HANDY & HARMAN LTD. - FORM 8-K - EX-99.4

Attached files

file	filename
8-K - HANDY & HARMAN LTD.	form8k06447_11142011.htm
EX-99.3 - HANDY & HARMAN LTD.	ex993to8k06447_11142011.htm
EX-99.1 - HANDY & HARMAN LTD.	ex991to8k06447_11142011.htm
EX-99.2 - HANDY & HARMAN LTD.	ex992to8k06447_11142011.htm
EX-23.1 - HANDY & HARMAN LTD.	ex231to8k06447_11142011.htm

Exhibit 99.4

Item 8.

Financial Statements and Supplementary Data

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	Page

Report of Independent Registered Public Accounting Firm	1
Consolidated Financial Statements:
Consolidated Balance Sheets as of December 31, 2009 and 2008	2
Consolidated Statements of Operations for the years ended December 31, 2009 and 2008	3
Consolidated Statements of Cash Flows for the years ended December 31, 2009 and 2008	4
Consolidated Statements of Stockholders’ Deficit for the years ended December 31, 2009 and 2008	5
Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2009 and 2008	5
Notes to Consolidated Financial Statements	6

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Shareholders

Handy & Harman Ltd.

We have audited the accompanying consolidated balance sheets of Handy & Harman Ltd. (formerly known as WHX Corporation prior to January 3, 2011) (a Delaware corporation) and Subsidiaries (the “Company”) as of December 31, 2009 and 2008, and the related consolidated statements of operations, cash flows and changes in stockholders’ deficit and comprehensive income (loss) for each of the two years in the period ended December 31, 2009. These financial statements are the responsibility of the Company’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. The Company is not required to have, nor were we engaged to perform an audit of its internal control over financial reporting. Our audit 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 Company’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, 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 consolidated financial statements referred to above present fairly, in all material respects, the financial position Handy & Harman Ltd. (formerly known as WHX Corporation prior to January 3, 2011) and Subsidiaries as of December 31, 2009 and 2008, and the results of their operations and their cash flows for each of the two years in the period ended December 31, 2009 in conformity with accounting principles generally accepted in the United States of America.

/s/ Grant Thornton LLP

Edison, New Jersey

March 11, 2011 (except for Note 21, as to which the date is November 15, 2011)

HANDY & HARMAN LTD.

Consolidated Balance Sheets

(Dollars and shares in thousands)	December 31, 2009			December 31, 2008
ASSETS
Current Assets:
Cash and cash equivalents	$	8,796		$	8,656
Trade and other receivables-net of allowance for doubtful accounts of $2,172 and $2,593, respectively		60,294			64,326
Inventories		45,007			54,762
Deferred income taxes		1,023			1,164
Other current assets		8,032			9,335
Current assets of discontinued operations		29,512			40,738
Total current assets		152,664			178,981

Property, plant and equipment at cost, less accumulated depreciation and amortization		83,110			90,768
Goodwill		63,946			65,071
Other intangibles, net		33,931			36,989
Other non-current assets		11,571			18,510
Non-current assets of discontinued operations		8,618			11,922
	$	353,840		$	402,241
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
Trade payables	$	30,212		$	29,201
Accrued liabilities		20,219			33,955
Accrued environmental liability		6,692			8,478
Accrued interest - related party		1,600			263
Short-term debt		18,949			32,699
Current portion of long-term debt		5,944			8,295
Deferred income taxes		300			151
Current portion of pension liability		9,700			1,800
Current liabilities of discontinued operations		9,686			15,863
Total current liabilities		103,302			130,705

Long-term debt		95,082			110,144
Long-term debt - related party		54,098			54,098
Long-term interest accrual - related party		11,797			2,237
Accrued pension liability		92,309			131,876
Other employee benefit liabilities		4,840			4,233
Deferred income taxes		4,258			5,274
Other liabilities		5,255			4,942
Long-term liabilities of discontinued operations		696			639
		371,637			444,148
Commitments and Contingencies

Stockholders' Deficit:
Preferred stock- $.01 par value; authorized 5,000 shares; issued and outstanding -0- shares		-			-
Common stock - $.01 par value; authorized 180,000 shares; issued and outstanding 12,179 shares		122			122
Accumulated other comprehensive loss		(118,402	)		(163,502	)
Additional paid-in capital		552,834			552,583
Accumulated deficit		(452,351	)		(431,110	)
Total stockholders' deficit		(17,797	)		(41,907	)
	$	353,840		$	402,241

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

HANDY & HARMAN LTD.

Consolidated Statements of Operations

	Year ended December 31,
	2009			2008

	(in thousands except per share)

Net sales	$	460,702		$	591,859
Cost of goods sold		345,668			440,869
Gross profit		115,034			150,990

Selling, general and administrative expenses		89,915			113,325
Pension expense (credit)		14,097			(8,335	)
Asset impairment charges		3,016			-
Goodwill impairment charge		1,140			-
Income from proceeds of insurance claims, net		(4,035	)		(3,399	)
Income from benefit plan curtailment		-			(3,875	)
Restructuring charges		1,082			-
Other operating expenses		132			99
Income from continuing operations		9,687			53,175
Other:
Interest expense		25,741			36,212
Realized and unrealized loss on derivatives		777			1,355
Other expense (income)		(110	)		1,060
Income (loss) from continuing operations before tax		(16,721	)		14,548
Tax provision (benefit)		(497	)		1,255
Income (loss) from continuing operations, net of tax		(16,224	)		13,293

Discontinued Operations:
Loss from discontinued operations, net of tax		(6,849	)		(10,170	)
Gain (loss) on disposal of assets, net of tax		1,832			(112	)
Net loss from discontinued operations		(5,017	)		(10,282	)

Net income (loss)	$	(21,241	)	$	3,011

Basic and diluted per share of common stock

Income (loss) from continuing operations, net of tax	$	(1.33	)	$	3.32
Discontinued operations, net of tax		(0.41	)		(2.57	)
Net income (loss)	$	(1.74	)	$	0.75

Weighted average number of common shares outstanding		12,179			4,001

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

HANDY & HARMAN LTD.

Consolidated Statements of Cash Flows

	Year Ended December 31,
(in thousands)	2009			2008
Cash flows from operating activities:
Net income (loss)	$	(21,241	)	$	3,011
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization		17,080			18,078
Non-cash stock based compensation		186			553
Amortization of debt related costs		1,429			1,806
Long-term interest on related party debt		9,560			5,285
Income from curtailment of employee benefit obligations		-			(3,875	)
Deferred income taxes		(955	)		(643	)
Loss on asset dispositions		132			100
Asset impairment charges		3,017			-
Goodwill impairment charge		1,140			-
Unrealized loss (gain) on derivatives		409			(384	)
Reclassification of net cash settlements on derivative instruments		368			1,739
Net cash provided by operating activities of discontinued operations		10,284			15,398
Decrease (increase) in operating assets and liabilities:
Trade and other receivables		3,410			5,470
Inventories		9,153			4,634
Other current assets		2,141			1,453
Accrued interest expense-related party		1,338			(17,643	)
Other current liabilities		(508	)		(20,410	)
Other items-net		2,565			(4,493	)
Net cash provided by operating activities		39,508			10,079
Cash flows from investing activities:
Plant additions and improvements		(7,204	)		(10,395	)
Net cash settlements on derivative instruments		(368	)		(1,739	)
Proceeds from sales of assets		110			8,253
Proceeds from sale of investment		3,113			-
Net cash provided by (used in) investing activities of discontinued operations		2,405			(1,919	)
Net cash used in investing activities		(1,944	)		(5,800	)
Cash flows from financing activities:
Proceeds of stock-rights offering		-			155,561
Proceeds of term loans		9,577			4,000
Net revolver repayments		(14,164	)		(17,084	)
Repayments of term loans - domestic		(26,623	)		(30,049	)
Repayments of term loans - related party		-			(111,188	)
Deferred finance charges		(1,191	)		(1,562	)
Net change in overdrafts		(231	)		(1,107	)
Net cash used to repay debt of discontinued operations		(4,704	)		(835	)
Other		(274	)		618
Net cash used in financing activities		(37,610	)		(1,646	)
Net change for the period		(46	)		2,633
Effect of exchange rate changes on net cash		186			(67	)
Cash and cash equivalents at beginning of period		8,656			6,090
Cash and cash equivalents at end of period	$	8,796		$	8,656

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

HANDY & HARMAN LTD.

Consolidated Statements of Changes in Stockholders’ Deficit and Comprehensive Income (Loss)

(Dollars and shares in thousands)
	Common Stock							Accumulated Other Comprehensive Income			Accumulated			Capital in Excess of		Total Stockholders'
	Shares		Amount		Warrants			(Loss)			Deficit			Par Value		Deficit

Balance, January 1, 2008		1,000	$	10	$	1,287		$	(32,559	)	$	(434,121	)	$	395,838	$	(69,545	)

Current period change		-		-					(130,943	)		-					(130,943	)
Net income		-		-		-			-			3,011			-		3,011
Total comprehensive loss																	(127,932	)
Expiration of warrants						(1,287	)								1,287		-
Stock rights offering		11,179		112		-			-			-			154,846		154,958
Amortization of stock options		-		-		-			-			-			612		612

Balance, December 31, 2008		12,179		122		-			(163,502	)		(431,110	)		552,583		(41,907	)

Current period change		-		-					45,100			-					45,100
Net loss		-		-		-			-			(21,241	)		-		(21,241	)
Total comprehensive income																	23,859
Amortization of stock options		-		-		-			-			-			251		251

Balance, December 31, 2009		12,179	$	122	$	-		$	(118,402	)	$	(452,351	)	$	552,834	$	(17,797	)

	Year Ended December 31,
	2009			2008
Comprehensive Income (Loss)
Net income (loss)	$	(21,241	)	$	3,011

Changes in pension plan assets and other benefit obligations:
Curtailment/settlement gain/(loss)		169			(517	)
Current year actuarial gain/(loss)		29,940			(127,252	)
Amortization of actuarial loss		13,215			497
Amortization prior service (credit)/cost		63			(202	)

Foreign currency translation adjustment		1,549			(3,305	)
Valuation of marketable equity securities		164			(164	)
Comprehensive income (loss)	$	23,859		$	(127,932	)

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 – Nature of the Business

Organization

HNH, the parent company, manages a group of businesses on a decentralized basis. HNH owns Handy & Harman (“H&H”), a diversified holding company whose strategic business units encompass three reportable segments: Precious Metal, Tubing, and Engineered Materials. HNH also owns Bairnco Corporation (“Bairnco”), another diversified holding company that manages business units in two reportable segments: Arlon Electronic Materials (“EM”) segment and Kasco Replacement Products and Services (“Kasco”). See Note 20 for a description of the business and products of each of the Company’s segments. The business units of H&H and Bairnco principally operate in North America. All references herein to “we,” “our” or the “Company” shall refer to HNH, together with all of its subsidiaries.

Note 1a – Management’s Plans and Liquidity

Liquidity

The Company recorded a net loss of $21.2 million in 2009, but generated $39.5 million of positive cash flow from operating activities. This compares with net income of $3.0 million and $10.1 million provided by cash flows from operating activities in 2008.

Prior to 2008, the Company incurred significant losses and negative cash flows from operations, and as of December 31, 2009 had an accumulated deficit of $452.4 million. On March 7, 2005, HNH filed a voluntary petition to reorganize under Chapter 11 of the Bankruptcy Code. HNH continued to operate its business and own and manage its assets as a debtor in possession until it emerged from protection under Chapter 11 of the Bankruptcy Code on July 29, 2005.

As of December 31, 2009, the Company’s current assets totaled $152.7 million and its current liabilities totaled $103.3 million, resulting in working capital of $49.4 million, as compared to working capital of $48.3 million as of December 31, 2008. The Company has reduced its level of debt in 2009 from $205.5 million as of December 31, 2008 to $174.2 million as of December 31, 2009 in connection with its continuing operations, and also repaid $4.7 million of debt from its discontinued operations.

See the discussions below regarding the separate liquidity of HNH the parent company, H&H and Bairnco.

Handy & Harman Ltd., the parent company

HNH, the parent company’s, sources of cash flow consist of its cash on-hand, distributions from its principal subsidiaries, H&H and Bairnco, and other discrete transactions. H&H’s credit facilities effectively do not permit it to transfer any cash or other assets to HNH with the exception of (i) an unsecured loan for required payments to the WHX pension Plan, and (ii) an unsecured loan for other uses in the aggregate principal amount not to exceed $12.0 million, $9.5 million of which has been distributed. The remaining $2.5 million is not permitted to be loaned to HNH before March 31, 2010. H&H’s credit facilities are collateralized by a first priority lien on all of the assets of H&H and its subsidiaries. Similarly, Bairnco’s credit facilities and term loan do not permit it to make any distribution, pay any dividend or transfer any cash or other assets to HNH other than common stock of Bairnco and up to $0.6 million annually for services performed by HNH on behalf of Bairnco, under certain circumstances. Bairnco’s credit facilities are collateralized by a first priority lien on all of the assets of Bairnco and of its U.S. subsidiaries.

HNH’s ongoing operating cash flow requirements consist of funding the minimum requirements of the WHX pension Plan and paying HNH’s administrative costs. The significant decline of stock prices starting in 2008 across a cross-section of financial markets contributed to an unfunded pension liability of the WHX pension Plan which totaled $101.1 million as of December 31, 2009 and $132.8 million as of December 31, 2008. The Company expects to have required minimum contributions for 2010 and 2011 of $9.6 million and $21.0 million, respectively. Such required future contributions are determined based upon assumptions regarding such matters as discount rates on future obligations, assumed rates of return on plan assets and legislative changes. Actual future pension costs and required funding obligations will be affected by changes in the factors and assumptions described in the previous sentence, as well as other changes such as a plan termination.

As of December 31, 2009, HNH and its subsidiaries that are not restricted by loan agreements or otherwise from transferring funds to HNH had cash of approximately $3.3 million and current liabilities of approximately $11.0 million. Such current liabilities include $9.6 million of estimated required contributions to the WHX pension Plan, which HNH is permitted to borrow from H&H pursuant to H&H’s credit agreements.

On July 31, 2009, HNH CS Corp., one of these unrestricted subsidiaries of HNH, sold its equity investment in CoSine to SP II for $3.1 million. A subordinated secured loan of $3.0 million was made by HNH to Bairnco in connection with Bairnco’s partial repayment of their Credit Agreement with Ableco Finance LLC (“Ableco”), as administrative agent thereunder (the “Ableco Facility”). Management expects that HNH will be able to fund its operations in the ordinary course over at least the next twelve months.

Handy & Harman and Bairnco

The ability of both H&H and Bairnco to draw on their respective revolving lines of credit is limited by their respective borrowing base of accounts receivable and inventory. As of December 31, 2009, H&H’s availability under its credit facilities was $22.7 million, and Bairnco’s availability under its U.S. credit facilities was $10.5 million. As of March 24, 2010, H&H’s availability under its credit facilities was approximately $18.5 million, and Bairnco’s availability under its U.S. credit facilities was approximately $9.2 million. However, there can be no assurances that H&H and Bairnco will continue to have access to all or any of their lines of credit if their respective operating and financial performance does not satisfy the relevant borrowing base criteria and financial covenants set forth in the applicable financing agreements. If either H&H or Bairnco do not meet certain of their respective financial covenants or satisfy the relevant borrowing base criteria, and if they are unable to secure necessary waivers or other amendments from the respective lenders on terms acceptable to management, their ability to access available lines of credit could be limited, their debt obligations could be accelerated by their respective lenders, and their liquidity could be adversely affected.

The Company

We do not anticipate that the Company will have any additional sources of cash flow other than (i) as described above, (ii) from operations, (iii) from the sale of assets and/or businesses, and (iv) from other discrete transactions.

Management is utilizing the following strategies to continue to enhance liquidity: (1) continuing to implement improvements throughout all of the Company’s operations to increase operating efficiencies, (2) supporting profitable sales growth both internally and potentially through acquisitions, (3) evaluating strategic alternatives with respect to all lines of business and/or assets and (4) seeking financing alternatives that may lower its cost of capital and/or enhance current cash flow. The Company also plans to continue, as appropriate, cost containment measures that it implemented during 2009.

The ability of the Company to meet its cash requirements for at least the next twelve months is dependent, in part, on the Company’s continuing ability to meet its business plans. The Company continues to examine all of its options and strategies, including acquisitions, divestitures, and other corporate transactions, to increase cash flow and stockholder value. If the Company’s planned cash flow projections are not met, management could consider the additional reduction of certain discretionary expenses and the sale of certain assets and/or businesses.

Furthermore, if the Company’s cash needs are significantly greater than anticipated or the Company does not materially meet its business plan, the Company may be required to seek additional or alternative financing sources. There can be no assurance that such financing will be available or available on terms acceptable to the Company. There can be no assurance that the funds available from operations and under the Company’s credit facilities will be sufficient to fund its debt service costs, working capital demands, pension plan contributions, and environmental remediation costs. The Company’s inability to generate sufficient cash flows from its operations or through financing could impair its liquidity, and would likely have a material adverse effect on its businesses, financial condition and results of operations, and could raise substantial doubt that the Company will be able to continue to operate.

The Company believes that recent amendments to its financing arrangements, continuing improvements in its core operations, and stabilization of the global economy as it effects the markets that the Company serves, will permit the Company to generate sufficient working capital to meet its obligations as they mature. Management believes that existing capital resources and sources of credit, including the H&H credit facilities and the Bairnco credit facilities, will be adequate to meet its current and anticipated cash requirements. However, if the Company’s cash needs are greater than anticipated or the Company does not materially satisfy its business plan, the Company may be required to seek additional or alternative financing sources. There can be no assurance that such financing will be available or available on terms acceptable to the Company.

The Company has taken the following actions, which it believes has and in certain instances, will continue to improve liquidity over time and help provide for adequate liquidity to fund the Company’s capital needs:

On various dates in 2008 and 2009, Company management has worked with the principal lenders of H&H and Bairnco to amend their respective credit facilities. Amendments affecting liquidity have been made in order to (i) extend the maturity date of the H&H debt to June 30, 2011, (ii) reset the levels of certain financial covenants, (iii) permit certain additional loans from SPII and Ableco, (iv) permit loans or advances from H&H to HNH, subject to certain conditions, (v) allow for the acquisition of a business, a sale-leaseback of an operating facility, and the closure of non-performing businesses, (vi) allow prepayments of the various loans on different occasions, (vii) provide a limited cross-guaranty between H&H and Bairnco, and (viii) amend applicable interest rates. (See Note 13 for additional information about these credit facilities and amendments).

On September 25, 2008, HNH completed a rights offering by issuing common stock for proceeds of approximately $156.5 million (the “Rights Offering”), and repaid debt and accrued interest of approximately $155.7 million.

The Company continues to apply the HNH Business System at all of its business units, which utilizes lean tools and philosophies to reduce and eliminate waste coupled with the Six Sigma tools targeted at variation reduction.

On January 4, 2009, the Company implemented a 5% salary reduction to annual salaries over $40,000 for all salaried employees, including all of the Company’s executive officers, in furtherance of the Company’s ongoing efforts to lower its operating costs. The Company also suspended its employer contributions to 401(k) savings plans for all employees not covered by a collective bargaining agreement. Additionally, during 2009, the Company’s bonus program for senior management of its operations was significantly curtailed. The Company also took other steps to further reduce fixed and variable expenses at its various locations. In January 2010, the Company reinstated the 5% salary reduction and its matching contribution to the 401(k) savings plan. The Company also fully reinstated in 2010 its bonus plan for senior management, subject to the terms and conditions of the bonus plan.

In 2009 and 2008, the Company engaged in various restructuring activities that management believes will result in a more efficient infrastructure that can be leveraged in the future. These activities included consolidation of the Bairnco corporate office into the HNH corporate office, the closure of facilities in New Hampshire and Dallas in 2009, and San Antonio in 2008, and relocation of the functions to other existing facilities. In connection with these activities, restructuring charges totaled $1.9 million in 2009 and $1.6 million in 2008.

In 2008, the Company decided to exit the welded specialty tubing market in Europe and close its Indiana Tube Denmark (“ITD”) subsidiary, sell ITD’s assets, pay off ITD’s related debt and repatriate cash remaining post-closing. The decision to exit this market was made after evaluating current economic conditions and competition from lower cost manufacturers. The withdrawal from this market has been largely accomplished although the ITD building has been offered for sale, but has not yet sold. In 2008, the Company also evaluated its Sumco, Inc. (“Sumco”) subsidiary in light of ongoing operating losses and future prospects. Sumco provided electroplating services primarily to the automotive market. Sumco had declining cash flows in 2008 and projected negative 2009 cash flows principally caused by the decline in U.S. economic activity and by Sumco’s reliance on the automotive market for over 90% of its sales. The Company decided to exit this business, which has been completed as of December 31, 2009.

The Company filed a shelf registration statement on Form S-3 with the SEC which was declared effective on June 29, 2009. Pursuant to this statement, the Company may, from time to time, issue up to $25 million of its common stock, preferred stock, debt securities, warrants to purchase common stock, preferred stock, or debt securities, or any combination of the above, separately or as units. The terms of any offerings under the shelf registration statement would be determined at the time of the offering. The Company does not presently have any definitive plans or current commitments to sell securities that may be registered under the shelf registration statement. However, management believes that the shelf registration statement provides the Company with the flexibility to quickly raise capital in the market as conditions permit with a minimum of administrative preparation and expense. The net proceeds of any such issuances under the shelf registration statement could be used for general corporate purposes, which may include working capital and/or capital expenditures.

In view of the matters described in the preceding paragraphs, management believes that the Company has the ability to meet its cash requirements on a continuing basis for at least the next twelve months. However, if the Company’s planned cash flow projections are not met and/or credit is not available in sufficient amounts, management could consider the additional reduction of certain discretionary expenses and sale of certain assets. In the event that these plans are not sufficient and/or the Company’s credit facilities are not adequate, the Company’s ability to operate could be materially adversely affected.

Note 2 – Summary of Accounting Policies

Basis of Presentation

The consolidated financial statements include the accounts of HNH and its subsidiaries. All material intercompany transactions and balances have been eliminated.

On November 24, 2008, the Company consummated a 1-for-10 Reverse Stock Split of its outstanding common stock. Pursuant to the Reverse Stock Split, every ten (10) shares of common stock issued and outstanding at the time the split was effected were changed and reclassified into one (1) share of common stock immediately following the Reverse Stock Split. The Reverse Stock Split affected all shares of common stock, stock options and rights of the Company outstanding at the effective time of the Reverse Stock Split. The Reverse Stock Split did not change the proportionate equity interests of the Company’s stockholders, nor were the respective voting rights and other rights of stockholders altered, except due to immaterial differences because fractional shares were not issued and the number of shares of a holder was rounded up. To enhance comparability, unless otherwise noted, all references to the Company’s common stock and per share amounts have been adjusted on a retroactive basis as if the Reverse Stock Split had occurred on January 1, 2008.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, the Company evaluates its estimates, including those related to bad debts, inventories, long-lived assets, intangibles, accrued expenses, income taxes, pensions and other post-retirement benefits, and contingencies and litigation. Estimates are based on historical experience, future cash flows and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand and on deposit and highly liquid debt instruments with original maturities of three months or less. As of December 31, 2009 and 2008, the Company had cash held in foreign banks of $4.9 million and $2.7 million, respectively. The Company’s credit risk arising from cash deposits held in U.S. banks in excess of insured amounts is not significant given that as a condition of its revolving credit agreements (See Note 13), cash balances in U.S. banks are generally swept on a nightly basis to pay down the Company’s revolving credit loans.

Revenue Recognition

Revenues are recognized when the title and risk of loss has passed to the customer. This condition is normally met when product has been shipped or the service performed. An allowance is provided for estimated returns and discounts based on experience. Cash received by the Company from customers prior to shipment of goods, or otherwise not yet earned, is recorded as deferred revenue. Rental revenues are derived from the rental of certain equipment to the food industry where customers prepay for the rental period-usually 3 to 6 month periods. For prepaid rental contracts, sales revenue is recognized on a straight-line basis over the term of the contract. Service revenues consist of repair and maintenance work performed on equipment used at mass merchants, supermarkets and restaurants.

The Company experiences a certain degree of sales returns that varies over time, but is able to make a reasonable estimation of expected sales returns based upon history. The Company records all shipping and handling fees billed to customers as revenue, and related costs are charged principally to cost of sales, when incurred. In limited circumstances, the Company is required to collect and remit sales tax on certain of its sales. The Company accounts for sales taxes on a net basis, and such sales taxes are not included in net sales on the consolidated statements of operations.

Accounts Receivable and Allowance for Doubtful Accounts

The Company extends credit to customers based on its evaluation of the customer’s financial condition. The Company does not require that any collateral be provided by its customers. The Company has established an allowance for accounts that may become uncollectible in the future. This estimated allowance is based primarily on management’s evaluation of the financial condition of the customer and historical experience. The Company monitors its accounts receivable and charges to expense an amount equal to its estimate of potential credit losses. Accounts that are outstanding longer than contractual payment terms are considered past due. The Company considers a number of factors in determining its estimates, including the length of time its trade accounts receivable are past due, the Company’s previous loss history and the customer’s current ability to pay its obligation. Accounts receivable balances are charged off against the allowance when it is determined that the receivable will not be recovered, and payments subsequently received on such receivables are credited to recovery of accounts written off. The Company does not charge interest on past due receivables.

The Company believes that the credit risk with respect to Trade Accounts Receivable is limited due to the Company’s credit evaluation process, the allowance for doubtful accounts that has been established, and the diversified nature of its customer base. There were no customers which accounted for more than 5% of consolidated net sales in 2009 or 2008. In 2009 and 2008, the 15 largest customers accounted for approximately 25% and 22% of consolidated net sales, respectively.

Inventories

Inventories are stated at the lower of cost or market. Cost is determined by the last-in, first-out (“LIFO”) method for precious metal inventories. Non precious metal inventories are stated at the lower of cost (principally average cost) or market. For precious metal inventories, no segregation among raw materials, work in process and finished goods is practicable.

Non-precious metal inventory is evaluated for estimated excess and obsolescence based upon assumptions about future demand and market conditions and is adjusted accordingly. If actual market conditions are less favorable than those projected, write-downs may be required.

Derivatives and Risks

Precious Metal Risk

H&H enters into commodity futures and forwards contracts on precious metals that are subject to market fluctuations in order to economically hedge its precious metal inventory against price fluctuations. Future and forward contracts to sell or buy precious metal are the derivatives used for this objective.

As of December 31, 2009 and 2008, the Company had contracted for $7.2 million and $4.6 million, respectively, of forward contracts with a counter party rated A by Standard & Poors, and the future contracts are exchange traded contracts through a third party broker. Accordingly, the Company has determined that there is minimal credit risk of default. The Company estimates the fair value of its derivative contracts through use of market quotes or broker valuations when market information is not available.

As these derivatives are not designated as accounting hedges under GAAP, they are accounted for as derivatives with no hedge designation. These derivatives are marked to market and both realized and unrealized gains and losses on these derivatives are recorded in current period earnings as other income (loss). The unrealized gain or loss (open trade equity) on the derivatives is included in other current assets or other current liabilities, respectively.

Foreign Currency Exchange Rate Risk

H&H and Bairnco are subject to the risk of price fluctuations related to anticipated revenues and operating costs, firm commitments for capital expenditures and existing assets or liabilities denominated in currencies other than U.S. dollars. H&H and Bairnco have not generally used derivative instruments to manage this risk.

Property, Plant and Equipment

Depreciation of property, plant and equipment is provided principally on the straight line method over the estimated useful lives of the assets, which range as follows: machinery & equipment 3 –15 years and buildings and improvements 10 – 30 years. Interest cost is capitalized for qualifying assets during the assets’ acquisition period. Maintenance and repairs are charged to expense and renewals and betterments are capitalized. Profit or loss on dispositions is credited or charged to operating income.

Goodwill, Intangibles and Long-Lived Assets

Goodwill is reviewed annually for impairment in accordance with GAAP. The Company uses judgment in assessing whether assets may have become impaired between annual impairment tests. Circumstances that could trigger an interim impairment test include but are not limited to: the occurrence of a significant change in circumstances, such as continuing adverse business conditions or legal factors; an adverse action or assessment by a regulator; unanticipated competition; loss of key personnel; the likelihood that a reporting unit or significant portion of a reporting unit will be sold or otherwise disposed; or results of testing for recoverability of a significant asset group within a reporting unit.

The testing of goodwill for impairment is performed at a level referred to as a reporting unit. Goodwill is allocated to each reporting unit based on actual goodwill valued in connection with each business combination consummated within each reporting unit. Six reporting units of the Company have goodwill assigned to them.

Goodwill impairment testing consists of a two-step process. Step 1 of the impairment test involves comparing the fair values of the applicable reporting units with their carrying values, including goodwill. If the carrying amount of a reporting unit exceeds the reporting unit’s fair value, Step 2 of the goodwill impairment test is performed to determine the amount of impairment loss. Step 2 of the goodwill impairment test involves comparing the implied fair value of the affected reporting unit’s goodwill against the carrying value of that goodwill. In performing the first step of the impairment test, the Company also reconciles the aggregate estimated fair value of its reporting units to its enterprise value (which includes a control premium).

To estimate the fair value of our reporting units, we use an income approach and a market approach. The income approach is based on a discounted cash flow analysis (“DCF”) and calculates the fair value by estimating the after-tax cash flows attributable to a reporting unit and then discounting the after-tax cash flows to a present value using a risk-adjusted discount rate. Assumptions used in the DCF require the exercise of significant judgment, including judgment about appropriate discount rates and terminal values, growth rates, and the amount and timing of expected future cash flows. The forecasted cash flows are based on current plans and for years beyond that plan, the estimates are based on assumed growth rates. We believe the assumptions are consistent with the plans and estimates used to manage the underlying businesses. The discount rates, which are intended to reflect the risks inherent in future cash flow projections, used in the DCF are based on estimates of the weighted-average cost of capital (“WACC”) of a market participant. Such estimates are derived from our analysis of peer companies and considered the industry weighted average return on debt and equity from a market participant perspective. The Company believes the assumptions used to determine the fair value of our respective reporting units are reasonable. If different assumptions were used, particularly with respect to forecasted cash flows or WACCs, different estimates of fair value may result and there could be the potential that an impairment charge could result. Actual operating results and the related cash flows of the reporting units could differ from the estimated operating results and related cash flows. The recoverability of goodwill may be impacted if estimated future operating cash flows are not achieved.

A market approach values a business by considering the prices at which shares of capital stock of reasonably comparable companies are trading in the public market, or the transaction price at which similar companies have been acquired.

Relative weights are then given to the results of each of these approaches, based on the facts and circumstances of the business being valued. The use of multiple approaches (in our case, income and market approaches) is considered preferable to a single method. In our case, significant weight is given to the income approach because it generally provides a reliable estimate of value for an ongoing business which has a reliable forecast of operations. The income approach closely parallels investors’ consideration of the future benefits derived from ownership of an asset.

Intangible assets with finite lives are amortized over their estimated useful lives. We also estimate the depreciable lives of property, plant and equipment. Both property, plant and equipment, as well as intangible assets with finite lives are reviewed for impairment if events, or changes in circumstances, indicate that we may not recover the carrying amount of an asset. Long-lived assets consisting of land and buildings used in previously operating businesses are carried at the lower of cost or fair value, and are included in Other Non-Current Assets in the consolidated balance sheets. A reduction in the carrying value of such long-lived assets used in previously operating businesses is recorded as an asset impairment charge in the consolidated statement of operations.

Equity Investments

Investments are accounted for using the equity method of accounting if the investment provides the Company the ability to exercise significant influence, but not control, over an investee. Significant influence is generally deemed to exist if the company has an ownership interest in the voting stock of the investee of between 20% and 50%, although other factors, such as representation on the investee’s Board of Directors, are considered in determining whether the equity method of accounting is appropriate. The Company accounted for its investment in CoSine using the equity method of accounting. The CoSine investment was sold in 2009.

Stock Based Compensation

The Company accounts for stock options granted to employees as compensation expense which is recognized in exchange for the services received. The compensation expense is based on the fair value of the equity instruments on the grant-date.

At the Company’s Annual Meeting of Shareholders on June 21, 2007, the Company’s shareholders approved a proposal to adopt Handy & Harman Ltd.’s 2007 Incentive Stock Plan (the “2007 Plan”), and reserved 80,000 shares of common stock under the 2007 Plan, as adjusted pursuant to the terms of the 2007 Plan to reflect the Reverse Stock Split. On July 6, 2007, stock options for an aggregate of 62,000 shares of common stock, as adjusted pursuant to the terms of the 2007 Plan to reflect the Reverse Stock Split, were granted under the 2007 Plan to employees and to two outside directors of the Company, and additional options have periodically been granted under the 2007 Plan to other key employees hired by the Company since that time.

Environmental Liabilities

The Company accrues for losses associated with environmental remediation obligations when such losses are probable and reasonably estimable. Accruals for estimated losses from environmental remediation obligations generally are recognized no later than completion of the remedial feasibility study.

Such accruals are adjusted as further information develops or circumstances change. Costs of future expenditures for environmental remediation obligations are not discounted to their present value. Recoveries of environmental remediation costs from other parties are recorded as assets when their receipt is deemed probable.

Income Taxes

Income taxes currently payable or tax refunds receivable are recorded on a net basis and included in accrued liabilities on the consolidated balance sheets. Deferred income taxes reflect the tax effect of NOLs, capital loss or tax credit carryforwards and the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting (GAAP) and income tax purposes, as determined under enacted tax laws and rates. Valuation allowances are established if, based on the weight of available evidence, it is more likely than not that some portion or the entire deferred tax asset will not be realized. The financial effect of changes in tax laws or rates is accounted for in the period of enactment.

Earnings Per Share

Basic earnings per share are based on the weighted average number of shares of Common Stock outstanding during each year. Diluted earnings per share gives effect to dilutive potential common shares outstanding during the period.

Foreign Currency Translation

Assets and liabilities of foreign subsidiaries are translated at current exchange rates, and related revenues and expenses are translated at average rates of exchange in effect during the year. Resulting cumulative translation adjustments are recorded as a separate component of accumulated other comprehensive income.

Fair Value Measurements

The Company adopted Accounting Standards Codification No. 820, “Fair Value Measurements” effective January 1, 2009. Under this standard, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e ,the “exit price”) in an orderly transaction between market participants at the measurement date.

In determining fair value, the Company uses various valuation approaches. The hierarchy of those valuation approaches is broken down into three levels based on the reliability of inputs as follows:

Level 1 inputs are quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. An active market for the asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis. The valuation under this approach does not entail a significant degree of judgment.

Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include: quoted prices for similar assets or liabilities in active markets, inputs other than quoted prices that are observable for the asset or liability, (e.g., interest rates and yield curves observable at commonly quoted intervals or current market) and contractual prices for the underlying financial instrument, as well as other relevant economic measures.

Level 3 inputs are unobservable inputs for the asset or liability. Unobservable inputs are used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date.

The fair value of the Company’s financial instruments, such as cash and cash equivalents, accounts receivable, and accounts payable approximate carrying value due to the short-term maturities of these assets and liabilities. Fair value of the Company’s long term debt approximates its carrying cost due to variable interest rates.

The Company's non-financial assets measured at fair value on a non-recurring basis include goodwill and intangible assets, any assets and liabilities acquired in a business combination, or its long-lived assets written down to fair value. To measure fair value for such assets, the Company uses techniques including discounted expected future cash flows, a market approach, and/or appraisals (Level 3 inputs).

The derivative instruments that the Company purchases, specifically commodity futures and forwards contracts on precious metal, are valued at fair value. The futures contracts are Level 1 measurements since they are traded on a commodity exchange. The forward contracts are entered into with a counterparty, and are considered Level 2 measurements.

Legal Contingencies

The Company provides for legal contingencies when the liability is probable and the amount of the associated costs is reasonably determinable. The Company regularly monitors the progress of legal contingencies and revises the amounts recorded in the period in which a change in estimate occurs.

Advertising Costs

Advertising costs consist of sales promotion literature, samples, cost of trade shows, and general advertising costs, and are included in selling, general and administrative expenses on the consolidated statements of operations. Advertising, promotion and trade show costs totaled approximately $2.4 million in 2009 and $2.7 million in 2008.

Reclassification

Certain amounts for prior years have been reclassified to conform to the current year presentation. In particular, the assets, liabilities and losses of discontinued operations (see Note 4) have been reclassified into separate lines on the financial statements to segregate them from continuing operations. On the consolidated statement of operations, certain significant items, such as pension credit and restructuring costs have been shown separately. On the consolidated balance sheet, the current portion of pension and other benefit plan liabilities has been reclassified from long-term liabilities, and interest payable to related party has been shown on a separate line.

Note 3 – Recently Issued Accounting Pronouncements

In July 2009, the Financial Accounting Standards Board (“FASB”) issued “The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles” (“the Codification” or “ASC”). The Codification was effective for the Company’s third-quarter 2009 financial statements. The Codification is the official single source of authoritative GAAP and all existing accounting standards have been superseded. All other accounting guidance not included in the Codification are considered non-authoritative. The Codification also includes all relevant SEC guidance organized using the same topical structure in separate sections within the Codification. The Codification did not change GAAP and all references to authoritative accounting literature included herein have now been referenced in accordance with the Codification.

In May 2009, the FASB issued ASC No. 855 “Subsequent Events” (“ASC 855”). ASC 855 establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued. This statement sets forth the period after the balance sheet date that management should evaluate events for transactions that may occur for potential recognition or disclosure in the financial statements. ASC 855 also sets forth the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements and the disclosures that an entity should make about events or transactions that occurred after the balance sheet date. ASC 855 was applicable to interim or annual financial periods ending after June 15, 2009. The Company adopted ASC 855 in the second quarter of 2009, and its adoption did not have a significant effect on the Company’s consolidated financial position and results of operations.

In April 2009, the FASB issued ASC No. 825, “Interim Disclosures about Fair Value of Financial Instruments” (“ASC 825”), which increases the frequency of fair value disclosures from an annual to a quarterly basis. ASC 825 was effective for interim and annual periods ending after June 15, 2009, and the Company adopted its provisions in the second quarter of 2009. The adoption of ASC 825 did not impact the Company’s financial position or results of operations.

In April 2009, the FASB issued ASC No. 820-10, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“ASC 820-10”). It provides guidance for estimating fair values when there is no active market or where the price inputs being used represent distressed sales and identifying circumstances that indicate a transaction is not orderly. ASC 820-10 was effective for interim and annual reporting periods ending after June 15, 2009, and the Company adopted it in the second quarter of 2009. Adoption of ASC 820-10 did not have any effect on the Company’s financial position or results of operations.

In December 2008, the FASB issued ASC No. 715-20, “Employer’s Disclosures about Postretirement Benefit Plan Assets” (“ASC 715-20”), to provide guidance on an employer’s disclosures about plan assets of a defined benefit pension or other postretirement plan. ASC 715-20 will become effective for financial statements issued for fiscal years and interim periods ending after December 15, 2009. ASC 715-20 changes the disclosure requirements for benefit plan assets, but does not change the accounting for such assets or plans, and therefore, the Company believes that its adoption will not have an effect on its consolidated financial position and results of operations.

In March 2008, the FASB issued ASC No. 815-10, “Disclosures about Derivative Instruments and Hedging Activities” (“ASC 815-10”), which changed the disclosure requirements for derivative instruments and hedging activities, but did not change the accounting for such instruments. Therefore, the adoption of ASC 815-10 did not have an effect on the Company’s consolidated financial position and results of operations. ASC 815-10 became effective in the first quarter of 2009. See Note 10 “Derivative Instruments”.

In September 2006, the FASB issued ASC No. 820, “Fair Value Measurements” (“ASC 820”) which defined fair value, established a framework for measuring fair value in accordance with GAAP, and expanded disclosures about fair value measurements. ASC 820 did not require any new fair value measurements; rather, it applies under other accounting pronouncements that require or permit fair value measurements. On January 1, 2009, the Company adopted ASC 820 for all non-financial assets and liabilities measured at fair value on a non-recurring basis. The application of ASC 820 did not have an impact on the Company's financial position or results of operations. The Company's non-financial assets measured at fair value on a non-recurring basis include goodwill and intangible assets. In a business combination, the non-financial assets and liabilities of the acquired company would be measured at fair value in accordance with ASC 820. The requirements of ASC 820 include using an exit price based on an orderly transaction between market participants at the measurement date assuming the highest and best use of the asset by market participants.

In December 2007, the FASB issued ASC No. 810, “Non-controlling Interests in Consolidated Financial Statements” (“ASC 810”), which established accounting and reporting standards for the non-controlling interest in a subsidiary and for the deconsolidation of a subsidiary. ASC 810 became effective for fiscal years beginning after December 15, 2008. The Company adopted ASC 810 on January 1, 2009, and its adoption did not have a significant effect on the Company’s consolidated financial position and results of operations.

In December 2007, the FASB also issued ASC No. 805, “Business Combinations” (“ASC 805”), which requires an entity to recognize assets acquired, liabilities assumed, contractual contingencies and contingent consideration at their fair value on the acquisition date. ASC 805 also requires that (1) acquisition-related costs be expensed as incurred; (2) restructuring costs generally be recognized as a post-acquisition expense; and (3) changes in deferred tax asset valuation allowances and income tax uncertainties after the measurement period impact income tax expense. The Company adopted ASC 805 on January 1, 2009, and its adoption did not have a significant effect on the Company’s consolidated financial position and results of operations.

Note 4 – Discontinued Operations

Arlon CM

In 2010, the Company decided to exit the business of manufacturing adhesive films, specialty graphic films and engineered coated products, and in February 2011, the Company entered into two separate asset sale transactions. (see Note 21-“Subsequent Events”). These businesses comprised the Arlon CM segment. The Company recorded an asset impairment charge of $1.3 million in 2010 in connection with certain of these assets.

Kasco-France

During the third quarter of 2011, the Company sold the stock of Eurokasco S.A.S. (“Kasco-France”), a part of its Kasco segment, to Kasco-France’s former management team for one Euro plus 25% of any pre-tax earnings over the next three years. Additionally, Kasco-France signed a five year supply agreement to purchase certain products from Kasco. Kasco-France has been included as a discontinued operation on a retroactive basis for the twelve months ending December 31, 2010 and 2009 (see Note 21-“Subsequent Events”).

Indiana Tube Denmark

In 2008, the Company decided to exit the welded specialty tubing market in Europe and close its Indiana Tube Denmark subsidiary (“ITD”), sell ITD’s assets, pay off ITD’s debt with cash generated by ITD, and repatriate the remaining cash. ITD had been part of the Company’s Tubing segment. The decision to exit this market was made after evaluating current economic conditions and ITD’s capabilities, served markets, and competitors. In conjunction with the decision to close ITD, the Company reviewed the recoverability of ITD’s long-lived assets in accordance with ASC No 360, “Accounting for Impairment or Disposal of Long-Lived Assets.” A review of future cash flows, based on the expected closing date, indicated that cash flows would be insufficient to support the carrying value of certain machinery and equipment at ITD. As a result of the Company’s review, a non-cash impairment charge of $0.5 million was recognized in 2008 to write down the individual components of long-lived assets to estimated fair value.

During 2009, ITD ceased operations and sold or disposed of its inventory and most of its equipment. A gain on the sale of equipment of $1.7 million was recognized. ITD has collected its receivables, and its only remaining asset is the ITD facility, which has been offered for sale. ITD repaid $4.6 million of its long-term debt during 2009.

Sumco, Inc.

In 2008, the Company also evaluated its Sumco subsidiary in light of ongoing operating losses and future prospects. A non-cash asset impairment charge of $7.8 million was recognized in 2008 to write down the individual components of long-lived assets to estimated fair value. Sumco provided electroplating services primarily to the automotive market, and had been part of the Precious Metal segment. Sumco had declining cash flows in 2008 and projected negative 2009 cash flows principally caused by the decline in U.S. economic activity and Sumco’s reliance on the automotive market for over 90% of its sales. The Company decided to exit this business. In June 2009, Sumco entered into an agreement with the collective bargaining agent representing its unionized workers which specified the conditions of termination of employment for its unionized employees. Sumco also entered into an agreement with a company owned by two former employees (the “Management Company”) whereby the Management Company agreed to fulfill various remaining customer contracts of Sumco until the contracts’ expiration on December 31, 2009. In return, Sumco paid the Management Company a management service fee and leased space to the Management Company for a nominal rent. As part of the transactions, Sumco incurred severance costs of approximately $0.5 million.

On December 31, 2009, Sumco entered into a two-year lease of its manufacturing facility in Indianapolis, Indiana with the principals of the former Management Company (the “Tenant”). As part of the lease, Sumco granted the Tenant an option to purchase Sumco’s manufacturing facility beginning on January 1, 2011, as well as granted the Tenant a right of first refusal to purchase the manufacturing facility by matching a bona fide offer of a third party. In addition, Sumco sold various machinery, equipment, and inventory to the Tenant and has licensed the “Sumco” name to the Tenant during the lease term.

The following assets and liabilities of the discontinued operations, Arlon CM, Kasco-France, ITD and Sumco, have been segregated in the accompanying consolidated balance sheets as of December 31, 2009 and 2008.

(in thousands)
	December 31, 2009		December 31, 2008
Current Assets:
Trade accounts receivable	$	12,943	$	19,040
Inventory		15,233		20,508
Other current assets		1,336		1,190
	$	29,512	$	40,738

Long-term Assets:
Property, plant & equipment, net	$	8,284	$	11,740
Intangibles, net		104		-
Other non-current assets		230		183
	$	8,618	$	11,923
Current Liabilities:
Note payable to bank	$	-	$	4,661
Current liabilities		9,686		11,202
	$	9,686	$	15,863

Non-current Liablities
Deferred income taxes	$	171	$	139
Pension liability		346		314
Other non-current liabilities		179		186
	$	696	$	639

The income (loss) from Discontinued Operations consists of the following:

	Years ended December 31,
(in thousands)	2009			2008

Net sales	$	93,503		$	133,926

Asset impairment charges		(1,149	)		(8,291	)

Operating loss		(6,251	)		(9,187	)

Interest/other expense		(702	)		(868	)

Income tax benefit (expense)		104			(115	)

Loss from discontinued operations, net		(6,849	)		(10,170	)

Gain (loss) on sale of assets, net of tax		1,832			(112	)

Note 5 -Restructuring

In 2009, the Company engaged in various cost improvement initiatives in order to positively impact productivity and profitability, including certain activities that management believes will result in a more efficient infrastructure that can be leveraged in the future. In connection with these activities, restructuring charges totaled $1.1 million in 2009.

Restructuring costs of $0.6 million were recorded in 2009 relating to the consolidation of the former Bairnco Corporate office into the HNH Corporate office. The Bairnco corporate office consolidation has been completed.

In April 2009, the Company announced the closure of a facility in New Hampshire which was part of the Precious Metal segment and the relocation of the functions to its facility in Milwaukee, Wisconsin. Such relocation has been completed and the Company has offered the facility for sublease. Restructuring costs of approximately $0.4 million were recorded in connection with this relocation, including an estimate of future net lease costs for the facility. The lease expires in December 2014.

The restructuring costs and activity in the restructuring reserve for the year ended December 31, 2009 consisted of:


	Reserve Balance							Reserve Balance
	December 31, 2008		Expense		Payments			December 31, 2009
(in thousands)
Termination benefits	$	-	$	725	$	(633	)	$	92
Rent expense		-		317		(151	)		166
Other facility closure costs		-		40		(40	)		-
	$	-	$	1,082	$	(824	)	$	258

Note 6 –Asset Impairment Charges

The Company recorded $3.0 million of asset impairment charges in 2009, as follows:

The Company owns certain real property that is not currently used in operations and is not being depreciated, principally former manufacturing plants. Such real property is included in Other Non-Current Assets on the consolidated balance sheets. In accordance with GAAP, the Company reviewed such properties for impairment and determined that certain properties should be written down to fair value. In the fourth quarter of 2009, the Company recorded non-cash asset impairment charges of $1.0 million related to these properties.

In addition, in the second quarter of 2009, the Company recorded a $0.9 million non-cash impairment charge related to certain manufacturing equipment located at one of its Tubing facilities. The equipment had been utilized exclusively in connection with a discontinued product line, has no other viable use to the Company, and limited scrap value.

The Company also recorded a $1.1 million impairment charge related to an investment accounted for under the equity method. The equity investment was sold by the Company during the third quarter of 2009 for cash proceeds of $3.1 million, and the amount of the impairment represents the difference between the carrying value of the investment and the selling price.

Note 7 – Pensions, Other Postretirement and Post-Employment Benefits

The Company maintains several qualified and non-qualified pension plans and other postretirement benefit plans covering substantially all of its employees. The Company’s pension, health care benefit and significant defined contribution plans are discussed below. The Company’s other defined contribution plans are not significant individually or in the aggregate.

Qualified Pension Plans

Handy & Harman Ltd. sponsors a defined benefit pension plan, the WHX pension Plan, covering many of HNH and H&H employees and certain employees of HNH’s former subsidiary, Wheeling-Pittsburgh Corporation, or WPC. The WHX pension Plan was established in May 1998 as a result of the merger of the former H&H plans, which covered substantially all H&H employees, and the WPC plan. The WPC plan, covering most USWA-represented employees of WPC, was created pursuant to a collective bargaining agreement ratified on August 12, 1997. Prior to that date, benefits were provided through a defined contribution plan, the Wheeling-Pittsburgh Steel Corporation Retirement Security Plan (“RSP”). The assets of the RSP were merged into the WPC plan as of December 1, 1997. Under the terms of the WHX pension Plan, the benefit formula and provisions for the WPC and H&H participants continued as they were designed under each of the respective plans prior to the merger.

The qualified pension benefits under the WHX pension Plan were frozen as of December 31, 2005 and April 30, 2006 for hourly and salaried non-bargaining participants, respectively, with the exception of a single operating unit.

WPC Group employees ceased to be active participants in the WHX pension Plan effective July 31, 2003 and as a result such employees no longer accrue benefits under the WHX pension Plan.

Bairnco Corporation had several pension plans (“Bairnco Plans”), which covered substantially all of its employees. In 2006, Bairnco froze the Bairnco Corporation Retirement Plan and initiated employer contributions to its 401(k) plan. On June 2, 2008, two Bairnco plans (Salaried and Kasco) were merged into the WHX pension Plan. The remaining plan that has not been merged with the WHX pension Plan covers certain employees at a facility located in Bear, Delaware (the “Bairnco Bear Plan”), and the pension benefits under the Bairnco Bear Plan were frozen during 2009.

Bairnco’s Canadian subsidiary provides retirement benefits for its employees through a defined contribution plan. In addition, the Company’s European subsidiaries provide retirement benefits for employees consistent with local practices. The foreign plans are not significant in the aggregate and therefore are not included in the following disclosures.

Other Comprehensive Income for 2009 and 2008 includes:

							Other Post-Retirement
	Defined Benefit Plans						Benefit Plans
(in thousands)	2009			2008			2009			2008
Amortization of actuarial losses	$	(13,215	)	$	(351	)	$	-		$	(146	)
Amortization of prior service credits (costs)		(63	)		(63	)		-			265
Net actuarial (gains) losses		(30,708	)		127,081			768			171
One-time adjustment-charge (credit)		-			-			(169	)		517

The pretax amount of actuarial losses and prior service cost (credits) included in Accumulated Other Comprehensive Income (Loss) at December 31, 2009 that is expected to be recognized in net periodic benefit cost in 2010 is $8.6 million and $0.1 million, respectively, for defined benefit pension plans and $41,000 and -0-, respectively, for other post retirement benefit plans.

Pension benefits are based on years of service and the amount of compensation earned during the participants’ employment. However, as noted above, the qualified pension benefits were frozen for most participants.

Pension benefits for the WPC bargained participants include both defined benefit and defined contribution features, since the plan includes the account balances from the RSP. The gross benefit, before offsets, is calculated based on years of service and the benefit multiplier under the plan. The net defined benefit pension plan benefit is the gross amount offset for the benefits payable from the RSP and benefits payable by the Pension Benefit Guaranty Corporation from previously terminated plans. Individual employee accounts established under the RSP are maintained until retirement. Upon retirement, participants who are eligible for the WHX pension Plan and maintain RSP account balances will normally receive benefits from the WHX pension Plan. When these participants become eligible for benefits under the WHX pension Plan, their vested balances in the RSP Plan become assets of the WHX pension Plan. Aggregate account balances held in trust in individual RSP Plan participants’ accounts totaled $28.7 million at December 31, 2009. These assets cannot be used to fund any of the net benefit that is the basis for determining the defined benefit plan’s benefit obligation at December 31, 2009.

The measurement date for plan obligations is December 31. The discount rate is the rate at which the plans’ obligations could be effectively settled and is based on high quality bond yields as of the measurement date.

Summarized information regarding the significant qualified defined benefit pension plans of Handy & Harman Ltd. and Bairnco is as follows:


WHX Pension Plan
(in thousands)	2009			2008
Components of net periodic benefit cost (credit):

Service cost	$	295		$	308
Interest cost		25,569			23,657
Expected return on plan assets		(25,089	)		(31,885	)
Amortization of prior service cost		63			63
Actuarial loss amortization		13,175			351
Total	$	14,013		$	(7,506	)

Bairnco Plans	Bairnco Bear Plan						Other Bairnco Plans (a)
(in thousands)	2009			2008			2008
Components of net periodic benefit cost (credit):

Service cost	$	84		$	81		$	-
Interest cost		140			128			2,635
Expected return on plan assets		(107	)		(146	)		(3,527	)
Amortization of prior service cost		-			-			-
Recognized actuarial loss		40			-			-
Total	$	157		$	63		$	(892	)

(a) Two Bairnco plans were merged into the WHX Pension Plan effective June 2, 2008.


	2009									2008
																Other
	WHX			Bairnco						WHX			Bairnco			Bairnco Plans (a)
	Plan			Bear Plan			Total			Plan			Bear Plan			Bairnco Plans (a)			Total
	(in thousands)
Change in benefit obligation:
Benefit obligation at January 1	$	445,088		$	2,183		$	447,271		$	405,865		$	1,982		$	43,537		$	451,384
Service cost		295			84			379			308			82			-			390
Interest cost		25,569			140			25,709			23,657			128			2,635			26,420
Actuarial loss		15,317			71			15,388			5,890			33			-			5,923
Benefits paid		(35,463	)		(42	)		(35,505	)		(36,027	)		(41	)		(998	)		(37,066	)
Business Combinations		-			-			-			45,174			-			(45,174	)		-
Transfers from RSP		1,227			-			1,227			221			-			-			221
Benefit obligation at December 31	$	452,033		$	2,436		$	454,469		$	445,088		$	2,184		$	-		$	447,272

Change in plan assets:
Fair value of plan assets at January 1	$	312,253		$	1,269		$	313,522		$	391,470		$	1,738		$	42,723		$	435,931
Business Combinations		-			-			-			41,725			-			(41,725	)		-
Actual returns on plan assets		71,086			179			71,265			(85,135	)		(428	)		-			(85,563	)
Benefits paid		(35,463	)		(42	)		(35,505	)		(36,028	)		(41	)		(998	)		(37,067	)
Company contributions		1,808			143			1,951			-			-			-			-
Transfers from RSP		1,227			-			1,227			221			-			-			221
Fair value of plan assets at December 31	$	350,911		$	1,549		$	352,460		$	312,253		$	1,269		$	-		$	313,522

Funded status	$	(101,122	)	$	(887	)	$	(102,009	)	$	(132,835	)	$	(915	)	$	-		$	(133,750	)

The pre tax amounts recognized in
accumulated other comprehensive income:
Net actuarial loss	$	126,207		$	556		$	126,763		$	170,062		$	597		$	-		$	170,659
Prior service cost		200			-			200			263			-			-			263
	$	126,407		$	556		$	126,963		$	170,325		$	597		$	-		$	170,922

Accumulated benefit obligation (ABO) for qualified
defined benefit pension plans :
ABO at January 1	$	445,088		$	2,183		$	447,271		$	405,865		$	1,982		$	43,535		$	451,382
ABO at December 31		452,033			2,436			454,469			445,088			2,183			-			447,271

(a) Two Bairnco plans were merged into the WHX Pension Plan effective June 2, 2008.

The weighted average assumptions used in the valuations of pension benefits were as follows:

	WHX Plan						Bairnco Bear Plan
	2009			2008			2009			2008
Assumptions used to determine benefit
obligations at December 31:
Discount rate		5.55	%		6.00	%		6.05	%		6.15	%
Rate of compensation increase		N/A			N/A			N/A			N/A

Assumptions used to determine net
periodic benefit cost for the period
ending December 31:
Discount rate		6.00	%		6.05	%		6.15	%		6.35	%
Expected return on assets		8.50	%		8.50	%		8.50	%		8.50	%
Rate of compensation increase		N/A			N/A			N/A			N/A

In determining the expected long-term rate of return on assets, the Company evaluated input from various investment professionals. In addition, the Company considered its historical compound returns as well as the Company’s forward-looking expectations for the plan. The Company determines its actuarial assumptions for its pension and postretirement plans on December 31 of each year to calculate liability information as of that date and pension and postretirement expense for the following year. The discount rate assumption is derived from the rate of return on high-quality bonds as of December 31 of each year.

The Company’s investment policy is to maximize the total rate of return with a view to long-term funding objectives of the pension plan to ensure that funds are available to meet benefit obligations when due. The three to five year objective of the Plan is to achieve a rate of return that exceeds the Company’s expected earnings rate by 150 basis points at prudent levels of risk. Therefore the pension plan assets are diversified to the extent necessary to minimize risk and to achieve an optimal balance between risk and return. There are no target allocations. The Plan’s assets are diversified as to type of assets, investment strategies employed, and number of investment managers used. Investments may include equities, fixed income, cash equivalents, convertible securities, and private investment funds. Derivatives may be used as part of the investment strategy. The Company may direct the transfer of assets between investment managers in order to rebalance the portfolio in accordance with asset allocation guidelines established by the Company.

The fair value of pension investments is defined by reference to one of the three following categories: Level 1 inputs are quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. An active market for the asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis. The valuation under this approach does not entail a significant degree of judgment (“Level 1”).

The WHX pension Plan’s assets at December 31, 2009, by asset category, are as follows:


WHX Pension Plan Assets	Assets (Liabilities) at Fair Value as of December 31, 2009
(in thousands)	Quoted Prices
	In Active			Significant
	Markets for			Other			Significant
	Identical			Observable			Unobservable
	Assets			Inputs			Inputs
	(Level 1)			(Level 2)			(Level 3)		Total
Defined benefit pension plan investment assets:
Equities	$	27,482		$	946		$	-	$	28,428
Fixed income securities		8,625			26,201			123		34,949
Insurance contracts		-			10,084			-		10,084
Common trust funds (a)					106,134			-		106,134
Fund of funds (b)		-			32,804			27,469		60,273
		36,107			176,169			27,592		239,868
Futures contracts, net		(832	)		(198	)		-		(1,030	)
Total	$	35,275		$	175,971		$	27,592	$	238,838
Cash and cash equivalents										114,985
Net payables										(2,912	)
Total pension assets									$	350,911

(a) Common Trust Funds- Common trust funds are comprised of shares or units in commingled funds that are not publicly traded. The underlying assets in these funds are primarily publicly traded equity securities, fixed income securities, and commodity-related securities and are valued at their Net Asset Values (“NAVs”) that are calculated by the investment manager or sponsor of the fund and have daily or monthly liquidity.

(b) Fund of funds consist of fund-of-fund LLC or commingled fund structures. The underlying assets in these funds are primarily publicly traded equity securities, fixed income securities, and commodity-related securities. The LLCs are valued based on NAVs calculated by the fund and are not publicly available. In most cases, the liquidity for the LLCs is quarterly with advance notice and is subject to liquidity of the underlying funds. In some cases, there may be extended lock-up periods greater than 90 days or side-pockets for non-liquid assets.

The fair value measurements of the WHX pension Plan assets using significant unobservable inputs (Level 3) changed during 2009 due to the following:

2009 Changes in Fair Value Measurements Using Significant Unobservable Inputs (Level 3)

	Balance		Purchases,		Transfers			Gains/			Balance
	beginning		Sales &		In/(Out)			(losses)			end
(in thousands)	of Year		Settlements								of Year

Fixed income securities	$	-	$	428	$	-		$	(305	)	$	123
Fund of funds	$	1,377	$	18,276	$	(332	)	$	8,148		$	27,469

The Bairnco Bear Pension Plan’s assets at December 31, 2009, by asset category, are as follows:

Bairnco Bear Pension Plan Assets	Assets (Liabilities) at Fair Value as of December 31, 2009
(in thousands)	Quoted Prices
	In Active			Significant
	Markets for			Other			Significant
	Identical			Observable			Unobservable
	Assets			Inputs			Inputs
	(Level 1)			(Level 2)			(Level 3)		Total
Defined benefit pension plan investment assets:
Equities	$	125		$	4		$	-	$	129
Fixed income securities		39			119			1		159
Insurance contracts		-			-			-		-
Common trust funds		-			482			-		482
Fund of funds		-			149			125		274
		164			754			126		1,044
Futures contracts, net		(4	)		(1	)		-		(5	)
Total	$	160		$	753		$	126	$	1,039
Cash and cash equivalents										523
Net payables										(13	)
Total pension assets									$	1,549

The fair value measurements of the Bairnco Bear Pension Plan assets using significant unobservable inputs (Level 3) changed during 2009 due to the following:

2009 Changes in Fair Value Measurements Using Significant Unobservable Inputs (Level 3)

	Balance		Purchases,		Transfers			Gains/			Balance
	beginning		Sales &		In/(Out)			(losses)			end
(in thousands)	of Year		Settlements								of Year

Fixed income securities		-		2		-			(1	)	$	1
Fund of funds	$	6	$	83	$	(2	)	$	38		$	125

Total qualified pension plan assets at December 31, 2009, by asset category, are as follows:

Total Pension Plan Assets	Assets (Liabilities) at Fair Value as of December 31, 2009
(in thousands)	Quoted Prices
	In Active			Significant
	Markets for			Other			Significant
	Identical			Observable			Unobservable
	Assets			Inputs			Inputs
	(Level 1)			(Level 2)			(Level 3)		Total
Defined benefit pension plan investment assets:
Equities	$	27,607		$	950		$	-	$	28,557
Fixed income securities		8,664			26,320			124		35,108
Insurance contracts		-			10,084			-		10,084
Common trust funds		-			106,616			-		106,616
Fund of funds		-			32,953			27,594		60,547
		36,271			176,923			27,718		240,912
Futures contracts, net		(835	)		(200	)		-		(1,035	)
Total	$	35,436		$	176,723		$	27,718	$	239,877
Cash and cash equivalents										115,508
Net payables										(2,925	)
Total pension assets									$	352,460

The fair value measurements of total qualified plan assets using significant unobservable inputs (Level 3) changed during 2009 due to the following:

2009 Changes in Fair Value Measurements Using Significant Unobservable Inputs (Level 3)

	Balance		Purchases,		Transfers			Gains/			Balance
	beginning		Sales &		In/(Out)			(losses)			end
(in thousands)	of Year		Settlements								of Year

Fixed income securities	$	-	$	430	$	-		$	(306	)	$	124
Fund of funds	$	1,383	$	18,359	$	(333	)	$	8,185		$	27,594

The Company’s Pension Plans’ asset allocations at December 31, 2009 and 2008, by asset category, are as follows:

	WHX/Bairnco Bear Plans
	2009			2008
Asset Category
Cash and cash equivalents		32	%		23	%
Equity securities		8	%		22	%
Fixed income securities		10	%		8	%
Insurance contracts		3	%		-
Common trust funds		30	%		26	%
Fund of funds		17	%		21	%
Total		100	%		100	%

The Common Trust Funds and the Funds of Funds (collectively, the “Funds”) or the investment funds they are invested in, own marketable and non-marketable securities and other investment instruments. Such investments are valued by the Funds, underlying investment managers or the investment funds, at fair value, as described in their respective financial statements and offering memorandums. The Company utilizes these values in quantifying the value of the assets of its pension plans, which is then used in the determination of the unfunded pension liability on the balance sheet. Because of the inherent uncertainty of valuation of some of the WHX pension Plan’s investments in the Funds and some of the underlying investments held by the investment funds, the recorded value may differ from the value that would have been used had a ready market existed for some of these investments for which market quotations are not readily available and are valued at their fair value as determined in good faith by the respective Funds, underlying investment managers, or the investment funds.

Contributions

Employer contributions consist of funds paid from employer assets into a qualified pension trust account. The Company’s funding policy is to contribute annually an amount that satisfies the minimum funding standards of ERISA.

The Company expects to have required minimum contributions for the WHX pension Plan for 2010 and 2011 of $9.6 million and $21.0 million, respectively. Required future contributions are based upon assumptions such as discount rates on future obligations, assumed rates of return on plan assets and legislative changes. Pension costs and required funding obligations will be affected by changes in the factors and assumptions described in the previous sentence, as well as other changes such as a plan termination.

Benefit Payments

Estimated future benefit payments for the qualified defined benefit plans over the next ten years are as follows (in thousands):

Years	WHX Plan		Bairnco Bear Plan		Total
2010	$	35,656	$	54	$	35,710
2011		35,375		60		35,435
2012		35,214		67		35,281
2013		34,996		75		35,071
2014		34,706		77		34,783
2015 - 2019		167,831		536		168,367

Non-Qualified Pension Plans

In addition to the aforementioned benefit plans, H&H has a non-qualified pension plan for certain current and retired employees. Such plan adopted an amendment effective January 1, 2006, to freeze benefits under the plan. In 2009, HNH decided to cashout any remaining participants in the plan in 2010.

The measurement date for plan obligations is December 31.

Summarized information regarding the non qualified defined benefit pension plan of H&H is as follows:

	2009		2008
Components of net periodic benefit cost:	(in thousands)

Service cost	$	-	$	-
Interest cost		11		12
Amortization of prior service cost		-		-
Amortization of actuarial gain (loss)		-		-
Total	$	11	$	12

	2009			2008
	(in thousands)
Change in benefit obligation:
Benefit obligation at January 1	$	242		$	201
Service cost		-			-
Interest cost		11			12
Actuarial (gain) loss		(27	)		35
Benefits paid		(6	)		(6	)
Benefit obligation at December 31	$	220		$	242

Plan assets	$	-		$	-
Funded status	$	(220	)	$	(242	)

The pre tax amounts recognized in
accumulated other comprehensive income:
Net actuarial (gain) loss	$	(13	)	$	14

Accumulated benefit obligation for
defined benefit pension plans :
Accumulated benefit obligation at January 1	$	242		$	201
Accumulated benefit obligation at December 31		220			242

The weighted average assumptions used in the valuations of these pension benefits were as follows:

	2009	2008
Assumptions used to determine benefit
obligations at December 31:
Discount rate	5.55%	6.00%
Rate of compensation increase	N/A	N/A

Assumptions used to determine net
periodic benefit cost (credit) for the period
ending December 31:
Discount rate	6.00%	6.05%
Rate of compensation increase	N/A	N/A

Contributions

The non-qualified plan is not funded. Employer contributions are equal to annual benefit payments.

Benefit Payments

The Company estimates that its future benefit payments for the H&H non-qualified plan will be $0.2 million in 2010.

401(k) Plans

Certain H&H employees participate in an H&H sponsored savings plan, which qualifies under Section 401(k) of the Internal Revenue Code. This savings plan allows eligible employees to contribute from 1% to 75% of their income on a pretax basis. In 2008, H&H matched 50% of the first 3% of the employee’s contribution. The charge to expense for the Company’s matching contribution amounted to $0.8 million in 2008. In addition, in 2008, the Company accrued an additional contribution to the 401(k) Plan of $0.5 million due to the freezing of benefits under the pension plan.

Certain Bairnco employees participated in a Bairnco sponsored savings plan, which qualifies under Section 401(k) of the Internal Revenue Code. In 2008, Bairnco contributed 1% of pay to each participant’s account (total amount of $0.3 million), plus Bairnco matched 50% of the first 4% of the employee’s contribution. Employer matching contributions to this 401(k) plan were $0.6 million for 2008.

In January 2009, the Company suspended its employer contributions to 401(k) savings plans for all employees not covered by a collective bargaining agreement. In January 2010, the matching contribution was reinstated, with a match of 50% of the first 6% of the employee’s contribution for both H&H and Bairnco employees, provided that employees had made an election to participate in the 401(k) savings plans on or before January 31, 2010.

Other Postretirement Benefits

Certain current and retired employees of H&H are covered by postretirement medical benefit plans. The benefits provided are for medical expenses and prescription drugs. Contributions from a majority of the participants are required, and for those retirees and spouses, the Company’s payments are capped.

The measurement date for plan obligations is December 31.

At year-end 2008, benefits were discontinued under two of the Company’s post-retirement benefit plans. The accounting impact of these events was recognized at year-end. The accumulated postretirement benefit obligation decreased by $3.2 million and there was a one-time curtailment gain of $3.7 million.

Summarized information regarding the postretirement medical benefit plans of H&H is as follows:

	2009		2008
Components of net periodic benefit cost:	(in thousands)
Service cost	$	-	$	13
Interest cost		179		366
Amortization of prior service cost (credit)		-		(265	)
Amortization of actuarial loss		-		146
Charge due to plan redesign		-		(3,710	)
Total	$	179	$	(3,450	)

	2009			2008
Change in benefit obligation:	(in thousands)
Benefit obligation at January 1	$	3,121		$	6,411
Service cost		-			13
Interest cost		179			366
Actuarial loss		600			178
Participant contributions		52			97
Benefits paid		(238	)		(769	)
Curtailment/Settlement		-			(3,175	)
Benefit obligation at December 31	$	3,714		$	3,121

Plan assets	$	-		$	-
Funded status	$	(3,714	)	$	(3,121	)

The pre tax amounts recognized in
accumulated other comprehensive income:
Net actuarial loss	$	777		$	178
Prior service cost (credit)		-			-
Total	$	777		$	178

The weighted average assumptions used in the valuations of these other postretirement benefits were as follows:

	2009			2008
Assumptions used to determine benefit
obligations at December 31:
Discount rate		5.55	%		6.00	%
Health care cost trend rate - initial		8.00	%		8.00	%
Health care cost trend rate - ultimate		5.00	%		5.00	%
Year ultimate is reached		2016			2015

Assumptions used to determine net
periodic benefit cost for the period
Discount rate		6.00	%		6.05	%
Health care cost trend rate - initial		8.00	%		8.00	%
Health care cost trend rate - ultimate		5.00	%		5.00	%
Year ultimate is reached		2015			2014

At December 31, 2009, the health care cost trend rate was 8% decreasing to an ultimate rate of 5% by the year 2016. A one percentage point increase in healthcare cost trend rates in each year would increase the accumulated postretirement benefit obligation as of December 31, 2009 by $0.3 million and the aggregate of the service cost and interest cost components of 2009 annual expense by $0. A one percentage point decrease in healthcare cost trend rates in each year would decrease the accumulated postretirement benefit obligation as of December 31, 2009 by $0.3 million and the aggregate of the service cost and interest cost components of 2009 annual expense by $0.

Contributions

Employer contributions are expected to be $0.2 million for the 2010 plan year.

Benefit Payments

Expected benefit payments over the next ten years are as follows:


Year	Amount
(in thousands)
2010	$	249
2011		265
2012		269
2013		272
2014		271
2015 - 2019		1,345

The Company has an Executive Post-Retirement Life Insurance Program that provides for life insurance benefits equal to three and one half times payroll, as defined for certain Company executives upon their retirement. Under GAAP, the Company is required to recognize in its financial statements an annual cost and benefit obligation related to estimated future benefit payments to be made to its current and retired executives. Funding for these obligations is made by the Company.

During 2009, the plan was terminated and all policies were either redeemed for cash value or transferred to participants. This resulted in a reduction of the accumulated post-retirement benefit obligation of $1.3 million and a one-time settlement gain of $1.1 million.

Summarized information regarding the Executive Post-Retirement Life Insurance Program is as follows:

	2009			2008
Components of net periodic benefit cost:	(in thousands)
Service cost	$	41		$	64
Interest cost		69			75
Amortization of actuarial loss		-			-
Gains from settlements		(1,114	)		(165	)
Total	$	(1,004	)	$	(26	)

	2009			2008
Change in benefit obligation:	(in thousands)
Benefit obligation at January 1	$	1,112		$	1,184
Service cost		41			64
Interest cost		69			75
Settlement		(1,282	)		-
Curtailment		-			(183	)
Actuarial loss (gain)		169			(7	)
Benefit payments		(109	)		(21	)
Benefit obligation at December 31	$	-		$	1,112

Plan assets	$	-		$	-
Funded status	$	-		$	(1,112	)

The pre tax amounts recognized in
accumulated other comprehensive income:
Net actuarial (gain) loss	$	-		$	-

The weighted average assumptions used in the valuations of Executive Post-Retirement Life Insurance Program were as follows:

	2009			2008
Assumptions used to determine benefit
obligations at December 31:
Discount rate		5.55	%		6.00	%

Assumptions used to determine net
periodic benefit cost for the period
ending December 31:
Discount rate		6.00	%		6.05	%
Rate of compensation increase		N/A			N/A

Contributions and Benefit Payments

Since the Executive Post-Retirement Life Insurance Program was terminated, there are no employer contributions or benefit payments expected to be made in the future.

Note 8 – Income Taxes

	2009			2008
	(in thousands)
Income (loss) before income taxes:
Domestic	$	(19,157	)	$	12,286
Foreign		2,436			2,262
Total income (loss) before income taxes	$	(16,721	)	$	14,548

The provision for (benefit from) income taxes for the two years ended December 31 is as follows:

	2009			2008
	(in thousands)
Income Taxes

Domestic	$	190		$	1,188
Foreign		31			1,029
Total income taxes, current	$	221		$	2,217

Domestic	$	(744	)	$	(867	)
Foreign		26			(95	)
Total income taxes, deferred	$	(718	)	$	(962	)
Income tax provision (benefit)	$	(497	)	$	1,255

Deferred income taxes result from temporary differences in the financial basis and tax basis of assets and liabilities. The amounts shown on the following table represent the tax effect of temporary differences between the Company’s consolidated tax return basis of assets and liabilities and the corresponding basis for financial reporting, as well as tax credit and operating loss carryforwards.

Deferred Income Tax Sources
	2009			2008
	(in thousands)
Current Deferred Tax Items:
Inventory	$	1,954		$	3,019
Environmental Costs		2,509			2,467
Accrued Expenses		2,306			2,199
Miscellaneous Other		828			1,121
Current deferred income tax asset before valuation allowance		7,597			8,806
Valuation allowance		(6,574	)		(7,642	)
Current deferred tax asset	$	1,023		$	1,164

Foreign	$	(300	)	$	(151	)
Current deferred tax liability	$	(300	)	$	(151	)

Non-Current Deferred Tax Items:
Postretirement and postemployment employee benefits	$	1,243		$	1,625
Net operating loss carryforwards		77,530			70,757
Capital loss carryforward		-			829
Additional minimum pension liability		39,394			53,981
Impairment of long-lived assets		4,029			3,146
California tax credits		411			186
Foreign tax credits		443			443
Minimum tax credit carryforwards		1,950			1,996
Miscellaneous other		161			476
Non current deferred tax asset before valuation allowance		125,161			133,439
Valuation allowance		(106,719	)		(114,250	)
Non current deferred tax asset		18,442			19,189

Property plant and equipment		(12,177	)		(12,028	)
Intangible assets		(7,908	)		(10,265	)
Undistributed foreign earnings		(1,489	)		(1,617	)
Other-net		(1,126	)		(553	)
Non current deferred tax liability		(22,700	)		(24,463	)
Net non current deferred tax liability	$	(4,258	)	$	(5,274	)

GAAP requires that a net deferred tax asset be reduced by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some portion or all of the net deferred tax asset will not be realized. Due to the Company’s recurring tax losses and only recent history of generating limited amounts of taxable income, a valuation allowance of $113.8 million has been established. Included in deferred tax assets at December 31, 2009 are U.S. federal NOLs of $207.3 million ($72.6 million tax-effected), as well as certain foreign and state NOLs. The U.S. federal NOLs expire between 2010 and 2027. In 2009, NOLs of $3.2 million expired. Management performs a periodic evaluation of deferred tax assets and will adjust the valuation allowance as circumstances warrant. Also, included in deferred income tax assets are tax credit carryforwards of $2.8 million. The net current deferred tax asset is expected to be realizable from the reversal of offsetting temporary differences.

Net income taxes payable totaled $1.4 million and $1.7 million as of December 31, 2009 and 2008, respectively.

Upon its emergence from bankruptcy on July 29, 2005, the Company experienced an ownership change as defined by Section 382 of the Internal Revenue Code, which imposes annual limitations on the utilization of net operating carryforwards post ownership change. The Company believes it qualifies for the bankruptcy exception to the general Section 382 limitations. Under this exception, the annual limitation imposed by Section 382 resulting from an ownership change will not apply; instead the NOLs must be reduced by certain interest expense paid to creditors who became stockholders as a result of the bankruptcy reorganization. Thus, the Company’s U.S. federal NOLs of $207.3 million as of December 31, 2009 include a reduction of $31.0 million ($10.8 million tax-effect).

As of December 31, 2009, the Company has a deferred income tax liability relating to $3.9 million of undistributed earnings of foreign subsidiaries. In addition, there were approximately $9.5 million of undistributed earnings of foreign subsidiaries that are deemed to be permanently reinvested, and thus, no deferred income taxes have been provided on these earnings.

Total federal, state and foreign income taxes paid in 2009 and 2008 were $2.5 million and $4.2 million, respectively.

The provision (benefit) for income taxes differs from the amount of income tax determined by applying the applicable U.S. statutory federal income tax rate to pretax income (loss) as follows:

	Years Ended December 31,
	2009			2008
	(in thousands)

Income (loss) from continuing operations before income tax	$	(16,721	)	$	14,548
Tax provision (benefit) at statutory rate	$	(5,852	)	$	5,154
Increase (decrease) in tax due to:
Foreign dividend income		454			2,485
Incentive stock options granted		74			174
State income tax, net of federal effect		192			792
Increase (decrease) in valuation allowance		4,410			(7,828	)
Increase (decrease) in liability for uncertain tax positions		409			(830	)
Change in estimated deferred state tax rate		(455	)		-
Expiration of net operating loss carryforward		1,110			1,026
Net effect of foreign tax rate and tax holidays		(2,591	)		82
Other, net		1,752			200
Tax provision (benefit)	$	(497	)	$	1,255

GAAP provides that the tax effects from an uncertain tax position can be recognized in the financial statements only if the position is more likely than not of being sustained on audit, based on the technical merits of the position. At both December 31, 2009 and 2008, the Company had $2.1 million of unrecognized tax benefits, respectively, all of which would affect the Company’s effective tax rate if recognized. The change in the amount of unrecognized tax benefits in 2009 and 2008 was as follows:

	Years Ended December 31,
(in thousands)	2009			2008

Beginning balance	$	2,127		$	3,082
Additions for tax positions related to current year		263			510
Additions due to interest accrued		91			119
Tax positions of prior years:
Increase in liabilities, net		539			-
Payments		(425	)		-
Due to settlement of audit examinations		-			(986	)
Due to lapsed statutes of limitations		(484	)		(598	)
Ending balance	$	2,111		$	2,127

The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. As of both December 31, 2009 and 2008, approximately $0.4 million of interest related to uncertain tax positions was accrued. No penalties were accrued. It is reasonably possible that the total amount of unrecognized tax benefits will decrease by as much as $0.2 million during the next twelve months as a result of the lapse of the applicable statutes of limitations in certain taxing jurisdictions. For federal income tax purposes, the statute of limitations for audit by the IRS is open for years 2006 through 2009. In addition, NOLs generated in prior years are subject to examination and potential adjustment by the IRS upon their utilization in future years’ tax returns.

Note 9 – Inventories

	December 31,
	2009			2008

Finished products	$	18,669		$	26,928
In-process		7,002			8,671
Raw materials		14,486			18,039
Precious metal inventory in various stages of completion		6,482			2,247
		46,639			55,885
LIFO reserve		(1,632	)		(1,123	)
	$	45,007		$	54,762

Precious Metal Inventory

In order to produce certain of its products, the Company purchases, maintains and utilizes precious metal inventory. H&H enters into commodity futures and forwards contracts on precious metal that are subject to market fluctuations in order to economically hedge its precious metal inventory against price fluctuations. As these derivatives are not designated as accounting hedges under GAAP, they are accounted for as derivatives with no hedge designation. Accordingly, the Company recognizes realized and unrealized gains and losses on the derivative instruments related to precious metal. Such realized and unrealized gains and losses are recorded in current period earnings as other income or expense in the Company’s consolidated statement of operations. Realized and unrealized losses related to derivatives in 2009 and 2008 were $0.8 million and $1.4 million, respectively. In addition, the Company records its precious metal inventory at LIFO cost, subject to lower of cost or market with any adjustments recorded through cost of goods sold. The market value of the precious metal inventory exceeded LIFO value cost by $1.7 million and $1.1 million at December 31, 2009 and December 31, 2008, respectively.

Certain customers and suppliers of H&H choose to do business on a “toll” basis, and furnish precious metal to H&H for return in fabricated form (customer metal) or for purchase from or return to the supplier. When the customer metal is returned in fabricated form, the customer is charged a fabrication charge. The value of this customer metal is not included in the Company’s balance sheet. In 2007, a subsidiary of H&H received 500,000 troy ounces of silver from a single customer under an unallocated pool account agreement, which was in excess of orders placed by the customer. This agreement was cancelable by the customer upon six months notice. Because H&H had excess customer metal to use in its production processes, this replaced the need to purchase its own inventory. During 2008, the Company’s precious metal inventory continued to decline, primarily from higher utilization of customer metal in its production processes, as well as a companywide emphasis on Lean Manufacturing and inventory management. Accordingly, the Company experienced a liquidation of its precious metal inventory that is accounted for under the LIFO method. Operating income for 2008 included a $3.9 million credit to cost of goods sold from the liquidation of precious metal inventories valued at LIFO. In 2009, the customer who had transferred 500,000 ounces of silver to H&H in 2007 requested its inventory be returned and the Company incurred a non-recurring cash expenditure of $7.4 million to replace such silver inventory. There was a reduction in the quantity of H&H’s inventory of gold, resulting in a credit to cost of goods sold of $0.6 million from the liquidation of the gold inventory valued at LIFO. As of December 31, 2009, H&H held customer metal in the following quantities: 271,805 ounces of silver, 1,430 ounces of gold, and 1,391 ounces of palladium.

Supplemental inventory information:	December 31,
	2009		2008
	(in thousands, except per ounce)

Precious metals stated at LIFO cost	$	4,890	$	1,124

Market value per ounce:
Silver	$	16.83	$	11.30
Gold	$	1,095.78	$	883.00
Palladium	$	402.00	$	185.00

Note 10 – Derivative Instruments

H&H enters into commodity futures and forwards contracts on precious metal that are subject to market fluctuations in order to economically hedge its precious metal inventory against price fluctuations. As of December 31, 2009, the Company had entered into forward and future contracts for gold with a total value of $1.2 million and for silver with a total value of $4.8 million.

The forward contracts, in the amount of $7.2 million, were made with a counter party rated A by Standard & Poors, and the future contracts are exchange traded contracts through a third party broker. Accordingly, the Company has determined that there is minimal credit risk of default. The Company estimates the fair value of its derivative contracts through use of market quotes or broker valuations when market information is not available.

In 2008 and during part of 2009, the Company also economically hedged its exposure on variable interest rate debt denominated in foreign currencies at one of its foreign subsidiaries. There is no credit risk on this derivative instrument as of December 31, 2009, as it was settled earlier in 2009.

As these derivatives are not designated as accounting hedges under GAAP, they are accounted for as derivatives with no hedge designation. The derivatives are marked to market and both realized and unrealized gains and losses are recorded in current period earnings in the Company's consolidated statement of operations. The Company’s hedging strategy is designed to protect it against normal volatility. However, abnormal price increases in these commodity or foreign exchange markets could negatively impact H&H’s costs. The twelve month periods ended December 31, 2009 and 2008 include net losses of $0.8 million and $1.4 million, respectively, on derivative instruments.

As of December 31, 2009, the Company had the following outstanding forward or future contracts with settlement dates ranging from January 2010 to March 2010.

Commodity	Amount

Silver		285,000	ounces
Gold		1,100	ounces

GAAP requires companies to recognize all derivative instruments as either assets or liabilities at fair value in the balance sheet.

Fair Value of Derivative Instruments in the Consolidated Balance Sheets

(in thousands)
		December 31,			December 31,
Derivative	Balance Sheet Location	2009			2008

Commodity contracts	Other current assets/(liabilities)	$	(54	)	$	355
Interest rate swap	Accrued liabilities		-			(199	)
Total derivatives not designated as hedging instruments			(54	)		156

Total derivatives		$	(54	)	$	156

Effect of Derivative Instruments on the Consolidated Statements of Operations

(in thousands)		Years Ended December 31,
		2009			2008
Derivative	Statement of Operations Line	Gain (Loss)

Commodity contracts	Realized and Unrealized Loss on Derivatives	$	(777	)	$	(1,355	)
Interest rate swap	Interest expense		(317	)		(240	)
Total derivatives not designated as hedging instruments		$	(1,094	)	$	(1,595	)

Total derivatives		$	(1,094	)	$	(1,595	)

Note 11 – Property, Plant & Equipment

	December 31,
	2009		2008
	(in thousands)

Land	$	8,949	$	9,222
Buildings, machinery and equipment		156,608		151,075
Construction in progress		1,721		1,126
		167,278		161,423
Accumulated depreciation and amortization		84,168		70,655
	$	83,110	$	90,768

Depreciation expense for the years 2009 and 2008 was $14.9 million and $16.3 million, respectively.

Note 12 – Goodwill and Other Intangibles

The changes in the carrying amount of goodwill by reportable segment for the years ended December 31, 2008 and 2009 were as follows:

(in thousands)

	Balance at			Acquisitions/						Balance at		Accumulated
Segment	January 1,			Other		Impairment				December 31,		Impairment
	2008									2008		Losses

Precious Metal	$	1,005		$	501		$	-		$	1,506	$	-
Tubing		1,895			-			-			1,895		-
Engineered Materials		51,232			-			-			51,232		-
Arlon Electronic Materials		10,185			253			-			10,438		-
Total	$	64,317		$	754		$	-		$	65,071	$	-


	Balance at			Acquisitions/						Balance at		Accumulated
Segment	December 31,		Adjustments				Impairment			December 31,		Impairment
		2008									2009	Losses
Precious Metal	$	1,506		$	15		$	-		$	1,521	$	-
Tubing		1,895			-			-			1,895		-
Engineered Materials		51,232			-			-			51,232		-
Arlon Electronic Materials		10,438			-			(1,140	)		9,298		(1,140	)
Total	$	65,071		$	15		$	(1,140	)	$	63,946	$	(1,140	)

The Company conducted the required annual goodwill impairment reviews in 2009 and 2008, and computed updated valuations for each reporting unit using a discounted cash flow approach and market approach, as described in Note 2 “Summary of Accounting Policies”. As of June 30, 2009, the Company had conducted an interim goodwill impairment review of its Silicone Technology Division (“STD”) reporting unit principally because of continuing adverse business conditions for STD, which resulted in a decline in the estimated future cash flows of STD. Based on the results of these reviews, the Company recorded a goodwill impairment charge of $1.1 million in the third quarter of 2009. The Silicone Technology Division is part of the Arlon Electronic Materials segment. There was no goodwill impairment in 2008.

Other intangible assets as of December 31, 2009 and 2008 consisted of:

(in thousands)
	December 31, 2009							December 31, 2008							Weighted
	Cost		Accumulated Amortization			Net		Cost		Accumulated Amortization			Net		Average Amortization Life
															(in years)

Products and customer relationships	$	34,082	$	(6,040	)	$	28,042	$	34,082	$	(3,931	)	$	30,151		16.3
Trademark/Brand name		3,958		(763	)		3,195		3,958		(359	)		3,599		16.4
Patents and patent applications		2,474		(721	)		1,753		2,361		(571	)		1,790		14.1
Non-compete agreements		756		(361	)		395		756		(248	)		508		4.4
Other		1,548		(898	)		650		1,548		(631	)		917		8
Total	$	42,818	$	(8,783	)	$	34,035	$	42,705	$	(5,740	)	$	36,965

Amortization expense in both 2009 and 2008 totaled $3.0 million. The estimated amortization expense for each of the five succeeding years and thereafter is as follows:


	Products and				Patents and
	Customer				Patent		Non-Compete
	Relationships		Trademarks		Applications		Agreements		Other		Total
(in thousands)

2010	$	2,168	$	292	$	214	$	174	$	190	$	3,038
2011		2,168		292		214		174		190		3,038
2012		2,168		292		214		47		190		2,911
2013		2,168		292		214				80		2,754
2014		2,168		292		214						2,674
Thereafter		17,202		1,735		683						19,620
	$	28,042	$	3,195	$	1,753	$	395	$	650	$	34,035

As of December 31, 2009, approximately $3.2 million of goodwill related to prior acquisitions made by Bairnco is expected to be amortizable for income tax purposes.

Note 13 – Debt

Long-term debt at December 31, 2009 and 2008 was as follows:

	Years Ended December 31,
(in thousands)	2009		2008

Long-term Debt to Non Related Party:
H&H Wachovia Facility term loans	$	43,216	$	54,670
Other H&H debt-domestic		7,436		7,580
Bairnco Wells Fargo Facility term loan		3,624		6,466
Bairnco Ableco Facility term loan		42,000		45,000
Bairnco foreign loan facilities		4,750		4,721
Total debt to non related party		101,026		118,437
Less portion due within one year		5,944		8,295
Long-term debt to non related party		95,082		110,142

Long-term Debt to Related Party:
H&H Term B Loan		44,098		44,098
Bairnco Subordinated Debt Credit Agreement		10,000		10,000
Long-term debt to related party		54,098		54,098

Total long-term debt	$	149,180	$	164,240

Long term debt as of December 31, 2009 matures in each of the next five years as follows:

Long-term Debt Maturity
(in thousands)	Total		2010		2011		2012		2013		Thereafter
Long-term debt to non-related party	$	101,026	$	5,944	$	48,332	$	46,750	$	-	$	-
Long term debt to related party		54,098		-		44,098		-		10,000		-
Total Debt	$	155,124	$	5,944	$	92,430	$	46,750	$	10,000	$	-

Credit Facilities

The following are the terms and conditions of the Company’s various credit facilities as of December 31, 2009, and therefore reflect all amendments to such agreements made prior to that date.

Handy & Harman

H&H’s financing agreements include its Loan and Security Agreement with Wachovia Bank, National Association (“Wachovia”), as agent (the “Wachovia Facilities”), which provide for revolving credit and term loan facilities, and its Loan and Security Agreement with Steel Partners II Liquidating Series Trust (Series E), (the “SP II Series E Trust”), as successor-in-interest to SP II (the “Term B Loan”).

The Wachovia Facilities provide for maximum borrowings of $115 million, consisting of a revolving credit facility of up to $75 million of borrowings dependent on the levels of and collateralized by eligible accounts receivable and inventory, and reduced by the amount of certain term and supplemental term loans outstanding to Wachovia. In addition, the Wachovia Facilities also include term loans funded by Ableco ($33.0 million as of December 31, 2009). The term loans are collateralized by eligible machinery and equipment and real estate. The revolving credit facility and the term and supplemental loans payable under the Wachovia Facilities bear interest at LIBOR, which shall at no time be less than 1.00%, plus applicable margins of between 2.75% and 3.75%, or the U.S. Base rate (Prime rate, which shall at no time be less than 3.00%) plus 1.00% to 2.00%. The applicable margin for the revolving credit facility and the term loans payable under the Wachovia Facilities is dependent on H&H’s Quarterly Average Excess Availability for the prior quarter, as that term is defined in the agreement. The term loans payable to Ableco bear interest at LIBOR, which shall at no time be less than 3.25%, plus an applicable margin of 11.75%, or the U.S. Base rate (Prime rate, which shall at no time be less than 5.00%) plus 10.00%. Borrowings under the Wachovia Facilities are collateralized by first priority security interests in and liens upon all present and future stock and assets of H&H and its subsidiaries, including all contract rights, deposit accounts, investment property, inventory, equipment, real property, and all products and proceeds thereof. Principal payments for the term loans under the Wachovia Facilities are due in monthly installments of $0.3 million. The Wachovia Facilities contain affirmative, negative, and financial covenants (including minimum EBITDA, maximum Senior Leverage Ratio, and limited Capital Expenditures, as such terms are defined therein), and cash distributions that can be made to HNH are restricted. The Company was in compliance with the applicable covenants at December 31, 2009. The Wachovia Facilities mature on June 30, 2011.

The Term B Loan also matures on June 30, 2011. H&H was indebted to SP II under the Term B Loan until July 15, 2009, when SP II assigned its interest in the Term B Loan to SP II Series E Trust. The Term B Loan provides for annual payments based on 40% of excess cash flow as defined in the agreement (no principal payments are currently payable). Interest accrues monthly at the Prime Rate plus 14%, and at no time shall the Prime Rate (as that term is defined in the agreement) be below 4.0%. Pursuant to the terms of a subordination agreement between Steel and the participants in the Wachovia Facilities, H&H’s interest payable to Steel is accrued but not paid. The Term B Loan has a second priority security interest in and lien on all assets of H&H, subject to the prior lien of the Wachovia Facilities and H&H’s $17 million guaranty and security interest for the benefit of Ableco as agent of the Bairnco indebtedness. In addition, H&H has pledged a portion of all outstanding stock of Indiana Tube Danmark A/S, a Danish corporation, and Protechno, S.A., a French corporation, both of which are indirect wholly-owned subsidiaries of H&H. The Term B Loan contains affirmative, negative, and financial covenants (including minimum EBITDA, maximum Senior Leverage Ratio, and limited Capital Expenditures, as such terms are defined therein), and cash distributions that can be made to HNH are restricted. The Company was in compliance with the applicable covenants at December 31, 2009. The Term B Loan also contains cross-default provisions with the Wachovia Facilities.

On March 12, 2009, H&H and almost all of its subsidiaries amended each of the Wachovia Facilities and the Term B Loan to, among other things, (i) extend the term of the loans for two years until June 30, 2011, (ii) increase certain interest rates, (iii) reset the levels of certain financial covenants, (iv) permit the disposition and/or cessation of operations of certain of H&H’s direct and indirect subsidiaries (v) provide for an increase in the aggregate amount of unsecured loans, distributions or other advances from H&H to HNH for general business purposes from up to $7.0 million to up to $12.0 million, subject to certain limitations, and (vi) provide for an increase in the existing limited guaranty by H&H from up to $7.0 million to up to $12.0 million. In addition, the Wachovia Facilities were also amended to, among other things, reduce the amount of the credit facility from $125.3 million to $115.0 million including decreasing the revolving credit facility from $83.0 million to $75.0 million.

On May 8, 2009, H&H and its subsidiaries further amended the Wachovia Facilities to provide for, among other things, additional term loans to the borrowers thereunder in the aggregate principal amount of approximately $5.3 million, which were consolidated with the existing term loans under the Wachovia Facilities for a combined aggregate principal amount of $15.0 million, and additional guaranties by certain subsidiary trusts. Pursuant to this amendment: (i) a portion of the obligations under the tranche B term loan under the Wachovia Facilities was prepaid in an amount equal to $5.0 million; and (ii) the remaining available proceeds of the term loans are to be used for operating and working capital purposes. The Term B Loan was also amended on May 8, 2009 to provide for additional guaranties by certain subsidiary trusts.

Effective July 31, 2009, H&H and its subsidiaries amended each of the Wachovia Facilities and the Term B Loan to, among other things, (i) reset certain financial covenants, (ii) increase the existing limited H&H Guaranty of Bairnco’s obligations under the Ableco Facility from up to $12 million to up to $17 million, and (iii) provide for the repayment of a portion of the term loan under the Wachovia Facilities in the amount of $3.0 million.

Other Handy & Harman Debt

On January 24, 2006, H&H’s wholly-owned subsidiary, OMG, Inc., entered into an $8.0 million five-year loan and security agreement with Sovereign Bank. The loan is collateralized by a mortgage on OMG, Inc.’s real property. Principal is payable monthly in installments of $12,000. The loan bears interest at a variable rate equal to Libor plus 1.55% (2.55% as of December 31, 2009).

Bairnco

Bairnco’s financing agreements include its Credit Agreement with Wells Fargo Foothill, Inc. (“Wells Fargo”), as arranger and administrative agent thereunder ( the “Wells Fargo Facility”), which provides for revolving credit and term loan facilities, the Ableco Facility and its Loan and Security Agreement with Steel Partners II Liquidating Series Trust (Series A), (the “SP II Series A Trust”), as successor-in-interest to SP II (the “Subordinated Debt Credit Agreement”), both of which are also term loan facilities.

The Wells Fargo Facility provides for a revolving credit facility in an aggregate principal amount not to exceed $30.0 million and a term loan facility of $28.0 million. Borrowings under the Wells Fargo Facility bear interest, (A) in the case of base rate advances at 0.75% above the Wells Fargo Prime rate and base rate term loans at 1.25% above the Wells Fargo Prime rate, and (B) in the case of LIBOR rate loans, at rates of 3.00% for advances or 3.50% for term loans, as applicable, above the LIBOR rate. Obligations under the Wells Fargo Facility are guaranteed by certain of Bairnco’s subsidiaries, and secured by a first priority lien on all assets of Bairnco and such subsidiaries. Principal payments for the term loans under the Wells Fargo Facility are due in monthly installments of $0.2 million. The scheduled maturity date of the indebtedness under the Wells Fargo Facility is July 17, 2012.

The Ableco Facility provides for a term loan facility of $48.0 million. Borrowings under the Ableco Facility bear interest, in the case of base rate loans, at 6.50% above the rate of interest publicly announced by JPMorgan Chase Bank in New York, New York as its reference rate, base rate or prime rate, and, in the case of LIBOR rate loans, at 9.00 % above the LIBOR rate. Obligations under the Ableco Facility are guaranteed by Bairnco and certain of its subsidiaries, and secured by a second priority lien on all of their assets. The Ableco Facility is also collateralized by a limited guaranty by H&H of up to $17 million, secured by a second lien on all of the assets of H&H pursuant to the terms and conditions of the H&H Security Agreement and the H&H Guaranty. Principal payments for the term loans under the Ableco Facility are due on the maturity date, which is July 17, 2012.

The Wells Fargo Facility and the Ableco Facility contain affirmative, negative, and financial covenants (including minimum EBITDA, maximum Leverage Ratio, minimum Fixed Charge Coverage Ratio, and limited Capital Expenditures, as such terms are defined therein). The Company was in compliance with the applicable covenants at December 31, 2009.

The Subordinated Debt Credit Agreement provides for a term loan facility. Bairnco was indebted to SP II under the Subordinated Debt Credit Agreement until July 15, 2009, when SP II assigned its interest in the Subordinated Debt Credit Agreement to SP II Series A Trust. The original principal of approximately $31.8 million was reduced to $10.0 million with proceeds from HNH’s Rights Offering. All borrowings under the Subordinated Debt Credit Agreement bear interest at 9.50% above the rate of interest publicly announced by JPMorgan Chase Bank in New York, New York as its reference rate, base rate or prime rate. Principal, interest and all fees payable under the Subordinated Debt Credit Agreement are due and payable on the scheduled maturity date, January 17, 2013. Obligations under the Subordinated Debt Credit Agreement are guaranteed by Bairnco and certain of its subsidiaries, and collateralized by a subordinated priority lien on their assets. The Subordinated Debt Credit Agreement contains customary representations, warranties, affirmative and negative covenants, events of default and indemnification provisions.

On March 12, 2009, Bairnco and certain of its subsidiaries amended the Wells Fargo Facility and the Ableco Facility to, among other things, (i) increase the interest rates and (ii) reset the levels of certain financial covenants. The Ableco Facility was also amended to provide for, among other things, an increase in the existing limited guaranty by H&H from up to $7 million to up to $12 million, secured by a second lien on all of the assets of H&H pursuant to the terms and conditions of the H&H Security Agreement and the H&H Guaranty. The Subordinated Debt Credit Agreement was also amended to, among other things, increase the interest rates.

Effective August 18, 2009, Bairnco and certain of its subsidiaries also amended the Ableco Facility to, among other things, (i) reset certain financial covenants, (ii) increase the existing limited H&H Guaranty of Bairnco’s obligations under the Ableco Facility from up to $12 million to up to $17 million and (iii) provide for the repayment of a portion of the Ableco Facility in the amount of $3.0 million. The Wells Fargo Facility and the Subordinated Debt Credit Agreement were also amended effective August 18, 2009, to, among other things, (i) reset certain financial covenants to levels consistent with the Ableco Facility, as amended, and (ii) permit the repayment of a portion of the Ableco Facility in the amount of $3.0 million.

Approximately $4.5 million of irrevocable standby letters of credit were outstanding under the Wells Fargo Facility as of December 31, 2009, which are not reflected in the accompanying consolidated financial statements. $1.5 million of the letters of credit guarantee various insurance activities and $3.0 million represents letters of credit securing borrowings for one of the China foreign loan facility. These letters of credit mature at various dates and have automatic renewal provisions subject to prior notice of cancellation.

The China foreign loan facility reflects borrowing by Bairnco’s Chinese facilities through two banks. Approximately $2.8 million of such borrowings are secured by US dollar denominated letters of credit, and $2.0 million by a mortgage on one of Bairnco’s Chinese facilities. Interest rates on amounts borrowed under the China foreign loan facilities averaged 2.9% at December 31, 2009.

Interest Cost

Cash interest paid in 2009 was $12.6 million. Cash interest paid in 2008 was $54.6 million, including $9.3 million of “pay in kind” interest and $28.1 million of interest that had accrued to SP II through the date of the Rights Offering and was paid with proceeds from the Rights Offering. The Company has not capitalized any interest costs in 2009 or 2008.

As of December 31, 2009, the revolving and term loans under the Wachovia Facilities bore interest at rates ranging from 3.75% to 15.0%; and the Term B Loan bore interest at 18.0%. The Wells Fargo Facility bore interest at rates ranging from 2.61% to 4.5% as of December 31, 2009, and the Ableco Facility bore interest at 9.29%. The Subordinated Debt Credit Agreement bore interest at 12.75% as of December 31, 2009. Weighted average interest rates for the years ended December 31, 2009 and 2008 were 10.85% and 9.88%, respectively.

Note 14 – Earnings Per Share

The computation of basic earnings or loss per common share is based upon the weighted average number of shares of Common Stock outstanding. Diluted earnings per share gives effect to dilutive potential common shares outstanding during the period. The Company has potentially dilutive common share equivalents including stock options and other stock-based incentive compensation arrangements (See Note 16-Stock-Based Compensation).

On November 24, 2008, the Company effected a reverse split of its outstanding common stock by a ratio of 1-for-10. The earnings per share calculations below and on the Consolidated Statements of Operations reflect the reduction in the number of shares outstanding on a retroactive basis as if the Reverse Stock Split had occurred on January 1, 2008.

No common share equivalents were dilutive in 2009 because the Company reported a net loss and therefore, any outstanding stock options would have had an anti-dilutive effect. No common share equivalents were dilutive in 2008 since the exercise price of the Company’s warrants (prior to expiration) and its stock options and other stock-based incentive compensation arrangements was in excess of the average market price of the Company’s common stock. As of December 31, 2009, stock options for an aggregate of 60,500 shares of common stock are excluded from the calculation of net loss per share.

A reconciliation of the income and shares used in the earnings (loss) per share computations follows:

	Years Ended December 31,
	2009			2008
	(in thousands, except per share)

Basic and Diluted calculations:

Income (loss) from continuing operations, net of tax	$	(16,224	)	$	13,263
Weighted average number of common
shares outstanding		12,179			4,001
Income (loss) from continuing operations, net of tax
per common share	$	(1.33	)	$	3.31


Discontinued operations	$	(5,017	)	$	(10,252	)
Weighted average number of common
shares outstanding		12,179			4,001

Discontinued operations per common share	$	(0.41	)	$	(2.56	)


Net income (loss)	$	(21,241	)	$	3,011
Weighted average number of common
shares outstanding		12,179			4,001

Net income (loss) per common share	$	(1.74	)	$	0.75

Note 15 – Stockholders’ (Deficit) Equity

Rights Offering

On September 25, 2008, the Company completed the Rights Offering to its existing stockholders. The Company sold 11,178,459 shares of common stock to existing stockholders through the exercise of rights at a subscription price of $14.00 per share, for an aggregate purchase price of approximately $156.5 million. SP II, the Company’s largest stockholder at that time, subscribed for 8,630,910 shares of the Company’s common stock, for an aggregate purchase price of approximately $120.8 million, pursuant to its basic and applicable oversubscription privileges. The Company used the proceeds of the Rights Offering to (i) redeem preferred stock issued by a wholly-owned subsidiary of the Company, which was held by SP II, plus accumulated dividends, together totaling $6.0 million, (ii) repay Company indebtedness to SP II of $18.9 million, and (iii) repay $117.6 million of indebtedness and accrued interest of certain wholly-owned subsidiaries of the Company to SP II. After such payments, $14.0 million remained with the Company as cash, of which $13.2 million was used to repay additional debt of the Company on October 29, 2008.

Authorized and Outstanding Shares

On January 31, 2008, HNH’s stockholders approved a proposal to set the Company’s authorized capital stock at a total of 100,000,000 shares, consisting of 95,000,000 shares of Common Stock and 5,000,000 shares of Preferred Stock. On September 16, 2008, HNH’s stockholders approved a proposal to further increase the Company’s authorized capital stock to a total of 185,000,000 shares, consisting of 180,000,000 shares of common stock and 5,000,000 shares of Preferred Stock. On November 24, 2008, the Company effected the Reverse Stock Split, by a ratio of 1-for-10. To enhance comparability, unless otherwise noted, all references to the Company’s common stock and per share amounts have been adjusted on a retroactive basis as if the Reverse Stock Split had occurred on January 1, 2008.

Of the authorized shares, no shares of Preferred Stock have been issued, and 12,178,565 shares of Common Stock were issued and outstanding as of December 31, 2009 and 2008, respectively.

Although the Board of Directors of HNH is expressly authorized to fix the designations, preferences and rights, limitations or restrictions of the Preferred Stock by adoption of a Preferred Stock Designation resolution, the Board of Directors has not yet done so. The Common Stock of HNH has voting power, is entitled to receive dividends when and if declared by the Board of Directors and subject to any preferential dividend rights of any then-outstanding Preferred Stock, and in liquidation, after distribution of the preferential amount, if any, due to the Preferred Stockholders, are entitled to receive all the remaining assets of the corporation.

Warrants

As part of the Plan of Reorganization of HNH upon emergence from bankruptcy on July 29, 2005, in exchange for the extinguishment and cancellation of their stock, the Series A preferred stockholders and Series B preferred stockholders (at that time) received their pro rata share of 800,000 shares of the new common stock of the reorganized HNH and their pro rata share of 752,688 warrants to purchase common stock of the reorganized company, exercisable at $11.20 per share. The warrants were valued at $1.3 million using the Black-Scholes valuation method at $1.71 per warrant. The warrants expired February 28, 2008.

Accumulated Other Comprehensive Income (Loss)

Accumulated other comprehensive income (loss) balances as of December 31, 2009 and 2008 were comprised as follows:

	2009			2008
	(in thousands)
Net actuarial losses and prior service costs and
credits (net of tax)	$	(122,465	)	$	(165,851	)
Foreign currency translation adjustment		4,063			2,513
Valuation of marketable equity securities		-			(164	)
	$	(118,402	)	$	(163,502	)

Note 16 – Stock-Based Compensation

The Company measures stock-based compensation cost at the grant date, based on the fair value of the award, and recognizes the expense on a straight-line basis over the employee’s requisite service (vesting) period. All of the share amounts and stock option prices in this note reflect the Reverse Stock Split as if it had been effective on January 1, 2008.

At the Company’s Annual Meeting of Shareholders on June 21, 2007, the Company’s shareholders approved a proposal to adopt Handy & Harman Ltd.’s 2007 Plan, and reserved 80,000 shares of common stock under the 2007 Plan. The 2007 Plan permits options to be granted up to a maximum contractual term of 10 years. On July 6, 2007, stock options for an aggregate of 62,000 shares of common stock were granted under the 2007 Plan to employees and to two outside directors of the Company, at an exercise price of $90.00 per share. The options are exercisable in installments as follows: half of the options granted were exercisable immediately, one-quarter of the options granted became exercisable on July 6, 2008 and the balance of the options became exercisable on July 6, 2009. The options will expire on July 6, 2015. In 2008, the Company granted options for an aggregate of 18,000 shares to four employees at an exercise price of $90.00 per share. The weighted average fair value of the options granted in 2008 was $10.79 per share. The options are exercisable in installments as follows: one-third of the options granted were exercisable immediately, one-quarter of the options granted became exercisable one year from the date of grant, and the balance of the options become exercisable two years from the date of grant. The options will expire in 2016. The Company’s policy is to use shares of unissued common stock upon exercise of stock options.

The Company estimated the fair value of the stock options granted in accordance with GAAP using a Black-Scholes option-pricing model. The expected average risk-free rate is based on U.S. treasury yield curve. The expected average life represents the period of time that options granted are expected to be outstanding. Expected volatility is based on historical volatilities of HNH’s post-bankruptcy common stock. The expected dividend yield is based on historical information and management’s plan.

Assumptions	2008
Risk-free interest rate	2.62%-3.22%
Expected dividend yield	0.00%
Expected life (in years)	4.5 years
Volatility	68.4% - 80.9%
Forfeiture rate	3.0%

The Company has recorded $0.3 million and $0.6 million of non-cash stock-based compensation expense related to its stock options in 2009 and 2008, respectively.

Activity related to the Company’s 2007 Plan was as follows:

Options	Shares (000's)			Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value (000)

Outstanding at December 31, 2008		64		$	90.00		6.90		-
Granted		-		$	-		-		-
Exercised		-		$	-		-		-
Forfeited or expired		(4	)	$	90.00		-		-
Outstanding at December 31, 2009		60		$	90.00		6.30		-
Of the outstanding options at December 31, 2009:
Exercisable at December 31, 2009		54		$	90.00		6.09		-
Exercisable and expected to vest in the future		60		$	90.00		6.30		-

Nonvested Options	Shares (000's)			Fair Value

Nonvested at December 31, 2008		23		$	37.80
Granted		-		$	-
Vested		(13	)	$	35.71
Forfeited		(4	)	$	37.80
Nonvested at December 31, 2009		6		$	10.79

As of December 31, 2009 there was approximately $10,000 of unrecognized compensation cost related to non-vested share based compensation arrangements granted under the 2007 Plan. That cost is expected to be recognized over a weighted-average period of 0.1 years. The total fair value of shares vested in 2009 and 2008 was $0.5 million and $0.6 million, respectively.

On July 6, 2007, the Compensation Committee of the Board of Directors of the Company adopted incentive arrangements for two members of the Board of Directors who are related parties to the Company. These arrangements provide, among other things, for each to receive a bonus equal to 10,000 multiplied by the difference of the fair market value of the Company’s stock price and $90.00 per share. The bonus is payable immediately upon the sending of a notice by either board member, respectively. The incentive arrangements terminate July 6, 2015, to the extent not previously received. Under GAAP, the Company is required to adjust its obligation for the fair value of such incentive arrangements from the date of actual grant to the latest balance sheet date and to record such incentive arrangements as liabilities in the consolidated balance sheet. The Company has recorded $0.1 million of non-cash income related to these incentive arrangements in both 2009 and 2008.

Note 17 – Commitments and Contingencies

Operating Lease Commitments:

The Company leases certain facilities under non-cancelable operating lease arrangements. Rent expense for the Company in 2009 and 2008 was $8.0 million and $8.2 million, respectively. Future minimum operating lease and rental commitments under non-cancelable operating leases are as follows (in thousands):

Year	Amount

2010	$	6,019
2011		5,472
2012		4,281
2013		2,302
2014		1,229
Thereafter		6,359
	$	25,662

On June 30, 2008, Arlon Inc., a wholly owned subsidiary of Bairnco and part of its Arlon Electronic Materials segment, (i) sold land and a building located in Rancho Cucamonga, California for $8.5 million and (ii) leased back such property under a 15 year operating lease with two 5-year renewal options. The annual lease payments are $570,000, and are subject to a maximum increase of 5% per annum. The lease expires in 2023. Such amounts are included in the operating lease commitment table above. Bairnco has agreed to guarantee the payment and performance of Arlon Inc. under the lease. To account for the sale leaseback, the property was removed from the books, but the recognition of a $1.8 million gain on the sale of the property was deferred and will be recognized ratably over the 15 year lease term as a reduction of lease expense. Approximately $1.6 million and $1.7 million of such deferred gain was included in Other Long-term Liabilities on the consolidated balance sheets as of December 31, 2009 and 2008, respectively.

Legal Matters:

Paul E. Dixon & Dennis C. Kelly v. Handy & Harman

Paul Dixon and Dennis Kelly, two former officers of H&H (the “Claimants”) filed a Statement of Claim with the American Arbitration Association (the “Arbitration”) on or about January 3, 2006. The Claimants were employees of H&H until September 2005 when their employment was terminated by H&H. Their arbitration claims included seeking payments allegedly due under employment contracts and allegedly arising from their terminations, and seeking recovery of benefits under what they allege was the H&H Supplemental Executive Retirement Plan (“H&H SERP”).

In the Arbitration, Claimants sought an award in excess of $4.0 million each, plus interest, costs and attorneys’ fees. The Claimants also sought indemnification for certain matters and an injunction against H&H with regard to life insurance policies. On February 15, 2006, H&H brought a special proceeding in the Supreme Court of the State of New York, County of Westchester (“Supreme Court, Westchester County”), for a judgment staying the arbitration of three of the four claims. On March 10, 2006, all of the parties filed a stipulation with the court, discontinuing the court proceeding and agreeing therein, among other things, that all claims asserted by the Claimants in the Arbitration (which was also discontinued at that time) would be asserted in Supreme Court, Westchester County.

In April 2006, the Claimants served a request for benefits, severance and other amounts, similar to those described above, on H&H and various plan administrators and fiduciaries thereof. The request was reviewed in accordance with the procedures of the benefit plans at issue and by letter dated September 27, 2006, claimants were notified that their request was largely denied.

In January 2008, Mr. Kelly filed a lawsuit against HNH, H&H and various benefit plans (the “Defendants”) in the United States District Court for the Southern District of New York. Mr. Dixon did not join in this lawsuit, and his counsel has not indicated whether Mr. Dixon intends to file his own lawsuit. Mr. Kelly’s claims in this lawsuit are essentially the same claims that he asserted in the above-described arbitration and request for benefits. Mr. Kelly’s complaint seeks approximately $4.0 million in money damages plus unspecified punitive damages. On April 22, 2009, the Defendants filed a motion for summary judgment seeking dismissal of the case. In an Opinion filed February 11, 2010, the district court granted Defendants’ motion for summary judgment, dismissed with prejudice plaintiff’s claims under the H&H SERP and dismissed without prejudice plaintiff’s state law breach of contract claim. The district court also denied plaintiff’s cross motion for summary judgment. On February 25, 2010, plaintiff filed a notice of appeal with the United States Circuit Court of Appeals for the Second Circuit to appeal the dismissal of the plaintiff’s claims related to the H&H SERP. Plaintiff also retains the right to file a breach of contract case in state court for damages allegedly arising out of his termination. The Defendants intend to vigorously litigate the appeal and any state court lawsuit should Mr. Kelly elect to file a new lawsuit. There can be no assurance that the Defendants will be successful in defending against Mr. Kelly’s state court claims should they be filed, or that the Defendants will not have any liability on account of Mr. Kelly’s claims. Such liability, if any, cannot be reasonably estimated at this time, and accordingly, there can be no assurance that the resolution of this matter will not be material to the financial position, results of operations and cash flow of the Company.

Arista Development LLC V. Handy & Harman Electronic Materials Corporation (“HHEM”)

In 2004, HHEM, a subsidiary of H&H, entered into an agreement to sell a commercial/industrial property in Massachusetts (the “MA Property”). Disputes between the parties resulted in the purchaser (plaintiff) initiating litigation in Bristol Superior Court in Massachusetts. The plaintiff alleges that HHEM is liable for breach of contract relating to HHEM’s alleged breach of the agreement, unfair and deceptive acts and practices, and certain consequential and treble damages as a result of HHEM’s termination of the agreement in 2005, although HHEM subsequently revoked its notice of termination. HHEM has denied liability and has been vigorously defending the case. The court entered a preliminary injunction enjoining HHEM from conveying the property to anyone other than the plaintiff during the pendency of the case. Discovery on liability and damages has been stayed while the parties are actively engaged in settlement discussions. Since discovery is not completed, it cannot be known at this time whether it is foreseeable or probable that plaintiff would prevail in the litigation or whether HHEM would have any liability to the plaintiff.

Electroplating Technologies, Ltd. v. Sumco, Inc.

Electroplating Technologies, Ltd. (“ETL”) filed a lawsuit against Sumco, a subsidiary of H&H, in Lehigh, Pennsylvania County Court of Common Pleas. ETL contended that Sumco misappropriated trade secrets and breached contractual obligations with respect to certain allegedly proprietary and confidential ETL information. ETL sought damages in excess of $4.55 million. In its pretrial filings, ETL also asserted a claim for $9.0 million in punitive damages. On May 8, 2009, after a ten day trial, the jury found that Sumco had not misappropriated ETL’s trade secrets. However, the jury found that Sumco had breached a contractual obligation owed to ETL and as compensation for that breach of contract, awarded ETL the sum of $250,000. Following the jury verdict, the court denied ETL’s equitable requests for an injunction and for an accounting. On May 18, 2009, Sumco filed a motion with the court for judgment notwithstanding the verdict to set aside the damage award. On May 28, 2009, ETL filed a motion with the court seeking (i) a new trial and (ii) a modified verdict in the amount of $2,250,000. In an order docketed September 25, 2009, the court denied ETL’s motion for a new trial and to increase the jury’s verdict. The court then granted Sumco’s motion for a judgment notwithstanding the verdict and overturned the jury’s May 2009 award of $250,000 against Sumco for breach of contract. ETL filed a notice of appeal of the court’s decision on October 16, 2009. Each of ETL and Sumco have filed briefs with the appellate court. The Company expects the appellate court to hear oral argument on the appeal during the summer of 2010 and to render its decision by the end of 2010. There can be no assurance that the resolution of this matter will not be material to the financial position, results of operations and cash flow of the Company.

World Properties, Inc. et. al. v. Arlon, Inc.

In December 2008, World Properties, Inc. and Rogers Corporation (collectively, “Rogers”) filed a lawsuit against Arlon, Inc. (“Arlon”), a subsidiary of Bairnco, in the United States District Court for the District of Connecticut. The lawsuit alleged that Rogers is the exclusive licensee under U.S. Patent No. 5,552,210 (the “210 Patent”) and that Arlon’s TC600 circuit board infringed that patent. In the complaint, Rogers demanded that Arlon cease the manufacture, sale and distribution of its TC600 circuit board and that the district court award unspecified damages to compensate Rogers for the alleged infringement. On January 14, 2009, Arlon moved to dismiss the lawsuit, based upon a covenant not to sue contained in an asset purchase agreement between Rogers and Arlon, dated January 30, 1996 (the “APA”), that Arlon contends covers the TC600 and the 210 Patent. Arlon also requested that the district court stay discovery on Rogers’ patent infringement claim pending resolution of the motion to dismiss. On February 13, 2009, the district court: (i) agreed to a stay of discovery on the patent infringement claim; (ii) directed the parties to conduct expedited discovery on the issue of the applicability of the covenant not to sue in the APA to the TC600 and the 210 Patent; and (iii) denied the motion to dismiss without prejudice. On June 24, 2009, plaintiffs filed a motion to amend its complaint in order to assert that a second Arlon product (AD 1000) infringed a second Rogers patent, U.S. Patent No. 5,384,181 (the “181 Patent”). Arlon subsequently filed its opposition to plaintiffs’ motion to amend its complaint. On June 30, 2009, Arlon filed a motion for summary judgment seeking to dismiss the lawsuit based upon the APA. In an order issued October 9, 2009, the district court granted Arlon’s motion for summary judgment and dismissed all of Rogers’ affirmative patent infringement claims. The parties are currently in settlement discussions regarding the remaining claim in the case, which is Arlon’s affirmative claim for contractual indemnification for Rogers’ breach of a covenant not to sue Arlon.

Environmental Matters

H&H has been working with the Connecticut Department of Environmental Protection (“CTDEP”) with respect to its obligations under a 1989 consent order that applies to a property in Connecticut that H&H sold in 2003 (“Sold Parcel”) and an adjacent parcel (“Adjacent Parcel”) that together with the Sold Parcel comprises the site of a former H&H manufacturing facility. Remediation of all soil conditions on the Sold Parcel was completed on April 6, 2007, although H&H performed limited additional work on that site, solely in furtherance of now concluded settlement discussions between H&H and the purchaser of the Sold Parcel. Although no groundwater remediation is required, there will be monitoring of the Sold Parcel site for several years. On September 11, 2008, the CTDEP advised H&H that it had approved H&H’s Soil Action Remediation Action Report, dated December 28, 2007 as amended by an addendum letter dated July 15, 2008, thereby concluding the active remediation of the Sold Parcel. Approximately $29.0 million was expended through December 31, 2009, and the remaining remediation and monitoring costs for the Sold Parcel are expected to approximate $0.3 million. H&H previously received reimbursement of $2.0 million from an insurance company under a cost-cap insurance policy and in January 2010, net of attorney’s fees, H&H received $1.034 million as the final settlement of H&H’s claim for additional insurance coverage relating to the Sold Parcel. The $1.034 million settlement is included in the “Income from Proceeds of Insurance Claims” line on the 2009 Consolidated Statement of Operations, and is included in the “Trade and Other Receivables” line on the Consolidated Balance Sheet as of December 31, 2009. H&H also has been conducting an environmental investigation of the Adjacent Parcel, and is continuing the process of evaluating various options for its remediation of the Adjacent Parcel. Since the total remediation costs for the Adjacent Parcel cannot be reasonably estimated at this time, accordingly, there can be no assurance that the resolution of this matter will not be material to the financial position, results of operations and cash flow of H&H.

HHEM entered into an administrative consent order (the “ACO”) in 1986 with the New Jersey Department of Environmental Protection (“NJDEP”) with regard to certain property that it purchased in 1984 in New Jersey. The ACO involves investigation and remediation activities to be performed with regard to soil and groundwater contamination. HHEM and H&H settled a case brought by the local municipality in regard to this site in 1998 and also settled with certain of its insurance carriers. HHEM is actively remediating the property and continuing to investigate effective methods for achieving compliance with the ACO. A remedial investigation report was filed with the NJDEP in December 2007. By letter dated December 12, 2008, NJDEP issued its approval with respect to additional investigation and remediation activities discussed in the December 2007 remedial investigation report. HHEM anticipates entering into discussions with NJDEP to address that agency’s natural resource damage claims, the ultimate scope and cost of which cannot be estimated at this time. Pursuant to a settlement agreement with the former owner/operator of the site, the responsibility for site investigation and remediation costs, as well as any other costs, as defined in the settlement agreement, related to or arising from environmental contamination on the property (collectively, “Costs”) are contractually allocated 75% to the former owner/operator (with separate guaranties by the two joint venture partners of the former owner/operator for 37.5% each) and 25% jointly to HHEM and H&H after the first $1.0 million. The $1.0 million was paid solely by the former owner/operator. As of December 31, 2009, over and above the $1.0 million, total investigation and remediation costs of $1,353,970 and $451,658 have been expended by the former owner/operator and HHEM, respectively, in accordance with the settlement agreement. Additionally, HHEM indirectly is currently being reimbursed through insurance coverage for a portion of the Costs for which HHEM is responsible. HHEM believes that there is additional excess insurance coverage, which it intends to pursue as necessary. HHEM anticipates that there will be additional remediation expenses to be incurred once a remediation plan is agreed upon with NJDEP, and there is no assurance that the former owner/operator or guarantors will continue to timely reimburse HHEM for expenditures and/or will be financially capable of fulfilling their obligations under the settlement agreement and the guaranties. The additional Costs cannot be reasonably estimated at this time, and accordingly, there can be no assurance that the resolution of this matter will not be material to the financial position, results of operations and cash flow of HHEM.

H&H and Bairnco (and/or one or more of their respective subsidiaries) have also been identified as potentially responsible parties (“PRPs”) under the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”) or similar state statutes at several sites and are parties to administrative consent orders in connection with certain other properties. H&H and Bairnco (and/or one or more of their respective subsidiaries) may be subject to joint and several liabilities imposed by CERCLA on PRPs. Due to the technical and regulatory complexity of remedial activities and the difficulties attendant in identifying PRPs and allocating or determining liability among them, H&H and Bairnco are unable to reasonably estimate the ultimate cost of compliance with such laws.

H&H received a notice letter from the United States Environmental Protection Agency (“EPA”) in August 2006 formally naming H&H as a PRP at a superfund site in Massachusetts (the “Superfund site”). H&H is part of a group of thirteen (13) other PRPs (the “PRP Group”) to work cooperatively regarding remediation of the Superfund site. H&H executed a participation agreement, consent decree and settlement trust on June 13, 2008 and all of the other PRP’s have signed as well. On December 9, 2008, the EPA lodged the consent decree with the United States District Court for the District of Massachusetts and the consent decree was entered, after no comments were received during the thirty-day comment period on January 27, 2009. With the entry and filing of the consent decree, H&H was required to make two payments in 2009: one payment of $182,053 relating to the “true-up” of monies previously expended for remediation and a payment of $308,380 for H&H’s share of the early action items for the remediation project. In addition, on March 11, 2009, HNH executed a financial guaranty of H&H’s obligations in connection with the Superfund site. The PRP Group has both chemical and radiological PRPs. H&H is a chemical PRP; not a radiological PRP. The remediation of radiological contamination at the site, under the direction of the Department of Energy (“DOE”), has begun but is not expected to be completed until the Fall of 2011 at the earliest, and it may be delayed even further due to inadequate funding in the federal program financing the DOE work. Additional financial contributions will be required by the PRP Group when it starts its work upon completion of the DOE’s radiological remediation work. H&H has recorded a significant liability in connection with this matter. There can be no assurance that the resolution of this matter will not be material to the financial position, results of operations and cash flow of H&H.

HHEM is continuing to comply with a 1987 consent order from the Massachusetts Department of Environmental Protection (“MADEP”) to investigate and remediate the soil and groundwater conditions at the MA Property that is the subject of the Arista Development litigation discussed above. On January 20, 2009, HHEM filed with MADEP a partial Class A-3 Response Action Outcome Statement (“RAO-P”) and an Activity & Use Limitation (“AUL”) for the MA Property. By letter dated March 24, 2009, MADEP advised HHEM that the RAO-P did not require a comprehensive audit. By letter dated April 16, 2009, the MADEP advised HHEM that a MADEP AUL Audit Inspection conducted on March 18, 2009 did not identify any violations of the requirements applicable to the AUL. Together, the March 24 and April 16 MADEP letters, combined with HHEM’s Licensed Site Professional’s partial RAO opinion constitute confirmation of the adequacy of HHEM’s investigation of the MA Property as well as its remediation and post closure monitoring plans. HHEM is negotiating with MADEP and the Massachusetts Attorney General a covenant not to sue (CNTS) to cover the MA Property. Once the CNTS is executed, HHEM will file a Remedy Operation Status and will then work towards filing a Class A-3 RAO to close the site once groundwater monitoring demonstrates that the remediation has controlled the conditions at the site. In addition, HHEM has concluded settlement discussions with abutters of the MA Property and entered into settlement agreements with each of them. Therefore, HHEM does not expect that any claims from any additional abutters will be asserted, but there can be no such assurances.

As discussed above, H&H and Bairnco and/or their subsidiaries have existing and contingent liabilities relating to environmental matters, including capital expenditures, costs of remediation and potential fines and penalties relating to possible violations of national and state environmental laws. H&H and Bairnco and/or their subsidiaries have substantial remediation expenses on an ongoing basis, although such costs are continually being readjusted based upon the emergence of new techniques and alternative methods. In addition, the Company has insurance coverage available for several of these matters and believes that excess insurance coverage may be available as well. The Company had approximately $6.7 million accrued related to estimated environmental remediation costs as of December 31, 2009. Based upon information currently available, including prior capital expenditures, anticipated capital expenditures, and information available on pending judicial and administrative proceedings, H&H and Bairnco and/or their subsidiaries do not expect their respective environmental compliance costs, including the incurrence of additional fines and penalties, if any, relating to the operation of their respective facilities to have a material adverse effect on them, but there can be no such assurances that the resolution of these matters will not have a material adverse effect on the financial positions, results of operations and cash flows of H&H and Bairnco and/or their subsidiaries. The Company anticipates that H&H and Bairnco and/or their subsidiaries will pay such amounts out of their respective working capital, although there is no assurance that H&H and Bairnco and/or their subsidiaries will have sufficient funds to pay such amounts. In the event that H&H and Bairnco and/or their subsidiaries are unable to fund their liabilities, claims could be made against their respective parent companies, including HNH, for payment of such liabilities.

On July 31, 2009, H&H reached a settlement agreement with an insurer for reimbursement of remediation and legal expense for five sites where H&H and/or its subsidiaries had incurred environmental remediation expenses. The insurer agreed to pay H&H $3,000,000 for past indemnity expense and $150,000 for past defense costs. Such insurance proceeds were received on August 10, 2009, and $3,000,000 was included in the “Income from proceeds of insurance claims” line on the consolidated statement of operations in the third quarter.

Other Litigation

Certain of the Company’s subsidiaries are defendants (“Subsidiary Defendants”) in numerous cases pending in a variety of jurisdictions relating to welding emissions. Generally, the factual underpinning of the plaintiffs’ claims is that the use of welding products for their ordinary and intended purposes in the welding process causes emissions of fumes that contain manganese, which is toxic to the human central nervous system. The plaintiffs assert that they were over-exposed to welding fumes emitted by welding products manufactured and supplied by the Subsidiary Defendants and other co-defendants. The Subsidiary Defendants deny any liability and are defending these actions. It is not possible to reasonably estimate the Subsidiary Defendants’ exposure or share, if any, of the liability at this time.

In addition to the foregoing cases, there are a number of other product liability, exposure, accident, casualty and other claims against HNH or certain of its subsidiaries in connection with a variety of products sold by such subsidiaries over several years, as well as litigation related to employment matters, contract matters, sales and purchase transactions and general liability claims, many of which arise in the ordinary course of business. There is also one filed and served case in state court arising out of H&H’s sale of a used piece of equipment which allegedly caused a fire resulting in property damage and interruption of a third party’s business operations. It is not possible to reasonably estimate the Company’s exposure or share, if any, of the liability at this time in any of these matters.

There is insurance coverage available for many of the foregoing actions, which are being litigated in a variety of jurisdictions. To date, HNH and its subsidiaries have not incurred and do not believe they will incur any significant liability with respect to these claims, which they are contesting vigorously in most cases. However, it is possible that the ultimate resolution of such litigation and claims could have a material adverse effect on the Company’s results of operations, financial position and cash flows when they are resolved in future periods.

Pension Plan Contingency Arising from the WPC Group Bankruptcy

In July 2003, the Company entered into an agreement among the Pension Benefit Guaranty Corporation (“PBGC”), certain of its former subsidiaries (“WPC” and “WPSC”), and the United Steelworkers of America, AFL-CIO-CLC (“USWA”), in settlement of matters relating to the Termination Litigation, in which the PBGC was seeking to terminate the WHX pension Plan. Under the settlement, HNH agreed, among other things, (i) to certain administrative facts and legal conclusions about the WHX pension Plan, as well as certain ongoing agreements, as set forth in the settlement agreement, and (ii) that HNH will not contest a future action by the PBGC to terminate the WHX pension Plan in connection with a future WPC Group facility shutdown. The WPC Group was a wholly-owned subsidiary of HNH until August 1, 2003. In the event that such a plan termination occurs, the PBGC has agreed to release HNH from any claims relating to the shutdown. However, there may be PBGC claims related to unfunded liabilities that may exist as a result of a termination of the WHX pension Plan.

Note 18 – Related Party Transactions

SP II is the direct owner of 4,774,591 shares of the Company’s common stock, representing approximately 39.2% of the outstanding shares. Steel Partners Holdings L.P. (“SPH”), formerly known as WebFinancial L.P., is the sole limited partner of SP II. Steel Partners Holdings GP LLC (the “General Partner”) is SPH’s General Partner. SPH is the sole member of the General Partner. Steel Partners LLC (“Steel Partners”) is the manager of SPH and SP II. Warren G. Lichtenstein, the manager of Steel Partners and Chairman of the board of directors of the General Partner, is the Chairman of the Board of the Company.

On September 8, 2005, H&H completed the assignment of its approximately $70.6 million Term B Loan from Canpartners, to SP II, as agent and lender. Substantially all of the terms and conditions of the Term B Loan continued without amendment. H&H was indebted to SP II under the Term B Loan until July 15, 2009, when SP II assigned its interest in the Term B Loan to the SP II Series E Trust. As of December 31, 2009, $44.1 million of loan principal and $11.8 million of accrued interest was owed to the SP II Series E Trust. Interest is not expected to be paid in cash pursuant to the terms of a Subordination Agreement between Steel and Wachovia.

During 2007, in connection with the Bairnco Acquisition, SP II entered into the Subordinated Loan Agreement with HNH and the Subordinated Debt Credit Agreement with Bairnco. (See Note 13). On September 29, 2008, HNH repaid all indebtedness and accrued interest under the Subordinated Loan Agreement, using proceeds from the Rights Offering. On July 15, 2009, SP II assigned its interest in the Subordinated Debt Credit Agreement to the SP II Series A Trust. As of December 31, 2009, $10.0 million of loan principal and $1.6 million of accrued interest was owed to the SP II Series A Trust.

Mr. Glen Kassan, a Managing Director and operating partner of Steel Partners, was appointed Chief Executive Officer of HNH on October 7, 2005. In 2006, the Compensation Committee approved a salary of $600,000 per annum for Mr. Kassan. In 2008, in addition to his salary, the Compensation Committee of the Board of Directors approved the grant of a cash bonus to Mr. Kassan in the amount of $100,000.

Effective March 26, 2010, a special committee of the Board of Directors, composed entirely of independent directors, approved a management and services fee to be paid to SP Corporate Services, LLC (“SP”) in the amount of $950,000 for services performed in 2009. SP is an affiliate of Steel Partners and is controlled by the Chairman of the Board of the Company, Warren G. Lichtenstein. This fee was the only consideration paid for the services of the Chairman of the Board, Warren G. Lichtenstein, the Vice Chairman and Chief Executive Officer, Glen M. Kassan, the director and Vice President, John J. Quicke, and the directors Jack L. Howard and John H. McNamara, Jr., as well as other assistance from Steel Partners. The $600,000 salary of Glen Kassan, the Company’s Chief Executive Officer, which had been deferred from 2009 (net of the 5% company-wide salary reduction) will not be separately paid. The services provided included management and advisory services with respect to operations, strategic planning, finance and accounting, sale and acquisition activities and other aspects of the businesses of the Company. The Company is in discussions with SP regarding a management and services agreement for 2010.

During 2009, the Company provided certain accounting services to SPH, and continues to provide certain accounting services on an ongoing basis. The Company billed SPH $91,000 on account of services provided in 2009.

On October 26, 2005, HNH CS Corp. (“CS”), a wholly-owned subsidiary of the Company, entered into a Stock Purchase Agreement with SP II. Pursuant to that agreement, CS sold 1,000 shares of Series A Preferred Stock, par value $0.01 per share (the “HNH CS Preferred”) to SP II. SP II paid a purchase price of $5,100 per share or an aggregate purchase price of $5.1 million. The proceeds of the sale were used by CS to purchase 1,898,337 shares of CoSine. The HNH CS Preferred accrued dividends at 6.0% ($306,000) per annum. The HNH CS Preferred were redeemed, together with accrued dividends, on September 29, 2008 from the proceeds of the Rights Offering.

CS’s investment in CoSine was accounted for under the equity method and was included in other non-current assets on the consolidated balance sheet. Although CS owned 18.8% of the outstanding common stock of CoSine, the Company accounted for CoSine under the equity method because a related party (SP II) owned an additional percentage of the outstanding common stock and as a result of the combined ownership percentage, indirectly had the ability to exercise control. In the second quarter of 2009, the Company recorded a $1.2 million non-cash impairment charge in connection with its equity investment in CoSine. The amount of the impairment represented the difference between the carrying value of the investment and its fair value. On July 31, 2009, CS sold its equity investment in CoSine to SP II for cash proceeds of $3.1 million.

On July 6, 2007, the Compensation Committee of the Board of Directors of the Company adopted incentive arrangements for Mr. Kassan and Mr. Lichtenstein. These arrangements provide, among other things, for each to receive a bonus equal to 10,000 multiplied by the difference of the fair market value of the Company’s stock price and $90.00, as adjusted pursuant to the terms of the 2007 Incentive Stock Plan to reflect the Reverse Stock Split. The bonus is payable immediately upon the sending of a notice by either Mr. Kassan or Mr. Lichtenstein, respectively The incentive arrangements terminate July 6, 2015, to the extent not previously received. Under GAAP, the Company is required to adjust its obligation for the fair value of such incentive arrangements from the date of actual grant to the latest balance sheet date and to record such incentive arrangements as liabilities in the consolidated balance sheet. The Company has recorded $0.1 million of non-cash income related to these incentive arrangements in both 2009 and 2008.

On September 25, 2008, HNH completed the Rights Offering. The Company sold 11,178,459 shares of common stock to existing stockholders through the exercise of rights at a subscription price of $14.00 per share, for an aggregate purchase price of approximately $156.5 million. SP II subscribed for 8,630,910 shares of the Company’s common stock, for an aggregate purchase price of approximately $120.8 million, pursuant to its basic and applicable oversubscription privileges. After giving effect to the Rights Offering, SP II owned 75% of the outstanding shares of common stock of the Company, but has since reduced its owned shares. The Company used the proceeds of the Rights Offering to (i) redeem preferred stock issued by a wholly-owned subsidiary of the Company, which was held by SP II, plus accumulated dividends, together totaling $6.0 million, (ii) repay Company indebtedness to SP II of $18.9 million, and (iii) repay $117.6 million of indebtedness and accrued interest of certain wholly-owned subsidiaries of the Company to SP II. After such payments, $14.0 million remained with the Company as cash, of which $13.2 million was used to repay additional debt of the Company on October 29, 2008.

Note 19 – Other Income (Expense)

	Years Ended December 31,
	2009			2008
	(in thousands)
Equity income (loss) from affiliated companies	$	(46	)	$	28
Foreign currency transaction gain (loss)		142			(1,095	)
Other, net		14			7
	$	110		$	(1,060	)

Note 20 – Reportable Segments

Handy & Harman Ltd., the parent company, manages a group of businesses on a decentralized basis. HNH owns H&H, a diversified holding company whose strategic business units encompass three reportable segments: Precious Metal, Tubing, and Engineered Materials. HNH also owns Bairnco, another diversified holding company that manages business units in three reportable segments: Arlon EM segment, Arlon CM segment, and Kasco Replacement Products and Services. The business units of H&H and Bairnco principally operate in North America. The Company’s six reportable segments are as follows:

(1)

Precious Metal segment activities include the fabrication of precious metal and their alloys into brazing alloys. H&H’s brazing alloys are used to join similar and dissimilar metals as well as specialty metals and some ceramics with strong, hermetic joints. H&H offers these metal joining products in a wide variety of alloys including gold, silver, palladium, copper, nickel, aluminum, and tin. These brazing alloys are fabricated into a variety of engineered forms and are used in many industries including electrical, appliance, transportation, construction, and general industrial, where dissimilar material and metal-joining applications are required. H&H’s operating income from precious metal products is principally derived from the “value added” of processing and fabricating and not from the purchase and resale of precious metal. In accordance with general practice, prices to customers are principally a composite of two factors: (1) the value of the precious metal content of the product and (2) the “fabrication value,” which includes the cost of base metals, labor, overhead, financing and profit.

(2)

Tubing segment manufactures a wide variety of steel tubing products. The Stainless Steel Tubing Group manufactures small-diameter precision-drawn seamless tubing both in straight lengths and coils. The Stainless Steel Tubing Group’s capabilities in long continuous drawing of seamless stainless steel coils allow this Group to serve the petrochemical infrastructure and shipbuilding markets. The Stainless Steel Tubing Group also manufactures products for use in the medical, semiconductor fabrication, aerospace and instrumentation industries. The Specialty Tubing Group manufactures welded carbon steel tubing in coiled and straight lengths with a primary focus on products for the refrigeration, automotive, and HVAC industries. In addition to producing bulk tubing, the Specialty Tubing Group also produces value added products and assemblies for these industries.

(3)

Engineered Materials segment manufactures and supplies products to the construction and building industries. H&H manufactures fasteners and fastening systems for the U.S. commercial flat roofing industry. Products are sold to building and roofing material wholesalers. The products are also private labeled to roofing system manufacturers. A line of specialty fasteners is produced for the building products industry for fastening applications in the construction and remodeling of homes, decking and landscaping. H&H also manufactures plastic and steel fittings and connectors for natural gas and water distribution service lines along with exothermic welding products for electrical grounding, cathodic protection, and lightning protection. In addition, H&H manufactures electro-galvanized and painted cold rolled sheet steel products primarily for the construction, entry door, container and appliance industries.

(4)

Arlon EM segment designs, manufactures, markets and sells high performance laminate materials and silicone rubber products utilized in the military/aerospace, wireless communications, transportation, energy generation, oil drilling, general industrial, and semiconductor markets. Among the products included in the Arlon EM segment are high technology laminates and bonding materials used in the manufacture of printed circuit boards and silicone rubber products such as electrically insulating tapes and thermally conductive materials.

(5)

Kasco Replacement Products and Services segment is a leading provider of meat-room products (principally replacement band saw blades) and on-site maintenance services principally to retail food stores, meat and deli operations, and meat, poultry and fish processing plants throughout the United States, Canada and Europe. In Canada, in addition to providing its replacement products, Kasco also sells equipment to the supermarket and food processing industries.

Management has determined that certain operating companies should be aggregated and presented within a single reporting segment on the basis that such operating segments have similar economic characteristics and share other qualitative characteristics. Management reviews sales, gross profit and operating income to evaluate segment performance. Operating income for the reportable segments includes the costs of shared corporate headquarters functions such as finance, auditing, treasury, legal, benefits administration and certain executive functions, but excludes other unallocated general corporate expenses. Other income and expense, interest expense, and income taxes are not presented by segment since they are excluded from the measure of segment profitability reviewed by the Company’s management.

The following table presents information about reportable segments for the years ended December 31, 2009 and 2008.

Statement of operations data:	Twelve Months Ended
(in thousands)	December 31,
	2009			2008

Net Sales:
Precious Metal	$	85,972		$	129,431
Tubing		75,198			100,961
Engineered Materials		191,709			246,815
Arlon Electronic Materials		60,145			64,207
Kasco		47,678			50,445
Total net sales	$	460,702		$	591,859

Segment operating income:
Precious Metal		5,490			17,335
Tubing		4,746			9,581
Engineered Materials		16,903			22,553
Arlon Electronic Materials		4,338			6,243
Kasco		3,661			3,978
Total	$	35,138		$	59,690

Unallocated corporate expenses & non operating units		(13,547	)		(22,013	)
Income from proceeds of insurance claims, net		4,035			3,399
Unallocated pension credit (expense)		(14,013	)		8,335
Corporate restructuring costs		(636	)		-
Income from benefit plan curtailment		-			3,875
Asset impairment charge		(1,158	)		-
Loss on disposal of assets		(132	)		(111	)
Income from continuing operations	$	9,687		$	53,175

Interest expense		(25,741	)		(36,212	)
Realized and unrealized loss on derivatives		(777	)		(1,355	)
Other income (expense)		110			(1,060	)
Income (loss) from continuing operations before income taxes	$	(16,721	)	$	14,548

(a) Segment operating income for the Precious Metal segment for 2009 includes restructuring charges of $0.4 million relating to the closure of a facility in New Hampshire. The results for the Precious Metal segment for 2009 and 2008 also include gains of $0.6 million and $3.9 million, respectively, resulting from the liquidation of precious metal inventory valued at LIFO cost.

(b) Segment operating income for the Tubing segment for 2009 includes non-cash asset impairment charges of $0.9 million to write-down to fair value certain equipment formerly used in the manufacture of a discontinued product line.

(c) Segment operating results for the Arlon EM segment for 2009 include a $1.1 million goodwill impairment charge recorded to adjust the carrying value of one of the Arlon EM segment’s reporting units to its estimated fair value.

(d) Segment operating income for the Kasco segment for 2009 includes $0.2 million asset impairment charge associated with certain real property located in Atlanta Georgia.

	2009		2008
Capital Expenditures	(in thousands)


Precious Metal	$	629	$	3,188
Tubing		2,525		1,061
Engineered Materials		2,083		3,057
Arlon Electronic Materials		819		1,180
Kasco		937		1,868
Corporate and other		211		41
	$	7,204	$	10,395

		2009		2008
	(in thousands)
Depreciation and amortization expense

Precious Metal	$	1,635	$	1,428
Tubing		3,056		3,236
Engineered Materials		4,858		4,705
Arlon Electronic Materials		3,971		4,539
Kasco		2,690		2,808
Corporate and other		870		1,361
	$	17,080	$	18,077

	December 31,
		2009		2008
Total Assets		(in thousands)

Precious Metal	$	40,582	$	37,211
Tubing		36,291		45,758
Engineered Materials		127,105		140,063
Arlon Electronic Materials		65,583		69,718
Kasco		26,484		29,913
Corporate and other		19,666		26,917
Discontinued operations		38,129		52,661
	$	353,840	$	402,241

The following table presents revenue and long lived asset information by geographic area as of and for the years ended December 31. Long-lived assets in 2009 and 2008 consist of property, plant and equipment, plus approximately $7.8 million and $8.4 million, respectively, of land and buildings from previously operating businesses, and other non-operating assets that are carried at the lower of cost or fair value and are included in other non-current assets on the consolidated balance sheets.

Geographic Information
	Revenue				Long-Lived Assets
	2009		2008		2009		2008
	(in thousands)				(in thousands)

United States	$	424,047	$	545,391	$	81,107	$	94,777
Foreign		36,655		46,468		13,574		14,500

	$	460,702	$	591,859	$	94,681	$	109,277

Foreign revenue is based on the country in which the legal subsidiary is domiciled. Neither revenue nor long-lived assets from any single foreign country was material to the consolidated revenues of the Company.

There were no customers which accounted for more than 5% of consolidated net sales in 2009 and 2008. In 2009 and 2008, the 15 largest customers accounted for approximately 25% and 22% of consolidated net sales, respectively.

Note 21 –Subsequent Events

The Company has updated its historical consolidated financial statements to reflect certain businesses that were sold since the issuance of the original financial statements, and these businesses are presented in the accompanying financial statements as discontinued operations.

On February 4, 2011, Arlon LLC (“Arlon”), an indirect wholly-owned subsidiary of HNH, sold substantially all of its assets and existing operations located primarily in the State of California related to its Adhesive Film Division for an aggregate sale price of $27.0 million. Net proceeds of approximately $24.2 million from this sale were used to repay indebtedness under the Company’s revolving credit facility. A gain on the sale of these assets of $11.5 million was recorded in the first quarter of 2011.

On March 25, 2011, Arlon LLC and its subsidiaries sold substantially all of their assets and existing operations located primarily in the State of Texas related to Arlon’s Engineered Coated Products Division and SignTech subsidiary for an aggregate sale price of $2.5 million. In addition, Arlon LLC sold a coater machine to the same purchaser for a price of $0.5 million. The Company recorded a loss of $5.0 million on the sale of these assets in the first quarter of 2011. The net proceeds from these asset sales were used to repay indebtedness under the Company’s revolving credit facility.

During the third quarter of 2011, the Company sold the stock of Kasco-France, a part of its Kasco segment, to Kasco-France’s former management team for one Euro plus 25% of any pre-tax earnings over the next three years. Additionally, Kasco-France signed a five year supply agreement to purchase certain products from Kasco. As a result of the sale, the Company recorded a loss, net of tax, of $0.6 million in the third quarter of 2011.

Arlon CM and Kasco-France have been included in the accompanying financial statements as discontinued operations on a retroactive basis for the twelve months ending December 31, 2009 and 2008.

Attached files

Stock widget

Investing forum

HANDY & HARMAN LTD. Reports