<PAGE>   1

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                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                               ------------------

                                   FORM 10-K
                               ------------------
                ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
                      THE SECURITIES EXCHANGE ACT OF 1934

  FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996          COMMISSION FILE NUMBER
                                     1-5365

                                 HANDY & HARMAN
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

                                    NEW YORK
                        (STATE OR OTHER JURISDICTION OF
                         INCORPORATION OR ORGANIZATION)

                                   13-5129420
                                (I.R.S. EMPLOYER
                              IDENTIFICATION NO.)

                                250 PARK AVENUE
                               NEW YORK, NY 10177
                    (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)

       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (212) 661-2400
          SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:

<TABLE>
<CAPTION>
                                             NUMBER OUTSTANDING
                                              AS OF MARCH 26,     NAME OF EACH EXCHANGE ON
             TITLE OF EACH CLASS                    1997              WHICH REGISTERED
    --------------------------------------   ------------------   -------------------------
    <S>                                      <C>                  <C>
    Common Stock Par Value $1 Per Share...       11,993,344        New York Stock Exchange
    Common Stock Purchase Rights..........       11,993,344        New York Stock Exchange
</TABLE>

          SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
                                      None

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [  ]

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Registration S-K is not contained herein, and will not be contained, to
the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [  ]

     The aggregate market value of the Common Stock outstanding and held by
non-affiliates (as defined in Rule 405 under the Securities Act of 1933) of the
registrant, based upon the closing sale price of the Common Stock on the New
York Stock Exchange on March 26, 1997 was $185,334,000.

     Certain portions of the respective documents listed below have been
incorporated by reference into the indicated Part of this Annual Report on Form
10-K.

<TABLE>
    <S>                                                              <C>
    (1)  Annual Report to Shareholders for fiscal year ended         Part I, Item 1
          December 31, 1996                                          Part II, Items 5-8
    (2)  Notice of Annual Meeting of Shareholders and Proxy          Part III,
         Statement dated April 2, 1997                               Items 10-13
</TABLE>

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<PAGE>   2

                                     PART I

ITEM 1.  BUSINESS

                                    GENERAL

     Handy & Harman (hereinafter "H&H" or the "Company"), was incorporated in
the State of New York in 1905 as the successor to a partnership which commenced
business in 1867. Unless the context indicates otherwise, the terms, "H&H" and
the "Company," refer to Handy & Harman and its consolidated subsidiaries.

     Historically, until commencing a diversification program in 1966, the
Company was engaged primarily in the manufacture of silver and gold alloys in
mill forms and the refining of precious metals from jewelry and industrial
scrap. The Company's markets were largely among silversmiths and manufacturing
jewelers, users of silver brazing alloys, and manufacturers who required silver
and gold primarily for the properties of those metals. The Company publishes a
daily New York price for its purchases of silver and gold and also publishes a
daily price for its fabricated silver and gold. The silver price is recognized,
relied on and used by others throughout the world. The diversification program
has added lines of precious metals products and various specialty manufacturing
operations, including stainless steel and specialty metal alloy products, for
industrial users in a wide range of applications which include the electric,
electronic, automotive original equipment, office equipment, oil and other
energy related, refrigeration, utility, telecommunications and medical
industries. In September 1994, the Company acquired Sumco Inc., a precision
electroplating firm, which does electroplating of electronic connector and
connector stock for the automotive, telecommunications, electronic and computer
industries and in June 1996, the Company acquired ele Corporation, which brings
a value-added reel-to-reel molding capability appropriate for the semiconductor
lead frame and sensors marketplace.

     The Company's business segments are (a) manufacturing and selling of
non-precious metal wire, cable and tubing products primarily stainless steel and
specialty alloys; (b) manufacturing and selling precious metals products and
precision electroplated materials and stamped parts; and (c) manufacturing and
selling other specialty products supplied to natural gas, electric and water
utility companies. Three-year financial data for the Company's business segments
appear under the caption "The Company's Business" on pages 15 and 16 of the
Handy & Harman 1996 Annual Report to Shareholders (hereinafter referred to as
the "Annual Report") and are incorporated by reference herein.

     Export sales and revenues are not significant in the total sales and
revenues of any of the Company's business segments.

              MANUFACTURING OF SPECIALTY WIRE AND TUBING PRODUCTS

     The Company, through several subsidiaries, manufactures a wide variety of
non-precious metal wire and tubing products. Small diameter precision drawn
tubing fabricated from stainless steel, nickel alloy and carbon and alloy steel
is produced in many sizes and shapes to critical specifications for use in the
semi-conductor, aircraft, petrochemical, automotive, appliance, refrigeration
and instrumentation industries. Additionally, tubular product is manufactured
for the medical industry for use as implants, surgical supplies and
instrumentation. Nickel alloy, galvanized, carbon steel and stainless steel wire
products redrawn from rods are produced for such diverse applications as
bearings, brushes, cable lashing, hose reinforcement, nails, knitted mesh, wire
rope and cloth, air bags and antennas in the aerospace, automotive, chemical,
communications, marine, medical, petrochemical, welding and other industries.

     Raw Materials -- The raw materials used in this segment include stainless,
galvanized and carbon steels, nickel alloys and a variety of high performance
alloys. The Company purchases all such raw materials at open market prices from
domestic and foreign suppliers. The Company has not experienced any problem in
obtaining the necessary quantities of raw materials. Prices and availability,
particularly of raw materials purchased from foreign suppliers, will be affected
by world market conditions and governmental policies.

                                        1
<PAGE>   3

     Competition -- There are many companies, domestic and foreign, which
manufacture wire and tubing products of the types manufactured by this segment.
Competition is based on quality, service, price and new product introduction,
each of which is of equal importance.

     Distribution -- Most of the products manufactured by this segment are sold
directly to customers through Company sales personnel and the remainder are sold
through manufacturer's representatives and distributors.

                            PRECIOUS METALS PRODUCTS

     The operational structure of the parent company's precious metals
activities consists of the Products Operations. Within the precious metals
segment of the Company's business, two principal classes of products are
manufactured: wire products and rolled products. The Company's profits from the
products manufactured in this segment are derived from the "value added" of
processing and fabricating and not from the purchase and resale of precious
metals. In accordance with general practice in the industry, prices to customers
are a composite of two factors; namely, (1) the value of the precious metal
content of the product plus (2) an amount referred to as "fabrication values" to
cover the cost of base metals, labor, overhead, financing and profit.

     Wire Products -- In the manufacture of the Company's wire products,
precious metal alloys are cast, extruded and then drawn into wire. The Company's
precious metal wire products consist of sterling and other alloys of silver, and
other precious metal alloys in drawn and coiled wire and rod forms of differing
diameters, ranging from seven thousandths of an inch to one fourth of an inch.
The Company also manufactures Easy-Flo(R), Sil-Fos(R) and other silver brazing
alloys in wire form for making permanent, strong, leak-tight joints of the
metals joined. Brazing alloy wire is also sold in preformed rings and special
shapes. The Company's precious metal alloy wire products are marketed for
electrical conductive and contact applications in a wide variety of industries,
including the aerospace, electronics and appliance industries. Manufacturing
jewelers use the Company's precious metal wire in a wide range of production
applications, including, for example, necklaces, bracelets, earring parts and
pins and clips.

     Rolled Products -- The Company's rolled products are manufactured from
precious metals in sheets, strips and bars of varying thicknesses, widths and
lengths. These precious metal rolled products range in standard thickness from
foils five ten thousandths of an inch thick to strips or bars three eighths of
an inch thick and in standard widths from strips one eighth of an inch wide to
fifteen inches wide. Rolled products are shipped in lengths up to many hundred
feet. The Company's rolled products include precious metals bonded with other
metals in bimetallic and trimetallic strips which provide more versatile
industrial applications at a lower cost than would be possible if a solid
precious metal or a precious metal alloy were used.

     Because of the physical properties of precious metals and precious metal
alloys, the Company's rolled products have a wide variety of applications by the
Company's industrial customers. The Company's rolled products are sold to
silversmiths for use as anodes in plating operations and for flatware and
hollowware, to manufacturing jewelers for a variety of jewelry, to mints and
others for coins, commemorative medals and ingots, to manufacturers of
electrical and electronic devices for electrical contacts and circuitry, to the
nuclear power industry for control assemblies, to the defense industry as foil
for batteries, and to the aerospace industry for use in guidance systems.

     Powder Products -- The Company produces silver/tin alloy powders for use in
dental applications and silver/copper alloy powders, which are sold under the
names Easy-Flo(R) and Sil-Fos(R) for use in industrial brazing applications.

     Precision Plating and Surface Finishing -- The Company produces precision
electroplated materials and stamped parts (often using gold, silver, palladium
and various base metals on such materials and stamped parts) for use in the
semiconductor, telecommunications, automotive electronics and computer
industries. It also participates in the medical plastics field.

                                        2
<PAGE>   4

     Other Precious Metals Products -- The Company produces grain beads of
various precious metal alloys by melting the metal and then pouring it through
water. Grain beads are distinguished from the Company's precious metals powders,
which are not as coarse and are produced by atomization spraying.

     The Company exited the karat gold fabricated product business in 1995.
Karat gold was used in the production of wire products, rolled products and
grain beads stated above. See Note 1 to the Consolidated Financial Statements
included in the Annual Report.

     Raw Materials -- The raw materials for the Company's precious metals
products consist principally of silver, gold, copper, cadmium, zinc, nickel, tin
and the platinum group metals in various forms. Silver and gold constitute the
major portion of the value of the raw materials involved. The Company purchases
all of its precious metals at free market prices from either customers, primary
producers or bullion dealers. The prices of silver and gold are subject to
fluctuations and are expected to continue to be affected by world market
conditions. Nonetheless, the Company has not experienced any problem in
obtaining the necessary quantities of raw materials required for this segment
and, in the normal course of business, receives precious metals from suppliers
and customers. These metals are returnable in fabricated or commercial bar form
under agreed upon terms. Since precious metals are fungible, the Company does
not physically segregate supplier and customer metals from its own inventories.
Therefore, to the extent that supplier or customer metals are used by the
Company, the amount of inventory which the Company must own is reduced. All raw
materials used in this segment are readily available from several sources. For a
discussion of the Company's inventory purchasing and pricing and of the
Company's practices to eliminate the economic risk of precious metal price
fluctuations, see "The Company's Business" on page 15 of the Annual Report.

     Working Capital Items -- The Company maintains a level of inventory of fine
and fabricated precious metals in various stages of processing for customer
delivery requirements and for a continuous supply of raw materials. Such
inventories are carried under the Last-In, First-Out (LIFO) method of
accounting. The LIFO carrying values are substantially less than the market
values of the inventories. In the Notes to Consolidated Financial Statements,
commencing on page 26 of the Annual Report, see Note 2 for a comparison of the
cost and market values of the Company's precious metals inventories at December
31, 1996 and December 31, 1995 and Note 3 for a discussion of the effects of
fluctuations in precious metals prices on the Company's credit requirements.
Both Notes are incorporated by reference herein.

     Product Development, Patents and Trademarks -- While the Company holds a
number of patents and trademarks related to its precious metals products and
processes, and is licensed under others, the precious metals business, as a
whole, is not dependent upon such patents. The Company's trademarks are
registered in the United States and in several foreign countries. The Company
maintains a technical laboratory and staff in connection with its precious
metals operations and a portion of the work of that staff is devoted to
metallurgical products and development.

     Distribution Facilities -- The Company distributes precious metals products
directly to customers from its plants and service branches, except that certain
products, primarily brazing alloys, are distributed through independent
distributors throughout the United States and Canada. The Company has a
marketing organization trained to service its customers and dealers, to solicit
orders for its precious metal and related products. This organization markets
all of the Company's precious metals products and provides special technical
assistance with respect to precious metals through product engineers and other
technical personnel. The Company maintains customer service and sales offices at
its various manufacturing and processing plants. It also has warehouse
facilities to support sales and distribution at each of its manufacturing and
processing plants.

     Competition -- The Company is one of the leading fabricators of precious
metals. The Company currently sells its precious metal fabricated products to
approximately 5,000 customers throughout the United States and Canada. Although
there are no companies in the precious metals field whose operations exactly
parallel those of H&H in every area, there are a number of competitors in each
of the classes of the Company's precious metals products. Many of these
competitors also carry on activities in other product lines in which the Company
is not involved. Competition is based on quality, service and price, each of
which is of equal importance.

                                        3
<PAGE>   5

                   MANUFACTURING OF OTHER SPECIALTY PRODUCTS

     A subsidiary of the Company manufactures plastic and steel fittings and
connections, plastic pipe and non-ferrous thermite welding powders for the
natural gas, electric and water distribution industries.

     Distribution -- Most of the Company's products comprising this segment are
sold directly to customers through Company sales personnel. In particular, gas
distribution supplies and fittings, thermite welding powders and certain other
products are sold primarily through manufacturers' representatives to the
ultimate users, with the remaining sales made by agents and manufacturers'
representatives to distributors.

     Raw Materials -- The raw materials used in this segment include various
steel alloys and various plastic compositions. The Company purchases all such
raw materials at open market prices primarily from domestic suppliers. The
Company has not experienced any problem in obtaining the necessary quantities of
raw materials. Prices and availability, particularly as to raw materials
purchased from foreign suppliers, will continue to be affected by world market
conditions and governmental policies.

     Competition -- There are many companies, domestic and foreign, which
manufacture products of the type manufactured by this segment. Some are larger
than the Company and many are larger than the Company's operations with which
they compete. Competition is generally based on quality, service and price, each
of which is of equal importance.

                              RECENT DEVELOPMENTS

     On February 28, 1997, the Company completed the acquisition of Olympic
Manufacturing Group, Inc., the leading domestic manufacturer and supplier of
fasteners for the commercial roofing industry. The Company purchased all of the
shares of capital stock of Olympic, which also sells other construction related
fasteners, from a group of investors led by Saugatuck Associates, a private
investment firm headquartered in Stamford, Connecticut, for approximately $53
million net of certain debt, stock option and warrant obligations, paid by the
Company at the closing of the transaction. In the twelve months ended December
30, 1996, Olympic, based in Agawam, Massachusetts, had sales of approximately
$42.5 million.

                            DISCONTINUED OPERATIONS

     In August 1996 the Company sold its domestic refining business, which
recovered precious metals from waste and scrap generated by users of the
Company's precious metals products, by other industrial users of precious
metals, by non-manufacturing refining customers, and from high grade mining
concentrates and bullion. During 1995 the Company sold, in two phases, its
automotive segment which manufactured a wide variety of parts, cables,
components and assemblies for North American automotive original equipment
manufacturers. The cable operations were sold on July 20, 1995 and the remaining
operations on December 29, 1995. See Note 1 to the Consolidated Financial
Statements included in the Annual Report.

                                SHARE REPURCHASE

     In addition to the Company's repurchase of 1.8 million shares via a "Dutch
Auction" completed in December 1996, the Company may, at the discretion of its
Board of Directors, elect to repurchase additional shares (up to an aggregate of
one and one-half million), of its currently outstanding Common Stock.

                             GOVERNMENT REGULATION

     During the last fiscal year, the Company spent or committed approximately
$3,000,000 in complying with federal, state and local occupational safety and
health, environmental control and equal employment opportunity laws and
regulations. These expenditures included monies spent by the Company in the
clean-up of hazardous wastes and toxic substances under federal, state and local
laws and regulations relating to protection of the environment. Typical of large
domestic manufacturing concerns, the Company's operations may affect the
environment. These operations may produce, process and dispose of materials and
waste products which, under certain conditions, are toxic or hazardous under
such environmental laws and regulations. The Company expects to make comparable
expenditures and commitments during the current fiscal year, provided that no
further changes are made in such laws and regulations or in their application.

                                        4
<PAGE>   6

Such expenditures are not material to the competitive position or financial
condition of the Company; however, such laws and regulations may require capital
expenditures not now contemplated and may result in increased operating costs.
See Item 3 Legal Proceedings.

                                     ENERGY

     The Company requires significant amounts of electricity, natural gas, fuel
oil and propane to operate its facilities. The Company has few contracts
covering natural gas or electricity, but has some one-year contracts for the
delivery of fuel oil and propane at some facilities. These contracts are the
result of competitive bidding.

     In an attempt to minimize the effects of any fuel shortages, the Company
has made a number of process and equipment changes to allow use of alternate
fuels in key processes, and the Company has equipped certain plants with
alternate fuel reserves intended to reduce any curtailment upon a local
shortage. A general and continuing shortage of such fuels, however, or a
government allocation of supplies resulting in a general reduction in fuel
supplies, could cause some curtailment of production.

                                   EMPLOYEES

     The Company had 2,304 employees on December 31, 1996. Of these,
approximately 42 percent are covered by collective bargaining agreements, which
expire at various times during the next three years.

ITEM 2.  PROPERTIES

     The Company has 22 active operating plants in the United States, Canada,
England, Denmark and Singapore (50% owned) with a total area of approximately
1,730,000 square feet, including warehouse, office and laboratory space, but not
including the plants used by the Singapore operation. The Company owns or leases
sales, service and warehouse facilities at two other locations in the United
States, which, with the Company's executive and general offices, have a total
area of approximately 63,000 square feet and owns eleven non-operating or
discontinued locations with a total area of approximately 836,000 square feet.
The Company considers its manufacturing plants and service facilities to be well
maintained and efficiently equipped, and therefore suitable for the work being
done. The productive capacity and extent of utilization of the Company's
facilities is dependent in some cases on general business conditions and in
other cases on the seasonality of the utilization of its products. Productivity
can be expanded readily to meet additional demands. A description of the
Company's principal plants by industry segment is as follows:

WIRE AND TUBING

     The headquarters of the wire portion of this segment is in Cockeysville,
Maryland, and the headquarters of the tubing portion of this segment is in
Norristown, Pennsylvania. Manufacturing facilities are located in: Cockeysville,
Maryland; Norristown, Pennsylvania; Willingboro and Middlesex, New Jersey;
Oriskany, New York; Camden, Delaware; Evansville, Indiana; Fort Smith, Arkansas;
Retford, Notts. and Liversedge, Yorkshire, England; and Kolding, Denmark. All
these plants are owned in fee except the Retford plant, which is leased.

PRECIOUS METALS

     The Company's principal precious metal products operation is conducted in
Fairfield, Connecticut. Other precious metal operations are conducted in: North
Attleboro, Massachusetts; East Providence, Rhode Island; Cudahy, Wisconsin;
Carmel, Indiana; Indianapolis, Indiana; Fontana, California; Toronto, Canada and
Singapore (50 percent owned). The Company owns all these operating plants in
fee.

OTHER SPECIALTY PRODUCTS

     The principal facilities currently engaged in the Company's other specialty
products businesses are located in Tulsa and Broken Arrow, Oklahoma. The
Oklahoma plants are owned in fee.

                                        5
<PAGE>   7

COMPANY'S OFFICES

     The Company's executive offices are in New York, New York and occupy 17,000
square feet under a lease. The Company has its general offices in leased
premises containing approximately 30,000 square feet located in Rye, New York.

ITEM 3.  LEGAL PROCEEDINGS

     There are no pending legal proceedings to which the Company or any of its
subsidiaries is a party or which any of their property is the subject, other
than ordinary, routine litigation incidental to the business, none of which
individually or in the aggregate is material to the business or financial
condition of the Company, except as follows:

  Montvale, New Jersey Facility

     An action was commenced in April 1993 by the Borough of Park Ridge, New
Jersey against Handy & Harman Electronic Materials Corporation, a subsidiary
("HHEM"), Handy & Harman and other defendants, in the Superior Court of New
Jersey, Law Division, Bergen County, asserting that a chemical used at a
formerly owned facility in Montvale, New Jersey, an adjoining municipality, had
migrated and entered a drinking water supply of Park Ridge. This action seeks
recovery of the alleged cost of treatment and remediation of water wells of the
Borough of Park Ridge as a result of alleged contamination by the defendants.
Although the precise amount of the Borough's claims is not known, a settlement
demand of approximately $4.5 million has been made by the plaintiff.

     There is no presently scheduled trial. The Court may schedule a trial date
at the Case Management Conference in May 1997.

     The Handy & Harman defendants deny responsibility for the alleged
contamination of the Park Ridge wells and assert that if any such contamination
exists as a result of operation of the Montvale facility, damages arising
therefrom are the responsibility of the owner or operator thereof prior to the
purchase of the facility by HHEM from Plessey Incorporated (Plessey). The Handy
& Harman defendants have asserted substantial cross-claims against Plessey,
GEC-Marconi Materials Corp. and a vendor of the chemical involved. The Handy &
Harman defendants are seeking from the Plessey defendants, in the event that the
Handy & Harman defendants are held to be responsible for any damages asserted by
the Borough, return of the purchase price, repayment of amounts spent by HHEM in
remediation of the site, contribution and indemnity.

     Plessey has asserted cross-claims for contribution and indemnity against
the Handy & Harman defendants, as have other parties.

     Handy & Harman has filed a separate action, since consolidated with the
above Park Ridge action, against Twin Cities Fire Insurance Company and other
carriers, claiming coverage under various liability insurance policies.

     Although the final outcome of this matter cannot be assured, the Company
believes that it will not have a materially adverse affect on the financial
position of the Company.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     None during the fourth quarter of the year ended December 31, 1996.

                       EXECUTIVE OFFICERS OF THE COMPANY

     As of March 26, 1997, the executive officers of the Company, their ages,
their present positions and offices, and their recent business experience and
employment, are as follows:

          Richard N. Daniel -- age 61; Chairman (since 1988) and Chief Executive
     Officer of the Company (since 1983); a Director (since 1974).

                                        6
<PAGE>   8

          Frank E. Grzelecki -- age 59; President and Chief Operating Officer of
     the Company (since 1992); prior thereto Vice Chairman of the Board (since
     1989); a Director (since 1988).

          Robert D. LeBlanc -- age 47; Executive Vice President (since 1996);
     prior thereto Executive Vice President of Elf Atochem North America, Inc.
     (since prior to 1996).

          Robert F. Burlinson -- age 57; Vice President and Treasurer (since
     1996); prior thereto Senior Vice President, Chief Financial Officer and
     Treasurer of The National Guardian Corporation (since prior
     to 1996).

          Paul E. Dixon -- age 52; Vice President, General Counsel and Secretary
     (since 1993); prior thereto Vice President and General Counsel (since
     1992); prior thereto Senior Vice President and General Counsel of The
     Warnaco Group (since prior to 1990).

          Dennis C. Kelly -- age 45; Controller (since 1993) of the Company;
     prior thereto Assistant Controller (since 1989).

          Robert M. Thompson -- age 64; Vice President (since 1994); prior
     thereto Group Vice President (since 1984).

     There are no family relationships between any of the executive officers.
The regular term of office for all executive officers is one year, beginning on
May 1. There are no arrangements or understandings between any of the executive
officers and any other person pursuant to which such officer was elected to be
an officer.

                                    PART II

ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
         MATTERS

     The information for this Item is incorporated by reference to the section
entitled "Stock Trading and Dividends" on page 16 of the Annual Report and to
Note 6 of the Notes to Consolidated Financial Statements included in the Annual
Report.

ITEM 6.  SELECTED FINANCIAL DATA

     The information for this Item is incorporated by reference to the section
entitled "Five Year Selected Financial Data" on page 17 of the Annual Report.

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

     The information for this Item is incorporated by reference to the section
entitled "Management's Discussion and Analysis" on pages 18 through 20 of the
Annual Report.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The information for this Item is incorporated by reference to the
Consolidated Financial Statements contained on pages 21 through 24 of the Annual
Report and by reference to the Summary of Significant Accounting Policies
contained on pages 25 and 26 of the Annual Report and the Notes to Consolidated
Financial Statements commencing on page 26 of the Annual Report and by reference
to the Independent Auditors' Report set forth on page 33 of the Annual Report.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

     Not Applicable.

                                        7
<PAGE>   9

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY

     The information for this Item is incorporated by reference to the section
entitled "Election of Directors," on pages 3 and 4 of the Company's Proxy
Statement, dated April 2, 1997 (the "Proxy Statement"), for the 1997 Annual
Meeting of Shareholders and by reference to the item captioned "Executive
Officers of the Company" at the end of Part I of this Annual Report on Form
10-K. No person who was during the 1996 fiscal year a director, officer or
beneficial owner of more than ten percent of any class of equity securities of
the registrant failed to file on a timely basis reports required by Section
16(a) of the Exchange Act of 1934, as amended, except as set forth in the
Company's Proxy Statement.

ITEM 11.  EXECUTIVE COMPENSATION

     The information for this Item is incorporated by reference to the sections
entitled "Executive Compensation," "Base Salaries," "Annual Incentive Awards for
1996," "Stock Options," "Long-Term Incentive Plan," "Compensation Committee
Report on Executive Compensation," "Pensions," "Compensation of Directors,"
"Employment Contracts and Termination of Employment and Change-in-Control
Agreements" on pages 5 to 12 of the Proxy Statement.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The information for this Item is incorporated by reference to the sections
entitled "Voting Rights and Principal Holders Thereof" and "Election of
Directors" on pages 1, 2, 3, and 4, respectively, of the Proxy Statement.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The information for this Item is incorporated by reference to the section
entitled "Election of Directors" on pages 3 and 4 of the Proxy Statement.

                                    PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(A) DOCUMENTS FILED AS A PART OF THIS REPORT

1.  FINANCIAL STATEMENTS

     The Consolidated Financial Statements (pages 21 through 24 of the Annual
Report), the Summary of Significant Accounting Policies and Notes to
Consolidated Financial Statements (pages 25 through 32 of the Annual Report),
the Independent Auditors' Report (page 33 of the Annual Report) and the items of
Supplementary Information incorporated by reference in Part II, Item 8 of this
Report are incorporated by reference.

2.  FINANCIAL STATEMENT SCHEDULE

     The following Financial Statement Schedule is filed as a part of this
Report, beginning herein at the respective pages indicated:

     (i) Report and Consent of Independent Auditors (page F-1).

     (ii) Schedule II -- Valuation and Qualifying Accounts and Reserves (page
S-1).

     All other Schedules are omitted because they are not applicable or not
required or because the required information is included in the Consolidated
Financial Statements or Notes thereto.

                                        8
<PAGE>   10

3.  EXHIBITS REQUIRED TO BE FILED

     The following exhibits required to be filed as part of this Report have
been included:

     (1) PLAN OF ACQUISITION, REORGANIZATION, ARRANGEMENT, LIQUIDATION OR
SUCCESSION.

     (a) Asset Purchase Agreement, dated as of July 8, 1996, by and between
Golden West Refining Corporation Limited and the Company.

     (b) Stock Purchase Agreement, dated as of February 19, 1997, among
Saugatuck Capital Company Limited Partnership III, the other sellers named
therein and the Company.

     With respect to (a) and (b), above, the disclosure schedules (relating to
certain factual matters concerning the Company and the other parties to the
respective agreements) and ancillary agreements (relating to the provision of
certain services by or to the Company with respect to (a) and (b), and the
consignment of certain precious metals to the other party to the agreement
described in (a) to such agreements have been omitted pursuant to Item 601(b)(2)
of Regulation S-K; the Company agrees to furnish such documents to the
Securities and Exchange Commission upon its request.

     (2) CERTIFICATE OF INCORPORATION AND BY-LAWS.

     (a) Restated Certificate of Incorporation of the Company (Filed as Exhibit
3(a) to the Company's 1989 Annual Report on Form 10-K and incorporated herein by
reference).

     (b) By-Laws, as amended (Filed as Exhibit 3(b) to the Company's 1990 Annual
Report on Form 10-K and incorporated herein by reference).

     (3) INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS, INCLUDING
INDENTURES.

     (a) Revolving Credit Agreement dated as of September 28, 1994 among the
Company, certain financial institutions as lenders, The Bank of Nova Scotia,
Chemical Bank and The Bank of New York as Co-Agents and The Bank of Nova Scotia,
as the Administrative Agent (Filed as Exhibit 10.3 to the Company's Current
Report on Form 8-K dated October 12, 1994 and incorporated herein by reference).

     (b) Short Term Revolving Credit Agreement dated as of September 28, 1994
among the Company, certain financial institutions as lenders, The Bank of Nova
Scotia, Chemical Bank and The Bank of New York as Co-Agents and The Bank of Nova
Scotia, as the Administrative Agent (Filed as Exhibit 10.4 to the Company's
Current Report on Form 8-K dated October 12, 1994 and incorporated herein by
reference).

     (c) Fee Consignment Agreement dated as of September 28, 1994 between the
Company and The Bank of Nova Scotia (Filed as Exhibit 10.5 to the Company's
Current Report on Form 8-K dated October 12, 1994 and incorporated herein by
reference).

     (d) Short Term Fee Consignment Agreement dated as of September 28, 1994
between the Company and The Bank of Nova Scotia, (Filed as Exhibit 10.6 to the
Company's Current Report on Form 8-K dated October 12, 1994 and incorporated
herein by reference).

     (e) Dollar Supply Agreement dated as of September 28, 1994 among the
Company, certain financial institutions as lenders, The Bank of Nova Scotia,
Chemical Bank and The Bank of New York as Co-Agents and The Bank of Nova Scotia,
as the Administrative Agent (Filed as Exhibit 10.7 to the Company's Current
Report on Form 8-K dated October 12, 1994 and incorporated herein by reference).

     (f) Short Term Dollar Supply Agreement dated as of September 28, 1994 among
the Company, certain financial institutions as lenders, The Bank of Nova Scotia,
Chemical Bank and The Bank of New York as Co-Agents and The Bank of Nova Scotia,
as the Administrative Agent (Filed as Exhibit 10.8 to the Company's Current
Report on Form 8-K dated October 12, 1994 and incorporated herein by reference).

     (g) First Amendment to Revolving Credit Agreement dated as of June 30, 1995
among the Company, certain financial institutions as lenders, The Bank of Nova
Scotia, Chemical Bank and The Bank of New York as Co-Agents and The Bank of Nova
Scotia, as the Administrative Agent.

                                        9
<PAGE>   11

     (h) Second Amendment to Revolving Credit Agreement dated as of September
24, 1996 among the Company, certain financial institutions as lenders, The Bank
of Nova Scotia, Chemical Bank and The Bank of New York as Co-Agents and The Bank
of Nova Scotia, as the Administrative Agent.

     (i) Third Amendment to Revolving Credit Agreement dated as of October 11,
1996 among the Company, certain financial institutions as lenders, The Bank of
Nova Scotia, Chemical Bank and The Bank of New York as Co-Agents and The Bank of
Nova Scotia, as the Administrative Agent.

     (j) Fourth Amendment to Revolving Credit Agreement dated as of January 15,
1997 among the Company, certain financial institutions as lenders, The Bank of
Nova Scotia, Chemical Bank and The Bank of New York as Co-Agents and The Bank of
Nova Scotia, as the Administrative Agent.

     (k) First Amendment to Short Term Revolving Credit Agreement dated as of
June 30, 1995 among the Company, certain financial institutions as lenders, The
Bank of Nova Scotia, Chemical Bank and The Bank of New York as Co-Agents and The
Bank of Nova Scotia, as the Administrative Agent.

     (l) Second Amendment to Short Term Revolving Credit Agreement dated as of
September 24, 1996 among the Company, certain financial institutions as lenders,
The Bank of Nova Scotia, Chemical Bank and The Bank of New York as Co-Agents and
The Bank of Nova Scotia, as the Administrative Agent.

     (m) Third Amendment to Short Term Revolving Credit Agreement dated as of
October 11, 1996 among the Company, certain financial institutions as lenders,
The Bank of Nova Scotia, Chemical Bank and The Bank of New York as Co-Agents and
The Bank of Nova Scotia, as the Administrative Agent.

     (n) Fourth Amendment to Short Term Revolving Credit Agreement dated as of
January 15, 1997 among the Company, certain financial institutions as lenders,
The Bank of Nova Scotia, Chemical Bank and The Bank of New York as Co-Agents and
The Bank of Nova Scotia, as the Administrative Agent.

     (o) First Amendment to Fee Consignment Agreement dated as of June 30, 1995
between the Company and The Bank of Nova Scotia.

     (p) Second Amendment to Fee Consignment Agreement dated as of September 24,
1996 between the Company and The Bank of Nova Scotia.

     (q) First Amendment to Short Term Fee Consignment Agreement dated as of
June 30, 1995 between the Company and The Bank of Nova Scotia.

     (r) Second Amendment to Short Term Fee Consignment Agreement dated as of
September 24, 1996 between the Company and The Bank of Nova Scotia.

     (s) First Amendment to Dollar Supply Agreement dated as of September 24,
1996 among the Company, certain financial institutions as lenders, The Bank of
Nova Scotia, Chemical Bank and The Bank of New York as Co-Agents and The Bank of
Nova Scotia, as the Administrative Agent.

     (t) First Amendment to Short Term Dollar Supply Agreement dated as of
September 24, 1996 among the Company, certain financial institutions as lenders,
The Bank of Nova Scotia, Chemical Bank and The Bank of New York as Co-Agents and
The Bank of Nova Scotia, as the Administrative Agent.

     (u) Rights Agreement, dated as of January 26, 1989, between the Company and
ChaseMellon Shareholder Services, L.L.C., (formerly known as Morgan Shareholder
Services Trust Company), as Rights Agent, including all exhibits thereto (filed
as Exhibit 1 to the Company's Registration Statement on Form 8-A dated February
3, 1989 and incorporated herein by reference).

     (v) Amendment, dated as of April 25, 1996, to the Rights Agreement between
the Company and ChaseMellon Shareholder Services, L.L.C., as Rights Agent (filed
as Exhibit 1 to the Company's Registration Statement on Form 8-A/A dated May 21,
1996 and incorporated herein by reference).

     (w) Amendment, dated as of October 22, 1996, to the Rights Agreement
between the Company and ChaseMellon Shareholder Services, L.L.C., as Rights
Agent (filed as Exhibit 1 to the Company's Registration Statement on Form 8-A/A
dated October 24, 1996 and incorporated herein by reference).

                                       10
<PAGE>   12

     The Company agrees to furnish to the Securities and Exchange Commission
upon its request therefor a copy of each instrument omitted pursuant to Item
601(b)(4)(iii) of Regulation S-K.

     (10) MATERIAL CONTRACTS.

     (a) 1982 Stock Option Plan (Filed as Exhibit 1 to the Company's
Registration Statement on Form S-8 (Registration No. 2-78264) under the
Securities Act of 1933 and incorporated herein by reference).

     (b) Amendment to 1982 Stock Option Plan approved in December 1988 (Filed as
Exhibit 10(a) to the Company's Report on Form 8-K for December 1988 and
incorporated herein by reference).

     (c) Handy & Harman Management Incentive Plan Corporate Group Participants,
as amended and restated on December 15, 1994.

     (d) Subsidiary, Division, Group or Unit Management Incentive Plan, as
amended and restated on December 15, 1994.

     (e) Handy & Harman Deferred Fee Plan For Directors, as amended and restated
on December 15, 1994, effective as of January 1, 1995.

     (f) Form of Executive Agreement entered into with the Company's executive
officers in September 1986 (Filed as Exhibit 10(d) to the Company's 1986 Annual
Report on Form 10-K and incorporated herein by reference).

     (g) Amendment to Executive Agreement approved in December 1988 (Filed as
Exhibit 10(b) to the Company's Report on Form 8-K for December 1988 and
incorporated herein by reference).

     (h) 1988 Long-Term Incentive Plan (Filed as Exhibit 10(h) to the Company's
1988 Annual Report on Form 10-K and incorporated herein by reference).

     (i) Amendment to 1988 Long-Term Incentive Plan approved in December 1988
(Filed as Exhibit 10(c) to the Company's Report on Form 8-K for December 1988
and incorporated herein by reference).

     (j) Amendment to 1988 Long-Term Incentive Plan approved in June 1989 (Filed
as Exhibit 10(j) to the Company's 1989 Annual Report on Form 10-K and
incorporated herein by reference).

     (k) Agreement dated as of May 1, 1989, between the Company and R. N. Daniel
(Filed as Exhibit 10(k) to the Company's 1989 Annual Report on Form 10-K and
incorporated herein by reference).

     (l) Amendment to Agreement between the Company and R. N. Daniel approved by
the Company on May 11, 1993, (Filed as Exhibit 10(m) to the Company's 1993
Annual Report on Form 10-K and incorporated herein by reference).

     (m) Supplemental Executive Retirement Plan approved and restated by the
Company in December 1994.

     (n) Outside Directors' Stock Option Plan (Filed as Exhibit 10(m) to the
Company's 1990 Annual Report on Form 10-K and incorporated herein by reference).

     (o) Amended and Restated Joint Venture Agreement dated as of June 1, 1990,
by and between Allen Heat Transfer Products Inc. and Handy & Harman Radiator
Corporation (Filed as Exhibit 2 to the Company's Report on Form 8-K for June
1990 and incorporated herein by reference).

     (p) Handy & Harman Long-Term Incentive Stock Option Plan (Filed as Exhibit
10(p) to the Company's 1991 Annual Report on Form 10-K and incorporated herein
by reference).

     (q) Handy & Harman Supplemental Executive Plan (Filed as Exhibit 10(q) to
the Company's 1992 Annual Report on Form 10-K and incorporated herein by
reference).

     (r) Amended and Restated Agreement between the Company and Mr. Grzelecki
(Filed as Exhibit 10(r) to the Company's Annual Report on Form 10-K and
incorporated herein by reference).

     (s) Press Release of the Company dated November 6, 1995 (Filed as Exhibit
10(s) to the Company's Annual Report on Form 10-K and incorporated herein by
reference).

                                       11
<PAGE>   13

     (t) 1995 Omnibus Stock Incentive Plan (Filed as Exhibit 4.1 to the
Company's Registration Statement on Form S-8 (Registration No. 33-80803) on
December 22, 1995, under the Securities Act of 1933 and incorporated herein by
reference).

     (11) Statement re computation of per share earnings. Incorporated by
reference to Item (h) of Summary of Significant Accounting Policies on page 25
of the Annual Report.

     (13) Pages 15 through 32 of the Company's Annual Report to Shareholders for
1996. Except for those portions which are expressly incorporated by reference in
this Annual Report on Form 10-K, this exhibit is furnished for the information
of the Commission and is not deemed to be filed as part of this Annual Report on
Form 10-K.

     (21) List of Subsidiaries of the Company. Filed as Exhibit 21 to this
Annual Report on Form 10-K.

     (23) Report and Consent of Independent Auditors. Included as part of the
Report and Consent of Independent Auditors on page F-1 filed with the Financial
Statement Schedule as part of this Annual Report on Form 10-K pursuant to Part
IV hereof and incorporated herein by reference thereto.

(B) REPORTS ON FORM 8-K

     The Company filed a current report on Form 8-K dated January 28, 1997 with
respect to the signing of a letter of intent regarding the acquisition of all of
the capital stock of Olympic Manufacturing Group, Inc. by the Company.

     For the purposes of complying with the amendments to the rules governing
Form S-8 (effective July 13, 1990) under the Securities Act of 1933, the
undersigned registrant hereby undertakes as follows, which undertaking shall be
incorporated by reference into registrant's Registration Statements on Form S-8
Nos. 2-78264 (filed July 1, 1982), 33-37919 (filed November 21, 1990), 33-43709
(filed October 31, 1991) and 33-80803 (filed December 22, 1995):

     Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.

                                       12
<PAGE>   14

                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Handy & Harman has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                          HANDY & HARMAN

Dated: March 27, 1997
                                          By         /s/ R. N. DANIEL
                                            ------------------------------------
                                                       (R. N. DANIEL)

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the Company,
in the capacities and on the respective dates indicated.

<TABLE>
<CAPTION>
                  SIGNATURE                                 TITLE                     DATE
---------------------------------------------   ------------------------------   ---------------

<C>                                             <S>                              <C>
              /s/ R. N. DANIEL                  Chairman and Director             March 27, 1997
---------------------------------------------   (Principal Executive Officer)
               (R. N. DANIEL)
             /s/ F. E. GRZELECKI                President and Director            March 27, 1997
---------------------------------------------   (Chief Operating Officer)
              (F. E. GRZELECKI)

             /s/ R. F. BURLINSON                Vice President and Treasurer      March 27, 1997
---------------------------------------------   (Principal Financial Officer)
              (R. F. BURLINSON)

               /s/ D. C. KELLY                  Controller                        March 27, 1997
---------------------------------------------   (Principal Accounting Officer)
                (D. C. KELLY)

             /s/ C. A. ABRAMSON                 Director                          March 27, 1997
---------------------------------------------
              (C. A. ABRAMSON)

             /s/ R. E. CORNELIA                 Director                          March 27, 1997
---------------------------------------------
              (R. E. CORNELIA)

                                                Director                          March 27, 1997
---------------------------------------------
               (G. G. GARBACZ)

              /s/ G. M. NICHOLS                 Director                          March 27, 1997
---------------------------------------------
               (G. M. NICHOLS)

               /s/ H. P. SOTOS                  Director                          March 27, 1997
---------------------------------------------
                (H. P. SOTOS)

              /s/ E. J. SUSSMAN                 Director                          March 27, 1997
---------------------------------------------
               (E. J. SUSSMAN)

             /s/ R. E. TETRAULT                 Director                          March 27, 1997
---------------------------------------------
              (R. E. TETRAULT)
</TABLE>

                                       13
<PAGE>   15

                                                                             F-1

                   REPORT AND CONSENT OF INDEPENDENT AUDITORS

THE BOARD OF DIRECTORS AND SHAREHOLDERS HANDY & HARMAN:

     Under the date of February 28, 1997 we reported on the consolidated balance
sheet of Handy & Harman and Subsidiaries as of December 31, 1996 and 1995 and
the related consolidated statements of income, shareholders' equity and cash
flows for each of the years in the three-year period ended December 31, 1996, as
contained in the 1996 Annual Report to Shareholders. These consolidated
financial statements and our report thereon are incorporated by reference in the
Annual Report on Form 10-K for the year 1996. In connection with our audit of
the aforementioned consolidated financial statements, we also audited the
related consolidated financial statement schedule on page S-1. This consolidated
financial statement schedule is the responsibility of the Company's management.
Our responsibility is to express an opinion on this consolidated financial
statement schedule based on our audits.

     In our opinion, such consolidated financial statement schedule, when
considered in relation to the basic consolidated financial statements taken as a
whole, presents fairly in all material respects the information set forth
therein.

     We also consent to the incorporation by reference in the Registration
Statements on Form S-8 (Registration Nos. 2-78264, 33-37919, 33-43709 and
33-80803) of Handy & Harman of our report dated February 28, 1997.

                                          KPMG PEAT MARWICK LLP

New York, New York
March 27, 1997

                                      14-1
<PAGE>   16

                                                                             S-1

                        HANDY & HARMAN AND SUBSIDIARIES

                                  SCHEDULE II

                 VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

<TABLE>
<CAPTION>
                                          BALANCE,                                     BALANCE,
                                         BEGINNING      ADDITIONS      DEDUCTIONS       CLOSE
              DESCRIPTION                OF PERIOD         (A)        FROM RESERVE    OF PERIOD
----------------------------------------------------   ------------   ------------   ------------
                                                         (THOUSANDS OF DOLLARS)
<S>                                     <C>            <C>            <C>            <C>
Allowance for doubtful accounts
  receivable
  (deducted from accounts receivable):
     Year ended December 31, 1996.......    $3,021        $1,052         $2,387(c)      $1,686
     Year ended December 31, 1995.......    $3,597        $  329         $  905         $3,021
     Year ended December 31, 1994.......    $3,721        $  906(b)      $1,030         $3,597
</TABLE>

<TABLE>
<CAPTION>
                                                                    1996      1995     1994
                                                                   ------     ----     ----
    <S>                                                            <C>        <C>      <C>
    (a) Provision for doubtful accounts -- charged to costs and
      expenses.................................................... $1,052     $329     $784
    (b) Includes $122 acquired through business combination.
    (c) Includes $694 of allowance for doubtful accounts
      receivable
          related to discontinued operations reclassed
      accordingly.
</TABLE>

                                      14-2
<PAGE>   17

Handy & Harman and Subsidiaries

The Company's Business

The Company's industry segments are: manufacturing of specialty wire and tubing,
manufacturing of precious metals products, and manufacturing of other
non-precious metal products. The table below presents information about the
segments with additional segment information for 1996, 1995 and 1994 found in
Note 7 of the Notes to Consolidated Financial Statements on page 30. A further
analysis of the industry segments can be found under "Management's Discussion
and Analysis" beginning on page 18.

     The wire and tubing segment has two product groups. Stainless steel wire is
drawn from rod to a wide range of smaller diameters. Applications are widespread
and include springs, telecommunication networks, mobile antennas, brushes,
laparoscopic instruments, petroleum well screens and conveyor belts. Tubing is
manufactured from carbon steel, stainless steel and a variety of specialty
alloys. Applications are similarly numerous including semiconductor fabrication,
electronics, oil field services, petrochemicals, refrigeration, automotive,
hydraulic, medical and aerospace.

     The precious metals segment is engaged in precision plating and surface
finishing for electronic and electrical components, the manufacturing of a
variety of products, generally in mill forms, containing silver, gold and other
precious metals in combination (alloys) with non-precious metals and the sale of
such products to users in a wide range of industries, including silverware and
jewelry, electrical and electronic, automotive, telecommunication, heating and
refrigeration components, aerospace and appliance.

     It is the Company's operating policy to maintain constant precious metals
inventory levels under the last-in, first-out (LIFO) method of accounting.
Precious metals are purchased at the same prices and quantities as selling
commitments to customers. In the normal course of business, the Company accepts
precious metals from suppliers and customers, which quantities are returnable in
fabricated or commercial bar form under agreed upon terms. Since precious metals
are fungible, the Company does not physically segregate the supplier and
customer metals. Therefore, to the extent such metals are used by the Company to
meet its operating requirements, the amount of inventory which the Company must
own is reduced. The Company's inventory positions are sufficient to protect
against any losses in connection with these supplier and customer accounts. To
the extent that additional inventory is required to support operations, precious
metals are purchased and immediately sold for future delivery, eliminating the
economic risk of price fluctuations. Such purchases and sales are not included
in either sales or cost of sales. From time to time, management reviews the
appropriate inventory levels and may elect to make adjustments.

     A high percentage of the selling price for precious metals products is the
cost of the precious metal content. Therefore, both sales and cost of sales are
influenced by fluctuations in the prices of precious metals. In addition,
certain customers choose to do business on a "toll" basis, that is, to furnish
bullion to Handy & Harman for fabrication. When the metals are returned to the
customer in fabricated form, the customer pays only a fabrication charge, and
the precious metal value of this consignment business is not included in sales
or cost of sales.

     The business unit in the other non-precious metal businesses segment
manufactures products using steel and plastic which are sold principally to
water and natural gas distribution companies.

     The following table provides details of sales from continuing operations,
as well as profit contribution by each reportable segment before general
corporate and interest expenses. See "Management's Discussion and Analysis"
beginning on page 18.

(Thousands of dollars)                        1996          1995           1994
================================================================================
Sales:
  Wire/Tubing                            $ 175,451     $ 175,092      $ 153,750
  Precious metals                          215,246       236,196        240,140
  Other non-precious
     metal businesses                       16,410        15,900         15,078
--------------------------------------------------------------------------------
                                         $ 407,107     $ 427,188      $ 408,968
================================================================================
Profit contribution before
  unallocated expenses:
  Wire/Tubing                            $  18,426     $  17,870      $  14,117
  Precious metals                           49,998*        8,588**        8,172
  Other non-precious
     metal businesses                        2,031         2,226          1,900
--------------------------------------------------------------------------------
                                            70,455        28,684         24,189
General corporate expenses                  (1,800)       (1,800)        (1,850)
Interest expense (net)                      (9,682)      (12,598)       (10,772)
--------------------------------------------------------------------------------
Income from continuing
  operations before income
  taxes and extraordinary item           $  58,973     $  14,286      $  11,567
================================================================================
*    Includes a $33,630,000 gain in 1996 as a result of reduction in the
     quantities of precious metal inventories valued under the LIFO method of
     accounting.
**   Includes a $9,549,000 charge in 1995 related to the restructuring and asset
     writedowns for the Precious Metals Fabricated Products Division.

     The following table segregates identifiable assets to the three reported
segments, corporate and discontinued operations.

                                                           Assets
================================================================================
(Thousands of dollars)                          1996          1995          1994
--------------------------------------------------------------------------------
Wire/Tubing                                 $103,893      $103,939      $ 92,696
Precious metals                              122,397       130,356       122,882
Other non-precious
   metal businesses                            9,802        10,568         8,901
Corporate                                     80,372        67,674        58,566
Discontinued operations                           --        28,512       121,973
--------------------------------------------------------------------------------
                                            $316,464      $341,049      $405,018
================================================================================


                                                                              15
<PAGE>   18

Handy & Harman and Subsidiaries

STOCK TRADING AND DIVIDENDS

Handy & Harman Common Stock is traded on the New York Stock Exchange. The
following table sets forth, for the quarterly periods indicated, the reported
high and low sales prices for the Common Stock on the New York Stock Exchange
and the dividends paid on the Common Stock during such periods.

   At February 14, 1997, there were 2,816 holders of record of Common Stock of
Handy & Harman.

                             Common Stock           Dividend Paid on
                             Sales Prices             Common Stock
                           High          Low           Per Share
================================================================================
1996
January 1-March 31       $17 5/8       $15 3/8          6(cent)
April 1-June 30           18 3/4        16              6(cent)
July 1-September 30       18 1/8        16 1/4          6(cent)
October 1-December 31     19 1/4        15 7/8          6(cent)
--------------------------------------------------------------------------------
1995
January 1-March 31       $16 1/2       $14 1/8          6(cent)
April 1-June 30           16 1/2        14 7/8          6(cent)
July 1-September 30       16 7/8        14 5/8          6(cent)
October 1-December 31     16 5/8        13 5/8          6(cent)
================================================================================

SELECTED QUARTERLY DATA

Summarized financial data for interim periods of 1996 and 1995 (expressed in
thousands of dollars, except per share data) are shown below.

                                                1996 Quarter Ended
                                      Mar. 31     June 30   Sept. 30    Dec. 31
================================================================================
Sales                               $ 108,340   $ 105,806   $ 95,890   $ 97,071
Gross profit                           21,349      21,429     23,572     47,185
Earnings (loss):
   Continuing operations                4,363       4,454      5,684     19,272
   Extraordinary item                      --          --         --     (2,889)
   Discontinued operations             (9,654)         --         --     (4,861)
--------------------------------------------------------------------------------
Net income (loss)                   $  (5,291)  $   4,454   $  5,684   $ 11,522
--------------------------------------------------------------------------------
Earnings (loss) per share:
   Continuing operations            $     .31   $     .32   $    .41   $   1.44
   Extraordinary item                      --          --         --       (.22)
   Discontinued operations               (.69)         --         --       (.36)
--------------------------------------------------------------------------------
Net income (loss)                   $    (.38)  $     .32   $    .41   $    .86
================================================================================

                                                1995 Quarter Ended
                                      Mar. 31     June 30   Sept. 30    Dec. 31
================================================================================
Sales                               $ 113,497   $ 114,593   $ 99,876   $ 99,222
Gross profit                           22,749      21,613     18,092     15,997
Earnings (loss):
   Continuing operations                4,021      (1,205)     2,380      2,313
   Discontinued operations              1,167          84       (672)    10,552
--------------------------------------------------------------------------------
Net income (loss)                   $   5,188   $  (1,121)  $  1,708   $ 12,865
--------------------------------------------------------------------------------
Earnings (loss) per share:
   Continuing operations            $     .28   $    (.08)  $    .17   $    .16
   Discontinued operations                .09          --       (.05)       .75
--------------------------------------------------------------------------------
Net income (loss)                   $     .37   $    (.08)  $    .12   $    .91
================================================================================

The 1996 continuing operations includes after-tax LIFO gains of $2,913,000 or
$.21 per share in the third quarter and $16,347,000 or $1.22 per share in the
fourth quarter.

     The extraordinary item is attributable to the early retirement of debt.

     The 1996 discontinued operations includes loss results and special charges
for the sale of the domestic refining business.

     The 1995 continuing operations second quarter includes the after tax impact
of nonrecurring charges of $6,150,000 or $.44 per share related to restructuring
and asset writedowns for the Precious Metals Fabricated Products Division.

     1995 discontinued operations totalling $11,131,000 or $.79 per share is for
the reclassified domestic refining business results and the automotive segment's
results and gain from its sale.


16
<PAGE>   19

Handy & Harman and Subsidiaries

Five Year Selected Financial Data

<TABLE>
<CAPTION>
Dollars in thousands
except per share figures                           1996        1995       1994       1993         1992
======================================================================================================
OPERATIONS
<S>                                           <C>          <C>        <C>        <C>          <C>
Sales                                         $ 407,107    $427,188   $408,968   $372,571     $377,015
Income from continuing operations
   before extraordinary item and
     excluding net LIFO gains (b)                14,513       7,509      6,743      1,928(a)     3,532
Net LIFO gains (b)                               19,260          --         --         --           --
Loss from extraordinary item                     (2,889)         --         --         --           --
Income (loss) from discontinued operations      (14,515)     11,131      9,768      7,548        8,165
Net income                                       16,369      18,640     16,511      9,476(a)    11,697
Dividends                                         3,341       3,383      2,811      2,803        2,801

PER SHARE DATA
Income from continuing operations
   before extraordinary item and
     excluding net LIFO gains (b)                  1.05         .53        .48        .14(a)       .26
Net LIFO gains (b)                                 1.40          --         --         --           --
Loss from extraordinary item                       (.21)         --         --         --           --
Income (loss) from discontinued operations        (1.05)        .79        .70        .54          .58
Net income                                         1.19        1.32       1.18        .68(a)       .84
Dividends                                           .24         .24        .20        .20          .20
Average shares outstanding (thousands)           13,796      14,092     14,050     14,021       14,001
------------------------------------------------------------------------------------------------------
FINANCIAL POSITION (AT DECEMBER 31)
Current assets                                  138,674     163,101    187,336    226,441      200,613
Current liabilities                              76,838     113,621    153,593    114,534       92,444
Working capital                                  61,836      49,480     33,743    111,907      108,169
Property, plant and equipment-net                83,205      91,406    117,200    106,220      109,605
Total assets                                    316,464     341,049    405,018    406,160      371,351
Long-term debt                                  127,500      93,500    131,750    188,750      186,287
Deferred income taxes                            15,261      13,534     13,551     11,276        7,681
Shareholders' equity                             95,606     120,394    106,124     91,600       84,939
LIFO reserve(c)                                  97,996     141,458    139,068    141,273      105,416
------------------------------------------------------------------------------------------------------
STATISTICAL DATA
Property, plant and equipment
   acquired through capital expenditures         14,694      23,143     18,567     15,147       14,440
Depreciation and amortization                    12,000      16,668     15,683     15,816       14,854
Interest expense (net)-continuing operations      9,682      12,598     10,772     10,977       12,411
Number of shareholders                            2,816       3,096      2,259      2,238        3,046
Number of employees at December 31                2,304       2,567      4,826      4,246        4,478
------------------------------------------------------------------------------------------------------
FINANCIAL RATIOS
Return on average shareholders' equity             15.2%       16.5%      16.7%      10.7%        14.4%
Current ratio                                       1.8         1.4        1.2        2.0          2.2
======================================================================================================
</TABLE>
(a)  Includes a benefit of $576,000 or $.04 per share, from cumulative effect of
     accounting change.
(b)  Net LIFO gains (after-tax) are due to change in levels of precious metal
     inventories stated at LIFO cost.
(c)  Excess of year-end market value of LIFO inventory over cost.


                                                                              17
<PAGE>   20

Handy & Harman and Subsidiaries

Management's Discussion and Analysis

LIQUIDITY, CAPITAL RESOURCES AND OTHER FINANCIAL DATA

The Company's precious metal inventory, consisting principally of gold and
silver, is readily convertible to cash. Furthermore, these precious metal
inventories which are stated in the Balance Sheet at LIFO cost have a market
value of $97,996,000 in excess of such cost as of December 31, 1996.

     It is the Company's policy to obtain funds necessary to finance inventories
and receivables from various banks under commercial credit facilities.
Fluctuations in the market prices of gold and silver have a direct effect on the
dollar volume of sales and the corresponding amount of customer receivables
resulting from sale of precious metal products. In addition, receivables
resulting from the sale of precious metal bullion for future delivery were also
financed by bank borrowings. The Company adjusts the level of its credit
facilities from time to time in accordance with its borrowing needs for
receivables and inventories and maintains bank credit facilities well in excess
of anticipated requirements.

     Consistent with other precious metal fabricating companies, some of the
Company's gold and silver requirements are furnished by customers and suppliers
on a consignment basis. Title to the consigned gold and silver remains with the
Consignor. The value of consigned gold and silver held by the Company is not
included in the Company's Balance Sheet. The Company's gold and silver
requirements are provided from a combination of owned inventories, precious
metals which have been purchased and sold for future delivery, and gold and
silver received from suppliers and customers on a consignment basis.

     The Company has a $200,000,000 Revolving Credit Facility which provides
$150,000,000 for a three year period and $50,000,000 for 364 days. As of
December 31, 1996 there were only borrowings of $120,000,000 under the long-term
facility. In addition to the Revolving Credit Facilities, banks also provide
$111,750,000 of Gold and Silver Fee Consignment Facilities. The Fee Consignment
Facility of $83,812,500 is for a three-year period and the short-term Fee
Consignment Facility of $27,937,500 is for 364 days. All gold and silver
consigned to the Company pursuant to these Consignment agreements is located at
the Company's plant in Fairfield, Connecticut. As of December 31, 1996, there
were 5,300 ounces of gold and 14,209,000 ounces of silver leased under these fee
consignment facilities.

     In addition to the Revolving Credit Facilities the Company had arrangements
with four institutional lenders for $50,000,000 of long-term borrowing at a rate
of 8.83% maturing in 2002, which were prepaid on October 10, 1996 along with
other long-term debt of $14,500,000 at a rate of 9.37% maturing in 1999.
Prepayment penalties amounting to approximately $4.6 million relating to this
debt were incurred and are reported as an extraordinary item. Funds for the
prepayment of these long-term borrowings and related penalties were provided by
the Revolving Credit Facilities discussed above. The Company is currently in the
process of reviewing other new long-term debt opportunities.

     On May 14, 1996, Handy & Harman announced that it had decided to exit the
precious metals refining business, exclusive of the Company's minor satellite
refining operations located in Singapore and Canada. The Company completed the
sale of the Handy & Harman Refining Division in the third quarter of 1996.
Accordingly, operations for this major division have been classified as
discontinued operations. A charge associated with exiting this business of
$22,350,000 ($13,161,000 after-tax) was recorded in 1996. The sale of this
division released a significant portion of the Company's owned precious metal
inventory position, making this potential liquidity, along with the Company's
credit facilities, available for deployment to continuing operations,
acquisition of new businesses and repurchase of 1.8 million shares of the
Company's common stock via a "Dutch Auction", completed in December 1996.

     Subsequent to year end, on February 28, 1997, the Company acquired Olympic
Manufacturing Group, Inc. for $53,000,000 which was funded by the Revolving
Credit Facilities discussed above.

     Over the past three years the Company's operating activities and investing
activities have provided net cash of $70,092,000 and $10,478,000, respectively,
which were used for financing activities amounting to $74,091,000.

OPERATING ACTIVITIES

Net cash provided by operating activities amounted to $41,198,000 in 1996,
$20,086,000 in 1995 and $8,808,000 in 1994. Net cash flow from operating
activities increased $21,112,000 from 1995 to 1996 primarily due to an increase
of $17,947,000 in net income adjusted for non-cash and non operating items. This
increase is primarily due to proceeds from the reduction of LIFO inventories
partially offset by expenditures associated with the disposal of the refining
business. The balance of the cash flow increase from operating activities was
due to a decrease of $3,165,000 in working capital requirements.

     Net cash flow from operating activities increased $11,278,000 from 1994 to
1995 primarily due to a decrease in working capital requirements of $20,720,000,
an increase in net income of $2,129,000, non-cash restructuring and nonrecurring
charges of $8,369,000, partially offset by the gain on sale of business units of
$20,176,000. The decrease in working capital requirements was due primarily to a
decrease in accounts receivable caused by the exit from the karat gold business
as well as lower sales of the discontinued automotive segment.


18
<PAGE>   21

Handy & Harman and Subsidiaries

Management's Discussion and Analysis

INVESTING ACTIVITIES

Net cash (used)/provided in investing activities amounted to ($12,456,000) in
1996, $70,637,000 in 1995 and ($47,703,000) in 1994. Net cash provided by
investing activities decreased $83,093,000 in 1996 over 1995 primarily due to
net proceeds in 1995 of $68,032,000 from the sale of the automotive (OEM)
segment and $24,750,000 in net investing activities of discontinued operations
due to the realization of proceeds on the Company's investment in and receivable
from GO/DAN Industries, a joint venture, versus net proceeds in 1996 of
$5,074,000 for the sale of the refining division and use of cash for the
purchase of ele Corporation amounting to $3,700,000 (net). Cash outflows for
capital expenditures decreased by $8,449,000 in 1996 versus 1995 due to plant
expansion primarily experienced in the wire/tubing segment in 1995.

     Net cash provided by investing activities increased $118,340,000 in 1995
over 1994 primarily due to net proceeds of $68,032,000 and $24,250,000, as
described in the preceding paragraph, payments in 1994 for the purchase of Sumco
Inc. in the amount of $26,000,000 and related acquired debt of $3,921,000,
offset partially by the 1995 increase in capital expenditures of $4,576,000,
primarily for plant expansion and machinery and equipment in the wire/tubing
segment.

FINANCING ACTIVITIES

During this past three year period the Company's net financing activities were
the repayment of $83,449,000 in debt, cash provided by the net decrease in
futures receivable of $62,333,000, dividend payments of $9,535,000, net
purchases of Company stock of $40,059,000, penalties paid on the early
retirement of debt of $4,640,000, and proceeds from a joint venture partner of
$1,259,000 for a total net cash usage of $74,091,000.

     The net cash used in financing activities was $25,668,000 in 1996 due to
the purchase of company stock for $40,036,000 via a "Dutch Auction" in December
1996 and the plan to buyback up to 1.5 million shares of the Company's common
stock announced on November 6, 1995, penalties paid on the early retirement of
debt of $4,640,000 and the payment of dividends of $3,341,000. This was
partially offset by an increase in debt of $3,301,000, a decrease in futures
receivables of $7,681,000, an increase in futures payable of $9,246,000, funding
proceeds received from a joint venture partner of $1,259,000, and other treasury
stock transactions proceeds of $862,000.

     The net cash used in financing activities was $86,558,000 in 1995 primarily
due to the decrease in futures payable of $37,772,000 and increase in futures
receivable of $7,681,000, repayment of debt of $36,500,000, payment of dividends
of $3,383,000 and purchase of the Company's common stock amounting to $1,505,000
(cash-settlement basis) which is part of a plan to buy back up to 1.5 million
shares of the Company's common stock announced on November 6, 1995.

     The net cash provided by financing was $38,135,000 in 1994 primarily due to
the Company's ability to realize its futures receivable of $53,087,000 and
increase futures payable by $37,772,000, offset by the repayment of debt of
$50,250,000 and payment of dividends of $2,811,000.

     The Company's program to expand productive capacity through acquisition of
new businesses and expenditures for new property, plant and equipment will
continue to be financed with internally generated funds and long-term debt, if
necessary.

     The Company's foreign operations consist of four wholly owned subsidiaries,
(one in Canada, two in the United Kingdom, and one in Denmark), and one equity
investment in Asia. Substantially all unremitted earnings of such entities are
free from legal or contractual restrictions.

     Statements contained in Management's Discussion and Analysis are
forward-looking statements and are made pursuant to the safe harbor provision of
the private securities litigation reform act of 1995. Forward-looking statements
involve a number of risks and uncertainties including, but not limited to,
product demand, pricing, market acceptance, precious metal and other raw
materials price fluctuations, intellectual property rights and litigation, risks
in product and technology development and other risk factors detailed in the
Company's Securities and Exchange Commission filings.

COMPARISON OF 1996 VERSUS 1995

Sales for the wire/tubing segment increased $359,000 and profit contribution
(pre-tax income before deducting interest and corporate expenses) increased
$556,000 (3%) due to a strong increase in demand for stainless steel tubing
brought about by rapid growth in the semiconductor fabrication industry
experienced during the first half of 1996. This was partially offset by a
decrease in sales destined for the automotive market experienced by one of the
segment's wire units. Although this segment's 1997 beginning performance is not
as robust as the previous year's due to the semiconductor fabrication industry's
slowdown, other operating units have improved due to their numerous niche
products, especially in the medical field. As the semiconductor fabrication
industry improves, additional contribution from and further investment in this
segment is anticipated.

     Sales for the precious metal segment decreased $20,950,000 (9%) due
primarily to the elimination of the karat gold fabricated product line in 1995.
The average price of gold in 1996 was $387.70 per ounce and in 1995 was $384.19
per ounce. The average price of silver in 1996 was $5.18 per ounce and in 1995
was $5.19 per ounce. The profit contribution increased $41,410,000 (482%)
primarily due to the reductions in the quantities of


                                                                              19
<PAGE>   22

Handy & Harman and Subsidiaries

Management's Discussion and Analysis

precious metal inventories valued at LIFO cost which produced a gain of
$33,630,000. Also, in 1995 there was a nonrecurring charge of $5,342,000 for
severance costs and asset write-downs related to the decision to exit the karat
gold fabricated product line in East Providence, Rhode Island and $4,207,000 of
additional costs, primarily asset write-downs, related to the Company's ongoing
operation in Fairfield, Connecticut. Excluding the gain on LIFO inventory and
the nonrecurring charges in 1995 described above, the profit contribution
decreased $1,769,000 (10%) due to product mix changes experienced in fabricated
precious metals and a decrease in sales due to the higher demand in the first
half of 1995 from the electronic components sector of the automotive industry
experienced by the Company's precision surface finishing business. The addition
of ele Corporation in 1996, the major modernization program at our product
fabrication facility in Fairfield, Connecticut and the retro-fitting of the
former karat gold facility in East Providence, Rhode Island by the Electronics
Materials Group should enhance this segment's contribution in 1997.

     In the other non-precious metal segment, sales increased $510,000 (3%) due
primarily to growth of the thermOweld(R) product line, particularly in foreign
markets, partially offset by decreased steel fitting sales. Profit contribution
decreased $195,000 (9%) due to low production volume of steel fittings, and the
related expense of unabsorbed production costs partially offset by increased
thermOweld(R) sales discussed above. Accelerated new product flow in 1996 should
improve earnings in 1997.

     Interest expense decreased $2,916,000 (23%) due to decreased levels of
borrowings as a result of proceeds from the completion of the sales of the
Company's automotive segment and investment in GO/DAN Industries in the latter
part of 1995.

     The effective income tax rate for 1996 was 42.7% and 1995 was 47.4%. The
reason for the lower effective income tax rate for 1996 compared to 1995 is due
to decreased foreign losses, for which a valuation allowance has been provided,
as a percentage of income before taxes.

COMPARISON OF 1995 VERSUS 1994

Sales for the wire/tubing segment increased $21,342,000 (14%) due to the strong
demand for wire products, most notably in Europe through the Company's U.K.
business unit and also a strong increase in demand for seamless stainless steel
tubing brought about by rapid growth in the semiconductor fabrication industry.
Profit contribution increased $3,753,000 (27%) due to the increased sales noted
above, reduced production costs stemming from new and/or improved manufacturing
equipment and facilities, and reduced raw material costs all of which were
partially offset by start up costs of the new tubing facility in Europe.

     Sales for the precious metal segment decreased $3,944,000 (2%). The average
price of gold in 1995 was $384.19 per ounce and in 1994 was $384.13 per ounce.
The average price of silver in 1995 was $5.19 per ounce and in 1994 was $5.29
per ounce. Decreased product sales due to exiting the karat gold fabricated
product line, previously discussed, were primarily offset by increased sales of
the precision surface finishing businesses. The profit contribution increased
$416,000 (5%). In 1995 nonrecurring charges of $5,342,000 and $4,207,000 of
additional costs, as described in the 1996 versus 1995 comparison, were
recorded. Excluding these nonrecurring charges the profit contribution increased
$9,965,000 (122%) due to the increased sales of the precision surface finishing
businesses as well as controlling operating costs.

     In the other non-precious metal segment, sales increased $822,000 (5%) and
profit contribution increased $326,000 (17%) primarily due to substantial growth
of this business unit's thermOweld(R) product line.

     Interest expense increased $1,826,000 (17%) primarily due to higher
interest rates on borrowings and leased metal during the year.

     The effective income tax rate for 1995 was 47.4% and 1994 was 41.7%. The
higher effective income tax rate for 1995 over 1994 is attributable to the
valuation allowance for the deferred tax asset on foreign losses as well as
goodwill amortization associated with the acquisition of Sumco Inc. in September
1994.


20
<PAGE>   23

Handy & Harman and Subsidiaries

Consolidated Statement of Income

<TABLE>
<CAPTION>
Year ended December 31                                                     1996            1995           1994
==============================================================================================================
<S>                                                               <C>             <C>             <C>
Sales                                                             $ 407,107,000   $ 427,188,000   $408,968,000
Cost of sales                                                       293,572,000     348,737,000    340,664,000
--------------------------------------------------------------------------------------------------------------
Gross profit                                                        113,535,000      78,451,000     68,304,000
Selling, general, and administrative expenses                        44,504,000      45,524,000     43,351,000
Restructuring charge                                                         --       5,342,000             --
--------------------------------------------------------------------------------------------------------------
Income from operations                                               69,031,000      27,585,000     24,953,000
--------------------------------------------------------------------------------------------------------------
Other deductions:
   Interest expense (net)                                             9,682,000      12,598,000     10,772,000
   Other (net)                                                          376,000         701,000      2,614,000
--------------------------------------------------------------------------------------------------------------
                                                                     10,058,000      13,299,000     13,386,000
--------------------------------------------------------------------------------------------------------------
Income from continuing operations before
    income taxes and extraordinary item                              58,973,000      14,286,000     11,567,000
Income tax provision                                                 25,200,000       6,777,000      4,824,000
--------------------------------------------------------------------------------------------------------------
Income from continuing operations
   before extraordinary item                                         33,773,000       7,509,000      6,743,000
Extraordinary loss on early retirement of
   debt (net of $2,030,000 income tax benefit)                       (2,889,000)             --             --

Discontinued operations:
   Income/(loss) from operations, net of
      income taxes/(benefit)($1,026,000), ($252,000), $6,986,000     (1,354,000)       (365,000)     9,768,000
   Gain/(loss) on disposal, net of
      income taxes/(benefit) - ($9,190,000), $8,220,000             (13,161,000)     11,496,000             --
--------------------------------------------------------------------------------------------------------------
                                                                    (14,515,000)     11,131,000      9,768,000
--------------------------------------------------------------------------------------------------------------
Net income                                                        $  16,369,000   $  18,640,000   $ 16,511,000
==============================================================================================================
Earnings per share:
    Income from continuing operations
      before extraordinary item                                   $        2.45   $         .53   $        .48
   Extraordinary loss on early retirement of debt                          (.21)             --             --
   Discontinued operations                                                (1.05)            .79            .70
--------------------------------------------------------------------------------------------------------------
Net income                                                        $        1.19   $        1.32   $       1.18
==============================================================================================================
Average number of shares outstanding                                 13,796,000      14,092,000     14,050,000
==============================================================================================================
</TABLE>
The accompanying summary of significant accounting policies and notes are an
integral part of the financial statements.


                                                                              21
<PAGE>   24

Handy & Harman and Subsidiaries

Consolidated Balance Sheet

<TABLE>
<CAPTION>
December 31                                                               1996            1995
==============================================================================================
<S>                                                              <C>             <C>
ASSETS
Current assets:
   Cash                                                          $   9,701,000   $   6,637,000
   Accounts receivable, less allowance for doubtful accounts of
     $1,686,000 in 1996 and $3,021,000 in 1995                      51,572,000      61,036,000
   Futures receivable                                                       --       7,681,000
   Inventories                                                      70,357,000      84,422,000
   Prepaid expenses, deposits and other current assets               7,044,000       3,325,000
----------------------------------------------------------------------------------------------
Total current assets                                               138,674,000     163,101,000
----------------------------------------------------------------------------------------------
Investments in affiliates, at equity                                 3,122,000       2,686,000
Property, plant and equipment                                      195,623,000     214,345,000
   Less accumulated depreciation and amortization                  112,418,000     122,939,000
----------------------------------------------------------------------------------------------
                                                                    83,205,000      91,406,000

Prepaid retirement costs (net)                                      54,566,000      51,152,000
Intangibles, net of amortization                                    24,818,000      22,141,000
Other assets                                                        12,079,000      10,563,000
----------------------------------------------------------------------------------------------
                                                                 $ 316,464,000   $ 341,049,000
==============================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
   Short-term borrowings                                         $  15,000,000   $  40,000,000
   Current maturities of long-term debt                                     --       3,500,000
   Accounts payable                                                 30,163,000      32,899,000
   Futures payable                                                   9,246,000              --
   Federal and foreign taxes on income                                 792,000       8,072,000
   Other current liabilities                                        21,637,000      29,150,000
----------------------------------------------------------------------------------------------
Total current liabilities                                           76,838,000     113,621,000
----------------------------------------------------------------------------------------------
Long-term debt, less current maturities                            127,500,000      93,500,000
Minority interest                                                    1,259,000              --
Deferred income taxes                                               15,261,000      13,534,000
Commitments
----------------------------------------------------------------------------------------------
Shareholders' equity:
   Common stock - par value $1; 60,000,000
      shares authorized; 14,611,432 shares issued                   14,611,000      14,611,000
   Capital surplus                                                  13,432,000      12,033,000
   Retained earnings                                               112,399,000      99,371,000
   Foreign currency translation adjustment                             (61,000)       (748,000)
----------------------------------------------------------------------------------------------
                                                                   140,381,000     125,267,000
----------------------------------------------------------------------------------------------
Less: Treasury stock 1996 - 2,618,421 shares;
       1995 - 603,800 shares - at cost                              44,308,000       4,873,000
       Unearned compensation                                           467,000              --
----------------------------------------------------------------------------------------------
Total shareholders' equity                                          95,606,000     120,394,000
----------------------------------------------------------------------------------------------
                                                                 $ 316,464,000   $ 341,049,000
==============================================================================================
</TABLE>

The accompanying summary of significant accounting policies and notes are an
integral part of the financial statements.


22
<PAGE>   25

Handy & Harman and Subsidiaries
Consolidated Statement of Shareholders' Equity

Three Years Ended December 31, 1996

<TABLE>
<CAPTION>
                                                                                  Foreign
                                   Par Value $1                                  Currency                                    Total
                                         Common       Capital       Retained  Translation      Treasury     Unearned  Shareholders'
                                          Stock       Surplus       Earnings   Adjustment        Stock  Compensation         Equity
===================================================================================================================================
<S>                                 <C>           <C>            <C>           <C>           <C>          <C>          <C>
Balance,
   January 1, 1994                  $14,611,000   $11,296,000    $70,414,000   ($951,000)    ($3,770,000)        --    $91,600,000
Net income                                                        16,511,000                                            16,511,000
Cash dividends on common
   stock-$.20 per share                                           (2,811,000)                                           (2,811,000)
Stock issued under 1988
   long-term incentive plan
   (28,600 shares)                                    296,000                                    144,000  ($220,000)       220,000
Stock awarded under
   outside director
   stock option plan
   (awarded 4,110 shares)                              36,000                                                               36,000
Stock issued under the
   incentive stock option
   plan (27,000 shares)                               202,000                                    135,000                   337,000
Translation adjustment                                                           231,000                                   231,000
-----------------------------------------------------------------------------------------------------------------------------------
Balance,
   December 31, 1994                 14,611,000    11,830,000     84,114,000    (720,000)     (3,491,000)  (220,000)   106,124,000
Net income                                                        18,640,000                                            18,640,000
Cash dividends on common
   stock-$.24 per share                                           (3,383,000)                                            (3,383,000)
Remeasurement and
   amortization of
   stock issued under 1988
   long-term incentive plan                             4,000                                     (6,000)   220,000        218,000
Stock awarded under
   outside director stock
   option plan (awarded
   3,290 - issued 2,852 shares)                        34,000                                     14,000                    48,000
Stock issued under the
   incentive stock option
   plan (22,800 shares)                               165,000                                    115,000                   280,000
Shares purchased by Company
   for treasury (95,500 shares)                                                               (1,505,000)                (1,505,000)
Translation adjustment                                                           (28,000)                                   (28,000)
-----------------------------------------------------------------------------------------------------------------------------------
Balance,
   December 31, 1995                 14,611,000    12,033,000     99,371,000    (748,000)     (4,873,000)        --    120,394,000
Net income                                                        16,369,000                                            16,369,000
Cash dividends on common
  stock-$.24 per share                                            (3,341,000)                                            (3,341,000)
Stock issued under
   1988 long-term incentive
   plan (62,750 shares)                               735,000                                    315,000   (467,000)       583,000
Stock awarded under
   outside director stock
   option plan (awarded
   4,194 - issued 8,640 shares)                        54,000                                     43,000                    97,000
Stock issued under the
   incentive stock option
   plan - net (69,889 shares)                         610,000                                    243,000                   853,000
Shares purchased by Company
   for treasury (2,155,900 shares)                                                           (40,036,000)               (40,036,000)
Translation adjustment                                                           687,000                                   687,000
-----------------------------------------------------------------------------------------------------------------------------------
Balance,
   December 31, 1996                $14,611,000   $13,432,000   $112,399,000    ($61,000)   ($44,308,000)  ($467,000)  $95,606,000
===================================================================================================================================
</TABLE>
The accompanying summary of significant accounting policies and notes are an
integral part of the financial statements.


                                                                              23
<PAGE>   26

Handy & Harman and Subsidiaries

Consolidated Statement of Cash Flows
<TABLE>
<CAPTION>
                                                                   Increase (Decrease) in Cash
                                                         ------------------------------------------
Year Ended December 31,                                          1996           1995           1994
<S>                                                      <C>            <C>            <C>
Cash flows from operating activities:
Net income                                               $ 16,369,000   $ 18,640,000   $ 16,511,000
Adjustments to reconcile net income
   to net cash provided by operating activities:
     Extraordinary loss on debt retirement                  4,919,000             --             --
     Depreciation and amortization                         12,000,000     16,668,000     15,683,000
     Provision for doubtful accounts                        1,052,000        329,000        784,000
     Gain on disposal of property, plant and equipment         68,000         91,000        454,000
     (Gain)/loss on disposal of business units              8,704,000    (20,176,000)     1,300,000
     Restructuring and nonrecurring charges                        --      8,369,000             --
     Net prepaid retirement costs                          (3,995,000)    (2,339,000)    (3,832,000)
     Equity in earnings of affiliates                        (421,000)      (451,000)      (338,000)
     Earned compensation-1988 long-term incentive
       and outside director stock option plans                648,000        266,000        277,000
     Changes in assets and liabilities, net of effects
       from acquisitions and divestitures:
         Accounts receivable                                3,659,000      3,369,000    (12,813,000)
         Inventories                                       13,227,000     (7,877,000)      (459,000)
         Prepaid expenses                                  (3,767,000)     1,210,000     (1,425,000)
         Deferred charges and other assets                 (1,050,000)    (2,951,000)    (2,883,000)
         Accounts payable and other current liabilities    (4,662,000)    (1,775,000)    (7,813,000)
         Federal and foreign taxes on income               (5,279,000)     6,730,000      1,342,000
         Deferred income taxes                               (274,000)       (17,000)     2,020,000
---------------------------------------------------------------------------------------------------
Net cash provided by operating activities                  41,198,000     20,086,000      8,808,000
---------------------------------------------------------------------------------------------------
Cash flows from investing activities:
   Proceeds from sale of property, plant and equipment        864,000        520,000        307,000
   Capital expenditures                                   (14,694,000)   (23,143,000)   (18,567,000)
   Acquisition, net of cash and debt acquired              (3,700,000)            --    (29,943,000)
   Divestitures, net of cash sold                           5,074,000     68,032,000             --
   Investment in affiliates - net                                  --        478,000             --
   Net investing activities of discontinued operations             --     24,750,000        500,000
---------------------------------------------------------------------------------------------------
Net cash provided/(used) in investing activities          (12,456,000)    70,637,000    (47,703,000)
---------------------------------------------------------------------------------------------------
Cash flows from financing activities:
   Short-term borrowings                                  (27,199,000)     5,250,000      6,750,000
   Repayment of other long-term debt                      (64,500,000)   (11,750,000)    (7,000,000)
   Long-term revolving credit facilities                   95,000,000    (30,000,000)   (50,000,000)
   Net (increase)/decrease in futures receivable            7,681,000     (7,681,000)    53,087,000
   Net increase/(decrease) in futures payable               9,246,000    (37,772,000)    37,772,000
   Dividends paid                                          (3,341,000)    (3,383,000)    (2,811,000)
   Purchase of treasury stock (net)                       (39,174,000)    (1,222,000)       337,000
   Penalties paid on early retirement of debt              (4,640,000)            --             --
   Funding proceeds from joint venture partner              1,259,000             --             --
---------------------------------------------------------------------------------------------------
Net cash provided/(used) in financing activities          (25,668,000)   (86,558,000)    38,135,000
---------------------------------------------------------------------------------------------------
Effect of exchange rate changes on net cash                   (10,000)       (87,000)        (1,000)
---------------------------------------------------------------------------------------------------
Net change in cash                                          3,064,000      4,078,000       (761,000)
Cash at beginning of year                                   6,637,000      2,559,000      3,320,000
---------------------------------------------------------------------------------------------------
Cash at end of year                                      $  9,701,000   $  6,637,000   $  2,559,000
===================================================================================================
Cash paid during the year for:
   Interest, net of contango on futures and
     forward contracts                                   $ 12,886,000   $ 20,979,000   $ 15,721,000
   Income taxes                                          $ 20,678,000   $  6,365,000   $  8,709,000
===================================================================================================
</TABLE>
The accompanying summary of significant accounting policies and notes are an
integral part of the financial statements.


24
<PAGE>   27

Handy & Harman and Subsidiaries

Summary of Significant Accounting Policies

A -- PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of the Company and
its wholly owned subsidiaries. All significant intercompany items have been
eliminated. Investments in affiliates, which are 20%-50% owned companies, are
accounted for by the equity basis of accounting.

B -- INVENTORIES

Precious metals inventories are valued at cost as computed under the last-in,
first-out (LIFO) method, which is lower than market. Non-precious metals
inventories are stated at the lower of cost (principally average) or market. For
precious metals inventories no segregation among raw materials, work in process
and finished goods is practicable.

C -- PROPERTY, PLANT AND EQUIPMENT, AND DEPRECIATION

Property, plant and equipment are stated at cost. Depreciation and amortization
are provided principally on the straight-line method for financial reporting
purposes and on accelerated methods for tax purposes.

D -- INTANGIBLES AND AMORTIZATION

Purchased patents are stated at cost, which is amortized over the respective
remaining lives of the patents. The excess of purchase price over net assets
acquired in business combinations is being amortized on the straight-line method
over 40 years. The Company uses undiscounted cash flows when evaluating annually
the recoverability of the unamortized balance for the excess of purchase price
over net assets acquired in a business combination. The assessment of the
recoverability of goodwill will be impacted if estimated future operating cash
flows are not achieved.

E -- FUTURES CONTRACTS

Consistent with the Company's policy of maintaining constant inventory levels
under the last-in, first-out (LIFO) method of accounting, precious metals are
purchased at the same prices and quantities as shipments to customers.
Additionally, to the extent that an increase in inventory is required to support
operations, precious metals are purchased and immediately sold for future
delivery, creating a futures receivable and eliminating the economic risk of
price fluctuations. Also to the extent there is a decrease in the inventory
required to support operations, precious metals are sold and immediately
purchased for future receipt, creating a futures payable and also eliminating
the economic risk of price fluctuations.

   Future sales and purchases of precious metals are excluded from sales and
cost of sales in the accompanying income statement. The related margin deposits
are included with the futures receivable/payable. The income/expense from future
sales/purchases of precious metals is amortized over the contract period and is
included in interest expense.

F -- SALES

A high percentage of the sales prices for the Company's precious metals products
is the value of the precious metals content. Changes in the unit sales price of
such precious metals result in corresponding changes in sales and cost of sales.
The Company includes in both sales and cost of sales the precious metal value of
sales of fabricated products if the customer purchased the precious metal from
the Company, whether or not the precious metal is sold at the same time as the
fabricated product. In addition, certain customers choose to do business on a
"toll" basis, that is, to furnish bullion to Handy & Harman for fabrication.
When the metals are returned to the customer in fabricated form, the customer
pays only a fabrication charge, and the precious metal value of this consignment
business is not included in sales or cost of sales.

G -- TAXES ON INCOME

The Company accounts for certain income and expense items differently for
financial reporting and income tax purposes. In accordance with SFAS No. 109
"Accounting for Income Taxes" deferred tax assets and liabilities are determined
based on the difference between the financial statement and tax bases of assets
and liabilities applying enacted statutory tax rates in effect for the year in
which the differences are expected to reverse.

H -- INCOME PER SHARE

Per share amounts are based on the weighted average number of shares outstanding
during the year. Outstanding stock options are considered common stock
equivalents using the treasury stock method and are included in the calculation
when their effect would be dilutive; however they had no dilutive effect in
1996, 1995 and 1994.

I -- FOREIGN CURRENCY TRANSLATION

Assets and liabilities of foreign subsidiaries have been translated at current
exchange rates, and related revenues and expenses have been translated at
average rates of exchange in effect during the year. Resulting cumulative
translation adjustments have been recorded as a separate component of
shareholders' equity.

J -- FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair value amounts for cash, receivables (net), and short-term borrowings
approximate carrying amounts due to the short maturities of these instruments.

   The fair value of long-term debt was estimated based on the current rates
offered to the Company for debt of the same remaining maturities. The difference
between the fair value and the carrying value is not material and the Company
has no plans to retire significant portions of its long-term debt prior to
scheduled maturity.

K -- LONG-LIVED ASSETS

In 1995 the Financial Accounting Standards Board issued SFAS No. 121 "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
of". SFAS No. 121 requires that long-lived assets and certain identifiable
intangibles to be held and used or disposed of by an entity be reviewed for
impairment whenever events or changes in circumstances


                                                                              25
<PAGE>   28

Handy & Harman and Subsidiaries

indicate that the carrying amount of an asset may not be recoverable. During
1996, the Company adopted this statement and determined that no impairment loss
need be recognized for applicable assets of continuing operations.

L -- STOCK BASED COMPENSATION

In 1995 the Financial Accounting Standard Board issued SFAS No. 123 "Accounting
for Stock-Based Compensation". SFAS No. 123 encourages, but does not require
companies to record compensation cost for stock-based employee compensation
plans at fair value. The Company has chosen to continue to account for
stock-based compensation using the intrinsic value method prescribed in
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees" and related Interpretations. Accordingly, compensation cost for stock
options is measured as the excess, if any, of the quoted market price of
Company's stock at the date of the grant over the amount an employee must pay to
acquire stock. Refer to Note 6.

M -- USE OF ESTIMATES

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the consolidated financial statements and related
notes to financial statements. Changes in such estimates may affect amounts
reported in future periods.

N -- RECLASSIFICATIONS

Certain reclassifications have been made to the 1995 and 1994 consolidated
financial statements to conform to the 1996 presentation.

================================================================================

Notes to Consolidated Financial Statements

NOTE 1:  ACQUISITIONS, DIVESTITURES, RESTRUCTURING AND OTHER CHARGES

On June 27, 1996 the Company acquired 100% of ele Corporation's outstanding
shares for $4,341,000. The acquisition has been accounted for as a purchase;
accordingly, the purchase price has been allocated to the underlying assets and
liabilities based on their respective estimated fair values at the date of
acquisition. The estimated fair value of assets acquired is $4,314,000 and
liabilities assumed is $3,254,000 (inclusive of $2,199,000 of debt). The excess
of the purchase price over the fair value of the assets acquired and liabilities
assumed was $3,281,000 and is being amortized over a period of 40 years. This
business is not material to the revenues of the Company.

     The Company sold the Handy & Harman Refining Division in August 1996 for
which the Company received $5,074,000. Accordingly, operations for this major
division have been classified as discontinued operations. A charge associated
with exiting this business of $22,350,000 was recorded in 1996. Revenues from
this division for 1996, 1995 and 1994 were $98,934,000, $168,309,000, and
$194,531,000, respectively. The net property, plant and equipment of this
discontinued operation included in the consolidated balance sheet for 1995 was
$12,773,000.

     The Company sold its automotive (OEM) segment in two phases during 1995 and
recorded a net gain on its sale amounting to $19,716,000. The first phase was
the sale of this segment's cable operations on July 20, 1995 for which the
Company received cash of $3,211,000. The cable operations' working capital
retained by the Company also generated approximately $3,000,000 in cash. The
second phase was the sale of this segment's remaining operations on December 29,
1995 for which the Company received $64,821,000 (net of cash sold) with an
additional amount due of $5,246,000. Accordingly, the results of this segment
for all years presented are reported in the accompanying consolidated statement
of income as discontinued operations. Revenues from this segment for 1995, 1994,
and 1993 were $150,629,000, $181,866,000 and $156,607,000, respectively. The
assets and liabilities of this discontinued operation included in the
consolidated balance sheet for 1994 are as follows: Working capital -
$25,582,000, Net property, plant and equipment - $24,813,000, Other assets -
$318,000.

     With the sale of GO/DAN Industries, a joint venture, and the related
receipt of $24,750,000 in September 1995, the previously discontinued operations
net assets, primarily composed of the Company's investment in and receivable
from GO/DAN Industries, were realized.

     During 1995 the Company exited the karat gold fabricated product line
located in its East Providence, Rhode Island facility. A restructuring charge to
exit the business amounting to $5,342,000 was recorded as follows: employee
separation (155 employees) - $733,000, asset write-downs -$3,819,000, and other
exit costs - $790,000. This action was substantially completed at December 31,
1995. In addition to this restructuring charge, a charge of $4,207,000,
primarily asset write-downs, was recorded relating to the Company's ongoing
operation in Fairfield, Connecticut.


26
<PAGE>   29

Handy & Harman and Subsidiaries

Notes to Consolidated Financial Statements

     Included in other deductions for 1995 is a gain on the sale of the
Company's joint venture in Brazil amounting to $460,000.

     On September 9, 1994 the Company acquired 100% of Sumco Inc.'s outstanding
shares for $26,000,000. The acquisition has been accounted for as a purchase;
accordingly, the purchase price has been allocated to the underlying assets and
liabilities based on their respective estimated fair values at the date of
acquisition. The estimated fair value of assets acquired was $11,100,000 and
liabilities assumed was $7,100,000 (inclusive of $3,921,000 of debt). The excess
of the purchase price over the fair value of the assets acquired and liabilities
assumed was $22,000,000 and is being amortized over a period of 40 years. This
business was not material to the revenues of the Company.

     Included in Other Deductions are provisions for the disposals of the
Company's interest in a Mexican joint venture of $1,300,000 and land and
building of $400,000.

NOTE 2: INVENTORIES AND FEE CONSIGNMENT FACILITIES

The components of inventories at December 31, 1996 and 1995 are as follows:

                                                           1996            1995
================================================================================
Precious Metals:
  Fine and Fabricated metals in
  various stages of completion                      $26,569,000     $ 34,230,000
Non-Precious Metals:
  Base metals, factory supplies
  and raw materials                                  20,993,000       21,797,000
  Work in process                                    15,192,000       19,384,000
  Finished goods                                      7,603,000        9,011,000
--------------------------------------------------------------------------------
                                                    $70,357,000     $ 84,422,000
================================================================================

Other inventory information at December 31, 1996 and 1995:

                                                           1996            1995
================================================================================
Precious metals stated at LIFO cost                 $24,763,000     $ 28,870,000
================================================================================
LIFO inventory-excess of year-end
  market value over LIFO cost                       $97,996,000     $141,458,000
================================================================================
Dec. 31 market value per ounce:
Silver                                              $      4.73     $       5.11
Gold                                                $    369.00     $     386.95
================================================================================

   Consigned precious metal ounces due to/(from) customers and suppliers:

                                                           1996            1995
================================================================================
Silver ounces
Net open account                                        500,000        4,375,000
Leased/Futures                                        9,419,000       13,742,000
--------------------------------------------------------------------------------
Total                                                 9,919,000       18,117,000
================================================================================
Gold ounces
Net open account                                         14,600           21,000
Leased/Futures                                            5,700          101,000
--------------------------------------------------------------------------------
Total                                                    20,300          122,000
================================================================================

     In 1994 the Company was provided a Gold and Silver Fee Consignment Facility
amounting to $250,750,000 of which $111,750,000 remains after exiting the karat
gold business in 1995 and refining business in 1996. The Fee Consignment
Facility of $83,812,500 is for a three-year period and the short-term Fee
Consignment Facility of $27,937,500 is for 364 days. As of December 31, 1996,
14,209,000 ounces of silver and 5,300 ounces of gold were leased to the Company
and are included in leased amounts above. The fee rates at December 31, 1996 for
gold and silver were 2.2% and .92%, respectively.

     Included in continuing operations for 1996 are profits before taxes of
$33,630,000 resulting from reduction in the quantities of precious metal
inventories valued under the LIFO method. The effect on continuing operations
amounted to $19,260,000 or $1.40 per share in 1996.

NOTE 3:  DEBT AND CREDIT AGREEMENTS

The Company's borrowing requirements are primarily related to the level of
inventories, the market value of precious metals, and changes in the Company's
receivables. The Company adjusts the level of its credit facilities from time to
time in accordance with its borrowing needs. At December 31, 1996, the Company
had short-term credit facilities of $50,000,000; (see discussion below regarding
revolving credit facilities) short-term bank borrowing amounted to $15,000,000.
The corresponding amounts for December 31, 1995 were: credit
facilities--$53,750,000 and short-term bank borrowings-$40,000,000.

     At December 31, 1996, 1995, and 1994 the average interest rate for
outstanding short-term borrowing was 6.0%, 6.0%, and 6.9%, respectively. During
1996, the average month-end short-term borrowing was $40,979,000; the weighted
average interest rate of 5.8% was computed on the basis of the number of days
the borrowings were outstanding; and the maximum month-end short-term borrowing
was $66,600,000. The corresponding amounts for the years ended December 31, 1995
and 1994 were: average month-end borrowing-$54,300,000 and $53,777,000 weighted
average interest rate 6.5% and 5.4%, and maximum month-end borrowing-$75,500,000
and $117,000,000.

     Long-term debt at December 31, 1996 and 1995 is summarized as follows:

                                                           1996             1995
================================================================================
Credit facility                                    $120,000,000      $25,000,000
8.83% notes due 2002*                                        --       50,000,000
9.37% note due 1999*                                         --       14,500,000
Industrial revenue bonds,
   floating rate, due 2004-2005                       7,500,000        7,500,000
--------------------------------------------------------------------------------
                                                    127,500,000       97,000,000
Less installments due within year                            --        3,500,000
--------------------------------------------------------------------------------
Total long-term debt                               $127,500,000      $93,500,000
================================================================================
* Prepaid on October 10, 1996


                                                                              27
<PAGE>   30

Handy & Harman and Subsidiaries

Notes to Consolidated Financial Statements

The $120,000,000 credit facility matures in 1999. During the third quarter of
1994, the Company finalized $215,000,000 of Revolving Credit Facilities with
twenty banks. These Credit Facilities provided both $161,250,000 for a three
year period and $53,750,000 for 364 days. Due to the sale of the Company's
automotive segment, the three year portion of the credit facility was reduced to
$96,250,000. On September 24, 1996 the Revolving Credit Facilities were amended
to increase the three year portion to $150,000,000 and reduce the short-term
portion to $50,000,000 for a total of $200,000,000. Under both of these credit
facilities interest is payable at the prime rate or LIBOR plus a margin varying
from .45% to 1% depending upon certain financial ratios. At December 31, 1996
the margin over LIBOR was .6%.

     All the above loans have restrictive covenants. At December 31, 1996 the
Company was in compliance with all covenants.

NOTE 4:  INCOME TAXES

The components of pre-tax income are as follows (in thousands):

                                                   1996         1995        1994
================================================================================
Continuing operations - domestic               $ 59,090      $12,906     $10,178
Continuing operations - foreign                    (117)       1,380       1,389
Extraordinary item                               (4,919)          --          --
--------------------------------------------------------------------------------
                                                 54,054       14,286      11,567
Discontinued operations - domestic              (24,731)      19,099      16,754
--------------------------------------------------------------------------------
   Total                                       $ 29,323      $33,385     $28,321
================================================================================

The provision for taxes on income was comprised of the following (in thousands):

                                                          1996
                                          Current       Deferred          Total
================================================================================
CONTINUING OPERATIONS
Federal                                  $ 18,260       $    764       $ 19,024
Foreign                                       676             --            676
State and local                             5,443             57          5,500
--------------------------------------------------------------------------------
                                           24,379            821         25,200
--------------------------------------------------------------------------------
EXTRAORDINARY ITEM
Federal                                    (1,557)            --         (1,557)
State and local                              (473)            --           (473)
--------------------------------------------------------------------------------
                                           (2,030)            --         (2,030)
--------------------------------------------------------------------------------
DISCONTINUED OPERATIONS
Federal                                    (8,709)           843         (7,866)
State and local                            (2,413)            63         (2,350)
--------------------------------------------------------------------------------
                                          (11,122)           906        (10,216)
--------------------------------------------------------------------------------
   Total                                 $ 11,227       $  1,727       $ 12,954
================================================================================

                                                          1996
================================================================================
                                          Current       Deferred          Total
================================================================================
CONTINUING OPERATIONS
Federal                                  $  2,653       $  1,913       $  4,566
Foreign                                     1,594           (386)         1,208
State and local                               223            780          1,003
--------------------------------------------------------------------------------
                                            4,470          2,307          6,777
--------------------------------------------------------------------------------
DISCONTINUED OPERATIONS
Federal                                     7,847         (1,776)         6,071
State and local                             2,445           (548)         1,897
--------------------------------------------------------------------------------
                                           10,292         (2,324)         7,968
--------------------------------------------------------------------------------
   Total                                 $ 14,762       ($    17)      $ 14,745
================================================================================

                                                          1994
================================================================================
                                          Current       Deferred          Total
================================================================================
CONTINUING OPERATIONS
Federal                                  $    602       $  2,379       $  2,981
Foreign                                       748            (25)           723
State and local                             1,120             --          1,120
--------------------------------------------------------------------------------
                                            2,470          2,354          4,824
--------------------------------------------------------------------------------
DISCONTINUED OPERATIONS
Federal                                     5,492            (79)         5,413
State and local                             1,573             --          1,573
--------------------------------------------------------------------------------
                                            7,065            (79)         6,986
--------------------------------------------------------------------------------
   Total                                 $  9,535       $  2,275       $ 11,810
================================================================================

     The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at December 31,
1996 and 1995 follow (in thousands):

                                                         1996
================================================================================
                                     Deferred Tax    Deferred Tax   Net Deferred
                                        Assets       Liabilities     Liability
================================================================================
Prepaid retirement costs                       --        $19,098       ($19,098)
Property, plant and equipment                  --          3,442         (3,442)
Discontinued operations                  $  3,312             --          3,312
Foreign losses                              1,625             --          1,625
All other                                   7,168          3,201          3,967
Valuation allowance                        (1,625)            --         (1,625)
--------------------------------------------------------------------------------
   Total                                 $ 10,480        $25,741       ($15,261)
================================================================================

                                                         1995
                                     Deferred Tax    Deferred Tax   Net Deferred
                                        Assets       Liabilities     Liability
================================================================================
Prepaid retirement costs                       --        $17,903       ($17,903)
Property, plant and equipment                  --          5,054         (5,054)
Restructuring and discontinued
  operations                             $  5,972             --          5,972
Foreign losses                                890             --            890
All other                                   5,364          1,913          3,451
Valuation allowance                          (890)            --           (890)
--------------------------------------------------------------------------------
   Total                                 $ 11,336        $24,870       ($13,534)
================================================================================


28
<PAGE>   31

Handy & Harman and Subsidiaries

Notes to Consolidated Financial Statements

     Due to the Company's current taxable income and expected future taxable
income, management believes it is more likely than not that the Company will
realize the benefit of the existing deferred tax assets other than the deferred
tax asset on foreign losses for which a valuation allowance has been provided.

     Principal items making up the change in the net deferred tax liability
follow (in thousands):

                                                   1996        1995        1994
================================================================================
Prepaid retirement costs                        $ 1,195     $ 1,293     $ 1,340
Property, plant and equipment                    (1,612)     (4,175)       (257)
Restructuring and
   discontinued operations                        2,660         825         558
Foreign tax credit carryforwards                     --         495         689
Investment tax credit carryforwards                  --          --       1,502
All other                                          (516)      1,545      (1,557)
--------------------------------------------------------------------------------
                                                $ 1,727     ($   17)    $ 2,275
================================================================================

Deferred income taxes have not been provided on the undistributed earnings of
foreign subsidiaries and other foreign investments carried at equity. These
earnings have been substantially reinvested and the Company does not plan to
initiate any action that would precipitate the payment of income taxes thereon.

     The major elements contributing to the difference between the U.S. Federal
statutory tax rate and the consolidated effective tax rate for continuing
operations are as follows:

                                                     1996       1995      1994
==============================================================================
U.S. Federal effective statutory tax rate            35.0%      35.0%     35.0%
State and local income taxes, net
      of Federal income tax benefit                   6.1        4.6       6.3
Valuation allowance                                   1.3        4.8       1.6
Net effect of foreign tax rates                      (0.1)       0.1       0.4
Other                                                 0.4        2.9      (1.6)
--------------------------------------------------------------------------------
                                                     42.7%      47.4%     41.7%
================================================================================

NOTE 5:  COMMITMENTS

Commitments at December 31, 1996 for the purchase of additional property, plant
and equipment approximated $5,925,000. Rent expense for 1996, 1995, and 1994 was
$2,885,000, $3,591,000 and $3,460,000 respectively. Operating lease and rental
commitments for future years are as follows:

================================================================================
1997                                                                 $ 1,538,000
1998                                                                   1,622,000
1999                                                                   1,135,000
2000                                                                     975,000
2001                                                                     918,000
2002 and beyond                                                        6,047,000
--------------------------------------------------------------------------------
Total lease and rental commitments                                   $12,235,000
================================================================================

NOTE 6: INCENTIVE PLANS
HANDY & HARMAN 1995 OMNIBUS STOCK INCENTIVE PLAN (SUCCESSOR TO THE HANDY &
HARMAN LONG-TERM INCENTIVE STOCK OPTION PLAN ADOPTED IN 1991)

After incorporating 1994's remaining "shares available for option" of the
predecessor plan the combined number of shares subject to award under this
succeeding plan adopted in 1995 shall not exceed 1,000,000 shares of Common
Stock. The compensation committee of the Board of Directors may grant options,
stock appreciation rights (tandem or stand alone), shares of restricted or
phantom stock, and stock bonuses, in such amounts and with such terms and
conditions as the compensation committee shall determine, subject to the
provisions of the plan. Through 1996 only options have been awarded under the
successor and predecessor plans and, commencing one year after the date of
grant, each option becomes exercisable cumulatively at the rate of 25% per year
(20% for predecessor plan awarded options). These options will expire ten years
from the date such options were granted.

     Successor and predecessor plans' transactions are as follows:

                                            Shares under option       Weighted
                             Shares      --------------------------    Average
                            Available                 Range of         Exercise
                           for Option     Shares        Price           Price
================================================================================
Balance,
    January 1, 1994          348,200     648,000    $ 9.625-15.3125      13.15
Options granted             (118,000)    118,000    $13.75-16.625        16.45
Options exercised                 --     (27,000)   $ 9.625-12.625       12.51
Options expired               23,000     (23,000)   $12.625              12.62
--------------------------------------------------------------------------------
Balance,
    December 31, 1994        253,200     716,000    $ 9.625-16.625       13.74
Increase in shares
   subject to award          746,800
Options granted             (162,000)    162,000    $15.125-15.438       15.13
Options exercised                 --     (22,800)   $ 9.625-12.937       12.25
Options expired               28,200     (28,200)   $11.313-16.625       13.67
--------------------------------------------------------------------------------
Balance,
    December 31, 1995        866,200     827,000    $ 9.625-16.625       14.06
Options granted             (260,000)    260,000    $17.75-18.625        17.92
Options exercised                 --     (78,500)   $ 9.625-16.625       12.80
Options expired               48,800     (48,800)   $12.625-16.625       13.20
--------------------------------------------------------------------------------
Balance,
    December 31, 1996        655,000     959,700    $ 9.625-18.625       15.25
================================================================================


                                                                              29
<PAGE>   32

Handy & Harman and Subsidiaries

Notes to Consolidated Financial Statements

     Additional information on options outstanding and options exercisable at
December 31, 1996 is as follows:

                          Options Outstanding               Options Excercisable
--------------------------------------------------------------------------------
                                     Weighted
                                      Average   Weighted                Weighted
                         Number     Remaining    Average        Number   Average
                    Outstanding   Contractual  Excercise  Excercisable Excercise
                    at 12/31/96          Life      Price   at 12/31/96     Price
================================================================================
$9.625 to $14.125       292,500       4 years     $13.64       292,500    $13.64
$12.0625 to $12.5625     14,000       6 years      12.21        11,200     12.21
$12.937                 125,200       7 years      12.94        75,120     12.94
$13.75 to $16.625       107,000       8 years      16.44        42,800     16.44
$15.125 to $15.438      161,000       9 years      15.13        40,000     15.13
$17.75-18.625           260,000      10 years      17.92            --        --
--------------------------------------------------------------------------------
                        959,700                                461,620
================================================================================

     The disclosure-only method described in SFAS No.123 "Accounting for
Stock-Based Compensation" is being used by the Company, therefore the proforma
effect of recognizing compensation cost for the above plan on net income and
earnings per share is as follows:

                                                         1996           1995
================================================================================
Net income - as reported                          $16,369,000    $18,640,000
Net income - proforma                             $15,980,000    $18,277,000
Net income per share - as reported                      $1.19          $1.32
Net income per share - proforma                         $1.14          $1.29

     The fair value of each option grant is estimated using the Black-Scholes
option-pricing model with the following assumptions used for options granted in
1996 and 1995, respectively: expected dividend yield - 1.34% and 1.58%; expected
stock price volatility - 27.05% and 25.94%; risk-free interest rate - 6.42% and
6.41%; and expected life of options - 6 years and 6 years. Additionally, 100% of
the stock options granted in 1995 were assumed vested as a baseline for proforma
calculations.

     The effects of applying SFAS No. 123 in this proforma disclosure are not
indicative of future proforma amounts. SFAS No. 123 does not apply to awards
prior to 1995 and additional awards in future years are anticipated.

OUTSIDE DIRECTOR STOCK OPTION PLAN

Under the Outside Director Stock Option Plan each outside director is awarded
fully and immediately exercisable options, on an annual basis, to purchase
Common Stock at an option price of $1. The market value of the Company's shares
at date of grant less the option price is amortized to compensation expense
during the year. Transactions under this Plan are summarized below:

                                                   1996        1995        1994
================================================================================
Options outstanding January 1                     9,977       9,539       7,810
Options awarded                                   4,194       3,290       4,110
Options expired                                      --          --      (2,381)
Options exercised                                (8,640)     (2,852)         --
--------------------------------------------------------------------------------
Options outstanding December 31                   5,531       9,977       9,539
================================================================================
Shares subject to award December 31              67,741      71,935      75,225
================================================================================

All options outstanding under the Outside Director Stock Option Plan are
exercisable at December 31, 1996.

1988 LONG-TERM INCENTIVE PLAN

Shares issued under the 1988 Long-Term Incentive Plan are in the name of the
employee, who has all the rights of a shareholder, subject to certain
restrictions or forfeitures. Of the 400,000 shares which may be awarded under
this Plan cumulative shares amounting to 79,500 were issued as of December 31,
1995, of which 4,000 shares were forfeited. Additional awards of 62,750 shares
were made in 1996. The market value of shares issued under the Plan is recorded
as unearned compensation and shown as a separate component of shareholders'
equity. This compensation is amortized to expense over the period the employees
become vested.

     Compensation expense for both the Outside Director Stock Option Plan and
the 1988 Long-Term Incentive Plan amounted to $648,000, $266,000 and $277,000,
in 1996, 1995 and 1994, respectively.

NOTE 7:  SEGMENT INFORMATION

Information regarding the Company's industry segments and discontinued
operations is contained on page 15 under the heading "The Company's Business"
and is incorporated herein by reference.

     Additional information concerning industry segments, corporate and
discontinued operations is as follows:

                                                  1996         1995         1994
================================================================================
Depreciation and
amortization expense:
Wire/Tubing                                $ 5,461,000  $ 5,029,000  $ 4,355,000
Precious metals                              4,560,000    4,545,000    3,609,000
Other non-precious
  metal businesses                             442,000      543,000      504,000
Corporate                                    1,136,000    1,053,000    1,072,000
Discontinued operations                        401,000    5,498,000    6,143,000
--------------------------------------------------------------------------------
                                           $12,000,000  $16,668,000  $15,683,000
================================================================================
Property, plant and equipment additions:
   Wire/Tubing                             $ 3,881,000  $11,378,000  $ 8,017,000
   Precious Metals                           9,315,000    7,738,000    4,537,000
   Other non-precious
     metal businesses                          419,000      929,000    1,069,000
   Corporate                                    31,000       47,000       56,000
--------------------------------------------------------------------------------
                                            13,646,000   20,092,000   13,679,000
--------------------------------------------------------------------------------
   Discontinued operations                   1,048,000    3,051,000    4,888,000
--------------------------------------------------------------------------------
                                           $14,694,000  $23,143,000  $18,567,000
================================================================================


30
<PAGE>   33

Handy & Harman and Subsidiaries

Notes to Consolidated Financial Statements

NOTE 8:  SUPPLEMENTAL INFORMATION

                                        Life/
                                        Years           1996             1995
================================================================================
a-Property, plant and equipment:
    Land                                        $  3,355,000     $  3,872,000
    Buildings and improvements          10-50     43,642,000       48,594,000
    Machinery and equipment              3-20    130,573,000      140,107,000
    Furniture and fixtures               2-20     11,932,000       11,974,000
    Automotive                            4-8        566,000          515,000
    Leasehold improvements         Lease Life      1,684,000        2,269,000
    Construction in progress               --      3,871,000        7,014,000
--------------------------------------------------------------------------------
                                                $195,623,000     $214,345,000
================================================================================

Depreciation and amortization of property, plant and equipment charged to
operations for 1996, 1995 and 1994 was $10,816,000, $15,066,000 and $14,633,000,
respectively.

                                                             1996           1995
================================================================================
b-Intangibles (net of amortization):
     Patents and other                                $   515,000    $   455,000
     Excess of purchase price over
         net assets acquired in business
         combinations                                  24,303,000     21,686,000
--------------------------------------------------------------------------------
                                                      $24,818,000    $22,141,000
================================================================================

NOTE 9:  RETIREMENT PLANS AND OTHER BENEFITS
RETIREMENT PLANS

The Company and substantially all of its subsidiaries have noncontributory
defined benefit plans covering most of their employees. The benefits are based
on years of service and the employee's compensation at the time of retirement.
Contributions are made by the Company as necessary to provide assets sufficient
to meet the benefits payable to plan participants, and are determined in
accordance with applicable minimum funding standard requirements as promulgated
by the Internal Revenue Service. Such contributions are based on actuarial
computations of the amount sufficient to fund normal (current service) cost plus
an amortization of the unfunded actuarial accrued liability over periods of up
to 30 years.

     The components of net periodic pension cost (credit) for 1996, 1995 and
1994 are as follows:

                                             1996           1995           1994
================================================================================
Service cost-benefits earned
  during the period                  $  2,678,000   $  3,582,000   $  3,858,000
Interest cost on the
  projected benefits
  obligation                            7,784,000      7,974,000      7,530,000
Return on plan assets                 (26,000,000)   (37,283,000)        43,000
Net amortization
  and deferral                         11,202,000     21,399,000    (15,540,000)
--------------------------------------------------------------------------------
Net periodic pension
  cost (credit)                      ($ 4,336,000)  ($ 4,328,000)  ($ 4,109,000)
================================================================================

     Assumptions used in the accounting at December 31 are:

                                               1996         1995         1994
================================================================================
Discount rate:
  Beginning of year                             6.5%         7.0%         6.5%
  End of year                                   6.5%         6.5%         7.0%
Compensation increase                           5.0%         5.0%         5.0%
Expected asset return                           8.0%         8.0%         8.5%
================================================================================

     The plans' funded status as of December 31 and the amounts recognized in
the accompanying financial statements are as follows:

                                                         1996              1995
================================================================================
Actuarial present value of
  benefit obligations:
    Vested benefit obligation                   $ 107,909,000     $ 106,422,000
--------------------------------------------------------------------------------
    Accumulated benefit
      obligation                                $ 113,260,000     $ 111,635,000
--------------------------------------------------------------------------------
    Projected benefit obligation                $ 119,544,000     $ 122,555,000
Plan assets at fair value                         196,253,000       181,835,000
--------------------------------------------------------------------------------
Plan assets in excess of projected
  benefit obligation                               76,709,000        59,280,000
Unrecognized net (gain)/loss                      (10,974,000)        4,032,000
Unrecognized prior service cost                      (925,000)       (1,467,000)
Unrecognized net asset                             (4,553,000)       (6,403,000)
--------------------------------------------------------------------------------
Prepaid pension cost                            $  60,257,000     $  55,442,000
================================================================================

     The plans' assets are invested primarily in stocks and insurance contracts.

     The Company incurred pension curtailment gains from discontinued operations
amounting to $287,000 in 1996 and $1,354,000 in 1995.

POSTRETIREMENT BENEFITS OTHER THAN PENSIONS

Certain operations of the Company provide postretirement medical benefits to
current and retired employees. Certain employees of these operations become
eligible for postretirement medical benefits after fulfilling minimum age and
service requirements.

     Postretirement benefit costs were determined assuming discount rates of
6.5%, 7% and 6.5% for the years ended 1996, 1995 and 1994, respectively. The
components of net periodic postretirement benefit cost are as follows:

                                              1996           1995          1994
================================================================================
Service cost                            $  134,000     $  174,000     $  207,000
Interest cost                              539,000        596,000        577,000
Amortization of transition
    obligation                             311,000        371,000        433,000
--------------------------------------------------------------------------------
                                        $  984,000     $1,141,000     $1,217,000
================================================================================

In addition, a curtailment loss of $868,000 incurred on the 1996 sale of the
refining business is included in discontinued operations.

     The Company's funding policy with respect to these benefits is to pay the
amounts required to provide the benefits during each year. The following table
presents the Company's postretirement medical benefits funded status as of
December 31, 1996 and 1995.


                                                                              31
<PAGE>   34

Handy & Harman and Subsidiaries

Notes to Consolidated Financial Statements

   Accumulated Postretirement Benefit Obligation:

                                            1996        1995
================================================================================
Retirees                                             $ 4,414,000    $ 4,272,000
Future retirees                                        4,041,000      4,856,000
--------------------------------------------------------------------------------
Total accumulated postretirement
   benefit obligation                                  8,455,000      9,128,000
Unrecognized transition obligation                    (3,762,000)    (5,432,000)
Unrecognized actuarial gain (loss)                       998,000        594,000
--------------------------------------------------------------------------------
Net postretirement benefit liability -
    classified with prepaid retirement costs         $ 5,691,000    $ 4,290,000
================================================================================

The assumed discount rate used to measure the accumulated postretirement benefit
obligation was 6.5% for 1996 and 1995. The unrecognized transition obligation
amortization period is 20 years beginning on January 1, 1991, the implementation
date.

     For measurement purposes, a 15% annual rate of increase in the health care
cost trend rate was assumed for 1992 through 1994; the rate was assumed to
decrease gradually to 6% by the year 2003 and remain at that level thereafter. A
1% increase in the assumed health care trend rate would not have a significant
impact on the accumulated postretirement benefit obligation as of December 31,
1996 and 1995.

SAVINGS PLAN

The Company has a savings plan which qualifies under Section 401(k) of the
Internal Revenue Code. This savings plan allows eligible employees to contribute
from 1% to 15% of their income on a pretax basis to this savings plan. The
Company matches 50% of the first 3% of the employee's contribution. Such
matching Company contributions are invested in shares of the Company's common
stock and become immediately vested. The charge to operations for the Company's
matching contribution amounted to $570,000, $932,000 and $900,000 for 1996, 1995
and 1994, respectively.

NOTE 10: COMMON STOCK PURCHASE RIGHTS

In 1989, the Board of Directors declared a dividend of one Common Stock Purchase
Right on each outstanding share of Handy & Harman Common Stock to holders of
record on February 6, 1989.

     If the rights become exercisable, the rights will separate from the common
stock and each right will entitle the holder to purchase from the Company a
share of common stock at a predefined price. The rights are not exercisable
until either ten days after certain changes in ownership of the Company occurs
or ten days following the commencement of a tender offer for at least 20% of the
Company's common stock.

     The rights are redeemable by the Company at a fixed price after certain
defined events or at any time prior to the expiration of the rights on January
26, 1999, if such events do not occur.

     Through December 31, 1996, the Company had reserved common shares as
issuable pursuant to these rights. At the present time, the rights have no
dilutive effects on the earnings per share calculation.

NOTE 11:  ACQUISITION OF OLYMPIC
           MANUFACTURING GROUP, INC.

On February 28, 1997 the Company acquired 100% of the outstanding shares of
Olympic Manufacturing Group, Inc. Olympic, which has annual sales of
approximately $42.5 million, is the leading domestic manufacturer and supplier
of fasteners for the commercial roofing industry. The purchase price of
approximately $53 million was financed by utilizing existing unused credit
facilities. The acquisition will be accounted for as a purchase; accordingly,
the purchase price will be allocated to the underlying assets and liabilities
based on their respective estimated fair values at the date of the acquisition.
The estimated value of assets acquired was $16,000,000 and the liabilities
assumed was $5,800,000. Olympic will operate as part of the other non-precious
metals business segment.


32
<PAGE>   35

Handy & Harman and Subsidiaries

Independent Auditors' Report

TO THE BOARD OF DIRECTORS AND
SHAREHOLDERS OF HANDY & HARMAN:

We have audited the consolidated balance sheets of Handy & Harman and
Subsidiaries as of December 31, 1996 and 1995, and the related consolidated
statements of income, shareholders' equity, and cash flows for each of the years
in the three-year period ended December 31, 1996. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

     We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

     In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Handy &
Harman and Subsidiaries as of December 31, 1996 and 1995, and the results of
their operations and their cash flows for each of the years in the three-year
period ended December 31, 1996 in conformity with generally accepted accounting
principles.

/s/ KPMG Peat Marwick LLP

KPMG Peat Marwick LLP
New York, New York

February 28, 1997


Responsibility for Financial Statements

The financial statements presented in this Annual Report were prepared by Handy
& Harman which is responsible for their fairness. Such statements include, in
some instances, judgments as to those amounts which are estimates and
approximations and such amounts could differ from actual results. The Company
believes that the consolidated financial statements are in conformity with
generally accepted accounting principles.

     The Company depends upon an accounting system, including internal
accounting controls, administered by a staff of corporate accountants. The
controls are designed to provide reasonable assurance that the Company's
financial records are reliable, that the corporate assets are safeguarded and
that transactions are executed in accordance with the appropriate corporate
authorizations and recorded properly to permit the preparation of financial
statements in accordance with generally accepted accounting principles. It must
be recognized, however, that errors and irregularities may nevertheless occur,
so the effectiveness of such a financial system depends to a great extent upon
the careful selection of financial and other responsible managers. Also,
estimates and judgments are required to assess and balance the relative cost and
expected benefits of the Company's controls. The Company believes that its
accounting controls provide reasonable assurance that errors or irregularities
which could be material to the financial statements are prevented or would be
detected within a timely period by employees in the normal course of performing
their assigned functions. KPMG Peat Marwick LLP, independent certified public
accountants, has been engaged by the Company to conduct quarterly reviews and an
audit of the Company's financial statements in accordance with generally
accepted auditing standards.

     Such standards provide for numerous procedures, including obtaining an
understanding of the Company's accounting systems and performing reviews of
internal accounting control systems and tests of transactions deemed appropriate
by the auditors. KPMG Peat Marwick LLP is a member of the SEC Practice Section
of the AICPA Division of CPA firms.

     For many years the Company has had an Audit Committee of the Board of
Directors consisting exclusively of outside Directors of the Company. The
Committee meets periodically with the independent auditors, internal auditors,
management and corporate staff accountants to review and evaluate their
accounting, auditing and financial reporting activities and responsibilities.
The independent auditors as well as the internal auditors and the Corporate
Controller have full and free access to the Audit Committee. The independent
auditors meet with the Audit Committee, with and without Company employees
present, to discuss their audit plan and at a later date the results of their
audits.


                                                                              33
<PAGE>   36

Handy & Harman and Subsidiaries

Directors and Officers

Listed at right are the members of the
Board of Directors of the Company and
its officers, together with their
principal business occupations or
employment and the principal business
of the organizations by which they are
employed. In the case of each of the
officers, the principal occupation is
employment with the Company.

BOARD OF DIRECTORS

Clarence A. Abramson++
Former Vice President and Secretary
Merck & Co., Inc.
(a pharmaceutical company)
Active consultant to the health care industry.

Robert E. Cornelia++
Management Consultant

Richard N. Daniel*
Chairman of the Board
of the Company

Gerald G. Garbacz+
Chairman, President and Chief Executive
Officer, Nashua Corporation (an interna-
tional provider of coated products, office
supplies and photofinishing services)

Frank E. Grzelecki*
President of the Company

Gouverneur M. Nichols*+
Business Consultant

Hercules P. Sotos++
Retired 1995 as Vice Chairman and
a Director of Playtex Products, Inc.
(a manufacturer of health and beauty
aid products)

Dr. Elliot J. Sussman+
President and Chief Executive Officer
of Lehigh Valley Health Network, Inc.
and Lehigh Valley Hospital, Inc.

Roger E. Tetrault+
Vice Chairman of the Board
and Chief Executive Officer
McDermott International, Inc.
(a manufacturer and supplier of power
generation systems and equipment and
also marine construction services)


*    Member of Executive Committee
+    Member of Audit Committee
++   Member of Compensation Committee


OFFICERS

Richard N. Daniel
Chairman of the Board and
Chief Executive Officer

Frank E. Grzelecki
President and Chief Operating Officer

Robert D. LeBlanc
Executive Vice President

Robert F. Burlinson
Vice President and Treasurer

Paul E. Dixon
Vice President, General Counsel and
Secretary

Dennis C. Kelly
Controller

Robert M. Thompson
Vice President
International
<PAGE>   37
                                EXHIBIT INDEX
                                -------------



     (1) PLAN OF ACQUISITION, REORGANIZATION, ARRANGEMENT, LIQUIDATION OR
SUCCESSION.

     (a) Asset Purchase Agreement, dated as of July 8, 1996, by and between
Golden West Refining Corporation Limited and the Company.

     (b) Stock Purchase Agreement, dated as of February 19, 1997, among
Saugatuck Capital Company Limited Partnership III, the other sellers named
therein and the Company.

     With respect to (a) and (b), above, the disclosure schedules (relating to
certain factual matters concerning the Company and the other parties to the
respective agreements) and ancillary agreements (relating to the provision of
certain services by or to the Company with respect to (a) and (b), and the
consignment of certain precious metals to the other party to the agreement
described in (a) to such agreements have been omitted pursuant to Item 601(b)(2)
of Regulation S-K; the Company agrees to furnish such documents to the
Securities and Exchange Commission upon its request.

     (2) CERTIFICATE OF INCORPORATION AND BY-LAWS.

     (a) Restated Certificate of Incorporation of the Company (Filed as Exhibit
3(a) to the Company's 1989 Annual Report on Form 10-K and incorporated herein by
reference).

     (b) By-Laws, as amended (Filed as Exhibit 3(b) to the Company's 1990 Annual
Report on Form 10-K and incorporated herein by reference).

     (3) INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS, INCLUDING
INDENTURES.

     (a) Revolving Credit Agreement dated as of September 28, 1994 among the
Company, certain financial institutions as lenders, The Bank of Nova Scotia,
Chemical Bank and The Bank of New York as Co-Agents and The Bank of Nova Scotia,
as the Administrative Agent (Filed as Exhibit 10.3 to the Company's Current
Report on Form 8-K dated October 12, 1994 and incorporated herein by reference).

     (b) Short Term Revolving Credit Agreement dated as of September 28, 1994
among the Company, certain financial institutions as lenders, The Bank of Nova
Scotia, Chemical Bank and The Bank of New York as Co-Agents and The Bank of Nova
Scotia, as the Administrative Agent (Filed as Exhibit 10.4 to the Company's
Current Report on Form 8-K dated October 12, 1994 and incorporated herein by
reference).

     (c) Fee Consignment Agreement dated as of September 28, 1994 between the
Company and The Bank of Nova Scotia (Filed as Exhibit 10.5 to the Company's
Current Report on Form 8-K dated October 12, 1994 and incorporated herein by
reference).

     (d) Short Term Fee Consignment Agreement dated as of September 28, 1994
between the Company and The Bank of Nova Scotia, (Filed as Exhibit 10.6 to the
Company's Current Report on Form 8-K dated October 12, 1994 and incorporated
herein by reference).

     (e) Dollar Supply Agreement dated as of September 28, 1994 among the
Company, certain financial institutions as lenders, The Bank of Nova Scotia,
Chemical Bank and The Bank of New York as Co-Agents and The Bank of Nova Scotia,
as the Administrative Agent (Filed as Exhibit 10.7 to the Company's Current
Report on Form 8-K dated October 12, 1994 and incorporated herein by reference).

     (f) Short Term Dollar Supply Agreement dated as of September 28, 1994 among
the Company, certain financial institutions as lenders, The Bank of Nova Scotia,
Chemical Bank and The Bank of New York as Co-Agents and The Bank of Nova Scotia,
as the Administrative Agent (Filed as Exhibit 10.8 to the Company's Current
Report on Form 8-K dated October 12, 1994 and incorporated herein by reference).

     (g) First Amendment to Revolving Credit Agreement dated as of June 30, 1995
among the Company, certain financial institutions as lenders, The Bank of Nova
Scotia, Chemical Bank and The Bank of New York as Co-Agents and The Bank of Nova
Scotia, as the Administrative Agent.

<PAGE>   38

     (h) Second Amendment to Revolving Credit Agreement dated as of September
24, 1996 among the Company, certain financial institutions as lenders, The Bank
of Nova Scotia, Chemical Bank and The Bank of New York as Co-Agents and The Bank
of Nova Scotia, as the Administrative Agent.

     (i) Third Amendment to Revolving Credit Agreement dated as of October 11,
1996 among the Company, certain financial institutions as lenders, The Bank of
Nova Scotia, Chemical Bank and The Bank of New York as Co-Agents and The Bank of
Nova Scotia, as the Administrative Agent.

     (j) Fourth Amendment to Revolving Credit Agreement dated as of January 15,
1997 among the Company, certain financial institutions as lenders, The Bank of
Nova Scotia, Chemical Bank and The Bank of New York as Co-Agents and The Bank of
Nova Scotia, as the Administrative Agent.

     (k) First Amendment to Short Term Revolving Credit Agreement dated as of
June 30, 1995 among the Company, certain financial institutions as lenders, The
Bank of Nova Scotia, Chemical Bank and The Bank of New York as Co-Agents and The
Bank of Nova Scotia, as the Administrative Agent.

     (l) Second Amendment to Short Term Revolving Credit Agreement dated as of
September 24, 1996 among the Company, certain financial institutions as lenders,
The Bank of Nova Scotia, Chemical Bank and The Bank of New York as Co-Agents and
The Bank of Nova Scotia, as the Administrative Agent.

     (m) Third Amendment to Short Term Revolving Credit Agreement dated as of
October 11, 1996 among the Company, certain financial institutions as lenders,
The Bank of Nova Scotia, Chemical Bank and The Bank of New York as Co-Agents and
The Bank of Nova Scotia, as the Administrative Agent.

     (n) Fourth Amendment to Short Term Revolving Credit Agreement dated as of
January 15, 1997 among the Company, certain financial institutions as lenders,
The Bank of Nova Scotia, Chemical Bank and The Bank of New York as Co-Agents and
The Bank of Nova Scotia, as the Administrative Agent.

     (o) First Amendment to Fee Consignment Agreement dated as of June 30, 1995
between the Company and The Bank of Nova Scotia.

     (p) Second Amendment to Fee Consignment Agreement dated as of September 24,
1996 between the Company and The Bank of Nova Scotia.

     (q) First Amendment to Short Term Fee Consignment Agreement dated as of
June 30, 1995 between the Company and The Bank of Nova Scotia.

     (r) Second Amendment to Short Term Fee Consignment Agreement dated as of
September 24, 1996 between the Company and The Bank of Nova Scotia.

     (s) First Amendment to Dollar Supply Agreement dated as of September 24,
1996 among the Company, certain financial institutions as lenders, The Bank of
Nova Scotia, Chemical Bank and The Bank of New York as Co-Agents and The Bank of
Nova Scotia, as the Administrative Agent.

     (t) First Amendment to Short Term Dollar Supply Agreement dated as of
September 24, 1996 among the Company, certain financial institutions as lenders,
The Bank of Nova Scotia, Chemical Bank and The Bank of New York as Co-Agents and
The Bank of Nova Scotia, as the Administrative Agent.

     (u) Rights Agreement, dated as of January 26, 1989, between the Company and
ChaseMellon Shareholder Services, L.L.C., (formerly known as Morgan Shareholder
Services Trust Company), as Rights Agent, including all exhibits thereto (filed
as Exhibit 1 to the Company's Registration Statement on Form 8-A dated February
3, 1989 and incorporated herein by reference).

     (v) Amendment, dated as of April 25, 1996, to the Rights Agreement between
the Company and ChaseMellon Shareholder Services, L.L.C., as Rights Agent (filed
as Exhibit 1 to the Company's Registration Statement on Form 8-A/A dated May 21,
1996 and incorporated herein by reference).

     (w) Amendment, dated as of October 22, 1996, to the Rights Agreement
between the Company and ChaseMellon Shareholder Services, L.L.C., as Rights
Agent (filed as Exhibit 1 to the Company's Registration Statement on Form 8-A/A
dated October 24, 1996 and incorporated herein by reference).


<PAGE>   39

     The Company agrees to furnish to the Securities and Exchange Commission
upon its request therefor a copy of each instrument omitted pursuant to Item
601(b)(4)(iii) of Regulation S-K.

     (10) MATERIAL CONTRACTS.

     (a) 1982 Stock Option Plan (Filed as Exhibit 1 to the Company's
Registration Statement on Form S-8 (Registration No. 2-78264) under the
Securities Act of 1933 and incorporated herein by reference).

     (b) Amendment to 1982 Stock Option Plan approved in December 1988 (Filed as
Exhibit 10(a) to the Company's Report on Form 8-K for December 1988 and
incorporated herein by reference).

     (c) Handy & Harman Management Incentive Plan Corporate Group Participants,
as amended and restated on December 15, 1994.

     (d) Subsidiary, Division, Group or Unit Management Incentive Plan, as
amended and restated on December 15, 1994.

     (e) Handy & Harman Deferred Fee Plan For Directors, as amended and restated
on December 15, 1994, effective as of January 1, 1995.

     (f) Form of Executive Agreement entered into with the Company's executive
officers in September 1986 (Filed as Exhibit 10(d) to the Company's 1986 Annual
Report on Form 10-K and incorporated herein by reference).

     (g) Amendment to Executive Agreement approved in December 1988 (Filed as
Exhibit 10(b) to the Company's Report on Form 8-K for December 1988 and
incorporated herein by reference).

     (h) 1988 Long-Term Incentive Plan (Filed as Exhibit 10(h) to the Company's
1988 Annual Report on Form 10-K and incorporated herein by reference).

     (i) Amendment to 1988 Long-Term Incentive Plan approved in December 1988
(Filed as Exhibit 10(c) to the Company's Report on Form 8-K for December 1988
and incorporated herein by reference).

     (j) Amendment to 1988 Long-Term Incentive Plan approved in June 1989 (Filed
as Exhibit 10(j) to the Company's 1989 Annual Report on Form 10-K and
incorporated herein by reference).

     (k) Agreement dated as of May 1, 1989, between the Company and R. N. Daniel
(Filed as Exhibit 10(k) to the Company's 1989 Annual Report on Form 10-K and
incorporated herein by reference).

     (l) Amendment to Agreement between the Company and R. N. Daniel approved by
the Company on May 11, 1993, (Filed as Exhibit 10(m) to the Company's 1993
Annual Report on Form 10-K and incorporated herein by reference).

     (m) Supplemental Executive Retirement Plan approved and restated by the
Company in December 1994.

     (n) Outside Directors' Stock Option Plan (Filed as Exhibit 10(m) to the
Company's 1990 Annual Report on Form 10-K and incorporated herein by reference).

     (o) Amended and Restated Joint Venture Agreement dated as of June 1, 1990,
by and between Allen Heat Transfer Products Inc. and Handy & Harman Radiator
Corporation (Filed as Exhibit 2 to the Company's Report on Form 8-K for June
1990 and incorporated herein by reference).

     (p) Handy & Harman Long-Term Incentive Stock Option Plan (Filed as Exhibit
10(p) to the Company's 1991 Annual Report on Form 10-K and incorporated herein
by reference).

     (q) Handy & Harman Supplemental Executive Plan (Filed as Exhibit 10(q) to
the Company's 1992 Annual Report on Form 10-K and incorporated herein by
reference).

     (r) Amended and Restated Agreement between the Company and Mr. Grzelecki
(Filed as Exhibit 10(r) to the Company's Annual Report on Form 10-K and
incorporated herein by reference).

     (s) Press Release of the Company dated November 6, 1995 (Filed as Exhibit
10(s) to the Company's Annual Report on Form 10-K and incorporated herein by
reference).


<PAGE>   40

     (t) 1995 Omnibus Stock Incentive Plan (Filed as Exhibit 4.1 to the
Company's Registration Statement on Form S-8 (Registration No. 33-80803) on
December 22, 1995, under the Securities Act of 1933 and incorporated herein by
reference).

     (11) Statement re computation of per share earnings. Incorporated by
reference to Item (h) of Summary of Significant Accounting Policies on page 25
of the Annual Report.

     (13) Pages 15 through 32 of the Company's Annual Report to Shareholders for
1996. Except for those portions which are expressly incorporated by reference in
this Annual Report on Form 10-K, this exhibit is furnished for the information
of the Commission and is not deemed to be filed as part of this Annual Report on
Form 10-K.

     (21) List of Subsidiaries of the Company. Filed as Exhibit 21 to this
Annual Report on Form 10-K.

     (23) Report and Consent of Independent Auditors. Included as part of the
Report and Consent of Independent Auditors on page F-1 filed with the Financial
Statement Schedule as part of this Annual Report on Form 10-K pursuant to Part
IV hereof and incorporated herein by reference thereto.