SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
X ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
- --- SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2000
or
TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
- --- SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from _____ to _____
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ENGELHARD CORPORATION SAVINGS PLAN FOR HOURLY PAID EMPLOYEES
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(Full title of the plan)
ENGELHARD CORPORATION
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(Exact name of issuer as specified in its charter)
101 WOOD AVENUE, ISELIN, NEW JERSEY 08830
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
DELAWARE 22-1586002
- ------------------------------- ---------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
1
Engelhard Corporation Savings Plan for Hourly Paid Employees
Table of Contents
Description Page
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Report of Independent Public Accountants 3
Statement of Net Assets Available for Benefits 4
at December 31, 2000 and 1999
Statement of Changes in Net Assets Available for Benefits 5
for the year ended December 31, 2000
Notes to Financial Statements 6-13
Supplemental Schedule
Schedule of Assets Held for Investment Purposes 14
at December 31, 2000
Schedule of Reportable Transactions for the
Year Ended December 31, 2000 15
Consent of Independent Public Accountants 16
2
Report of Independent Public Accountants
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To the Pension and Employee Benefit Committee of Engelhard Corporation:
We have audited the accompanying statements of net assets available for
benefits of the Engelhard Corporation Savings Plan for Hourly Paid Employees
(the "Plan") as of December 31, 2000 and 1999 and the related statement of
changes in net assets available for benefits for the year ended December 31,
2000. These financial statements and the supplemental schedule referred to below
are the responsibility of the Plan's management. Our responsibility is to
express an opinion on these financial statements and schedules based on our
audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principals used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the net assets available for benefits as of December
31, 2000 and 1999, and the changes in net assets available for benefits for
the year ended December 31, 2000, in conformity with accounting principles
generally accepted in the United States.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of Assets Held
for Investment Purposes and Reportable Transactions are presented for purposes
of additional analysis and are not a required part of the basic financial
statements but are supplementary information required by the Department of Labor
Rules and Regulations for Reporting and Disclosure under the Employee Retirement
Income Security Act of 1974. The supplemental schedules have been subjected to
the auditing procedures applied in the audits of the basic financial statements
as of and for the year ended December 31, 2000, and in our opinion, are fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
ARTHUR ANDERSEN LLP
New York, New York
June 26, 2001
3
Engelhard Corporation Savings Plan for Hourly Paid Employees
Statement of Net Assets Available for Benefits
At December 31, 2000 and 1999
2000 1999
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Assets
- ------
Investments at fair value $24,086,728 $20,019,653
Receivables:
Participant Contributions 274,343 353,524
Employer Contributions 68,008 72,486
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Total Receivables $ 342,351 $ 426,010
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Net Assets Available for Benefits $24,429,079 $20,445,663
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See accompanying notes to Financial Statements
4
Engelhard Corporation Savings Plan for Hourly Paid Employees
Statement of Changes In Net Assets Available for Benefits
For the year ended December 31, 2000
2000
----
Additions:
Net Investment Income:
Dividends $ 709,574
Interest 380,482
------------
Total Investment Income 1,090,056
Contributions:
Participant 3,629,366
Employer 766,946
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Total Contributions 4,396,312
Net Realized loss on Sale
of Investments (79,553)
Unrealized Appreciation
of Investments 51,506
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Total Additions 5,458,321
Distributions 1,474,905
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Net Increase 3,983,416
Net Assets Available for Benefits 20,445,663
at Beginning of Year
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Net Assets Available for Benefits $ 24,429,079
at Beginning of Year
============
See Accompanying Notes to Fianncial Statements
5
Notes to Financial Statements
Note 1 - Description of the Plan
The Engelhard Corporation Savings Plan for Hourly Paid Employees (the
Plan), effective as of January 1, 1991, is designed to provide eligible
employees of Engelhard Corporation (the Company) an opportunity to save part of
their earnings by having the Company reduce their compensation and contribute
the amount of the reduction to the Plan on a tax deferred basis.
The following plan description provides only general information.
Participants of the Plan should refer to the Plan Document for a more complete
description of plan provisions.
Eligibility
- -----------
Except as specifically included or excluded by the Board of Directors of
the Company (the Board), the hourly paid employees of Engelhard Corporation
represented by Locals 333 of the Independent Workers of North America, Locals
233, 237 and 238 of the United Paper Workers International Union, Local 1668,
1668A and 1668B of the United Automobile Workers, Local 170 of the United Steel
Workers of America until May 1, 1998, Local 8-406 and 2-286 of the Oil, Chemical
and Atomic Workers International Union, Local 663 of the International Chemicals
Workers Union, Local 73 of the International Chemical Workers Union, Local 1430
of the International Brotherhood of Electrical Workers and Local 174 of the
United Steel Workers of America who have completed at least one year of service,
as defined, are eligible to participate in the Plan as of the first day of the
month in which they meet the year of service requirement.
Contributions
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The Plan permits eligible employees participating in the Plan the
opportunity to defer on a pretax basis up to 15 percent of their compensation,
as defined, subject to certain restrictions and limitations, and to have that
amount contributed to the Plan. Employees may also contribute, subject to
certain restrictions and limitations, up to 10 percent of compensation to the
Plan on a post-tax basis.
Matching Contributions
- ----------------------
The Company will contribute, on a monthly basis and subject to limitations
and exclusions, either cash or common stock of the Company in an amount, ranging
from 10% to 50% of the first 6%, depending on the union contract, of the amount
contributed by the Participants.
Investments
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All contributions to the Plan are held and invested by Vanguard Fiduciary Trust
Company (the Trustee). The Trustee maintains seventeen separate investment funds
within the Plan:
a) The Company Stock Fund consists of assets invested or
held for investment in the common stock of the Company. In
the event the assets cannot be immediately invested in
Company common stock, the funds are invested in short-term
securities pending investment in Company common stock.
6
b) The Fixed Income Fund consists of assets invested in
shares of the Vanguard Retirement Savings Trust. In the event
the assets cannot be immediately invested in such shares or
deposited as specified above, the assets are invested in
direct obligations of the United States Government or agencies
thereof, or obligations guaranteed as to the payment of
principal and interest by the United States Government.
c) The Explorer Fund consists of assets invested in shares of the
Vanguard Explorer Fund, which invests in common stocks of
small companies with favorable prospects for above-average
growth in market value.
d) The Balanced Fund consists of assets invested in the
Vanguard Asset Allocation Fund, which invests in stocks,
bonds and cash reserves for the purpose of maximizing long-
term total return with less volatility than a portfolio of
common stock.
e) The Equity Index Fund consists of assets invested in
the Vanguard Growth and Income Portfolio, which invests
primarily in common stocks for the purpose of realizing a
total return greater than the Standard & Poor's 500 Index
while maintaining fundamental investment characteristics
similar to such Index.
f) The International Growth Fund consists of assets invested in
shares of the Vanguard International Growth Portfolio or such
other mutual fund or funds which invest primarily in common
stocks of companies based outside the United States that have
above-average growth potential for the purpose of realizing
long-term capital growth.
g) The Treasury Money Market Fund consists of assets invested in
direct obligations of the U.S. Government which guarantees
payment of principal and interest.
h) The Life Strategy Growth Fund consists of assets invested in
the Vanguard Life Strategy Growth Portfolio. This fund
invests in other Vanguard mutual funds representing a
combination of stocks, bonds and reserves in order to provide
growth of capital.
i) The Prime Cap funds consists of assets invested in the
Vanguard Prime Cap fund and seeks long-term growth of
capital.
j) The U.S. Growth portfolio seeks to provide long-term capital
appreciation by investing in common stocks of companies
with above-average growth potential for the purpose
of seeking long-term capital growth.
7
k) The Growth Fund consists of assets invested in the
Vanguard Windsor Fund, which invests primarily in common
stocks for the purpose of realizing long-term growth of
capital and income.
l) The Windsor II Fund consists of assets invested in the
Vanguard Windsor II Fund, which invests primarily in stocks
which seeks long-term growth and income from dividends.
m) The Short-Term Bond Fund consists of assets invested
in shares of the Vanguard Fixed Income Fund or Short-Term
Corporate Portfolio of the Vanguard Fixed Income Securities
Fund or such other mutual fund or funds which invest primarily
in relatively short maturity investment-grade bonds for the
purpose of providing a level of current income consistent with
a two to three year average maturity while helping to preserve
capital.
n) The Small Cap Fund consists of assets invested in shares of
the Vanguard Index Trust - Small Cap Stock Portfolio or such
other mutual fund or funds which invest primarily in common
stocks of small-sized companies for the purpose of providing
a comparatively low-cost method of passively capturing the
investment returns of small-sized companies and attempting to
provide investment results that parallel the performance of
the unmanaged Russell 2000 Small Stock Index.
o) The Life Strategy Income Fund consists of assets invested in
the Vanguard Life Strategy Income Portfolio. This fund
invests in other Vanguard mutual funds representing a
combination of stocks, bonds and reserves in order to provide
current income.
p) The Life Strategy Conservative Growth Fund consists of assets
invested in the Vanguard Life Strategy Conservative Growth
portfolio. This fund invests in other Vanguard mutual funds
representing a combination of stocks, bonds, and reserves in
order to provide current income and a low to moderate growth
of capital.
q) The Life Strategy Moderate Growth Fund consists of assets
invested in the Vanguard Life Strategy Moderate Growth Fund.
This fund invests in other Vanguard mutual funds representing
a combination of stocks, bonds and reserves in order to
provide growth of capital and a reasonable level of current
income.
8
Participants have the right to elect, subject to restrictions, the
investment fund or funds in which their contributions are invested. All matching
contributions are initially invested in the Company Stock Fund. The Participants
matching contributions are initially restricted and become unrestricted at the
rate of 25 percent per year. Once unrestricted, funds may be moved to any of the
other investment funds.
The number of Participants in each fund was as follows at December 31:
Participants 2000 1999
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Company Stock Fund 1,010 996
Fixed Income Fund (Retirement Savings Trust) 463 439
Explorer Fund 125 99
Balanced Fund (Asset Allocation Fund) 466 476
Equity Index Fund (Growth and Income Portfolio) 573 563
International Growth Fund 150 146
Treasury Money Market Fund 63 54
Life Strategy Growth Fund 9 1
Prime Cap Fund 82 12
U.S. Growth Portfolio 42 7
Growth Fund (Windsor Fund) 9 2
Windsor II Fund 14 3
Short Term Bond Fund 4 -
Small Cap Fundx 27 -
Life Strategy Income Fund - -
Life Strategy Conservative Growth Fund 4 -
Life Strategy Moderate Growth Fund 3 -
The total number of Participants in the Plan was less than the sum of the
number of Participants shown above because many were participating in more than
one fund.
9
The number of units representing Participant interests in each fund and the
related net asset value per unit were as follows at December 31:
2000 1999
Value Value
Units per Unit Units per Unit
----- -------- ----- --------
Company Stock Fund 288,335 $34.22 238,420 $31.75
Fixed Income Fund 4,101,091 1.00 3,457,667 1.00
Explorer Fund 8,937 60.09 4,393 68.62
Balanced Fund 112,989 23.67 102,692 23.80
Equity Index Fund 123,897 32.06 109,292 37.08
International Growth Fund 24,938 18.87 21,504 22.49
Treasury Money Market Fund 163,210 1.00 163,564 1.00
Life Strategy Growth Fund 1,804 19.59 872 21.41
Prime Cap Fund 6,878 60.38 1,091 62.07
U.S. Growth Portfolio 4,036 27.65 367 43.53
Growth Fund 543 15.29 45 15.17
Wndsor II Growth Fund 884 27.20 211 24.97
Short Term Bond Fund 154 10.65 - -
Small Cap Fund 1,406 19.44 - -
Life Stratgey Income Fund - - - -
Life Strategy Conservative Growth Fund 195 14.70 - -
Life Strategy Moderate Growth Fund 181 17.24 - -
10
Included in the Statement of Net Assets Available for Benefits are
non-participant directed funds that are included in the Company Stock Fund.
These amounts represent the restricted portion of the Employer Matching
Contribution. The following describes the change in the balance during the years
ended December 31, 2000.
Balance @ 12/31/99 $2,030,582
Dividends 19,669
Appreciation 18,880
Contributions 766,946
Transfer to unrestricted (2,309,142)
Distributions (48,989)
Other (57,726)
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Balance @ 12/31/00 $420,220
Vesting
- -------
Participants at all times have a fully vested and non-forfeitable interest
in their contributions and in the matching contributions allocated to their
account.
Termination
- -----------
Although it expects and intends to continue the Plan indefinitely, the Company
has reserved the right of the Board to terminate or amend the Plan.
Loan Provision
- --------------
Participants may borrow from their funds accounts a minimum of $1,000 up to
a maximum equal to 50% of their fund balance or $50,000, whichever is less. The
loans are secured by the balance in the Participant's accounts and bear interest
at a reasonable rate as determined by the Company in accordance with applicable
laws and regulations. Principal and interest is paid ratably through monthly
payroll deductions. Loans are generally five years in duration unless the loan
is for the purchase of a primary residence in which case the term can be up to
ten years.
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Distributions and Withdrawals
- -----------------------------
Upon termination of employment, as provided in the Plan Document, employees
generally have the option of taking a distribution, rolling the balance over
into another qualified plan, or leaving the money in the Plan until retirement.
After-tax contributions may be withdrawn at any time however the earnings on the
contribution will be subject to current income taxes, as well as a penalty for
early withdrawal unless the participant has reached the age of 59 1/2. All
distributions are made in the form of cash except the balance in the Engelhard
stock fund may be made in the form of shares at the Participant's discretion.
The Plan under certain circumstances permits hardship withdrawals. The
hardship withdrawals are only made in accordance with IRS guidelines and must be
approved in advance by the Employee Benefit Plans Administrative Committee.
Note 2 - Accounting Policies
The accounts of the Plan are maintained on an accrual basis. Purchases and
sales of investments are reflected on a trade date basis. Assets of the Plan are
valued at fair value. Gains and losses on distributions to Participants and
sales of investments are based on average cost.
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported. Actual results may differ from
those estimates.
The Plan provides for various investment options in any combination of
stocks or mutual funds. Investment securities are exposed to various risks, such
as interest rate, market and credit. Due to the level of risk associated with
certain investment securities and the level of uncertainty related to changes in
the value of investment securities, it is at least reasonably possible that
changes in risks in the near term would materially affect Participants' account
balances and the amounts reported in the Statement of Net Assets Available for
Benefits and the Statement of Changes in Net Assets Available for Benefits.
Certain reclassifications have been made to prior year numbers to conform
to current year presentations.
Note 3 - Income Tax Status
The Plan and the Trust created thereunder are intended to qualify under
Sections 401(a) and 501(a) of the Internal Revenue Code of 1986, as amended (the
Code) and the Plan includes a cash or deferred arrangement intended to meet the
requirements of Section 401(k) of the Code. The Internal Revenue Service issued
a favorable determination letter dated March 29, 1995 as to the Plan's qualified
status under the Code. Amounts contributed to and earned by the Plan are not
taxed to the employee until a distribution from the Plan is made. In addition,
any unrealized appreciation on any shares of common stock of the Company
distributed to an employee is not taxed until the time of disposition of such
shares. The Plan has been amended since receiving the determination letter.
However, the Plan Administrator believes the Plan is designed and is currently
operating in compliance with the Internal Revenue Code.
12
Note 4 - Administrative Expenses
Expenses are incurred at either the fund level or the Plan level. All
expenses incurred by the fund (commissions, management fees, ect.) are paid out
of investor assets and are therefore netted in unrealized
appreciation/depreciation of investments in the statement of changes in net
assets available for benefits. Loan administration expenses are included in
other expenses in the statement of changes in net assets available for benefits.
Commissions on the purchase of Engelhard Corporation stock incurred when such
purchases are made in the stock market are netted in unrealized
appreciation/depreciation of investments in the statement of changes in net
assets available for benefits. The Company pays all other plan expenses.
Note 5 - Concentrations of Credit Risk
Investments in securities are generally exposed to various risks, such as
interest rate, credit, and overall volatility risks.
Financial instruments which potentially subject the plan to concentration
of credit risk consists principally of investments in the Engelhard Corporation
Stock Fund. The plan limits the concentration of credit risk by allowing
particpants the opportunity to invest in an array of mutual funds offered by the
Vanguard Group.
Note 6 - Investments
Investments in the common stock of the Company are valued at the
readily-available, quoted market price as of the valuation date and investments
in Vanguard Funds are valued based on the quoted net asset value (redemption
value) of the respective investment fund as of the valuation date.
Note 7 - Related Party Transactions
For the 2000 plan year the Company transferred 42,713 treasury stock shares
(representing a contribution dollar amount of $766,946) to Vanguard to fund the
employer match. The number of shares transferred each month represented the
employer matching contribution divided by the closing market price on the day
the contribution was remitted.
Note 8 - Ommited Schedules and Information
The Plan has no commitments or leases in default, as defined by ERISA
Section 2520.103(b)(3)(E) for the year ended December 31, 2000.
13
Engelhard Corporation Savings Plan for Hourly Paid Employees
Schedule of Assets Held for Investment Purposes
at December 31, 2000
(C)Description of
(B)Identity of Investment Including
Issue, Borrower, Maturity Date, Rate of
(A) Lessor, or Interest, Collateral, Par (E)Current
Similiar Party or Maturity Value (D)Cost Value
- --- -------------- --------------------------- ----------- ------------
* Vanguard Engelhard Corporation
Company Stock Fund $ 9,039,970 $ 9,728,519 **
* Vanguard Fixed Income Fund 4,049,152 4,049,152 **
(Retirement Savings Trust)
* Vanguard Explorer Fund 572,885 530,703
* Vanguard Balanced Fund 2,466,736 2,631,655 **
(Asset Allocation Fund)
* Vanguard Equity Index Fund 3,628,784 3,903,156 **
(Growth and Income Portfolio)
* Vanguard International Growth Fund 471,326 461,196
* Vanguard Treasury Money Market Fund 159,248 159,248
* Vanguard Life Strategy Growth Fund 36,453 34,573
* Vanguard Prime Cap Fund 447,781 405,314
* Vanguard U.S. Growth Portfolio 154,718 106,500
* Vanguard Growth Fund 7,926 7,745
(Windsor Fund)
* Vanguard Windsor II Fund 21,837 22,723
* Vanguard Life Strategy Conservative 2,373 2,311
Growth Fund
* Vanguard Life Strategy Moderate 3,190 3,065
Growth Fund
* Vanguard Short Term Bond Fund 1,458 1,479
* Vanguard Small Cap Fund 29,781 25,173
*Promissory notes from Participants 2,014,216 2,014,216
having interest at rates of 8.75% to 10.50%
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Total $23,107,834 $24,086,728
=========== ===========
**Market value is greater than 5% of Net Assets.
*Represents party-in-interest
14
Engelhard Corporation Plan for
Hourly Employees
Schedule of Reportable Transactions*
Year Ended December 31, 2000
Identity of Party Description of Assets (include Purchase Selling Historical Cost Current Value
Involved interest rate and maturity in Price Price of Asset of Asset Historical
the case of a loan) on Transactions Gain(Loss)
- ----------------- ------------------------------ ---------- -------- --------------- ----------------- ----------
Vanguard Vanguard Asset Allocation Fund $ 844,087 $ 844,087
Vanguard Vanguard Asset Allocation Fund $ 571,450 $ 524,139 571,450 $ 47,311
Vanguard Vanguard Growth & Income 1,357,425 1,357,425
Vanguard Vanguard Growth & Income 830,300 702,243 830,300 128,057
Vanguard Vanguard Retir. Savings Trust 1,265,256 1,265,256
Vanguard Vanguard Retir. Savings Trust 609,324 609,324 609,324
N/A Engelhard Corp. Stock Fund 2,559,895 2,559,895
N/A Engelhard Corp. Stock Fund 1,062,342 1,154,547 1,062,342 (92,201)
*Transactions or a series of transactions in excess of 5% of the current value of the Plan's assets as of the beginning
of the plan year as defined in section 2520.103-6 of the Department of Labor Rules and Regulations for Reporting and
and Disclosure under ERISA.
15
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
As indpendent public accountants, we hereby consent to the incorporation by
reference of our report included in this Form 11-K into the Company's previously
filed Registration Statements.
File Nos.: 2-72830
2-81559
2-84477
2-89747
33-28540
33-37724
33-40365
33-40338
33-43934
33-65990
333-02643
333-71439
333-39570
/s/ ARTHUR ANDERSEN L.L.P.
New York, New York
June 26, 2001
16
Signature
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Form 11-K
Engelhard Corporation Savings Plan for Hourly Paid Employees
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Pension and Employee Benefit Plans Committee of Engelhard Corporation has
duly caused this Form 11-K to be signed on its behalf by the undersigned,
thereunto duly authorized, in Iselin, New Jersey on this 26th day of June,
2001.
/s/ John C. Hess
-------------
By: John C. Hess
Secretary to the Committee and
Vice President of Human Resources
17