11K Salary Deferral Savings Plan of Engelhard Corp
UNITED
STATES
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, 2004
or
o
TRANSITION REPORT
PURSUANT TO SECTION 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For
the
transition period from _____ to _____
SALARY
DEFERRAL SAVINGS PLAN OF ENGELHARD CORPORATION
(Full
title of the plan)
ENGELHARD
CORPORATION
(Exact name of issuer as specified in its charter)
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101
WOOD AVENUE, ISELIN, NEW JERSEY
(Address
of principal executive offices)
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08830
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DELAWARE
(State
or other jurisdiction of incorporation or organization)
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22-1586002
(IRS Employer Identification Number)
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Salary
Deferral Savings Plan
of
Engelhard Corporation
Table
of Contents
Description
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Page
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Report
of Independent Registered Public Accounting Firm
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3
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Statements
of Net Assets Available for Benefits
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at
December 31, 2004 and 2003
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4
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Statement
of Changes in Net Assets Available for Benefits
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or
the years ended December 31, 2004 and 2003
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5
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Notes
to Financial Statements
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6-12
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Supplemental
Schedule
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Schedule
of Assets (Held at end of year)
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13-14
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Consent
of Independent Registered Public Accounting Firm
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15
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Signature
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16
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Report
of Independent Registered Public Accounting Firm
To
the
Pension and Employee Benefit Committee of Engelhard Corporation:
We
have
audited the accompanying statements of net assets available for benefits of
the
Salary Deferral Savings Plan of Engelhard Corporation as of December 31, 2004
and 2003, and the related statements of changes in net assets available for
benefits for the years then ended. 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 the standards of the Public Company Accounting
Oversight Board (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. We were not engaged to perform
an
audit of the Plan’s internal control over financial reporting. Our audits
included consideration of internal control over financial reporting as a basis
for designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the Plan’s
internal control over financial reporting. Accordingly, we express no such
opinion. An audit also 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 net assets available for benefits of the plan at December
31, 2004 and 2003, and the changes in its net assets available for benefits
for
the years then ended, in conformity with U.S. generally accepted accounting
principles.
Our
audits
were performed for the purpose of forming an opinion on the financial statements
taken as a whole. The accompanying supplemental schedule of assets (held at
end
of year) as of December 31, 2004, is presented for purposes of additional
analysis and is not a required part of the 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 has been subjected to the auditing
procedures applied in our audits of the financial statements and, in our
opinion, is fairly stated in all material respects in relation to the financial
statements taken as a whole.
ERNST
& YOUNG LLP
Iselin,
New Jersey
June
10,
2005
Salary
Deferral Savings Plan of Engelhard Corporation
Statements
of Net Assets Available for Benefits
At
December 31, 2004 and 2003
Assets |
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2004
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2003
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Investments
at fair value |
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$ |
273,571,067 |
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$ |
247,307,185 |
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Receivables: |
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Participant
Contributions
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1,067,927 |
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1,021,360 |
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Employer
Contributions |
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291,002 |
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285,789 |
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Total
Receivables |
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1,358,929 |
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1,307,149 |
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Net
Assets Available for Benefits |
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$ |
274,929,996 |
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$ |
248,614,334 |
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See
Accompanying Notes to Financial Statements
Salary
Deferral Savings Plan
of
Engelhard Corporation
Statement
of Changes in Net Assets Available for Benefits
For
the Years Ended December 31, 2004 and 2003
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2004
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2003
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Additions: |
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Net
Investment Income: |
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Dividends
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$ |
3,316,897 |
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$ |
2,381,970 |
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Interest |
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2,329,799 |
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2,456,658 |
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Total
Investment Income |
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5,646,696 |
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4,838,628 |
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Contributions: |
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Particpant |
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15,021,909 |
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14,502,229 |
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Employer |
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3,434,490 |
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3,412,767 |
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Plan
Merger (Note 8) |
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– |
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6,157,480 |
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Asset
Transfers In |
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757,563 |
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151,860 |
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Rollovers |
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516,639 |
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399,036 |
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Total
Contributions |
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19,730,601 |
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24,623,372 |
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Net
Realized/Unrealized Appreciation in Fair Value of Investments |
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17,063,936 |
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44,562,289 |
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Total
Additions |
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42,441,233 |
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74,024,289 |
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Deductions: |
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Distributions |
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16,105,999 |
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15,938,821 |
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Other
Expenses |
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19,572 |
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19,360 |
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Total
Deductions |
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16,125,571 |
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15,958,181 |
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Net
Increase |
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26,315,662 |
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58,066,108 |
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Net
Assets Available for Benefits at Beginning of Year |
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248,614,334 |
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190,548,226 |
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Net
Assets Available for Benefits at End of Year |
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$ |
274,929,996 |
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248,614,334 |
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See
Accompanying Notes to Financial Statements
Notes
to Financial Statements
Note
1 - Description of the Plan
The
Salary
Deferral Savings Plan of Engelhard Corporation (the "Plan"), effective September
1, 1989, 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 and/or post-tax 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"), United States salaried employees of the Company and its wholly-owned
(directly or indirectly) domestic subsidiaries and all non-collectively
bargained hourly employees are eligible to participate in the Plan.
Contributions
The
Plan
permits eligible employees participating in the Plan the opportunity to defer
on
a pretax basis up to 50 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.
For 2004, the compensation limit in determining eligibility to make after tax
contributions to the Plan is $205,000. The Plan allows for catch-up
contributions for employees age 50 and over as allowed under the Internal
Revenue Code. For 2004, participants age 50 and over are allowed to contribute
an additional $3,000 to the Plan as catch-up contributions.
Matching
Contributions
The
Company
will contribute, on a monthly basis, subject to certain limitations and
exclusions, either cash or common stock of the Company in an amount equal to
50
percent of the first 6 percent contributed by the Participants. Participants
must have completed one year of service to be eligible for a matching
contribution. No matching contributions are made on behalf of a Participant
who
is eligible to receive an award pursuant to the Company's Key Employees Stock
Bonus Plan or other plans as designated by the Committee. Effective January
1,
2003, matching contributions are not restricted and can be moved into other
funds at any time.
Effective
January 1, 2004 the plan was amended to designate the Company Stock fund as
an
Employee Stock Ownership Plan (ESOP). In connection with this change, the first
$400 in employer matching contributions (on an annual basis) will be made into
the Fixed Income Fund. Also, employees will have the opportunity to receive
the
dividends paid on shares held in the ESOP paid out as current income.
Investments
All
contributions to the Plan are held and invested by Vanguard Fiduciary Trust
Company (the Trustee). The Trustee maintains the following seventeen separate
investment funds within the Plan:
a) |
The
Company Stock
Fund.
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b) |
The
Fixed Income Fund (Vanguard Retirement Savings
Trust).
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c) |
The Windsor II Growth Fund (Vanguard Windsor II
Fund). |
d) |
The
Windsor Growth Fund (Vanguard Windsor
Fund).
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e) |
The
Balanced Fund (Vanguard Asset Allocation
Fund).
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f) |
The Equity Index Fund (Vanguard Growth and Income
Fund). |
g) |
The Small Cap Fund (Vanguard Small-Cap Index
Fund). |
h) |
The Life Strategy Growth Fund (Vanguard Life Strategy
Growth Fund) |
i) |
The Life Strategy Conservative Growth Fund (Vanguard
LifeStrategy
Conservative Growth Fund). |
j) |
The Vanguard U.S. Growth
Fund. |
k) |
The
Life Strategy Moderate Growth Fund (Vanguard Life Strategy Moderate
Growth Fund).
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l) |
The Prime Cap Funds (Vanguard PRIMECAP
Fund). |
m) |
The International Growth Fund (Vanguard International
GrowthFund). |
n) |
The Life Strategy Income Fund (Vanguard Life Strategy
IncomeFund). |
o) |
The
Short-Term Bond Fund (Vanguard Short-Term Investment Grade
Fund).
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p) |
The
Mid Cap Fund (Vanguard Mid-Cap Index
Fund).
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q) |
The
Total Bond Market Fund (Vanguard Total Bond Market Index
Fund).
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Participant
Accounts
Each
participant's account is credited with the participant's contributions and
allocations of (a) the Company Contributions and (b) plan earnings including
realized gains/losses, unrealized appreciation/depreciation, and an allocation
of fund expenses. Allocations are based on participant earnings or account
balances, as defined. The benefit to which a participant is entitled is the
benefit that can be provided from the participant's account.
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.
Loan
Provision
Participants
may borrow from their Fund 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.
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.
Distributions
and Withdrawals
Upon
termination of employment, as provided in the Plan Document, participants
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 contributions 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
Company Stock Fund, which 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 U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. 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 market value 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.
Note
3 - Income Tax Status
The
Plan has
received a determination letter from the Internal Revenue Service dated
September 24, 2003, stating that the Plan is qualified under Section 401 (a)
of
the Internal Revenue Code (the "Code") and, therefore, the related trust is
exempt from taxation. Subsequent to this issuance of the determination letter,
the Plan was amended. Once qualified, the Plan is required to operate in
conformity with the Code to maintain its qualification. The plan administrator
believes the Plan is being operated in compliance with the applicable
requirements of the Code and, therefore, believes that the Plan, as amended,
is
qualified and the related trust is tax exempt. If any operational defects are
identified, the Company will take all necessary action to correct the defects
and maintain the qualified status of the Plan.
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, etc.) 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 administrative expenses.
Note
5 - Concentrations of Credit Risk
Investments
in securities are generally exposed to various risks, such as interest rate,
credit, and overall market volatility risks. Financial instruments that
potentially subject the plan to concentration of credit risk consist principally
of investments in the Engelhard Corporation Stock Fund. The plan limits the
concentration of credit risk by allowing participants, subject to the lapsing
of
restrictions, 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.
Investments
that represent 5% or more of fair value of the Plan's net assets are as
follows:
Investments: |
|
2004
|
|
2003
|
|
Engelhard
Corporation Company Stock Fund
|
|
$ |
58,995,993 |
|
$ |
58,594,527 |
|
Fixed
Income Fund (Retirement Savings Trust) |
|
|
49,552,686 |
|
|
46,697,044 |
|
Growth
Fund (Windsor Fund) |
|
|
36,919,644 |
|
|
33,079,959 |
|
Balanced
Fund (Asset Allocation Fund) |
|
|
16,917,968 |
|
|
15,309,910 |
|
Equity
Index Fund (Growth and Income Fund) |
|
|
22,378,182 |
|
|
21,326,938 |
|
Prime
Cap Fund |
|
|
22,128,236 |
|
|
18,004,398 |
|
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Net
realized/unrealized appreciation in fair value of investments consists of the
following for the years ended December 31, 2004 and 2003:
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2004
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2003
|
|
Common
Stock
|
|
$ |
1,495,577 |
|
$ |
15,532,363 |
|
Mutal
Funds |
|
|
15,568,359 |
|
|
29,029,926 |
|
Total |
|
$ |
17,063,936 |
|
$ |
44,562,289 |
|
Note
7 - Related Party Transactions
For
the 2004
plan year, the Company transferred $824,602 in cash and $2,609,888 in Company
stock (representing 89,198 treasury stock shares), or a total of $3,434,490,
to
Vanguard to fund the employer match. The number of shares transferred each
month
represented the stock portion of the employer matching contribution divided
by
the closing market price on the day the contribution was remitted.
During
the
year, in the ordinary course of doing business, various Vanguard funds may
take
a position in Engelhard Corporation common stock. On February 11, 2005, the
Vanguard Windsor Fund filed an amended Schedule 13G with the Securities and
Exchange Commission indicating they held 8,925,400 shares or 7.30% of Company
Stock. On February 6, 2004, the Vanguard Windsor Fund filed an amended schedule
13G with the Securities and Exchange Commission indicating it held 9,476,500
shares or 7.55% of Company Stock.
Salary
Deferral Savings Plan of Engelhard Corporation
Schedule
of Assets (Held at end of year)
as
of
December 31, 2004
EIN
#22-1586002 Plan #015
Note
8 - Merger of Net Assets from Engelhard-CLAL Salary Deferral Savings
Plan
On
September
19, 2002, the Company and its partner, Fimalac, formally agreed to adopt a
plan
to unwind their Paris-based joint venture, Engelhard-CLAL LLP. As part of the
distribution of assets, Engelhard received certain US-based operations. As
a
result, effective January 1, 2003, the net assets of the Engelhard-CLAL Salary
Deferral Savings Plan were merged into the Salary Deferral Savings Plan of
Engelhard Corporation. A total of $6,157,480, representing the net assets of
Engelhard-CLAL Salary Deferral Savings Plan was transferred to the Salary
Deferral Savings Plan of Engelhard Corporation, as a result of this
merger.
Salary
Deferral Savings Plan of Engelhard Corporation
Schedule
of Assets (Held at end of year)
as
of December 31, 2004
EIN
#22-1586002 Plan #015
(A)
|
(B)
Identity of Issue, Borrower,
Lessor
or Similary Party
|
(C)
Description of Investment Including
Maturity
Date, Rate of Interest, Collateral,
Par
or Maturity Value
|
Current
Value
|
|
|
|
|
*
|
Vanguard
Fiduciary
Trust
Company
|
Engelhard
Corporation
Company
Stock Fund
|
$
58,995,993
|
|
|
|
|
*
|
Vanguard
Fiduciary
Trust
Company
|
Fixed
Income Fund
(Retirement
Savings Trust)
|
49,552,686
|
|
|
|
|
*
|
Vanguard
Fiduciary
Trust
Company
|
Windsor
II Fund
|
9,157,793
|
|
|
|
|
*
|
Vanguard
Fiduciary
Trust
Company
|
Growth
Fund
(Windsor
Fund)
|
36,919,644
|
|
|
|
|
*
|
Vanguard
Fiduciary
Trust
Company
|
Balanced
Fund
(Asset
Allocation Fund)
|
16,917,968
|
|
|
|
|
*
|
Vanguard
Fiduciary
Trust
Company
|
Equity
Index Fund
(Growth
and Income Portfolio)
|
22,378,182
|
|
|
|
|
*
|
Vanguard
Fiduciary
Trust
Company
|
International
Growth Portfolio
|
7,182,335
|
|
|
|
|
*
|
Vanguard
Fiduciary
Trust
Company
|
Small
Cap Fund
|
10,075,905
|
|
|
|
|
*
|
Vanguard
Fiduciary
Trust
Company
|
Total
Bond Market Index Fund
|
1,153,847
|
|
|
|
|
*
|
Vanguard
Fiduciary
Trust
Company
|
Short-Term
Corporate Fund
|
5,541,419
|
|
|
|
|
*
|
Vanguard
Fiduciary
Trust
Company
|
Life
Strategy Growth Portfolio
|
6,213,077
|
Salary
Deferral Savings Plan of Engelhard Corporation
Schedule
of Assets (Held at end of year)
as
of December 31, 2004, Continued
EIN
#22-1586002 Plan #015
(A)
|
(B)
Identity of Issue, Borrower,
Lessor
or Similary Party
|
(C)
Description of Investment Including
Maturity
Date, Rate of Interest, Collateral,
Par
or Maturity Value
|
Current
Value
|
|
|
|
|
*
|
Vanguard
Fiduciary
Trust
Company
|
PRIMECAP
Fund
|
22,128,236
|
|
|
|
|
*
|
Vanguard
Fiduciary
Trust
Company
|
Life
Strategy Income
Portfolio
|
1,923,772
|
|
|
|
|
*
|
Vanguard
Fiduciary
Trust
Company
|
Life
Strategy Consertative
Growth
Portfolio
|
2,230,836
|
|
|
|
|
*
|
Vanguard
Fiduciary
Trust
Company
|
U.S. Growth
Fund
|
7,563,692
|
|
|
|
|
*
|
Vanguard
Fiduciary
Trust
Company
|
Life
Strategy Moderate
Growth
Portfolio
|
4,761,722
|
|
|
|
|
*
|
Vanguard
Fiduciary
Trust
Company
|
Mid-Cap
Index Fund
|
2,373,180
|
|
|
|
|
*
|
Promissory
notes from Participants having interest rates at 5.00% to 10.5%
with
maturity
dates ranging from 2005 to 2013
|
8,500,780
|
|
|
|
|
|
Total
|
|
$ 273,571,067
|
|
|
|
|
*
|
Represents
party-in-interest
|
|
|
CONSENT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We
consent to
the incorporation by reference in the Registration Statement (Form S-8 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, 333-71856, 333-88424)
pertaining to the Salary Deferral Savings Plan of our report dated June 10,
2005, with respect to the financial statements and schedules of the Salary
Deferral Savings Plan included in this Annual Report (Form 11-K) for the year
ended December 31, 2004.
Iselin,
New Jersey
June
23,
2005
Signature
Form
11-K
Salary
Deferral Savings Plan of Engelhard Corporation
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 27th day of June,
2005.
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/s/
John C. Hess
By:
John C. Hess
Secretary
to the Committee and
Vice
President of Human Resources
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