-----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, HN+dEu+HAdX2b5AIs07wVuRV9gSFHgrNr+i/hbfDO7tqWy5BhUzwBsmYFTYyk91N uS4/Bs8eEjFNiAZ4JQvJyw== 0000914760-96-000018.txt : 19960209 0000914760-96-000018.hdr.sgml : 19960209 ACCESSION NUMBER: 0000914760-96-000018 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960208 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: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-03940 FILM NUMBER: 96513167 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-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FORM 10-Q For the period ended December 31, 1995 Commission file number 1-3940 National-Standard Company (Exact name of registrant as specified in its charter) Indiana 38-1493458 (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 1618 Terminal Road, Niles, Michigan 49120 (Address of principal executive offices) (Zip Code) (616) 683-8100 (Registrant's telephone number, including area code) Indicate by check mark whether registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [X] Yes [ ] No Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Title of Each Class Shares Outstanding at February 1, 1996 Common Stock, $ .01 par value 5,380,396 Part I. FINANCIAL INFORMATION National-Standard Company and Subsidiaries Consolidated Statements of Operations (Unaudited) ($000, Except Per Share Amounts)
Three Months Ended December 31 1995 1994 Net Sales $60,531 $58,605 Cost of sales 52,968 50,214 Gross profit 7,563 8,391 Selling and administrative expenses 5,336 5,115 Operating profit 2,227 3,276 Interest expense (1,335) (1,375) Other income 3,622 35 Income before income taxes 4,514 1,936 Income taxes 170 9 Net income $4,344 $1,927 Income (loss) per share $ .81 $ .36 Dividends per share $ 0.00 $ 0.00 Average shares outstanding 5,384,606 5,366,675 See accompanying notes to financial statements.
National-Standard Company and Subsidiaries Consolidated Balance Sheets ($000)
December 31, 1995 September 30, 1995 (Unaudited) Assets Current assets: Cash $ 410 $ 2,064 Receivables, net 26,175 26,071 Inventories: Raw material $11,292 $ 9,946 Work-in-process 17,811 15,383 Finished goods 1,147 30,250 1,059 26,388 Prepaid expenses 4,263 4,000 Other current assets 326 350 Total current assets $61,424 $58,873 Property, plant and equipment $147,619 $147,034 Less accumulated depreciation 103,264 44,355 102,384 44,650 Other assets 12,467 12,576 $118,246 $116,099 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $30,375 $26,605 Employee compensation and benefits 2,290 3,319 Accrued pension 965 965 Other accrued expenses 7,763 7,813 Current accrued postretirement benefit cost 2,700 2,700 Notes payable under revolving credit agreement expiring October 1997 (see Note 2) 18,098 - Current portion of long-term debt 5,475 7,000 Total current liabilities $67,666 $48,402 Notes payable under revolving credit agreement expiring October 1997 (see Note 2) - 20,658 Other long-term debt 12,788 13,494 Other long-term liabilities 6,321 6,365 Accrued postretirement benefit cost 48,655 48,655 Stockholders equity: Common stock -- $ .01 par value. Authorized 25,000,000 shares; issued 5,402,644 and 5,399,094 shares, respectively $27,630 $27,594 Retained deficit (41,505) (45,849) $(13,875) $(18,255) Less: Foreign currency translation adjustments 2,120 2,205 Unamortized value of restricted stock 109 85 Treasury stock, at cost, 28,748 and 14,076 shares, respectively 254 104 Excess of additional pension liability over unrecognized prior service cost 826 (17,184) 826 (21,475) $118,246 $116,099 See accompanying notes to financial statements.
National-Standard Company and Subsidiaries Consolidated Statements of Cash Flows (Unaudited) ($000)
Three Months Ended December 31 1995 1994 Net cash provided by operating activities $ 4,447 $ 3,180 Investing Activities: Capital expenditures (1,217) (2,676) Net cash used for investing activities (1,217) (2,676) Financing Activities: Net borrowings (reduction) under revolving credit agreements (4,027) 512 Principal payments under term loans (707) (808) Other (150) (5) Net cash used for financing activities (4,884) (301) Net increase (decrease) in cash (1,654) 203 Beginning cash 2,064 378 Ending cash $ 410 $ 581 Supplemental Disclosures: Interest paid $ 1,171 $ 1,166 Income taxes paid $ 1 $ 7 See accompanying notes to financial statements.
National-Standard Company and Subsidiaries Notes to Consolidated Financial Statements 1. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) necessary for a fair statement of the financial statements for the interim periods included herein have been made. The accounting policies followed by the Company are set forth in Note 1 to the Company's financial statements in the 1995 National-Standard Company Form 10-K, Annual Report, and this report should be read in conjunction therewith. 2. On November 16, 1995, the Emerging Issues Task Force (EITF) of the Financial Accounting Standards Board reached a consensus opinion that borrowings outstanding under a revolving credit agreement with requirements similar to those in the Company's agreement that expires October 1, 1997 should be classified as short-term obligations. Accordingly, the Company has classified all amounts due under its revolving credit agreement as a current liability at December 31, 1995. Amounts outstanding under this agreement were classified as long-term debt at September 30, 1995. There have been no changes in the terms of the Company's revolving credit agreement since September 30, 1995. Debt under the revolving credit agreement would have been classified as long-term debt at December 31, 1995 had the EITF opinion not been issued. 3. The results of operations for the three-month period ended December 31, 1995 are not necessarily indicative of the results to be expected for the full year. National-Standard Company and Subsidiaries Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations Net sales for the three months ended December 31, 1995 increased 3.3% over the same period last year. Gross margin percentages were 12.5% for the current three-month period compared to 14.3% for the same period last year. Sales of air bag inflator filtration products increased approximately 12% over the first quarter last year, while the Company's weld wire product lines experienced an 11% decline over the same time period. Operating margins were $2.2 million compared to $3.3 million for the same period last year, resulting from a slowdown in the automotive industries and sales of lower margin products. Net income for the quarter was $4.3 million or 81 cents per share versus $1.9 million or 36 cents per share for the same period last year. This year's net income includes approximately $3.5 million from the sale of shares of Allmerica Financial Corporation which the Company received as a result of the demutualization of the State Mutual Life Assurance Company of America in which the Company had participated since 1946. Operations in the United Kingdom were breakeven in the current three-month period compared to a net loss of $0.3 million for the same period last year on slightly higher sales. The United Kingdom continues to experience increased demand for its products and continued improvement is expected for the remainder of the year. Interest expense of $1.3 million in the current three-month period decreased 4% over the same period last year, as a lower level of average borrowings was offset by higher interest rates. The Company remains in an operating loss carryforward position in the United States, Canada, and the United Kingdom. Income tax expense on current income was substantially offset by a portion of these carryforwards. Liquidity and Capital Resources Total borrowings decreased $4.7 million during the quarter, due primarily to the sale of the Allmerica Financial Corporation shares. During 1994, the Company entered into a long-term financing arrangement, which was modified in September 1995, to provide up to $51.0 million in revolving credit facilities, term loans and a line of credit for future capital expenditures. The loans mature in October 1997 and are fully secured by the Company's assets. The Company believes adequate funding is in place to fund future growth and meet the market demand for our products. Part II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits (10) Material Contracts (i) National-Standard Company Targeted Retirement Benefit Plan. (ii) National-Standard Company Deferred Compensation Plan. (27) Financial Data Schedule (b) There were no reports on Form 8-K filed for the three months ended December 31, 1995. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. NATIONAL-STANDARD COMPANY Registrant Date February 8, 1996 /s/ M. B. Savitske M. B. Savitske President and Chief Executive Officer Date February 8, 1996 /s/ W. D. Grafer W. D. Grafer Vice President, Finance EX-10.(I) 2 NATIONAL-STANDARD COMPANY TARGETED RETIREMENT BENEFIT PLAN C E R T I F I C A T E I, _________________, duly-authorized Chairman of the Board of Directors of National-Standard Company ("the Company") do hereby adopt the attached National-Standard Company Targeted Retirement Benefit Plan on behalf of the Company effective _______________________. Dated this ______________ day of __________, 1995. NATIONAL-STANDARD COMPANY By TABLE OF CONTENTS PAGE SECTION 1 1 Introduction 1 Purpose 1 Effective Date 1 Employers 1 Plan Administration 1 SECTION 2 1 Eligibility and Membership 1 Eligibility 1 Leave of Absence 2 Disability Retirement Date 2 Normal Retirement Date 2 Early Retirement Date 2 SECTION 3 2 Benefits 2 Amount of Benefits 2 Form of Payment 4 Earnings 5 Benefit Payments 6 Small Amounts 6 Final Average Earnings 6 Amount of Replacement Death Benefits 6 Amount of Disability Benefits 7 Early Retirement 7 SECTION 4 8 Miscellaneous 8 Information Required by Company 8 Employment Rights 8 Facility of Payment 8 Gender and Number 8 Review of Benefit Determinations 8 Committee's Decision Final 8 Action by Employer 9 Interests Not Transferable 9 Controlling Law 9 Designation of Beneficiary 9 SECTION 5 9 Amendment and Termination 9 NATIONAL-STANDARD COMPANY TARGETED RETIREMENT BENEFIT PLAN SECTION 1 Introduction 1.1 Purpose. NATIONAL-STANDARD COMPANY TARGETED RETIREMENT BENEFIT PLAN (the "plan") has been established by NATIONAL-STANDARD COMPANY (the "company") to provide benefits for eligible employees of the company and its subsidiaries which adopt the plan. 1.2 Effective Date. The effective date of the plan is May 1, 1995 (the "effective date"). 1.3 Employers. Any subsidiary of the company may adopt the plan, with the company's consent, by resolution of its Board of Directors. The company and its subsidiaries which adopt the plan are referred to below collectively as the "employer" and individually as an "employer". 1.4 Plan Administration. The plan will be administered by the company. SECTION 2 Eligibility and Membership 2.1 Eligibility. An employee who is a member of the plan during any period commencing on or after the effective date shall continue as a member so long as he meets all of the following requirements: (a) he is employed as a salaried employee of an employer; (b) he is a participant in the National-Standard Company Employees' Pension Plan (the "pension plan"); and (c) he is designated as a participant by the Board of Directors of the company in writing. A participant who ceases to be an employee of an employer and is reemployed by an employer shall not again become eligible to participate in the plan unless he is again designated as a participant by the Board of Directors of the company. 2.2 Leave of Absence. A leave of absence which is not treated as a termination of employment by an employer or which is required by law because of military service will not interrupt membership in the plan. 2.3 Disability Retirement Date. A participant's "disability retirement date" shall be the first day of the month following the date the participant becomes disabled. For purposes of the plan, "disability" means the inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or which has lasted for a continuous period of not less than six months. The disability of a participant shall be determined by the Board of Directors of the company in its sole discretion. However, if the condition constitutes total disability under the federal Social Security Acts, the plan administrator may rely upon such determination that the participant is disabled for the purposes of this plan. The determination shall be applied uniformly to all participants similarly situated. 2.4 Normal Retirement Date. A participant's "normal retirement date" will be the first day of the month coincident with or next following his attainment of age 65 years. 2.5 Early Retirement Date. A participant's "early retirement date" will be the first day of the month coincident with or next following the date of his retirement from the employ of the company or an employer before his normal retirement date but after he has both attained age 55 years and completed 10 or more years of credited service under the pension plan. SECTION 3 Benefits 3.1 Amount of Benefits. A participant in this plan will be entitled to receive as his benefit under this plan an amount equal to: (a) a monthly payment equal to 1/12 of 55% of the participant's final average earnings; less (b) An amount equal to the sum of: (i) An amount of monthly benefit, payable in the form of a life annuity, which is actuarially equivalent to the amount payable to the participant under the terminated National-Standard Retirement Plan for Salaried Employees. (ii) The amount of monthly pension benefit payable to him under the pension plan payable in the form of a straight life annuity. (iii) An amount of benefit, payable in the form of a life annuity, which is actuarially equivalent to the aggregate deferred compensation payable to him under all other non-qualified deferred compensation plans of, and all other binding agreements with, the company or any other corporation. For purposes of this subparagraph 3.1(b), with respect to amounts payable under the National-Standard Deferred Compensation Plan, only amounts attributable to "company contributions" made pursuant to paragraph A-5 of Supplement A of such plan shall be considered. Amounts attributable to the National-Standard Spouse's Benefit Plan shall be offset as provided in subparagraph 4.1(b)(vi). (iv) An amount of benefit, payable in the form of a life annuity, which is actuarially equivalent to the amount of the participant's employer contribution account under the National-Standard Company Employees' Stock Savings Plan. In the event a contribution account described in the preceding sentence is not maintained, or a withdrawal from the account has previously been made, the offset under this subparagraph 3.1(b) shall equal the sum of the amount of any contribution account previously distributed to the participant projected from the date of distribution until the date of determination using an annual interest rate of 7% plus the participant's employer contribution account as of the date of determination. (v) 50% of the participant's monthly Primary Insurance Amount under the Social Security Act determined as of the participant's Social Security Retirement Age. (vi) In the event of the participant's death prior to commencement of benefit, the amount of monthly benefit payable to the participant's spouse under the National-Standard Spouse's Benefit Plan. 3.2 Form of Payment. Except as otherwise specifically provided, payment of benefits shall be made to a participant as follows: (a) Life Annuity. A participant who is not legally married on the date as of which such payments commence, or a participant who prior to that date elects not to receive his benefit in the form of a joint and survivor annuity, shall receive a benefit in accordance with the plan payable during his lifetime, with the last payment to be made for the month in which his death occurs. (b) Joint and Survivor Annuity. A participant who is legally married on the date as of which such payments commence and who had not made an election to waive a joint and survivor form of payment shall receive a joint and survivor annuity which is actuarially equivalent to the amount of monthly benefit otherwise payable to him in accordance with the plan on a life annuity basis. Such joint and survivor annuity shall consist of a reduced benefit continuing during the participant's lifetime, and if the participant's spouse is living at the date of the participant's death, payment of one-half of such reduced monthly benefit to such spouse until the spouse's death occurs, with the last payment to be made for the month of the death of the last to die of the participant and his spouse. 3.3 Earnings. A participant's "earnings" means the annual rate of cash compensation payable to him for services rendered to the company as an employee, including: (a) bonuses paid to him during the preceding 12-month period (or which would have been paid but for the participant's election to defer payment to a subsequent period); (b) amounts which would have constituted earnings as defined in this subsection, but for the participant's earnings reduction authorization in effect under any defined contribution plan or cafeteria plan maintained by an employer pursuant to Section 401(k) or 125 of the Internal Revenue Code, respectively, or but for the participant's deferral of earnings pursuant to the National-Standard Deferred Compensation Plan; and (c) any cash awards under an employer's long-term incentive, bonus, or non-deferred profit sharing plan; but excluding: (d) payment (prior to his employment termination date) of compensation previously deferred by the participant which would have constituted earnings at the time of deferral if paid at that earlier time; (e) reimbursement of expenses, such as travel expenses, relocation or educational assistance allowances, or the cost of physical examinations; (f) imputed income; (g) contributions by an employer to, or amounts paid from, any tax- qualified pension, profit sharing or stock bonus plan (except to the extent included under (b) above); and (h) severance pay or accrued vacation pay paid to him as a result of his termination of employment. 3.4 Benefit Payments. Commencing as of the effective date, any benefit payable under the plan will be paid directly by the company. The company shall not be required to segregate on its books or otherwise any amount to be used for payment of benefits under the plan. Notwithstanding the foregoing, the employers reserve the right to hereafter establish a trust or purchase insurance contracts for the purpose of providing benefits under the plan. 3.5 Small Amounts. If the amount of any monthly benefit that becomes payable is less than $20, the company may pay the actuarial equivalent of such benefit in a series of installments less frequently than monthly. 3.6 Final Average Earnings. The "final average earnings" of a participant shall mean the monthly average of the earnings paid to the participant for the five consecutive 12-month periods immediately preceding the participant's normal retirement date or earlier termination of employment (or the monthly average of earnings for the entire period of the participant's employment if such period is less than five consecutive 12-month periods). Such average shall be computed by dividing the total of the participant's earnings for such five consecutive 12-month periods by 60 months or the shorter period of employment if applicable. 3.7 Amount of Replacement Death Benefits. Subject to the conditions and limitations of the plan, if a participant dies prior to the date benefits commence to him under the plan, the participant's beneficiary shall be entitled to a benefit equal to the amount of benefit which would have been payable to the participant in accordance with subsection 3.1 in the form of a life annuity assuming the participant had remained in service until age 65. A calculation of benefit under this subsection 3.7 shall be based on the participant's final average earnings as of his date of death projected until age 65 and increased at an annual rate of 5%. The amount of offset provided under subparagraphs 3.1(b)(ii), (iii) and (iv) shall similarly be calculated by assuming that the participant would have remained in service and continued to participate in the applicable plan until age 65 and based on earnings projected as provided in the preceding sentence. In addition, account balances which are derived from application of subparagraphs 3.1(b)(iii) and (iv) shall be shall be projected forward to the date the participant would have attained age 65 and, for this purpose, increased at an annual rate of 7%. If payments to the participant's beneficiary commence prior to the date the participant would have attained normal retirement age, payments shall be reduced in accordance with subsection 3.8 to the date of commencement. A death benefit payable in accordance with this subsection 3.7 shall be payable monthly until a total of 120 payments have been made. If a participant's beneficiary dies prior to the date 120 total payments have been made, payments shall cease. 3.8 Amount of Disability Benefits. Subject to the conditions and limitations of the plan, if a participant retires on a disability retirement date, he shall be entitled to a benefit equal to the amount of benefit which would have been payable to the participant in accordance with subsection 3.1 in the form of a life annuity, projected forward to the date the participant would have attained age 65 in the manner described in subsection 3.7 but reduced by an additional amount equal to 3% per year for each year the date of commencement of the disability benefit precedes the date the participant attains age 65 years and further reduced by an additional amount equal to 3% per year for each year the disability benefit precedes the participant's attainment of age 55 years. A disability benefit payable in accordance with this subsection 3.8 shall be payable monthly until 180 monthly payments have been made. If a participant dies prior to the date 180 monthly payments have been made, payments shall continue to the participant's designated beneficiary until a total of 180 monthly payments have been made, taking into account payments made to the participant and the participant's designated beneficiary. If a participant's beneficiary dies prior to the date a total of 180 payments have been made, taking into account payments made to the participant and the participant's designated beneficiary, payments shall cease. 3.9 Early Retirement. In lieu of receiving the monthly retirement income otherwise payable under subsection 3.1 commencing on his normal retirement date, a participant who retires on an early retirement date may elect a monthly retirement income commencing on his early retirement date, or on the first day of any calendar month thereafter before his normal retirement date. Such monthly retirement income will be computed in accordance with subsection 3.1, and projected forward to the date the participant would have attained age 65 in the manner described in subsection 3.7, but actuarially reduced by an amount equal to 3% per year for each year the early retirement benefit precedes his normal retirement date to take into account the participant's younger age and the early commencement of his benefits. An election to receive benefits prior to attaining normal retirement age must be in writing and filed with the company at such time prior to the date earlier payment of the participant's retirement income is to begin as the company shall determine. SECTION 4 Miscellaneous 4.1 Information Required by Company. Each person entitled to benefits under the plan must file with the company from time to time in writing such person's post office address and each change of post office address. Any communication, statement or notice addressed to any such person at the last post office address filed with the company will be binding upon such person for all purposes of the plan. Each person entitled to benefits under the plan shall also furnish the company with such documents, evidence, data or information as the company considers necessary or desirable for the purpose of administering the plan. 4.2 Employment Rights. The plan does not constitute a contract of employment, and membership in the plan will not give any person the right to be retained in the employ of any employer, nor any right or claim to any benefit under the plan, unless such right or claim has specifically accrued under the terms of the plan. 4.3 Facility of Payment. When a person entitled to benefits under the plan is under legal disability, or, in the company's opinion, is in any way incapacitated so as to be unable to manage financial affairs, the committee may cause benefits otherwise payable to such person to be paid to such person's legal representative, or to a relative or friend of such person for such person's benefit, or the committee may direct the application of such benefits for the benefit of such person. Any payment made in accordance with the preceding sentence shall be a full and complete discharge of any liability for such payment under the plan. 4.4 Gender and Number. Where the context admits, words in the masculine gender shall include the feminine and neuter genders, the singular shall include the plural and the plural shall include the singular. 4.5 Review of Benefit Determinations. The company will provide notice in writing as required by applicable law to any person whose claim for benefits under the plan is denied and the company shall afford such person a full and fair review of its decision if so requested. 4.6 Committee's Decision Final. Any interpretation of the plan and any decision on any matter within the company's discretion made in good faith is binding on all persons. A misstatement or other mistake of fact shall be corrected when it becomes known, and the company shall make such adjustment on account thereof as it considers equitable and practicable. 4.7 Action by Employer. Any action required or permitted to be taken by an employer under the plan shall be by resolution of its Board of Directors, or by a person or persons authorized by resolution of its Board of Directors. 4.8 Interests Not Transferable. The interests of members and beneficiaries under the plan are not subject to the claims of their creditors and may not be voluntarily or involuntarily transferred, assigned, alienated or encumbered. 4.9 Controlling Law. Except to the extent superseded by the laws of the United States, the laws of the State of Indiana shall be controlling in all matters relating to the plan. 4.10 Designation of Beneficiary. Each participant, from time to time, by signing a form furnished by the company, may designate any person or persons to whom his benefits are to be paid if he dies before he receives all of his benefits. A beneficiary designation form will be effective only when the form is filed with the company while the participant is alive and will cancel all beneficiary designation forms previously filed with the company. If a deceased participant failed to designate a beneficiary as provided above, or if all of the designated beneficiaries die before the participant, the participant's benefits shall be distributed to his spouse or, if there is none, no benefits shall be paid. SECTION 5 Amendment and Termination The company reserves the right to amend the plan from time to time. The company also reserves the right to terminate the plan as applied to all employers, and each employer reserves the right to terminate the plan as applied to its employees. Members will be notified of an amendment or termination of the plan within a reasonable time. EX-10.(II) 3 NATIONAL-STANDARD COMPANY DEFERRED COMPENSATION PLAN (As Amended and Restated Effective as of January 1, 1996) NATIONAL-STANDARD COMPANY DEFERRED COMPENSATION PLAN 1. Name of Plan. This plan has been established by National-Standard Company (the "Company") and shall be known as the National-Standard Company Deferred Compensation Plan, hereafter referred to as "the Plan." 2. Objective. The objective of the Plan is to provide an unfunded arrangement under which eligible personnel may elect to defer a portion or all of their base compensation and/or bonuses to a future date. 3. Eligibility. The following employees of the Company shall be eligible to participate in the Plan for a calendar year: (a) All salaried personnel within the United States with an annual base compensation of more than the dollar amount determined under Internal Revenue Code Section 414(q)(1)(C); and (b) All salaried personnel participating in the National-Standard Company Bonus Plan. In addition to the employees identified above, prior to December 31 of each year, the Chief Executive Officer of the Company may designate additional employees as eligible to participate in the Plan for the following calendar year. An employee's designation as a participant for a calendar year shall not confer upon the employee any right to participate in the Plan for any subsequent year. 4. Rules and Regulations. The Compensation Committee of the Board of Directors, hereafter referred to as "the Committee," may establish such rules and regulations as it deems necessary for effective administration of the Plan. Full power and authority to construe, interpret and administer this Plan shall be vested in the Committee. In particular, the Committee shall have full discretionary power and authority to make each determination provided for in this Plan, and all determinations made by the Committee shall be conclusive upon the Company, upon each eligible employee, and upon each eligible employee's designees. If one or more members of the Committee are disqualified by personal interest from taking part in a particular decision, the remaining member or members of the Committee (although less than a quorum) shall have full power to act on such matter. 5. Administration. Subject to paragraph 4, above, the Plan shall be administered on a daily basis by one or more designated representatives of the Finance and/or Human Resource Departments under the direction of the Chief Executive Officer. 6. Participation. Eligible employees may participate in the Plan by making an "irrevocable" election to defer a portion of their base compensation and/or bonus earned. (a) Such election shall be on the form provided by the designated Company representative and shall specify: (i) the portion of the eligible employee's base compensation and/or bonus to be deferred, (ii) the period of deferral, and (iii) the manner of payment of such deferred amounts (i.e., lump sum, approximately equal monthly installments, or both). The form by which an eligible employee may elect to participate in the Plan is attached hereto as Exhibit A and, as it may be amended from time to time in accordance with the provisions of Item 20 below, forms a part of the Plan. Subject to rules established by the Committee, an eligible employee who wishes to participate in the Plan must complete the election form provided by the designated Company representative and file such form with the designated Company representative prior to the first day of the calendar year in which the amounts to be deferred are earned and would otherwise be paid; provided, however, that an employee who becomes an eligible employee after the Effective Date may make his or her first such election during the thirty (30) day period next following the date on which such person becomes an eligible employee, to be effective as of the date filed with the designated Company representative. Each such election shall apply to all of the base compensation and/or bonus amounts earned by such employee after the date as of which the election is made, and until such time as the election is terminated either pursuant to Item 6(b) below or due to the participant's ceasing to be an eligible employee. Such an election by an employee, once made, shall be irrevocable by the employee with respect to all amounts earned by the employee while the election is in effect. (b) An eligible employee may terminate an election to defer the receipt of base compensation and/or bonuses at any time by written direction to the designated Company representative. Any such termination shall take effect with respect to the base compensation and/or bonuses payable to such eligible employee for calendar years commencing after the written direction is received by the designated Company representative. An eligible employee who has terminated an election to defer the receipt of base compensation and/or bonuses may not again elect to defer the receipt of base compensation and/or bonuses until a period of twelve (12) months has elapsed from the Effective Date as of which the previous election was terminated. A separate account shall be established with respect to the deferred amounts payable pursuant to each such election. (c) Deferred amounts shall be subject to the rules set forth in the Plan, and each participant shall have the right to receive cash payments on account of previously deferred base compensation and/or bonus amounts only in the amounts and under the circumstances hereinafter set forth. 7. Effect of Election. (a) Nothing contained herein shall be deemed to create a trust of any kind or create any fiduciary relationship. All amounts deferred hereunder shall be reflected on the Company's books of accounts as general unsecured and unfunded obligations. If the Company, in its discretion, should from time to time set aside amounts for the purposes of payment of salaries and bonuses deferred hereunder, such amounts shall be solely for the Company's own account and shall not in any way be considered to create a fund or trust for the benefit of the participant or the participant's beneficiaries; the participant shall have no right, title, or interest in or to any such investments; and the participant's rights hereunder shall be solely those of an unsecured creditor to receive the payments provided hereunder. (b) Participation in the Plan shall not confer on the participant any right to remain employed with the Company for any period of time, nor the right to receive a bonus in any year. 8. Establishment of Accounts. The Company will maintain a recordkeeping account in the name of each participant which will reflect his base compensation and/or bonuses deferred under the Plan, and the income, losses, appreciation and depreciation attributable thereto. The Company also may maintain such other accounts as it considers advisable, including but not limited to subaccounts for each participant to reflect different elections by the participant pursuant to subparagraph 6(b). References in the Plan to a participant's "account" means all accounts maintained in his name under the Plan. 9. Adjustment of Accounts. As of the end of each calendar quarter, the Company shall: (a) First, charge to the proper accounts all payments or distributions made since the end of the preceding calendar quarter (that have not been charged previously) as of the date such payments or distributions were actually made to the participant; (b) Next, credit participants' accounts with the amount of deferred base compensation and/or bonuses, if any, that are to be credited as of the date such amounts otherwise would have been paid to the relevant participant and which have not been credited previously to the participants' accounts; (c) Finally, credit participants' accounts with interest, at the rate specified below, based on each participant's average account balance for such calendar quarter. A participant's average account balance shall be determined by determining the participant's daily account balance after application of subparagraphs (a) and (b) above, and averaging such account balances by the number of days in the such calendar quarter. While the Company has no obligation to invest or reinvest any funds pursuant to this Plan, the Company agrees that interest shall be credited at a rate of interest equal to the thirty (30) year fixed Federal National Mortgage Association (FNMA) rate, published in The Wall Street Journal as of the close of business on the first day of the first month of such calendar quarter. 10. Effect on Other Benefit Plans. Amounts deferred under this Plan shall be considered in computing benefits under other Company benefit plans only in accordance with the provisions of such other plans and applicable federal, state, or local laws and regulations. 11. Designation of Beneficiaries. Each participant shall have a right to designate beneficiaries who are to receive payments due the participant under the Plan in the event of the participant's death. The designation of beneficiaries shall be in writing on the form provided, which must be signed by the participant. The form by which a participant may designate a beneficiary is attached hereto as Exhibit B and, as it may be amended from time to time in accordance with the provisions of Item 20 below, forms a part of the Plan. Each designation will revoke all prior designations by the participant, and will be effective only when filed by the participant with the designated Company representative. Should a beneficiary not be designated or a designated beneficiary die without a secondary or designated successor beneficiary, distribution shall be made to the participant's estate. 12. Disability. If a participant or a designated beneficiary is under legal disability or, in the opinion of the Committee, is in any way incapacitated to the point of not being able to manage his or her financial affairs, the Committee may direct that any payment hereunder be made to the participant's or beneficiary's legal representative, or in any manner it determines is in the best interest of the participant or beneficiary. 13. Severe Financial Hardship. Although elections under the Plan are irrevocable, termination of the current year's deferral or withdrawal from account balances prior to elected periods may be made in the case of an unanticipated, severe financial hardship due only to the health or educational needs of the participant or his dependents (as defined in Section 152(a) of the Internal Revenue Code of 1986, as amended) beyond the control of the participant. Termination or withdrawal for any other material needs will not be permitted. Requests for such termination of deferral or for withdrawal of funds must be submitted in writing with proof of hardship to the designated Company representative along with an estimate of the amounts necessary to prevent severe financial hardship. Hardship payments shall only be made to the extent necessary to satisfy the financial hardship, and shall not be made to the extent that the hardship is or may be relieved through reimbursement or compensation, by insurance or otherwise, by cessation of deferrals pursuant to the Plan, or by liquidation of the participant's assets (to the extent such liquidation itself would not cause severe financial hardship). Any funds withdrawn under such conditions shall be distributed via a regular payroll check. 14. Other Termination of Employment. If a participant is terminated from the employment of the Company for any reason other than retirement, disability or death, the Company shall have the right, in its sole discretion, to pay the balance of the deferred amount in the participant's account in a lump sum, or in installments within a reasonable period of time following such termination of employment, irrespective of the manner or time elected by the participant to receive such deferred payments. 15. Change of Control. In the event of a change of control of the Company, the amount in each participant's account on the day immediately preceding the change of control date (as hereinafter defined) shall be paid to the participant in a lump sum within a reasonable period of time following the change of control date, irrespective of the manner or time elected by the participant to receive payment of the amount. In determining the amount of each participant's account, interest shall be accrued on the day immediately preceding the change of control date, in accordance with Item 9 of the Plan, as if that day were the last day of the calendar quarter. For purposes of this Item, the "change of control" date shall mean the earliest date on which: (a) any "person" (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")] becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company, representing at least 25% of the combined voting power of the Company's then outstanding securities, or (b) a majority of the individuals comprising the Company's Board of Directors have not served in such capacity for the entire two- year period immediately preceding such date, or (c) a change occurs of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Exchange Act; provided, however, that if the transactions or elections causing a date to be a change of control date shall have been approved by an affirmative vote of a majority of the "continuing directors," such date shall not be deemed to be a change of control date. A "continuing director" means a person who was a member of the Board of Directors of the Company immediately prior to the transactions or elections, resulting in there being a change of control date, or who was designated (before his initial election or appointment as a director) as a continuing director by a majority of the whole Board of Directors, but only if the majority of the whole Board of Directors then consisted of continuing directors, or if a majority of the whole Board of Directors did not then consist of continuing directors, by a majority of the then continuing directors. Notwithstanding the foregoing provisions of this Item 15, the receipt of or investment in stock of the Company by a trust maintained by the Company which is tax-exempt under Section 501(a) of the Internal Revenue Code in amounts which comply with Section 407 of the Employee Retirement Income Security Act of 1974 prior to a change of control date as otherwise defined herein shall not cause a change of control date to occur. 16. Payment of Account Balances. The Company shall pay to each participant or beneficiary from the general assets of the Company the amount of his or her account balance in the manner elected by the participant, unless such payments are to be made in a different manner and/or at an earlier date pursuant to Items 12, 13, 14 or 15 herein. 17. Withholding. The Company shall withhold the amount of local, state or federal taxes required by law from payments ultimately paid under the Plan. 18. No Alienation. To the extent permitted by law, the right of any participant or any beneficiary to any payment hereunder shall not be subject in any manner to attachment or other legal process for the debts of the participant or beneficiary, and any such benefit or payment shall not be subject to anticipation, sale, alienation, transfer, assignment or encumbrance. 19. Determination of Taxability. Should the Internal Revenue Service determine that any amount deferred by the participant under the Plan is currently taxable, even though not received by the participant, the Company shall pay to such participant, immediately upon receipt of a copy of the final IRS determination of taxability, the amount of deferred compensation and/or bonuses deemed to be subject to tax. 20. Amendment or Termination. The Plan may be terminated or amended at any time in whole or in part as determined by the Board of Directors of the Company; provided, however, that no such amendment or termination shall (without the participant's consent) alter a participant's right to payments of amounts previously credited to such participant's accounts prior to the date of such amendment or termination, or the amount or times of payment of such amounts. 21. Miscellaneous. (a) Plan Binding. This Plan shall be binding upon and inure to the benefit of the Committee, the Company, the participants, their legal representatives, successors and assigns, and all persons entitled to benefits hereunder. (b) Notice. Any notice given in connection with the Plan shall be in writing and shall be delivered in person or by certified mail, return receipt requested. Any notice given by certified mail shall be deemed to have been given upon the date of delivery indicated on the certified mail return receipt, if correctly addressed. (c) Expenses. The expenses of administering the Plan shall be borne by the Company. (d) Applicable Law. This Plan and all rights hereunder shall be construed in accordance with and governed by the laws of the State of Michigan. (e) Action by Company. Any action required or permitted to be taken by the Company under the Plan shall be by resolution of its Board of Directors, by resolution of a duly authorized committee of its Board of Directors, or by a person or persons authorized by resolution of its Board of Directors or such committee. 22. Effective Date. The Plan originally was effective as of November 19, 1986. The effective date of this amendment and restatement is January 1, 1996. SUPPLEMENT A TO NATIONAL-STANDARD COMPANY DEFERRED COMPENSATION PLAN A-1 Purpose. The purpose of this Supplement A is to allow eligible employees under the Plan to make a special deferral election with respect to the amount (if any) of before-tax contributions which they may be prevented from making under the National-Standard Company Employees' Stock Savings Plan (the "ESSP"), due to the nondiscrimination requirements of Section 401(k) or the maximum limitations on elective deferrals under Section 402(g) of the Internal Revenue Code, and to provide for a Company contribution hereunder based upon the amount of such deferrals as described in Paragraph A-3 below. Elections made under this Supplement A shall be in addition to any other deferral election made under the Plan. A-2 Eligible Employee's Election. In accordance with Item 6(a) of the Plan, each eligible employee may make an irrevocable written election to defer an amount of base compensation and/or bonuses equal to the amount such employee is prevented from contributing to the ESSP as a before-tax contribution under the ESSP, due to the Section 401(k) nondiscrimination rules or the Section 402(g) elective deferral limitations. A-3 Company Contributions. For each calendar year, the Company will contribute on behalf of each participant hereunder an amount equal to the matching contribution the participant would have received under the ESSP if the amount deferred by the participant under this Supplement A for that year was deferred as before-tax contributions under the ESSP; provided that the amount deferred by a participant for any year under this Supplement A which shall be recognized for purposes of this Paragraph A-3 shall not exceed the Section 402(g) effective deferral limitation in effect for that year, reduced by his before-tax contributions to the ESSP. A-4 Terms. The definition of terms used under the ESSP, such as "before-tax contributions," are hereby incorporated by reference. All other terms and conditions of the Plan shall apply to this Supplement A, except that where such terms and conditions of the Plan and this Supplement A conflict, the terms and provisions of this Supplement A shall govern. EX-27 4
5 This schedule contains first quarter summary financial information extracted from National-Standard Company's 1996 first quarter Form 10-Q and is qualified in its entirety by reference to such form 10-Q filing. 1,000 3-MOS SEP-30-1996 DEC-31-1995 410 0 26,582 407 30,250 61,424 147,619 103,264 118,246 67,666 0 27,630 0 0 (44,814) 118,246 60,531 60,531 52,968 52,968 (3,622) 0 1,335 4,514 170 4,344 0 0 0 4,344 .81 .81
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