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 (Fee Required)
For The Year Ended December 31, 1994
or
[ ] Transition Report Pursuant to Section 15(d) of the
Securities Exchange Act of 1934 (No Fee Required)
For The Transition Period from ________ to ________
Commission File Number 00107923
HANDLEMAN COMPANY SALARY DEFERRAL
AND STOCK PLAN
--------------
(Full title of the Plan)
HANDLEMAN COMPANY
-----------------
(Name of issuer of the securities held pursuant to the Plan)
500 Kirts Boulevard
Troy, Michigan 48084
--------------------
(Address of principal executive offices)
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The following financial statements and exhibits are presented pursuant to
Section 15(d) of the Securities Exchange Act of 1934:
Page
------------
(a) Financial Statements:
Report of Independent Accountants I-1
Statement of Assets Available for Benefits
as of December 31, 1994 and 1993 I-2
Statement of Changes in Assets Available for
Benefits for the year ended December 31, 1994 I-3
Notes to Financial Statements I-4 to I-10
Item 27a -- Schedule of Assets Held for Investment
Purposes as of December 31, 1994 I-11
Item 27d -- Schedule of Reportable Transactions I-12 to I-13
for the year ended December 31, 1994
Schedules:
Schedule I, II and III have been omitted because
the required information is shown in the financial
statements or notes thereto, or in another schedule
Exhibit
Number
------------
(b) 1. Consent of Independent Accountants with
respect to their report on their audit
of the financial statements of the Handleman
Company Salary Deferral and Stock Plan for
the years ended December 31, 1994 and 1993 28.1
SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons who administer the Plan) have duly caused this annual
report to be signed by the undersigned thereunto duly authorized.
HANDLEMAN COMPANY SALARY DEFERRAL AND STOCK PLAN
By: /s/ Richard J. Morris
------------------------------------------------
Richard J. Morris, Senior Vice President/Finance
Handleman Company
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HANDLEMAN COMPANY
SALARY DEFERRAL AND STOCK PLAN
INDEX TO FINANCIAL STATEMENTS
-----------------------------
PAGES
-----
Report of Independent Accountants 4
Financial Statements:
Statement of Assets Available for
Benefits as of December 31, 1994 and 1993 5
Statement of Changes in Assets Available
for Benefits for the year ended
December 31, 1994 6
Notes to Financial Statements 7-13
Supplemental Schedules:
Item 27a - Schedule of Assets Held for
Investment Purposes as of December 31, 1994 14
Item 27d - Schedule of Reportable Transactions
for the year ended December 31, 1994 15-16
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REPORT OF INDEPENDENT ACCOUNTANTS
To the Administrative Committee of the Handleman Company Salary Deferral and
Stock Plan:
We have audited the accompanying statement of assets available for benefits of
the Handleman Company Salary Deferral and Stock Plan as of December 31, 1994 and
1993, and the related statement of changes in assets available for benefits for
the year ended December 31, 1994. These financial statements are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with 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 financial statements referred to above present fairly, in
all material respects, the assets available for benefits of the Handleman
Company Salary Deferral and Stock Plan as of December 31, 1994 and 1993, and the
changes in assets available for benefits for the year ended December 31, 1994,
in conformity with generally accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules on pages 14
through 16 of this Form 11-K are presented for the purpose of additional
analysis and are not a required part of the basic financial statements but are
supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. The supplemental schedules have been subjected to the
auditing procedures applied in the audits of the basic financial statements and,
in our opinion, are fairly stated in all material respects in relation to the
basic financial statements taken as a whole.
Coopers & Lybrand L.L.P.
Detroit, Michigan
June 23, 1995
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HANDLEMAN COMPANY
SALARY DEFERRAL AND STOCK PLAN
STATEMENT OF ASSETS AVAILABLE FOR BENEFITS
December 31. 1994 and 1993
--------------------------
1994 1993
---------- -----------
ASSETS:
Accrued dividends and interest $ 20,373 $ 16,579
Employee contributions receivable 47,443 62,092
Employer contribution receivable 129,328 156,748
Cash 661 -
Investments at Estimated Fair Value
-----------------------------------
NBD Bank Investments:
Employee Benefit Money Market Fund (1),
(880,362 and 729,638 shares at
December 31, 1994 and 1993,
respectively) 880,362 729,638
Stable Asset Income Fund (2), (3,776
and 3,614 shares at December 31,
1994 and 1993, respectively) 708,381 637,047
Investments at Fair Value as Determined
by Quoted Market Price
---------------------------------------
NBD Bank Investment:
Woodward Equity Index Fund (3), (140,501
and 97,355 shares at December 31, 1994
and 1993, respectively) 1,496,485 1,085,313
Handleman Company common stock (4), (146,219
shares and 139,668 shares at December 31,
1994 and 1993, respectively) 1,663,245 1,850,601
Loans to participants at rates of 9.75%
to 10.0%, maturing in 6 months to 5 years 36,082 34,782
---------- ----------
ASSETS AVAILABLE FOR BENEFITS $4,982,360 $4,572,800
========== ==========
(1) The Plan's cost of the investment in the Employee Benefit Money Market Fund
was $880,362 and $729,638 as of December 31, 1994 and 1993, respectively.
(2) The Plan's cost of the investment in the Stable Asset Income Fund was
$645,582 and $609,200 as of December 31, 1994 and 1993, respectively.
(3) The Plan's cost of the investment in the Woodward Equity Index Fund was
$1,477,441 and $1,002,607 as of December 31, 1994 and 1993, respectively.
(4) The Plan's cost of the common stock was $1,807,203 and $1,759,670 as of
December 31, 1994 and 1993, respectively.
The accompanying notes are an integral part of the financial statements.
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HANDLEMAN COMPANY
SALARY DEFERRAL AND STOCK PLAN
STATEMENT OF CHANGES IN ASSETS
AVAILABLE FOR BENEFITS
for the year ended December 31, 1994
------------------------------------
1994
----------
Additions:
Employer contributions $ 86,441
Employee authorized contributions 689,604
Dividend income 100,840
Interest income 41,160
Other 2,138
----------
Total additions 520,183
Deductions:
Participants' benefits 262,789
Net depreciation in fair value
of investments 241,447
Other 6,387
----------
Net increase 409,560
Assets available for benefits,
beginning of year 4,572,800
----------
Assets available for benefits,
end of year $4,982,360
==========
The accompanying notes are an integral part of the financial statements.
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HANDLEMAN COMPANY
SALARY DEFERRAL AND STOCK PLAN
NOTES TO FINANCIAL STATEMENTS
-----------------------------
1. Description of Plan
-------------------
The following description of the Handleman Company Salary Deferral and Stock
Plan (the "Plan") provides only general information. Participants should
refer to the Plan Document for a complete description of the Plan's
provisions.
General
The Plan is a defined contribution plan which includes salary deferral and
employee stock ownership provisions. The Plan covers all employees of the
Handleman Company (the "Company") and subsidiaries and affiliates that have
adopted the Plan who have one year of service and who are not covered by
collective bargaining agreements (unless they specifically refer to the
Plan). The Plan is subject to the provisions of the Employee Retirement
Income Security Act of 1974 (ERISA).
Contributions
Employee authorized contributions of tax deferred compensation are limited
in any one year to the lesser of twenty percent of employee compensation or
$9,240 in 1994. Effective July 1, 1995, each participant's maximum elective
deferral has been reduced to fifteen percent. In addition, total
contributions by highly compensated employees cannot exceed specific
percentage limitations of the aggregate contributions of all other employees
as set forth in the Internal Revenue Code.
Prior to July 1, 1995, the Company may contribute to the Plan at the
discretion of its Board of Directors. Effective July 1, 1995, the Plan has
been amended to provide for a Company matching contribution equal to 25
percent of the elective contribution made by each participant, up to six
percent of such participant's compensation, to be invested in Company stock.
Plan Assets
To the extent practicable, Plan assets related to the Company stock portion
of the Plan are invested in Company stock. Employees may direct investment
of employee authorized contributions to the Plan into various investment
funds which are established by the Company from time to time.
Participant Accounts
Each participant's account is credited with employee authorized
contributions, in addition to an allocation of any Company contribution and
Plan earnings, net of Plan expenses. A participant must be employed by the
Company on the last day of the Company's fiscal year to receive the
allocation of Company contributions.
Salary Deferral Portion - Company contributions to the Salary Deferral
portion of the Plan are allocated to participants who are eligible as
defined by the Plan. There are certain limitations on the amounts which
can be allocated.
Stock Ownership Portion - Company contributions are allocated equally
among the stock accounts of eligible participants (as defined by the
Plan), not to exceed 10 shares in any one year or 20 shares, in total, per
stock account. Effective May 2, 1994, the Plan was amended to discontinue
Company contributions for employees hired after April 30, 1994.
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HANDLEMAN COMPANY
SALARY DEFERRAL AND STOCK PLAN
NOTES TO FINANCIAL STATEMENTS, Continued
-----------------------------
1. Description of Plan, continued
Loans to Participants
The Plan allows participants to borrow against their account balances. The
maximum loan to any participant is the lesser of 50% of the participant's
non-forfeitable salary deferral account balance or $50,000.
Plan Expenses
Expenses of the Trustee and Administrative Committee are charged to
participant accounts unless the Company at its discretion elects to pay
these expenses. The Company paid such expenses for the year ended
December 31, 1994.
Vesting
Participants are fully vested in amounts credited to their accounts.
Effective July 1, 1995, the Plan has been amended to include a graded
vesting schedule for matching contributions of 20 percent for each year of
service, resulting in 100 percent vesting after five years of service.
Payment of Benefits
On termination of service, a participant will be eligible to receive the
plan assets allocated to the participant's account and which have vested or
an equivalent amount in cash. At December 31, 1994 and 1993, $236,665 and
$206,075, respectively, were recorded as benefits payable on the Form 5500.
2. Summary of Accounting Policies
------------------------------
Company Contributions
Company contributions are accrued in the plan year to which the
contributions relate. Company contributions are in the form of Company
stock.
Investments
At the end of the plan year, Company stock is valued at the closing market
price of the stock on the last business day of the Plan's year. The Stable
Asset Income Fund, Woodward Equity Index Fund and Employee Benefit Money
Market Fund are reflected at fair values at the date of the balance sheet,
as reported by the Plan's investment custodian, NBD Bank.
The basis on which cost is determined to compute realized gains or losses
from sales of investments, other than the Company stock, is average cost.
The basis on which cost is determined for the Company stock is specific
identification.
The Plan presents in the statement of changes in assets the net appreciation
(depreciation) in fair value of investments which consists of the realized
gains or losses and the unrealized appreciation (depreciation) on those
investments.
For purposes of determining Company contributions, Company stock received as
the Company contribution is valued at the closing price on the day the
contribution is made.
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HANDLEMAN COMPANY
SALARY DEFERRAL AND STOCK PLAN
NOTES TO FINANCIAL STATEMENTS, Continued
-----------------------------
2. Summary of Accounting Policies, continued
------------------------------
Dividend Income
Dividend income is recognized on the ex-dividend date. Dividend income on
Company stock for the year ended December 31, 1994 was $52,392.
3. Investments
-----------
During the Plan year ended December 31, 1994, the Plan's investments
(including investments bought and sold, as well as held during the year)
depreciated (appreciated) in value by $241,447 as follows:
Investments at Estimated Fair Value
------------------------------------
NBD Bank Investment:
Stable Asset Income Fund $(41,468)
Investments at Fair Value Determined
by Quoted Market Price
------------------------------------
NBD Bank Investment:
Woodward Equity Index Fund 17,231
Handleman Company Common Stock 265,684
--------
$241,447
========
4. Fund Information
----------------
The following is a summary of assets for each investment fund option for the
years ended December 31, 1994 and 1993 and of changes by investment fund for
the year ended December 31, 1994. Funds with net assets of less than 5
percent of the Plan's total assets have been combined with funds having
similar investment objectives.
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HANDLEMAN COMPANY
SALARY DEFERRAL AND STOCK PLAN
ALLOCATION OF ASSETS AND LIABILITIES TO INVESTMENT PROGRAMS
DECEMBER 31, 1994
-----------------
NON-PARTICIPANT
DIRECTED PARTICIPANT-DIRECTED
--------------- ------------------------------------------------------------
HANDLEMAN EQUITY MONEY MARKET FIXED
ESOP FUND INDEX FUND FUND INCOME FUND OTHER FUNDS TOTAL
--------------- ---------- ------------ ----------- ----------- ----------
ASSETS:
Accrued dividends and interest $ 13,198 $ 109 $ 4,000 $ 30 $ 3,036 $ 20,373
Employee contributions receivable 26,158 8,403 8,132 4,750 47,443
Employer contribution receivable 129,328 - - - - 129,328
Cash - 479 46 73 63 661
NBD Bank Investments:
Employee Benefit Money
Market Fund 2,279 - 843,578 32 34,473 880,362
Stable Asset Income Fund - - - 708,381 - 708,381
Woodward Equity Index Fund - 1,496,485 - - - 1,496,485
Handleman Company common stock
(146,219 shares) 1,363,731 - - - 299,514 1,663,245
Loans to participants 340 - - - 35,742 36,082
---------- ---------- -------- -------- -------- ----------
ASSETS AVAILABLE FOR BENEFITS $1,508,876 $1,523,231 $856,027 $716,648 $377,578 $4,982,360
========== ========== ======== ======== ======== ==========
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HANDLEMAN COMPANY
SALARY DEFERRAL AND STOCK PLAN
ALLOCATION OF ASSETS AND LIABILITIES TO INVESTMENT PROGRAMS
DECEMBER 31, 1993
-----------------
NON-PARTICIPANT
DIRECTED PARTICIPANT-DIRECTED
--------------- ------------------------------------------------------------
HANDLEMAN EQUITY MONEY MARKET FIXED
ESOP FUND INDEX FUND FUND INCOME FUND OTHER FUNDS TOTAL
--------------- ---------- ------------ ----------- ----------- ----------
ASSETS:
Accrued dividends and interest $ 11,770 $ 24 $ 1,943 $ 9 $ 2,833 $ 16,579
Employee contributions receivable - 31,066 12,388 10,733 7,905 62,092
Employer contribution receivable 156,748 - - - - 156,748
NBD Bank Investments:
Employee Benefit Money
Market Fund 638 - 701,047 166 27,787 729,638
Stable Asset Income Fund - - - 637,047 - 637,047
Woodward Equity Index Fund - 1,085,313 - - - 1,085,313
Handleman Company common stock
(139,668 shares) 1,520,802 - - - 329,799 1,850,601
Loans to participants 949 - - - 33,833 34,782
---------- ---------- -------- -------- -------- ----------
ASSETS AVAILABLE FOR BENEFITS $1,690,907 $1,116,403 $715,378 $647,955 $402,157 $4,572,800
========== ========== ======== ======== ======== ==========
I-8
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HANDLEMAN COMPANY
SALARY DEFERRAL AND STOCK PLAN
ALLOCATION OF INCOME AND CHANGES IN EQUITY TO INVESTMENT PROGRAMS
FOR THE YEAR ENDED DECEMBER 31, 1994
------------------------------------
NON-PARTICIPANT
DIRECTED PARTICIPANT-DIRECTED
--------------- ------------------------------------------------------------
HANDLEMAN EQUITY MONEY MARKET FIXED
ESOP FUND INDEX FUND FUND INCOME FUND OTHER FUNDS TOTAL
--------------- ---------- ------------ ----------- ----------- ----------
Additions:
Employer contributions $ 86,441 $ 86,441
Employee authorized
contributions - $ 378,949 $123,865 $118,378 $ 68,412 689,604
Dividend Income 52,392 36,762 - - 11,686 100,840
Interest Income 120 1,151 34,835 603 4,451 41,160
Other 17 - - - 2,121 2,138
---------- ---------- -------- -------- -------- ----------
Total additions 138,970 416,862 158,700 118,981 86,670 920,183
Deductions:
Participants' benefits 108,111 43,727 31,429 64,407 15,115 262,789
Net depreciation (appreciation)
in fair value of investments 212,890 17,231 - (41,468) 52,794 241,447
Other - - - - 5,280 5,280
Transfers between funds - (50,924) (13,378) 27,349 38,060 1,107
---------- ---------- -------- -------- -------- ----------
Net increase (decrease) (182,031) 406,828 140,649 68,693 (24,579) 409,560
Assets available for benefits,
beginning of year 1,690,907 1,116,403 715,378 647,955 402,157 4,572,800
---------- ---------- -------- -------- -------- ----------
Assets available for benefits,
end of year $1,508,876 $1,523,231 $856,027 $716,648 $377,578 $4,982,360
========== ========== ======== ======== ======== ==========
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HANDLEMAN COMPANY
SALARY DEFERRAL AND STOCK PLAN
NOTES TO FINANCIAL STATEMENTS, Continued
-----------------------------
5. Plan Termination
----------------
Although it has not expressed any intent to do so, the Company has the
right under the Plan to discontinue its contributions at any time and
to terminate the Plan subject to the provisions of ERISA.
6. Tax Status
----------
The plan administrator has received a favorable determination letter from
the Internal Revenue Service stating the Plan as amended through
September, 1994 constitutes a qualified trust under Section 104(a) of the
Internal Revenue Code and is therefore exempt from federal income taxes
under provisions of Section 501(a).
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HANDLEMAN COMPANY
SALARY DEFERRAL AND STOCK PLAN
Form 5500
Calendar Plan year 1994
ITEM 27a, SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
---------------------------------------------------------
(a) (b) (c) (d) (e)
Asterisk Identity of
denotes party- issue, borrower Description
in-interest to lessor, or of Current
the Plan similar party Investment Cost Value
- -------------- --------------- -------------------- ---------- ----------
Reporting Criteria I:
- --------------------
Investment assets held by
the Plan on the last day
of the Plan year
Employee Benefit Cash Equivalents $ 880,362 $ 880,362
* Money Market
Fund
* Stable Asset Bond Fund $ 645,582 $ 708,381
Income Fund
* Woodward Equity Common Stock $1,477,441 $1,496,485
Index Fund Fund
* Handleman Common $1,807,203 $1,663,245
Company Stock
Common Stock $.01 par value
* Loans to Interest rates of -0- $ 36,082
Participants 9.75% to 10% and
maturing in 6 months
to 5 years
Reporting Criteria II:
- ---------------------
Investment assets acquired
and disposed of during the
Plan year.
None
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HANDLEMAN COMPANY
SALARY DEFERRAL AND STOCK PLAN
ITEM 27d--SCHEDULE OF REPORTABLE TRANSACTIONS
for the year ended December 31, 1994
------------------------------------
Current Value
Purchase Selling Cost of Asset on Net Gain
Identity of Party Involved Description of Assets Price Price of Asset Transaction Date or (Loss)
- -------------------------- --------------------- -------- ------- -------- ---------------- ---------
REPORTING CRITERION I: Any transaction within the plan year,
- --------------------- with respect to any plan asset, involving
an amount in excess of five percent of
the current value of plan assets.
Reviewed consolidated and individual
statements noting no individual
transactions exceeded the floor of
228,640.
None.
REPORTING CRITERION II: Any series of transactions (other than
- ---------------------- transactions with respect to securities)
within the plan year with or in
conjunction with the same person which,
when aggregated, regardless of the
category of asset and the gain or loss
of any transaction, involves an amount
in excess of five percent of the current
value of plan assets.
None.
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HANDLEMAN COMPANY
SALARY DEFERRAL AND STOCK PLAN
ITEM 27d--SCHEDULE OF REPORTABLE TRANSACTIONS, Concluded
for the year ended December 31, 1994
------------------------------------
Current Value
Purchase Selling Cost of Asset on Net Gain
Identity of Party Involved Description of Assets Price Price of Asset Transaction Date or (Loss)
- -------------------------- --------------------- -------- ------- -------- ---------------- ---------
REPORTING CRITERION III: Any transaction within the plan year
- ----------------------- involving securities of the same issue if
within the plan year any series of
transactions with respect to such
securities, when aggregated, involves an
amount in excess of five percent of the
current value of plan assets.
NBD Bank, N.A. Employee Benefit Money Market Fund
348 purchases - 1,170,855 units $1,170,855 $1,170,855 $1,170,855
193 sales - 1,027,885 units $1,027,885 1,027,885 1,027,885
NBC Bank, N.A. Woodward Equity Index Fund
35 purchases - 50,854 units 554,738 554,738 554,738
REPORTING CRITERION IV: Any transaction within the plan year
- ---------------------- with respect to securities with or in
conjunction with a person if any prior
or subsequent single transaction within
the plan year with such person with
respect to securities exceeds five
percent of the current value of plan
assets.
None.
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