of determination.
(v) 50% of the participant's monthly Primary Insurance
Amount under the Social Security Act determined as of
the participant's Social Security Retirement Age.
(vi) In the event of the participant's death prior to
commencement of benefit, the amount of monthly
benefit payable to the participant's spouse under the
National-Standard Spouse's Benefit Plan.
3.2 Form of Payment. Except as otherwise specifically provided, payment of
benefits shall be made to a participant as follows:
(a) Life Annuity. A participant who is not legally married on the
date as of which such payments commence, or a participant who
prior to that date elects not to receive his benefit in the form
of a joint and survivor annuity, shall receive a benefit in
accordance with the plan payable during his lifetime, with the
last payment to be made for the month in which his death occurs.
(b) Joint and Survivor Annuity. A participant who is legally married
on the date as of which such payments commence and who had not
made an election to waive a joint and survivor form of payment
shall receive a joint and survivor annuity which is actuarially
equivalent to the amount of monthly benefit otherwise payable to
him in accordance with the plan on a life annuity basis. Such
joint and survivor annuity shall consist of a reduced benefit
continuing during the participant's lifetime, and if the
participant's spouse is living at the date of the participant's
death, payment of one-half of such reduced monthly benefit to
such spouse until the spouse's death occurs, with the last
payment to be made for the month of the death of the last to die
of the participant and his spouse.
3.3 Earnings. A participant's "earnings" means the annual rate of cash
compensation payable to him for services rendered to the company as an
employee, including:
(a) bonuses paid to him during the preceding 12-month period (or
which would have been paid but for the participant's election to
defer payment to a subsequent period);
(b) amounts which would have constituted earnings as defined in this
subsection, but for the participant's earnings reduction
authorization in effect under any defined contribution plan or
cafeteria plan maintained by an employer pursuant to Section
401(k) or 125 of the Internal Revenue Code, respectively, or but
for the participant's deferral of earnings pursuant to the
National-Standard Deferred Compensation Plan; and
(c) any cash awards under an employer's long-term incentive, bonus,
or non-deferred profit sharing plan;
but excluding:
(d) payment (prior to his employment termination date) of
compensation previously deferred by the participant which would
have constituted earnings at the time of deferral if paid at that
earlier time;
(e) reimbursement of expenses, such as travel expenses, relocation or
educational assistance allowances, or the cost of physical
examinations;
(f) imputed income;
(g) contributions by an employer to, or amounts paid from, any tax-
qualified pension, profit sharing or stock bonus plan (except to
the extent included under (b) above); and
(h) severance pay or accrued vacation pay paid to him as a result of
his termination of employment.
3.4 Benefit Payments. Commencing as of the effective date, any benefit payable
under the plan will be paid directly by the company. The company shall not
be required to segregate on its books or otherwise any amount to be used
for payment of benefits under the plan. Notwithstanding the foregoing, the
employers reserve the right to hereafter establish a trust or purchase
insurance contracts for the purpose of providing benefits under the plan.
3.5 Small Amounts. If the amount of any monthly benefit that becomes payable
is less than $20, the company may pay the actuarial equivalent of such
benefit in a series of installments less frequently than monthly.
3.6 Final Average Earnings. The "final average earnings" of a participant
shall mean the monthly average of the earnings paid to the participant for
the five consecutive 12-month periods immediately preceding the
participant's normal retirement date or earlier termination of employment
(or the monthly average of earnings for the entire period of the
participant's employment if such period is less than five consecutive
12-month periods). Such average shall be computed by dividing the total of
the participant's earnings for such five consecutive 12-month periods by 60
months or the shorter period of employment if applicable.
3.7 Amount of Replacement Death Benefits. Subject to the conditions and
limitations of the plan, if a participant dies prior to the date benefits
commence to him under the plan, the participant's beneficiary shall be
entitled to a benefit equal to the amount of benefit which would have been
payable to the participant in accordance with subsection 3.1 in the form of
a life annuity assuming the participant had remained in service until age
65. A calculation of benefit under this subsection 3.7 shall be based on
the participant's final average earnings as of his date of death projected
until age 65 and increased at an annual rate of 5%. The amount of offset
provided under subparagraphs 3.1(b)(ii), (iii) and (iv) shall similarly be
calculated by assuming that the participant would have remained in service
and continued to participate in the applicable plan until age 65 and based
on earnings projected as provided in the preceding sentence. In addition,
account balances which are derived from application of subparagraphs
3.1(b)(iii) and (iv) shall be shall be projected forward to the date the
participant would have attained age 65 and, for this purpose, increased at
an annual rate of 7%. If payments to the participant's beneficiary
commence prior to the date the participant would have attained normal
retirement age, payments shall be reduced in accordance with subsection 3.8
to the date of commencement. A death benefit payable in accordance with
this subsection 3.7 shall be payable monthly until a total of 120 payments
have been made. If a participant's beneficiary dies prior to the date 120
total payments have been made, payments shall cease.
3.8 Amount of Disability Benefits. Subject to the conditions and limitations
of the plan, if a participant retires on a disability retirement date, he
shall be entitled to a benefit equal to the amount of benefit which would
have been payable to the participant in accordance with subsection 3.1 in
the form of a life annuity, projected forward to the date the participant
would have attained age 65 in the manner described in subsection 3.7 but
reduced by an additional amount equal to 3% per year for each year the date
of commencement of the disability benefit precedes the date the participant
attains age 65 years and further reduced by an additional amount equal to
3% per year for each year the disability benefit precedes the participant's
attainment of age 55 years. A disability benefit payable in accordance
with this subsection 3.8 shall be payable monthly until 180 monthly
payments have been made. If a participant dies prior to the date 180
monthly payments have been made, payments shall continue to the
participant's designated beneficiary until a total of 180 monthly payments
have been made, taking into account payments made to the participant and
the participant's designated beneficiary. If a participant's beneficiary
dies prior to the date a total of 180 payments have been made, taking into
account payments made to the participant and the participant's designated
beneficiary, payments shall cease.
3.9 Early Retirement. In lieu of receiving the monthly retirement income
otherwise payable under subsection 3.1 commencing on his normal retirement
date, a participant who retires on an early retirement date may elect a
monthly retirement income commencing on his early retirement date, or on
the first day of any calendar month thereafter before his normal retirement
date. Such monthly retirement income will be computed in accordance with
subsection 3.1, and projected forward to the date the participant would
have attained age 65 in the manner described in subsection 3.7, but
actuarially reduced by an amount equal to 3% per year for each year the
early retirement benefit precedes his normal retirement date to take into
account the participant's younger age and the early commencement of his
benefits. An election to receive benefits prior to attaining normal
retirement age must be in writing and filed with the company at such time
prior to the date earlier payment of the participant's retirement income is
to begin as the company shall determine.
SECTION 4
Miscellaneous
4.1 Information Required by Company. Each person entitled to benefits under
the plan must file with the company from time to time in writing such
person's post office address and each change of post office address. Any
communication, statement or notice addressed to any such person at the last
post office address filed with the company will be binding upon such person
for all purposes of the plan. Each person entitled to benefits under the
plan shall also furnish the company with such documents, evidence, data or
information as the company considers necessary or desirable for the purpose
of administering the plan.
4.2 Employment Rights. The plan does not constitute a contract of employment,
and membership in the plan will not give any person the right to be
retained in the employ of any employer, nor any right or claim to any
benefit under the plan, unless such right or claim has specifically accrued
under the terms of the plan.
4.3 Facility of Payment. When a person entitled to benefits under the plan is
under legal disability, or, in the company's opinion, is in any way
incapacitated so as to be unable to manage financial affairs, the committee
may cause benefits otherwise payable to such person to be paid to such
person's legal representative, or to a relative or friend of such person
for such person's benefit, or the committee may direct the application of
such benefits for the benefit of such person. Any payment made in
accordance with the preceding sentence shall be a full and complete
discharge of any liability for such payment under the plan.
4.4 Gender and Number. Where the context admits, words in the masculine gender
shall include the feminine and neuter genders, the singular shall include
the plural and the plural shall include the singular.
4.5 Review of Benefit Determinations. The company will provide notice in
writing as required by applicable law to any person whose claim for
benefits under the plan is denied and the company shall afford such person
a full and fair review of its decision if so requested.
4.6 Committee's Decision Final. Any interpretation of the plan and any
decision on any matter within the company's discretion made in good faith
is binding on all persons. A misstatement or other mistake of fact shall
be corrected when it becomes known, and the company shall make such
adjustment on account thereof as it considers equitable and practicable.
4.7 Action by Employer. Any action required or permitted to be taken by an
employer under the plan shall be by resolution of its Board of Directors,
or by a person or persons authorized by resolution of its Board of
Directors.
4.8 Interests Not Transferable. The interests of members and beneficiaries
under the plan are not subject to the claims of their creditors and may not
be voluntarily or involuntarily transferred, assigned, alienated or
encumbered.
4.9 Controlling Law. Except to the extent superseded by the laws of the United
States, the laws of the State of Indiana shall be controlling in all
matters relating to the plan.
4.10 Designation of Beneficiary. Each participant, from time to time, by
signing a form furnished by the company, may designate any person or
persons to whom his benefits are to be paid if he dies before he receives
all of his benefits. A beneficiary designation form will be effective only
when the form is filed with the company while the participant is alive and
will cancel all beneficiary designation forms previously filed with the
company. If a deceased participant failed to designate a beneficiary as
provided above, or if all of the designated beneficiaries die before the
participant, the participant's benefits shall be distributed to his spouse
or, if there is none, no benefits shall be paid.
SECTION 5
Amendment and Termination
The company reserves the right to amend the plan from time to time. The company
also reserves the right to terminate the plan as applied to all employers, and
each employer reserves the right to terminate the plan as applied to its
employees. Members will be notified of an amendment or termination of the plan
within a reasonable time.
NATIONAL-STANDARD COMPANY
DEFERRED COMPENSATION PLAN
(As Amended and Restated Effective as of January 1, 1996)
NATIONAL-STANDARD COMPANY
DEFERRED COMPENSATION PLAN
1. Name of Plan.
This plan has been established by National-Standard Company (the "Company")
and shall be known as the National-Standard Company Deferred Compensation
Plan, hereafter referred to as "the Plan."
2. Objective.
The objective of the Plan is to provide an unfunded arrangement under which
eligible personnel may elect to defer a portion or all of their base
compensation and/or bonuses to a future date.
3. Eligibility.
The following employees of the Company shall be eligible to participate in
the Plan for a calendar year:
(a) All salaried personnel within the United States with an annual
base compensation of more than the dollar amount determined under
Internal Revenue Code Section 414(q)(1)(C); and
(b) All salaried personnel participating in the National-Standard
Company Bonus Plan.
In addition to the employees identified above, prior to December 31 of each
year, the Chief Executive Officer of the Company may designate additional
employees as eligible to participate in the Plan for the following calendar
year. An employee's designation as a participant for a calendar year shall
not confer upon the employee any right to participate in the Plan for any
subsequent year.
4. Rules and Regulations.
The Compensation Committee of the Board of Directors, hereafter referred to
as "the Committee," may establish such rules and regulations as it deems
necessary for effective administration of the Plan. Full power and
authority to construe, interpret and administer this Plan shall be vested
in the Committee. In particular, the Committee shall have full
discretionary power and authority to make each determination provided for
in this Plan, and all determinations made by the Committee shall be
conclusive upon the Company, upon each eligible employee, and upon each
eligible employee's designees. If one or more members of the Committee are
disqualified by personal interest from taking part in a particular
decision, the remaining member or members of the Committee (although less
than a quorum) shall have full power to act on such matter.
5. Administration.
Subject to paragraph 4, above, the Plan shall be administered on a daily
basis by one or more designated representatives of the Finance and/or Human
Resource Departments under the direction of the Chief Executive Officer.
6. Participation.
Eligible employees may participate in the Plan by making an "irrevocable"
election to defer a portion of their base compensation and/or bonus earned.
(a) Such election shall be on the form provided by the designated
Company representative and shall specify: (i) the portion of the
eligible employee's base compensation and/or bonus to be
deferred, (ii) the period of deferral, and (iii) the manner of
payment of such deferred amounts (i.e., lump sum, approximately
equal monthly installments, or both). The form by which an
eligible employee may elect to participate in the Plan is
attached hereto as Exhibit A and, as it may be amended from time
to time in accordance with the provisions of Item 20 below, forms
a part of the Plan. Subject to rules established by the
Committee, an eligible employee who wishes to participate in the
Plan must complete the election form provided by the designated
Company representative and file such form with the designated
Company representative prior to the first day of the calendar
year in which the amounts to be deferred are earned and would
otherwise be paid; provided, however, that an employee who
becomes an eligible employee after the Effective Date may make
his or her first such election during the thirty (30) day period
next following the date on which such person becomes an eligible
employee, to be effective as of the date filed with the
designated Company representative. Each such election shall
apply to all of the base compensation and/or bonus amounts earned
by such employee after the date as of which the election is made,
and until such time as the election is terminated either pursuant
to Item 6(b) below or due to the participant's ceasing to be an
eligible employee. Such an election by an employee, once made,
shall be irrevocable by the employee with respect to all amounts
earned by the employee while the election is in effect.
(b) An eligible employee may terminate an election to defer the
receipt of base compensation and/or bonuses at any time by
written direction to the designated Company representative. Any
such termination shall take effect with respect to the base
compensation and/or bonuses payable to such eligible employee for
calendar years commencing after the written direction is received
by the designated Company representative. An eligible employee
who has terminated an election to defer the receipt of base
compensation and/or bonuses may not again elect to defer the
receipt of base compensation and/or bonuses until a period of
twelve (12) months has elapsed from the Effective Date as of
which the previous election was terminated. A separate account
shall be established with respect to the deferred amounts payable
pursuant to each such election.
(c) Deferred amounts shall be subject to the rules set forth in the
Plan, and each participant shall have the right to receive cash
payments on account of previously deferred base compensation
and/or bonus amounts only in the amounts and under the
circumstances hereinafter set forth.
7. Effect of Election.
(a) Nothing contained herein shall be deemed to create a trust of any
kind or create any fiduciary relationship. All amounts deferred
hereunder shall be reflected on the Company's books of accounts
as general unsecured and unfunded obligations. If the Company,
in its discretion, should from time to time set aside amounts for
the purposes of payment of salaries and bonuses deferred
hereunder, such amounts shall be solely for the Company's own
account and shall not in any way be considered to create a fund
or trust for the benefit of the participant or the participant's
beneficiaries; the participant shall have no right, title, or
interest in or to any such investments; and the participant's
rights hereunder shall be solely those of an unsecured creditor
to receive the payments provided hereunder.
(b) Participation in the Plan shall not confer on the participant any
right to remain employed with the Company for any period of time,
nor the right to receive a bonus in any year.
8. Establishment of Accounts. The Company will maintain a recordkeeping
account in the name of each participant which will reflect his base
compensation and/or bonuses deferred under the Plan, and the income,
losses, appreciation and depreciation attributable thereto. The Company
also may maintain such other accounts as it considers advisable, including
but not limited to subaccounts for each participant to reflect different
elections by the participant pursuant to subparagraph 6(b). References in
the Plan to a participant's "account" means all accounts maintained in his
name under the Plan.
9. Adjustment of Accounts.
As of the end of each calendar quarter, the Company shall:
(a) First, charge to the proper accounts all payments or
distributions made since the end of the preceding calendar
quarter (that have not been charged previously) as of the date
such payments or distributions were actually made to the
participant;
(b) Next, credit participants' accounts with the amount of deferred
base compensation and/or bonuses, if any, that are to be credited
as of the date such amounts otherwise would have been paid to the
relevant participant and which have not been credited previously
to the participants' accounts;
(c) Finally, credit participants' accounts with interest, at the rate
specified below, based on each participant's average account
balance for such calendar quarter. A participant's average
account balance shall be determined by determining the
participant's daily account balance after application of
subparagraphs (a) and (b) above, and averaging such account
balances by the number of days in the such calendar quarter.
While the Company has no obligation to invest or reinvest any funds
pursuant to this Plan, the Company agrees that interest shall be
credited at a rate of interest equal to the thirty (30) year fixed
Federal National Mortgage Association (FNMA) rate, published in The
Wall Street Journal as of the close of business on the first day of
the first month of such calendar quarter.
10. Effect on Other Benefit Plans.
Amounts deferred under this Plan shall be considered in computing benefits
under other Company benefit plans only in accordance with the provisions of
such other plans and applicable federal, state, or local laws and
regulations.
11. Designation of Beneficiaries.
Each participant shall have a right to designate beneficiaries who are to
receive payments due the participant under the Plan in the event of the
participant's death. The designation of beneficiaries shall be in writing
on the form provided, which must be signed by the participant. The form by
which a participant may designate a beneficiary is attached hereto as
Exhibit B and, as it may be amended from time to time in accordance with
the provisions of Item 20 below, forms a part of the Plan. Each
designation will revoke all prior designations by the participant, and will
be effective only when filed by the participant with the designated Company
representative. Should a beneficiary not be designated or a designated
beneficiary die without a secondary or designated successor beneficiary,
distribution shall be made to the participant's estate.
12. Disability.
If a participant or a designated beneficiary is under legal disability or,
in the opinion of the Committee, is in any way incapacitated to the point
of not being able to manage his or her financial affairs, the Committee may
direct that any payment hereunder be made to the participant's or
beneficiary's legal representative, or in any manner it determines is in
the best interest of the participant or beneficiary.
13. Severe Financial Hardship.
Although elections under the Plan are irrevocable, termination of the
current year's deferral or withdrawal from account balances prior to
elected periods may be made in the case of an unanticipated, severe
financial hardship due only to the health or educational needs of the
participant or his dependents (as defined in Section 152(a) of the Internal
Revenue Code of 1986, as amended) beyond the control of the participant.
Termination or withdrawal for any other material needs will not be
permitted. Requests for such termination of deferral or for withdrawal of
funds must be submitted in writing with proof of hardship to the designated
Company representative along with an estimate of the amounts necessary to
prevent severe financial hardship. Hardship payments shall only be made to
the extent necessary to satisfy the financial hardship, and shall not be
made to the extent that the hardship is or may be relieved through
reimbursement or compensation, by insurance or otherwise, by cessation of
deferrals pursuant to the Plan, or by liquidation of the participant's
assets (to the extent such liquidation itself would not cause severe
financial hardship). Any funds withdrawn under such conditions shall be
distributed via a regular payroll check.
14. Other Termination of Employment.
If a participant is terminated from the employment of the Company for any
reason other than retirement, disability or death, the Company shall have
the right, in its sole discretion, to pay the balance of the deferred
amount in the participant's account in a lump sum, or in installments
within a reasonable period of time following such termination of
employment, irrespective of the manner or time elected by the participant
to receive such deferred payments.
15. Change of Control.
In the event of a change of control of the Company, the amount in each
participant's account on the day immediately preceding the change of
control date (as hereinafter defined) shall be paid to the participant in a
lump sum within a reasonable period of time following the change of control
date, irrespective of the manner or time elected by the participant to
receive payment of the amount. In determining the amount of each
participant's account, interest shall be accrued on the day immediately
preceding the change of control date, in accordance with Item 9 of the
Plan, as if that day were the last day of the calendar quarter. For
purposes of this Item, the "change of control" date shall mean the earliest
date on which:
(a) any "person" (as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange
Act")] becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of
the Company, representing at least 25% of the combined voting
power of the Company's then outstanding securities, or
(b) a majority of the individuals comprising the Company's Board of
Directors have not served in such capacity for the entire two-
year period immediately preceding such date, or
(c) a change occurs of a nature that would be required to be reported
in response to Item 6(e) of Schedule 14A of Regulation 14A
promulgated under the Exchange Act;
provided, however, that if the transactions or elections causing a date to
be a change of control date shall have been approved by an affirmative vote
of a majority of the "continuing directors," such date shall not be deemed
to be a change of control date. A "continuing director" means a person who
was a member of the Board of Directors of the Company immediately prior to
the transactions or elections, resulting in there being a change of control
date, or who was designated (before his initial election or appointment as
a director) as a continuing director by a majority of the whole Board of
Directors, but only if the majority of the whole Board of Directors then
consisted of continuing directors, or if a majority of the whole Board of
Directors did not then consist of continuing directors, by a majority of
the then continuing directors. Notwithstanding the foregoing provisions of
this Item 15, the receipt of or investment in stock of the Company by a
trust maintained by the Company which is tax-exempt under Section 501(a) of
the Internal Revenue Code in amounts which comply with Section 407 of the
Employee Retirement Income Security Act of 1974 prior to a change of
control date as otherwise defined herein shall not cause a change of
control date to occur.
16. Payment of Account Balances.
The Company shall pay to each participant or beneficiary from the general
assets of the Company the amount of his or her account balance in the
manner elected by the participant, unless such payments are to be made in a
different manner and/or at an earlier date pursuant to Items 12, 13, 14 or
15 herein.
17. Withholding.
The Company shall withhold the amount of local, state or federal taxes
required by law from payments ultimately paid under the Plan.
18. No Alienation.
To the extent permitted by law, the right of any participant or any
beneficiary to any payment hereunder shall not be subject in any manner to
attachment or other legal process for the debts of the participant or
beneficiary, and any such benefit or payment shall not be subject to
anticipation, sale, alienation, transfer, assignment or encumbrance.
19. Determination of Taxability.
Should the Internal Revenue Service determine that any amount deferred by
the participant under the Plan is currently taxable, even though not
received by the participant, the Company shall pay to such participant,
immediately upon receipt of a copy of the final IRS determination of
taxability, the amount of deferred compensation and/or bonuses deemed to be
subject to tax.
20. Amendment or Termination.
The Plan may be terminated or amended at any time in whole or in part as
determined by the Board of Directors of the Company; provided, however,
that no such amendment or termination shall (without the participant's
consent) alter a participant's right to payments of amounts previously
credited to such participant's accounts prior to the date of such amendment
or termination, or the amount or times of payment of such amounts.
21. Miscellaneous.
(a) Plan Binding. This Plan shall be binding upon and inure to
the benefit of the Committee, the Company, the participants,
their legal representatives, successors and assigns, and all
persons entitled to benefits hereunder.
(b) Notice. Any notice given in connection with the Plan shall be in
writing and shall be delivered in person or by certified mail,
return receipt requested. Any notice given by certified mail
shall be deemed to have been given upon the date of delivery
indicated on the certified mail return receipt, if correctly
addressed.
(c) Expenses. The expenses of administering the Plan shall be
borne by the Company.
(d) Applicable Law. This Plan and all rights hereunder shall be
construed in accordance with and governed by the laws of the
State of Michigan.
(e) Action by Company. Any action required or permitted to be taken
by the Company under the Plan shall be by resolution of its Board
of Directors, by resolution of a duly authorized committee of its
Board of Directors, or by a person or persons authorized by
resolution of its Board of Directors or such committee.
22. Effective Date.
The Plan originally was effective as of November 19, 1986. The effective
date of this amendment and restatement is January 1, 1996.
SUPPLEMENT A
TO
NATIONAL-STANDARD COMPANY
DEFERRED COMPENSATION PLAN
A-1 Purpose.
The purpose of this Supplement A is to allow eligible employees under the
Plan to make a special deferral election with respect to the amount (if
any) of before-tax contributions which they may be prevented from making
under the National-Standard Company Employees' Stock Savings Plan (the
"ESSP"), due to the nondiscrimination requirements of Section 401(k) or the
maximum limitations on elective deferrals under Section 402(g) of the
Internal Revenue Code, and to provide for a Company contribution hereunder
based upon the amount of such deferrals as described in Paragraph A-3
below. Elections made under this Supplement A shall be in addition to any
other deferral election made under the Plan.
A-2 Eligible Employee's Election.
In accordance with Item 6(a) of the Plan, each eligible employee may make
an irrevocable written election to defer an amount of base compensation
and/or bonuses equal to the amount such employee is prevented from
contributing to the ESSP as a before-tax contribution under the ESSP, due
to the Section 401(k) nondiscrimination rules or the Section 402(g)
elective deferral limitations.
A-3 Company Contributions.
For each calendar year, the Company will contribute on behalf of each
participant hereunder an amount equal to the matching contribution the
participant would have received under the ESSP if the amount deferred by
the participant under this Supplement A for that year was deferred as
before-tax contributions under the ESSP; provided that the amount deferred
by a participant for any year under this Supplement A which shall be
recognized for purposes of this Paragraph A-3 shall not exceed the Section
402(g) effective deferral limitation in effect for that year, reduced by
his before-tax contributions to the ESSP.
A-4 Terms.
The definition of terms used under the ESSP, such as "before-tax
contributions," are hereby incorporated by reference. All other terms and
conditions of the Plan shall apply to this Supplement A, except that where
such terms and conditions of the Plan and this Supplement A conflict, the
terms and provisions of this Supplement A shall govern.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains first quarter summary financial information extracted
from National-Standard Company's 1996 first quarter Form 10-Q and is qualified
in its entirety by reference to such form 10-Q filing.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> DEC-31-1995
<CASH> 410
<SECURITIES> 0
<RECEIVABLES> 26,582
<ALLOWANCES> 407
<INVENTORY> 30,250
<CURRENT-ASSETS> 61,424
<PP&E> 147,619
<DEPRECIATION> 103,264
<TOTAL-ASSETS> 118,246
<CURRENT-LIABILITIES> 67,666
<BONDS> 0
27,630
0
<COMMON> 0
<OTHER-SE> (44,814)
<TOTAL-LIABILITY-AND-EQUITY> 118,246
<SALES> 60,531
<TOTAL-REVENUES> 60,531
<CGS> 52,968
<TOTAL-COSTS> 52,968
<OTHER-EXPENSES> (3,622)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,335
<INCOME-PRETAX> 4,514
<INCOME-TAX> 170
<INCOME-CONTINUING> 4,344
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,344
<EPS-PRIMARY> .81
<EPS-DILUTED> .81
</TABLE>
