-----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, AeCxi0q/8dxRHifCtsThMoK2Y71dO+ewx7V7L3HkBqZsXXefikZj027oCOZsz0SY M7ghbwLFnlms/OiQesNAbA== 0000914760-96-000277.txt : 19961213 0000914760-96-000277.hdr.sgml : 19961213 ACCESSION NUMBER: 0000914760-96-000277 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961212 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: NATIONAL STANDARD CO CENTRAL INDEX KEY: 0000070564 STANDARD INDUSTRIAL CLASSIFICATION: STEEL WORKS, BLAST FURNACES & ROLLING & FINISHING MILLS [3310] IRS NUMBER: 381493458 STATE OF INCORPORATION: IN FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: 1934 Act SEC FILE NUMBER: 001-03940 FILM NUMBER: 96679471 BUSINESS ADDRESS: STREET 1: 1618 TERMINAL RD CITY: NILES STATE: MI ZIP: 49120 BUSINESS PHONE: 6166838100 MAIL ADDRESS: STREET 1: 1618 TERMINAL RD CITY: NILES STATE: MI ZIP: 49120 10-K405 1 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.
___________________________________________________________________________________________________________________ 1996 1995 1994 1993 1992 ____________________________________________________________________________________________________________________ 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
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:
___________________________________________________________________________________________________________________ 1996 1995 1994 1993 1992 ____________________________________________________________________________________________________________________ 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%
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.
____________________________________________________________________________________________________________________ 1996 1995 1994 1993 1992 ____________________________________________________________________________________________________________________ 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%
The net effect of all the above elements is seen in the Company's operating profit (loss).
____________________________________________________________________________________________________________________ 1996 1995 1994 1993 1992 ____________________________________________________________________________________________________________________ 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
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.
____________________________________________________________________________________________________________________ 1996 1995 1994 1993 1992 ____________________________________________________________________________________________________________________ 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%
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.
____________________________________________________________________________________________________________________ 1996 1995 1994 1993 1992 ____________________________________________________________________________________________________________________ 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%
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
____________________________________________________________________________________________________________________ Page Reference in Report on Form 10-K ____________________________________________________________________________________________________________________ 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.
NATIONAL-STANDARD COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in Thousands Except Share Data)
_____________________________________________________________________________________________________________________ Year Ended September 30 1996 1995 1994 ____________________________________________________________________________________________________________________ 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.
NATIONAL-STANDARD COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Dollars in Thousands except Share Data)
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 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.
NATIONAL-STANDARD COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Dollars in Thousands except Share Data)
____________________________________________________________________________________________________________________ September 30 1996 1995 ____________________________________________________________________________________________________________________ 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.
NATIONAL-STANDARD COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in Thousands except Share Data)
_____________________________________________________________________________________________________________________ Year Ended September 30 1996 1995 1994 ____________________________________________________________________________________________________________________ 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.
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
_______________________________________________________________________________________________________________ 1996 1995 _______________________________________________________________________________________________________________ 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
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
_______________________________________________________________________________________________________________ 1996 1995 _______________________________________________________________________________________________________________ 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
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:
_________________________________________________________________________________________________________________ Assets Exceed Accumulated Accumulated Benefits Exceed Benefits Assets _________________________________________________________________________________________________________________ 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
Net pension cost related to Company-sponsored plans included the following components: _______________________________________________________________________________________________________________ 1996 1995 1994 _______________________________________________________________________________________________________________ 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)
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:
_______________________________________________________________________________________________________________ 1996 1995 _______________________________________________________________________________________________________________ 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)
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:
_______________________________________________________________________________________________________________ 1996 1995 1994 _______________________________________________________________________________________________________________ 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
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
_______________________________________________________________________________________________________________ 1996 1995 _______________________________________________________________________________________________________________ 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
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
___________________________________________________________________________________________________________________ 1996 1995 ___________________________________________________________________________________________________________________ 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
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:
_______________________________________________________________________________________________________________ 1996 1995 1994 _______________________________________________________________________________________________________________ Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9,591 $ 7,462 $ (3,861) Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,549) 127 (708) $ 8,042 $ 7,589 $ (4,569)
The provisions for income taxes are as follows:
_______________________________________________________________________________________________________________ 1996 1995 1994 _______________________________________________________________________________________________________________ Currently payable (recoverable): Domestic . . . . . . . . . . . . . . . . . . . . . . . . $ 464 $ 216 $ - Foreign . . . . . . . . . . . . . . . . . . . . . . . . 26 23 56 490 239 56 Deferred: Domestic . . . . . . . . . . . . . . . . . . . . . . . . (1,300) - - $ (810) $ 239 $ 56
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:
_______________________________________________________________________________________________________________ 1996 1995 1994 Actual % Actual % Actual % _______________________________________________________________________________________________________________ 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
The net deferred tax asset included the following components:
_______________________________________________________________________________________________________________ 1996 1995 _______________________________________________________________________________________________________________ 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
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
____________________________________________________________________________________________________________________ 1996 1995 1994 ____________________________________________________________________________________________________________________ Joint venture . . . . . . . . . . . . . . . . . . . . . . . . $ 200 $ 200 $ 300 Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . 164 204 200 Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,645 (108) (74) $ 4,009 $ 296 $ 426
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:
_____________________________________________________________________________________________________________________ Options Outstanding Number Option of Shares Price _____________________________________________________________________________________________________________________ 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
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.
_______________________________________________________________________________________________________________ Year Ended September 30 1996 1995 1994 _______________________________________________________________________________________________________________ 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.
The net assets of foreign subsidiaries included in the consolidated figures at appropriate rates of exchange are as follows:
_______________________________________________________________________________________________________________ 1996 1995 _______________________________________________________________________________________________________________ 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
14. QUARTERLY FINANCIAL DATA (UNAUDITED)
_______________________________________________________________________________________________________________ First Second Third Fourth Quarter Quarter Quarter Quarter _______________________________________________________________________________________________________________ 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
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
____________________________________________________________________________________________________________________ 1996 1995 1994 ____________________________________________________________________________________________________________________ (In thousands) 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
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. EX-10.(A)(VIII) 2 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. EX-21 3 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.
________________________________________________________________________________________________________________________ State or Country in which % of Voting Owned Incorporated or Organized Securities ________________________________________________________________________________________________________________________ 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
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. EX-23 4 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 EX-24 5 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 EX-27 6
5 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. 1,000 YEAR SEP-30-1996 SEP-30-1996 2,423 0 24,912 380 22,144 53,882 155,870 108,431 114,688 61,374 0 0 0 27,689 (41,451) 114,688 248,554 248,554 216,433 216,433 (4,009) 0 4,838 8,042 (810) 8,852 0 0 0 8,852 1.65 1.65
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