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, 1999
or
TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
- --- SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from _____ to _____
------------------
ENGELHARD CORPORATION SAVINGS PLAN FOR HOURLY PAID EMPLOYEES
------------------------------------------------------------
(Full title of the plan)
ENGELHARD CORPORATION
---------------------
(Exact name of issuer as specified in its charter)
101 WOOD AVENUE, ISELIN, NEW JERSEY 08830
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
DELAWARE 22-1586002
- ------------------------------- ---------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
1
Engelhard Corporation Savings Plan for Hourly Paid Employees
Table of Contents
Description Page
----------- ----
Report of Independent Accountants 3-4
Statements of Financial Condition 5-9
at December 31, 1999 and 1998
Statements of Income and Changes in 10-16
Plan Equity for each of the three years
in the period ended December 31, 1999
Notes to Financial Statements 17-24
Supplemental Schedule
Schedule of Investments at December 31, 1999 and 1998 25-26
Consent of Independent Public Accountants 27-28
2
Report of Independent Accountants
---------------------------------
To the Pension and Employee Benefit Committee of the Engelhard Corporation:
We have audited the accompanying Statement of Financial Condition of the
Engelhard Corporation Savings Plan for Hourly Paid Employees (the "Plan") as of
December 31, 1999 and the related Statement of Income and Changes in Plan Equity
for the year ended December 31, 1999. 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 audit.
We conducted our audit in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial condition of the Plan as of December 31,
1999, and the income and changes in plan equity for the year ended December 31,
1999, in conformity with accounting principles generally accepted in the United
States.
Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental Schedule of Investments
is presented for purposes of additional analysis and is not a required part of
the basic financial statements but is 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
schedule is the responsibility of the Plan's management. The supplemental
schedule has been subjected to the auditing procedures applied in the audit of
the basic financial statements and, in our opinion, is 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 20, 2000
3
Report of Independent Accountants
To the Pension and Employee Benefit Plans Committee of Engelhard Corporation:
In our opinion, the Statement of Financial Condition as of December 31,
1998 and the related Statements of Income and Changes in Plan Equity for each of
the two years in the period ended December 31, 1998 listed on the Table of
Contents on page 2 of this Form 11-K present fairly, in all material respects,
the financial condition and income and changes in plan equity of the Engelhard
Corporation Savings Plan for Hourly Paid Employees at December 31, 1998 and for
each of the two years in the period ended December 31, 1998, in conformity with
accounting principles generally accepted in the United States. 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 of these statements in accordance with auditing standards
generally accepted in the United States, which 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,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
Our audits were performed for the purpose of forming an opinion on the
basic financial statements taken as a whole. The supplemental schedule listed in
the Table of Contents on page 2 of this Form 11-K is presented for the purpose
of additional analysis and is not a required part of the basic financial
statements but is 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. This supplemental schedule is the
responsibility of the Plan's management. The supplemental schedule as of
December 31, 1998 has been subjected to the auditing procedures applied in the
audits of the basic financial statements and, in our opinion, is fairly stated
in all material respects in relation to the basic financial statements taken as
a whole.
We have not audited the financial statements and the supplemental schedule
of the Engelhard Corporation Savings Plan for Hourly Paid Employees for any
period subsequent to December 31, 1998.
PRICEWATERHOUSECOOPERS
New York, New York
June 18, 2000
4
Engelhard Corporation Savings Plan for Hourly Paid Employees
Statement of Financial Condition
at December 31, 1999
(Page 1 of 3)
Company Stock Fixed Income Explorer Balanced Equity Index
Fund Fund Fund Fund Fund
------------- ------------ -------- ---------- ------------
Assets:
- ------
Investments, at fair value
(combined cost of $17,037,433) $7,398,731 $3,393,220 $292,175 $2,381,911 $3,958,425
Contributions receivable:
Participants 98,613 64,447 9,252 62,159 94,108
Engelhard Corporation 72,486 - - - -
Promissory notes from participants - - - - -
---------- ---------- -------- ---------- ----------
Total assets $7,569,830 $3,457,667 $301,427 $2,444,070 $4,052,533
========== ========== ======== ========== ==========
Plan equity:
Plan equity $7,569,830 $3,457,667 $301,427 $2,444,070 $4,052,533
========== ========== ======== ========== ==========
See Accompanying Notes to Financial Statements
5
Engelhard Corporation Savings Plan for Hourly Paid Employees
Statement of Financial Condition
at December 31, 1999
(Page 2 of 3)
Treasury Life Strategy
Int'l Growth Money Market Loan Growth
Fund Fund Fund Fund
------------- ------------ ---------- -------------
Assets:
- ------
Investments, at fair value
(combined cost of $17,037,433) $470,778 $156,620 $ - $18,272
Contributions receivable:
Participants 12,841 6,944 - 396
Engelhard Corporation - - - -
Promissory notes from participants - - 1,864,621 -
------- -------- ---------- -------
Total assets $483,619 $163,564 $1,864,621 $18,668
======== ======== ========== =======
Plan equity:
Plan equity $483,619 $163,564 $1,864,621 $18,668
======== ======== ========== =======
See Accompanying Notes to Financial Statements
6
Engelhard Corporation Savings Plan for Hourly Paid Employees
Statement of Financial Condition
at December 31, 1999
(Page 3 of 3)
U.S. Windsor Windsor II
Prime Cap Growth Growth Growth
Fund Fund Fund Fund Combined
-------- ------ ------- ---------- --------
Assets:
- -------
Investments, at fair value
(combined cost of $17,037,433) $65,217 $14,573 $409 $4,701 $18,155,032
Contributions receivable:
Participants 2,499 1,405 281 579 353,524
Engelhard Corporation - - - - 72,486
Promissory notes from participants - - - - 1,864,621
------- ------- ---- ------ -----------
Total assets $67,716 $15,978 $690 $5,280 $20,445,663
======= ======= ==== ====== ===========
Plan equity:
Plan equity $67,716 $15,978 $690 $5,280 $20,445,663
======= ======= ==== ====== ===========
See Accompanying Notes to Financial Statements
7
Engelhard Corporation Savings Plan for Hourly Paid Employees
Statement of Financial Condition
at December 31, 1998
(Page 1 of 2)
Company Stock Fixed Income Explorer Balanced Equity Index
Fund Fund Fund Fund Fund
------------- ------------ -------- --------- ------------
Assets:
- ------
Investments, at fair value
(combined cost of $13,462,226) $6,333,511 $2,884,869 $139,009 $1,982,676 $2,551,055
Contributions receivable:
Participants 100,948 59,123 9,173 55,972 83,807
Engelhard Corporation 53,907 - - - -
Promissory notes from participants - - - - -
---------- ---------- -------- ---------- ----------
Total assets $6,488,366 $2,943,992 $148,182 $2,038,648 $2,634,862
========== ========== ======== ========== ==========
Plan equity:
Plan equity $6,488,366 $2,943,992 $148,182 $2,038,648 $2,634,862
========== ========== ======== ========== ==========
See Accompanying Notes to Financial Statements
8
Engelhard Corporation Savings Plan for Hourly Paid Employees
Statement of Financial Condition
at December 31, 1998
(Page 2 of 2)
Treasury
Int'l Growth Money Market Loan
Fund Fund Fund Combined
------------- ------------ ----------- -----------
Assets:
- ------
Investments, at fair value
(combined cost of $13,462,226) $374,434 $61,956 $ - $14,327,510
Contributions receivable:
Participants 14,104 4,499 - 327,626
Engelhard Corporation - - - 53,907
Promissory notes from participants - - 1,342,584 1,342,584
------- ------- ---------- -----------
Total assets $388,538 $66,455 $1,342,584 $16,051,627
======== ======= ========== ===========
Plan equity:
Plan equity $388,538 $66,455 $1,342,584 $16,051,627
======== ======= ========== ===========
See Accompanying Notes to Financial Statements
9
Engelhard Corporation Savings Plan for Hourly Paid Employees
Statement of Income and Changes in Plan Equity
for the Year Ended December 31, 1999
(Page 1 of 3)
Company Stock Fixed Income Explorer Balanced Equity Index
Fund Fund Fund Fund Fund
------------- ------------ ---------- ---------- ------------
Net investment income:
Dividends $ 134,338 $ - $ 31,481 $ 171,148 $ 163,929
Interest - 184,187 - - -
---------- ---------- -------- ---------- ----------
134,338 184,187 31,481 171,148 163,929
Contributions and other receipts:
Participants 953,292 588,932 90,849 591,395 916,496
Engelhard Corporation 594,754 - - - -
---------- ---------- -------- ---------- ----------
1,548,046 588,932 90,849 591,395 916,496
Net realized gain (loss) on disposition
of investments (4,408) - 5,662 60,022 103,403
Unrealized appreciation (depreciation)
of investments (221,345) - 35,971 (122,168) 493,351
Distributions (295,727) (208,631) (26,099) (71,010) (145,802)
Transfers (79,440) (50,813) 15,381 (223,965) (113,706)
---------- ---------- -------- ---------- ----------
Change in net assets 1,081,464 513,675 153,245 405,422 1,417,671
Plan equity, beginning of year 6,488,366 2,943,992 148,182 2,038,648 2,634,862
---------- ---------- -------- ---------- ----------
Plan equity, end of year $7,569,830 $3,457,667 $301,427 $2,444,070 $4,052,533
========== ========== ======== ========== ==========
See Accompanying Notes to Financial Statements
10
Engelhard Corporation Savings Plan for Hourly Paid Employees
Statement of Income and Changes in Plan Equity
for the Year Ended December 31, 1999
(Page 2 of 3)
Life
Treasury Strategy
Int'l Growth Money Market Loan Growth
Fund Fund Fund Fund
------------- ------------ ---------- -------------
Net investment income:
Dividends $ 23,029 $ 4,484 $ - $ 376
Interest - - 127,440 -
-------- -------- ---------- -------
23,029 4,484 127,440 376
Contributions and other receipts:
Participants 133,125 56,540 2,238 1,295
Engelhard Corporation - - - -
-------- -------- ---------- -------
133,125 56,540 2,238 1,295
Net realized gain (loss) on disposition
of investments 11,774 - - -
Unrealized appreciation (depreciation)
of investments 61,240 - - 997
Distributions (38,430) - (33,864) -
Transfers (95,657) 36,085 426,223 16,000
-------- -------- ---------- -------
Change in net assets 95,081 97,109 522,037 18,668
Plan equity, beginning of year 388,538 66,455 1,342,584 -
-------- -------- ---------- -------
Plan equity, end of year $483,619 $163,564 $1,864,621 $18,668
======== ======== ========== =======
See Accompanying Notes to Financial Statements
11
Engelhard Corporation Savings Plan for Hourly Paid Employees
Statement of Income and Changes in Plan Equity
for the year Ended December 31, 1999
(Page 3 of 3)
U.S.
Prime Cap Growth Windsor Windsor II
Fund Fund Fund Fund Combined
--------- ------ ------- ---------- --------
Net investment income:
Dividends $ 4,216 $ 708 $ 49 $ 485 $ 534,243
Interest - - - - 311,627
------- ------- ---- ------ -----------
4,216 708 49 485 845,870
Contributions and other receipts:
Participants 5,602 2,865 689 889 3,344,207
Engelhard - - - - 594,754
------- ------- ---- ------ -----------
5,602 2,865 689 889 3,938,961
Net realized gain (loss) on disposition)
of investments - - - - 176,453
Unrealized appreciation (depreciation)
of investments 4,198 565 (48) (446) 252,315
Distributions - - - - (819,563)
Transfers 53,700 11,840 - 4,352 -
------- ------- ---- ------ -----------
Change in net assets 67,716 15,978 690 5,280 4,394,036
Plan equity, beginning of year - - - - 16,051,627
------- ------- ---- ------ -----------
Plan equity, end of year $67,716 $15,978 $690 $5,280 $20,445,663
======= ======= ==== ====== ===========
See Accompanying Notes to Financial Statements
12
Engelhard Corporation Savings Plan for Hourly Paid Employees
Statement of Income and Changes in Plan Equity
for the Year Ended December 31, 1998
(Page 1 of 2)
Company Stock Fixed Income Explorer Balanced Equity Index
Fund Fund Fund Fund Fund
------------- ------------ ---------- ---------- ------------
Net investment income:
Dividends $ 115,818 $ - $ 1,214 $ 145,694 $ 120,562
Interest - 168,898 - - -
---------- ---------- ------- ---------- ----------
115,818 168,898 1,214 145,694 120,562
Contributions and other receipts:
Participants 1,035,283 595,303 81,677 501,917 740,980
Engelhard Corporation 512,260 - - - -
---------- ---------- ------- ---------- ----------
1,547,543 595,303 81,677 501,917 740,980
Net realized gain (loss) on disposition
of investments 19,977 - (896) 58,381 92,694
Unrealized appreciation (depreciation)
of investments 701,889 - 7,404 167,743 245,457
Distributions (326,478) (252,340) (1,209) (50,823) (87,374)
Transfer to Attapulgus Plan (812,283) (89,698) (1,236) (73,367) (149,481)
Transfers (146,527) (246,797) 23,605 (12,410) 22,948
---------- ---------- ------- ---------- ----------
Change in net assets 1,099,939 175,366 110,559 737,135 985,786
Plan equity, beginning of year 5,388,427 2,768,626 37,623 1,301,513 1,649,076
---------- ---------- ------- ---------- ----------
Plan equity, end of year $6,488,366 $2,943,992 $148,182 $2,038,648 $2,634,862
========== ========== ======== ========== ==========
See Accompanying Notes to Financial Statements
13
Engelhard Corporation Savings Plan for Hourly Paid Employees
Statement of Income and Changes in Plan Equity
for the Year Ended December 31, 1998
(Page 2 of 2)
Treasury
Int'l Growth Money Market Loan
Fund Fund Fund Combined
------------- ------------ ---------- ----------
Net investment income:
Dividends $ 7,428 $ 2,197 $ - $ 392,913
Interest - - 81,325 250,223
-------- ------- -------- -----------
7,428 2,197 81,325 643,136
Contributions and other receipts:
Participants 138,910 36,692 418 3,131,180
Engelhard Corporation - - - 512,260
-------- ------- -------- -----------
138,910 36,692 418 3,643,440
Net realized gain (loss) on disposition
of investments (2,987) - - 167,169
Unrealized appreciation (depreciation)
of investments 36,942 - - 1,159,435
Distributions (12,941) - (72,097) (803,262)
Transfer to Attapulgus Plan - - - (1,126,065)
Transfers 2,217 (1,126) 358,090 -
-------- ------- -------- -----------
Change in net assets 169,569 37,763 367,736 3,683,853
Plan equity, beginning of year 218,969 28,692 974,848 12,367,774
-------- ------- -------- -----------
Plan equity, end of year $388,538 $66,455 $1,342,584 $16,051,627
======== ======= ========== ===========
See Accompanying Notes to Financial Statements
14
Engelhard Corporation Savings Plan for Hourly Paid Employees
Statement of Income and Changes in Plan Equity
for the Year Ended December 31, 1997
(Page 1 of 2)
Company Stock Fixed Income Explorer Balanced Equity Index
Fund Fund Fund Fund Fund
------------- ------------ ---------- ---------- ------------
Net investment income:
Dividends $ 93,111 $ - $ 3,022 $ 95,529 $182,975
Interest - 148,198 - - -
---------- ---------- ------- -------- --------
93,111 148,198 3,022 95,529 182,975
Contributions and other receipts:
Participants 1,348,868 654,435 36,572 351,546 442,516
Engelhard Corporation 474,449 - - - -
---------- ---------- ------- -------- --------
1,823,317 654,435 36,572 351,546 442,516
Net realized gain on disposition
of investments 16,019 - 3,134 27,519 32,514
Unrealized appreciation (depreciation)
of investments (649,382) - (957) 116,502 134,772
Distributions (187,096) (117,930) (1,571) (37,724) (58,578)
Transfers (72,533) (147,031) (26,075) (31,268) 30,293
---------- ---------- ------- -------- --------
Change in net assets 1,023,436 537,672 14,125 522,104 764,492
Plan equity, beginning of year 4,364,991 2,230,954 23,498 779,409 884,584
---------- ---------- ------- -------- --------
Plan equity, end of year $5,388,427 $2,768,626 $37,623 $1,301,513 $1,649,076
========== ========== ======= ========== ==========
See Accompanying Notes to Financial Statements
15
Engelhard Corporation Savings Plan for Hourly Paid Employees
Statement of Income and Changes in Plan Equity
for the Year Ended December 31, 1997
(Page 2 of 2)
Treasury
Int'l Growth Money Market Loan
Fund Fund Fund Combined
------------- ------------ ---------- ----------
Net investment income:
Dividends $ 8,828 $ 894 $ - $ 384,359
Interest - - 75,520 223,718
------- ------ -------- ----------
8,828 894 75,520 608,077
Contributions and other receipts:
Participants 116,654 15,645 - 2,966,236
Engelhard Corporation - - - 474,449
------- ------ -------- ----------
116,654 15,645 - 3,440,685
Net realized gain on disposition
of investments 1,005 - - 80,191
Unrealized appreciation (depreciation)
of investments (12,244) - - (411,309)
Distributions (9,876) - (18,240) (431,015)
Transfers 25,080 6,330 215,204 -
------- ------ -------- ----------
Change in net assets 129,447 22,869 272,484 3,286,629
Plan equity, beginning of year 89,522 5,823 702,364 9,081,145
------- ------ -------- ----------
Plan equity, end of year $218,969 $28,692 $974,848 $12,367,774
======== ======= ======== ===========
See Accompanying Notes to Financial Statements
16
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 income 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 is provided for general information
purposes. Participants of the Plan should refer to the Plan Document for more
detailed and complete information.
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, 233, 237 and 238 of the Independent Workers of North
America, Local 1668, 1668A and 1668B of the United Automobile Workers, Local 170
of the United Steel Workers of America until May 1, 1998 (see Note 8), 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 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
- -------------
The Plan permits eligible employees participating in the Plan the opportunity
to contribute up to 15% of their compensation, as defined, subject to certain
restrictions and limitations, and have the related taxes deferred. Effective
October 31, 1999 the plan was amended to allow particpants to contribute 10% of
compensation into the plan on a pretax 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
- -----------
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.
17
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.
18
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 preformance 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.
The Short-Term Bond Fund, The Small Cap Fund, The Life Strategy Income
Fund, The Life Strategy Conservative Growth Fund, and the Life Strategy Moderate
Growth Fund were not included in the Statement of Financial Condition or the
Statement of Income and Changes in Plan Equity due to the fact that there was no
activity during the year and there were zero balances at year-end.
19
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 initally 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 1999 1998
---- ----
Company Stock Fund 996 981
Fixed Income Fund 439 439
Explorer Fund 99 97
Balanced Fund 476 462
Equity Index Fund 563 539
International Growth Fund 146 146
Treasury Money Market Fund 54 44
Life Strategy Growth Fund 1 -
Prime Cap Fund 12 -
U.S. Growth Fund 7 -
Windsor Growth Fund 2 -
Windsor II 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.
The number of units representing Participant interests in each fund and the
related net asset value per unit were as follows at December 31:
20
Participant interests
Treasury
Company Stock Fixed Income Explorer Balanced Equity Index Int'l Growth Money Market
Fund Fund Fund Fund Fund Fund Fund
------------- ------------ -------- -------- ------------ ------------ ------------
1999:
Units 238,420 3,457,667 4,393 102,692 109,292 21,504 163,564
Value per unit $31.75 $1.00 $68.62 $23.80 $37.08 $22.49 $1.00
Life Strategy U.S. Windsor Windsor II
Growth Prime Cap Growth Growth Growth Loan
Fund Fund Fund Fund Fund Fund
------------- -------- ------ ------- ---------- ----
1999:
Units 872 1,091 367 45 211 1,864,621
Value per unit $21.41 $62.07 $43.53 $15.17 $24.97 $1.00
Treasury
Company Stock Fixed Income Explorer Balanced Equity Index Int'l Growth Money Market
Fund Fund Fund Fund Fund Fund Fund
------------- ------------ -------- -------- ------------ ------------ ------------
1998:
Units 197,515 2,943,992 2,613 83,620 85,659 20,700 66,456
Value per unit $32.85 $1.00 $56.71 $24.38 $30.76 $18.77 $1.00
The accompanying Statement of Financial Condition as of December 31, 1999
includes all individual investments which exceed five percent of the Plan's
total assets at this date. The only non-participant directed investment is the
Engelhard Corp Stock Fund and is included in the accompanying Statement of
Financial Condition.
Included in the Engelhard Corporation Stock Fund is $1,309,596 at December
31, 1999 and $1,094,264 at December 31, 1998 of restricted
Company matching contributions.
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
- --------------
The Plan allows Participants who have completed one year of service to borrow
funds from their accounts, subject to certain terms and conditions, at a
reasonable rate of interest as determined by the Company in accordance with
applicable laws and regulations.
21
Distributions and Withdrawals
- -----------------------------
All distributions and withdrawals from the Plan are made to Participants in a
lump sum cash payment except those amounts distributed from the Company Stock
Fund which may, at the Participant's election, be paid in full shares of the
Company's common stock with cash paid in lieu of fractional shares.
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 Financial Condition and
the Statement of Income and Changes in Plan Equity.
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 has
issued a favorable determination letter 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.
Note 4 - Administrative Expenses
All expenses of the Plan are paid for by the Company except for certain
loan administration and loan application fees. Investment advisory fees for
portfolio management of Vanguard funds are paid directly from fund earnings.
Advisory fees are included in the fund expense ratio and will not reduce the
assets of the Plan. Brokerage commissions paid to purchase Engelhard Corporation
common stock are being charged against each Participant's fund unit value.
Note 5 - Concentrations of Credit Risk
Financial instruments which potentially subject the Plan to concentrations
of credit risk consist principally of investment contracts with insurance and
other financial institutions. The Plan places its investment contracts with
high-credit quality institutions and, by policy, limits the amount of credit
exposure to any one financial institution.
22
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.
The net realized gain (loss) on disposition of investments was computed as
follows:
Treasury
Common Fixed Equity Int'l Money
Stock Income Explorer Balanced Index Growth Market
Net realized gain (loss) Fund Fund Fund Fund Fund Fund Fund Combined
---------- -------- -------- --------- -------- -------- -------- ----------
Year ended December 31, 1999 -
Amount realized $ 893,065 $601,666 $70,302 $564,211 $562,092 $169,405 $28,699 $2,889,440
Cost-average 897,473 601,666 64,640 504,189 458,689 157,631 28,699 2,712,987
Net realized gain (loss) (4,408) - 5,662 60,022 103,403 11,774 - 176,453
Year ended December 31, 1998 -
Amount realized $1,612,701 $777,688 $14,751 $329,212 $475,479 $ 68,458 $ 8,881 $3,287,170
Cost-average 1,592,724 777,688 15,647 270,831 382,785 71,445 8,881 3,120,001
Net realized gain (loss) 19,977 - (896) 58,381 92,694 (2,987) - 167,169
Year ended December 31, 1997 -
Amount realized $2,677,505 $440,633 $79,229 $648,041 $881,160 $178,801 $11,454 $4,916,823
Cost-average 2,661,486 440,633 76,095 620,522 848,646 177,796 11,454 4,836,632
Net realized gain (loss) 16,019 - 3,134 27,519 32,514 1,005 - 80,191
The net unrealized appreciation (depreciation) of investments held was
computed as follows:
Company Equity Int'l Life Strategy
Net unrealized appreciation Stock Explorer Balanced Index Growth Growth
(depreciation) Fund Fund Fund Fund Fund Fund
---------- --------- ---------- ---------- --------- -------------
Year ended December 31, 1999 -
Balance, beginning of year $ (17,664) $ 6,152 $357,319 $493,193 $ 26,284 $ -
Net change (221,345) 35,971 (122,168) 493,351 61,240 997
Balance, end of year (239,009) 42,123 235,151 986,544 87,524 997
PrimeCap U.S. Growth Windsor Windsor II
Fund Fund Fund Fund Combined
-------- ----------- ------- ---------- ----------
Year ended December 31, 1999 -
Balance, beginning of year $ - $ - $ - $ - $ 865,284
Net change 4,198 565 (48) (446) 252,315
Balance, end of year 4,198 565 (48) (446) 1,117,599
23
Company Equity Int'l
Stock Explorer Balanced Index Growth
Fund Fund Fund Fund Fund Combined
---------- --------- ---------- --------- --------- ------------
Year ended December 31, 1998 -
Balance, beginning of year $(719,553) $(1,252) $189,576 $247,736 $(10,658) $ (294,151)
Net change 701,889 7,404 167,743 245,457 36,942 1,159,435
Balance, end of year (17,664) 6,152 357,319 493,193 26,284 865,284
Year ended December 31, 1997 -
Balance, beginning of year $ (70,171) $ (295) $ 73,074 $112,964 $ 1,586 $ 117,158
Net change (649,382) (957) 116,502 134,772 (12,244) (411,309)
Balance, end of year (719,553) (1,252) 189,576 247,736 (10,658) (294,151)
Note 7 - Related Party Transactions
For the 1999 plan year the Company transferred 31,269 treasury stock shares
(representing a contribution dollar amount of $594,754) 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 - Attapulgus Plan Transfer
During 1998 employees represented by the Local 170 of the United Steel
Workers of America renegotiated their union contract to provide additional 401K
benefits. As a result a new plan was formed and $1,126,065 in assets were
transferred to the Savings Plan for Hourly Paid Employees at Attapulgus,
Georgia. These assets represented the sum of account balances for participants
represented by Local 170 of the United Steel Workers Union as of May 1, 1998 the
effective date of the new Plan.
Note 9 - Subsequent Event
Effective January 1, 2000, the plan was amended to allow Local 174 of the
United Steel Workers of America to participate in the plan.
24
Engelhard Corporation Savings Plan for Hourly Paid Employees
Schedule of Investments
at December 31, 1999
Approximate
Cost Market Value
----------- ------------
Common Stock of $ 7,637,740 $ 7,398,731
Engelhard Corporation
(391,985 shares)
Vanguard Retirement Savings 3,393,220 3,393,220
Trust
Vanguard Explorer Fund 250,052 292,175
Vanguard Asset Allocation 2,146,760 2,381,911
Fund
Vanguard Growth and Income 2,971,881 3,958,425
Portfolio
Vanguard International Growth Fund 383,254 470,778
Treasury Money Market Fund 156,620 156,620
Life Strategy Growth Portfolio 17,275 18,272
Prime Cap Fund 61,019 65,217
U.S. Growth Fund 14,008 14,573
Windsor Growth Fund 457 409
Windsor II Growth Fund 5,147 4,701
----------- -----------
Total $17,037,433 $18,155,032
=========== ===========
25
Engelhard Corporation Savings Plan for Hourly Paid Employees
Schedule of Investments
at December 31, 1998
Approximate
Cost Market Value
----------- ------------
Common Stock of $ 6,351,175 $ 6,333,511
Engelhard Corporation
(324,795 shares)
Vanguard Retirement Savings Trust 2,884,869 2,884,869
Vanguard Explorer Fund 132,857 139,009
Vanguard Asset Allocation Fund 1,625,357 1,982,676
Vanguard Growth and Income 2,057,862 2,551,055
Portfolio
Vanguard International Growth 348,150 374,434
Fund
Treasury Money Market Fund 61,956 61,956
----------- -----------
Total $13,462,226 $14,327,510
=========== ===========
26
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
As indpendent public accountants, we hereby consent to the incorporation
of our report dated June 20, 2000 on the financial statements and financial
statement schedule as of, and for the year ended December 31, 1999 of the
Engelhard Corporation Savings Plan for Hourly Paid Employees into the Company's
previously filed Registration Statements on Form S-8 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
/s/ ARTHUR ANDERSEN L.L.P.
New York, New York
June 20, 2000
27
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the Registration
Statements on Form S-8 (File Nos. 2-72830, 2-81559, 2-84477, 2-89747, 33-28540,
33-37724, 33-40365, 33-40338, 33-43934, 33-65990, 333-02643 and 333-71439) of
Engelhard Corporation and Subsidiaries of our report dated June 18, 2000
relating to the financial statements and financial statement schedule of
Engelhard Corporation Savings Plan for Hourly Paid Employees as of December 31,
1998, and for each of the two years in the period ended December 31, 1998 which
appears in this Form 11-K.
New York, New York /S/PRICEWATERHOUSECOOPERS
June 18, 2000
28
Signature
---------
Form 11-K
Engelhard Corporation Savings Plan for Hourly Paid Employees
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Pension and Employee Benefit Plans Committee of Engelhard Corporation has
duly caused this annual report to be signed on its behalf by the undersigned,
thereunto duly authorized, in Iselin, New Jersey on this 20th day of June,
2000.
/s/ John C. Hess
-------------
By: John C. Hess
Secretary to the Committee and
Vice President of Human Resources
29