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, 1996
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
Incorporation or Organization) Identification No.)
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 26, 1996, based on the closing price of the shares on
the New York Stock Exchange and assuming that 60 percent of the shares were
held by non-affiliates, was approximately $21,912,144.
As of November 26, 1996, 5,312,035 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 23, 1997 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 1996, 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 $33,330,000 and $36,620,000 at September 30, 1996 and 1995,
respectively.
During 1996, the Company acquired the passenger side air bag filter
manufacturing capacity of Olin Air Bag Products, Moses Lake, Washington. The
Company placed the equipment in production in October 1996 in a leased
facility in Moses Lake, Washington. The Company invested approximately
$450,000 for the additional capacity, funded through available lines of
credit.
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 1990, the Company entered into a joint venture with Toyota Tsusho
America, Inc. 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
stabilization, 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 were
$403,000, primarily for plant environmental stabilization. Expected cash
outlays for 1997 will be approximately $300,000.
During 1988, the Company closed its strip steel and flat wire facility
located in Clifton, New Jersey. During the past eight 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 $254,000, $304,000, $285,000, $282,000, $380,000,
$3,027,000, $712,000, and $3,028,000 in 1996, 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 1996, 1995, 1994, 1993, 1992, 1991 and
1990, the Company expensed $254,000, $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
$250,000 in 1997 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 $2,493,000,
$2,777,000 and $2,531,000 during the 1996, 1995, and 1994 fiscal years on
pollution control equipment and related operational environmental projects
and procedures at the Company's ten plants. The largest annual cash outlays
during 1996, 1995, and 1994 were $2,059,000, $1,751,000, and $1,740,000,
respectively, primarily for environmental operational procedures, cleanup of
existing operations, and improvements of environmental systems in 1996, and
primarily for plant environmental stabilization at the closed Columbiana
facility in 1995 and 1994. Compliance with federal, state, and local
environmental regulations which have been enacted or adopted is estimated to
require operational cash outlays of approximately $3,000,000 during 1997.
During 1996, 1995 and 1994, the Company provided $2,595,000, $3,315,000 and
$2,832,000, 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 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. The majority of the
1996 environmental cost was related to potentially responsible party
provisions and normal environmental operating expenses. In addition to the
amounts charged to earnings, $440,000, $119,000 and $165,000 of costs were
capitalized in the respective years. The Company's actual environmental
related cash outlays for 1996, 1995 and 1994 were $2,747,000, $3,081,000 and
$2,816,000, respectively, of which $254,000, $304,000 and $285,000 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 seven actual or
potential superfund sites. 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 in PRP sites and has previously accrued $500,000 in 1995 and an
additional $850,000 in 1996 for its share of the 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.
During the second quarter, the City of Stillwater, Oklahoma and the Company
announced that they had reached a settlement of their lawsuits pending in
Federal Court in Oklahoma City. The suits, which began in May 1995,
concerned operations at the Company's Stillwater plant, compliance with a
City-issued wastewater discharge permit, and the shutdown of the Company's
plant last April. Each side claimed that it had been damaged by the other's
actions.
As part of the settlement, the Company paid $1,600,000 to the City.
Substantially all costs and expenses related to the action with the City of
Stillwater have now been either accrued or paid. Net income for 1996 was
adversely affected by $900,000 for legal expenses and settlement costs.
As a result of the settlement, the Company and the City have established an
ongoing dialogue in order to avoid a recurrence of the events which led to
the lawsuits.
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 1997 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., Bridgestone/Firestone,
Inc., the Cooper Tire and Rubber Company, the Dunlop Tire and Rubber
Corporation (owned by Sumitomo), Gates Rubber Company, General Tire (owned by
Continental), the Goodyear Tire and Rubber Company, and the Uniroyal-Goodrich
Company (owned by Michelin). TRW accounted for approximately 18%, Goodyear
accounted for approximately 12%, Morton accounted for approximately 11%, and
the ten largest customers, in the aggregate, accounted for approximately 59%
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 1996 fiscal year, the Company spent approximately $968,000 on
research and development of new products and process alternatives compared to
$912,000 and $959,000 for the years ended September 30, 1995 and 1994,
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 22% of total
sales in 1996; 35% and 24% of total sales in 1995; and 38% and 21% of total
sales in 1994. Air bag inflator filters accounted for 13% of total sales in
1996; 13% of total sales in 1995; and 12% of total sales in 1994.
During 1993, the Company experienced work stoppages by the United
Steelworkers 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
approximately $4,266,000 for the work stoppage in Columbiana in 1994.
At September 30, 1996, the Company employed 1,495 persons in its operations
throughout the world.
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
generally the same markets. The financial information about foreign and
domestic operations for the three years ended September 30, 1996 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, restrictions 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 1996, reflects a slight decrease of approximately
$30,000. 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 1995. The change in exchange rates does not have a materially
adverse effect on the cash flow of the international operations.
During 1996, the Company acquired substantially all of the inventory and
equipment of Engineering and Welding Supplies, Limited, Walsall, England for
approximately $800,000. The acquisition provided 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 1,236,000 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 (60,000
square feet); Clearfield, Utah (53,000 square feet); Mesa, Arizona (36,000
square feet), and Moses Lake, Washington (14,000 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 Moses Lake facility was leased in 1996.
The Company also operates from principal facilities in England (325,000
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
redistribute 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.
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 25, 1996.
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
Directors. Some of the Officers of the Registrant also serve as Directors
or Officers of the subsidiaries.
_____________________________________________________________________________
Name Age Present Position Date Assumed Present Position
_____________________________________________________________________________
Michael B. Savitske 55 President and Chief Executive Officer 1989
David M. Baldwin 55 Vice President, Wire Division 1996
William D. Grafer 51 Vice President, Finance 1987
David L. Lawrence 49 Treasurer, Assistant Secretary 1987
Timothy C. Wright 55 General Counsel and Secretary 1996
All of the above-named officers of the Registrant have been employees of the
Company for more than five years except Mr. Baldwin and Mr. Wright.
Messrs. Baldwin and Wright joined the Company in 1996. For the 31 years
prior to 1996, Mr. Baldwin was employed by Delphi-Saginaw Steering Systems, a
division of General Motors Corporation, most recently as Director of
Manufacturing Engineering. Mr. Wright operated his own practice, Wright
Associates, from 1993 to 1996 and also served as General Counsel for CAPCO
Automotive Products Corporation beginning in 1995. Prior to 1993, Mr. Wright
held senior in-house counsel positions with Uniroyal Technology Corporation
from 1989 to 1992 and Clark Equipment Company from 1979 to 1989.
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 1996 or 1995, nor during the portion of fiscal 1997 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>
___________________________________________________________________________________________________________________
1996 1995 1994 1993 1992
____________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
For the Year:
Net sales $ 248,554 $ 247,420 $ 217,916 $ 208,254 $ 215,133
Operating profit (loss) $ 8,871 $ 12,924 $ (1,110) $ (1,055) $ 44
Net earnings (loss) before
effect of accounting change $ 8,852 $ 7,350 $ (4,625) $ (4,701) $ (5,885)
Net earnings (loss) $ 8,852 $ 7,350 $ (4,625) $ (53,377) $ (5,885)
At Year-End:
Shareholders' equity $ (13,762) $ (21,475) $ (28,266) $ (24,827) $ 25,320
Net current assets $ (7,492) $ 10,471 $ 6,263 $ (39) $ 1,483
Total assets $ 114,688 $ 116,099 $ 108,685 $ 103,976 $ 113,939
Long-term debt $ 11,203 $ 34,152 $ 34,328 $ 24,100 $ 29,346
Ratio of current assets to
current liabilities .9 : 1.0 1.2 : 1.0 1.1 : 1.0 1.0 : 1.0 1.0 : 1.0
Common shares outstanding 5,323 5,385 5,366 5,359 4,502
Average common shares outstand-
ing used in per share calculations 5,358 5,373 5,365 5,085 4,379
Number of employees 1,495 1,403 1,282 1,248 1,460
Per Common Share:
Earnings (loss) before effect of
accounting change $ 1.65 $ 1.37 $ ( .86) $ ( .92) $ (1.34)
Net earnings (loss) $ 1.65 $ 1.37 $ ( .86) $ (10.50) $ (1.34)
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 $248,554 were .5% above 1995, as sales of air bag
inflator filtration products increased 2.6% over 1995. Weld wire sales
decreased 2.6% due primarily to a slowdown in the automotive industry.
Growth, however, in both products is expected for at least the next several
years.
Net sales for 1995 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.
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
increased 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.
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 $22,126
while sales from remaining operations have increased 34%. During this
period, air bag sales have increased 451%. The effect of the divestiture
activities on the Company's sales and gross margins is shown in the following
table:
<TABLE>
<CAPTION>
___________________________________________________________________________________________________________________
1996 1995 1994 1993 1992
____________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
Net Sales
Remaining operations $ 248,554 $ 247,420 $ 216,937 $ 197,418 $ 193,863
Divested operations - - 979 10,836 21,270
Total $ 248,554 $ 247,420 $ 217,916 $ 208,254 $ 215,133
Gross Profit
Remaining operations $ 32,121 $ 37,328 $ 25,069 $ 24,283 $ 24,314
Divested operations - - (1,213) (278) 1,138
Total $ 32,121 $ 37,328 $ 23,856 $ 24,005 $ 25,452
Gross Profit %
Remaining operations 12.9% 15.1% 11.6% 12.3% 12.5%
Divested operations - - (123.9)% (2.6)% 5.4%
Total 12.9% 15.1% 10.9% 11.5% 11.8%
</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 1996, lower
selling prices, primarily for automotive related products, were the primary
cause of lower margins.
During 1993, the Company experienced work stoppages by the United
Steelworkers 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.
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 10.
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. During 1996, sales from
international operations increased 1% due primarily to increased sales of
weld wire in the United Kingdom.
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 1991, inflation as measured by the
Consumer Price Index has risen 15%, while average selling prices have risen
only 5%. Had selling prices increased 15%, sales in 1996 would have been
approximately $273,000.
During 1996, 1995 and 1994, the Company provided $2,595, $3,315 and $2,832,
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 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.
The majority of the 1996 environmental cost related to potentially
responsible party provisions and normal environmental operating expenses. In
addition to the amounts charged to earnings, $440, $119 and $165 of costs
were capitalized in the respective years. The Company's actual environmental
related cash outlays for 1996, 1995 and 1994 were $2,747, $3,081 and $2,816,
respectively, of which $254, $304 and $285 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 seven actual or
potential superfund sites. 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 in PRP sites and has previously accrued $500 in 1995 and an
additional $850 in 1996 for its share of the 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.
The Company has reviewed its current environmental projects which are
expected to be completed in 1997 and all environmental regulations and acts
to ensure continuing compliance. In 1997, the Company expects to spend $250
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 $3,000 on environmentally related capital and
operational projects, of which $600 will be charged against 1997 earnings.
In 1989, in response to expected market changes, the Company adopted a
strategy that included, among other things, the decision to exit non-
strategic and/or non-profitable businesses and to continually adapt general
and administrative cost levels to the changing business.
In 1996, 1995, 1994, 1993, and 1992, $254, $2,842, $6,955, $2,390, and
$2,677, respectively, the net cost of restructuring the Company in those
years, including net loss on sale of fixed assets and product lines of $0,
$0, $0, $196, and $1,451, respectively; the write-off of nonproductive
facilities and obsolete inventory of $0, $120, $4,219, $909, and $681,
respectively; severance costs of the salaried and hourly workforce, and
provision for transferring manufacturing 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 environmental stabilization. The 1996 net cost of
restructuring of $254 was associated with costs related to the Clifton, New
Jersey property. The Company will incur no further material cash outflows
related to the restructuring.
The following summary shows the changing level of selling and administrative
expense and identifies selling and administrative expense directly
attributable to divested operations and amounts attributable to restructuring
activities.
<TABLE>
<CAPTION>
____________________________________________________________________________________________________________________
1996 1995 1994 1993 1992
____________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
Selling and Administrative Expense:
Remaining operations $ 22,996 $ 21,562 $ 18,011 $ 22,549 $ 21,970
Divested operations - - - 121 761
Restructuring costs 254 2,842 6,955 2,390 2,677
Total $ 23,250 $ 24,404 $ 24,966 $ 25,060 $ 25,408
As a Percent of Sales
Remaining operations 9.3% 8.7% 8.3% 11.4% 10.6%
Divested operations - - - 22.1% 9.0%
Total 9.4% 9.9% 11.5% 12.0% 11.8%
</TABLE>
The net effect of all the above elements is seen in the Company's operating
profit (loss).
<TABLE>
<CAPTION>
____________________________________________________________________________________________________________________
1996 1995 1994 1993 1992
____________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
Operating Profit (Loss)
Remaining operations $ 9,125 $ 15,766 $ 7,058 $ 1,547 $ 2,739
Divested operations - - (1,213) (212) (18)
Restructuring costs (254) (2,842) (6,955) (2,390) (2,677)
Total $ 8,871 $ 12,924 $ (1,110) $ (1,055) $ 44
</TABLE>
Operating profit by Geographic Area is presented in Note 13 of Notes to
Consolidated Financial Statements in Item 8.
Interest expense decreased in 1996 due to lower interest rates and lower
borrowings. In 1995 and 1994 interest expense increased due to higher
interest rates in both years and higher average borrowings in 1995.
<TABLE>
<CAPTION>
____________________________________________________________________________________________________________________
1996 1995 1994 1993 1992
____________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
Interest expense $ 4,838 $ 5,631 $ 3,885 $ 3,742 $ 4,990
Capitalized interest $ 0 $ 0 $ 168 $ 100 $ 50
Average borrowings $ 37,333 $ 41,567 $ 36,572 $ 37,240 $ 45,743
Average interest rate 12.5% 13.2% 11.1% 10.3% 11.0%
</TABLE>
Other income in 1996 is primarily 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. In 1995 and 1994, other
income is primarily the Company's share of profits in the joint venture.
In 1996, 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 and a decrease in the valuation allowance of
$1,300. 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
Working capital decreased $17,963 in 1996 due to the Emerging Issues Task
Force (EITF) of the Financial Accounting Standards Board reaching 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 September 30, 1996. 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 September 30, 1996 had the EITF
opinion not been issued. Working capital increased $4,208 in 1995 as current
assets increased to support the higher sales in air bag inflator filtration
materials.
Net cash from 1996 and 1995 operations of $14,501 and $10,586 was due
primarily to improved results from operations.
During 1996, 1995, and 1994, the Company invested $26,769 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 1997 are expected to be $8,000,
primarily for projects to add filtration material and weld wire capacity and
improve quality and operating efficiencies. The Company 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>
____________________________________________________________________________________________________________________
1996 1995 1994 1993 1992
____________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
Current ratio .9 : 1.0 1.2 : 1.0 1.1 : 1.0 1.0 : 1.0 1.0 : 1.0
Total debt to total capital, excluding
SFAS No. 106 adjustment 49.1% 57.9% 65.2% 57.4% 62.9%
Long-term debt to total capital, exclud-
ing SFAS No. 106 adjustment 14.9% 48.1% 52.5% 41.8% 43.0%
</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 Schedule are set forth on pages 15 to 33 of this Report and are
incorporated herein by reference.
ITEM 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosures
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 23, 1997 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 23, 1997 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 23, 1997 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 23, 1997 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) A Form 8-K (Item 5) was filed July 22, 1996 regarding third-quarter
sales and income, and announcing a stock repurchase program for
holders of less than 100 shares of the Company's common stock.
A second Form 8-K (Item 5) was filed August 5, 1996 regarding the
Company's stock repurchase program for holders of less than 100 shares
of the Company's common stock.
A third Form 8-K (Item 5) was filed September 16, 1996 regarding the
Company's purchase of an additional manufacturing facility.
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 6, 1996
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/ Timothy C. Wright
JOHN E. GUTH, JR. Chairman of the Board) Timothy C. Wright
ERNEST J. NAGY Director ) Attorney-in-Fact
CHARLES E. SCHROEDER Director )
DONALD F. WALTER Director ) December 6, 1996
NATIONAL-STANDARD COMPANY
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE
<TABLE>
<CAPTION>
____________________________________________________________________________________________________________________
Page Reference
in Report on
Form 10-K
____________________________________________________________________________________________________________________
<S> <C>
Consolidated Statements of Operations for the years ended September 30, 1996, 1995, 16
and 1994
Consolidated Statements of Shareholders' Equity for the years ended September 30, 17
1996, 1995, and 1994
Consolidated Balance Sheets at September 30, 1996 and 1995 18
Consolidated Statements of Cash Flows for the years ended September 30, 1996, 1995 19
and 1994
Notes to Consolidated Financial Statements 20-31
Report of Independent Auditors 32
Schedule:
II. Valuation and Qualifying Accounts (copy not included in Annual Report) 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.
</TABLE>
NATIONAL-STANDARD COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands Except Share Data)
<TABLE>
<CAPTION>
_____________________________________________________________________________________________________________________
Year Ended September 30
1996 1995 1994
____________________________________________________________________________________________________________________
<S> <C> <C> <C>
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 248,554 $ 247,420 $ 217,916
Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . 216,433 210,092 194,060
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,121 37,328 23,856
Selling and administrative expenses . . . . . . . . . . . . . . . . 23,250 24,404 24,966
Operating profit (loss) . . . . . . . . . . . . . . . . . . . 8,871 12,924 (1,110)
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . (4,838) (5,631) (3,885)
Other income, net . . . . . . . . . . . . . . . . . . . . . . . . . 4,009 296 426
Income (loss) before income taxes . . . . . . . . . . . . . . 8,042 7,589 (4,569)
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . (810) 239 56
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . $ 8,852 $ 7,350 $ (4,625)
Income (loss) per share . . . . . . . . . . . . . . . . . . . . . . $ 1.65 $ 1.37 $ (.86)
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>
Note Excess of
Receiv- Unamortized Additional Pension
Retained Cumulative able, Value of Liability Over
Common Earnings Transla- Treasury ESOP Restricted Unrecognized Prior
Stock (Deficit) tion Stock Common Stock Service Cost
Adjustment Stock
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at September 30, $ 26,932 $(48,574) $(2,425) $ (67) $ (17) $ (42) $ (634)
1993
68 (18) (62)
Restricted stock award 17
activity 33
ESOP payments 384
Restricted stock amortiza- 1
tion
Deferred debt discount 323
Stock issuance 440
Adjustment for foreign (4,625)
currency translation
Adjustment of pension lia-
bility
Net loss for 1994
Balance at September 30, $ 27,384 $(53,199) $(2,102) $ (84) $ 0 $ (71) $ (194)
1994
58 (21) (54)
Restricted stock award 40
activity 152
Restricted stock amortiza- 1
tion
Stock options exercised (103)
Stock issuance (632)
Adjustment for foreign 7,350
currency translation
Adjustment of pension lia-
bility
Net income for 1995
Balance at September 30, $ 27,594 $(45,849) $(2,205) $(104) $ 0 $ (85) $ (826)
1995
37 (20) (37)
Restricted stock award 49
activity 58
Restricted stock amortiza- 1
tion (590)
Stock options exercised
Stock issuance 30
Stock purchase (667)
Adjustment for foreign 8,852
currency translation
Adjustment of pension lia-
bility
Net income for 1996
Balance at September 30, $ 27,689 $(36,997) $(2,175) $(713) $ 0 $ (73) $ (1,493)
1996
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
1996 1995
____________________________________________________________________________________________________________________
<S> <C> <C>
Assets
Current assets:
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,423 $ 2,064
Receivables, less allowance for doubtful accounts
($380 and $398, respectively) . . . . . . . . . . . . . . . . . . . . . . . 24,532 26,071
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,144 26,388
Deferred tax asset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,300 -
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,483 4,350
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53,882 58,873
Property, plant and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . 47,439 44,650
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,367 12,576
$ 114,688
$ 116,099
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 23,067 $ 26,605
Employee compensation and benefits . . . . . . . . . . . . . . . . . . . . . . 2,021 3,319
Accrued pension . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 334 965
Other accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,765 7,813
Current accrued postretirement benefit cost . . . . . . . . . . . . . . . . . . 2,500 2,700
Notes payable to banks and current portion of long-term debt . . . . . . . . . 25,687 7,000
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . 61,374 48,402
Other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,433 6,365
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,203 34,152
Accrued postretirement benefit cost . . . . . . . . . . . . . . . . . . . . . . . . . 49,440 48,655
Shareholders' equity:
Common stock - $.01 par value.
Authorized 25,000,000 shares; issued 5,409,144 and
5,399,094 shares, respectively . . . . . . . . . . . . . . . . . . . . 27,689 27,594
Preferred stock - $1.00 par value.
Authorized 600,000 shares; issued none . . . . . . . . . . . . . . . . . . - -
Retained earnings (deficit) . . . . . . . . . . . . . . . . . . . . . . . . . . (36,997) (45,849)
Cumulative translation adjustment . . . . . . . . . . . . . . . . . . . . . . . (2,175) (2,205)
Treasury stock, at cost; 86,609 and 14,076 shares, respectively . . . . . . . . (713) (104)
Unamortized value of restricted stock . . . . . . . . . . . . . . . . . . . . . (73) (85)
Excess of additional pension liability over unrecognized prior service cost . . (1,493) (826)
(13,762) (21,475)
$ 114,688 $ 116,099
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
1996 1995 1994
____________________________________________________________________________________________________________________
<S> <C> <C> <C>
Operating Activities:
Net earnings (loss) . . . . . . . . . . . . . . . . . . . . . . . . $ 8,852 $ 7,350 $ (4,625)
Non-cash charges (credits) to earnings:
Depreciation and amortization . . . . . . . . . . . . . . . . 6,933 6,217 6,552
Loss on divested operations and asset writedowns . . . . . . . - - 4,254
Changes in short-term assets and liabilities, net of dispositions:
Receivables . . . . . . . . . . . . . . . . . . . . . . . . . 1,539 (1,389) 160
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . 3,971 (1,242) (1,786)
Deferred income taxes . . . . . . . . . . . . . . . . . . . . (1,300) - -
Other current assets . . . . . . . . . . . . . . . . . . . . . 867 487 (733)
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . (3,538) (2,436) (2,301)
Employee compensation and benefits, accrued pension,
and other accrued expenses . . . . . . . . . . . . . . . . (1,904) 3,303 (3,270)
Currency translation effect on short-term assets and liabilities (273) (167) 812
Changes in other long-term assets and liabilities . . . . . . . . . (646) (1,537) 2,025
Net cash provided by operating activities . . . . . . . . . . 14,501 10,586 1,088
Investing Activities:
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . (8,630) (7,650) (10,489)
Disposal of property, plant and equipment . . . . . . . . . . . . - 73 256
Net cash used for investing activities . . . . . . . . . . . . (8,630) (7,577) (10,233)
Financing Activities:
Term loan advance . . . . . . . . . . . . . . . . . . . . . . . . - 1,471 20,062
Net borrowings under revolving credit agreements . . . . . . . . (1,826) (345) 4,048
Principal payments under term loans . . . . . . . . . . . . . . . (3,135) (2,581) (14,932)
Purchases of treasury stock . . . . . . . . . . . . . . . . . . . (609) (20) (11)
Stock option proceeds . . . . . . . . . . . . . . . . . . . . . . 58 152 -
Decrease in notes receivable due from ESOP . . . . . . . . . . . - - 17
Net cash (used for) provided by financing activities . . . . . . (5,512) (1,323) 9,184
Net increase in cash . . . . . . . . . . . . . . . . . . . . . . 359 1,686 39
Cash at beginning of year . . . . . . . . . . . . . . . . . . . . 2,064 378 339
Cash at end of year . . . . . . . . . . . . . . . . . . . . . . . $ 2,423 $ 2,064 $ 378
Supplemental Disclosures:
Interest paid . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,331 $ 4,994 $ 4,480
Income taxes paid . . . . . . . . . . . . . . . . . . . . . . . . $ 409 $ 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
Nature of Operations - The Company produces tire bead wire, welding wire,
wire cloth, hose reinforcing wire, stainless spring and specialty wire,
plated wire, and nonwoven metal fiber materials. The Company also
produces filters for automotive air bag inflators. These products are
generally sold directly to other manufacturers, principally tire
manufacturers and automotive air bag manufacturers. Its major market
includes the United States, with other markets in Canada and Europe.
Principles of Consolidation - The consolidated financial statements
include the Company and all of 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
shareholders' 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. The following table depicts
the depreciable lives of major classes of the Company's depreciable
assets:
Type of Asset Depreciable Life
Land Improvements . . . 10 - 15
Buildings . . . . . . . 10 - 33-1/3
Machinery and Equipment 3 - 10
Research and Development - Research and development costs are expensed
currently. The Company expended $968, $912 and $959 in 1996, 1995 and
1994, 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. Common shares used in
calculating earnings per share for 1996, 1995, and 1994 were 5,358,000,
5,373,000 and 5,365,000, 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 - Deferred income taxes are 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.
FAIR VALUE OF FINANCIAL INSTRUMENTS - The fair value of the Company's
financial instruments, which consist of cash, receivables, accounts
payable, accrued expenses, notes payable and long-term debt, approximate
their carrying values.
Reclassification - Certain 1995 and 1994 amounts in the Consolidated
Financial Statements have been reclassified to conform with 1996
presentation.
USE OF ESTIMATES - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
2. INVENTORIES
<TABLE>
<CAPTION>
_______________________________________________________________________________________________________________
1996 1995
_______________________________________________________________________________________________________________
<S> <C> <C>
Finished goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,708 $ 1,059
Work in process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,863 15,383
Raw material (including certain partially processed materials) . . . . . . . . 7,573 9,946
$ 22,144 $ 26,388
</TABLE>
The material content of domestic steel inventories amounting to $10,974
and $16,532 at September 30, 1996 and 1995, respectively, is valued on a
LIFO basis. During 1996, LIFO inventory layers were reduced. This
reduction had an immaterial effect on earnings in 1996. Had the FIFO
method been used, inventory would have been $4,205 and $4,914 higher than
that reported at September 30, 1996 and 1995, respectively.
3. PROPERTY, PLANT AND EQUIPMENT
<TABLE>
<CAPTION>
_______________________________________________________________________________________________________________
1996 1995
_______________________________________________________________________________________________________________
<S> <C> <C>
Cost:
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 331 $ 331
Land improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,152 1,943
Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,794 23,440
Machinery and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122,082 115,249
Construction in progress . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,511 5,872
155,870 146,835
Less accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . 108,431 102,185
$ 47,439 $44,650
</TABLE>
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 for qualified plans 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 con-
tribution.
The following table sets forth the pension plans' funded status and
amounts recognized in the Company's consolidated balance sheet at
September 30, 1996 and 1995:
<TABLE>
<CAPTION>
_________________________________________________________________________________________________________________
Assets Exceed Accumulated
Accumulated Benefits Exceed
Benefits Assets
_________________________________________________________________________________________________________________
<S> <C> <C>
1996
Actuarial present value of benefit obligations:
Vested benefit obligation . . . . . . . . . . . . . . . . . . . . . . . . $ 64,662 $ 12,514
Accumulated benefit obligation . . . . . . . . . . . . . . . . . . . . . . $ 65,283 $ 13,892
Projected benefit obligation for service rendered to-date . . . . . . . . . . . $ 70,906 $ 14,745
Plan assets at fair value . . . . . . . . . . . . . . . . . . . . . . . . . . . 86,584 10,777
Plan assets in excess of (less than) projected benefit obligation . . . . . . . 15,678 (3,968)
Unrecognized net (gain) loss from past experience, different from
that assumed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,271) 1,530
Prior service cost not yet recognized in net periodic pension cost . . . . . . 386 1,427
Unrecognized net asset at October 1, 1985 being recognized over 15 years . . . (380) (31)
Unrecognized net asset for the United Kingdom plan at October 1, 1989
being recognized over 12.6 years . . . . . . . . . . . . . . . . . . . . . (3,200) -
Additional minimum liability . . . . . . . . . . . . . . . . . . . . . . . . . - (2,895)
(Accrued) prepaid pension cost . . . . . . . . . . . . . . . . . . . . . . . . $ 9,213 $ (3,937)
Intangible asset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ - $ 1,402
Charge to equity (excess of additional pension liability over unrecognized
prior service cost) . . . . . . . . . . . . . . . . . . . . . . . . . . . $ - $ 1,493
1995
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
</TABLE>
<TABLE>
<CAPTION>
Net pension cost related to Company-sponsored plans included the following components:
_______________________________________________________________________________________________________________
1996 1995 1994
_______________________________________________________________________________________________________________
<S> <C> <C> <C>
Service costs -- benefits earned during the year . . . . . . $ 1,842 $ 1,546 $ 1,467
Interest cost on projected benefit obligation . . . . . . . . 6,509 6,001 5,814
Actual return on plan assets . . . . . . . . . . . . . . . . (11,748) (15,300) (5,995)
Net amortization and deferral . . . . . . . . . . . . . . . . 1,422 4,871 (3,084)
Termination benefits recognition . . . . . . . . . . . . . . 815 - -
Benefit curtailment recognition . . . . . . . . . . . . . . . - - 284
Net periodic pension income . . . . . . . . . . . . . . . . . $ (1,160) $ (2,882) $ (1,514)
</TABLE>
The weighted average discount rate and rate of increase in future
compensation levels used in determining the 1996 actuarial present value
of the projected benefit obligation were 8.00% and 4.75%, respectively,
for U.S. plans and 8.5% and 6.5%, respectively, for foreign plans. The
1995 rates were 7.75% and 4%, respectively, for U.S. plans and 8.5% and
6.5%, respectively, for foreign plans. The 1996 and 1995 expected
long-term rate of return on assets was 10.5% in 1996 and 1995 for U.S.
plans and 9.5% in 1996 and 1995 for foreign plans. The Company made
contributions to the plans in 1996 and 1995 of $790 and $187,
respectively. As of September 30, 1996, the plan owns 1,475,079 shares of
the Company's common stock.
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 $337 for 1996, $265 for 1995, and $248 for
1994.
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 $2,402 for 1996,
$2,697 for 1995, and $2,794 for 1994.
The following table sets forth the plan's funded status, reconciled with
amounts recognized in the Company's consolidated balance sheet at
September 30, 1996 and 1995:
<TABLE>
<CAPTION>
_______________________________________________________________________________________________________________
1996 1995
_______________________________________________________________________________________________________________
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (30,790) $ (33,520)
Fully eligible active plan participants . . . . . . . . . . . . . . . . (2,044) (2,390)
Other active plan participants . . . . . . . . . . . . . . . . . . . . . (4,281) (5,235)
(37,115) (41,145)
Plan assets at fair value . . . . . . . . . . . . . . . . . . . . . . . - -
Accumulated postretirement benefit obligation in excess
of plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . (37,115) (41,145)
Unrecognized prior service cost . . . . . . . . . . . . . . . . . . . . (2,080) (2,241)
Unrecognized net (gain) loss from past experience different
from that assumed and from changes in assumptions . . . . . . . . . (12,745) (7,969)
Accrued postretirement benefit cost . . . . . . . . . . . . . . . . . . $ (51,940) $ (51,355)
</TABLE>
The accrued postretirement benefit cost includes approximately
$2,500 and $2,700 of expected 1997 and 1996 payments,
respectively, that are included in the balance sheet as a
current liability.
Net periodic postretirement benefit cost included the following
components:
<TABLE>
<CAPTION>
_______________________________________________________________________________________________________________
1996 1995 1994
_______________________________________________________________________________________________________________
<S> <C> <C> <C>
Service cost -- benefits attributed to service during the period $ 420 $ 298 $ 410
Interest on accumulated postretirement benefit obligation . . . 3,039 3,296 3,980
Net amortization and deferral . . . . . . . . . . . . . . . . . (473) (567) -
Net periodic postretirement benefit cost . . . . . . . . . . . . $ 2,986 $ 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, 1996 by $3,243 and
the aggregate of the service and interest cost components of net periodic
postretirement benefit cost for the year then ended by $397.
The 1996 and 1995 weighted-average discount rates used in determining the
accumulated postretirement benefit obligation were 8.00% and 7.75%,
respectively. The weighted-average discount rates used in determining the
1996 and 1995 net periodic postretirement benefit cost and the transition
obligation were 7.75% and 8.75%, respectively.
6. OTHER ASSETS
<TABLE>
<CAPTION>
_______________________________________________________________________________________________________________
1996 1995
_______________________________________________________________________________________________________________
<S> <C> <C>
Equity in affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 500 $ 500
Property held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,856 3,856
Intangible pension asset . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,402 377
Prepaid pension cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,611 6,027
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,998 1,816
$ 13,367 $ 12,576
</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 1996, 1995 and
1994, the Company expensed $254, $1,110 and $2,030, respectively,
associated with the project.
7. DEBT
<TABLE>
<CAPTION>
___________________________________________________________________________________________________________________
1996 1995
___________________________________________________________________________________________________________________
<S> <C> <C>
Credit arrangement expiring in December 1998, interest
at 9.25% in 1996 and 10.25% in 1995 . . . . . . . . . . . . . . . . . . . $ 695 $ 685
Revolving credit arrangement expiring on October 1, 1997, interest
at prime plus 1.25% in 1996 and 1.75% in 1995 . . . . . . . . . . . . . . 18,443 20,658
Promissory notes payable in monthly installments with the balance
due October 1, 1997, interest at prime plus 1.5% in 1996 and
2.0% in 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,449 16,277
Capital lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 472 0
Various debt due to 1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . 137 130
Foreign subsidiary short-term operating lines of credit with interest
at approximately 7.75% in 1996 and 8.75% in 1995 . . . . . . . . . . . . . 3,694 3,402
36,890 41,152
Less short-term debt and current portion of long-term debt included
in current liabilities 25,687 7,000
$ 11,203 $ 34,152
</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.
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 September 30, 1996.
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 September 30, 1996 had the EITF opinion not been issued.
Aggregate maturities on long-term debt, based upon the credit agreements
for the three fiscal years subsequent to September 30, 1997, amount to
$11,061 in 1998, $101 in 1999, and $41 in 2000. There are no maturities
extending beyond 2000.
8. LEASES
Minimum rental commitments under noncancellable operating leases and
future minimum capital lease payments, primarily machinery and equipment,
in effect at September 30, 1996 were:
Operating Capital
Leases Leases
1997 . . . . . . . . $3,060 $ 591
1998 . . . . . . . . 2,660 92
1999 . . . . . . . . 2,242 67
2000 . . . . . . . . 865 41
2001 . . . . . . . . 317 0
Later years . . . . 225 0
Operating lease rental expense was $3,860 in 1996, $4,353 in 1995, and
$2,626 in 1994. Capital lease payments were $395 in 1996, $0 in 1995, and
$0 in 1994.
9. INCOME TAXES
The domestic and foreign components of earnings (loss) before income taxes
are as follows:
<TABLE>
<CAPTION>
_______________________________________________________________________________________________________________
1996 1995 1994
_______________________________________________________________________________________________________________
<S> <C> <C> <C>
Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9,591 $ 7,462 $ (3,861)
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,549) 127 (708)
$ 8,042 $ 7,589 $ (4,569)
</TABLE>
The provisions for income taxes are as follows:
<TABLE>
<CAPTION>
_______________________________________________________________________________________________________________
1996 1995 1994
_______________________________________________________________________________________________________________
<S> <C> <C> <C>
Currently payable (recoverable):
Domestic . . . . . . . . . . . . . . . . . . . . . . . . $ 464 $ 216 $ -
Foreign . . . . . . . . . . . . . . . . . . . . . . . . 26 23 56
490 239 56
Deferred:
Domestic . . . . . . . . . . . . . . . . . . . . . . . . (1,300) - -
$ (810) $ 239 $ 56
</TABLE>
At September 30, 1996, the Company had tax loss carryforwards of $22,000
in the United States and $7,825 in the United Kingdom. The United Kingdom
carryforward period is unlimited; however, if not utilized to offset
future taxable income, $7,600 of the United States loss will expire in
2005, $12,400 in 2006, $900 in 2008, and $1,100 in 2009.
At September 30, 1996, 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>
_______________________________________________________________________________________________________________
1996 1995 1994
Actual % Actual % Actual %
_______________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
Taxes at federal statutory rate $ 2,815 35.0 $ 2,656 35.0 $ (1,553) (34.0)
Decrease of valuation reserve (1,300) (16.2) - - - -
Utilization of net operating loss
carryforward (3,108) (38.7) (2,541) (33.5) - -
Foreign 26 .3 23 .3 56 1.2
Losses with no current benefit 523 6.6 92 1.2 1,558 34.1
Other 234 2.9 9 .1 (5)
(.1)
$ (810) (10.1) $ 239 3.1 $ 56 1.2
</TABLE>
The net deferred tax asset included the following components:
<TABLE>
<CAPTION>
_______________________________________________________________________________________________________________
1996 1995
_______________________________________________________________________________________________________________
<S> <C> <C>
Deferred tax assets
Accrued postretirement benefits . . . . . . . . . . . . . . . . . $ 20,776 $ 17,974
Net operating loss carryforwards . . . . . . . . . . . . . . . . . 11,366 12,698
Tax credit carryforwards . . . . . . . . . . . . . . . . . . . . . 1,395 1,395
Environmental reserves . . . . . . . . . . . . . . . . . . . . . . 3,164 2,488
Fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,569 -
Inventory reserves . . . . . . . . . . . . . . . . . . . . . . . . 1,296 1,047
Reserve against property held for sale . . . . . . . . . . . . . . 4,263 3,635
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,326 3,030
47,155 42,267
Valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . (42,467) (38,544)
4,688 3,723
Deferred tax liabilities
Fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . - (1,488)
Pension . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,388) (2,235)
(3,388) (3,723)
Net deferred tax asset $ 1,300 $ 0
</TABLE>
During the year, the Company recognized an increase in net deferred tax
assets over liabilities of $5,223. However, the Company increased the
offsetting valuation allowance by only $3,923. This resulted in a
reduction of deferred income taxes and a net increase to the deferred tax
assets during the year of $1,300.
In assessing the realizability of deferred tax assets, the Company
considers whether it is more likely than not that some portion or all of
the deferred tax assets will be realized. The ultimate realization of
deferred tax assets is dependent upon the generation of future taxable
income during the periods in which those temporary differences become
deductible. This assessment was performed considering the scheduled
reversal of deferred tax liabilities, projected future taxable income, and
tax planning strategies. The Company has determined that it is more
likely than not that $1,300 of deferred tax assets will be realized. The
remaining valuation of $42,467 is maintained on deferred tax assets which
the Company has not determined to be more likely than not realizable at
this time. This valuation adjustment will be reviewed on a regular basis
and adjustments made as appropriate.
The undistributed earnings of foreign subsidiaries amounting to $2,580 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>
____________________________________________________________________________________________________________________
1996 1995 1994
____________________________________________________________________________________________________________________
<S> <C> <C> <C>
Joint venture . . . . . . . . . . . . . . . . . . . . . . . . $ 200 $ 200 $ 300
Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . 164 204 200
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,645 (108) (74)
$ 4,009 $ 296 $ 426
</TABLE>
Included in the $3,645 other is approximately $3,500 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.
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
consolidated 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, 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . 362,293 $ 3,220
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)
Transactions during 1996:
Options granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000 52
Options expired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (10,937) (104)
Options cancelled . . . . . . . . . . . . . . . . . . . . . . . . . . . . (15,000) (129)
Options exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . (7,000) (60)
Balance, September 30, 1996 . . . . . . . . . . . . . . . . . . . . . . . . . 350,500 $ 3,172
</TABLE>
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 1996 and 1995,
5,000 and 70,000 options, respectively, were granted to key management
employees. The exercise price is $10-3/8 for all options granted in 1996
and $10-5/8 for those granted in 1995.
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, 1996, certain employees
held 10,800 shares of restricted common stock of the Company. Awards for
3,300 and 5,700 of these shares were granted in 1996 and 1995,
respectively, with 1,950 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, 1996 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 1996 of $45,367, $29,774, and $26,555; sales to three
customers in 1995 of $41,163, $31,276, and $27,915; and sales to three
customers in 1994 of $38,038, $27,621, and $25,583. Sales to an
affiliated joint venture were $1,536, $236 and $55 in 1996, 1995 and 1994,
respectively.
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 1996, 1995 and
1994, respectively, are approximately $254, $2,842, and $6,955 of costs
associated with divestitures and restructuring. Included in the
divestiture and restructuring costs in 1996 and 1995 are $0 and $1,110,
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
1996 1995 1994
_______________________________________________________________________________________________________________
<S> <C> <C> <C>
GEOGRAPHIC AREAS
Net Sales
United States . . . . . . . . . . . . . . . . . . . . . . . . $ 194,175 $ 191,262 $ 170,667
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . 55,111 57,342 51,579
Eliminations (1) . . . . . . . . . . . . . . . . . . . . . . (732) (1,184) (4,330)
$ 248,554 $ 247,420 $ 217,916
Operating Profit (Loss)
United States . . . . . . . . . . . . . . . . . . . . . . . $ 15,787 $ 17,847 $ 8,628
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . (1,046) 864 197
Segment Operating Profit (Loss) . . . . . . . . . . 14,741 18,711 8,825
General Corporate Expense . . . . . . . . . . . . . . . . . (5,870) (5,787) (9,935)
$ 8,871 $ 12,924 $ (1,110)
Total Assets
United States . . . . . . . . . . . . . . . . . . . . . . . $ 70,527 $ 70,806 $ 62,933
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . 22,999 23,588 24,348
Corporate . . . . . . . . . . . . . . . . . . . . . . . . . 21,162 21,705 21,404
$ 114,688 $ 116,099 $ 108,685
(1) Represents primarily sales of foreign wire to the United States.
</TABLE>
The net assets of foreign subsidiaries included in the consolidated
figures at appropriate rates of exchange are as follows:
<TABLE>
<CAPTION>
_______________________________________________________________________________________________________________
1996 1995
_______________________________________________________________________________________________________________
<S> <C> <C>
Net current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,592 $ 3,922
Plant, equipment and other assets, net of long-term debt, deferred taxes, and
other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . 3,748 4,055
$ 8,340 $ 7,977
</TABLE>
14. QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
_______________________________________________________________________________________________________________
First Second Third Fourth
Quarter Quarter Quarter Quarter
_______________________________________________________________________________________________________________
<S> <C> <C> <C> <C>
September 30, 1996
Net sales . . . . . . . . . . . . . . . . . . . . . . $ 60,531 $ 66,016 $ 60,853 $ 61,154
Gross profit . . . . . . . . . . . . . . . . . . . . 7,563 8,540 8,131 7,887
Earnings:
Net . . . . . . . . . . . . . . . . . . . . . . 4,344 1,510 1,369 1,629
Per share . . . . . . . . . . . . . . . . . . . .81 .28 .26 .30
Common stock:
Market price:
High . . . . . . . . . . . . . . . . . . . 13-5/8 11 8 8-1/4
Low . . . . . . . . . . . . . . . . . . . 9-5/8 7-7/8 6-3/8 6-5/8
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
</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, 1996, there were 1,946 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, 1996 and 1995, and the
results of their operations and their cash flows for each of the years in the
three-year period ended September 30, 1996, 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.
KPMG Peat Marwick LLP
Chicago, Illinois
November 7, 1996
NATIONAL-STANDARD COMPANY AND SUBSIDIARIES
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
Years Ended September 30, 1996, 1995 and 1994
<TABLE>
<CAPTION>
____________________________________________________________________________________________________________________
1996 1995 1994
____________________________________________________________________________________________________________________
(In thousands)
<S> <C> <C> <C>
Allowance for Doubtful Accounts:
Balance at Beginning of Period . . . . . . . . . . . . . . . . $ 398 $ 398 $ 386
Additions (Recoveries) Charged to Costs and Expenses . . . 41 28 72
Recoveries of Accounts Previously Written Off . . . . . . . - - -
Deductions (Uncollectible Accounts Written Off) . . . . . . (59) (28) (60)
BALANCE AT END OF PERIOD . . . . . . . . . . . . . . . . . . . . . $ 380 $ 398 $ 398
</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 Regis-
trant'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)(ii) to Registrant's Quarterly Report on Form 10-Q
for the first quarter of 1996 filed February 8, 1996).
(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).
(vii) National-Standard Company Targeted Retirement Benefit Plan
(incorporated by reference to Exhibit (10)(i) to Registrant's
Quarterly Report on Form 10-Q for the first quarter of 1996
filed February 8, 1996).
(viii) National-Standard Company Directors' Deferred Fee Plan.
(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).
(21) Subsidiaries of National-Standard Company.
(23) Consent of Independent Auditors.
(24) Powers of Attorney.
(27) Financial Data Schedule.
Exhibit 10.(a)(viii)
NATIONAL-STANDARD COMPANY
DIRECTORS' DEFERRED FEE PLAN
Effective October 1, 1995
NATIONAL-STANDARD COMPANY
DIRECTORS' DEFERRED FEE 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 Directors' Deferred Fee
Plan, hereafter referred to as "the Plan."
2. Objective.
The objective of the Plan is to provide an unfunded arrangement under which
eligible directors may defer to a future date the receipt of directors'
fees that otherwise would be payable to them currently for their services
as directors of the Company.
3. Eligibility.
Any member of the Board of Directors of the Company who is entitled to fees
for service as a director shall be eligible to participate in the Plan.
4. Rules and Regulations.
The Compensation/Nominating 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 director, and upon each
eligible director'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 directors may participate in the Plan by making an "irrevocable"
election to defer a portion of their directors' fees.
(a) Such election shall be on the form provided by the designated
Company representative and shall specify: (i) the portion of fees
to be deferred, (ii) the period of deferral, and (iii) the manner
of payment of such deferred fees (i.e., lump sum, approximately
equal monthly installments, or both). The form by which an
eligible director 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 19 below, forms
a part of the Plan. Subject to rules established by the
Committee, an eligible director 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 fees to be deferred are earned and would
otherwise be paid; provided, however, that a director who is an
eligible director on the Effective Date and any director who
becomes an eligible director after the Effective Date may make
his or her first such election during the thirty (30) day period
next following the later of the Effective Date or the date on
which such person becomes an eligible director, to be effective
as of the date filed with the designated Company representative.
Each such election shall apply to all of the fees earned by such
director after the date as of which the election is made and
until such time as the election is: (I) terminated pursuant to
Item 6(b) below, (II) terminated due to the participant's ceasing
to be an eligible director, or (III) superseded by the director's
new election (filed in accordance with the rules set forth above)
with respect to fees payable in a subsequent calendar year. A
separate account shall be established with respect to the
deferred fees payable pursuant to each election made by a
director.
(b) An eligible director may terminate an election to defer the
receipt of fees at any time by written direction to the
designated Company representative. Any such termination shall
take effect with respect to the fees payable to such eligible
director for calendar years commencing after the written
direction is received by the designated Company representative.
An eligible director who has terminated an election to defer the
receipt of fees may not again elect to defer the receipt of fees
until a period of twelve (12) months has elapsed from the
effective date as of which the previous election was terminated.
(c) Deferred fees 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 fees 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 fees 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 fees 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 interfere with or limit in
any way the right of the shareholders of the Company to remove
any director from the Board pursuant to the by-laws of the
Company nor confer upon any director any right to continue in the
service of the Company as a director.
8. Establishment of Accounts.
The Company will maintain a recordkeeping account in the name of each
participant which will reflect his deferred fees 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(a).
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
fees, if any, that are to be credited as of the date such fees
would otherwise have been paid to the relevant participant and
which have not previously been credited 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 partici-
pant's daily account balance after application of subparagraphs
(a) and (b) above, and averaging such account balances by the
number of days in 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.
Fees 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. 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 current
year 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).
14. 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 14, 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.
15. 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, or 14
herein.
16. Withholding.
The Company shall withhold the amount of local, state or federal taxes
required by law from payments ultimately paid under the Plan.
17. 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.
18. 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 fees deemed to be subject to tax.
19. 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.
20. 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 this document 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.
21. Effective Date.
This Plan shall be effective October 1, 1995.
Exhibit 21
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 in which % of Voting
Owned Incorporated or Organized Securities
________________________________________________________________________________________________________________________
<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 (1)
(1) 100% owned by National-Standard Company, Limited
</TABLE>
A domestic affiliate, 50% owned, is not considered significant and is not named
above. Financial results 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 7, 1996, relating to the consolidated balance sheets of
National-Standard Company and subsidiaries as of September 30, 1996 and 1995,
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,
1996, and the related schedule, which report appears in the September 30, 1996
annual report on Form 10-K of National-Standard Company.
KPMG Peat Marwick LLP
Chicago, Illinois
December 10, 1996
EXHIBIT 24
POWER OF ATTORNEY
The undersigned, a director of NATIONAL-STANDARD COMPANY (the "Company"), does
hereby constitute and appoint TIMOTHY C. WRIGHT 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, 1996, 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 20, 1996
/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 TIMOTHY C. WRIGHT 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, 1996, 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 20, 1996
/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 TIMOTHY C. WRIGHT 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, 1996, 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 20, 1996
/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 TIMOTHY C. WRIGHT 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, 1996, 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 20, 1996
/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 TIMOTHY C. WRIGHT 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, 1996, 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 20, 1996
/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 TIMOTHY C. WRIGHT 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, 1996, 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 20, 1996
/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 1996 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> YEAR
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> SEP-30-1996
<CASH> 2,423
<SECURITIES> 0
<RECEIVABLES> 24,912
<ALLOWANCES> 380
<INVENTORY> 22,144
<CURRENT-ASSETS> 53,882
<PP&E> 155,870
<DEPRECIATION> 108,431
<TOTAL-ASSETS> 114,688
<CURRENT-LIABILITIES> 61,374
<BONDS> 0
0
0
<COMMON> 27,689
<OTHER-SE> (41,451)
<TOTAL-LIABILITY-AND-EQUITY> 114,688
<SALES> 248,554
<TOTAL-REVENUES> 248,554
<CGS> 216,433
<TOTAL-COSTS> 216,433
<OTHER-EXPENSES> (4,009)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,838
<INCOME-PRETAX> 8,042
<INCOME-TAX> (810)
<INCOME-CONTINUING> 8,852
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,852
<EPS-PRIMARY> 1.65
<EPS-DILUTED> 1.65
</TABLE>
