-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Me4urZZHkbXNmS/qtG/WN4PbVGa3+gi+mD/ChDE71tGkgzv3/PJwBoZr7Jq1oBIN eOAa21JFxycwBZDpti75zg== 0000352947-03-000020.txt : 20030626 0000352947-03-000020.hdr.sgml : 20030626 20030626111445 ACCESSION NUMBER: 0000352947-03-000020 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20021231 FILED AS OF DATE: 20030626 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ENGELHARD CORP CENTRAL INDEX KEY: 0000352947 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL INORGANIC CHEMICALS [2810] IRS NUMBER: 221586002 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 11-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-08142 FILM NUMBER: 03757826 BUSINESS ADDRESS: STREET 1: 101 WOOD AVENUE CITY: ISELIN STATE: NJ ZIP: 08830 BUSINESS PHONE: 7322055000 MAIL ADDRESS: STREET 1: 101 WOOD AVENUE CITY: ISELIN STATE: NJ ZIP: 08830 11-K 1 hour02-11k.txt HOURLY PLAN SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 11-K X ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE - ---- SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2002 or TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE - ---- SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED) For the transition period from _____ to _____ ------------------ ENGELHARD CORPORATION SAVINGS PLAN FOR HOURLY PAID EMPLOYEES ------------------------------------------------------------ (Full title of the plan) ENGELHARD CORPORATION --------------------- (Exact name of issuer as specified in its charter) 101 WOOD AVENUE, ISELIN, NEW JERSEY 08830 - ----------------------------------------- ---------- (Address of principal executive offices) (Zip Code) DELAWARE 22-1586002 - -------------------------------- --------------------- (State or other jurisdiction of (IRS Employer incorporation or organization) Identification Number) 1 Engelhard Corporation Savings Plan for Hourly Paid Employees Table of Contents Description Page ----------- ---- Report of Independent Auditors 3 Statements of Net Assets Available for Benefits 4 at December 31, 2002 and 2001 Statement of Changes in Net Assets Available for Benefits 5 for the years ended December 31, 2002 and 2001 Notes to Financial Statements 6-11 Supplemental Schedules Schedule of Assets (Held at end of year) 12 Schedule of Reportable Transactions for the Year Ended December 31, 2002 13 Consent of Independent Auditors 14 Signature 15 Exhibit 99 - Certification Accompanying Periodic Report Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 16 2 Report of Independent Auditors ------------------------------ To the Pension and Employee Benefit Committee of Engelhard Corporation: We have audited the accompanying statements of net assets available for benefits of the Engelhard Corporation Savings Plan for Hourly Paid Employees as of December 31, 2002 and 2001 and the related statements of changes in net assets available for benefits for the years then ended. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. 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 financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the plan at December 31, 2002 and 2001, and the changes in it's net assets available for benefits for the years then ended, in conformity with accounting principles generally accepted in the United States. Our audits were made for the purpose of forming an opinion on the financial statements taken as a whole. The accompanying supplemental schedules of assets (held at end of year) as of December 31, 2002 and reportable transactions for the year then ended are presented for purposes of additional analysis and are not a required part of the financial statements but are supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental schedules are the responsibility of the Plan's management. The supplemental schedules have been subjected to the auditing procedures applied in our audits of the financial statements, and in our opinion, are fairly stated in all material respects in relation to the financial statements taken as a whole. ERNST & YOUNG LLP MetroPark, New Jersey June 23, 2003 3 Engelhard Corporation Savings Plan for Hourly Paid Employees Statements of Net Assets Available for Benefits At December 31, 2002 and 2001 2002 2001 ---- ---- Assets - ------ Investments at fair value $28,626,469 $30,375,086 Receivables: Participant Contributions 278,016 264,690 Employer Contributions 74,855 71,531 ----------- ----------- Total Receivables $ 352,871 $ 336,221 ----------- ----------- Net Assets Available for Benefits $28,979,340 $30,711,307 =========== =========== See accompanying notes to Financial Statements 4 Engelhard Corporation Savings Plan for Hourly Paid Employees Statement of Changes in Net Assets Available for Benefits For the year ended December 31, 2002 and 2001 2002 2001 ---- ---- Additions: Net Investment Income: Dividends $ 301,680 $ 328,640 Interest 491,269 474,341 ------------ ------------ Total Investment Income 792,949 802,981 Contributions: Participant 3,411,217 3,463,312 Employer 926,905 884,059 Asset Transfers In - 25,861 Rollovers 50,396 1,022 ------------ ------------ Total Contributions 4,388,518 4,374,254 Net Realized/Unrealized (Depreciation) Appreciation in Fair Value of Investments (4,586,385) 2,548,809 ------------ ------------ Total Additions 595,082 7,726,044 Distributions 2,253,413 1,442,596 Asset Transfers Out 72,520 - Other deductions 1,116 1,220 ------------ ------------ Total deductions 2,327,049 1,443,816 Net (Decrease) Increase (1,731,967) 6,282,228 Net Assets Available for Benefits 30,711,307 24,429,079 at Beginning of Year ------------ ------------ Net Assets Available for Benefits $ 28,979,340 $ 30,711,307 at End of Year ============ ============ See Accompanying Notes to Financial Statements 5 Notes to Financial Statements Note 1 - Description of the Plan The Engelhard Corporation Savings Plan for Hourly Paid Employees (the "Plan"), effective as of January 1, 1991, is designed to provide eligible employees of Engelhard Corporation (the "Company") an opportunity to save part of their earnings by having the Company reduce their compensation and contribute the amount of the reduction to the Plan on a tax deferred basis and or post tax basis. The following plan description provides only general information. Participants of the Plan should refer to the Plan Document for a more complete description of plan provisions. Eligibility - ----------- Eligibility rules vary depending upon negotiated union contract. Participants should see the Plan Document for specific rule pertaining to employee group. The following employee groups are eligible for participation in the plan: a) Local 3-0233 of the Paper, Allied-Industrial, Chemical and Energy Workers International Union (Gordon, GA) b) Locals 3-0237 and 3-0238 of the Paper, Allied-Industrial, Chemical and Energy Workers International Union (McIntyre, GA) c) Locals 1668, 1668A and 1668B of the International Union, United Aerospace and Agricultural Implement Workers of American (UAW) (Carteret, NJ) d)Local 8-406 of the Paper, Allied Industrial, Chemical and Energy Workers International Union (East Newark, NJ) e) Local 66, of the Inernational Chemical Workers Union Council/UFCW (Louisville, KY) f) Local 73 of the International Chemical Workers Union Council/UFCW (Elyria, OH) g) Local 1430 of the International Brotherhood of Electrial Workers (Peekskill, Ossining and Buchanan, NY) h) Local 333 of the Paper, Allied-Industrial, Chemical and Energy Workers International Union (Jackson, MS) i) Local 174 of the United Steel workers of America (Quincy, FL) 6 Contributions - ------------- The Plan permits eligible employees participating in the Plan the opportunity to defer on a pretax basis up to 50 percent of their compensation, as defined, subject to certain restrictions and limitations, and to have that amount contributed to the Plan. Employees may also contribute, subject to certain restrictions and limitations, up to 10 percent of compensation to the Plan on a post-tax basis. The Plan allows for catch-up contributions for employees age 50 and over as allowed under the Internal Revenue Code. Matching Contributions - ---------------------- The Company will contribute, on a monthly basis and subject to limitations and exclusions, either cash or common stock of the Company in an amount ranging from 20% to 50% of the first 6%, depending on the union contract, of the amount contributed by the Participants. Investments - ----------- All contributions to the Plan are held and invested by Vanguard Fiduciary Trust Company (the Trustee). The Trustee maintains the following seventeen separate investment funds within the Plan: a) The Company Stock Fund. b) The Fixed Income Fund (Vanguard Retirement Savings Trust). c) The Windsor II Growth Fund (Vanguard Windsor II Fund). d) The Windsor Growth Fund (Vanguard Windsor Fund). 7 e) The Balanced Fund (Vanguard Asset Allocation Fund). f) The Equity Index Fund (Vanguard Growth and Income Fund). g) The Small Cap Fund (Vanguard Small-Cap Index Fund). h) The Life Strategy Growth Fund (Vanguard Life Strategy Growth Fund). i) The Life Strategy Conservative Growth Fund (Vanguard Life Strategy Conservative Growth Fund). j) The Vanguard U.S. Growth Fund. k) The Life Strategy Moderate Growth Fund (Vanguard Life Strategy Moderate Growth Fund). l) The Prime Cap Funds (Vanguard PRIMECAP Fund). m) The International Growth Fund (Vanguard International Growth Fund). n) The Life Strategy Income Fund (Vanguard Life Strategy Income Fund). o) The Short-Term Bond Fund (Vanguard Short-Term Corporate Fund). p) Explorer Fund. q) Treasury Money Market Fund. Participants have the right to elect, subject to restrictions, the investment fund or funds in which their contributions are invested. All matching contributions are initially invested in the Company Stock Fund. The Participants matching contributions are initially restricted and become unrestricted at the rate of 25 percent per year. Once unrestricted, funds may be moved to any of the other investment funds. Included in the Statement of Net Assets Available for Benefits are non-participant directed funds that are included in the Company Stock Fund. These amounts represent the restricted portion of the Employer Matching Contribution. The following describes the change in the balance during the year ended December 31, 2002 and 2001. 2002 2001 ---- ---- Balance at beginning of year $ 1,398,366 $ 420,220 Dividends 20,336 13,727 Net unrealized (depreciation)/ appreciation (340,557) 219,639 Contributions 923,580 880,536 Transfer to unrestricted (351,085) (112,045) Distributions (102,238) (29,241) Other 2,718 5,530 ---------- ---------- Balance at end of year $1,551,120 $1,398,366 ========== ========== 8 Participant Accounts - -------------------- Each participant's account is credited with the participant's contributions and allocations of (a) the Company Contributions and (b) plan earnings including realized gains/losses, unrealized appreciation/depreciation, and an allocation of fund expenses. Allocations are based on participant earnings or account balances, as defined. The benefit to which a participant is entitled is the benefit that can be provided from the participants account. Vesting - ------- Participants at all times have a fully vested and non-forfeitable interest in their contributions and in the matching contributions allocated to their account. Plan Termination - ---------------- Although it has not expressed any intent to do so, the Company has the right under the plan to discontinue its contributions at any time and to terminate the plan subject to the provisions of ERISA. Loan Provision - -------------- Participants may borrow from their funds accounts a minimum of $1,000 up to a maximum equal to 50% of their fund balance or $50,000, whichever is less. The loans are secured by the balance in the Participant's accounts and bear interest at a reasonable rate as determined by the Company in accordance with applicable laws and regulations. Principal and interest is paid ratably through monthly payroll deductions. Loans are generally five years in duration unless the loan is for the purchase of a primary residence in which case the term can be up to ten years. Distributions and Withdrawals - ----------------------------- Upon termination of employment, as provided in the Plan Document, employees generally have the option of taking a distribution, rolling the balance over into another qualified plan, or leaving the money in the Plan until retirement. After-tax contributions may be withdrawn at any time, however, the earnings on the contributions will be subject to current income taxes as well as a penalty for early withdrawal unless the participant has reached the age of 59 1/2. All distributions are made in the form of cash except the balance in the Engelhard stock fund may be made in the form of shares at the Participant's discretion. The Plan under certain circumstances permits hardship withdrawals. The hardship withdrawals are only made in accordance with IRS guidelines and must be approved in advance by the Employee Benefit Plans Administrative Committee. Other - ----- Certain reclassifications have been made to prior years figures to conform to current years presentation. Note 2 - Accounting Policies The accounts of the Plan are maintained on an accrual basis. Purchases and sales of investments are reflected on a trade date basis. Assets of the Plan are valued at fair value. Gains and losses on distributions to Participants and sales of investments are based on average cost. 9 The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates. The Plan provides for various investment options in any combination of stocks or mutual funds. Investment securities are exposed to various risks, such as interest rate, market and credit risks. Due to the level of risk associated with certain investment securities and the level of uncertainty related to changes in the value of investment securities, it is at least reasonably possible that changes in market value in the near term would materially affect Participants' account balances and the amounts reported in the Statement of Net Assets Available for Benefits and the Statement of Changes in Net Assets Available for Benefits. Note 3 - Income Tax Status The Plan has received a determination letter from the Internal Revenue Service dated March 29, 1995, stating that the Plan is qualified under Section 401 (a) of the Internal Revenue Code (the "Code") and, therefore, the related trust is exempt from taxation. Subsequent to this issuance of the determination letter, the Plan was amended. The plan has applied for but not yet received a new determination letter from the Internal Revenue Service. Once qualified, the Plan is required to operate in conformity with the Code to maintain its qualification. The plan administrator believes the Plan is being operated in compliance with the applicable requirements of the Code and, therefore, believes that the Plan, as amended, is qualified and the related trust is tax exempt. Note 4 - Administrative Expenses Expenses are incurred at either the fund level or the Plan level. All expenses incurred by the fund (commissions, management fees, etc.) are paid out of investor assets and are therefore netted in unrealized appreciation/depreciation of investments in the statement of changes in net assets available for benefits. Loan administration expenses are included in other expenses in the statement of changes in net assets available for benefits. Commissions on the purchase of Engelhard Corporation stock incurred when such purchases are made in the stock market are netted in unrealized appreciation/depreciation of investments in the statement of changes in net assets available for benefits. The Company pays all other plan administrative expenses. Note 5 - Concentrations of Credit Risk Investments in securities are generally exposed to various risks, such as interest rate, credit, and overall volatility risks. Financial instruments which potentially subject the plan to concentration of credit risk consist principally of investments in the Engelhard Corporation Stock Fund. The plan limits the concentration of credit risk by allowing participants, subject to the lapsing of restrictions, the opportunity to invest in an array of mutual funds offered by the Vanguard Group. Note 6 - Investments Investments in the common stock of the Company are valued at the readily-available, quoted market price as of the valuation date and investments in Vanguard Funds are valued based on the quoted net asset value (redemption value) of the respective investment fund as of the valuation date. 10 Investments that represent more than 5% or more of fair value of the Plan's net assets are as follows: Investments 2002 2001 - ------------ ------------ ----------- Engelhard Corporation Company Stock Fund $ 10,587,163* $ 12,885,445* Fixed Income Fund (Retirement Savings Trust) 6,487,768 5,648,101 Balanced Fund (Asset Allocation Fund) 2,579,172 2,813,421 Equity Index Fund (Growth and Income Portfolio) 3,499,841 3,947,575 *Includes assets that are non-participant directed (see Note 1). Net realized/unrealized appreciation (depreciation) in fair value of investments consists of the following at December 31, 2002 and 2001: 2002 2001 ---- ---- Common Stock $(2,419,914) $3,509,412 Mutual Funds (2,166,471) (960,603) ----------- ---------- Total $(4,586,385) $2,548,809 =========== ========== Note 7 - Related Party Transactions For the 2002 plan year the Company transferred 35,033 treasury stock shares (representing a contribution dollar amount of $926,905) to Vanguard to fund the employer match. The number of shares transferred each month represented the employer matching contribution divided by the closing market price on the day the contribution was remitted. During the year in the ordinary course of doing business, various Vanguard funds may take a position in Engelhard Corporation common stock. On February 12, 2002, the Vanguard Windsor Fund filed Form 13G with the Securities and Exchange Commission indicating they held 10,454,200 shares or 8.06% of Company Stock. On February 13, 2003 and amended Form 13G was filed indicating they held 9,566,700 or 7.49% of Company Stock. Note 8 - Subsequent Event On September 19, 2002, the Company and its partner, Fimalac, formally agreed to adopt a plan to unwind their Paris-based joint venture, Engelhard-CLAL LLP. As part of the distribution of assets Engelhard received certain US-based operations. As a result, on January 1, 2003, the net assets of the Engelhard-CLAL LP Plan for Hourly Paid Employees were merged into the Engelhard Corporation Savings Plan for Hourly Paid Employees. A total of $3,733,127, representing the net assets of the Engelhard-CLAL LP Plan for Hourly Paid Employees on December 31, 2002, was transferred to the Engelhard Corporation Savings Plan for Hourly Paid Employees. Net Assets Available for Benefits @ 12/31/02 - per Financial Statements $ 28,979,340 Plus: Net assets transferred from the Engelhard-CLAL LP Plan for Hourly Paid Employees 3,733,127 ------------ Net Assets Available for Benefits @ 12/31/02 - per Form 5500 $ 32,712,467 ============ 11 Engelhard Corporation Savings Plan for Hourly Paid Employees Schedule of Assets (Held at end of year) as of December 31, 2002 (C)Description of (B)Identity of Investment Including Issue, Borrower, Maturity Date, Rate of (A) Lessor, or Interest, Collateral, Par (E)Current Similar Party or Maturity Value (D)Cost Value - ---- -------------- --------------------------- ----------- ----------- * Vanguard Fiduciary Engelhard Corporation Trust Company Company Stock Fund $10,018,368 $10,587,163 * Vanguard Fiduciary Fixed Income Fund 6,487,768 6,487,768 Trust Company (Retirement Savings Trust) * Vanguard Fiduciary Explorer Fund 583,276 435,919 Trust Company * Vanguard Fiduciary Balanced Fund 3,080,144 2,579,172 Trust Company (Asset Allocation Fund) * Vanguard Fiduciary Equity Index Fund 4,532,155 3,499,841 Trust Company (Growth and Income Portfolio) * Vanguard Fiduciary International Growth Fund 707,545 518,170 Trust Company * Vanguard Fiduciary Treasury Money Market Fund 279,521 279,521 Trust Company * Vanguard Fiduciary Life Strategy Growth Fund 202,928 160,394 Trust Company * Vanguard Fiduciary Prime Cap Fund 875,772 619,807 Trust Company * Vanguard Fiduciary U.S. Growth Portfolio 299,055 158,761 Trust Company * Vanguard Fiduciary Growth Fund 310,889 249,220 Trust Company (Windsor Fund) * Vanguard Fiduciary Windsor II Fund 155,579 130,550 Trust Company * Vanguard Fiduciary Life Strategy Conservative 46,260 43,201 Trust Company Growth Fund * Vanguard Fiduciary Life Strategy Moderate 48,989 43,412 Trust Company Growth Fund * Vanguard Fiduciary Life Strategy Income Fund 17,470 17,236 Trust Company * Vanguard Fiduciary Short-Term Corporate Fund 155,678 156,539 Trust Company * Vanguard Fiduciary Small Cap Fund 127,273 106,212 Trust Company *Promissory notes from Participants - 2,553,583 having interest at rates of 5.75% to 10.50% and maturity dates ranging from 1 month to 10 years ----------- ----------- Total $27,928,670 $28,626,469 =========== =========== *Represents party-in-interest 12 Engelhard Corporation Plan for Hourly Paid Employees Schedule of Reportable Transactions* Year Ended December 31, 2002 Identity of Party Description of Assets (include Purchase Selling Historical Cost Current Value Involved interest rate and maturity in Price Price of Asset of Asset Historical the case of a loan) on Transaction Gain(Loss) Date - ------------------ ------------------------------ ---------- -------- --------------- ----------------- ---------- Vanguard Vanguard Growth & Income $1,208,040 $1,208,040 Vanguard Vanguard Growth & Income $ 684,600 $ 804,055 684,600 $(119,455) Vanguard Vanguard Retir. Savings Trust 2,687,438 2,687,438 Vanguard Vanguard Retir. Savings Trust 1,847,772 1,847,772 1,847,772 Engelhard Engelhard Corp. Stock Fund 2,735,942 2,735,942 Engelhard Engelhard Corp. Stock Fund 2,614,310 2,055,422 2,614,310 558,888 *Transactions or a series of transactions in excess of 5% of the current value of the Plan's assets as of the beginning of the plan year as defined in section 2520.103-6 of the Department of Labor Rules and Regulations for Reporting and and Disclosure under ERISA.
13 CONSENT OF INDEPENDENT AUDITORS ------------------------------- We consent to the incorporation by reference in the Registration Statement (Form S-8 Nos.: 2-72830, 2-81559, 2-84477, 2-89747, 33-28540, 33-37724, 33-40365, 33-40338, 33-43934, 33-65990, 333-02643, 333-71439, 333-39570, 333-71856, 333-88424) pertaining to the Savings Plan for Hourly Paid Employees report dated June 23, 2003, with respect to the financial statements and schedules of the Savings Plan for Hourly Paid Employees Plan included in this Annual Report (Form 11-K) for the year ended December 31, 2002. /s/ Ernst & Young L.L.P. MetroPark, New Jersey June 23, 2003 14 Signature --------- Form 11-K Engelhard Corporation Savings Plan for Hourly Paid Employees Pursuant to the requirements of the Securities and Exchange Act of 1934, the Pension and Employee Benefit Plans Committee of Engelhard Corporation has duly caused this Form 11-K to be signed on its behalf by the undersigned, thereunto duly authorized, in Iselin, New Jersey on this 23rd day of June, 2003. /s/ John C. Hess ------------- By: John C. Hess Secretary to the Committee and Vice President of Human Resources 15 Exhibit 99 Certification Accompanying Periodic Report Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350) The undersigned, Barry W. Perry, Chairman and Chief Executive Officer of Engelhard Corporation, and Michael A. Sperduto, Vice President and Chief Financial Officer of Engelhard Corporation, (Engelhard Corporation is the administrator of Engelhard Corporation Savings Plan for Hourly Paid Employees) each hereby certifies that the Annual Report of the Plan on Form 11-K for the year ended December 31, 2002 (the "Report") (1) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Plan. Date: June 23, 2003 /s/ Barry W. Perry ----------------- ---------------------- Barry W. Perry Chairman and Chief Executive Officer Date: June 23, 2003 /s/ Michael A. Sperduto ----------------- -------------------------- Michael A. Sperduto Vice President and Chief Financial Officer This certification accompanies this Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Company for purposes of Section 18 or any other provision of the Securities Exchange Act of 1934, as amended. A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. 16 -----END PRIVACY-ENHANCED MESSAGE-----